The Mediation and Arbitration Process - Essay Example

Mediation and Arbitration Process Mediation and Arbitration Process Arbitration and mediation are two methods of alternative dispute resolution (ADR). (Massey, 2010). They are alternative to litigation process, which involves resolving a dispute through a court process. Many people prefer using arbitration and mediation because litigation can be a complicated, long and costly process. The arbitration and mediation process involve bringing of cases of disputes to third parties in order to reach a resolution. The two terms are sometimes thought to mean the same but arbitration and mediation are different. Arbitration is more formal than mediation and the arbitrator’s decision is a usually binding on both parties. On the other hand, mediation focuses on negotiation and the mediator aims at facilitating an agreement between the parties Arbitration is the process of submitting a dispute to an impartial person for final and binding determination. Arbitration agreements are generally divided into two types. The first type of arbitration is whereby the two parties enter into a contract that has an arbitration clause stating that if a dispute should arise it will be settled through arbitration. The second type of agreement is usually signed after a dispute has occurred and then the parties agree that the dispute should be resolved through arbitration. This sometimes is called a submission agreement. Both types of agreements are legally binding between the parties. (Colvin, Dispute Resolution and Arbitration, 2012) Mediation is a method of resolving dispute whereby a third party mediator is brought in to assist the parties in reaching a settlement. It involves individuals trained in negotiation who remain neutral bringing the disputing parties together and create a dialogue in an attempt to work out a resolution to a dispute that both parties can agree. A mediator does not impose a solution on the parties as in the case of an arbitrator. The United States’ mediator codes- of- conduct lay emphasis on client directed solutions. Mediation practice requirements vary from state to state and some states may require one to have licenses, training as well as continued training for mediators. It is worth noting that there are various types of arbitration processes. This paper will mainly focus on grievance arbitration; its use in the United States was largely promoted by labor unions. Discussion The process of arbitration and mediation as methods of resolving dispute has a long history. It began long before the 20th century. Long before the white man conquered what is now the United States of the indigenous American tribes as a means of resolving disputes within and between different tribes. The first U.S president, George Washington, also used arbitration. He had an arbitration clause in his will that stated that incase of any dispute arising from the wording of the document a panel of three arbitrators should be set to give binding decision to resolve the dispute (Massey, 2010). He stated that the decision made by the arbitrators should be as final and binding as any decision made the supreme court of the United States. The first arbitration clause to be used in a labor management document in the United States history was made by the Journeymen Cabinet-Makers from Philadelphia. It was more of an interest arbitration clause than a grievance clause and was written in their union in 1829. In addition, the United Mine workers of America (UMWA) formulated a type of grievance arbitration clause that was adopted by the delegates and placed in its constitution at the UMWA’s founding convention of 1890. Studies conducted in the United States unionized sector have shown that a number of collective bargaining agreements that contain arbitration as a means of dispute resolution (grievance arbitration) has been on the rise. For instance, in 1944 the bureau of Labor statistic showed that 73% of all labor contracts in United States had arbitration clauses .This percentage had grown to 95%by early 1980’s.Currently, 98%of all bargaining agreements contain arbitration clauses (Massey, 2010). The federal government has also been seen to support arbitration as a method of dispute resolution. This example can be seen in the interstate Commerce Act of 1887, which had a voluntary arbitration clause for workers in the railroad industry. A second example is in the passing of Federal Arbitration Act (FAA) in 1925 by the congress. This act further enhanced the credibility of arbitration and in the 1991; Civil Rights Act Congress encouraged the use of arbitration in the interpretation of the antidiscrimination laws (Massey, 2010). Mediation like arbitration also can trace its foundation back in the early days of American history. In United States, labor mediation is very common. Mediation has been a tradition in labor relations since 1898, when the Erdman Act was created as a settlement system for disputes between railway carriers and workers for salaries, working time and other conditions at work. Among all ADR procedures mediation has seen to be the most preferred method if dispute resolution. It has been largely adopted in resolving individual disputes and conflicts within the companies (Zahorka, 2011). In United States of America, there are more than 2500 laws on federal and state level that covers all kinds of mediation regulations. This implies that mediation is useable as a decentralized, deregulated, and a unified system with very many different facets of attempts and results and in an environment of relative high legal fees for all parties. Mediation in labor law has a resolution of 85% quota.it is usually marked as a high yield-low risk procedure and it is therefore highly preferred by many organizations for good results (Zahorka, 