Arbitration is a legal process which takes place outside of the courts, but still results in a final and legally binding decision similar to a court judgment. Parties involved in arbitration are effectively opting out of the court system and submitting their case for resolution by a neutral, third party arbitrator. The reasons for selecting arbitration vary from case to case. Arbitration is generally faster, less expensive and more informal than going to court. It also has the advantage of being private and confidential.
Within the limits permitted by law, parties are free to negotiate the ground rules under which they want the arbitration to take place, such as the number of arbitrators or whether formal rules of evidence will apply. Binding arbitration clauses can be written into most kinds of contracts, requiring that in the event a dispute arises in conjunction with the contract, the parties will go to binding arbitration instead of to court. The cost of arbitration is generally shared by the parties.
The decision of an arbitrator is as binding on the parties to the arbitration as a court judgment, and it can be enforced by the courts, if necessary.
What is Arbitration?
Arbitration is a method of dispute resolution in which a neutral third party, an arbitrator, conducts an evidentiary hearing and/or reviews written submissions from the parties. Upon consideration of the evidence, the arbitrator makes a legally binding decision which can be enforced in the same manner as a civil court judgment.
Arbitration differs from mediation in that once you enter the arbitration process, you are bound by the arbitrator's decision. Mediation is a negotiation process, in which the mediator helps the parties negotiate a mutually acceptable solution.
How does Arbitration work?
Arbitration conducted through ZA-LLP is governed by the applicable Rules of Arbitration. The Commercial, Employment and Personal Injury Rules of Arbitration provide an administrative structure for the arbitration, including a method of selecting a mutually acceptable neutral arbitrator. The selected arbitrator then rules on pre-hearing disputes or questions, conducts the arbitration session, and issues a binding decision or award.
Arbitration hearings are attended by the parties involved, their attorneys, the arbitrator, and the parties' witnesses. Each party makes an opening statement, presents evidence, questions and cross examines witnesses, and makes a closing statement. During this presentation, formal rules of evidence generally do not apply. Alternatively, arbitration can be conducted with written submissions only in appropriate cases. The arbitrator then renders his or her decision or award.
What are the benefits of Arbitration?
Arbitration provides distinct advantages over the court system in many different types of disputes. Because arbitration is a private method of settling disputes, parties can tailor the arbitration proceeding in almost any manner they choose. For example, parties involved in arbitration can agree to limit the number of witnesses each side will present, set parameters on the amount and type of evidence that will be presented, and pre-determine what issues the arbitrator's award should cover.
Another important benefit of arbitration is its ability to provide the parties with an arbitrator experienced in the subject matter of the dispute. Many cases involve complex evidence, testimony, and documents. The arbitrator's knowledge allows for a quick understanding of the issues, which in turn saves time and expense.
Because they are conducted by private agreement, arbitration hearings are not open to the public and the decisions reached are generally not matters of public record.
What is high-low Arbitration?
In High-Low arbitration, the parties mutually establish, prior to the hearing, a range in which the award must be. lf the arbitrator's decision is between the high and the low figures, that amount is the final award. However, if the award is above the pre-set maximum, it automatically moves down to the previously agreed-upon high figure. Conversely, if the arbitrator's decision is below the established minimum, the award moves up to the predetermined low figure. In most instances, the parties agree to not inform the arbitrator of the range of their High-Low agreement.
Is Arbitration final?
Arbitration awards are final and binding on all parties to the arbitration, and may not be appealed except under very limited circumstances provided by statute. Awards may be confirmed in any court having jurisdiction and, thereafter, carry the same force and effect as an original court decision. Rules of Arbitration include an Internal Appeal Procedure, but it does not apply unless the parties specifically so state in their Contract to Arbitrate.
Mediation is a process in which a neutral third person, the mediator, encourages and facilitates the resolution of a dispute between two or more parties. It is an informal and non-adversarial process which has the objective of helping the disputing parties reach a mutually acceptable and voluntary agreement. With non-binding mediation, decision-making and authority rest entirely with the parties. The mediator acts as a facilitator, guiding the parties in identifying issues, engaging in joint problem-solving, and exploring creative settlement alternatives. Although the process is voluntary and nonbinding, it results in a strikingly high settlement rate. There are a variety of reasons to select mediation, rather than litigation or arbitration, and it has become increasingly common for courts to order parties to mediate in cases in which they have not engaged in settlement negotiations prior to trial.
Parties are generally more satisfied with a mediated resolution, rather than one imposed upon them such as happens with a court judgment, because the parties created the solution themselves. In recent years, the use of binding mediation has developed as an alternative to arbitration and incorporates the negotiation aspects of mediation with the certainty of an outcome. Mediation is also much less costly than protracted litigation or arbitration.
