When disagreements arise in the world of commerce and trade, settling them in court is no longer the only avenue to find resolution. The increasing use of alternative dispute resolution (ADR) methods has opened up ways of resolving conflicts that are time-efficient, cost-effective, confidential, and provide a means of preserving business relationships without the contentious format of traditional litigation.
Some who are unfamiliar with ADR sometimes confuse two types that business entities often use, mediation and arbitration. They are two distinct processes that have different structures but the similar goal of resolving disputes outside the courtroom, with the advantage of keeping the process and outcome out of the public eye.
How arbitration works
Arbitration is a formal process that some describe as a simplified form of a trial, with limited discovery or rules of evidence. It is appropriate where disputing parties want an impartial third party to decide the outcome of the dispute outside the framework of the courtroom.
Arbitration is a common mechanism to resolve contractual issues, and many contracts such as employment agreements include provisions for mandatory arbitration to settle disputes. The arbitrator or panel of arbitrators serve the function of a judge and usually have expertise or familiarity with the business’s industry. Arbitration is often binding, meaning that the parties agree to accept the decision of the arbitration panel and waive their right to a trial or appeal.
The mediation process
Mediation is an informal process that has a great deal of flexibility in its format and is usually nonbinding. It involves a neutral third party trained in mediation methods selected by both parties to help manage the discussion with the goal of conflict resolution. The mediator meets privately with each side before bringing the parties together to discuss their differences as well as their goals.
Rather than serve as a judge who renders a verdict after both sides have presented their case, the mediator encourages both sides to create a path forward in which they may not get everything they are seeking, but can compromise with the goal of preserving relationships.
ADR in Florida
Florida business entities have had the advantage of comprehensive court-connected mediation and arbitration services for over 30 years, and certified mediators and court-appointed arbitrators are bound by state-mandated ethical standards. For Tampa-area business owners, it is important to have resources at their disposal to find effective resolutions to conflicts that inevitably occur in professional relationships.