Arbitration and mediation are both forms of alternative dispute resolution (ADR) where conflicts are heard out-of-court. Although no court has rendered a decision, in some circumstances the ADR determination is binding (creates a legal obligation) on the parties (disputing persons or entities). Therefore, it is important that ADR parties have the assistance of an Arbitration and Mediation Attorney. View qualified Dispute Resolution Law Firms, Arbitration Law Firms, and Mediation Law Firms in your area to find ADR Lawyers to get help with this process.
Arbitration is binding, meaning that once you agree to have your dispute heard by an arbitrator (a third-party who is knowledgeable in the subject matter of the conflict), you must comply with his decision. Arbitration differs from traditional lawsuits in a number of ways, including:
Typically, there is no right to appeal (absent arbitrator misconduct or fraud)
Costs (including attorney’s fees) are often charged against the loser
Unlike courts, arbitrators are not required to follow precedent
The parties may choose where to have the hearing and the applicable law. In traditional lawsuits, the parties must bring their suit in a court that has some relationship to them, and are bound by that law.
There are several types of arbitration:
- Non-binding arbitration is similar to mediation (see below) except that the arbiter’s goal is not to find a settlement, but to determine liability
- High-low arbitration allows the parties to set limits on the amount of the arbitration award (the award cannot be more or less than amounts agreed to)
Examples of typical matters that are arbitrated include:
- Labor disputes – such as between a labor union and large employer
- Contract disputes – such as between businesses or between a consumer and a business
- Securities disputes – such as between a broker and a customer
Arbitration clauses are commonly included in contracts, such as credit agreements with banks. Because few of us read the small print, it is likely that you have agreed to arbitrate a potential future claim and do not know it. Courts have consistently held that these clauses in consumer contracts are binding, and the unwitting consumer must bring his claim in arbitration, rather than in court, and, often, in another state, as provided in the clause.
Mediation is also a form of ADR, but it differs from arbitration:
- Although a third-party is present to facilitate the discussion, he does not make a decision
- Any binding decision will be reached by the parties (stipulated) and put into a separate agreement, which is enforceable as a contract
- Mediation may end with a stalemate, and the parties will proceed to enforce all of their rights in court (including the right to appeal court decisions)
Examples of typical matters that are mediated include:
- Family law issues – such as property distribution, alimony and custody
- Land use disputes – such as between neighbors or a municipality and a property owner
- Employment issues – such as a workplace grievance
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