TO ARBITRATE OR MEDIATE?

I continue to receive questions as to the difference between arbitration and mediation and how to make a decision as to which process one should use. In this post, I’ll try to provide some simple to use guidelines.

In arbitration a neutral party or parties review evidence, hears arguments and renders a decision. It is less formal than a court proceeding but, like a court proceeding, the neutral party will make the decision for the disputing parties. Typically, the arbitrator will have a background in the general disputes, such as construction, labor law, automotive repair and the like. The rules of evidence are generally more relaxed. And typically, there is little opportunity to appeal the arbitrator’s decision. Generally, individuals and corporations choose arbitration when they desire a time-sensitive confidential decision.

Disputes that arise from a contractual arrangement between disputing parties, such as a sales agreement or employment contract, may specify that the parties waive the right to sue and agree to use arbitration. In some contracts, this mandatory arbitration agreement is being challenged. In other cases, when the disputing parties have taken an issue to court, the court may assign an arbitrator to hear the dispute. In some court arbitration, the arbitrator’s decision is entered as the judgment of the court but, in some cases, could be set aside if the parties request a trial.

In mediation, a neutral party facilitates communication between disputing parties to help them work out a mutually agreeable solution. Mediators typically are not required to have expertise in the dispute itself because regardless of the mediator’s style, the final authority for the decision is in the disputing parties’ control. Mediation can be entered into voluntarily most often to preserve a business or personal relationship or when there are communication misunderstandings between the parties. Mediation can also be court-referred, but even so, the court can only mandate that the parties attempt to reach a resolution. The court may not impose a resolution.

Many people have had experience with family court mediation or mandatory mediation over child custody and visitation. While mediation is used for this special form of dispute, the form may not resemble other forms of mediation as the mediator may be skilled in social services and be empowered to make recommendations to the court if the parties do not agree.

 I often stress that in mediation the key is self determination, that is, the parties must make the decision. I describe what the mediator does as an art form. Done skillfully, what the mediator does to help the parties reach their own decision often does not appear obvious to the parties. I have said that the parties may not even recognize what the skilled mediator did to help them reach an agreement.

Which is better? Both processes are valuable dispute resolution procedures. Of course it depends on the parties’ objectives and skills, so use that as your guide when deciding which to choose.