Mediation vs. binding mandatory arbitration

A study recently published by Public Citizen blasts credit card companies for hiring arbitration firms that rule in favor of the companies and against individual consumers in almost every case. The study, published on Public Citizen’s website, is called “The Arbitration Trap” and details the effect on consumers of the standard fine print in many credit card agreements that requires binding mandatory arbitration.

For those who are unfamiliar with alternative dispute resolution processes, it can be easy to confuse various types. Yet the differences are significant.

As the article points out: ” Binding mandatory arbitration is wholly distinct from post-dispute arbitration, non-binding arbitration and mediation or other forms of alternative dispute resolution, particularly because agreements to use them are made after a dispute arises, not before and as a condition of receiving the good or service.”

Mediation is a voluntary process that individuals or entities choose as a method for resolving conflicts. Sometimes a contract or other agreement will state that mediation will be the first process that the parties to the agreement will use if conflict arises. But all the parties to the agreement will still have the ability to choose a mutually acceptable mediator and define the parameters of their own mediation. Most important, parties to a mediation — whether they are large corporations in the midst of expensive and lengthy litigation or family members trying to resolve difficult issues in order to prevent angry disputes in the future — are not forced to accept any proposed resolution to their dispute. In mediation, the parties keep control of their situation until they decide for themselves to agree to a particular resolution.

Posted in ADR: Dispute Resolution Processes, Monday, October 1st, 2007

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