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Mediation or Arbitration of Business Disputes

What are the Alternatives to Litigation of a Business Dispute? Should I Mediate or Arbitrate my Business Dispute?

Depending on what’s at stake, the parties involved in a commercial dispute frequently file a lawsuit. However, taking a business conflict to the trial can result in lengthy and expensive courtroom battles. Not to mention the litigation process is strenuous, galvanizing and threatens the on-going business operations. Once litigation has begun, it is highly unlikely that parties will reconcile their conflicts and continue to do business together. This fact may have an additional detrimental economic impact on one or both parties. The reality is that only a very lawsuits go all the way to trial. Consequently, businesses involved in a dispute is faced with a conundrum: How to economically and efficiently reach a settlement?

If you are faced with a Chicago area business dispute, you should know that you have options for an out-of-court resolution. Alternative Dispute Resolution (ADR) has two common forms: mediation and arbitration. Here's how each of these conflict resolution tools work and how they are different.

Mediation

Mediation is a dispute resolution process lead by an unbiased, neutral third-party mediator – think of it as a negotiation overseen by a professional peacemaker or a dutch uncle. Typically, mediation takes place in an informal yet moderated setting where the mediator speaks privately with each party (caucus) or gets both parties together for a discussion. Both parties are given uninterrupted time to have their say. After learning the positions of the parties and identifying their strengths and weaknesses, the mediator helps the parties come to a voluntary, uncoerced resolution to the conflict.

It should be understood that mediators do not independently make the decision as to how the dispute should be resolved. Instead, they facilitate communication between the parties and give them the tools to craft their own agreements.

Why Should you Consider Mediation?
  • It is the fastest and the least expensive dispute resolution method;
  • The process of mediation is not part of the public record, and hence, the settlements remain confidential;
  • The parties can come to a mutually agreeable outcome; and
  • Potential damage to the business relationship of both parties in the future is less likely to occur.
Why Should you not Consider Mediation?
  • The process lacks finality;
  • The open-ended process can be abused by one party; and
  • It can be challenging to reach a resolution if one side refuses to participate in the process.
Arbitration

In contrast to mediation, arbitration is a formal dispute resolution process lead by an impartial person who has the final and binding say in the conflict resolution. Think of it as a simplified form of court trials – but instead of using the court system, the parties appear before an arbitrator (who serves as a judge) or a panel of arbitrators. During the arbitration process, parties may be asked to submit relevant documents into evidence to be considered by the arbitrator. After reviewing the case, the arbitrator will make a binding decision, even if one side does not want to cooperate.

Why Should you Consider Arbitration?
  • The process of arbitration is faster and less expensive than lawsuit proceedings;
  • The process is not part of the public record, and hence, the settlements remain confidential; and
  • With binding outcomes, the process has finality.
Why Should you not Consider Arbitration?
  • Arbitration is considerably more expensive and time-consuming than mediation;
  • The losing party has limited right to appeal an arbitrator’s decision; and
  • It has the potential to sabotage the business relationship between the two sides.
Which Form of Alternative Dispute Resolution is Best for You?

Even with every precaution accounted for, business disputes can arise and create hurdles for your day-to-day operations or long - term financial goals. Once you are involved in a business dispute or lawsuit, your best option is to get out of it with as little financial setbacks and headaches as possible.

If you are faced with a business dispute, it is always best to consider alternative dispute resolution options before pulling the trigger on a lawsuit. Mediation and arbitration may be viable alternatives to reduce the time and money spent litigating. Contact the team of seasoned Chicago Business Litigation Lawyers at Bellas & Wachowski today to get help in making the right decision for you. Call George Bellas (847-823-9032), who is an experienced Chicago Business Litigation Lawyer, a certified e-discovery mediator and a former commercial arbitrator for the American Arbitration Association. George has worked on numerous mediations and arbitrations and is well positioned to help resolve your business dispute.