Those involved in business disputes frequently turn to litigation to resolve conflicts. Depending on the unique facts and circumstances of a particular case, alternative dispute resolution ("ADR") may provide a means for parties to settle their differences in a more efficient, and cost effective manner than a formal lawsuit. The field of ADR has grown substantially over the past twenty years, and it is now common for ADR processes to be used in lieu of court proceedings. Two of the more commonly used ADR processes in business or commercial disputes are arbitration and mediation. Although both processes fall under the ADR umbrella, they provide different methods of dispute resolution.
Arbitration
In arbitration, the parties agree to submit a dispute for decision by a neutral arbitrator or panel of arbitrators (tribunal). The parties agree on the selection of the arbitrator or tribunal, and the decision issued is generally final and binding. With regard to business litigation, arbitration proceedings are often before the American Arbitration Association or industry-specific tribunals. Although arbitration is less formal than court proceedings, businesses are still represented by attorneys who present each party's position to the arbitrator.
The advantages of arbitration are that the process is confidential and often less time consuming and expensive than traditional business litigation. Arbitration also allows for more control over the decision-making process in comparison to litigation. In addition to selecting the decision maker, there is usually more flexibility with regard to when and where the proceedings take place, how evidence is obtained and submitted and the use of testimony.
Mediation
Mediation involves a neutral third-party, a mediator, who helps facilitate negotiations between the parties with the goal of reaching a mutually agreeable settlement. In contrast to an arbitrator, generally a mediator does not have the authority to issue a binding decision unless the parties decide they want the mediator to have that power.
Like arbitration, mediation is private, more flexible and less formal than court proceedings. It also potentially saves time and costs. Additionally, mediation allows the parties the opportunity to preserve and improve their relationship by clarifying misunderstandings and finding areas of agreement. For mediation to be productive, however, both parties must be willing to be reasonable and open to negotiation.
Mediation is increasingly encouraged and sometimes required by courts during specific phases of a case.
Consult With an Attorney
If you are involved in a business dispute, an experienced business litigation attorney can provide information about all your available options, including arbitration, mediation and litigation, and can effectively assist you in selecting the process best suited to your specific needs and goals.
