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Before delving into the differences between the two processes, it is important to point out what the advantages of ADR are over traditional litigation. For most people, when they are in a dispute or have a legal claim, the first thing they think of doing is consulting a lawyer and going to the courts.
However, litigation is usually costly and it can take a long time to reach resolution. Even then, the parties might not be happy with the outcome.
Alternative dispute resolution, on the other hand, has many benefits. Both arbitration and mediation tend to be more cost-effective, and usually take less time than a court case.
There is a greater chance that parties will arrive at a mutually beneficial solution, and personal and business relationships are more likely to be preserved.
Mediators and arbitrators also have specialised training in resolving disputes.
Arbitration and mediation are both alternative dispute resolution processes that take place outside of court.
In arbitration, a third party arbitrator makes a decision, whereas in mediation the parties decide what the outcome will be. They do this with the assistance of a neutral mediator who facilitates negotiations,
Arbitration tends to be a more formal process and looks a little more like a court process than mediation does. The arbitrator, who usually has legal knowledge, makes a final and binding decision, which is called an award.
In mediation, which is a voluntary process, the two parties involved work with a mediator to solve problems and find a settlement.
Both dispute resolution processes play an important role in modern legal practice, as more parties want a quicker and more cost-efficient way of resolving disputes than court processes. A judge may also require parties to engage in mediation in the UK, and this is something that is happening more frequently.
To learn more about a career in arbitration sign up for our introductory course in arbitration led by one of the UK's leading arbitration scholars.
Comparative Analysis: Mediation vs. Arbitration in the UK
Mediation is typically informal, flexible, and guided by the needs and preferences of the parties involved. The process usually begins with an introductory session where the mediator explains the rules and goals of mediation.
Parties then have opportunities to present their perspectives to the mediator and to each other and work towards finding common ground.
The structure of mediation is a flexible and can be tailored to different types of disputes. The mediator's role is to facilitate the discussions and assist the parties in negotiation. To learn in more detail what is mediation check out one of our other posts where we compare it to other forms of ADR.
Arbitration is a more structured and formal procedure to resolve a dispute. It often resembles a court hearing, though it is generally less rigid and happens more quickly. The arbitration process usually begins with a preliminary hearing in which the arbitrator sets the ground rules, followed by the presentation of evidence and witness testimonies.
The arbitrator may ask questions, request additional evidence, and set deadlines. Arbitration hearings are usually held in private, and the process follows specific procedural rules that vary depending on the arbitration agreement or governing institution.
As a rule, arbitration tends to cost more than mediation, as the process takes longer and often requires special expertise. The arbitrator is often a lawyer or a retired judge, and usually has some expertise related to the specific circumstances of the case. The outcome is almost always a final decision that is legally binding.
Mediation costs less as the process is often confined to one day, with some preparatory and follow up meetings. The mediator might be a lawyer or a retired judge, or might be from a different professional background. The outcome is an agreement that the parties agree on, that might take the form of a signed settlement agreement, or sometimes a court order.
Each method has advantages and disadvantages. Arbitration can be quite technical, and it can take a long time to receive the award. However, the fact that the award is a binding decision is very important to many parties to a dispute, and it is still more efficient than going to court.
Mediation is less formal, and the parties voluntarily work together to resolve the dispute by negotiation. This can improve relationships between the parties. It is particularly suitable for situations where the parties might have to have ongoing discussions, such as in the case of divorce, for example. It can result in a binding agreement, but additional steps may have to be taken. These are just some of the benefits of mediation and why many disputants are turning to mediation as a serious alternative to court.
One of the fundamental differences between mediation and arbitration is who makes the decision. In mediation, the parties retain full control over the outcome. They do not have to reach an agreement, and if one party can't agree to resolve the matter the mediator ends. If this happens, the parties may choose to resolve the dispute via avenues such as arbitration or litigation.
In arbitration, the arbitrator has the sole authority to decide the outcome. The arbitrator’s decision, known as an award, is usually binding and enforceable, similar to a court judgment. This means that once an arbitrator has rendered a decision, the parties must comply with it, and there are limited grounds for appeal.
A range of different disputes can be resolved by arbitration and mediation. Interpersonal conflicts, such as those arising out of divorce or workplace conflict are very suitable for mediation. In these cases, the parties are often best placed to decide the terms of a settlement, and this type of facilitated negotiation has many benefits for the future relationship of those involved. Business disputes are also well suited to commercial mediation especially where there's a need to maintain ongoing commercial relationships.
While it can be difficult for parties to engage in negotiation directly, having a mediator to help them reach a solution often makes things easier.
Arbitration, while more costly, can be beneficial where a claim has a lot of technical and commercial aspects. Arbitrators can, for example, get other experts involved to give evidence and inform their decision. The fact that it is a private dispute resolution process is also useful, as it is often attractive for commercial entities such as companies to keep the terms of the settlement private.
To learn directly from some of the experts in the field watch this clip with full time Arbitrator Tim Hardy.
In this next video, Professor Bryan Clark, one the UK's leading dispute resolution scholar's describe the benefits of mediation for resolving disputes.
Recent Changes in ADR Legislation in the UK
Much of the law around mediation arbitration and other processes are contained in caselaw in the UK. Some new developments include rulings that parties can be compelled to attempt mediation before going to court, even though it is a voluntary process.
This happens quite frequently at present, as the government and the judiciary are keen to promote different forms of dispute resolution.
Pre-arbitration mediation is a dispute resolution strategy that involves attempting mediation before proceeding to arbitration when a conflict arises. This approach is often stipulated in contracts through a "mediation-arbitration" (med-arb) clause, which requires the parties to try mediation first as a means of resolving their dispute.
If this fails to produce an agreement, the parties then engage an arbitrator as the next step. This two-tiered approach offers the advantages of both processes, making it a popular option for resolving conflicts efficiently.
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Both mediation and arbitration are attractive alternatives to going to court.
If parties want to save money and time, these are good dispute resolution options. An additional benefit is that while the parties can't select judges for their case, they can select from a list or register of arbitrators or mediators based on their subject matter expertise, experience and availability.
If you want to improve your knowledge of Mediation you can sign up to one of our mediation courses and open up new career opportunities.
Whether arbitration mediation or another process is best depends on the type of conflict and the needs of the parties. Where ongoing relationships are involved, confidentiality is important and the parties can negotiate together in a collaborative way, mediation is a great option.
For more complex and technical disputes, finding an arbitrator that has the necessary expertise and technical knowledge can mean a swift and private settlement.
Both processes have distinct benefits over traditional litigation, each with distinct advantages and limitations. Mediation is a collaborative, flexible, and non-binding process that empowers parties to craft their resolutions. It is ideal for preserving relationships and fostering mutual agreements in a confidential and informal setting.
Arbitration, on the other hand, provides a more formal, binding, and enforceable resolution similar to a private court proceeding, making it suitable for complex or high-stakes disputes.
Understanding the differences between these two ADR methods helps individuals and businesses make informed decisions about how best to resolve their disputes, ensuring the chosen process aligns with their goals, needs, and the nature of their conflict.
If you're curious about ADR and in particular what a career might look like either in arbitration or mediation then sign up to on of our introductory Mediation Courses today.
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