Alternative dispute resolution (ADR) techniques can be used by opposing parties to settle an issue without litigation. Mediation and arbitration are two types of ADR that are commonly used in civil matters, as well as divorce matters and works' compensation claims. Their similarities, differences, benefits and risks are discussed herein.
First, let's look at the similarities. Both mediation and arbitration use a neutral third party (or multiple third parties in some cases of arbitration) to assist disagreeing parties on settling their issues without resorting to litigation in a court of law. Many parties find that there are similar benefits to mediating or arbitrating a case compared to trying it in a court of law. First of all, both forms of ADR are usually confidential, meaning their results are not public record unlike cases heard by a judge in court, which are usually made available to the public. Also, the parties themselves get to decide on the person or persons who mediate or arbitrate the matter. Although there are costs associated with mediating and arbitrating a case, they are usually considerably less than the expenses associated with taking a case to trial. The main cost for both is the cost for a third-party mediator or arbitrator and, in some cases, the facility used to hold the meetings. Less time spent on a matter is another advantage. Cases taken to court may take years to resolve. Mediation and/or arbitration can take only a matter of hours to resolve an issue. Though there are similarities, mediation and arbitration are also quite different in several ways.
Mediation is the less formal form of ADR. Mediation uses a neutral third party, sometimes a judge, lawyer or an individual trained in mediation, to help the feuding parties work through their differences in a matter. The parties are encouraged to work through their issues while the mediator simply guides the discussion and offers their opinion on the matters at hand. Although a mediator does not have to be a judge or attorney, it is helpful for that person to have an understanding of the matters at hand. The mediator's role is not to give the parties a judgment on the matter. The parties themselves decide when a matter has been resolved and the terms of the settlement. This is beneficial because, unlike trials or arbitration, the parties are more likely to carry out the settlement. The downside of mediation is that if the parties do not come to an agreement and they feel that an agreement is not forthcoming, the matter may end up in a court of law anyway.
Arbitration is a more formal form of ADR and may follow formal rules or procedures. In these cases, the neutral third party (or parties in some instances) usually has a background in law, although it is not required in all cases. The arbitrator decides the matter at hand and their decision is legally binding. The downside of this is that one or both parties may not like the decision that is made, and if the mediation is binding, there is no appealing from the decision. Cases that are arbitrated are never heard in a court of law because the arbitrator's decision is legally binding on both parties.
Alternative dispute resolution has become more common as people try to save money and time when dealing with a legal matter. Understanding the differences, similarities, benefits and risks of both mediation and arbitration are important in making the decision of whether they may be helpful in your case. If you are interested in using an alternative dispute resolution process to decide your case without litigating in a court of law, talk to your attorney about the benefits and risks in relation to your case.