Mediation and Arbitration and Mediation

Mediation and Arbitration

Arbitration and mediation are two divergent legal processes by means of which disputes might be settled. Mediation occurs when the disputing parties meet with a third party in order to reach a mutually agreed upon settlement. This occurs by means of discussion - each party is allowed to evidence in his or her defense. Both parties retain control over the proceeding and the decision. Finally, each party is allowed to dispute the final decision, upon which further negotiations will occur. Arbitration, on the other hand, involves an imposed settlement, in which neither party has control over the outcome. Parties are obliged to accept the final decision, and are not allowed to dispute this.

A recent development in dispute resolution ha been to combine mediation and arbitration for the optimal outcome from the point-of-view of the disputing parties. The basic way in which mediation and arbitration have been combined is a synergy between the processes of either mediation-arbitration or arbitration-mediation. In the former, a deadline is imposed upon the mediation process. If a settlement is not reached within this time, arbitration occurs. In the latter, arbitration occurs before the mediation process. If a decision is not reached in the mediation process, the arbitration decision is revealed and imposed. There are both disadvantages and advantages to each process as a result of their particular synergy. The greatest advantage of both is that they present disputants with a variety of choices. The processes can then synergize to provide disputants with the greatest possible advantages in terms of their particular situation.

In the arbitration-mediation process, the advantages are that voluntary settlement is both more likely and more frequent than in the mediation-arbitration process. One of the reasons for this is that overconfidence is reduced. Because an arbitration decision has already been reached, this imposes upon each party the possibility of an unfavorable decision. In other words, both have to consider that they might be unsuccessful in the arbitration ruling. In order to obtain a more favorable outcome, parties may therefore be encouraged to reach a voluntary decision rather than waiting for the decision to be revealed. A more amicable settlement might therefore be reached within a shorter time. A further advantage is that a higher quality of resolution can be attained, as parties will be more willing to reveal confidential information to clarify the case. As the arbitrary decision cannot be influenced, such information is no longer as crucial to keep hidden. Hence, a more targeted and fair decision can be reached. Finally, because the expectation of success is lowered, parties are more likely to modify their settlement requirements, with a voluntary outcome being more likely than having to wait for the arbitrary decision.

The greatest disadvantage of this type of synergy between arbitration and mediation is the perception of fairness. Parties may perceive that the process is unfair, as the arbitration decision is made prior to any information revealed during the mediation session. The latter cannot influence the decision in the former. Should the dispute not be settled during mediation, the arbitration decision may be perceived as unfair and inaccurate. Furthermore, there may also be a perception of a loss of control, as parties are as it were forced into a quick voluntary decision in order to escape the possible penalty of arbitration.

In mediation-arbitration disputing parties each retain the maximum control over the process and decisions made during the mediation phase. There is no arbitration decision that imposes pressure upon the parties when initial negotiations and decisions take place. The only limiting factor is a deadline, after which arbitration will take place if no voluntary decision can be reached. The advantage here is the perception of both control and fairness. Any evidence entered into the mediation phase can also be used in the arbitration phase in order to aid the decision.

Because of this factor, one major disadvantage of this procedure is the likelihood of a longer term in reaching a decision, and a greater likelihood of arbitration rather than voluntary decisions. Because there is no prior arbitration decision, the possible influence of extra information could also discourage the revelation of information that is pertinent to the case. This may influence both the mediation and arbitration phase negatively.

However, the fact that both parties retain control throughout the initial process may create a more amicable atmosphere for the settlement of the dispute. Process control is retained and uncertainty reduced.