Mediation or Arbitration, pt. 1

Many businesses are aware of alternatives to litigation. You may have mediation or arbitration clauses in your contracts or other agreements, or you may be trying to decide between one of these methods of alternative dispute resolution to include in your next agreement. So, it is always a good idea to have a basic understanding of the differences between going to arbitration or mediation.

Mediation is a much less formal process. The mediator’s job is not to solve your problems, resolve the matter or make a decision. The mediator will work with each side and  attempt to clarify the issues. This can help each side to decide what are the core issues and enable them to negotiate a solution that is mutually agreeable. The mediator may carry messages and offers between the parties as he or she works with each side to find a resolution.

A mediator cannot force a decision on a party and the can only suggest ways for the parties to reach a consensus. The advantages of the process are that it can be cost effective if each party is committed to resolving the matter. It also is confidential. There is no public record of the proceedings or of the resolution.

Of course, the downside may be that one or both parties may become intransigent on a particular issue and may refuse to compromise or meet the other side halfway on an issue. The process depends on the willingness of the parties to work together to create a viable solution. If some issue becomes intractable and good-faith negotiation breaks down, the process can become frustrating. At that point, the parties are likely to resort to litigation.

In our next post, we will look at how arbitration functions in contrast to mediation.