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Arbitration or mediation: Which one is best for business conflicts?

On Behalf of | Jan 6, 2022 | Business Litigation |

When you’re dealing with a contract dispute or other business-related issue, something you may want to consider is going into arbitration or mediation. Both of these forms of alternative dispute resolution help make it possible to resolve disputes outside of court, so there is a lesser chance of litigation that drags on and costs an extensive amount of money.

The purpose of mediation or arbitration is to try to come to a reasonable solution without getting the court involved. Since litigating makes a case public and can be detrimental to a business’s bottom line, it’s common to have businesses use contracts with arbitration or mediation clauses.

What happens in a business mediation session?

In a business mediation session, the two parties (or more, in some cases) who have a conflict will sit down together to talk about the issue and to come up with a solution. Mediation is nonbinding, so it is typically the least formal and most relaxed atmosphere for a discussion.

A mediator holds the mediation session and helps guide the parties through the discussion. The mediator does not make any decisions.

What happens in a business arbitration session?

Arbitration is a little bit different than mediation because it is legally binding. In arbitration sessions, the idea is that both parties will present their cases to the arbitrator. The arbitrator may be a former judge or another legal professional who is able to listen to the arguments and come up with what they believe is a reasonable solution.

In arbitration, the arbitrator makes the final decision. The decision is binding.

Should you use mediation or arbitration?

Either mediation or arbitration has the potential to help you resolve business conflicts without having to go to court. Whether you’re having a problem with a third-party vendor, a past client or a customer, it’s a good idea to consider using mediation or arbitration rather than litigating. When both parties can come to an acceptable resolution, it is usually better for everyone involved. Mediation and arbitration may save you money and help prevent this dispute from going public and affecting a business negatively.

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