Arbitration Versus Mediation: What’s the Difference?

When business disputes arise, owners and managers must determine the method of resolution that is most likely to produce a compromise between the two disputing parties. Arbitration and mediation are two alternative dispute resolution (ADR) strategies that are designed to resolve conflict outside of the court system. Read below to learn more about the difference between arbitration and mediation and the advantages of each. For businesses interested in alternative dispute resolution, you can rely on Dallas commercial business litigation attorney, David Ritter, to guide your business through this complex process and find the best outcome.

What is Arbitration?

Arbitration is a conflict resolution strategy used to keep parties out of the court system by allowing an arbitrator to make a final decision rather than a judge. This process is more adversarial and rigid than mediation and serves as a simplified form of trial where an arbitrator or team of arbitrators make a final decision to resolve the dispute. Many business contracts contain an arbitration clause to ensure that disputes are handled in a private setting. However, even if a business does not have an arbitration clause, it may be beneficial to attempt conflict resolution through arbitration if both parties agree.

Characteristics of arbitration can include privacy as the dispute and testimony is not subject to public disclosure, limited discovery, a faster process compared to the court system, and finality, as the decision reached through arbitration is usually difficult to appeal. These same characteristics can be advantageous to one side and disadvantageous to another side. If you think your business would benefit from arbitration to resolve a conflict, or if you are subject to arbitration by an agreement you entered into, you need an experienced corporate attorney or contract dispute lawyer to aid your company in receiving a positive result.

What is Mediation?

As a less formal option for dispute resolution, mediation is a process that may precede or replace a trial, where a neutral third party helps the disputing parties reach a compromise. Mediation requires both parties to be willing and prepared to negotiate and make concessions in order to achieve a satisfactory decision for all involved. A mediator does not make a final decision like an arbitrator does. Instead, mediators facilitate the conversation between parties and encourage an acceptable compromise. If the parties are not able to reach a mediated agreement, the parties still have the option to take the case to trial to solve their dispute through the court system.

Mediation has unique advantages, including the flexibility to transition a dispute to trial, a neutral third party encouraging compromise, an independent third party looking at both sides and advising of the strengths and weaknesses of each party’s position in the case, and the ability to reach a resolution between disputing parties without relying on an arbitrator or judge’s decision. A case can be mediated before or after suit is filed. A commercial litigation attorney can guide your business through the mediation process and advise your team on whether to accept a mediated compromise or progress to trial.

How Can Arbitration or Mediation Help My Business?

As it is costly and rarely desirable for businesses to resolve conflict in the court system, many companies are interested in opportunities for alternative dispute resolution. Arbitration and mediation give companies more freedom in how they reach compromises with other parties and offer more personal pathways to resolve disputes rather than relying on a judge. Alternative litigation tactics that avoid a trial help protect the privacy of resolution discussions and may also be more cost-effective for businesses in the long-term. Many contracts also contain clauses that require parties to mediate a dispute prior to litigation, or prior to arbitration.

Each company is unique, and how they resolve disputes should be tailored to suit the needs of the parties involved in the conflict. A skilled commercial litigation attorney can advise your business on the most beneficial avenue for dispute resolution and can develop a plan to secure the most favorable compromise for your business.

If your business is preparing to engage in any form of conflict resolution, you can rely on Dallas commercial business litigation attorney, David Ritter, to develop a creative strategy and provide expert guidance throughout the arbitration, mediation, or trial process. With over 25 years of experience as a commercial business litigator and contract dispute lawyer, David Ritter offers outstanding expertise to businesses interested in alternative dispute resolution. Whether your business is interested in developing an arbitration clause in your contracts or is currently involved in conflict resolution, your company can rely on Dallas law firm, Ritter Spencer Cheng.