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Conflict Resolution Series: Arbitration as a Form of Resolution

Conflict resolution comes through many forms from fighting fair and using tools in your own personal tool box to using the help of a third party. Depending on the situation and the parties involved, arbitration may be an effective form of mediation. As a matter of fact, you may have agreed ahead of time to arbitration when you entered into relationship with a company for credit or other goods and services.

Arbitration is designed to settle disputes in lieu of using an attorney or going to court. The thinking is that arbitration costs less and can eliminate the sometimes lengthy and costly expenses of a court battle. Large corporations often stipulate arbitration as a form of conflict resolution in many of their contracts, thereby reducing the likelihood they can be sued for large sums of money.

How does arbitration work?

Arbitration can seem very similar to presenting facts to a judge. A neutral, disinterested party listens to both sides of the conflict, forms an opinion and then issues a ruling that, in most cases, is legally binding. The process is more formal than a mediation and less formal than a court of law but is a binding agreement.

How is arbitration different than mediation?

In most cases, mediation is voluntary, and the goal of the process is for both parties to work out their dispute through the mediator, not by the mediator. The mediator serves as an intermediary who helps parties sort through the dispute and come to a compromise or consensus. An arbitrator, on the other hand, renders a decision after hearing both sides of the conflict.

Is arbitration mandatory?

In some cases, yes. Generally, parties agree to arbitration at the time they enter into a contract. Both parties agree to submit to and pay for arbitration in lieu of filing suit and hiring attorneys. In some cases, say applying for a credit card or other consumer transactions, there is a requirement to agree to arbitration. Sometimes the acknowledgment is in the “fine print” of a contract. Care should be taken to ensure you do not give away your rights to the most effective means for recourse when you enter into a contract.

A step up from mediation, arbitration can be an effective and cost-saving means to resolve conflict - especially for businesses. Think about adding arbitration to your tool chest when conflict cannot be resolved through other methods.

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