The use of binding and non-binding mediation has increased greatly in both the private and public sectors, particularly for legal and business disputes. Many companies have chosen to insert mediation clauses into standard contracts as a preliminary dispute resolution step before arbitration or litigation. ZA-LLP is a leader in providing innovative uses of mediation to resolve disputes throughout the country. ZA-LLP has developed standard mediation procedures which apply to all cases submitted to ZA-LLP offices.
What is Mediation?
During the last 10 years, mediation has grown into one of the most popular alternatives for resolving civil disputes in Pakistan. Many lawyers, insurance companies, risk managers and legal departments now use mediation on a day-to-day basis to help resolve claims and litigation as quickly and efficiently as possible. Across the country, ZA-LLP, through its local offices, successfully mediates many thousands of disputes each year in a wide variety of legal areas.
At a mediation session, the disputing parties meet with an impartial person, the mediator, to attempt to reach a mutually acceptable settlement. There are no formal court procedures or rules of evidence, although careful pre-mediation preparation and organization are crucial to a successful mediation outcome. Unlike a judge or arbitrator, the mediator has no authority to render a decision or force the parties to accept a settlement. Yet in the great majority of cases, the training and ability of a professional mediator can help achieve a final settlement of the matter which would not otherwise be possible.
What types of disputes can be resolved through Mediation?
All kinds. Mediation has been successfully used for tort claims, commercial and business disputes, construction issues, employee grievances, environmental claims, professional malpractice allegations, product liability claims, maritime issues, insurance coverage disputes, real estate interpretations, partnership dissolutions, securities-related disputes, domestic relations matters, and workers' compensation claims.
It makes no difference whether liability is admitted or hotly contested, whether the case is in litigation or not yet filed, or whether the dispute involves a few thousand dollars or many millions of dollars or issues other than money--mediation has proven effective in all of these situations.
What are the advantages of Mediation?
Settle disputes now. Almost every case will settle prior to trial. So the real issue is not if a case will settle, but when. A mediation session has the effect of getting settlement negotiations focused much more quickly than if the case proceeds to trial. Proposing mediation is an excellent way to get settlement discussions moving in the right direction and away from court.
Save money. An early settlement naturally saves litigation expenses and other costs related to managing the dispute.
Maintain control. Mediation differs from arbitration or trial because the mediator does not make a decision or force any party to accept a settlement. When you agree to mediate a dispute, you are only agreeing to attend the mediation session and participate in a good faith effort to settle the matter. Consequently, you are always in full control of the outcome.
Improve everyone's understanding. The mediation session is designed to educate everyone about the legal and factual issues involved in the dispute, and this can be particularly helpful to people who are unfamiliar with the litigation or claims process. For example, many attorneys have told us that their clients would not have accepted a reasonable settlement offer had they not attended a mediation session.
Informally explore settlement options. Because of the confidential nature of private meetings, often referred to as 'caucuses,' the mediator can explore settlement options without exposing your final position. This can remove the "posturing" that takes place during traditional negotiations.
Organize multiple party negotiations. The mediator can play a major role in simply organizing the discussions. The mediator can work closely, and confidentially, with each side to explore settlement possibilities and put a settlement package together.
Preserve continuing relationships. Mediation is particularly appropriate in situations in which the disputing parties will be working together after the dispute is resolved. Some examples include construction projects, commercial leases, partnerships, business suppliers, and employment relationships. Mediation allows the parties to stay on the best terms possible by doing everything they can to settle their dispute as quickly and easily as possible.
How is a Mediation case started?
Typically, one party to a dispute will contact the nearest ZA-LLP office to initiate mediation scheduling efforts or propose mediation to the other parties. As a general rule, the parties have discussed the possibility of mediation prior to contacting ZA-LLP, although it is always an option to have ZA-LLP initiate the contact about mediation. In some situations, ZA-LLP, as an impartial organization, might have a greater chance of gaining the parties' participation in mediation. Because mediation is such a sensible process, ZA-LLP administrators are usually successful at convincing everyone to participate. Under the ZA-LLP Fee Schedule (which varies by office), there is generally no administrative fee charged if a necessary party declines to participate in mediation.
Mediations are conducted in accordance with uniform ZA-LLP Mediation Procedures.
What takes place at the Mediation Session?
All parties to a dispute will be present at the mediation session. For example, participants in a typical personal injury case usually include the plaintiff and the plaintiff's counsel, an insurance company representative, possibly a defense attorney, and the mediator. In a commercial case, the owners and/or managers would attend, along with their attorneys.
