Arbitration vs. Mediation vs. Litigation in a Post-COVID World
On the two-year anniversary of when the world shut down, I found myself reflecting on how my life as a commercial litigator has changed. COVID-19 has disrupted the entire judicial system as we once knew it, forcing courts with already congested dockets to shutter and quickly embrace modern technological advances to enable remote proceedings. With rare exception, Zoom hearings have now become the default, as have years-long delays and undesirable uncertainty—all of which lead to increased costs. While as counsel we have always been faced with the dilemma of how to most effectively and efficiently resolve contentious business disputes consistent with our clients’ objectives, with the COVID-related backlogs courts across the country are facing, arbitration and mediation offer desired alternatives.
Arbitration and mediation are confidential proceedings, whereas litigation is not. Court proceedings are open to the public and copies of nearly all filings are accessible to anyone. Thus, particularly in high-stakes disputes, many businesses prefer the opaque nature of alternative dispute resolution.
What are the primary differences between arbitration and litigation?
- Generally speaking, arbitration is more flexible, less formal, less expensive, simpler, and quicker than a trial.
- Arbitration affords flexibility in the selection of panelists, whereas judge assignments are purely random and, for defendants, depend entirely on where the plaintiff files the case. With arbitration, the parties can select arbitrators with a specific expertise or background in the relevant industry or subject matter of the dispute.
- With arbitration, parties have greater flexibility and control over deadlines and the discovery process. Among other things, parties can limit the types of discovery exchanged as well as the number of depositions.
- Arbitration promotes finality. When the arbitration panel renders a decision, this terminates the dispute (subject to a court’s confirmation of the award, or any of the very limited grounds for challenging an award), whereas the appeal of a court decision can prolong the proceedings for years to come.
What are the primary differences between arbitration and mediation?
- In arbitration, a neutral third-party acts as the judge, hears evidence, and makes a binding decision.
- In mediation, a neutral third-party offers non-binding recommendations and negotiates with the parties to assist them in reaching a resolution. However, unless all parties agree to specific deal points and terms of a resolution, the process is non-binding.
- Parties can agree to mediate a dispute at any point, whereas with arbitration, the hearing typically happens only after motion practice, discovery, and pre-hearing briefing.
The best method of dispute resolution depends on the particular facts and circumstances of your case. Bearing in mind that some disputes are contractually required to be resolved via mediation and then arbitration, having counsel experienced in business disputes is critical to evaluating the risks and benefits of each option. If you would like to discuss these or similar issues in more detail, please contact us at (312) 368-0100.
