SanS51514848Antonio, TX
Arbitration and Mediation
Disputes between businesses, between businesses and consumers, and between families and neighbors arise everyday over every imaginable issue. When the disputing parties can’t come to an acceptable resolution on their own, a visit to the Courtroom is often the next step. However, there may be a better way to bring closure to many conflicts through mediation or arbitration. These two methods of “Alternative Dispute Resolution” (ADR) are typically faster and less expensive than litigation, and can be as binding as a judge’s decision. To learn more about arbitration and mediation, click on a question of interest or scroll below to review all topics of discussion. Related information can be can be found under Contracts and Agreements, Divorce, Employment and Labor Law, and Stocks and Securities Matters.

For further information or support from others with similar legal issues, you can post or review questions or comments at our free public discussion boards.

We have more than just the FAQ info below. Do you need legal forms to help you address an issue you are facing? We have over 25,000 forms available to download on virtually any legal topic. Visit our Legal Forms page to find attorney-prepared, state-specific forms by keyword, topic or by category. To learn a legal term definition, click on the "Glossary" tab above. Finally, find links to additional Internet legal resources in the column on the right.

All information provided herein has been compiled by contributors from varied resources and is presented in this Question and Answer format for the convenience of our readers. The information is intended only to provide an overview and better general understanding of the issue of interest, and some information may not apply to your specific case. Nothing herein is to be construed as legal advice or legal opinion, which should be sought only from qualified attorneys when needed. For further information, click on “Terms of Use” above.

What are the advantages of Alternative Dispute Resolutions?

Any method used to settle a dispute without full litigation is referred to as an Alternative Dispute Resolution (ADR). Common, but formalized methods of ADR include Arbitration and Mediation. Advantages that most participants find in ADR over litigation include its substantially lower costs; less stress; quicker closure; and its confidential proceedings and party agreements. Numerous federal and state laws have been enacted to encourage or even mandate the use of ADR over litigation.

[top]

What is mediation?

Mediation is a form of ADR where the disputing parties negotiate a settlement with the help of an unbiased, professional intermediary known as the mediator. The mediator does not make any decisions or conclusions about the case, but helps each party understand the other’s point of view; probes for hidden issues; and may offer settlement options for each party to consider. The mediator may meet with the disputing parties together and/or in separate-party meetings called “caucuses.” The mediator does not have the authority to force a settlement, but his neutrality, input and encouragement offer a positive environment for the parties to reach an acceptable agreement on the issue.

[top]

What is arbitration?

Arbitration is an ADR process in which parties refer their dispute to a single or panel of intermediaries who are authorized to render a decision about the dispute. The decision may be binding and enforceable if so agreed by the disputing parties in advance. Courts will abide by an arbitrator’s decision in most binding-arbitration cases. The arbitration process is trial-like in that each side may present its case to the arbitrator with evidence and witnesses in support of its position. However, the arbitrator may follow rules and procedures that differ from those of the judicial system, and this less-formal process is usually much quicker than litigation.

[top]

What are the key differences between arbitration and mediation?

Mediation has fewer formalized procedural requirements than arbitration, and can be scheduled, conducted and completed in a shorter time frame than arbitration. Mediators do not draw conclusions or make decisions about the merits of the dispute, but rather serve as guides to the disputing parties to resolve the issue on their own. Arbitrators, however, must render an impartial decision as a form of jury about the dispute after each side has presented their case. No mediation agreement is enforceable unless reduced to a legally binding contract executed by both parties, while an arbitration decision may be final and binding. Some parties agree to submit a dispute to mediation as an attempt to settle before submitting to binding arbitration. Mediators may meet with the disputing parties together or separately, and do not collect evidence or rely heavily on witnesses. Arbitration hearings are held with all parties present and each party may present evidence and witness testimony.

[top]

What kinds of disputes are appropriate for mediation or arbitration?

