Where do We Go From Here? - A Review of Mediation vs. Arbitration vs. Litigation

By Ehsan Ali and Alnoor Maherali

“What if we can’t negotiate an agreement or resolve our disagreement – where do I go next? What are my options?”

When people or organizations disagree on how to resolve a dispute, and negotiations fall apart, they face a decision about how best to move forward. If the dispute continues to cost them in dollars and peace of mind, it can be daunting to choose how best to seek the outcome they want to achieve. Below we outline the three broad options for dispute resolution - litigation, arbitration, and mediation. Note - there are variations that blend some of these categories; included here are the main options that people and organizations can consider:    

Litigation: This is the traditional model of dispute resolution – and it’s the one that most people are familiar with thanks to movies and TV.  At the basic level, litigation is when parties go to court to settle their dispute. To be litigated, the dispute must concern legal claims – i.e. arguments about rights and responsibilities that are grounded in legal statutes, regulations, precedents, etc. And this requires setting court dates and being subject to the procedural deadlines triggered by filing a lawsuit.     

In line with formal rules and procedures, the parties submit their evidence and their arguments to the “legal decision-maker” - a judge and sometimes a jury. The decision-maker considers what the parties have submitted and the options provided by the relevant laws. They then deliver their ruling or verdict - which is final and backed by the force of law. If either party is unsatisfied by the verdict, they can appeal on specific issues and there are more formal rules governing those appeals.  

In summary, litigation has formal rules and procedures and formal decision-makers who render final judgement on the parties. It can, however, be unpredictable as the judgement and the view of the overall dispute will be limited by: how the law regards the matter, what options the law explicitly provides for, how well each party or their lawyer makes their argument, and the particular perspective of the decision-maker.

Arbitration: Parties who don’t want the rigid formality and delays of a court, but still desire a third party to make the decision, can find that in arbitration. There are still rules of procedure and for the presentation of evidence. But often the parties can have the flexibility to amend those rules – either out of necessity or convenience. 

Generally, parties have to agree to arbitrate – though some contracts have mandatory arbitration provisions to avoid the cost of litigating multiple lawsuits in court. Once the parties decide to arbitrate, they must: select an arbitrator – who should be neutral and unbiased to fairly decide the dispute; define their procedures – often with the help of a particular provider like the American Arbitration Association; set the timeline for the dispute to be decided; and prepare and submit their case. 

In the end, like in court, the arbitrator still makes a judgement in the matter - likely giving the parties a decision along the lines of what they have presented. They may approve an amount less than the presenting party asked for; or enforce only some obligations on the defending party. Whatever the outcome, arbitration is less formal and more flexible than litigation but still relies on a third party to make the decision. And if it is a binding arbitration – as opposed to non-binding – the arbitrator’s decisions are final and as enforceable in court as if a judge made them. 

Mediation: If the prospect of a disconnected third party making all the decisions and creating the final outcome of the situation is unappealing, parties do have another option -- mediation. Like arbitration, mediation also engages the assistance of a neutral third-party. However, the job of the mediator is not to impose a judgment or to enforce a particular outcome.  The mediator is there to facilitate a discussion between the parties – a more structured negotiation. And to determine if there is a deal that can be reached by the parties without going to court or arbitration.

Mediation allows for creativity in finding solutions that are closer to a party’s ideal, but would be very difficult or impossible for an arbitrator or judge to order.  And mediation has expediency similar to (and sometimes greater than) arbitration. In mediation, parties are given the power to find solutions that are best suited to their situation; usually leaving each party better off than if they had gone straight to arguing their cases and seeking a judgment in court or arbitration. Any outcome resulting from mediation is one the parties have freely agreed to.  While the mediator controls the room and process, the parties control their own fate. They choose what to put on the table in terms of arguments and potential solutions.  Even if no solution is reached, parties leave with more information and a better understanding of the conflict. 

If you, your company, or someone you know is considering their options for resolving a dispute, contact Venn Mediation to learn more.  It can be invaluable as a method by which to (a) avoid costly litigation or arbitration or (b) settle ongoing lawsuits or arbitral cases after they have been filed.  Experienced mediators, like Venn Mediation, can assist you in finding better resolutions to your conflicts. We are based in New York but do online mediations as well. We would love to help.

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