COM4803-- Module 4 Overview: Formal Third Parties; The Arbitrator

Differences between mediation and arbitration and litigation/adjudication.

All of these are formal roles -- not spur of the moment or a "second hat" for someone already tangentially affected by the dispute, but they do take very different steps in terms of process for dispute resolution.

Mediation and Arbitration: What's the Difference?

Arbitration and mediation are similar in that they are alternatives to traditional litigation, and sometimes they are used in conjunction with litigation (opposing parties may first try to negotiate, and if that fails, move forward to trial). Both arbitration and mediation employ a neutral third party to oversee the process, and they both can be binding. However, it is common to employ mediation as a non-binding process and arbitration as a binding process. In simpler terms, binding arbitration replaces the trial process with the arbitration process. Arbitration is generally conducted with a panel of multiple arbitrators who take on a role like that of a judge, make decisions about evidence and give written opinions (which can be binding or non-binding). Although arbitration is sometimes conducted with one arbitrator, the most common procedure is for each side to select an arbitrator. Then, those two arbitrators select a third arbitrator, at which point the dispute is presented to the three chosen arbitrators. Decisions are made by majority vote. Mediation, on the other hand, is generally conducted with a single mediator who does not judge the case but simply helps to facilitate discussion and eventual resolution of the dispute.

Formality

Arbitration is almost always more formal than mediation, but is usually much less formal than a full blown court (adjudication) effort. Which is NOT to say that it does not have rules -- here is one example (Links to an external site.) -- only that they are less comprehensive than a full legal code and system of jurisprudence.

Arbitration Process

Arbitration is similar to going to court, but is usually faster, cheaper and less complex than litigation. It is a formal alternative to litigation in which two or more parties select a neutral third party, called an arbitrator, to resolve a dispute. The arbitrator's decision, called an award, is final and binding. By arbitrating a claim you cannot have the same matter decided by a court of law. In resolving disputes through arbitration, a FINRA arbitrator or panel (consisting of three arbitrators) will listen to the arguments set forth by the parties, study the testimonial and/or documentary evidence, and then render a decision. When an arbitration case goes to a hearing, it can take up to 16 months for an award to be determined. The size of the claim will determine how the arbitration process works. Claims involving more than $100,000 require an in-person hearing decided by a panel of three arbitrators, with one chairing the hearing. Smaller claims are decided by one arbitrator and the smallest—claims of up to $50,000—may be decided through a Simplified Arbitration Process, with the arbitrator deciding the case by reviewing all the materials presented by the parties without an in-person hearing.

Pre-Mediation Contracts

If you want to mediate a dispute, you and the opposing party should enter into a pre-mediation contract. This simple contract should include the following: The mediation should be confidential and non-binding. The parties should agree on who will conduct the mediation and how the mediator will be paid. The cost of the mediator is typically split between the two parties. The parties should agree on the length of the mediation. Most mediation is scheduled for either a half-day or a full day. The parties should agree to mediate in good faith until either party reasonably determines that it is fruitless to continue. If the parties cannot reach an agreement, the mediation will result in what is known as an impasse.

Mediation before or during arbitration

Mediation Mediation offers a flexible alternative to arbitration, and can be initiated at any time before arbitration commences and even during an arbitration case before it concludes. It is an informal process in which a trained, impartial mediator facilitates negotiations between disputing parties, helping them find a mutually acceptable solution. Both parties in a dispute must agree to mediation. However, FINRA does not require parties to mediate. FINRA mediators have subject-matter expertise, so parties can select a mediator who is knowledgeable in the particular securities or business area that is in dispute. Mediation is a voluntary process, so either party can decide to stop at any time. More than 80 percent of mediations result in a settlement, and the process is in most cases significantly faster than arbitration. And unlike arbitration, mediation does not impose a solution. It is not binding until the parties reach and sign a settlement agreement.

