By Merrill G. Emerick, Esq.
Arbitration and mediation are two forms of alternative dispute resolution where cases are resolved without the parties ever going to court. There are also other types of alternative dispute resolution, such as early neutral evaluation, but these two are the most common. Although the names are often used together, they are actually quite different. Both have the same goal, that being the conclusion of litigation without ever going to court.
Arbitration is either binding or non-binding. Binding arbitration occurs where the parties agree to have an independent third person decide the dispute between them. This person is usually a retired judge or an experienced attorney. The agreement may occur before there is any dispute when the parties enter into some form of written agreement that provides that if there are any disputes, rather than going to court, the matter will be submitted to an arbitrator to decide the dispute. The arbitrator's decision is binding. Usually, there is no right to appeal, and the arbitrator's decision may be made into a judgment. It will then have the same effect as though a judge or jury had decided the case after a trial.
Parties sometimes decide to submit their claim to binding arbitration after a lawsuit has already been filed. In this case, the parties enter into a stipulation that the dispute will be decided by an arbitrator and the decision will be binding. Sometimes statutes require that disputes be submitted to binding arbitration. For example, under the California Insurance Code, a dispute between an injured motorist and his or her own insurer must be decided in binding arbitration where the motorist's injuries were caused by a driver who had no insurance and the injured motorist had uninsured motorist coverage under his or her automobile insurance policy.
The actual form of the arbitration and the person who will hear it is usually governed by the agreement of the parties or the statute. The arbitration hearing usually takes less time than a court or jury trial and may be more informal. The parties are normally assured that the arbitration will actually occur on the date scheduled. Courts are sometimes not able to accommodate parties by having their case go to trial on the scheduled date because of other cases that have priority because of the nature of the case or the age of the case or the parties. Usually, the parties are entitled to pretrial discovery just as they are in a civil case. Unlike a court trial or jury trial where the costs associated with the salaries of the judges and court personnel are paid for by the taxpayers, the parties pay for the arbitrator's time. As a result, the costs may be more in arbitration than in a regular civil trial, but the attorney's fees are often less. If the arbitrator makes a mistake in deciding the case based on the facts or the laws, there is usually nothing that the losing party can do about it. The decision is final.
There is also non-binding arbitration. In this case the arbitrator decides the case, but if either side is dissatisfied, he or she may request a trial in court. The arbitrator's decision is of no effect, except if the party rejecting the arbitrator's decision does not obtain a better result in trial, he or she may not recover costs and may have to pay the other side's court costs. Non-binding arbitration usually occurs in civil cases where the parties are unable to agree on some other form of alternative dispute resolution and no contract or statute requires arbitration.
Mediation is a settlement conference before a retired judge or a trained mediator who is usually an attorney. In mediation, both parties must agree to some form of compromise to conclude the litigation and the dispute. Unlike arbitration, where a third person decides how a case will be resolved, in mediation, the parties decide. A mediator simply assists them in reaching this resolution. If the parties reach a resolution and enter into a written agreement, it is a binding contract that settles the dispute.
It is important that the attorneys representing the parties to a dispute be familiar with alternative dispute resolution and experienced in representing clients in these activities. Alternative dispute resolution is usually less expensive than litigation, is usually faster, and has an element of finality that avoids the uncertainty that can occur with appeals.
Many of the attorneys at Anderlini, Finkelstein, Emerick & Smoot have worked as arbitrators and mediators. We are intimately familiar with the various forms of alternative dispute resolution and mediation. We often recommend them to our clients when it is in their best interests.
Attorneys at Anderlini, Finkelstein, Emerick & Smoot welcome the opportunity to discuss your legal needs. Please feel free to Contact Us or call 866-662-2185, 650-288-0297 for an initial consultation with one of our attorneys.
