Mediation, settlement and arbitration

Mediation

Mediation is a process of peaceful settlement of disputes, in which there is an attempt of resolving a dispute with a help of a neutral third party – mediator. Experience shows that such a settlement is permanent and the arrangements often do not change. Of course for the mediation process to start, both parties need to agree to use it in advance. The good side of the mediation process is that both sides win, whereas in a regular court procedure there is always a winner and a loser which ultimately means the dispute between the parties will continue even after all the legal remedies in courts have been used. Once a mediation process is successfully finished parties sign an agreement (settlement) that may be legally enforced.

Mediator's task is to create favorable conditions in which both parties have a chance to openly speak about their views of the conflict and propose a way to solve the dispute. The mediator helps to ensure that both parties get to know each other’s legal situation and on this basis tries to find a way to settle the dispute. The mediator also makes sure that the potential settlement is for the benefit of both parties. 

Settlement

A settlement is a resolution between disputing parties about a legal case, reached either before or after a court procedure begins.

Arbitration

Arbitration, a form of alternative dispute resolution (ADR), is a technique for the resolution of disputes outside the courts, where the parties to a dispute refer it to one or more persons (the arbitrators), by whose decision they agree to be bound. It is a resolution technique in which a third party reviews the evidence in the case and imposes a decision that is legally binding for both sides and enforceable. Arbitration is often used for the resolution of commercial disputes, particularly in the context of international commercial transactions. The use of arbitration is also frequently employed in consumer and employment matters, where arbitration may be mandated by the terms of employment or commercial contracts.

Arbitration can be either voluntary or mandatory (although mandatory arbitration can only come from a statute or from a contract that is voluntarily entered into, where the parties agree to hold all existing or future disputes to arbitration, without necessarily knowing, specifically, what disputes will ever occur) and can be either binding or non-binding. Non-binding arbitration is similar to mediation in that a decision cannot be imposed on the parties. However, the principal distinction is that whereas a mediator will try to help the parties find a middle ground on which to compromise, the (non-binding) arbitrator remains totally removed from the settlement process and will only give a determination of liability and, if appropriate, an indication of the quantum of damages payable. 

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