Mediation: An Alternative to Arbitration - Chapter 12 - Securities Arbitration: Practice and Forms - Second Edition
W. Reece Bader
Burton W. Wiand
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Originally from Securities Arbitration: Practice and Forms - Second Edition
§ 12.01 Introduction: What Is Mediation?
Since the mid 1980s, mediation has become an increasingly popular form of alternate dispute resolution. It is a non-binding, voluntary, informal negotiation, facilitated by an independent neutral third-party known as a “mediator.” Since mediation, like arbitration, is a voluntary procedure, all parties to the dispute must agree to participate in the process. In fact, the voluntary aspect of mediation is one of the key elements that makes mediation successful. While arbitrators and judges decide, a mediator recommends. It is up to the parties to embrace the outcome.
Just as arbitration is less formal than litigation, mediation is less formal still. There are rarely pre-mediation pleadings or discovery, although experienced practioners will use mediation statements as a method to familiarize the mediator with the facts and legal theories. Mediation sessions generally do not entail a hearing, witnesses, or the presentation of evidence. Moreover, mediation sessions are private and there are no court reporters or other recordings. The mediator does not issue an opinion or make an award. Accordingly, there is no written decision at the close of a mediation regardless of whether a settlement has been reached. The results of the mediation, as well as all statements, settlement offers, and other discussions that occur during the mediation sessions, are completely confidential and inadmissible in any subsequent arbitration or courtroom litigation.
In addition to the procedural informality of mediation, the objectives of mediation differ significantly from those of arbitration or litigation. Mediation is primarily designed to resolve disputes in the most expeditious and cost-effective manner. It also improves the possibility of preserving an ongoing relationship between the parties. In contrast, arbitration and litigation are designed to pass judgment, assign fault, and assess damage. Because of mediation’s informal structure and interest in settlement, it enables the parties to concentrate on their primary goals rather than focus on the dispute itself. It also allows for greater flexibility and creativity in structuring settlement between the parties.