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The difference between mediation and arbitration

Region: Ontario Answer # 0534

Mediation agreement vs. arbitrator’s order

The two most popular alternative dispute resolution (ADR) processes, outside lawyer-lawyer negotiation, are mediation and arbitration.

Mediation involves the intervention of a third party professional who acts as a facilitator for the parties to help them reach their own agreement. Arbitration is a method of resolving disputes, where an arbitrator, instead of a judge, makes the final decision.

Mediators and arbitrators generally have backgrounds as lawyers, social workers and psychologists, and are usually selected because they are thoroughly familiar with the subject matter of the dispute. Research has found that generally, parties who mediate their own agreements have a greater tendency to actually stick to them. One theory is that this is because the parties have actively participated in the process, and feel that they each have had control of their own destinies. This is different from submitting the case for arbitration where neither party may be content with the arbitrator’s decision.

Mediator’s role vs. arbitrator’s role

Unlike a lawyer in litigation, it is not the role of arbitrators or mediators to represent one side or the other, or to give legal advice.

The mediator’s role is to try to bring the parties to agreement. By doing so, the mediator faces many challenges, including the following:

  1. Before taking a case, conducting an assessment to determine if it is appropriate for mediation .
  2. Creating a neutral and safe environment — emotionally and psychologically, physically and legally — so that each party feels able to fully participate in the negotiation without fear, duress, or threats of reprisal, judgement or prejudice.
  3. Managing intense emotions in a way that allows each party to fully express their worries, concerns and goals, without disempowering or insulting the other.
  4. Identifying the contentious issues, and empowering the parties to go below the surface of those issues to help them gain some insight into the underlying reasons for their respective positions.
  5. Helping the parties to stay focused on the best interests of their children, and respecting the rights of children to have their views heard.
  6. Helping the parties better understand where the other is ‘coming from’ legally, emotionally and psychologically.
  7. Encouraging the parties to come up with their own solutions, and finding neutral ways to help them see options they may not be able to see themselves.
  8. Reinforcing the parties’ efforts to negotiate and keeping them at the table when the going gets tough.
  9. Reality-checking with each party, often in private, and discussing their alternative to settlement, which is often either doing nothing or lengthy and costly litigation.
  10. Managing all of this in a way that lets each party feel heard, respected, and treated equally by the mediator.

The mediator’s role is to try to find some common ground between the parties, and work with them to help them come together to a final settlement on all issues.

In comparison, the arbitrator’s role is similar to that of a judge in a court. The arbitration can be conducted in writing, or at a hearing. The arbitrator may ask for further documents or explanations with regard to the documents being examined. After examining the documents and hearing the case presented by each party, the arbitrator will render a decision (called an “award”), which is legally enforceable and, under certain circumstances, can be appealed just like a court order.

The arbitrator’s decision must be in writing and provided to all parties. The decision must include an explanation of why the decision was made.

Cost of mediation vs. arbitration

Generally, the parties split the cost of mediation or arbitration 50-50. That means that both parties are splitting the cost of one professional. That is considerably less expensive than each party paying for his or her own lawyer in a lawsuit. As well, both the mediation and arbitration processes are generally outside the realm of the courtroom. Arbitration, however, is generally more costly than mediation and may involve some of the same expenses as going to court, such as:

  • Many meetings with your lawyer,
  • Getting your story and position down in affidavit form,
  • Reviewing and putting together disclosure materials such as financial documents, letters and correspondence from each party and from third parties,
  • Drafting the originating process, or application,
  • Research for the relevant legal issues, and
  • Drafting, serving and filing information statements for the arbitrator in addition to the pleadings.

In arbitration, the parties pay their respective lawyer for all these procedures.

Family mediation vs. arbitration

Family mediation

Family mediation is a process of facilitated negotiation. It is:

  • confidential, subject to exceptions relating to child protection and personal safety,
  • without prejudice,
  • voluntary,
  • a negotiation process, and
  • facilitated by a neutral third party.

Parties usually start family mediation by each of them meeting confidentially with the mediator for an intake session to determine if their situation is appropriate for mediation. If it is, the parties and mediator enter into a contract that defines the process and its scope.

Mediated settlements are not legally binding until the parties have formalized them into an agreement or court order, usually with legal advice. Parties can quit mediation at any time and pursue other options including arbitration and court. Mediation is entirely unregulated although most mediators voluntarily belong to one of four professional organizations that provide family mediation designations in Ontario.

In Ontario, family mediation is free in court, and subsidized by the Ontario government out of the courts. If it is government subsidized mediation, each party pays based on their income and number of dependants. For private family mediation, parties share the cost of the mediator between them.

Family arbitration

Family arbitration is a private process of adjudication (decision-making similar to a court process) rather than negotiation, with the arbitrator having authority to make legally binding decisions (like a judge). Family arbitration is:

  • confidential, unless there is an appeal, in which case the record of the arbitration will be filed with the court,
  • governed by Statute, (the Arbitration Act) which requires the arbitrator to treat both parties equally and fairly, and
  • provided by an arbitrator, who is selected and paid for by the parties.

Arbitration can be as simple or as complex as the parties (and their lawyers) wish it to be. Although the costs of arbitration tend to be much lower than going to court, they are higher than the costs of mediation. Arbitration costs can vary depending on several factors, such as:

  • whether there was an oral hearing requiring the attendance of the arbitrator and fees for the hearing facility, or if the arbitration required only written submissions,
  • if expert witnesses were called,
  • how long the arbitration lasted, and
  • if the arbitrator awarded costs of the arbitration to be paid by only one of the parties.

Family arbitrators, unlike mediators, are regulated by the government, and must take specific training. Also, unlike mediation, family arbitration is regulated under the Arbitration Act and Family Law Act, and arbitration agreements must include certain specified provisions, appeal rights and procedural protections.

Once the parties have signed an agreement for arbitration, neither party can change their minds unless both do. For this reason, it is required by law that each party first meet with a professional who will assess whether their case is suitable for arbitration. In a family arbitration, parties sign an agreement by which they agree to resolve their dispute privately, authorizing the arbitrator to make a binding decision instead of the court.

Studies have shown that the average cost of family mediation is less than $5,000, while the cost of arbitration is between $12,000 – $40,000.

Do I still need a lawyer in mediation or arbitration?

Even if the parties decide to mediate or arbitrate their dispute, each should continue to have his or her own lawyer. The lawyers will provide ongoing independent legal advice to ensure that each party is aware of their respective rights and responsibilities along the way. As well, both parties must be aware of the legal consequences of any agreement reached, and each of the lawyers will review the agreement and discuss it with the relevant party before signing. It is not the mediator’s or arbitrator’s role to give legal advice and so each party must have his or her own lawyer for that purpose.

Also, depending on the complexity of the case and the monetary value at stake, in arbitration, the parties may choose to hire lawyers to represent them at the arbitration.

Conclusion

Mediation and arbitration are both viable, affordable and effective alternatives to litigation. If you think you and the other party are capable of reaching an agreement with the help of a third party professional, you should consider mediation. Settling your differences through mediation can help you save time and money. If you believe that you can settle the matter outside the courts but still need someone to make the final decision because you and the other party will not be in a position to negotiate a settlement, then arbitration is best for you.

If you are looking for a mediator who specializes in family law matters, contact our preferred experts:

Mediate393

Riverdale Mediation


Mediate393 Arbitration & Mediation ON Mediation Topics April 7, 2018Mediate393 Arbitration & Mediation ON Mediation Topics April 7, 2018

Riverdale Arbitration & Mediation ON 503-509 April 7, 2018Riverdale Arbitration & Mediation ON 503-509 April 7, 2018



								

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