Conflict Resolution: Understanding and Implementing Effective Strategies

Conflict is a reality of life. Whether it occurs in our personal or professional lives, conflict can cause stress, unhappiness, and hinder our ability to achieve our goals. Conflict resolution is the process by which we manage and resolve conflicts in a productive and peaceful manner. In this article, we will explore the basics of conflict resolution, including its definition, causes, and effective resolution strategies.

What is Conflict Resolution?

Conflict resolution is the process of addressing conflicts in an effective and constructive way. It involves identifying the source of the conflict, exploring possible resolution strategies, and implementing the most effective solution. Conflict resolution is valuable in both personal and professional relationships and can help promote mutual understanding, respect, and cooperation.

Causes of Conflict

There are several causes of conflict, including:

i. Misunderstandings: Misunderstandings can cause confusion and lead to conflict.

ii. Differences in Goals: Conflicts can arise when people have different goals or objectives.

iii. Personality Conflicts: Personal conflicts can arise when people do not get along or have different communication styles.

iv. Power Struggles: Power conflicts can occur when people seek to exert power and control over one another.

Effective Conflict Resolution Strategies

There are several effective conflict resolution strategies that can be employed in addressing conflicts between individuals or groups.

1. Active Listening: Active listening is a technique involving paying attention to the speaker, asking questions, and summarizing key points. By using active listening techniques, we can increase our understanding of the other person’s perspective and find common ground.

2. Collaborative Problem-Solving: Collaborative problem-solving involves working together to find a solution that works for both parties. It involves generating options and brainstorming solutions that are mutually beneficial.

3. Mediation: Mediation is a facilitated process where a third party helps parties to a dispute come to a mutually agreed resolution. The mediator remains neutral and helps parties explore possible solutions while communicating with one another.

4. Compromise: Compromise involves finding a middle ground that both parties can agree on. This approach requires that both parties give up something to reach an agreement.

5. Walking Away: Walking away involves recognizing that a situation is not negotiable and deciding to remove oneself from the situation. This approach is typically employed when the conflict is too intense or the other party is not willing to cooperate.

Conclusion

Conflict resolution is a valuable and effective strategy for addressing conflict in our personal and professional lives. By identifying the sources of conflicts, employing effective communication strategies, and implementing an appropriate conflict resolution strategy, we can manage conflicts in a way that promotes mutual understanding, respect, and cooperation. Conflict resolution requires patience, effective communication, and a willingness to learn and grow from the experience.

What is Conflict Resolution?

Conflict resolution is a general term for numerous methods of addressing the sources of conflict.  Conflict resolution can be thought of in the legal sense as comprising arbitration, mediation, and other forms of alternate dispute resolution.  Conflict resolution can also be used to signify attempts at diplomacy between states and countries.  The objective of all these is to settle disputes between parties in the most positive way to avoid litigation, between parties contemplating a civil suit, or violent conflict, between countries.

What is involved in Conflict Resolution?

Conflict resolution involves the parties to the matter and an outside intermediary.  Depending on the type of conflict resolution in effect the intermediary is known as an arbitrator, mediator, or negotiator.

ARBITRATION

Arbitration is a form of conflict resolution in which an outside party, known as an arbitrator, evaluates a civil dispute between parties and, in essence, acts as the “judge and jury.”  The decision that the arbitrator makes is often binding upon the parties involved.  A court of law is, in no way, involved in arbitration and will only interfere when there are egregious actions taken on the part of the arbitrator.  Arbitration is the most common form of alternate dispute resolution seen in contract disputes.

MEDIATION

Mediation is defined as a negotiation to resolve differences that is conducted by an impartial party.  The mediation process is considered private and confidential between the parties involved.   A typical mediation will involve the parties themselves as well as their representatives plus an outside, neutral mediator.  The mediator is the focal point of mediation.  His/her job is to listen and evaluate the situation and attempt to resolve the matter through an amicable settlement.   Unlike arbitration, which can be binding, mediation is non-binding on the parties and for any agreement to be upheld in a court of law a contract outlining the settlement must be in writing and signed by both parties.

