Why Mediation & Arbitration

Mediation and arbitration do not necessarily appear to have that much in common. However, on closer examination, one can see that they share many characteristics. Both have party-appointed neutrals; both are generally confidential and both are non-court based forms of dispute resolution. Both can enable disputes to be resolved in a speedy and cost-effective manner.

But arbitration does share one major characteristic with litigation or court-based dispute resolution and that is that the output is an adjudication, which is a decision or ruling, which of necessity means that there will be one set of winners and one set of losers. Notwithstanding that, in arbitration, the parties at least have the satisfaction of knowing that they chose the tribunal between them ( or they had previously agreed a method for choosing the tribunal ), that they entered into the process voluntarily and that it was conducted in private.

There are various ways in which the worlds of arbitration and mediation are coming together. This recognises that, whilst the settlement record in mediation is very good, an outcome cannot be guaranteed. It also recognises that there are cases that go to arbitration that should be settled, for example where the legal and other costs on each side have exceeded or threaten to exceed the value of the substance of the dispute. In these circumstances, hybrid techniques may be worth exploring. In Civil Law countries, arbitrators are often under a duty to explore settlement options; in Australia, of course a leading Common Law country, the Australian Branch of the Chartered Institute of Arbitrators is working on a set of hybrid dispute resolution rules, which will combine the best of mediation and arbitration.

What this illustrates is the parties can choose a variety of different methods to resolve their disputes, some of which may blend the best of one method with the best of another or others.