Arbitration or Mediation?

    posted on          2021-09-30 02:17:38, UK

Dear Guido,

If Oliver and I are going to come over to seek to resolve this matter we all need to be clear about precisely what we are seeking to reach agreement about. We do not want any misunderstanding and bad feeling.

I am unclear what you mean when you write ' as soon as we have defined the issues that are still open'. I also do not understand what you have in mind when you refer to 'other forms of collateral'.

Arbitration of Mediation: Which is a Better Fit For Your Dispute?
I have been involved in resolving a great many commercial disputes either by means
of Arbitration or by Mediation.I have a great respect for both processes but find it
inescapable that some disputes get settled by Arbitration when Mediation would have
been more appropriate and vice versa. In this article I will highlight the salient
differences and give some pointers as to which process to use.
The first difference is the availability of the process. Mediation is available as an
option before proceeding to trial for almost any commercial dispute. Indeed, it is
positively encouraged by the Court, who are likely to penalise a successful litigant
who has declined to first try Mediation by restricting the Costs awarded. By contrast
an Arbitration can only be entered into if there is a contractual agreement that
Arbitration can be invoked in the event of a dispute, which pre-dates the dispute that
has now arisen.
Both methods of Dispute Resolution are often presented as being relatively informal.
This aspect has, perhaps, been overstated. Both methods do offer a route for
resolution of the matter in question without the formalities, costs and timescale of the
Court, but they have built up their own procedures. Both procedures can proceed as
fast as both Parties are able, at a venue mutually agreed, and to that extent there are
obvious cost savings. In my experience a Mediation can be arranged more quickly
than an Arbitration Hearing. I have never been involved in an Arbitration Hearing
where the Parties did not opt for a quasi judicial setting, with Counsel representing
each side and Court formalities observed.
The crucial distinction between the two procedures is that an Arbitration results in a
decision which is binding and a Mediation does not. At the end of a Mediation the
Parties can either come to an agreement or accept that they will meet each other
again in Court.This is simply not the case with an Arbitration; the Arbitrator will
provide a decision which is very difficult to overturn.This crucial difference has a
significant effect on the approach and demeanour of both Parties.In my experience,
some Parties enter a Mediation simply to test out the resolve of the other Party. This
cannot be the case with Arbitration. The Arbitration Hearing is the first and final
opportunity for each Party to present their case before an independent third party.
So which process is better? Both have much to recommend them for the resolution of
commercial disputes compared with the conventional Court process. It has been my
observation that Arbitration is more appropriate for a fundamental dispute over an
issue of principle or question of truth. These kind of disputes are unlikely to be
resolved without seeking the final decision of an experienced independent person
and are rarely resolved satisfactorily at a Mediation. However, if a dispute is
fundamentally a commercial dispute where there is an element of responsibility to be
borne by both sides and the dispute centres round the division of the financial
consequences of a failure of a commercial agreement Mediation is a more
appropriate method to bring the dispute to a negotiated conclusion so that both
Parties can put the dispute behind them.
David Bunker