Mediation and Arbitration: What Are the Differences?
There are two common ways to settle a dispute in North Carolina without ever filing a lawsuit. Mediation and arbitration are both forms of alternative dispute resolution (ADR) available to parties in North Carolina who seek an alternative to litigation.
While the two ADR methods share some similarities (most notably in that they do not involve a traditional court process and therefore tend to be much faster and more cost-efficient ways to resolve a dispute), they are distinct processes.
What Is Mediation?
Mediation is a settlement meeting between two or more parties that is conducted by a neutral, third-party mediator. The mediator facilitates communication between the parties, suggests resolutions, and attempts to get the parties to come to a resolution.
When Can I Choose Mediation? When Must I Choose Mediation?
Per North Carolina law, parties can choose mediation to settle most legal disputes. However, in North Carolina, certain cases filed in Superior Court must first go through a mediated settlement negotiation. If a settlement cannot be reached during mediation, only then can the case proceed to trial.
How Does Mediation Work?
The neutral mediator will meet together with all parties and their attorneys. He or she will begin by explaining the process and listening to each side’s attorney describe his or her client’s case. The parties will then sit in separate rooms and the mediator will discuss the case with each side, in private, and relay questions, settlement offers, and other information to the other side. The ultimate goal is to reach an agreement between the parties.
Who Represents Me During a Mediation?
Each party will be represented by his own attorney. The mediator is a neutral party, so he or she does not represent either party. During mediation, your lawyer will be actively involved in negotiating with the other side, through the mediator. You, too, can participate as much as you would like in the conversations, or if you choose, you can let your attorney speak on your behalf.
What Happens When We Reach an Agreement?
The ultimate goal is for the parties to reach an agreement during mediation. If this happens, your attorneys will document the agreement and the mediator will prepare something called a “memorandum of agreement” to document the terms of the settlement.
What If We Cannot Reach an Agreement?
You do not have to reach an agreement during mediation. If the parties cannot agree to a settlement, you can choose to proceed to file a lawsuit in court, you can pursue arbitration, or if a case has already been filed, you may proceed to trial.
What Is Arbitration?
While arbitration has many similarities to mediation, including the use of a neutral third-party, unlike mediation, it is the third-party arbitrator who decides the outcome, not the parties themselves. As such, arbitration is often referred to as a quasi-judicial proceeding. In arbitration, an informal trial will be held before an arbitrator (or sometimes a panel of arbitrators), who will hear the arguments and the evidence and decide the case.
To be eligible for a court-ordered, non-binding arbitration, a case must be pending in the North Carolina court system. Per the law, all district court civil cases with an amount in controversy of $25,000 or less are eligible for arbitration. The following types of cases (among others) are not eligible for arbitration:
· Cases for a collection on an account
· Cases involving a title to real estate
· Wills or estate cases
· Family law cases
· “Special” proceedings
· Cases involving a preliminary injunction or a temporary restraining order
· Class actions
How Does Arbitration Work?
The neutral arbitrator will meet with the parties and their attorneys and will begin by explaining the process. The parties will each have a chance to present their cases, including any evidence and witness testimony. Similar to a trial, each side will be able to question the other side’s witnesses and the arbitrator may ask questions, too, like a judge. In the end, each side will present a closing argument and the arbitrator will decide the outcome and present his decision, which is called an “award.”
What Is the Difference Between a Court Trial and Arbitration?
Arbitration is less formal than a traditional trial. While each side will present his case, like in court, the rules are more relaxed in arbitration and the arbitrator has more flexibility to run the arbitration as he wishes. You should still prepare for arbitration, bringing with you all of your evidence and documentation, just as you would a court case.
When Must I Choose Arbitration in North Carolina?
In some counties of North Carolina, there is court-ordered arbitration. In those counties, all civil cases where the dispute involves a financial claim for $25,000 or less must be resolved in arbitration. Also, if your case involves a contract, the contract may require arbitration.
When Can’t I Choose Arbitration in North Carolina?
Certain family law cases, such as those involving divorce and child custody, cases involving wills and estates, and eviction cases, among others, are not eligible for arbitration in North Carolina. Your attorney will be able to guide you as to whether arbitration is an option for you.
How Does Arbitration End?
Once an arbitrator makes his decision, he will issue a written “award” and file it with the court.
What If I Do Not Like the Result of Arbitration?
Arbitration can be binding or non-binding, depending on what was agreed upon in advance between the parties. If the arbitration is non-binding, either party can request a trial and take the dispute to the courtroom. If this happens, whatever was awarded by the arbitrator is thrown out. If the arbitration is binding, however, the arbitrator’s award will likely be final.
Mediation or Arbitration, Which One Is Right for You?
Which one is right for you depends on the specific facts of your dispute, but both mediation and arbitration are two forms of alternative dispute resolution in North Carolina that can save parties money, time, and stress.
Contact Our Team
The attorneys at Strauch Green & Mistretta are dedicated to delivering positive results for our clients. We take pride in offering the very best legal counsel and working with clients to devise the best strategy for their cases, whether through litigation or alternative dispute resolution methods like mediation and arbitration.
This article does not establish an attorney-client relationship and must not be construed as legal advice.