Providing Solutions

A guide to mediation and arbitration in Texas

| Oct 6, 2022 | Business Litigation, Partnership/Company Agreements And Disputes |

Not all business disputes are solved in Texas courts; there are various alternative methods that often produce better results and are more affordable and faster. The two most common alternative methods are mediation and arbitration.

Understanding mediation

Mediation is a process where a mediator facilitates communication between two or more parties to help them reach an agreed resolution of a dispute. The mediator is a neutral third party who does not take sides or make decisions for the parties. The mediator’s job is to help the parties effectively communicate so they can reach an agreement on their own.

The mediation process is confidential, which means that anything said cannot be used in court if the disputed is not resolved in mediation and eventually goes to trial. This allows the parties to feel free to discuss their issues openly without fear of putting themselves at risk.

After a lawsuit is filed, judges often order parties to go to mediation. However, mediation can also be voluntary, whether or not a lawsuit has been filed. Both parties must agree to participate and can choose to end the process at any time. If an agreement is reached, the agreement will be put in writing and signed by both parties to make it legally binding.

Understanding arbitration

Arbitration is similar to a lawsuit and trial, with a neutral third party (an arbitrator) serving as the decision maker (instead of a judge or jury). There are certain advantages and disadvantages in arbitrating a dispute, compared to a lawsuit and trial. The advantages: In arbitration, a decision is usually made far quicker than in a lawsuit, the parties have more control in setting deadlines and the hearing (trial) date in an arbitration, the process is more confidential and not open to the public like a lawsuit, and the overall cost of arbitration is often far less than in a lawsuit. The disadvantages: In arbitration, there is no jury (instead, an arbitrator or possibly a panel of arbitrators make the decision), and the arbitrator’s decision is final with very few avenues available to contest the decision.

All parties must agree to arbitrate the dispute. They can agree to this at any time. However, the agreements and contracts that are in dispute may already provide in them that the parties agree submit any disputes to arbitration.

Deciding whether to use mediation or arbitration to solve your business disputes will depend on factors such as the nature of the conflict, your relationship with the other party, and the amount of money at stake. Mediation may be a good choice if you are willing to compromise and would like to keep your relationship with the other party intact. Arbitration, however, may be helpful if you wish to have a binding decision on the matter in question, and want to have the decision sooner that it would take for a lawsuit to filed and eventually get to trial..