It’s a scenario which we all hope to avoid, entering a dispute. But if we do, and it does happen, the best thing is for it to be solved amicably. One way to do this is through Alternative Dispute Resolution, such as mediation and arbitration.
But what do these terms mean and how do they differ? Let’s take a look.
Mediation involves both parties meeting in a managed negotiation with a third party, called the mediator. It usually happens in a neutral location. Both sides get an opportunity to present their arguments.
The mediator’s role is to offer objective support and guidance as to how the dispute could be solved.
The advice, however, has no legal effect and stops short of being a direct solution – the responsibility for resolution lies firmly with those involved in the dispute. This is the key positive of mediation, that it avoids the need for any “official” proceedings, namely litigation, and generally brings issues to a close quickly.
Arbitration on the other hand, is a legal process. Like mediation, it involves both parties meeting along with a neutral third party, the arbitrator. Again everyone is given the chance to set out their arguments and position.
Unlike a mediator however, an arbitrator’s job is to take a direct course of action. This can be either advisory or legally binding, but in most cases all parties sign an agreement beforehand signalling that they will agree to accept the decision made.
Arbitration is something of a midway point, halfway between basic mediation and proper court proceedings. It’s clearly a more economical option than litigation, but can be the next stage if and when mediation has failed to solve the matter.
The differences and similarities summarised
- Mediation is advisory, arbitration can be both advisory or a legally binding process akin to a simplified court hearing.
- The third party. Mediators seek to offer objective advice to help those involved come to an agreement. Arbitrators on the other hand deliver a verdict and decide the most appropriate way forward for all parties.
- Both mediation and arbitration are generally non-public and confidential.
- Both are cheaper than standard litigation and are voluntary proceedings which rely on the consent of all parties to go ahead.
Alternative Dispute Resolution in the UK
ADR is being increasingly pushed as a means of solving disputes without formal court proceedings in the UK. It’s already widely encouraged in the case of taxpayer disputes with HMRC. It’s also employed in the aviation sector to handle passenger disputes. Under Civil Aviation Authority (CAA) rules, airlines are now obliged to point complainants in the direction of ADR bodies. The Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations, which came into law in 2015, introduced measures to expand and promote the use of ADR in disputes