Disagreements happen, even in business and even when a good contract is in place. Sometimes one of the parties to a dispute will file a lawsuit. However, another option is alternative dispute resolution methods like arbitration or mediation.
The parties involved in the dispute must agree to use arbitration to settle their differences. In fact, many contracts include provisions concerning dispute resolution. Some even require the use of arbitration. Most of us have actually signed contracts that include an arbitration or mediation clause without even realizing it. This type of provision is often contained in the fine print of disclaimers or agreements to buy phones, travel packages, and more.
The rules regarding arbitrations can change from one arbitrator to the next. Often the parties to the arbitration will agree on some ground rules before proceeding to the actual arbitration.
An arbitration is similar to a court hearing in that the parties present evidence to support their claims. Either one arbitrator or a panel of arbitrators will preside over the arbitration. Depending on the parties’ agreement, a decision may be handed down that is binding or non-binding.
Though somewhat less formal, mediation is similar to arbitration. A third-party mediator comes together with disputing parties to help them reach an agreement. Typically, the mediator does not have the authority to make a binding decision.
Which One Is Better – Arbitration or Mediation?
Both arbitration and mediation are types of alternative dispute resolution. Both are often less expensive and faster than going through civil litigation.
One way they differ is in formality. Arbitration is more like a formal court hearing or trial. However, mediation is an informal meeting between the parties for the purpose of fixing the problem.
Arbitrators can hand down legally-binding decisions. Mediators cannot.
Also, parties engaged in mediation can stop the proceeding at any time. Usually after parties have agreed to an arbitration and started the process, there’s no going back.
Consult with a Minnesota Lawyer.
You may be involved in a dispute or want to prevent one from happening. If so, your first step is to speak with attorneys about strategies and options right for your situation.
The attorneys at Virtus Law, PLLC, have the tools and experience to help you achieve the best result possible. To schedule an appointment, call us at 612.888.1000. Although located in Minneapolis, we serve clients throughout Minnesota including communities like Edina, Mendota Heights, and Red Wing.