Me Julie Banville
A lot of you agree on the fact that a civil law suit constitute a long, costly and inflexible avenue to an uncertain issue were there is only one winner and sometimes, none.
Since a few years, non judicial avenues have been put in place to simplify and allow more flexibility in the management and the resolution of conflicts.
Even though there are many non judicial dispute resolution mechanisms, we will only explore two of them: Mediation and arbitration.
Mediation
Mediation can be defined as a negotiation between two or more parties assisted by an impartial third party:
“The intervention, in the dispute resolution process, of a neutral and impartial third party who, even though he does not detain any decisional powers, may help the parties reach a mutual and acceptable agreement on the issues in dispute.”
Mediation is a voluntary practice that is gaining in popularity. It holds numerous advantages and is in the best interest of all parties involved.
The mediation process is confidential and its main objective is to allow parties to set aside their differences and put together their perceptions, in order to determine their actual needs and interests.
The mediator is a person that possesses appropriate expertise in his field of activity. His role is to help the parties reach a fair and satisfactory agreement. Throughout the mediation process, the mediator will look for different solutions which he will submit to the parties, whom are under no obligation to accept them. A party may, of course, be accompanied by a lawyer of its choice, who will act as a legal adviser throughout the mediation process. A successful mediation will conclude by the execution of an agreement binding the parties.
Arbitration
The arbitration process may be defined as follows:
“Parties to an agreement or a convention decide to submit any conflict that could arise during their business relation to one or many arbitrators (usually three) that will look for a solution which, in the end, will lead to a binding agreement between the parties.”
Arbitration is a hybrid mode of dispute resolution, as it is decisional as well as conventional. Arbitrators are called upon to render a decision that will respect the terms of the agreement signed by the parties. This is why it is essential to include to such an agreement an Arbitration Clause that will describe the extent and limitations of the arbitrators’ abilities and powers.
Contrary to a mediator, an arbitrator is a judge. He is therefore inducted, either by Agreement or by the Law, of all the powers necessary to render a decision on litigious issues and, therefore, end a dispute put before him by the parties.
Arbitration is also a confidential process. One of its advantages is that the causes are heard by experienced jurists, bringing therefore a determining competence in the dispute resolution process.
Even though arbitration offers numerous advantages, an arbitration clause should never be included in a contract if the parties have not previously been made aware of the particulars and the inconveniences of this process. Indeed, even if arbitration has shown to be quite efficient most of the time, it may, in certain cases, turn out to be as lengthy and costly as a traditional judicial process, and become a real nightmare for the parties bonded by an arbitration clause.
An arbitration clause should never be included in an agreement without preparation or advice from a experienced legal counsel. A good knowledge of the arbitration process will allow the parties to avoid the inconveniences that could arise from the dispute resolution process as well as from the contractual relationship following said dispute.
Finally, as for any contractual relationship, there is nothing better for a contracting party than to have a profound knowledge of the agreement he is entering into, both at the time of executing said agreement and at the time a dispute arises.
The present article is not a legal opinion and is published for information purposes only. For more information concerning this subject or any related subject, please do not hesitate to contact the writer or one of our professionals.