There are pros and cons to both mediation and arbitration – your situation and desired outcome will determine which alternative dispute resolution is best for you.
Mediation and conflict resolution are wonderful options for business disagreements with two parties who still wish to remain friends, partners, and will perhaps work together in the future. Mediators are neutral third parties, and mediations are often not binding.
Alternative dispute resolution refers to the methods of dispute resolution that do not escalate to court. Unlike mediation, which often results in an agreement, arbitration usually involves coming to a reward or decision of some sort at the end of resolution. Arbitrators are often lawyers, and the agreements made during arbitration are usually binding.
Arbitration and mediation are affected by the world around them, from current court cases to COVID-19. Just like in every other field, mediators and arbitrators had to turn virtual, which both highlighted issues and made way for new and innovative means of alternative dispute resolution.
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What is Mediation and Arbitration? (Harvard Law School Program on Negotiation, Jan. 16, 2023)
“What’s the difference between mediation and arbitration? In a mediation process, a neutral, trained mediator works to help disputants come to a consensus on their own. In arbitration, a neutral, trained arbitrator serves as a judge who is responsible for resolving the dispute. Mediation is appealing because it allows parties to reach a collaborative settlement, but it could end in impasse. Arbitration, on the other hand, can wrap up a dispute conclusively, but it doesn’t give disputants much say in the outcome.”
Mediation and the Conflict Resolution Process (Harvard Law School Program on Negotiation, Nov. 21, 2022)
“It’s often the case that when two people or organizations try to resolve a dispute by determining who is right, they get stuck. That’s why so many disputes end up in court. There is a better way to resolve your dispute: mediation by hiring an expert mediator who focuses not on rights but on interests—the needs, desires, or concerns that underlie each side’s positions. If someone asks you why a dispute is important to you, your answer will reveal your interests.”
“Litigation is an ancient process that involves determining issues through a court with a judge or jury. Arbitration, on the other hand, involves two parties in a dispute who agree to work with a neutral third party in an attempt to resolve the dispute. Arbitration is used in place of civil litigation involving two parties.”
When companies are owned equally, resolving conflicts that have gotten stuck in standoff mode can prove difficult. In addition to arbitration and mediation, business owners can try an independent, third-party swing vote, exercising put/call rights, or offering equity to the other owner. Finally, owners can decide to dissolve the business completely.
What is Med-Arb? (Harvard Law School Program on Negotiation, Sep. 19, 2023)
“Med-arb” refers to to the combined process of mediation and arbitration. First, both parties agree to the terms of the resolution – because arbitration may be involved in some way, the agreement is binding, unlike in most mediations. Mediation is attempted, but if an impasse is reached, the mediator can assume the role of an arbitrator.
“The combination of mediation and arbitration can take many forms and go by many names. The form addressed here—the incorporation of a mediation window into the arbitral process and the recording of any negotiated settlement as an arbitral award—is most commonly referred to by its procedural sequence, Arb-Med-Arb. If the parties are successful in resolving the entire dispute during the mediation window, the arbitration is reconvened simply to enter the negotiated settlement as a consent award. If the parties are unsuccessful, or successful only in part, then the arbitration is resumed to resolve remaining issues and to issue an arbitral decision and award. This hybrid procedure—which “beg[an] to make an appearance” a decade ago—has come to play an increasingly important role in alternative dispute resolution (“ADR”).”
Alternative dispute resolution, most often done through arbitration or mediation, offers many benefits, including; faster resolution, lower costs more flexibility, privacy, no bias, and less friction.
Alternative dispute resolution can be useful in many phases of the home buying and selling process, but especially during and after closing. Sometimes issues arise that cannot be quickly resolved – often issues or misunderstandings with the inspection and fixes that may or may not follow. Be sure to consult not only the rules in your state but also the National Association of REALTORS® Code of Ethics.
“Employers and alternative dispute resolution providers face new challenges in 2023 from the virtual working world. Remote workers, new statutory provisions, and a major overtime case before the US Supreme Court highlight the new year in employment law.”
Not everyone put in a position of mediation has professional experience as a mediator – even if one does, the personal nature of the work allows for things like lack of confidence to sneak in. In addition to lack of confidence, make sure to watch also retain an air of authority over the situation, and accept any communication training available to you.
“For too long within the mediation field, there has been confusion on how the foundational principles of mediator neutrality, impartiality, and self-determination work together to bring about a fair outcome. Referring to Silbey and Merry's framework (2001), the authors explain how mediators claim authority in how they present themselves and the mediation process to the parties in the pre-mediation stage, in controlling each stage of the in controlling each stage of the mediation process, and in exerting control, over the substantive issues discussed in mediation.”
