Mediation Vs Arbitration: Choosing the right fit for your dispute
Do you think you made the right choice?
Mediation and arbitration are popular methods of resolving disputes outside of court. They differ in significant ways that can affect your decision-making process such as:
1. Process:
Mediation: Mediation is a party-controlled process and a less formal method of resolving disputes. It involves the intervention of a neutral third party (the mediator) to facilitate communication between the disputing parties in order to reach a mutual agreement. The mediator does not impose a decision. Even if a mediator gives an opinion, parties are not bound to do as the mediator has said.
Arbitration: Arbitration is a more formal method of resolving disputes. It is similar to a court trial. An arbitrator (or panel of arbitrators) hears both sides of the dispute and makes a binding decision. The process of arbitration includes submission of evidence and witness testimony, just like an actual court. Also, the arbitrator(s) have the authority to make a decision for disputants and disputants are bound by the decision of the arbitrator, unlike mediation.
2. Role of the Third Party:
Mediation: Usually, the mediator remains neutral all through the process. The mediator facilitates communication among disputants in order to make issues less complicated, promote understanding, and assist in decision making, but they do not have the authority to decide the outcome.
Arbitration: The role of an arbitrator is similar to a judge. The arbitrator(s) have the authority to make decisions for the disputants. And decisions are based on the facts, evidence and testimonies presented during the session. Parties are bound by these decisions.
3. Outcome:
Mediation: Usually, the outcome of mediation is non-binding unless the disputants voluntarily reach an agreement and decide to formalize it in a contract. The disputants are in control of the resolution, not the mediator and it is based on mutual consent.
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Arbitration: The outcome of arbitration is binding and enforceable by law. The arbitrator’s decision is called ‘an award’ and can only be appealed in very limited circumstances, relating to fraud or procedural issues.
4. Flexibility:
Mediation: Mediation is more flexible than arbitration. Because mediation is a party controlled process, the disputing parties are allowed to negotiate solutions that meet their needs.
Arbitration: Arbitration is more structured and follows a formal procedure, having a serious undertone compared to mediation. The arbitrator(s) follows due process and finally makes a decision for the disputing parties and they are bound to obey such decisions whether they like it or not.
5. Confidentiality:
Mediation: Usually, mediation sessions are private sessions. Before a mediation session starts, the mediator is expected to emphasize the fact that whatever is discussed during the session remains confidential, and decisions made are confidential and private to both parties.
Arbitration: Arbitration on the other hand, depends on the terms of the agreement and the laws of the jurisdiction. Usually, decisions are made public.
By understanding the differences between mediation and arbitration, you can choose the right dispute resolution method for your case. If you’re unsure which option is best for your case, consult a professional to guide you through the decision-making process.
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