Mediation is a confidential proceeding conducted in a less intimidating environment than a courtroom. Solutions can be creative and more suited to the needs of the parties than what the court might be empowered to order. Mediators do not make decisions or rulings. Rather, they help the parties create their own voluntary agreement in a confidential setting. The agreement, when signed by each party, is a binding contract. If a settlement cannot be reached in mediation, the parties reserve all of their options to pursue another form of ADR or take their issue to court.
Like mediation, arbitration utilizes a neutral third party, called the Arbitrator, to resolve the conflict between the parties outside of a courtroom. However, unlike mediation, the Arbitrator serves as a private judge to listen to the evidence and make rulings to determine the outcome of the dispute. A disadvantage to mediation is that the parties may not be able to come together on an agreement and will end up in court anyway.
Arbitration is a more formal process for resolving disputes. Arbitration often follows formal rules of procedure and the arbitrator may have legal training that a mediator does not. The arbitrator is a neutral third party, but should have some expertise in the area that is the subject of the dispute. The parties should agree on who the arbitrator will be or on how he or she will be selected.
Unlike a mediator, the arbitrator has the authority to make determinations and decisions that are binding on the parties. The arbitrator's job is to listen to both sides and then make a decision that is mutually binding on both parties.
Arbitration avoids the risk that the parties won't agree and will end up in court anyway because the arbitrator makes the decisions and they are legally binding.
However, the disadvantage of this is that one or both parties may be more dissatisfied with the result. Both processes have their advantages and disadvantages. The main advantages they both have over a trial are the savings of cost and time, and a greater degree of predictability in the outcome. For a small business owner these could be extremely important considerations. There are also potential disadvantages to using mediation and arbitration.
Since these alternative procedures are not bound to follow legal precedent in coming to a decision, parties cannot count on legal precedent to be determinative of the result.
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Contact Show sub menu. Second Opinion? Business Interruption Insurance Claims. BII claims: 10 reasons why we can obtain optimal compensation. What is arbitration? Advantages of arbitration In disputes where the subject matter is highly technical, arbitrators with an appropriate degree of expertise can be appointed for example in construction disputes.
The arbitration process on the whole is faster than court proceedings especially at the moment with the courts experiencing delays due to COVID Arbitration may be cheaper and offer more flexible for companies. Arbitral awards are generally non-public and can be made confidential unlike in litigation where judgments are publicly available.
Arbitration awards are generally easier to enforce in other countries than court judgments. If you are successful in arbitration, there are limited avenues for the other party to appeal an arbitral award. How does arbitration differ from litigation? Contractual foundation: arbitration is based on contract with the rights and duties of the parties to arbitrate arise from the contract itself.
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