What is the Difference Between Mediation, Arbitration and Trial?
A trial is a formal legal proceeding which takes place inside a courtroom, where there are strict rules for what can be presented as evidence. Decisions made during a trial are based on the applicable law and the evidence presented. The verdict rendered at trial can generally be appealed.
Mediations and arbitrations are much more flexible. Mediation is an informal process. The legal counsel for all parties agree on a mediator who will meet with the parties and assist them in trying to reach a settlement agreement. After a joint meeting, the parties are separated into different rooms. The mediator goes back and forth between the rooms listening to parties, making recommendations and communicating settlement offers to the opposing party.
Arbitration is more formal than mediation. It is more similar to a trial, but it still takes place outside of a courtroom, and it does not follow the same strict rules of evidence. A single arbitrator or a panel of arbiters is selected by the parties who will review the evidence and hear the parties’ arguments. The arbiter(s) then decide(s) how the dispute should be resolved, based on what the arbiter(s) decide(s) is just.
If mediation is chosen, the parties will agree on a mediator. The parties explain the issue(s) involved in the case, inform the mediator of their position(s) and desired outcome, provide necessary information and make decisions regarding settlement demands and offers to assist the mediator in attempting to settle their case. It is important to note that the mediator cannot impose a result. The mediator, instead, attempts to assist the parties in reaching a settlement agreement.
If arbitration is chosen, the parties select a single arbitrator or a panel of three (3) arbiters. The proceeding is closer to a trial, with evidence and sometimes live witnesses. After being given all documents and testimony and hearing the arguments of the parties or their attorneys, the arbiter(s) make(s) a decision. In arbitration, the decision made by the arbiter(s) is oftentimes non-binding, but sometimes binding and final. If the decision is non-binding, either party may reject the arbiter(s)’s decision and, instead, demand a trial for a judge or jury to decide the disputed issue(s).
Faster proceedings: Arbitration and mediation are significantly less time-consuming and less expensive than a typical trial.
More flexible: There is more flexibility in how the proceedings go and how evidence can be presented.
Confidentiality: The disputes are privately handled and the mediation conference and the arbitration hearing are not open to the public.
Control over settlement: In mediation, the parties have complete control over any final agreement. In arbitration, the decision/award is made by the arbiter(s).
Enforceability: In arbitration, especially in binding arbitration, it is easier to enforce the results – as opposed to a trial verdict, which can always be appealed by one party or another. In a non-binding arbitration, either party may reject the arbiter(s)’s decision/award and, instead, demand a trial for a jury to decide the disputed issue(s).
Mediation is often divided into four steps:
1. There is a joint meeting (with all mediation participants present) where the mediator introduces himself/herself and describes how the mediation will be conducted.
2. All parties discuss the issues of the case from their perspective.
3. Information is presented by each party to identify the issues after which the parties (with their attorneys, if the party/ies is/are represented by counsel) are generally separated. The mediator then speaks to each party, asks them questions and, sometimes, provides recommendations for attempting to settle the dispute.
4. The mediator then goes back and forth between the parties and communicates offers and, sometimes, proposes a resolution, as both parties discuss a possible settlement agreement.
Arbitration generally has five steps:
1. One party must file a demand for (or the Court will order) arbitration, to start the process.
2. All parties agree on the arbiter(s) who will hear the evidence and arguments of the parties.
3. A preliminary hearing is sometimes held or information is exchanged between the parties and the arbiter(s).
4. A formal hearing is held where testimony is given (or summarized by the parties or their attorneys), documents/evidence is presented and arguments for the parties are made to the arbiter(s).
5. The arbiter(s) make(s) a decision thereby deciding the case and a formal written decision/award is sent to the parties or their attorneys.
Both mediation and arbitration are excellent forms of alternative dispute resolution for personal injury claims, but it is essential to understand their differences and limitations.
Mediations will not always result in a settlement agreement. If the mediator cannot get the parties to agree on a proposed settlement, the process ends (and, oftentimes, the case then proceeds to trial – generally for a jury to decide the issues).
There are two types of arbitration – binding and non-binding arbitration. Decisions reached as a result of binding arbitrations are oftentimes final. It is very difficult, if not impossible, to successfully contest a binding arbitration award. If the arbitration is non-binding, however, the decision can be rejected by either party, simply by the party filing a motion with the Court demanding a trial – instead of accepting the arbiter(s)’s decision/award. The parties will, however, be made aware, before the arbitration, as to whether it will be a binding or non-binding arbitration – something decided by the Court or set forth in an agreement/contract that the parties entered into before the dispute arose.