Web Exclusive - Choosing between Arbitration and Mediation

Alternative dispute resolution (ADR) typically offers businesses a more cost-effective and expeditious solution than court litigation, with better results in the majority of cases. But how do you know which type of ADR might be a good alternative for you? Consider arbitration when:

• You want to mandate in advance through your contractual dispute-resolution clause items such as which state’s laws will govern the proceeding, where the hearing will be located, the number of arbitrators (1 or 3) that will hear and determine the case, whether they are required to have any specific qualifications, how much pre-hearing documentary discovery may be conducted, which remedies are and are not available, whether the award (decision) will be a “bare” short form or expressly and fully reasoned, and many other criteria.

• You want a more streamlined and faster (hence cheaper) alternative to court litigation.

• You want more personal attention paid to your case than most judges can provide.

• You want to avoid the possibility of having a jury hear the case.

• You want to have a say in selecting the person who will hear and determine your case, which cannot be done in court.

• You prefer the somewhat-decreased level of formality in the proceedings, and the flexible, rather than strict, application of the rules of evidence in arbitration.

• You want a final decision to be issued more quickly.

• You want greater finality—awards in arbitration generally are not subject to appeal except in relatively rare circumstances (such as the arbitrator’s demonstrable fraud or bias, exceeding the scope of his or her authority, and the like).

• You prefer privacy in the proceeding and the result—business arbitration proceedings and awards are not public like court litigation and judgments.  

Consider mediation when: 

• You prefer a collaborative rather than combative process, allowing parties to express themselves (to “vent”) in a way that neither their “day in court” (with its restrictive evidentiary rules) nor even arbitration can permit.

• You are in the middle of a litigation that’s going nowhere, with costs mounting, and no end in sight—the parties can try mediation, which often is the sole realistic and rapid escape route for parties mired in court battles.

• You want to try to preserve rather than end relationships—after a successful mediation, the participants often are able to work together in the future, which usually is not possible after one side wins in a court trial.

• You realize that a neutral intermediary trained in resolving disputes consensually can add considerable value to the negotiation process beyond what the parties’ lawyers (whose role often is more akin to gladiator than peacemaker) can accomplish.

• You see the potential for a customized resolution of the conflict—often using elements that would not be admissible or relevant before a judge or even an arbitrator—to achieve a result that is less harmful and more beneficial to both sides.