Mediation has two purposes.  The first is to facilitate the communication between parties so that they may, on their own accord, come to a mutual agreement about a dispute.  If that does not happen mediation will take another form in which the mediator will take into account the facts and evidence presented and make a prediction on how a court of law might decide the matter.  Mediation is most often the route taken in interpersonal disputes such as divorce, estates, and other family matters.

LITIGATION

Of course the most well known form of conflict resolution in the legal system is litigation.  Litigation involves the disputing parties going into court to have a judge or jury decide the matter for them.  Litigation is by far the most costly form of legal conflict resolution and many should attempt to resolve their differences with a form of alternate dispute resolution prior to going down that path.

Although there are a number of ways a mediation process can proceed, there is a general framework that ensures that the process is methodical, fair and logical.  These steps are applicable to all forms of mediation, from interpersonal disputes, divorce proceedings or workplace issues.  This process will ensure that the two parties properly represent their case and the mediators have ample time to confer and decide on the frame work of an agreement.  It is important that both parties receive a fair amount of time to state their case and review settlement options.

Steps to a mediation process

The mediation process starts with rules of conduct, with both parties made aware of acceptable conduct during the proceedings and the prior knowledge that the mediator has on the dispute gleaned from briefs or any other sources.  All in the room agree on a timeframe for the mediation to reach its resolution.
The two parties will each make their case to the mediators, from their perspective and in their own words.  This is not treated as testimony would in court, but rather as an opportunity for the mediator to get a better feel of the perspectives of both parties.

The mediator will then ask both parties relevant questions about the issues, once again to gain a better understanding of the way the issue is framed in their mind.  Unlike in legal proceedings, these questions are not used to incriminate or pass judgment, only to ensure the mediator has the best possible understanding of the dispute and how he might resolve it.  Through this all, the mediator is thinking about how the case might be resolved.

Following this, the mediator may make some preliminary proposals which can be debated and modified by the parties.  A “caucus” with the client and either/or his attorney or mediator is also a common means of resolving the dispute and asserting the needs of the party.  Further proposals are made here to bring about a settlement.

With the mediator as the third party, eventually a settlement is agreed on and the dispute is resolved.  If the agreement is legally binding, it must be reviewed by attorneys and notorized.

Who is an Arbitrator?

Understanding the Role of a Neutral Third-Party Decision Maker

When parties find themselves in a dispute that cannot be resolved through negotiation or mediation, they may choose to turn to arbitration. In arbitration, a neutral third-party decision-maker, known as an arbitrator, is appointed to hear evidence and make a binding decision that is enforceable by law. In this article, we will provide an overview of the role of an arbitrator, including their qualifications, responsibilities, and decision-making process.

Qualifications of an Arbitrator

Arbitrators are typically legal professionals who have specialized training or experience in the area of law relevant to the dispute. They could also be industry experts in cases involving technical or complex matters. They must be impartial and free from conflicts of interest.

Responsibilities of an Arbitrator

The primary responsibility of an arbitrator is to conduct a fair and impartial hearing that results in a just and enforceable decision. To fulfill this duty, arbitrators have several tasks.

i. Arranging Prehearing Activities: Arbitrators arrange hearing dates, locations, and establish procedural rules and guidelines for the process. They may also conduct pre-hearing conferences to discuss procedural issues, evidence exchange, and witness testimony.

ii. Conducting the Hearing: During the hearing, the arbitrator ensures that each party has an opportunity to contribute and present evidence. They have discretion over procedural issues, including the admissibility of evidence and cross-examination.

iii. Rendering a Decision: After hearing all the evidence, the arbitrator applies the relevant law and makes a binding decision on the dispute. The decision is typically final and enforceable.

iv. Drafting the Award and Closing the Case: Once the arbitrator has made a decision, they prepare the final award that outlines the findings of fact, legal reasoning, and the decision reached. They then close the case and distribute the award to all parties involved.

The Decision-Making Process of an Arbitrator

Arbitrators have significant discretion in managing the arbitration process, including the timing and scope of discovery, witness examination, and the issues discussed. However, the decision-making process is straightforward and must adhere to several principles of procedural fairness.

i. Hearings are conducted in private, ensuring confidentiality.

ii. The arbitrator must give adequate notice to all parties of the hearing.

iii. A fair and unbiased opportunity to present evidence is afforded to all parties.

iv. Evidence received must be relevant and admissible.

v. The arbitrator applies relevant law and principles in making a fair and reasonable decision.

