Disputes over businesses are ugly and nobody wants to be involved in them. However, if you’ve reached a dead end, you may need to use some help to resolve the dispute. Usually, there are three ways to settle a business dispute, arbitration, mediation, and litigation. Businesses, these days, make it a point to include arbitration and mediation in their preamble to avoid lengthy court proceedings. So, how do these processes work? Let us find out:
As the name suggests, mediation aims to resolve conflicts and misunderstandings with the assistance of a mediator. Mostly, the role of a mediator is private and they usually do not influence the binding decision. Major benefits of mediation over litigation include:
- Mediation is confidential and does not require parties to initiate a trial, which is expensive and time-consuming
- The mediator brings with them objectivity and proposes parties to settle on alternatives if things are out of hand. Often times, the parties seek help from the mediator individually.
- Mediation is inexpensive, as the contentious parties bear the costs of the mediator. It also increases the chances of the parties working together again if they reach reconciliation.
- When a mediator comes in, they usually bring in creative and logical solutions to problems.
According to a study, more than 85% of mediations result in a settlement and that is why organizations prefer it to settle disputes. If things still do not work out and reach to the point of personal injuries to workers, it is wise to hire the services of an expert law firm.
In contrast to mediation, business dispute arbitration is the process of involving an independent and impartial individual for a final and binding determination of the conflict. Although formal, but during arbitration, legal rules and regulations of evidence do not apply and there is no formal discovery process. Arbitration is usually the second most preferred choice of businesses after mediation to resolve a dispute.
Usually, an arbitrator may ask for relevant documents while listening to both parties before submitting their verdict on the case. Both parties are given the opportunity to present their case to the arbitrator, but unlike litigation, there are no witnesses or court proceedings. Much like mediation, the arbitration process concludes swiftly.
International arbitration can be used to settle a dispute between two businesses from different countries. The major benefit of international arbitration is that it is enforceable, unlike litigation, which differs from country to country on the basis of their laws and jurisdiction. One of the largest arbitration associations is the International Chamber of Commerce.
Arbitration vs. Mediation – The Differences
Disputes at the workplace are certainly stressful if not dealt properly. The best approach is to implement the most appropriate solution with the intent to manage the situation. While Litigation is usually the last preferred method in scenarios like employee accidents where you need to hire services of a reputable car accident attorney, or an expert business lawyer, it is favorable to use mediation or arbitration first to avoid unnecessary hassle. Most entrepreneurs and professionals often wonder about the approach that they should take when resolving a business dispute. They cannot usually work out the difference between the mediation and arbitration.
While Arbitration is generally more of a passive listening approach where both parties communicate their perspectives to an individual for settlement, mediation is more of a casual negotiation. Arbitration tends to be formal, initiated with a complaint involving concerned parties with the aim to come up with a decision for dispute resolution. Mediation is more informal entailing an expert negotiator who works with the conflicting entities to reach a point of mutual consent with the aim to eliminate any misunderstandings. An arbitrator usually comes up with a decision binding upon both the involved parties while a mediator has little mana to coerce the conflicting stakeholders to come to a settlement.
Business Dispute Litigation
Litigation is the oldest method of settling a business dispute with the help of a court, in the presence of a judge or a jury. It is often time-consuming and expensive. Unlike mediation and arbitration where you choose the individual to settle the dispute, in the litigation, the judge is pre-appointed and the parties do not have any influence on the selection.
In addition, litigation enables both parties to gather evidence and disclose it before the judge or jury. In litigation, the parties are also subject to cross-examinations by the attorneys. Litigation is usually the last resort when parties cannot settle their dispute through mediation or arbitration.