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The Benefits of Mediation and Arbitration Procedure for your Business

Mediation and arbitration are two types of alternative dispute resolution or ADR in short that are intentionally designed to avoid the high costs and unpredictability that a lawsuit might bring. Mediation and arbitration are both private methods of resolving disputes. This means that, unlike a court case, they are not public information. For one or both of the parties involved in the disagreement, confidentiality may be a critical aspect. Mediation and arbitration can also allow both parties to determine their own ground rules for resolving their issues, such as the forms of evidence that can be given, the types of experts who can be consulted and the concepts that will be used to reach a final agreement or conclusion. Below are some of the expounding explanations of how these two resolving processes differ from each other.


Mediation is a more casual method of resolving a disagreement than arbitration.
The mediator is a neutral third party who assists the parties in reaching a negotiation for an agreement for both parties. It is the parties’ responsibility to reach an agreement in mediation, it is not the mediator’s business to make or enforce any decisions on them. The mediator listens to both sides and makes recommendations or endorsements to help the parties reach up an agreement. Because both parties are involved in settling the disagreement, mediation has the advantage of increasing the possibility of likelihood of the settlement being implemented. Mediation has its own downside also, and if ever both parties are not being settled or able to reach an agreement and thus end up in court.


Arbitration is a more formal method of settling disagreements. Arbitration frequently follows the formal rules of procedures and the arbitrator may have a legal experience that a mediator lacks. Same as the mediator, the arbitrator also is a neutral third party who should have some knowledge of the dispute’s subject matter. The parties should agree on who will be the arbitrator and how he or she will be chosen. Unlike a mediator, the arbitrator has the power to issue binding rulings and determinations for the parties. The arbitrator’s main responsibility is to listen to both sides and then make a ruling that both parties can agree on. Because the arbitrator makes the decisions they are legally bound and has the power to eliminate the chance that the parties will not agree and will wind up in court anyhow. However, this has the downside of making one or both parties more unsatisfied with the outcome.

The Conclusion:

Both approaches have their benefits and drawbacks. The key advantages they both have over a trial are cost and time savings, as well as a higher degree of outcome certainty. These could be critical issues for a small business owner. There are also some drawbacks to adopting mediation and arbitration. Parties cannot rely on legal precedent to determine the outcome because these alternative methods are not required to follow legal precedent in reaching a conclusion. The parties may also struggle to find a mediator or arbitrator with whom they are truly confident will be neutral or impartial.

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