Conclusion

Arbitration is a popular method of resolving disputes, particularly in commercial and international contexts, where parties value confidentiality and control over the decision-making process. An arbitrator is a neutral third-party decision-maker responsible for conducting a fair and impartial hearing and rendering an enforceable decision. Their training, experience, and impartiality are critical factors in ensuring parties can have confidence in the arbitration process. Understanding the role of an arbitrator is vital in choosing an appropriate dispute resolution process, ensuring that you find a suitable arbitrator and presenting your case effectively.

Introduction

An arbitrator is a professional that works to increase communication between two sides of a dispute.  The process of arbitration is an Alternative Dispute Resolution (ADR) that avoids litigation, which can be a time consuming, public and costly process.  Arbitrators can fill a variety of roles especially in contract negotiation and commercial disputes so effective arbitrators have knowledge and experience in the dispute that they seek to resolve.

What is the role of an arbitrator?

In all circumstances except non-binding arbitration, the arbitrator has the final word on resolving the dispute and makes a judgment as per provisions detailed in contractually mandated arbitration hearings.  Legislation may make arbitration binding so as to reduce the burden that civil cases will have on the courts system.  Therefore, it is in the interest of the courts to have the word of the arbitrator be final and binding.  The arbitrator decides an “award” of damages against a party which may involve monetary damages and declarations to refrain from certain activity, grant a service promised by contract or rectify the terms and conditions of an agreement between two parties.  A panel of more than one arbitrator is called an arbitration tribunal and those individuals confer on the proper award.  Unanimous support of the award may be required by the parties but it is not mandatory.

What is the role of the arbitrator in non-binding arbitration?

In non-binding arbitration, the arbitrator is merely an observer who (in their professional opinion) determines the rights of the parties and establishes an approximate benchmark of the damages with will be due.  From there the parties will either pursue the case through litigation, binding arbitration or reach a settlement using the non-binding determination of the arbitrator.

Can an arbitrator ruling be challenged?

As a general rule, jurisdictions do not intervene in arbitration agreements unless there is a clear case of fraud or arbitrator bias.  There may also be the possibility that the arbitrator does not have the jurisdiction to order the conditions stated in the award.  Additionally, the courts may monitor arbitration proceedings if it is a serious civil case that requires due caution and involves serious ramifications for the parties if the wrong determination is made.  As the parties have agreed, either by contract or prior to seeking arbitration, it is expected that they will abide by the rulings of the arbitration proceedings, as they are they of their own accord.

Government agencies, such as the Securities and Exchange Commission do not interfere with arbitrator decisions and instead direct parties to seek recourse in the legal system.  Parties that disagree with the arbitrator’s decision may file a “motion to vacate” the decision.  Motion to vacate filings are rarely granted as the party must prove that they were prevented from making their case, which is not only difficult to prove, but rarely occurs.  Motions to vacate must be served within three months (or potentially less in some jurisdictions) and frivolous filings may entitle the other party to recoup legal fees from the filing party.

Sources: https://www.sec.gov/answers/arbappeal.htm

What are Some Strategies to Resolve Conflicts?

Effective Approaches for Conflict Resolution

Conflict is an inevitable part of life, and how we handle it can have a significant impact on our relationships, both personal and professional. There are many strategies for resolving conflicts, ranging from direct confrontation to more cooperative or collaborative approaches. In this article, we will explore some effective strategies for resolving conflicts, assessing their pros and cons.

1. Direct Confrontation

Direct confrontation is a common approach to conflict resolution. This strategy involves directly addressing the conflict, discussing the issues, and finding a mutual solution. It requires assertiveness, good communication skills, and an openness to compromise. Direct confrontation, if not handled appropriately, can escalate the conflict, and both parties may be hesitant or unwilling to engage. However, if used correctly, direct confrontation can be very effective in resolving conflicts quickly.

2. Avoidance

Avoidance is another approach to conflict resolution. This strategy involves not addressing the conflict, hoping that it will dissipate on its own. Avoidance can be useful in cases of minor conflicts that are not worth the time or effort to resolve. However, if used inappropriately, avoidance can lead to mistrust, resentment, and hostile working or living conditions.

