Which is better arbitration or mediation

Whereas arbitration imposes solutions, mediation helps parties resolve their own disputes. Mediators can play many roles: getting participants to talk to each other, setting the agenda, helping disputants understand their problems, and suggesting possible solutions. Summary Jury Trial. Litigants are often unable to settle their disputes quickly because they have very different expectations of how a jury will view their claims.

An SJT gives them a nonbinding indication of how their claims might actually be received. Opposing lawyers select a small jury, a judge gives preliminary instructions on the law, and everything proceeds just as in a real trial, but with a limited number of witnesses and a restricted time frame for each party. The disputants usually initiate this procedure themselves, and formats vary. Typically, minitrials involve one high-level executive from each side someone not previously involved with the issue and one neutral adviser.

They also agree on format, timing, and procedures. During the minitrial, each side has an allotted time to present its case, and attendees can comment and ask questions. Afterward, the executives may be able to settle the dispute on their own, or they may turn to the neutral person for advice. The whole process usually takes from one to four days. Eventually, the judge ruled against Company A, which promptly asked an appeals court to overturn the decision.

After that, both companies began to litigate in earnest. They are still fighting today, and the list of suits and countersuits grows longer every year.

This depressing account graphically illustrates how an alternative method of dispute resolution can go wrong when the parties lack the commitment to make it work. Ingrained attitudes and belligerent corporate cultures worked against an equitable, agreeable outcome. In this case and in others we have seen, the chief obstacles were one or more of the following attitudes.

Few senior corporate managers are willing to forgo a chance to win a courtroom triumph. Under these circumstances, common sense urges negotiation to limit the extent of the claims. But when the company appears to be in the right, when millions in revenues are at stake, and when decision makers ache to go to the mat to prove their point, arguing for arbitration may strike some as foolish, if not downright disloyal.

Most lawyers—and hence the companies they serve—still view ADR as the alternative rather than the primary or preferred method of settling disputes. Such companies see the procedure as a way of settling peripheral, less important disputes, or, as in the electronics case, they simply abandon it when they fail to get the result they want. In any event, they have not decided to make dispute avoidance and early resolution the prime mission of the legal department. Even in companies where ADR has taken hold, there may be ways around the system.

Because few companies have made a serious commitment to ADR as a distinct system, and because there are very few rules governing it, the procedure is often allowed to become a litigation look-alike. To cut down on attorney time, arbitration permits the parties to stipulate, or agree on, certain facts and virtually eliminate briefs, discovery, and the endless reliance on expert testimony and countertestimony.

But the contending parties often waste prodigious quantities of time, money, and energy by reverting almost automatically to the habits of litigation. As happened in the electronics battle, lawyers make repetitious presentations of facts and legal arguments as if they were appearing before a judge rather than an arbitrator. They pursue discovery, file motions, and rely excessively on expert witnesses—exactly the way they would in a lawsuit. Outside the courtroom, lawyers grind out publicity favoring their cause.

Moreover, arbitrators themselves contribute to the problem by handing down damage awards that are beyond reason and contractual limits. Sometimes, they even award punitive damages. In the case of Companies A and B, both of which had pledged to seek alternatives before taking court action, belligerence and litigious habits undermined good intentions. Both sides felt they had been wronged and wanted the antagonist to pay.

A confrontational atmosphere tainted the action from the start, and the judge made matters worse. It is no easy matter to make ADR systematic and to give it top priority in resolving conflicts. These companies evaluate lawyers, contract managers, and paralegals not merely on lawsuits won or lost but also on disputes avoided, costs saved, and the crafting of solutions that preserve or even enhance existing relationships.

The legal departments use quantified measures and objectives to reduce systematically the number of lawsuits pending, the amount of time and money spent on each conflict, and the amount of financial exposure. NCR evaluates its lawyers not only on lawsuits won or lost but also on disputes avoided and relationships preserved.

NCR requires all of its commercial contracts to include a clause specifying ADR as the first, preferred method of settlement should a disagreement arise. Under this policy, staff ombudspersons or, as NCR prefers to call them, ombuds trained in problem solving, dispute avoidance, negotiation, and dispute resolution record and monitor all claims by or against the company.

Each case is reviewed to ascertain whether it should be arbitrated or litigated. Performance measures ensure that the procedure has teeth. If the parties are unable to agree upon a mediator, then the mediator shall be appointed by the American Arbitration Association.

In any event, the mediation shall take place within thirty 30 days of the date that a party gives the other party written notice of its desire to mediate the dispute. If not thus resolved, the disputes shall be resolved by arbitration pursuant to this section and the then-current rules and supervision of the American Arbitration Association.

The duties to mediate and arbitrate shall extend to any other office, employee, shareholder, principal, agent trustee in bankruptcy or otherwise, affiliate, subsidiary, third-party beneficiary, or guarantor of a party hereto making or defending any claim which would otherwise be subject to this section. The arbitration shall be held in the headquarters city of the party not initiating the claim before a single arbitrator who is knowledgeable in business information and electronic data processing systems.

The arbitrator shall not have the power to award punitive, exemplary, or consequential damages, or any damages excluded by or in excess of any damage limitations expressed in this agreement or any subsequent agreement between the parties. In order to prevent irreparable harm, the arbitrator may grant temporary or permanent injunctive or other equitable relief for the protection of property rights.

An arbitration proceeding, like a trial, is essentially a battle that involves attacks and counterattacks by both sides, whose goal is to discredit one another in front of the decisionmaker. The animosity, bitterness, stress and resentments associated with a formal dispute do not dissipate just because the hearing takes place in a conference room instead of a courtroom. As a result, there will almost always be serious wreckage to relationships as a result of using an arbitrator to decide the case.

Mediation, by contrast, helps people and businesses in conflict to preserve their relationships. Companies have an opportunity to remain on amicable terms and continue to do business together if they mediate their disputes. The specter of having clashed through an arbitrated proceeding will be replaced by an alliance built from collaborating in a joint-effort at resolving the conflict. Thanks for installing the Bottom of every post plugin by Corey Salzano.

Contact me if you need custom WordPress plugins or website design. Categories: Mediation v. The Alternatives. Phillip Neiman, Esq.

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Highlights What is the difference between arbitration and mediation? In an arbitration, the arbitrator looks into the legal rights and wrongs of a dispute and makes a decision. Once the arbitrator has arrived at a decision, it is binding on parties whether they agree with it or not.

It is very much like the way a court case is decided by a judge, except that the process does not take place in a court room, and it is not open to the public.