Sometimes parties get into a legal dispute. For example, parties to a contract might argue that the other party breached the contract. Neighbors might argue over a property line. There are different ways that the parties to the dispute can try to resolve the dispute.
What are Negotiations?
Negotiations are when the parties to a dispute try to resolve their differences among themselves without going to a third party. For example, two parties arguing over a contract could try to discuss between themselves how to solve their problem.
Negotiation is the most common way that civilized people try to reach an agreement. If you are trying to get a new job you will find yourself negotiating with potential employers over the terms of your employment contract.
What is a Mediation?
One way to describe mediation is “facilitated negoitation.” That is, a neutral third party will try to help the parties negotiate so they can reach an agreement without going to court.
Let’s say Patty thinks David breached their contract. Meanwhile, David thinks Patty breached the contract. To resolve their differences, Patty and David could ask a neutral third-party, Melody, to help them resolve their differences.
In this scenario, Melody is acting as a mediator. She will help Patty and David negotiate. If Patty and David reach an agreement, they can memorialize (write down or record) their resolution in a settlement agreement.
Typically in a mediation, the mediator cannot force the parties to settle. In our example above, if Patty and David cannot resolve their differences through a mediated negotiation, they will need to find another solution to their issue.
What is Litigation?
Litigation is a civil lawsuit to resolve a dispute within a country’s court system. In a litigation, one party – – the plaintiff – – sues one or more other parties – – the defendants.
In the United States, there are both federal and state courts where parties can sue each other. The judge or jury will render a decision to determine the outcome of the parties’ dispute, unless the parties first settle the case among themselves.
What is an Arbitration?
Aribtration is a system of private justice. That is, instead of bringing their lawsuit to a public court, the parties hire a private party to decide the case.
For example, if Patty and David are in a dispute over a contract, they could ask Nancy to decide who is right and who is wrong. Nancy does not work the government as a judge. Instead, she is acting privately as a neutral party who can decide whether Patty or David breached the contract. Generally speaking, the decision of an arbitrator is enforceable, just as if the parties had litigated until they received a decision in court. But instead of litigating in court, they litigate privately before the arbitrator.
Putting it All Together
One dispute could lead to several different forms of dispute resolution.
For example, let’s say Patty and David are arguing (again) over who breached the contract. They could first try to solve the problem themselves, through negotiation.
Let’s say that doesn’t work though. Patty decides enough is enough so she sues David in New York State court. Now the parties are litigating.
However, as soon as Patty sues David, David shows the court that the parties have an agreement to arbitrate all disputes with the American Arbitration Association (AAA). The judge tells Patty that her case does not belong in court and now the parties must arbitrate.
Patty and David bring their dispute to the AAA. Their arbitrator, Andy, explains to the parties that the arbitration could last six months. Patty and David have been arguing for so long they sick of fighting.
They hire Marvin to help them discuss their differences. This time the mediation is successful and Patty and David agree on terms to end their dispute.