Arbitration & Mediation: A Guide for Businesses and Individuals”


Arbitration & Mediation: A Guide for Businesses and Individuals”


 

 

Introduction

Alternative Dispute Resolution (ADR) has become a popular method of resolving disputes outside of the traditional court system. Two of the most common forms of ADR are arbitration and mediation. While both processes share similarities, they differ in many respects. In this article, we will focus on arbitration, its benefits, challenges, and considerations.

 

What is Arbitration?

Arbitration is a private process that is used to resolve disputes outside of the courts. It involves the use of an arbitrator who is appointed by the parties to the dispute, or in some cases, a court of law. The arbitrator is tasked with making a decision that is legally binding and enforceable on the parties.

 

What is Mediation?

Mediation is a process used to settle disputes between parties in conflict. The process typically involves a meeting among the disputants, their representatives, and a mediator who facilitates the discussion and negotiation of a settlement. The role of the mediator is to help the parties identify the issues at hand, explore their needs, and come up with possible settlement options. While the mediator may offer suggestions and point out issues that the parties may have overlooked, it is ultimately up to the parties themselves to resolve the dispute. Mediation can be scheduled quickly and requires minimal preparation time. The conference usually begins with a joint discussion of the case, followed by the mediator working with the parties both together and separately, if appropriate, to resolve the case. Many disputes are resolved within a few hours of mediation. Overall, mediation is an effective way of resolving conflicts as it allows parties to have control over the outcome and can save time and money compared to litigation.

 

How Does Mediation Differ From Arbitration?

 

Mediation and arbitration are two methods of alternative dispute resolution that are often used as alternatives to traditional litigation. While both mediation and arbitration aim to resolve disputes outside of the courtroom, they differ in several ways.

Arbitration is less formal than litigation, but more formal than mediation. In arbitration, a neutral third party, known as an arbitrator, is appointed to hear evidence and make a final and binding decision on the matter at hand. The arbitrator typically conducts a hearing in which evidence is presented, and witnesses are called to testify. After hearing all the evidence, the arbitrator issues an award that is binding on the parties.

In contrast, mediation is a non-binding process in which a neutral third party, known as a mediator, helps the parties to negotiate a resolution to their dispute. The mediator does not have the power to make a final and binding decision on the matter. Instead, the mediator works with the parties to help them identify the issues, understand each other’s positions, and explore possible solutions.

During mediation, the mediator may conduct joint sessions with the parties or separate meetings, known as caucuses. In these meetings, the mediator tries to obtain a candid discussion of the issues and priorities of each party. The mediator may use the information derived from each side to reduce hostility between the parties, open discussions into areas not previously considered, communicate positions or proposals in more understandable terms, probe and uncover additional facts and interests, narrow the issues and positions of each party, and explore alternatives and search for solutions.

The main goal of mediation is to help the parties reach a voluntary agreement that is mutually satisfactory. Unlike arbitration, the mediator does not impose a decision on the parties. Instead, the parties are free to accept or reject the proposed settlement agreement. If the parties are unable to reach an agreement, they are free to pursue other options, including arbitration or litigation.

 

The stages of a mediation process are (usually) as follows:

 

  1. The Agreement to Mediate: The parties must agree that their dispute will be conducted under the applicable mediation rules. This can be achieved by including a mediation clause in their contract or submitting an existing dispute to mediation.
  2. Selection of the Mediator: Upon receipt of the request for mediation or the submission to dispute resolution, a qualified mediator will be appointed to serve on the case. The parties are instructed to review the mediator’s biographical sketch closely and advise if there are any objections.
  3. Preparation for the Mediation Session: Both parties must prepare for mediation by defining and analyzing the issues involved in the dispute, identifying their needs and interests in settling the dispute, determining courses of action, positions, and tradeoffs, and readying facts, documents, and sound reasoning to support their claims.
  4. The Mediation Conference: The parties should come to the mediation conference prepared with all the evidence and documentation they feel will be necessary to discuss their respective cases. After the mediator describes the procedures and ground rules, each party describes their respective views of the dispute. The mediator then meets with each party in caucuses to clarify their versions of the facts, priorities, and positions, explore alternative solutions, and seek possible tradeoffs. During the final caucuses and joint sessions, the mediator narrows the differences between the parties and obtains agreement on major and minor issues, reducing a disagreement into a workable solution.

 

The stages of an arbitration are (usually) as follows:

 

  1. The Agreement to Arbitrate: This is the most important step and can either be in the form of a future-dispute arbitration clause in a contract or a submission of an existing dispute to arbitration.
  2. Selection of the Arbitrator: The arbitrator is selected from a panel of neutrals maintained by an arbitration organization. The parties have the opportunity to strike names to which they object and number the remaining names in order of preference. If the parties cannot agree on an arbitrator, the arbitration organization makes an administrative appointment.
  3. Preparation for the Hearing: The case manager consults all parties and arbitrators to determine a mutually convenient day and time for the hearing. The AAA staff manages details and arrangements to avoid direct communication between the parties and the arbitrator except at the hearing.
  4. The Hearing: The arbitrator hears evidence and arguments from both parties and makes a decision based on the evidence presented.
  5. The Award: The arbitrator renders a final award that is binding on both parties. The award is usually in writing and includes findings of fact and conclusions of law.
  6. Enforcement of the Award: The award is enforced through the courts, and a court judgment is entered on the award if necessary.

 


 

In conclusion, arbitration and mediation are two popular alternative dispute resolution methods that provide an alternative to the traditional court system. While both methods share some similarities, they differ in several ways. Arbitration is a more formal process, where a neutral third party hears evidence and makes a final, binding decision on the matter. On the other hand, mediation is a non-binding process in which a neutral third party helps the parties to negotiate a resolution to their dispute. Mediation allows parties to have more control over the outcome and can save time and money compared to litigation. Regardless of the method chosen, it is important for the parties to prepare and understand the process to ensure they get the best possible outcome.

 

 



 

By ,  Law & Bar Legal consultant Team

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Published By law & Bar

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