Has The Time Come To Stress The Value Of Mediation Over Arbitration? -
Two decades ago, the following statement appeared in the Appraisal Journal.
“Clogged courts and escalating litigation costs have made arbitration as a solution for civil disputes and claims of conflict more necessary than ever before.”
Today, with arbitration clauses routinely included in most commercial contracts, it has become the preferred alternative for dispute resolution. Unfortunately, in this writer’s experience, the increase in arbitration has given rise to a severe erosion of its intended benefits. Arbitration clauses ignore mediation and dictate a standard, comprehensive arbitration process. Judges and arbitrators, unwilling to circumscribe the rights of the parties, regularly allow the attorneys to dictate the process. Given the opportunity, attorneys prepare for Arbitration as though they are going to a formal trial. The discovery process is as thorough as for any trial. A plethora of documents are demanded, copied and reviewed. Witnesses are identified, prepped and presented. Experts are retained and asked to prepare comprehensive reports. The result, the expected benefits, reduced cost and diminished time, are eroded, if not lost entirely.
As someone who has experienced both arbitration and mediation from all aspects, I believe that encouraging a two-step pretrial process that begins with the increased use of Mediation followed by Arbitration, if necessary, would restore the benefits party- principals desire.
With today’s courts overly burdened and the litigation process more costly than ever, possibly it is time to recognize the advantages of mediation over arbitration for many civil disputes.
- Mediation and arbitration share a common goal – resolution of a dispute.
- Mediation generally results in a mutually acceptable result. Arbitration results in a final, usually binding decision cast in terms related to the pleadings. Mediation, though seldom binding, often results in finality based on a solution tailored by, and to the requirements of, the parties.
- Mediation generally requires little discovery. The parties know their position and have established reasonably specific demands.
- The mediation process is more direct. Mediation casts the principle decision makers before each other. Each is encouraged to state his/her own case as they see it, exempt from legalese and, often, with all the emotion and intensity their claim has engendered. With experienced guidance, often provided in private sessions, this “clearing the air,” aids in a better understanding of the opposing party’s position, a first step toward a mutually acceptable solution.
- The mediation process is more personal and flexible. Being a process that accentuates the role of the principals, the experienced mediator will usually impose few formal constraints beyond the request for civility. In many mediations, typically family disputes, attorneys may not even be present.
- Mediation is usually conducted and often successfully concluded in one day.
- The cost of mediation is usually minimal. Conducted in a single day, before a single mediator, generally with few, if any, witnesses, costs to the parties are substantially minimized.
- With a result tailored to what suits the parties the likelihood of a resolution that diminishes angst and aids in preserving the business relationship is increased.
Unfortunately, parties to a civil conflict are seldom aware of mediation as an available, potentially beneficial alternative. Furthermore, attorneys, trained in formal litigation requirements and process, are inclined to feel that arbitration better serves their obligation to their client and, of course in doing so, increases their billable hours.
Nonetheless, given the escalating costs of arbitration, the expanded base of trained mediators and the success of the mediation process, it is time to consider the merits of mediation as a valuable step prior to arbitration.
. Jerome N. Black, “The Process of Arbitration.” The Appraisal Journal, April 1993, pp. 234-38 Quoted more extensively in Valuing A Business, fifth edition, Shannon Pratt, pp 1054