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Important differences between mediation and arbitration

On Behalf of | Oct 30, 2020 | Mediation & Arbitration

Getting to the bottom of workplace disputes can be critical to the operations Lexington businesses. In order to avoid lengthy court cases and costly litigation, many entities use alternative dispute resolution to settle their internal and external challenges. Alternative dispute resolution can take a variety of different forms. This post will focus on two of them: mediation and arbitration.

This post does not provide any legal advice. Businesses should consult with attorneys to discuss their questions and concerns about using alternative dispute resolution methods in their operations.

An overview of mediation

Mediation is a process that occurs in many legal arenas, such as family law, business, and others. There is no presiding judge or final decision maker. During mediation, the parties to a conflict work with a neutral third party, known as a mediator. The mediator does not advocate for either party but rather helps them find solutions that may meet both of their needs and expectations.

Mediation is based on the efforts of the parties to find solutions to their differences. Through working together and communication, some businesses are able to settle disputes with others in mediated experiences.

The arbitration process

Like mediation, arbitration happens outside of a courtroom. However, unlike mediation, arbitration follows a similar process to litigation. In arbitration, the parties to a dispute may present their positions regarding their problem to a third party arbitrator. The arbitrator has the ability to make a decision on how the parties must settle their dispute.

Arbitrator’s decisions can be binding or nonbinding. Binding decisions require the parties to follow the terms of the arbitrator’s decision while nonbinding decisions can be set aside. When preparing for arbitration, parties should know what type of decisions their hearing will receive.

Arbitration and mediation both serve important functions in the operation of Kentucky businesses. Including them in business plans and contracts can help entities maintain control and order. Business law attorneys can help their clients incorporate these and other processes into their operations.