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Mediation vs. Arbitration: Choosing the Right Alternative Dispute Resolution

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What Is Alternative Dispute Resolution?

Alternative dispute resolution (ADR) refers to methods of resolving disputes without litigation. It involves conflict resolution that occurs outside of government authority. ADR enables parties involved in disputes to find solutions to their conflicts without traditional court proceedings. Mediation and arbitration are two of the most common alternative dispute resolution methods. 

As stated by the Cornell Law School Legal Information Institute (LII), other ADR methods include conciliation (attempt to resolve issues raised in a complaint through informal negotiations), negotiation (bargaining to reach an agreement), and transaction (entering into a contract with reciprocal concessions to end a dispute). Different rules govern different alternative dispute resolution methods. In practice, parties may use a combination of ADR methods to resolve different aspects of a dispute. 

The main advantages of alternative dispute resolution are confidentiality, flexibility, and a faster dispute resolution process. Although they may be asked to review the validity of the ADR method, the courts rarely overturn alternative dispute resolution awards or decisions. 

What Is the Difference Between Mediation and Arbitration?

Mediation and arbitration are two alternative dispute resolution methods that both involve a neutral third party but have different rules and outcomes.

How Does Mediation Work?

In mediation, a neutral third party, known as a mediator, works to help the parties resolve their dispute. The process is more flexible than arbitration or litigation, and it allows for techniques that may be prohibited in a different setting. For example, the mediator is permitted to speak separately (ex parte) with either or both parties in an attempt to find acceptable solutions. Mediators mainly act to facilitate settlement discussions between the parties and do not typically make decisions on the merits of a case. 

Mediation is non-binding. The mediator has no authority to impose a resolution on the parties. If they cannot reach an agreement, the mediation ends, and the parties are free to pursue other methods of dispute resolution or to take their case to court. 

How Does Arbitration Differ From Mediation?

Of all the alternative dispute resolution methods, arbitration most resembles litigation. The parties agree to have their case heard out of court by a qualified arbitrator. Because the procedural requirements are not as strict as they would be for a bench or jury trial, arbitration is usually less expensive than litigation. 

Arbitration is more formal than mediation. Similarities to court proceedings include limited discovery and simplified rules of evidence. Although arbitration is not subject to the Federal Rules of Evidence, the arbitrator has the authority to decide what evidence may be entered by the parties.

An arbitration award (decision made by the arbitrator) is as binding on the parties as the ruling of a court under the Federal Arbitration Act. Parties are not allowed to bring a claim in court after the matter has been settled in arbitration. 

Which is the Better Option for Alternative Dispute Resolution – Mediation or Arbitration?

Mediation and arbitration are forms of alternative dispute resolution to resolve conflicts out of court. Which ADR method is best in your situation will depend on the nature of the dispute, the parties involved, and other factors. 

When Is Mediation a Good Choice?

Mediation is a voluntary, non-binding process in which the parties attempt to resolve their differences with the help of a neutral mediator. It is often the first step taken to resolve a legal matter. Mediation may be the best choice if there is a chance the parties can work together to come to an agreement on their own. This can be particularly valuable when opposing parties have a relationship to preserve. If a settlement is not reached through mediation, the parties still have the option to go to court or attempt to resolve the dispute through another ADR method. 

Mediation is relatively affordable, collaborative, and less intimidating than arbitration or a trial. It is often the choice for settling smaller matters or at the beginning of a dispute. 

When Is Arbitration a Better Option Than Mediation?

When it is unlikely that the parties can reach an agreement on their own or with the help of a mediator, arbitration may be the best alternative dispute resolution option. This is particularly true in cases with higher stakes or more complex issues to resolve. Arbitration is conducted in a similar way to court proceedings but generally quicker, less formally, and with more privacy. Like a judge, the arbitrator will listen to arguments from both parties, examine evidence, and make a final decision on the issues. Advantages of arbitration include a faster process and a definitive outcome.

What Is Med-Arb and How Does It Work?

If you are undecided about whether to choose mediation or arbitration, you have the option to combine the two alternative dispute resolution methods in a hybrid ADR method known as Med-Arb. This modern practice combines elements of mediation and arbitration to help opposing parties settle conflicts. 

Med-Arb begins with the parties attempting to reach an agreement with the assistance of a mediator who is also qualified as an arbitrator. If the parties cannot come to an agreement through mediation, the mediator takes over as an arbitrator and makes a final decision on the case. The possibility of having a third party render a binding decision in arbitration may motivate the parties to settle the dispute on their own. 

Why Choose Our Firm?

At Peak Legal Group, our clients are not just numbers – we focus on relationships. We are responsive and down to earth, and we try to help our clients understand their options so they can make the best choices. If you are involved in a legal dispute, we can assist you with alternative dispute resolution methods, including mediation and arbitration. Contact us at (610) 989-7064.

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