What are the Differences Between Mediation vs Arbitration and Which Should I Use?

Mediation and arbitration are both dispute resolution processes that serve as an alternative to litigation. Mediation is often the first attempt to resolve differences before more formal processes occur; and, is also the quickest and least costly way to settle disagreements. The process takes place with a third party (the mediator) who is there to help find solutions that satisfy both parties. Arbitration is a formal method (although it is not a court process) and is also less costly than litigation. It involves parties seeking a binding resolution without going to court.

Mediation

What is Mediation?

Mediation is a frequently utilised Alternative Dispute Resolution (ADR) used to settle disagreements between two parties. Unlike other types of dispute resolution, mediation does not happen in a court of law.

An independent third party (the mediator) works with both parties to find a solution to issues in dispute, which they will both agree upon. The mediator does not determine the final resolution but assists with ideas and potential solutions the parties may not have considered. A mediator will strive to learn each party’s positions, objections, and goals. This helps maintain focus and moves the negotiations past secondary issues.

How Does Mediation Work?

Even though mediation is not a formal court proceeding, there are a number of steps to the process.

1. The parties involved must agree upon a mediator. Typically, the person has a great deal of experience in the specific area being mediated. Your legal team can assist in finding a mediator for your case.
2. The mediator will interview each party, gathering information in what is called an intake assessment, during which the parties will individually and confidentially discuss the best format for the mediation: some will choose to be in the same room; and others may opt for mediation via video conference, having the option to remain in separate rooms during the negotiation, leaving the mediator responsible for delivering messages and responses back and forth to the parties involved in the process.
3. Depending on the circumstances, sometimes mediation can proceed where there are power imbalances or matters relating to the safety of the parties. These issues are generally considered in the intake assessment by the mediator.
4. The mediator makes a brief opening statement outlining the mediation process, their impartiality, and required confidentiality. There will also be a discussion of goals.
5. All parties involved will receive a summary of both participants’ goals and expectations.
6. Common ground will be established. An agenda for disputed or undecided points will be set.
7. The mediator will lead both parties into negotiations and discussion of possible settlements.
8. Once an agreement is reached, the mediator will further assist by tabling or documenting the agreement.
9. If an agreement is not reached, the parties can decide whether to try mediation again, opt for arbitration, or choose to go to court.

What are the Advantages of Mediation?

• The mediation process can be completed in days.
• Mediation allows both parties to hear both sides in a neutral manner without excessive emotions.
• Sometime the relationship between the parties can be preserved because collaboration becomes necessary in reaching a settlement.
• Both parties, not the mediator, decide the solution to the problem.
• If a solution is not reached through, then mediation, other options are still available.
• Mediation is a confidential process, and topics discussed cannot be used against either party in future trials.

Arbitration

What is Arbitration?

Another popular method of Alternative Dispute Resolution, known as arbitration, is a process where the disputing parties agree to allow an impartial third party, known as the arbitrator, to hear their respective positions and make a judgement regarding the resolution. Typically, the arbitrator will be an expert in the field, or perhaps a former Judge. This aids the process by providing a foundation of understanding. After weighing the evidence, the arbitrator will pass their judgment. The ruling from the arbitrator is binding and final. It is challenging to find a way to appeal an arbitrator’s decision.

How Does Arbitration Work?

Arbitration is more formal and generally more costly than mediation, and numerous steps are part of the proceedings.

1. A claim requesting arbitration must be filed to begin the process by the party now known as the claimant. The request should include an explanation of the dispute, the parties involved, and what they seek regarding money and non-monetary goods. This should be clear and detailed. If possible, attach supporting documents and keep events in chronological order.
2. The respondent (whom the claimant is filing against) must issue an answer to the claim. They can outline their side of the dispute or explain their defence.
3. The arbitrator (s) are selected.
4. A prehearing conference will take place by telephone or video conference. The purpose is to discuss procedural details and schedule hearings. If either party is working with a legal representative, they should take part in the conference.
5. Parties exchange documents and identify any witnesses they may have.
6. All parties, representatives, and witnesses will attend the hearing in person unless other arrangements are made for video attendance. The hearing commences much like a court proceeding with the swearing-in of witnesses and options to cross-examine. The hearing is officially recorded, and both parties may request a copy of the recording.
7. After all the evidence is heard, the arbitrator will consider the case and render a legally binding decision.

What are the Advantages of Arbitration?

There are a number of advantages to choosing arbitration as a way to resolve legal discrepancies. These include,

• The process is often faster than litigation.
• The arbitration process is formal and more structured.
• Arbitration can cost less than going to court.
• There is a definite resolution to the issue at hand because a third party will provide a ruling.
• The arbitrator’s decision is legally binding and difficult to appeal. So, there is a greater chance that the matter will be settled after going through arbitration.
• It is easier to enforce internationally than some court decisions.
• Arbitration is confidential.

Should I Use Mediation or Arbitration?

Both mediation and arbitration are more flexible, expeditious, and cost-effective than going to court.

Mediation will serve you best if you and the other party share a desire to fairly iron out your differences with the help of a mediator. Additionally, there must be an element of trust that the other party will do what was agreed upon in mediation, as the process is not binding unless properly formalised with a settlement agreement.

Arbitration could be your best option if you are involved in a dispute with a corporation as opposed to with an individual. If you want a decision that is binding so that the dispute is reconciled quickly and with finality, arbitration is a smart choice.

Often, advice from a legal professional will ensure you are undertaking the best option to resolve your dispute. If you have questions about dispute resolution or other legal aspects, feel free to contact the experts at My Legal Crunch Lawyers. Our experienced team helps resolve your legal issues quickly, fairly, and with compassion.