Arbitration

Occupies an interesting niche on the spectrum of formal third party interventions. Arbitration, a form of alternative dispute resolution (ADR), is a way to resolve disputes outside the courts. The dispute will be decided by one or more persons (the "arbitrators", "arbiters" or "arbitral tribunal"), which renders the "arbitration award". An arbitration award is legally binding on both sides and enforceable in the courts.[1] Arbitration is often used for the resolution of commercial disputes, particularly in the context of international commercial transactions. In certain countries such as the United States, arbitration is also frequently employed in consumer and employment matters, where arbitration may be mandated by the terms of employment or commercial contracts and may include a waiver of the right to bring a class action claim. Mandatory consumer and employment arbitration should be distinguished from consensual arbitration, particularly commercial arbitration. Arbitration can be either voluntary or mandatory (although mandatory arbitration can only come from a statute or from a contract that one party imposes on the other, in which the parties agree to hold all existing or future disputes to arbitration, without necessarily knowing, specifically, what disputes will ever occur) and can be either binding or non-binding. Non-binding arbitration is similar to mediation in that a decision cannot be imposed on the parties. However, the principal distinction is that whereas a mediator will try to help the parties find a middle ground on which to compromise, the (non-binding) arbiter remains totally removed from the settlement process and will only give a determination of liability and, if appropriate, an indication of the quantum of damages payable. By one definition arbitration is binding and non-binding arbitration is therefore technically not arbitration. Arbitration is a proceeding in which a dispute is resolved by an impartial adjudicator whose decision the parties to the dispute have agreed, or legislation has decreed, will be final and binding. There are limited rights of review and appeal of arbitration awards. Arbitration is not the same as: judicial proceedings (although in some jurisdictions, court proceedings are sometimes referred as arbitrations[2]), alternative dispute resolution (ADR)[3], expert determination, mediation (a form of settlement negotiation facilitated by a neutral third party).

The Success of Mediation in Modern Litigation

The Success of Mediation in Modern Litigation Mediation has enjoyed increasing popularity as an important part of the litigation process. For example, in Florida, almost all lawsuits are required to be mediated before a court will allow them to be put on the trial calendar. The reasoning behind this requirement, according to the Florida senate, is because mediation has proven effective in reducing court dockets and trials, and offers a more efficient, cost-effective option to litigation. Mediation enjoys such high success rates because the parties are brought together in an environment where they can freely and confidentially present their position in front of a neutral third party. Mediation attempts to limit the issues and put them into proper perspective. Participants often feel much better after having an opportunity to get things "off their chest," and also benefit from hearing the other party's point of view. The neutrality and more relaxed atmosphere of mediation may eliminate the desire to continue hostile litigation once both parties have seen all the issues in a fair light. Mediation can be used for any kind of dispute; there is no need to wait until a dispute results in a lawsuit and is sent to mediation by a judge. Pre-lawsuit mediation is becoming more widely accepted as a sensible way of resolving disputes before they turn into litigation. Besides being confidential and non-binding, mediation is relatively quick and inexpensive compared to litigating a dispute. Please note that while most certified mediators are attorneys, mediators will not give legal advice during the mediation and are not supposed to make legal conclusions about the merits of either party's position. When the parties come to an eventual agreement, the parties themselves will put the agreement in writing and sign it so that it then becomes a binding contract.

success of mediation

The Success of Mediation in Modern Litigation Mediation has enjoyed increasing popularity as an important part of the litigation process. For example, in Florida, almost all lawsuits are required to be mediated before a court will allow them to be put on the trial calendar. The reasoning behind this requirement, according to the Florida senate, is because mediation has proven effective in reducing court dockets and trials, and offers a more efficient, cost-effective option to litigation. Mediation enjoys such high success rates because the parties are brought together in an environment where they can freely and confidentially present their position in front of a neutral third party. Mediation attempts to limit the issues and put them into proper perspective. Participants often feel much better after having an opportunity to get things "off their chest," and also benefit from hearing the other party's point of view. The neutrality and more relaxed atmosphere of mediation may eliminate the desire to continue hostile litigation once both parties have seen all the issues in a fair light. Mediation can be used for any kind of dispute; there is no need to wait until a dispute results in a lawsuit and is sent to mediation by a judge. Pre-lawsuit mediation is becoming more widely accepted as a sensible way of resolving disputes before they turn into litigation. Besides being confidential and non-binding, mediation is relatively quick and inexpensive compared to litigating a dispute. Please note that while most certified mediators are attorneys, mediators will not give legal advice during the mediation and are not supposed to make legal conclusions about the merits of either party's position. When the parties come to an eventual agreement, the parties themselves will put the agreement in writing and sign it so that it then becomes a binding contract.

Arbitration in history

While arbitration is a fairly "modern" form of dispute resolution, there are historical antecedents wherein an empowered third party would render a dispute resolution decision that was more or less binding on the parties to the dispute. Consider the examples of the brehon "judges" of Celtic Ireland (Links to an external site.)and the hakam in the Islamic tradition (Links to an external site.). In general, arbitration gives the parties themselves some role in choosing the arbitrator, who then listens to both sides and renders some form of judgment. This may or may not be legally binding upon the parties, but even where not legally binding it may carry quite a deal of force where parties do not wish to appear unreasonable.

Art Form

mediation is an art form calling for constant judgment and creative intervention. We have a growing set of tools available to us, but more important are our decisions about when and how to use those tools.