Virtually any kind of non-criminal dispute may be resolved through either ADR process. Some disputes have no legal basis for their resolution in the Courts, so ADR is not just an option; it may be the only method to resolve the issue. An example might be dispute between neighbors or family members over a relatively trivial matter in which no legal remedies existed but if left unsettled could escalate into a bigger problem. Additionally, some disputes are required to be resolved through ADR by pre-dispute contractual agreement between the parties, and disputes already in Court are usually mandated to undergo a mediation effort before being allowed to proceed to trial. However, ADR would not be appropriate if a party wishes to establish any type of legal precedent with a decision, as ADR decisions are relevant only to that particular dispute. Furthermore, if a party believes he would better benefit from a potentially emotional-based response of a jury instead of the response of a more balanced professional arbitrator, it may make sense to choose litigation over ADR.

[top]

What is the function of the American Arbitration Association?

The American Arbitration Association (AAA) is a nonprofit organization that has administered and provided ADR information and services to disputing parties, the judicial system and others for 75 years. The AAA administers over 100,000 arbitration and mediation cases annually through its 37 offices and the thousands of professional mediators on its roster. Most contracts that have arbitration clauses utilize language developed and approved by the AAA. The organization establishes rules and procedures for ADR proceedings and the conduct and methodology of its intermediaries. There are other ADR organizations that offer similar services to the AAA available to disputants in most areas.

[top]

Who qualifies as a mediator or arbitrator?

ADR intermediaries (a “neutral”) are usually nominated for consideration by peers in their particular field of expertise. ADR administering organizations such as the AAA add nominees to their panel of available experts after review and investigation of the candidate. Submitted disputes are then ideally matched up with a neutral with local expertise in the field of the dispute. Neutrals are often retired or current judges, attorneys, and businesspersons who have received additional training in arbitration and mediation. There are, however, no certification or licensing standards mandated by law.

[top]

How are mediators and arbitrators selected for a particular dispute?

The disputing parties normally select the neutral intermediary by agreement or as called for in a pre-dispute contract. There is typically less controversy in the selection process for a mediator as their role is one of support and direction, not decision-making. Referral agencies can provide a list of qualified mediators, including their credentials and relevant experience in the area of dispute and in ADR proceedings. The mediation parties can then choose from that list. The arbitrator selection process is similar, but since arbitrators have more power, the process may be more crucial to the parties. Arbitration hearings are conducted by either one or three arbitrators. If three, each side selects one arbitrator and those two arbitrators select the third. Arbitrators are paid by the disputing parties, are immune from civil liability for their decisions, but can be disqualified if a conflict of interest arises.

[top]

Do I need a lawyer if I agree to mediate or arbitrate a dispute with another party?

A lawyer is not required, but as with any other dispute, the nature and magnitude of your claim or liability should be considered in your decision regarding use of an attorney. Another consideration is whether your ADR process is binding arbitration or simpler mediation – the importance of an attorney to you may of course vary between those extremes. Some parties may obtain counsel to help prepare for an ADR hearing, but not have the attorney present at the proceeding. You should find an attorney that has experience in ADR processes, as the rules and procedures differ from judicial litigation. Furthermore, since mediation often entails a great deal of compromise, make sure your attorney is as adept at the conciliatory process as he is at confrontational litigation.

[top]

How do I initiate the mediation or arbitration process?

The first step is to ask the other party to consider ADR as an option, or if ADR has already been agreed to in advance by a pre-dispute contract, simply notify the other party of your intent to submit the dispute to mediation or arbitration pursuant to the contract. If the other party has not previously agreed to ADR, and is resisting efforts now, you may want to contact an independent ADR organization such as the American Arbitration Association (AAA) to contact the other party for you to encourage participation.

Once each party has agreed to ADR, contact a local ADR organization and submit the dispute for their review and action. The organization will coordinate the process from there, provide a choice of neutrals, schedule the hearings, and administer the proceedings until completion. There will normally be administrative fees payable to the organization and to the neutrals.

[top]

Is the Alternative Dispute Resolution process applicable to employer-employee disputes?

