No Business in today’s world will get by without some level of dispute, this could be between its employees, between itself and customers or between itself and supplier it is just about guaranteed that there will be disputes, this is just the nature of the beast. Traditionally these disputes have led to long and costly court cases, with courts costs raising, and delays in hearing due to the shear volume of cases being brought to court an alternative is required, and one exists, in fact Alternative Dispute Resolution in the form of Mediation and Arbitration has been around long before the legal system everyone turns to today, mediation is in fact referenced in the bible
Small business are now able, due to the internet and other factors, able to compete with bigger companies right to point when a dispute arises, then due to legal resources and costs they normally end up back down, major corporations have the funds and assets to wait for a long drawn out legal case to be resolved, for a small a company, which may well be in the right, this could mean their death.
As a business owner or a manager, it is key that you are aware of and familiarizes yourself and your company with genuine alternatives, Mediation and Arbitration.
Mediation is the first step in Alternative Dispute
Resolution and has a success rate of, on average, 90%.
Mediation is an informal and confidential way for parties
to resolve their disputes with the assistance of a third
party who is entirely neutral to the parties.
It is not the role of a Mediator to make a decision, this
remains with the parties involved, the Mediator is focused on helping the parties discuss and look for solutions, Mediation has the advantage of being totally flexible in the solutions that can be considered, it is not bound by strict legal rules.
Mediation is completely confidential, and many businesses prefer this as there is no public records and it will maintain the company’s good reputation. By failing at mediation, the next alternative would be Arbitration or Judicial Litigation, both of which could have a negative impact on a business resulting in the lost of customers, every business needs customers.
Arbitration normally follows when Mediation has been unsuccessfully, some companies however do prefer to take the risk and go straight to Arbitration, this is a risk. Unlike Mediation Arbitration is a decision-making process that is binding upon the parties, and unlike Litigation there are very few circumstances in which an appeal can be logged against an Arbitration decision. Traditionally Arbitration, as with Mediation, was a voluntary process, however more and more contract are now being written with Binding Arbitration as the defined method of dispute resolution and in some countries and states before the process of going to mediation first is becoming a legal requirement, and in defined situations Arbitration has to then be followed.
The Arbitrator(s) is effectively looking at the information presented and making a decision which is binding upon the parties, normally the Arbitrator(s) have specific knowledge of the industry or the points of law in question. Business prefer Arbitration over litigation due to a number of key factors, the Arbitrator(s) normally are selected because of their specific industry knowledge, the time frame for getting a case heard is drastically reduced, and the costs. Arbitration and Mediation are more cost effective methods of get a dispute resolved. Arbitration can if fact take place, with small less complex cases, without the need for a hearing. The Arbitrator(s) will decision based purely of the facts presented by each party.
The result of Arbitration is binding up all parties and the grounds for appeal are very restricted.
This is the traditional method of dispute resolution and
is the most costly method, cases heard in a court
become public record and can have a negative impact on
the reputation of your business, even if you are in the
right and win the public may not fully understand the
details of the case and be turned against you. Reputation loss can be a major factor in the success of a company.
One of the key factors in litigation is that in most litigation case the losing party will have the right to appeal, which could mean yet more costs and yet more delays in getting a final decision on a case, and for the small business this could be critical capital tied up which may prevent the company from moving forward or even meeting its own financial commitments.
Normally mediation is spilt evenly between the parties, it could be agreed during the mediation sessions that one party will bear the costs, generally, as a rule of Thumb, Mediation costs range from a few hundred Dollars to 3 or 4 Thousand dollars, with online Mediation these costs can be further reduced as can the time taken to get a resolution, this in its self could be a deciding factor for many. Arbitration is a more drawn out process and while a lawyer may not be required it would be advisable to have your arguments check and validated, there is no come back, you cannot claim that you did not have legal representation and fail to factor a key element in, costs for Arbitration are again traditional an even spilt, an Arbitration hearing normally starts at about $5,000 USD and can be defined as a percentage of the value of the contract. Litigation is by far the most drawn out process and the most costly, a good litigate can demand daily rates of a few thousand dollars, the court costs and hearing can take days or even weeks, and then there is the appeal, the other key factor here is that litigation takes place in an open court with a press gallery, yes it is possible for a private hearing but very rare, and once a decision has been made the records of the court become public information. Any awards and the grounds for the awards are public information, just think on that. In mediation there are no records and the only thing that is recorded, in confidence, is the settlement agreement, if this is breached this could be taken to the courts for specific performance