Disputes are part and parcel of life. When matters escalate into a legal dispute, our first reaction is typically to consider taking the matter to court. However, trials are not the only way to resolve a dispute.
There is a spectrum of dispute resolution processes. This ranges from the more informal and collaborative modes, to more formal and adjudicative mechanisms.
At one end of the spectrum we have negotiation. The most flexible of all the processes, parties typically communicate directly with one another in an unstructured discussion, and have to work out a solution between themselves. Negotiations are also usually free.
However, people tend to be emotional, and have their own views about what happened. If not done effectively, speaking and negotiating directly with the other party might result in a stalemate, and prolonged negotiations with no positive outcome can end up escalating tensions.
At the other end of the spectrum is litigation, i.e. taking the matter to court. Once taken to court, the dispute will necessarily be resolved when judgment is passed.
Court proceedings are dictated by court rules, hence parties have minimal control over the process. Parties also have no control over the outcome, which is decided by the judge. As the process is adversarial, someone can only win at the other’s expense, hence misunderstandings and tensions are inevitably escalated and relationships worsened during trial. Time and money have to be spent to prepare for and attend trial, and the emotional costs of going through the trial process usually takes a huge toll on parties. Matters discussed and documents disclosed for court proceedings become public knowledge. Courts are bound by precedent (previous cases), and can only award legal remedies such as financial compensation. Even then, court judgments are also often appealed as parties often do not agree with the court’s decision.
Arbitration is similar to litigation, in that parties agree to resolve the dispute by bringing it before a neutral third party, i.e. the arbitrator. Unlike litigation however, parties can decide for themselves who their arbitrators are. Arbitrators have more flexibility than court judges to decide how the arbitration should proceed and what weight to give evidence. Arbitrations are also confidential.
The arbitrator looks into the legal rights and wrongs of a dispute and makes a decision (i.e. an arbitral award). Once the arbitrator has arrived at a decision, it is binding on parties whether they agree with it or not. As in a court case, there is usually a winning and a losing party in an arbitration. Arbitration awards are enforceable in multiple countries under the New York Convention. However, losing parties will always find ways to resist arbitral awards and make it difficult to enforce.
Mediation exists closer to the negotiation end of the spectrum. Mediators are independent neutrals who serve as facilitators to negotiations between parties, i.e. they do not decide the outcome for parties. Mediations are voluntary and minimally structured to offer flexibility.
Mediators can offer a neutral perspective to help parties gain new understandings and overcome deadlocks, drawing on their professional experience to support the problem-solving process, while ensuring parties retain full control of the outcome. Mediators are trained to support constructive communication, manage emotions, and prevent conflicts from escalating. All information disclosed at the mediation is confidential and without prejudice. This means that it cannot be disclosed elsewhere, or used against either party in legal proceedings should parties not settle at mediation. Mediations are also almost always cheaper and faster than litigation or arbitration proceedings.
Should parties reach an agreement to settle, the terms will be recorded in a written agreement to be signed by the parties. This settlement agreement is enforceable as a contract, and can even be recorded as a court order under the new Mediation Act. In any case, studies have shown that mediated settlement agreements are unlikely to be breached. In reaching an agreement, each party will have their own interest in performing; otherwise they would not have signed it.
The next time a legal dispute arises, this guide can help you better choose the appropriate dispute resolution mechanism that best meets your needs.
Peacemakers is a select network of mediators. Peacemakers mediators have successfully mediated hundreds of conflicts arising between individuals, companies, and governments.
As mediators and mediation advocates, our settlement rate to date is close to 85%. If you need a mediator, contact us at email@example.com to see how we can assist you!