Due to the high cost of litigation in fees and lost time for both sides of an employment dispute, a heavy burden in particular to most employees, there is a trend toward use of ADR in resolving workplace issues. Personnel manuals now often include provisions for dispute resolutions through mediation and arbitration. In addition, some employers now require employees to contractually agree to ADR in the event of a dispute as a condition of employment, although the enforceability of such a clause has been questioned in some Courts. An employer’s formal ADR plan may include preliminary steps to exhaust internally before submission to an ADR organization, such as maintaining an effective open-door policy and in-house mediation. Furthermore, to ensure the perception of fairness by reducing the financial burden on the employee, the employer plan may call for the employer to pay part of the employee’s ADR administrative and neutrals cost. Once submitted, the procedures for ADR proceedings on a workplace issue are similar to any other ADR dispute. Employers wishing to implement ADR provisions in their employment practices can contact the American Arbitration Association or other ADR group for assistance in developing appropriate programs.

[top]

Is a dispute with a company in another country eligible for settlement by ADR?

The ADR process is recognized as a legitimate means of resolving disputes in many countries. The American Arbitration Association has promulgated rules and regulations addressing issues potentially arising from international disputes, such as the travel and expense logistics of the neutrals and disputants and any language barrier between the various parties.

[top]

Can I support my ADR case with courtroom-style evidence and testimony?

A qualified yes. In mediation there is no formal process for introduction of evidence into the hearing, but the fact that such evidence exists may be shared in the mediation hearings and thus may factor into any compromise reached between the parties. In arbitration hearings, limited testimony, evidence and other fact-finding processes are allowed as support to each side’s positions with the decision-making arbitrator.

[top]

What costs are involved in ADR proceedings?

Total costs of an arbitration proceeding are mostly dependent on the size of the monetary dispute between the parties. Non-refundable administrative fees ranging from a few hundred dollars to over $10,000 are paid to the administrating organization, such as the American Arbitration Association, when a case is first filed. Additional fees for larger disputes may be due if the case continues on to the hearing stage. Expenses and fees of the neutrals are paid separately. If not contractually agreed between the parties in advance, the arbitrator may allocate costs of the process to just one or pro rated between the parties as part of an award. Mediation is typically less expensive than arbitration, and usually charged by the hour, without regard to the underlying value of the dispute. Mediation may be available at little or no expense if provided by nonprofit community organizations or in certain cases mandated by a Court.

[top]

Do I have to follow the decisions of a mediator or arbitrator?

Mediators by definition do not have decision-making powers; they are merely guides and facilitators for the parties to reach a settlement of their own. Arbitrators do have decision-making power over the dispute. Their decision may be binding and enforceable if the parties agreed in advance to be bound by the decision. Some arbitration decisions are non-binding, but are often followed anyway as the decision gives at least the suggestion as to how a binding judicial decision might be made if the issue was litigated. After hearing each party’s arguments and support the arbitrator will usually issue the award within 30 days. The arbitrator’s decision will not likely be accompanied with an explanation as is often the case with a judge’s decision.

[top]

How is an arbitration decision enforced?

Despite an agreement between the parties that the arbitrator’s decision will be binding, the arbitrator or administrative organization is not involved in enforcement of the award. However, if the prevailing party does not receive benefit of the remedy as set forth by the arbitrator in the time frame specified, the matter can be submitted to the courts to compel the other party to act. Courts will generally recognize an arbitrator’s award in all but the most extreme cases, thus allowing the prevailing party the benefit of judgements, attachments and other enforcement tools.

[top]

How can I find qualified mediators or arbitrators in Texas?

Any attorney listed to the left offers services in Alternative Dispute Resolution. Referrals and additional information may also be found through ADR centers such as the American Arbitration Association (AAA). AAA offices in Texas include those in Dallas at 13455 Noel Rd., Suite 1750 (972) 702-8222; or in Houston at 1001 Fannin St. (713) 739-1302.

[top]

What Tax Court location serves me in Texas?

Tax Court judges are responsible for several locations and travel throughout their region to conduct trials. Accordingly, Tax Court is only held a few times a year in any given city. Texas Tax Court Cases are heard in Dallas, El Paso, Houston, Lubbock, and San Antonio. All petitions are filed with the Tax Court in Washington, and the Court will then advise you of the time and place of the trial. For more information, see the Tax Court web site at www.ustaxcourt.gov, or contact the Tax Court Clerk at 202-606-8754.

[top]