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Arbitration and Mediation

Arbitration and mediation are used to resolve disputes in a wide variety of fields.

Having an employee skilled in arbitration or mediation can alleviate office disputes. [©Shutterstock, 2010]
©Shutterstock, 2010
Having an employee skilled in arbitration or mediation can alleviate office disputes.

Arbitration and Mediation

Arbitration and mediation are two common forms of alternate dispute resolution (ADR) that involve the help of a neutral third party. According to Cornell University Law School, arbitration and mediation usually occur after negotiation attempts fail. While arbitration allows the arbitrator to make a decision on behalf of the parties involved in the dispute, mediation leaves the final responsibility of reaching an agreement to the parties involved. Individuals, businesses, private organizations and government agencies use these alternatives to litigation because they are less time-consuming, costly and stressful than court battles.

Description of Arbitration and Mediation

Mediation is an important first step in the process of dispute resolution. A mediator, or neutral third party trained in negotiation, attempts to work out a settlement or agreement to resolve the dispute. The mediator helps to reconcile differences through facilitated dialogue, but it is the responsibility of the parties involved to reach an agreement. If the dispute is unable to be resolved, they may then choose to proceed to arbitration.

Arbitration is a simplified version of a trial. It is less formal than court with limited discovery and simple rules of evidence. Each party taking part in the dispute may appear at hearings, present evidence and question witnesses to prove their side of the claim. Once both parties have presented their cases, an arbitrator or panel deliberates and makes a decision to resolve the dispute. Arbitrators are neutral third parties who hear evidence and make decisions on behalf of the parties involved. Arbitration can be either legally binding or non-binding, depending on the dispute. Those who are still unable to resolve their disputes may then decide to pursue litigation. More information on finding and choosing an ADR program can be found through the Federal Trade Commission.

Benefits and Types of Arbitration

The reasons for choosing arbitration over going to court vary from case to case, but arbitration has the advantage of being private and confidential as well as being less expensive and quicker than litigation.

Some common types of arbitration include:

  • Grievance arbitration: used to resolve a dispute between a union and an employer when a labor contract has been violated
  • Arbitration of statutory disputes: the resolution of non-union contract agreements.
  • Interest arbitration: a process in which a neutral party listens to the parties involved and submits in writing how to settle the bargaining agreement
  • International arbitration: occurs when the dispute is between different cultural groups, so the arbitrator must be familiar with the languages, cultures and laws of each group


Benefits and Types of Mediation

Mediation allows parties to maintain control of the decision making while avoiding an expensive, time-consuming legal battle. It is also a more confidential means of resolving the dispute. Mediation may be a better alternative for disputes over a small sum of money or situations that involve an ongoing relationship between parties.

The different types of mediation include:

  • Family mediation: involves divorce, marital agreements, family related businesses, elder care and inheritance
  • Business mediation: involves contract disputes, lawsuits, partnership-stockholder disagreements and employee grievances
  • Management mediation: involves managers, executives, owners and other personnel involved in lingering disputes. The mediator obtains information, negotiates and explores options to resolve the conflict, and the parties involved have the opportunity to learn conflict resolution skills
  • Real estate mediation: involves disputes between buyers, sellers, brokers, home inspectors and builders. Upon reaching an agreement, the mediator describes the terms in a written agreement that the involved parties sign


The Arbitration Process

Arbitration more closely resembles standard legal proceedings than other methods of ADR. The parties involved in the dispute are given the opportunity to choose an arbitrator with relevant experience who is neutral in relation to the parties and the situation. An attorney is not required and most people choose to represent themselves at an arbitration hearing. According to the Federal Mediation & Conciliation Service, both parties agree ahead of time that the impartial arbitrator's decision is final and legally binding. The hearing begins with the presentation of the complaining party's case and relevant evidence. The opposing party is then given the same opportunity. Since there are no formal rules of evidence, arbitration provides flexibility in deciding the relevance of the given evidence. The process is relatively private and involves only the parties taking part in the dispute and the relevant witnesses. The hearing is closed after the evidence has been presented and the parties have covered their issues. The decision of the arbitrator is as final and legally binding as a court judgment even though the arbitration takes place outside of the courts. When necessary, the decision may be enforced by the courts.

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