Mediation and arbitration play a role in resolving disputes outside of the court. These methods of conflict resolution are tailored to the trend of judicial relief and assist parties into resolving disputes according to the party’s needs. They take in account personal or business priorities and interests which no court judgement is able of addressing. So why is it that during the recent years the parties tend to lean more towards mediation, instead of arbitration or litigation? It is commonly known that binding arbitration is often perceived as a preferred method of going to court, given that it is always more formal, time consuming and expensive in comparison to mediation; such that it hands over the final decision-making authority to a third party2.
In arbitration, a judge and jury decides the merits of the case based on the law and facts that may lead to one sided results; and has become more adversarial in the sense that the parties are obliged to proceed with both their lawyers and a third-party decision maker that will impose the judgement.3 For these reasons business lawyers often persuade parties to only enter into arbitration after either negotiation or mediation has failed. The whole idea of mediation is to use a neutral third party to facilitate a deal amongst the parties. Mediation is a favored ADR technique as it focuses more on the parties towards settlement through compromise and negotiation. It has the advantage of reorienting parties towards each other, not by imposing rules on them. It assists the parties with achieving a new shared perception of their relationship with an innovative view that will redirect their attitudes towards each other.
When parties mediate, their relationships can be restored; however, not all relationships will survive when the conflict escalates into a legal dispute and not all should. In this scenario, the attitudes of the mediators are also significant for the parties and council, as they can start a “pre-dispute facilitation” method of communication by understanding and collaborating the hardened and oppositional attitudes that arise from active disputes.4 This however only works if the parties to the mediation process are not firmly entrenched in their position, and have a strong stance based on principle, or hold the idea that litigation is the only way they will succeed to reach their goals. To sum, mediation is one of the preferred methods of dispute resolution but only if the parties are ready to compromise in the interest of transactional cost avoidance and quantification of a palatable loss or gain.