3. Compromise

Compromise is often used in conflict resolution. This strategy involves finding a middle ground or a mutually beneficial solution that both parties can agree upon. Compromise can be an effective way to resolve conflicts, as it demonstrates a willingness to work together towards a solution. However, if used incorrectly, compromise can lead to dissatisfaction on one or both sides.

4. Collaboration

Collaboration is an approach to conflict resolution that emphasizes teamwork and cooperation to find solutions. Collaboration involves identifying the issues, brainstorming ideas, and working together to find a solution that benefits everyone involved. Collaboration requires good communication, trust, and a willingness to work together. Collaboration is often used in complex conflicts, as it allows for more creative solutions to be found, but it can also be time-consuming and requires a high level of trust and collaboration.

5. Mediation

Mediation is a method of conflict resolution where a neutral third-party mediator facilitates communication between the conflicting parties. Mediation aims to promote collaboration, communication, and understanding between the parties. It can be effective in resolving conflicts where there is a breakdown in communication or where the parties lack trust. Mediators are trained professionals who use specialized techniques to facilitate discussions and find common ground. Mediation can be costly, but it often preserves relationships and allows for mutually beneficial solutions.

Conclusion

There are many strategies for resolving conflicts, and each has its advantages and disadvantages. The choice of strategy depends on the nature of the conflict, the personalities involved, and the desired outcomes. Direct confrontation, avoidance, compromise, collaboration, and mediation can all be effective approaches when applied correctly. Understanding the various strategies and when to use them can help individuals navigate conflicts more effectively, maintain relationships, and find mutually beneficial solutions. By using appropriate strategies for resolving conflicts, individuals can mitigate its negative effects while finding positive outcomes.

Introduction

The primary goal when resolving conflicts is to identify potential sources of conflict before they arise.  Doing so is time effective and prevents a potential lengthy process of dispute resolution which may be unable to resolve the source of the initial conflict.  Communication is key to efforts that identify potential conflict as it empowers the otherwise, especially in an employer-subordinate relationship to clearly articulate grievances that the other party can work to redress.  After the root of the problem is eliminated, the other party can work to resolve the dispute, if it has not been resolved by attacking the root of the conflict.

What are ways to increase communication between two parties?

For organizations especially, hired professionals can enable communication within the organization by serving as a liaison or representative.  This liaison will maintain connections to both sides, for example subordinates and employers and articulate the needs and issues faced by both sides.  If the relationship breaks down due to a lack of communication or trust, third party individuals can enter the dispute and work to foster communication.  This conflict resolution strategy is called conciliation.

What are other methods of resolving conflicts?

No method of resolving conflicts will be entirely acceptable to both parties as the all involve one or both parties shedding some degree of self-interest in the name of conflict resolution.  For instance, one side may choose to accommodate the demands of the other party if the accommodating party recognizes that their needs are not as important as the needs of the opposing side.

Two other methods, known as collaboration and compromise, involve the two parties working closely together, sharing resources and common goals to achieve a larger goal.  Collaboration occurs when both sides are relatively equal in strength, interests and resources and their goals are not mutually exclusive.  Compromise is an element of conciliation where both parties will set aside some demands to work together on larger, more important issues.  This does of course require one or both sides to lessen demands that could be relatively important in the name of achieving the larger goal.  As with the others, this is an imperfect solution for one of both sides.

Lastly two other methods of conflict reduction involve drastically different approaches.  One party with a superior advantage may attempt to complete with the other side and overwhelm their demands.  This superior position in a conflict eliminates the need to bargain and make concessions and instead makes one side a loser and another winner.  There are obvious drawbacks to this approach in any organization as further conflicts may arise from unresolved grievances and bad faith on the part of the dominant party.

A smaller party may choose “avoidance” and avoid bringing attention to a conflict in hopes that the conflict will either resolve itself or that the side may have a stronger bargaining position in the future that prevents it from being ignored or crushed by a stronger side.  The drawback here is that the conflict may never be resolved and it may lead to further, far more drastic conflicts in the future.

Conciliation At A Glance: Understanding the Basics of this Conflict Resolution Process

Conciliation is a form of alternative dispute resolution that can help parties resolve disputes without going to court. It is an informal and voluntary process that involves a neutral third party who helps the parties come to an agreement. In this article, we will explore the basics of conciliation, including its definition, process, benefits, and limitations.

