Is Mediation A Good Alternative To Arbitration?
Mediation provides an alternative to arbitration utilizing an independent third party to facilitate agreement.
Conciliation may also be considered being similar to mediation but also allowing the third party to propose a solution(s).
Arbitration represents one method of alternative (non-litigation) dispute resolution (ADR); others include mediation and conciliation. Each also provides a private method of dispute resolution and is consensual in nature.
Mediation provides a means by which to resolve a dispute by utilizing an independent third party to facilitate agreement between the parties. Conciliation is similar but also allows the third party to propose a solution which the parties may accept or reject. The outcomes from both mediation and conciliation must be recorded in a contract to then become binding on the parties.
The benefits of mediation include, like arbitration, flexibility and control over the manner and process in which mediation is conducted.
Mediation can (by agreement) be quite informal, quick and cost effective. A key benefit is the involvement of the parties in the outcome(s). As these will be developed by the parties themselves (with assistance from the third party), the outcome(s) is more likely to be a commercially focussed and more applicable to the situation. The outcome will be mutually agreeable to the parties based on a win-win (albeit with compromises from both parties) rather than win-lose outcome thereby leading to higher compliance by both parties having been negotiated rather than imposed. The process may also lead to alternative outcomes being identified and agreed.
The main disadvantage of mediation is that there is no guarantee that the dispute will be resolved. Agreement and settlement of the dispute between the parties is voluntary and there is potential for the process to be exploited to prolong the dispute and as a means by which to defer arbitration or litigation proceedings.
The decision as to whether to adopt a mediation process will be largely dictated by the nature of the dispute (i.e. is it capable of being resolved through discussion/negotiation) and the parties willingness to actively engage in the process. If neither is apparent then arbitration or litigation may be a more effective means by which to resolve the dispute.