Mediation and arbitration are often collectively referred to as Alternative Dispute Resolution or ADR. They are however quite different.
Mediation is a process where, with the help of a mediator, you and the other party with whom you have a dispute are encouraged to settle your disagreement by negotiation. It is a process where a neutral person encourages communication between parties in dispute to help them reach a mutually acceptable agreement.The mediator will offer a new perspective to the dispute, highlight relevant matters, and form a bridge in negotiation. They will not, however, decide the case, or tell either party what they should agree. Information shared during the mediation will be private and confidential unless otherwise agreed.= and if the mediation is not successful either party can the bring court proceedings.
Mediation can be used to resolve just about any dispute, from resolving conflicts between families or neighbours to workplace disputes and grievances against public sector service providers, such as the health or education services. It is a flexible process, but in most types of mediation, the following steps take place:
If one party to a dispute suggests mediation, all those involved are contacted to check if they agree to take part;
If so, there will be discussions to agree a mediator;
Once a mediator is agreed, all involved will be contacted by the mediator. The mediator will ask each of them to explain how they see the current situation and how they would like it to be in the future. They will also ask what suggestions the parties have for sorting out the disagreement.
At the mediation meeting, the mediator will explain the structure of the meeting and ask everyone to agree to some basic rules, such as listening without interrupting and not using offensive remarks. Each person will then have a chance to talk about the problem as it affects him or her. The mediators will try to make sure that everyone understands what each person has said, and allow them to respond. They will then help both parties identify the issues that need to be sorted out. Very often, this leads to solutions that no one had thought of before, helping parties to reach an agreement. The agreement is usually written down and signed by both parties and the mediators. However, it is not legally binding and cannot be enforced in court, unless the parties decide to make it a legal contract. The agreement does not affect anyone’s legal rights either, allowing the freedom to find another way of dealing with the dispute at any time should mediation not succeed.
Mediation as a form of alternative dispute resolution is very much the flavour of the day. It is promoted by the courts, and a litigant who does not agree and co-operate with mediation is likely to be penalised in costs. It has advantages but also disadvantages. On the plus side are the advantages that mediation can be cheaper and quicker than disputed court proceedings, that a consensual settlement is preferable to one forced on a party, and that there will be confidentiality not available for a dispute heard in open court.
There are, however, also disadvantages to mediation. A party with a weak case is likely to argue for mediation in the hope of receiving some offer of settlement. For the party with the strong case not prepared to comprise it, mediation can only mean delay and further cost. Mediation will always equate with compromise and there can be little reason for a litigant with a compelling case to compromise simply because mediation has been required. Mediation can only succeed where there is room for compromise and is only worthwhile in money claims, where a binding order for payment is not required.
Arbitrations are different. Arbitrators do decide cases. Arbitration is a process in which one or more arbitrators hear evidence from the parties to a dispute and then issue an ‘award’ in settlement of the dispute. In most instances, the arbitrator will also provide an opinion, explaining the reasoning that led to the award. Usually, and unless decided otherwise by the parties when agreeing to use arbitration, the award will be binding and capable of being enforced as a court judgement.
Often, business agreements and particularly contracts of insurance will contain an ‘arbitration clause’, in which the parties will have agreed to refer any dispute to arbitration rather than a court.
Apart from costs advantages, there is an advantage that the arbitrator may well be chosen for his understanding and expertise in the subject of the dispute. As an example, with a building dispute, this might well be better resolved by an independent surveyor or architect, rather than a judge who may have no particular knowledge of building procedures.
Arbitrations can be either binding or not binding, depending upon any arbitration clause or agreement between the parties.
The first stage will be to try and agree the arbitrator. Lists of qualified arbitrators in most matters are available. If agreement is not possible, an arbitrator can be appointed by the Institute of Arbitrators. Once appointed, the arbitrator will decide on a procedure and timetable, after consultation with the parties. Sometimes a hearing will be held, or it can be decided that the arbitrator will make his decision ‘on the papers’, that is after reading all the evidence and written submissions by the parties.
Another form of alternative dispute resolution which can be worth consideration is expert determination. This is particularly appropriate where there are technical issues. It can and should be a simple straightforward and relatively inexpensive procedure. The parties to the dispute simply agree to the expert who will be called upon to decide matters and the terms of his appointment. Usually, the expert will have particular experience in the area of the dispute. The parties will agree beforehand that the decision will be binding upon them and all procedural matters such as costs and confidentiality of the determination.
Unless it has been agreed otherwise, the expert’s decision cannot be appealed, and can only be challenged on very limited grounds. These will be where there has been deceit or fraud, proven bias by the expert, or evidence that he has acted unfairly or outside of his jurisdiction. There is case law that even if an expert is wrong on a material fact, the determination is still binding.
Many types of cases are just not suitable for ADR. Examples of these include injunction proceedings, applications for freezing orders and claims against reluctant payers. The threat of court proceedings with its costs and the available sanctions will often concentrate a party’s mind on settling a claim. An invitation to mediate will often be taken as an invite to accept a lower payment, and will often be used as a means of delay.
There is a place for mediation in resolving disputes, and also a place for expert determination and the various other forms of ADR. At the end of the day, however, everybody has the right to court determination of an issue, and it is wrong that any attempt to distract from this is forced upon a litigant.