There is currently a trend developing whereby parties who are attending mediation will sign what is called a Mediation/Arbitration agreement. This means that if the parties are unable to reach an agreement in the mediation the mediator will automatically become an arbitrator at the end of the process and make a decision which is binding on the parties.
This can be a useful process but it also has some negative implications which are:
- Once parties sign a Mediation/Arbitration agreement they are required to arbitrate and cannot withdraw from the process without the consent of both parties.
- An Arbitration is essentially the same as a trial. If done properly it requires your lawyer to prepare and present evidence in a much more formal way that is required at mediation and this will increase the cost considerably.
- You will pay an arbitrator an hourly rate (usually approximately $400/hour) to both hear the case and to make a decision. You do not pay Judges.
- Judges are highly trained and experienced at making decisions, arbitrators may not be.
All of these factors need to be taken into account but there is one additional reason not to enter into a mediation/arbitration agreement and that is that it changes the nature of the mediation itself and can make the mediation much less effective. Mediation is a highly successful process and one of the reasons for that is that the mediator can interject their views regarding the likely outcome of the dispute if it were taken to a trial. A good mediator can also facilitate settlement by assisting parties to evaluate the risks involved in proceeding to trial. This often assists parties to accept settlements in the mediation process. If the mediator knows they will be called upon to arbitrate the issue they cannot express their views on the merits of the case during the mediation and the result is that the mediation is far less likely to succeed.
Deborah A. Todd