Arbitration and Mediation

Arbitration and mediation are two facets of alternate dispute resolution that seek to aid disputing parties in resolving their conflict without resort to trial before a court-assigned judge. Besides representing litigants involved in these processes, attorneys Gary Smith and Jeff Craven have served as court-appointed and privately-retained mediators and arbitrators.

1. What is arbitration?

Arbitration is a method of resolving a dispute in which an impartial third party called a neutral, selected by the parties, listens to the facts and arguments presented and makes a decision as to how the issues in dispute will be resolved.

2. What is mediation?

Mediation is a method of resolving a dispute in which an impartial third party called a neutral, selected by the parties, listens to the facts and arguments presented and provides evaluative and facilitative input about the strengths and weaknesses in the parties’ cases, in an effort to get the parties to settle their dispute on their own terms. By its nature, mediation is non-binding and does not result in any decisions for or against any party.

3. What is the difference between arbitration and mediation?

In arbitration, the arbitrator decides the outcome of the dispute, after hearing evidence. In mediation, the parties themselves decide the outcome.

4. What is the difference between arbitration and court?

In arbitration, the parties can usually choose who their arbitrator will be, whereas in court the parties cannot choose their judge. Court proceedings are held in public, whereas arbitration is held in private. Arbitration in theory is faster and less expensive than court. Court is held at a time and place dictated by the court, whereas arbitration proceedings are held at a time and place convenient to the parties.

5. Why arbitrate?

Arbitration is often faster than going to court. By way of example, the average time from filing of a lawsuit to trial in Maricopa County Superior Court is 1.5 years. Voluntary arbitration can occur in as quickly as 60 days. Likewise, arbitration can reduce the amount of discovery on a case, thereby reducing the lawyer bills. Further, arbitration can afford the parties more privacy than an open court proceeding, as the filings are not on the public record and the arbitration is not held in a public court of law. Also, arbitration can take place just about anywhere, as opposed to only at the courthouse.

6. Why mediate?

Mediation is best when the parties are not so committed to litigation and are willing to settle, but just can’t get there on their own. Oftentimes, parties just need to vent to a third party who can give them an honest outsider’s impression of their dispute. Mediation often works great for people who need a third party’s validation of their own willingness to compromise.

7. Who decides the outcome in arbitration?

The arbitrator.

8. Who decides the outcome in mediation?

The parties. Since there is no compulsion to settle, the outcome can also include not settling.

9. What is an arbitrator?

A neutral person who gives a binding decision after considering the evidence that the parties submit.

10. What role does the arbitrator have?

The function of the arbitrator is similar to a judge in court. The arbitrator must listen to and read the evidence presented during the arbitration hearing, make rulings on issues and listen to the arguments presented by each of the parties at the end of the evidence. Ultimately, the arbitrator must make a decision concerning the dispute.

11. What is a mediator?

A neutral person who attempts to get the parties to settle by facilitating a dialogue between them.

12. What role does the mediator have?

A mediator can do their job in many ways. The two most common are as facilitator, where the mediator tries to get the parties to talk; the second is as evaluator, where the mediator shares their impressions with the parties as to why they have a good or bad case. Under either approach, the goal is to get the parties to see the futility of expanding the dispute and the benefits of settlement.

13. Do the parties to arbitration or mediation need lawyers?

No, but it is generally a good idea to have counsel, since most lay people are not familiar with the applicable procedures and rules. Most important, trained lawyers can help focus the arguments to get right to the heart of the real issues. Oftentimes, clients are too emotionally involved or untrained in posing cogent arguments to be truly effective on their own.

14. Should the arbitrator or mediator be a lawyer?

Although it is probably best to have someone with legal training, such as a lawyer or retired judge as the arbitrator or mediator, persons with a background in the area which is to be arbitrated or mediated, such as a contractor or accountant, can work well too.

15. Is arbitration confidential?

Sort of. The only persons present at arbitration are the parties, the arbitrator and whoever else they invite and agree upon. Unlike most court cases, the public and the media cannot sit and listen to what is said or what the decision is. Only the parties and their lawyers receive copies of the arbitrator’s decision. However, as explained below, due to the need for a confirmation proceeding in the Superior Court, as well as the parties’ right to have court reporters present to document the arbitration proceedings, it is possible that what is revealed at arbitration can make it to the public eye. Therefore, if something you want kept private comes up during the arbitration, you should be prepared to see it on the public record if a confirmation proceeding proves necessary.

16. Is mediation confidential?

Yes. Mediation sessions are held behind closed doors and are typically cloaked under a confidentiality agreement. Outsiders, unless invited, are not permitted to attend.

17. How does arbitration work?

Arbitration has the following steps: selecting the arbitrator; scheduling the time and location of the hearing; preparation for the hearing (including preparing the witnesses); presenting the evidence at the hearing (including examination and cross-examination of witnesses); making submissions to the arbitrator at the end of the hearing; and the arbitrator making a decision. Following the arbitrator’s decision, the matter may be submitted to the Superior Court for confirmation.

18. How does mediation work?

Typically, the mediator will keep the parties together only briefly for introductory comments. Then the mediator will break the parties into separate camps called caucuses, and will shuttle between them conveying information and offers.

19. How long does the arbitration process take?

It depends on the several factors, including the number of issues and the number of witnesses. Usually the arbitration hearing can take place within a few weeks after the initial contact with the arbitrator. Arbitration is generally quicker than going to court.

20. How long does mediation take place?

Unlike arbitration, mediation usually is effective in shorter time spans. There are always exceptions. Mediation can occur in as little as two hours. The typical mediation lasts about one day. At the end of that day, the parties usually can tell if the case has settled or at least know if a dialogue has been established. If so, the parties can continue on another day to try and settle. If not, the parties can acknowledge their agreement to continue to disagree and then avail themselves of other dispute resolution methods, such as arbitration or litigation.

21. How much does arbitration or mediation cost?

The costs of arbitration or mediation are wide and varied. Some neutrals charge by the hour, whereas others charge a flat rate. In addition, there are many arbitration and mediation organizations that also charge administrative fees. Whatever the method of charges, you may safely assume that the longer the proceeding, the greater the cost. Worthy to note though is that unless your contract provides expressly for recoupment of attorney fees and costs, you are unlikely to have those sums awarded to you at the conclusion of arbitration. So, if you are serious about having arbitration clauses in your contract, make certain you have competent counsel review your arbitration provisions.

22. Who pays for arbitration or mediation?

The expense of mediation is typically split between the parties. Arbitration also can be split. However, most often in matters of arbitration, loser pays.

23. Is arbitration cheaper than going to court?

Usually arbitration is less formal and less time consuming than court. Therefore, it should be cheaper. Likewise, if you agree that time is money; you will also agree that arbitration is less expensive than court. However, arbitrators are typically paid, whereas judges are not. Also, if you utilize one of the many private arbitration organizations, there are administrative fees to be paid. So, depending on how quickly you need your dispute resolved, how well drafted your arbitration agreement is, and how much money is in dispute, arbitration can be cheaper. However, given the need to pay the arbitrator, who typically charges premium rates, it is not unheard of for arbitration to prove more costly than a traditional court proceeding.

24. Is arbitration binding and enforceable?

Yes.

25. Is mediation binding and enforceable?

No. There are no decisions in mediation, only settlements.