All parties, representatives and the mediator first meet in a joint meeting format. After introductory remarks by the mediator and the signing of the Agreement to Mediate (if not already signed earlier), each party is given the opportunity to explain its position in the presence of the other participants. These short and informal opening statements, typically no more than ten to twenty minutes long, are a starting point for the mediator to gain an understanding of the case.
After the joint session, the mediator will meet with each side individually. These separate meetings, called caucuses, are confidential. In each caucus, the mediator will discuss the risks of the case -- best and worst outcomes, quality of evidence and the costs of litigation. The mediator will also explore possible settlements. It is common for the mediator to go back and forth between the parties for a number of private meetings, just as the mediator may bring the parties back together for joint discussions. If the mediation results in a settlement, the parties may choose to draft a formal settlement agreement.
What if the case doesn't settle?
Most cases will settle at the mediation session or shortly thereafter. If a settlement is not reached at the mediation session, the mediator may continue the discussions by telephone, and in some cases the parties may elect to have a second session. If a full settlement is not reached, the parties are free to pursue other options such as arbitration or litigation. Parties whose cases don't settle in mediation at ZA-LLP do not pay any additional administrative fee to proceed with arbitration through ZA-LLP.
How to prepare for a Mediation Session?
Preparing for a mediation session is much easier than preparing for an arbitration or a trial:
There are no pre-session pleadings required, although in a more complex case the parties may wish to furnish the mediator with a short brief or explanatory documents that were prepared for another purpose.
Prior to the mediation session, all parties should have obtained sufficient information to make settlement decisions. It is common for ZA-LLP and/or the mediator to help with informal information exchanges. Please make ZA-LLP or the other parties aware of any information you need prior to the mediation session.
A critical element of a successful mediation is that each side must be represented by a person with adequate authority to settle the case. This typically means that clients, business managers, etc., should attend.
A ten to twenty minute opening statement should be prepared. Keep in mind that this is an excellent opportunity to talk directly to the other side. Representatives should consider whether their clients should participate in this presentation (e.g., how the accident or dispute has affected them).
Obviously, you need to be prepared to discuss the details of your case. Have quick access to needed information.
How much will Mediation Cost?
No filing fee is required upon initial submission of a case. ZA-LLP offices charge a basic administrative fee and hourly or per diem fees for the mediator's time, which will be pre-collected at the time of scheduling or billed after the mediation is concluded.
In many cases, the parties agree to divide the mediation costs, although it is not uncommon for one party to pay the entire cost. There must be a clear fee agreement prior to the mediation session taking place.
How is Mediation different from Arbitration and Settlement Conferences?
Arbitration involves the presentation of evidence to an arbitrator for a legally binding decision. Arbitration can be effective, but it is generally more time consuming and expensive than mediation, plus the parties give up control of the outcome (although high-low agreements can be used to provide a limited range for the decision).
In a judicial settlement conference, parties submit informal evidence to a judge for an advisory decision. However, any time an outside party is rendering an opinion, particularly about case value, there is a risk that one party will strongly disagree with the opinion and the other party will be locked in to a settlement at that figure. This can actually impair further settlement efforts. Remember that almost every case settles anyway, so the role of the neutral should be to help parties move toward settlement. For this reason, mediation is often preferred to arbitration or settlement conferences.
What cases should be sent to Mediation?
As discussed in previous sections, any type of case can be mediated, and there are often many benefits to mediating. ZA-LLP has developed a checklist of characteristics for selecting cases for mediation. Each ZA-LLP office also provides in-house training in how to identify mediation cases.
How are Mediation clauses used?
Many businesses and attorneys are routinely inserting mediation clauses into contracts. By using such a clause, the parties are pre-agreeing to use mediation in the event of a dispute.
ZA-LLP knows that disputes are inevitable, and some of them can be settled by the parties without outside intervention. Other disputes may require a jury trial as the only viable option. Most disputes, however, can be resolved through the effective use of one or more of the Alternative Dispute Resolution (ADR) services provided by ZA-LLP.
ZA-LLP provides consulting services to insurance companies, law firms, businesses and government agencies who are looking for cost-effective ways to manage claims and litigation. The services provided range from scheduling a single mediation, arbitration or fact-finding hearing to designing and implementing a multi-step, nationwide grievance process. Through consultation with ZA-LLP, many businesses have developed dispute avoidance techniques such as mediation clauses, arbitration clauses or in-house training courses in conflict management.
Other services have ranged from designing Settlement Day mediation programs for large numbers of similar claims to orchestrating mini-trials and arbitrations for complex commercial disputes. Whatever the approach, ZA-LLP maintains a staff of consulting ADR providers who can recommend the right approach for each particular situation.