WHAT IS ARBITRATION?
Arbitration FAQs & Answers
Although Mediation and Arbitration have many similarities (private, informal, party controlled), the key difference is that in Arbitration there is a Winner and a Loser. The Arbitrator decides the dispute. The Arbitrator is neutral and is selected by agreement of the parties. The parties can review the Arbitrator’s experience and have input and some control over the choice of the Arbitrator. The Arbitrator will disclose prior relationships with any party or their counsel.
Arbitration is more like a trial, and the parties have to present and prove their case. Arbitration is a like a private trial in a conference room and not a court room which is open to the public. The Arbitrator decides a Winner and a Loser. The Arbitrator is much like a private judge. The parties pay the Arbitrator(s) for their time.
Arbitration is less formal than court. The procedural rules of a court are not strictly applied. Arbitration is private (only the parties and their attorneys are present). The parties can ask for various types of decisions such as with or without reasons. Although not required, because there is a winner and loser in an Arbitration, and because the decision is enforceable in Court after the decision is made, the parties in an arbitration generally are represented by an attorney to help present their case and improve their chances of winning.
Scheduling and location are in the control of the parties. The parties also can determine the issues that the Arbitrator will decide, and they can limit or expand the type of award an Arbitrator can make. For example, the parties can give the arbitrator the authority to make monetary or many other types of judgments.
Med-Arb is a one stop type of event. The parties can submit the dispute to the mediator and if the parties can not reach agreement on a solution, the parties can proceed to an arbitration right away. The Mediator would then be authorized by the parties to hear the presentations of the case as if it were a trial, and decide the dispute.
The benefits to Med-Arb is that the Mediator/Arbitrator is the same person and will have a familiarity with the nature of the dispute, the issue and the position of the parties. The Arbitration can be conducted on the same occasion with a brief break in between the Mediation and Arbitration sessions. There would only be one preparation and the parties can end the Med-Arb with a resolution one way or the other.
The downside to Med-Arb is that the parties have shared their confidential settlement position with the Mediator/Arbitrator who will be deciding the dispute. This knowledge can be seen to lead to more of a split decision by the Mediator acting as an Arbitrator.