What is Conciliation?

Conciliation is a process that involves the intervention of a conciliator, who assists the parties to a dispute to reach a mutually acceptable resolution. The conciliator is a neutral third party who listens to both sides, identifies the issues in dispute, and assists the parties in finding a mutually acceptable solution.

Conciliation Process

The conciliation process typically starts with the parties attending an initial meeting with the conciliator. At this meeting, the parties will explain the nature of the dispute to the conciliator, who will then outline the process and explain the role of the conciliator. The conciliator will then work with the parties to identify the issues in dispute and encourage them to explore possible solutions.

During the conciliation process, the parties will attend several meetings with the conciliator. The conciliator may also meet with the parties separately to explore possible solutions. Throughout the process, the conciliator will remain neutral and not take sides. The goal of the conciliator is to help the parties reach an agreement that is mutually acceptable.

Benefits of Conciliation

There are several benefits of conciliation as a dispute resolution process. These include:

i. Informality: Conciliation is an informal process that allows the parties to maintain control over the outcome.

ii. Flexibility: The parties have more control over the outcome of conciliation, as they have the ability to craft solutions that meet their needs.

iii. Cost-effective: Conciliation is generally less expensive than going to court.

iv. Preserves relationships: Conciliation is a process that often preserves relationships since it encourages communication, understanding, and cooperation between the parties.

Limitations of Conciliation

While conciliation is an effective dispute resolution process, there are some limitations. These include:

i. Voluntary: Conciliation is a voluntary process, meaning that both parties must agree to participate. If one party is unwilling, then there will be no conciliation.

ii. Efficacy: The conciliation process may not always be successful in reaching a resolution.

iii. Legally binding: The agreement reached through conciliation may not be legally binding. Therefore, it is important to have legal advice before signing an agreement.

Conclusion

Conciliation is an effective alternative dispute resolution process that enables parties to retain control over disputes while preserving relationships. While there may be some limitations to its efficacy, conciliation can be a valuable process for resolving disputes without resorting to court proceedings. It encourages cooperation, understanding, and effective communication between the parties, and a neutral third party helps ensure that both parties’ perspectives are heard and respected.

What is Conciliation?

Conciliation is a form of alternate dispute resolution similar to mediation.  The main goal of conciliation is for the parties to resolve tensions and bring about a negotiated settlement.  Conciliation has no legal standing and the conciliator, the intermediary between the parties, has no authorization to seek evidence, facts, make a decision or award damages.

How does this differ from mediation and arbitration?

First, and foremost, arbitration can and, in business contracts, often is binding upon the parties involved.  In arbitration the arbitrator is permitted to gather evidence, make decisions, and award a party monetary or equitable relief.

Mediation is similar to conciliation in that the goal of mediation is to reach an agreement that optimizes each parties needs.  Mediation focuses more on intervening in a dispute and helping the parties involved come to a negotiation that is reasonable.

Conciliation, on the other hand is more like a give and take negotiation.  One of the forms of conciliation is to make a list of all the things each party wants out of the conciliation.  At that point the conciliator will go back and forth between the two parties and they will make concessions.

Mediation In Depth: Understanding the Process and Benefits

Mediation is a form of alternative dispute resolution that involves a neutral third party who facilitates communication and negotiation between parties in conflict. Mediation can be an effective way to resolve a variety of disputes, from family conflicts to employment disputes and more. In this article, we will explore the process and benefits of mediation and discuss how it can be used to promote a peaceful and productive resolution to a conflict.

What is Mediation?

Mediation is a voluntary process in which a neutral third party helps disputing parties come to a mutually acceptable resolution. The mediator is not a judge and does not have the power to impose decisions on the parties. Instead, the mediator helps facilitate communication and negotiation between parties, helping them to identify their true interests and find common ground.

The mediation process typically involves several key steps, including:

1. Initiating the Mediation: Mediation begins when all parties agree to participate in the process and select a mediator.

2. Intake: The mediator meets with each party separately to learn their perspectives and objectives for the mediation.

3. Joint Sessions: The mediator facilitates discussions between the parties and helps them to identify common goals and potential solutions.

