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What Is Alternative Dispute Resolution?

If you are involved in a legal dispute, there are options available to you for resolving the conflict aside from going to court. Alternative dispute resolution can provide you with a way to settle the issue quickly and at a much lower cost than through a lawsuit. The most common forms of alternative dispute resolution are mediation and arbitration.

Business disagreements are often resolved through mediation or arbitration. In fact, many contracts outline the arbitration process should a conflict arise. This built-in resolution option gives the parties a means of settling their disputes without having to worry about a lengthy legal battle.

Alternative Dispute Resolution Options

There are many options for resolving your legal dispute outside the courtroom. If you are involved in a business dispute, you may not be able to solve things without having an independent third party step in to help. However, that independent party does not have to be a judge. Instead, you could enlist the services of an arbitrator or a mediator to settle your conflict.

Of course, before you resort to any of these options, it is best to attempt negotiations on your own. If you can settle your dispute through direct negotiations, you can avoid legal fees and increase the likelihood that you will be able to maintain a working relationship with the other party.

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Arbitration vs. Mediation

Arbitration and mediation are similar processes. However, the biggest difference is that an arbitration agreement is enforceable, while a mediation agreement is non-binding.


Arbitration is a method of dispute resolution that allows conflicting parties to avoid the high costs of a courtroom trial while still maintaining much of the same structure that you would be dealing with at trial. With arbitration, the two parties will decide on an arbitrator (or arbitrators) who will preside over the arbitration process and ultimately rule on your case.

An arbitration ruling is legally binding, so if you enter into arbitration with another party, you need to be prepared to abide by the outcome. Arbitration is much quicker and cheaper than a courtroom trial. However, it is still a very involved process that can take some time to complete.

There are several different outlines for the arbitration process that the two parties can choose from, or you can determine the rules you will use point by point. If you enter into a contract with an arbitration arrangement included, you will already have the process you will use all worked out should a conflict arise.


Mediation is much less formal than arbitration, and the two parties are not held to the recommendation made by the mediator. Either party can choose to reject the option put forth by the mediator to settle the conflict. If mediation is unsuccessful, you will likely need to settle your dispute through arbitration or at trial.

A mediator is typically a trained attorney. However, they do not function as a judge in the proceedings. Instead, they are there to provide advice and guidance to help you reach an agreement with which both parties can be comfortable.

After your initial attempt to negotiate an agreement directly, mediation is often the next step to take. Mediation is much cheaper and quicker than a courtroom trial or even arbitration. Mediation is typically carried out in a single day, which means that if you reach an agreement through this process, you will be able to put the problem behind you quickly.

Pros and Cons of Alternative Dispute Resolution

There are many pros and cons to using a form of alternative dispute resolution versus going to court to settle a conflict. The primary benefits are that any form of alternative dispute resolution will result in a quicker end to your conflict at a greatly reduced price. Some other pros and cons of choosing these options include:

  • If arbitration is the mandatory method of resolving a conflict as laid out in a contract, this will be your only option for settling a dispute. This can be a pro or a con depending on the specifics of your situation.
  • When an arbitrator makes a ruling, it will not necessarily strictly adhere to the law. While the arbitrator should stick to the law, for the most part, they have leeway to consider extenuating circumstances. Once again, this can be an advantage or a disadvantage depending on your position.
  • There is no option for appeal in arbitration. If you are satisfied with the decision of the arbitrator, this is a major pro. However, if you do not agree with their ruling, it can make life challenging.
  • The outcome of arbitration can be more difficult to predict. Since an arbitrator can consider evidence that would not be admissible in a courtroom and has more leeway in their judgment, it can be much more difficult to predict the outcome of your case.
  • Since mediation is not binding, both sides must be willing to compromise to reach a conclusion to the dispute.
  • If you reveal critical information in mediation but are unable to resolve your conflict, you may end up giving the other side an advantage they otherwise would not have had during arbitration or at trial.
  • Mediation can actually end up costing you more time and money. If mediation is unsuccessful, you will still have to settle your dispute through arbitration or in court, which means that the time and money spent on mediation will be added to what you spend for one of these processes.