There are numerous reasons for business conflicts, and they can occur in small companies or large corporations. Just as there are different reasons for disputes, there are varying ways to resolve them.
Depending on the situation, the conflicting parties may choose to go through mediation, arbitration or litigation.
According to Harvard Law School’s Program on Negotiation, mediation is a popular alternative dispute resolution technique because it is less expensive and less time-consuming than other methods. A neutral third-party mediator listens to the arguments and feelings of each side and then works with them so they can come up with a resolution together. A mediator may work with the parties separately or together. The agreement is voluntary and nonbinding.
Arbitration also uses a third party, called the arbitrator, but this person also acts as a judge. Both sides present arguments and evidence, and then the arbitrator makes a decision. Unlike with mediation, the decision is binding and may not go through an appeal process.
Litigation involves court participation. The party making the decision is either a judge or a jury. Typically, each party has an attorney who is responsible to argue the case, find evidence and present it to the judge and jury.
One of the reasons businesses choose mediation or arbitration is because litigation is costly and stressful. However, there are times in which litigation is the best way to resolve the dispute.
According to the American Bar Association, mediation may be part of the litigation process. This is especially true when settling may be better than going to court. A mediator can assist both sides in coming to an agreement to avoid the uncertainty and expense of a drawn-out court trial.