4. Agreement: If the parties reach an agreement, the mediator works with them to draft a written agreement that outlines the terms of the agreement and any follow-up actions that are required.

Benefits of Mediation

Mediation has several benefits over traditional litigation, including:

1. Cost-Effective: Mediation is often less expensive than traditional litigation because it typically involves fewer motions, discovery, and court appearances.

2. Time-Saving: Mediation can often be completed in a matter of hours or days, compared to the months or years that traditional litigation can take.

3. Confidentiality: Discussions that take place during mediation are confidential and cannot be used in court.

4. Flexibility: Mediation allows parties to be creative in finding solutions that meet their unique needs and interests, rather than being bound by legal requirements.

5. Empowerment: Mediation empowers parties to take an active role in determining the outcome of the conflict, rather than having a decision imposed on them by a judge.

Conclusion

Mediation can be an effective way to resolve conflicts in a peaceful and productive manner. By working with a neutral third party, parties are empowered to find a resolution that meets their unique needs and interests. Mediation is cost-effective, time-saving, and flexible, and allows parties to focus on finding common ground rather than on winning in court. Whether the conflict is personal or professional, mediation can be a valuable option for those seeking a peaceful and productive resolution.

Introduction

Mediation is a form of Alternative Dispute Resolution (ADR) that involves an impartial third party to help settle a dispute.  The purpose of mediation is to help the parties reach an agreement on a dispute by improving communication, finding common ground and recommendations from a third party mediator if necessary.  Any event where the third party mediator actively makes recommendations is called conciliation.  Conciliation may involve an informed individual who can provide a framework of solving the dispute, such as a lawyer.

What are other forms of mediation?

Counseling is a form of mediation that focuses on the parties rather than on an agreement.  The third party mediator seeks to resolve disputes through analysis of behavior and individual perspectives of the other party.  For example, marriage counseling does not focus on reaching an agreement that makes the marriage a functional relationship, but rather patterns of behaviors and disputes that have deteriorated the relationship.  The role of the counselor here is to provide a supportive framework for the couple to resolve their dispute as well as over advice to resolve future issues.

Why is mediation preferable to litigation?

All court cases happen in public, which is a problem for parties that value privacy.  Mediation also speeds the resolution of cases, which keeps the costs down for the parties involved as drawn out legal cases tend to be expensive due to legal fees.  Mediation allows the dispute to be resolved amicably, while litigation has a significantly lower possibility of conciliation at the end of the legal action.  This ADR may also help to improve the workplace by increasing communication between disaffected parties and getting to the root of grievances in the workplace.  Litigation may simply exacerbate these tensions of enforce a settlement that damaged one or both parties.  Additionally, litigation tends to force the involved parties to become more entrenched in their positions, with less willingness to compromise and a higher degree of dissatisfaction with the legal process.

How does the mediation process work?

The US Equal Employment Opportunity Commission describes their mediation process as an alternative to a formal investigation when a charge is filed against an employer.  The EEOC first contacts both parties to offer mediation.  If both parties accept mediation, then there will be an approximately 3 – 4 hour sessions with a neutral mediator.  The mediators function is to remain impartial and facilitate the process so that the sides may come to a settlement on their own terms.  The parties may choose to involve attorneys in the mediation process, although the role they play is at the discretion of the mediator.  The mediation, when offered by the EEOC is free and gives the employer the ability to settle with the employee without a formal investigation process that would have been otherwise initiated by the EEOC if they found merit in the complaint.  Unlike most forms of mediation however, the EEOC settlement will be enforceable in court if either side does not comply with the resolution.

Source: https://www.eeoc.gov/eeoc/mediation/qanda.cfm

Arbitration: Is it Required?

Arbitration is an out-of-court process whereby a neutral third-party arbitrator renders a final and binding decision on a dispute between two parties. Notably, some contractual agreements mandate arbitration, while others do not. In this article, we will explore the question of whether arbitration is required and under what circumstances.

What is Arbitration?

Before we delve into the issue of whether arbitration is required, it is essential to understand what it entails. Arbitration is a form of Alternative Dispute Resolution (ADR) where two parties agree to settle their dispute by way of a third-party arbitrator. The decision of the arbitrator is binding and final, meaning that the parties cannot appeal to a higher court. Arbitration provides a chance to resolve disputes outside of the judicial system, alleviating the expensive, time-consuming, and public nature of the traditional litigation process.

