Mediation VS. Arbitration: Which One Is Better?

Mediation VS. Arbitration: Which One Is Better?

Alternative Dispute Resolution (ADR), such as mediation or arbitration, is often a preferred method of resolving conflicts over the more costly option of litigation in court. Parties have more control and can settle issues in a more amicable atmosphere with skilled mediators or arbitrators. However, deciding which ADR method is the best for a specific situation can be difficult. This article will outline the two main ADR choices, mediation and arbitration, and discuss a hybrid option of mediation-arbitration or med-arb.

What is the difference between mediation and arbitration?

Mediation and arbitration are both forms of alternative dispute resolution, but with fundamental differences. Both entail a third party either overseeing or facilitating proceedings, and both provide parties much more flexibility and control than litigation. However, the differences are significant, as the following closer look demonstrates.

Mediation

With mediation, parties appoint a mediator who is a neutral third party to facilitate the process. The mediator, generally experienced in ADR procedures, guides and manages the discussions between the disputing parties to settle. Parties can also select a mediator familiar or expert in the underlying subject matter, which can help inform the process. The mediator cannot adjudicate the conflict, so the involved parties have more control over the process.

Because the parties set the terms, from appointing mediators to scheduling and drafting settlements, mediations are often more expedient and cost-effective when compared to court litigation. Furthermore, mediations are private so that any information disclosed remains confidential, which is not always the case with court proceedings.

Arbitration

Parties appoint arbitrators to oversee and adjudicate conflicts in arbitration or an arbitral proceeding. There could be one arbitrator, or parties could appoint a panel, usually an odd number, to avoid a split decision. Parties in an arbitration still maintain more control than litigation by appointing arbitrators, setting schedules and locations, determining the rules or procedures, and other processes. These are usually set out in an arbitration agreement or arbitration clause before the process begins. However, unlike mediation, parties do not settle the conflict. Instead, arbitrators take on a role more similar to a judge in hearing testimony and evidence presentations. Then the arbitrators decide the dispute with an arbitral award that is usually legally binding.

As with mediation, arbitration is time and cost-saving and confidential and convenient. Additionally, arbitrations benefit from being enforceable, while mediation may not be.

Is mediation or arbitration better?

When trying to determine whether to select arbitration or mediation for an ADR process, parties must consider the dispute in question as well as the relationship between them. However, both mediation and arbitration have similar benefits in that they can be expedient, affordable, and confidential compared to litigation. Furthermore, since these ADR methods are less formal than court proceedings, they can provide a more amicable forum which may avoid any animosity between the parties.

With that said, mediation is a more informal process than arbitration as mediators facilitate a discussion between the disputing parties, who then must come to an agreement. This can only work if the parties agree and participate in good faith. Otherwise, even with the most skilled mediator, the parties may not settle. Furthermore, there may be a chance then that one or all parties choose not to acknowledge a settlement agreement since it is not legally binding. In such a situation, if the parties still want to avoid the complex intricacies and costs of litigation, they may want to pursue arbitration.

Nevertheless, parties who enter into mediation may still find themselves at an impasse, unable to settle. The parties may want to contemplate a med-arb if they anticipate such a problem.

Can mediation and arbitration be combined?

Med-arbs combines mediation and arbitration processes together. Often, it stems from an arbitration where an arbitrator suggests mediation first. However, the arbitrator takes on both roles as a med-arbiter rather than appointing a separate mediator.

In a med-arb, the med-arbiter begins with mediation and all that entails. They would facilitate discussions between the two parties to reach a mutually satisfying agreement. However, if no settlement satisfies both parties, the med-arbiter then switches to the role of arbitrator, which, as discussed above, is a more regimented process with a binding decision.

This process allows the arbitrator to fully understand the situation as they were involved at the beginning of the mediation. This also means further cost and time savings for the parties involved as there is no duplication of or catching up for a new neutral third party. Furthermore, the conclusion of a med-arb is a binding arbitral award that has the full force of law behind it.

THAC offers comprehensive ADR solutions

If you need assistance determining the best ADR solution for your dispute, contact the Thailand Arbitration Center (THAC). THAC is a full-service dispute resolution center. Centrally located by the Phrom Phong BTS Skytrain station, THAC is accessible by public transport and major roads, highways, and international airports, making our location convenient for local and cross-border ADR proceedings. Offering the highest international standard of service, parties can avail themselves of myriad mediators and arbitrators, skilled in ADR and expert in diverse subjects. Furthermore, THAC’s state-of-the-art facilities can host in-person or remote hearings with comprehensive business and administrative services. For more information about the different ADR options and services available at THAC, contact [email protected] or +66 (0)2018 1615