2011). Mediation is usually seen as a cheaper, faster, more discrete and more flexible procedure that the court procedures. There has been impressive figures that have shown the overall success of mediation; In the first year of applying mediation in the U.S coal industry in the 1980’s there were 153 complaints of which 89% were settled without arbitration procedures. The mediation process settled disputes three months faster than in arbitration and to a third of the cost of arbitration procedure; The Railway Labor Act rules the U.s railway and air traffic industry concerning conflicts. The national mediation Board reported that 97%of all conflict cases in history have been settled peacefully and that since 1980 less than only 1% had negative effects on transport services. The Brown &Root Corporation sees another case of success in the use of mediation in the application of mediation process in solving disputes. This is a big private construction company in U.S with around 30,000 employees who are not organized in labor unions (Zahorka, 2011). This company launched a mediation program by four steps: Open door policy: Every employee was able to turn to a manager of a higher level or human resources department or to an employee’s hotline run by trained employees. Step two is conference level: It’s conducted with meetings of the employee and representatives of the company together with an advisor or director of dispute settlement program. If step two does not end the conflict the next step would be external mediation by an external mediator. The final step is external arbitration by an external arbitrator. Brown & Root company had obliged itself to pay for the most of the legal fees and for the fees of the external mediators and arbitrators but , only 4% of all cases went beyond the third step. The company’s legal expenses decreased by almost 80%, there was also less fluctuation within the staff and its human capital was maximized. Other companies like Motorola saved 75% of their legal costs (Massey, 2010). The Process of Arbitration and Mediation Arbitration As earlier, mentioned for business disputes arbitration is the generally preferred method of resolving a dispute than the litigation process. This is generally because arbitration is less expensive in terms of financial costs and time taken and most importantly, it is private. The concerned parties can therefore keep their business disputes confidential and can protect them from unintended disclosure of business record, as it would be the case with litigation, whereby the documents and records filed in a civil lawsuit would be available for anyone to view. Parties to a contract can agree to arbitration at the timer of signing th4e agreement or after the dispute has risen by way of voluntary submission. Every state has effective statutory provisions granting the right of the arbitrator to execute a subpoena compelling the production of documents or witnesses. There are simplified rules of evidence and affidavits or declarations are admissible in lieu of live testimony of a witness. Hearsay sometimes is also acceptable as evidence and considered by the arbitrator even over the objection s of the concerned parties. The arbitrator gives his decision after an informal proceeding where each side presents evidence and witnesses. The process can take varying length; from a few hours to days or weeks depending on the complexity of the matter in question. At the submission of exhibits and conclusion of hearing, the arbitrator issues an Arbitration Award. This is done generally 30 days after the close of the hearing (Colvin, 2012). Mediation Mediation is very similar to arbitration except for one important difference. In arbitration, the arbitrator uses testimony and evidence and gives give a formal arbitration Award making findings and rulings at the conclusion of the proceedings. He then enters a verdict determining which party wins and which loses and if money is at issue, the amount awarded. In mediation the neutral still hears generally the same testimony and evidence but in a more condensed format. Stead of issuing an Award he acts as a facilitator to reach a resolution of the dispute, which is acceptable to both parties. The mediator does not possess the power to render a final decision on the matter. If a mutually satisfactory resolution cannot be reached, the parties can pursue either formal arbitration or use litigation by filing a civil lawsuit (Charles, 2002). Conclusion Grievance arbitration is the widely accepted means of conflict resolution in the workplace in unionized settings and is becoming more accepted in the nonunion sectors. It is not limited to labor relations and may ease the burden of the overcrowded courtrooms in the United States. Mediation on the other hand is an ADR process that has an upper hand over litigation in that. It is private as compared to a public court process, the mediator is objective moreover, helps the parties explore alternatives, is quick, less expensive and gives hope of continuation of the business relationship later because both parties are given consideration when the dispute is being settled. References Charles Hunt, J. (2002). Mediate,Arbitrate or Litigate?Dispute Resolution Catching On. Graziado Business Review, 5(3). Colvin, A. (2012). American Workplace Dispute Resolution in the Individual Rights Era. New York: Cornell University ILR School. Colvin, A. (2012). Dispute Resolution and Arbitration. New York: Cornell University ILR School. Massey, R. V. (2010). History of Arbitration and Grievance Arbitration in the United States. Virginia: West Virginia University Extension Service, Institute for Labor Studies and Research. Zahorka, H.-J. ( 2011). Mediation In Labor Relations: What Can Be Learned From the North American and EU Example? Uerope Aid. Read More