Disputes do not have to be settled in court. No law requires parties who have a legal dispute to seek judicial resolution if they can resolve their disagreement privately or through some other public forum. In fact, the threat of a lawsuit can frequently motivate parties toward private negotiation. Filing a lawsuit may convince one party that the other party is serious. Or the parties may decide that they will come to terms privately rather than wait the three or four years it can frequently take for a case to move up on the court calendar.
Beginning around 1980, a movement toward alternative dispute resolution began to gain force throughout the United States. Bar associations, other private groups, and the courts themselves wanted to find quicker and cheaper ways for litigants and potential litigants to settle certain types of quarrels than through the courts. As a result, neighborhood justice centers or dispute resolution centers have sprung up in communities. These are where people can come for help in settling disputes, of both civil and criminal nature, that should not consume the time and money of the parties or courts in lengthy proceedings.
While there are many forms of alternative dispute resolution, the three main forms are: Negotiation, Mediation and Arbitration.
Negotiation
Negotiation is just what its name implies – negotiation. The parties to the dispute work together, sometimes through counsel- sometimes without counsel, to try and settle the dispute without involving the courts or a third party mediator or arbitrator. Negotiation is voluntary and usually occurs in most disputes where one side tries to explain its position to the other side, and vice versa in an attempt to reach a resolution.
Mediation
Mediation allows a neutral third party, a trained mediator who has completed dispute resolution training, to hear the pros and cons of each party’s side of the dispute and work with them to reach a decision or settlement of the case. Mediation, like negotiation, is non-binding. The mediator is a neutral go-between who attempts to help the parties negotiate a solution, but does not impose a solution on the parties.
The mediator will communicate the parties’ positions to each other, will facilitate the finding of common ground, and will suggest possible outcomes. But the parties have complete control: they may ignore the recommendations of the mediator entirely, settle in their own way, find another mediator, agree to binding arbitration, go to court, or forget the whole thing.
In Maryland, the court system requires mediation of most Circuit Court civil cases unless the parties opt out of mediation after filing suit. For more information on Maryland’s mediation program see MACRO- Maryland Mediation.
Arbitration
Arbitration is a type of adjudication. The parties use a private decision maker, the arbitrator, and the rules of procedure are considerably more relaxed than those that apply in the courtroom. Arbitrators might be retired judges, lawyers, or anyone with the kind of specialized knowledge and training that would be useful in making a final, binding decision on the dispute. In a contractual relationship, the parties can decide even before a dispute arises to use arbitration when the time comes. Or parties can decide after a dispute arises to use arbitration instead of litigation. In a pre-dispute arbitration agreement (often part of a larger contract), the parties can spell out the rules of procedure to be used and the method for choosing the arbitrator. For example, they may name the specific person or delegate the responsibility of choosing to some neutral person, or they may each designate a person and the two designees may jointly pick a third arbitrator.
Many arbitrations take place under the auspices of the American Arbitration Association, a private organization headquartered in New York, with regional offices in many other cities. The association uses published sets of rules for various types of arbitration (e.g., labor arbitration or commercial arbitration); parties who provide in contracts for arbitration through the association are agreeing to be bound by the association’s rules. Similarly, the National Association of Securities Dealers provides arbitration services for disputes between clients and brokerage firms. International commercial arbitration often takes place through the auspices of the International Chamber of Commerce. A multilateral agreement known as the Convention on the Recognition and Enforcement of Arbitral Awards provides that agreements to arbitrate—and arbitral awards—will be enforced across national boundaries.
Arbitration has two advantages over litigation. First, it is usually much quicker, because the arbitrator does not have a backlog of cases and because the procedures are simpler. Second, in complex cases, the quality of the decision may be higher, because the parties can select an arbitrator with specialized knowledge.
Under both federal and state law, arbitration is favored, and a decision rendered by an arbitrator is binding by law and may be enforced by the courts. The arbitrator’s decision is final and binding, with very few exceptions (such as fraud or manifest disregard of the law by the arbitrator or panel of arbitrators). Saying that arbitration is favored means that if you have agreed to arbitration, you can’t go to court if the other party wants you to arbitrate. Under the Federal Arbitration Act and many state laws mandating arbitration, the other party can go to court and get a stay against your litigation and also get an order compelling you to go to arbitration.
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