Arbitration and mediation are the most common forms of alternative dispute resolution. Mediation is a process in which the parties sit down with a neutral third-party mediator, and the mediator helps guide the parties to an agreed-to resolution. Arbitration is a process in which a neutral third-party arbitrator (or multiple arbitrators) reviews each side’s arguments and make a binding determination. Although similar to litigation, arbitration is generally quicker, cheaper, and less formal.
Circumstances Requiring Arbitration/Mediation
Mediation may be required by a contract or may be ordered by a court. Otherwise, mediation is completely voluntary.
Generally, arbitration is optional unless agreed to by the parties in a contract. There are also limited instances in which statutes require arbitration, such as disputes over personal injury protection claims.
Even if a contract specifies that a matter should be sent to mediation or arbitration, the parties may mutually agree to proceed with litigation instead.
The Arbitration/Mediation Process
To mediate a case, the parties agree to a mediator and schedule a time and location for the mediation. During the mediation, the mediator will often meet with the parties together and separately. Information will be exchanged back and forth until a deal is agreed to by each party.
The arbitration process is more nebulous because arbitrators generally have the ability to proceed in the manner they deem just. According to the terms of the contract at issue or by mutual agreement, the parties may specify the arbitrator and/or arbitration process. Otherwise, a court order may be needed to resolve these issues.