When is Arbitration Required?

Arbitration may be required in certain scenarios, such as:

Employment Contracts

Often, employment contracts mandate that an employee cannot take a dispute to court but must opt for arbitration instead. With this type of agreement, arbitration is necessitated.

Consumer Contracts and Agreements

Consumer contracts sometimes require that individual disputes be resolved through arbitration. When a consumer agrees to, say, the terms and conditions of a product or service they purchase, they might also consent to arbitration as a way to settle disputes.

Arbitration Clauses in Commercial Contracts

Commercial agreements may contain arbitration clauses that mandate arbitration. These clauses may outline that disputes arising between the signatories to the contract shall be resolved through an arbitrator.

Is Arbitration Always Required?

It is common for some contracts to exclude the arbitration clause and rather allow court proceedings to take place. This is often dependent on the negotiation between the signatories to the contract. Many businesses, for example, choose to have arbitration clauses placed in contracts because it allows for quicker resolution of disputes, confidentiality, reduced litigation costs, and flexibility in the dispute resolution process.

Conclusion

While it is not mandated that legal disputes be resolved only through arbitration, it has advantages that make it an attractive option for many parties. There are instances where both parties agree to resolve a dispute in court, through mediation, or another dispute resolution process. Nonetheless, if you are a signatory to an agreement that contains an arbitration clause, you must honor it. It is essential to understand that entering into a contract with an arbitration clause means committing to ADR if a dispute arises. Arbitration is a beneficial means of resolving disputes, particularly when the parties value privacy, speed, flexibility, and cost-effectiveness. As such, it is advisable to operate with discretion and obtain legal advice before signing any agreement.

What is Arbitration?

Arbitration is a form of alternate dispute resolution in which an outside party, known as an arbitrator, evaluates a civil dispute between parties and, in essence, acts as the “judge and jury.”  The decision that the arbitrator makes is often binding upon the parties involved.  A court of law is, in no way, involved in arbitration and will only interfere when there are egregious actions taken on the part of the arbitrator.

When is arbitration binding?

Arbitration can be either “binding” or “non-binding.”  Binding arbitration means that the successful party in arbitration takes an arbitration award.  If the unsuccessful party to the arbitration refuses to honor the arbitration award the court can interfere and force the unsuccessful party to honor the arbitration agreement.

“Non-binding” arbitration is exactly what it sounds like, arbitration that does not result in a permanent resolution that can be enforced by the court system.  Non-binding arbitration is usually used as a forum to resolve differences between the parties but no one must be bound by the arbitrator’s decision.

Are there any safeguards to arbitration?

As noted earlier, arbitration occurs with little to no court involvement.  As such it is up to the parties involved to be cautious about whom they select as an arbitrator.  At times the result of arbitration can be unjust and when arbitration results in a completely unfair result the courts may intercede.  The instances when a court will review an arbitration award include:

·         Corruption, fraud, or miscarriage in arbitration proceedings

·         Bias of the arbitrator chosen to be neutral

·         The arbitration exceeded the powers authorized

Can arbitration be required?

As mentioned above, a court of law may not impose mandatory arbitration.  However, the parties to a contract may stipulate the imposition of arbitration.  This comes up most often when signing a boilerplate contract.  Somewhere in a boilerplate contract will arise a subsection requiring mandatory arbitration or mediation.  These sections are customary in many contracts and are a way for corporations and other entities to settle legal matters out of court.  The policy behind this is not only financial but also based on public perception.

Where matters that arise in front of a court of law are not only publicized in the media and open to the public, they are also part of the public record and accessible to all.  Arbitration, on the other hand is a private matter and the negotiations involved, and the results, are not a matter of public record and often take place in private.

Are arbitration clauses enforceable?

Current Supreme Court decisions have solidified the enforceability of mandatory arbitration clauses.  Specifically in Buckeye Check Cashing, Inc. v. Cardegna the Supreme Court held that even if a contract is found to be completely void on its face, the mandatory arbitration clause will stand.  This is a prime example of how the judicial system favors arbitration.