Distinctions regarding litigation, arbitration and mediation

Distinctions regarding litigation, arbitration and mediation

Distinctions regarding litigation, arbitration and mediation

Business litigation or commercial litigation is a broad term used to identify any kind of a business dispute that goes beyond an informal phase. Often, you will hear people talk about litigation, arbitration and mediation as if they are inter-changeable. They are not. It is important to understand the subtle, but important, distinctions between them.

Litigation refers to the discovery, pre-trial, law and motion, settlement, and trial phases of a business dispute when a complaint is filed with any court, from small claims court all the way to the Supreme Court. Documents filed as a part of litigation become part of the public records and are therefore available to the public, which includes individuals, other businesses, such as your competitors, and the press. This can be an important consideration in some situations. The outcome, or final judgment of a court of law, is binding on both parties. However, in some cases, a matter may be appealed to a higher court.

The cost of the courts and judges is paid for by the tax payers and is offset by filing fees. The rules of civil procedure to be applied in the court are decided in advance by law and are determined by the jurisdiction.

Arbitration refers to a matter that the parties have agreed, often in advance, will be settled by and arbiter, who acts as a private judge. The cost of arbitration is borne by the parties, although costs may be shifted or redistributed among them by the arbiter in some cases. Arbitration can be binding or non-binding. If it is binding, the parties must follow the ruling of the arbiter. If the arbitration is non-binding, either party may disregard the ruling and may elect to litigate the matter in a public court. Documents filed in an arbitration are not made public. While arbitration has the advantage of being more private than public court, it is often neither faster nor less expensive, as many people assume.

Mediation refers to a matter in which both parties have agreed to attempt to mediate a settlement before resorting to, or returning to a lawsuit. A mediator is not a judge, and may not have special training in deciding cases. A mediator is paid for by those parties in the dispute.

The purpose of the mediator is to attempt to facilitate a settlement by listening to both sides, advising the parties of the strength and weaknesses of their positions, and facilitating negotiation of a settlement. If mediation is unsuccessful, the matter may proceed to trial. If the mediation is successful, the parties will enter into a contractual settlement. The courts have no special power to enforce that settlement but may act to enforce the settlement of mediation if a party brings a separate suit for breach of the settlement contract. Mediation is a private method of dispute resolution; therefore documents disclosed in mediation are not available to the public. To find out if mediation is the appropriate course of action for your business dispute, please contact Gaston & Gaston APLC by calling 619.398.1882.

By Fred Gaston

Partner at Gaston and Gaston http://www.gastonandgaston.com

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