Arbitration or Mediation?

When faced with a legal dispute, it is not always necessary to spend lots of money on attorneys' fees and litigation. Arbitration and mediation are two forms of alternative dispute resolution that occur outside of the courtroom, but can result in legally binding judgments. Compared to litigation, these two viable legal options are more informal; the details are usually private and undisclosed to the public; and the process is not only cheaper, but also requires that less time be spent to reach a resolution.

Arbitration occurs when a neutral third party is brought in to hear all sides of the story. Frequently, the impartial arbiter is an expert in the area under discussion, and is agreed upon by the participants, who split the fees. As the specialist is already familiar with the subject matter, the parties save money and time because the arbitrator does not need to learn the fundamental information from the beginning. Before arbitration begins, the parties involved decide on certain terms to abide by, such as limiting the number of witnesses, issues to be discussed, and setting parameters on acceptable types of evidence.

Arbitration, while similar to trial proceedings, is more informal. The parties' attorneys begin by presenting opening statements. Facts and evidence are presented, as well as witness testimonies and cross-examinations. In the end, closing statements are made, and a decision is reached. Unless specified, arbitrated judgments are legally binding and can be enforced in a court of law. It is very difficult to appeal the decision unless there are extenuating circumstances that are acceptable according to arbitration statutes. Since arbitrators act in the capacity of judges, the parties give up their power, and do not have control over the outcome of the case.

Mediation can be either binding or non-binding, and is a very cost-effective and informal way to resolve all types of civil disputes. Similar to arbitration, the mediator is a neutral third party, typically an expert in the area of conflict, agreed upon by all involved parties. When parties agree to participate in mediation, the only agreement is that the parties consent to take part in a good faith effort to resolve the issue expeditiously. The role of the mediator is to facilitate and assist in the negotiation of a resolution that is acceptable to everyone.

In the beginning of a mediation session, all parties involved, their representatives, and the mediator meet in the same room. Parties present their opening statements and raise the issues to be resolved. Then the parties are separated into different rooms, the mediator goes back and forth into each room and confidentially discusses the situation with each party. The mediator then comes up with various proposals in hopes that an agreement will be voluntarily reached. If no settlement is reached at the end of the session, parties may request another meeting, a second mediation, an arbitration session, or continue towards litigation.

Since there are no established legal procedures or rules to abide by, attorney presence is not necessary. Both parties are always fully in control of the results and everybody wins. Due to the flexibility and non-adversarial nature of mediation, the parties are more relaxed and willing to compromise. Most simple issues are resolved within a day. Due to its efficiency and high settlement rate, many judges recommend mediation for parties who have not yet gone to trial.

By Cindy Liu