Where parties are in conflict and for financial or psychological reasons want or need to resolve their dispute quickly, and inexpensively without going to court, mediation may be the desirable approach. Mediation is a staged process that encourages parties to discuss their conflict face to face and to engage in negotiation based upon a review of their shared interests. The mediator encourages them to propose workable options that will allow them to realize as many of their objectives as possible. The more interests they share, the greater the opportunity for settlement. The two major keys to successful mediation are a willingness to listen, and to compromise so as to produce a ‘win-win’ for everyone.
Where parties are in dispute and a negotiated resolution is not possible, arbitration can help them resolve their conflict on a principled basis where a trained arbitrator decides who is right and who is wrong. Some decisions involve application of legal principles. Others are based on the application of accounting practices or other technical data about which the parties are arguing. Not every arbitration requires a formal hearing. The trained arbitrator acts like a judge. The major difference is that the process can be completed more quickly and less expensively without going to court.
Some parties choose to combine mediation and arbitration as a single process. This is called med/arb. Parties who agree to proceed this way want to have a mediator assist them in negotiating their own terms of settlement but are content to have the mediator change his role where the mediation breaks down, and decide the conflict as an arbitrator. Parties who choose this approach are prepared to live with a decided result where they cannot reach agreement. For them, early resolution is very important.