Many contracts include clauses that establish a binding commitment to resolve disputes through arbitration. However, there are times when parties may seek to bypass it. This may happen when they believe it limits their legal rights or fails to provide a fair and transparent resolution process.
This can be driven by concerns over biased arbitration outcomes, lack of access to the courts or a desire for a more open and public legal process, especially in cases involving significant disputes or issues of public interest. At such times, mediation may be a more preferable option. But the question is, when can you bypass the arbitration clause and opt for mediation?
Seeking mediation despite an arbitration clause
The choice to pursue mediation can be made when both sides willingly agree to it. In certain contracts, parties might even be obliged to attempt mediation before proceeding to arbitration. Should mediation fail to yield a resolution, the parties can then proceed with the arbitration process as outlined in the contract.
Considering the nature of the dispute
Understanding the nature of the dispute is crucial in determining the most suitable method of resolution. Different conflicts may call for distinct approaches. For instance, in cases where the dispute is primarily about monetary claims or specific legal matters, arbitration may be a more logical choice due to its binding and legally enforceable outcomes.
On the other hand, mediation tends to be a more fitting choice when dealing with disputes rooted in ongoing business relationships. In these situations, mediation offers a platform for constructive dialogue. It allows stakeholders to find mutually agreeable solutions that benefit all parties involved.
Unlike arbitration, where an arbitrator imposes a binding decision, mediation grants more control to the disputing parties. This enables them to craft resolutions that meet their specific needs. So, when there is an ongoing business relationship at stake, mediation stands out as an attractive option for finding common ground and maintaining a harmonious working partnership.