Mediation vs. Arbitration
When people learn I am a mediator, their response often makes me realize they’ve confused me with an arbitrator. I love using this opportunity to educate someone about the difference, as I’ve discovered an awareness problem out there when it comes to mediation.
In its simplest terms, arbitration is a process that parallels litigation in many ways. Still, it is a more straightforward, shorter way to get an enforceable judgment and is held in a private setting. Now, it is not that simple, and there are pros and cons to choosing (if you have a choice) between arbitration and litigation or some form of alternative dispute resolution.
Nearly every modern contract you sign has something called an arbitration “clause.”
It is a portion of the agreement that says the parties agree if there is any dispute between them, they will arbitrate and are excluded from bringing an action in court. If you attempt to file a lawsuit in court, it will almost certainly be dismissed because of this contract language.
An arbitrator acts as a judge and is typically a retired judge or practicing attorney. The process usually begins with the initiating party submitting a claim to the arbitration organization of choice (or one dictated by arbitration clause). The other party will usually respond, and then the process of choosing one or more arbitrators from a panel will begin. The use of one or a panel of three arbitrators is usually specified in an arbitration clause.
One of the significant differences between arbitration and traditional litigation is the condensed schedule. Once the arbitrator(s) are selected, there may be a couple of status conferences, but the parties jump pretty quickly into discovery, where all documents, witnesses, and other evidence are determined. It is common for parties to have a lot less time to complete discovery than in a traditional court. Evidence laws also don’t apply as strictly as in court, so there may be a little more flexibility regarding what evidence will be permitted.
The arbitrator will set the final hearing date where there will essentially be a bench trial (a trial by judge, not jury). The arbitrator will usually take some time to consider the arguments/evidence and issue the decision, known as an “award.” This is a binding decision, much like a judge’s order.
This brings us to one of the downsides of arbitration: There are much more limited circumstances in which one can appeal an arbitration award, whereas, in court, you have a right to an appeal. They are possible but hardly ever to be reviewed by an outside court and usually pertaining to rules of appeal with whatever organization handled the arbitration. So, despite some of the attraction to arbitration for its efficiency and privacy, its potential finality can be seen as a drawback. On the contrary, some who favor arbitration like that aspect as it can keep legal costs down.
Overall, there are just as many uncertainty issues, albeit slightly different, than with traditional litigation. They both place power over something essential in your life in the hands of a complete stranger. They both have high inherent costs and are adversarial. Arbitration being private is an advantage, particularly if you have arbitration clauses as part of your business. Arbitration is also sometimes more cost-effective from start to finish. It prevents litigation from continuing for longer periods of time and therefore acts as somewhat of a cap on attorney’s fees.
As mentioned, sometimes you are forced to arbitrate because of the terms of an agreement you’ve entered. So, where can mediation fit into this picture if that’s how you’d really hoped to deal with these circumstances? Well, luckily, some arbitration provisions provide for opportunities to mediate or are a hybrid mediation-arbitration clause. They usually state that the parties will attempt mediation in the event of a dispute and will move on to arbitration if that is unsuccessful. Luckily, in the absence of such a written term, the other party would likely agree to mediation at some point before going through to final hearings in arbitration in an attempt to keep costs down.
There’s never really a wrong time to try mediation because it is commonly used at some point, whether you are considering litigation or arbitration. In my (not so biased) opinion, mediation has many things that neither litigation or arbitration have, without giving up much.
Mediation is less costly and can often help you resolve your dispute within a matter of a day or over a few short sessions. It also leaves you with the most control over the result with critical personal issues, rather than leaving it more to chance with a stranger. The Mediator can’t force the parties to do anything, which some might see as a drawback when dealing with a party that refuses to negotiate. However, if there is any chance that the other party will agree to participate, then there is a chance of resolution worthy of giving mediation a shot, preferably from the beginning!
Whatever route you choose, or wherever the path leads you, just make sure you are trying to be as rational and practical as possible about the expenditures in relation to the attainability of the goal. And, whenever possible, try to work it out on your own, whether or not you choose to hire a mediator.