Arbitration is a type of dispute resolution that involves a neutral third party acting as a judge to resolve the conflict. The parties involved can negotiate the details of the arbitration process, such as whether lawyers will be present and what standards of evidence will be used. This method is often much less expensive than litigation. Mediation is another form of dispute resolution, in which the parties reach their own agreement.
Decisions made by the parties tend to be more durable than those made by a judge or jury in litigation or an arbitrator in arbitration. Agreements reached through mediation are binding, but those from litigation or arbitration are not enforced as often. Facilitated mediated negotiation is another form of conflict resolution, in which the mediator takes a more active role in guiding the parties to a solution. In this type of mediation, the mediator is expected to have substantive experience with the topic. Alternative Dispute Resolution (ADR) is any means of resolving disputes outside the courtroom, such as early neutral evaluation, negotiation, conciliation, mediation and arbitration.
As court queues, litigation costs and time delays continue to affect litigants, more states are experimenting with ADR programs. Negotiation is often the first approach taken before resorting to other ADR methods. It is more informal and offers flexibility to the parties. Transparency is essential for successful negotiations, as family, personal or relational tensions can cloud them. Mediation is a type of assisted negotiation, during which the parties get help from a neutral third party (the mediator) to help them resolve the dispute. Arbitration is more formal than negotiation, mediation or conciliation and may look more like litigation.
The parties submit their dispute to an arbitrator who makes a decision after the trial. To form a panel, both parties agree on an arbitrator or each side selects an arbitrator and they choose the third. The arbitrator or panel will issue an arbitration award that will be binding on the parties. Alternative Dispute Resolution (ADR) refers to different ways of resolving disputes without trial. Common ADR processes include mediation, arbitration and neutral evaluation.
These processes are generally confidential, less formal and less stressful than traditional court procedures. Participants in arbitration and mediation cases and FINRA neutrals can view case information and submit documents through this dispute resolution portal. It is important to hire a referee with a good record when using arbitration services. Learn more about the differences between arbitration and mediation and what to expect when using these services.