When a dispute arises, people are often confused about the best way to tackle it. To many, litigation seems the natural recourse. However, there are two other options that people engaged in a dispute can consider before they resort to litigation – mediation and arbitration.
What are mediation and arbitration?
Mediation is ‘a voluntary, alternative form of dispute resolution and facilitated discussion, where people in conflict come together in a safe and fair environment to try and settle disputes with the support of an independent third party – the mediator.
Arbitration is ‘the submission of a dispute to an unbiased third person designated by the parties to the controversy, who agree in advance to comply with the award – a decision to be issued after a hearing at which both parties have an opportunity to be heard.’
Both mediation and arbitration are alternate forms of dispute resolution that are considerably less costly than litigation. An added advantage is that they are much faster compared with litigation. Both methods are confidential and attempt to resolve the dispute using a third-party chosen and agreed to by all.
Between arbitration and mediation, the latter is typically more time-efficient and less expensive.
How are mediation and arbitration different?
Formal vs informal: Mediation is an informal negotiation session in the presence of a mediator. It is a flexible, yet structured process that uses mutual discussion of the issue to achieve common resolution. Arbitration is a more formal session similar to that in a court but in the presence of an arbitrator. It follows a strict process based on arbitration guidelines where both sides testify and present evidence.
Role of the mediator and the arbitrator: The mediator and arbitrator play very different roles. A mediator acts as a facilitator who facilitates communication between the people at conflict and moderates discussion on possible solutions. They guide everyone to articulate their interests and initiates discussions around them. The mediator does not pass judgement or make Orders. Once the participants in a mediation arrive at a mutually accepted outcome, the Outcome document signed by all the parties. It can then be forwarded to their lawyers or stakeholders to make the decision formal legally.
The arbitratoron the other hand plays a role similar to a judge. They hear both sides and consider evidence before passing a judgement that is often legally binding. Whereas the mediator is free to meet people involved in the mediation separately prior to the mediation sessions, the arbitrator cannot do the same. All meetings in an arbitration session have to occur in a formally adjudicated environment in the presence of all concerned. The parties agree to be bound by the decisions made by the arbitrator.
Control over the process: People involved in a mediation design the mediation process with the mediator have complete control over the convenience of the mediation process and especially the outcome of the joint session. Mediation aims to find a mutually satisfactory resolution, which is imaginative and agreed upon after considering and evaluating possibilities. However, in an arbitration, the parties have agreed to give the ultimate power to make the decision or judgement to the arbitrator they have appointed with the appropriate respect and confidence to be bound by their decision. The solution at the end of arbitration is certain and binding on all the parties to the arbitration and appealable in certain circumstances only.
Mediation or Arbitration – Which is right for you?
Ultimately, people need to have confidence in the process of dispute resolution to be willing to participate and engage with genuine goodwill. Both mediation and arbitration are preferable to litigation. Both should end with an acceptable outcome for the people who have agreed to their dispute resolution process. It is only be being aware of the different alternative dispute resolution processes that you can make an informed decision about which process is right for you. The purpose of this post is to highlight the differences between the two approaches of mediation and arbitration rather than to advocate for one over the other.