Alternatives to Courts
"Alternative Dispute Resolution" broadly describes processes that are available to resolve legal disputes other than by going through the formal court process. Sometimes they can precede a court proceeding or take place at the same time as a court proceeding, but independently of it, and sometimes they can take place as part of a court process, but independently of a trial. Most commonly in the context of civil litigation, alternative dispute resolution refers to mediation or arbitration.
Mediation is typically a non-binding, confidential, and "without prejudice" (meaning the discussions that take place may not subsequently be used in court) process where the parties to a dispute attempt to negotiate a resolution with the assistance of a neutral third party. The parties can enter into such a process voluntarily at any time, prior to or during the conduct of a lawsuit. In the province of Ontario, a mediation can also be required to take place by the court. In Toronto, in civil matters, the court typically requires that mediation take place prior to allowing a trial to proceed.
Mediation can be an extremely cost-effective way to resolve a dispute as compared to a trial process. It takes much less preparation and the neutrality of the forum allows for direct discussion between the parties which otherwise typically does not take place. Even in situations where the mediation is involuntary, that is, ordered to take place by the court, a resolution can often be achieved in this forum.
An additional advantage is that in most contexts, the parties can choose their mediator, and the style of mediation. For example, a mediator may be asked to neutrally evaluate the strength of the parties' respective positions as an aid to determining an appropriate settlement. In other cases, the mediator's role can be much more directed toward assisting the parties to communicate effectively to find common ground where they may be unable to do so directly.
In Toronto, there are many well qualified mediators available, including retired judges and senior lawyers, as well as others who may be experienced mediators but not lawyers.
The biggest disadvantage to mediation is that, in the event it is unsuccessful, the expense and time involved often can't be recovered. As well, there may be a risk associated with disclosure of information in the course of a mediation that might otherwise not be disclosed, or disclosed at that time, even though the information cannot be used in that form at trial. In other words, even though your opponent may not be able to use information disclosed in a mediation in court, your opponent may still gain an advantage from simply knowing that information.
Arbitration also involves a neutral third party, however, unlike in a mediation, the third party has the power to impose a binding decision upon the parties to resolve their dispute. In this respect it is much more similar to an actual court proceeding than a mediation. Where it differs from court is that, within limits, the parties to the dispute have a great deal of flexibility in defining amongst themselves the process by which the arbitration will take place, as well as the subject matter of what will be disputed. Therefore, and for example, the parties can agree on streamlined processes for exchanging documents and information, and upon a timeline that may be much more expeditious and much less expensive than the same process would require in court.
As in a mediation, the parties can choose their arbitrator, and one significant advantage is that even though the arbitrator imposes a binding result (unlike a mediator) the process and resolution can still be kept confidential. This is not usually the case in court proceedings, which are typically public. So an arbitration allows parties to a dispute to get a binding resolution, while at the same time keeping their dispute from the outside world, which may be of benefit to both.
Arbitrations typically arise in one of two ways. In the commercial context, parties to a contract may agree that disputes relating to the contract will be resolved by arbitration, so that what is to be arbitrated and the procedure governing the arbitration is agreed to in advance. In any context, however, the parties to a dispute can agree to arbitrate whenever they have a dispute they prefer to resolve in that fashion.
Arbitrations have the disadvantage that their effectiveness is only as good as the agreement under which the arbitrations take place. New issues that may arise in mid course cannot necessarily be included if the arbitration agreement does not provide for them in advance, for example. As well, sometimes the interpretation of an arbitration agreement can raise issues that ultimately have to be addressed by the court. So in some cases you can wind up in court anyway at the end of the day.
In Toronto, as with mediators, there are many well qualified arbitrators available, including many of the same judges and senior lawyers who are available for mediation purposes. In addition, some arbitration services have existing rules and regulations that may be adapted and adopted for any given case - lending a degree of predictability and credibility to the process that might not otherwise be available.
Lloyd's view: As always, the specifics of any particular dispute determine whether it lends itself to mediation or arbitration, and when. The first point is to be aware that these options exist. Personally, I prefer mediations to arbitrations. They are simpler to do and lead to negotiated results more frequently than one would normally expect, even where they are imposed by the court rather than entered into voluntarily.
It is, however, important that a mediation be undertaken at the right time. Typically, both the parties and the mediator can be more effective in the negotiation after sufficient information has been exchanged in a law suit to permit a proper evaluation of the strengths each side has in its case. In some kinds of disputes this can happen relatively easily and quickly (an example is an insurance case where the issues are largely contingent on the interpretation of medical records) and in others (commercial disputes may fall into this category) more extensive disclosure and discovery is required first.
As well, it is important to get the right mediator (or arbitrator) in any given case. Considerations include the mediator's style as well as background and experience. Ideally, the mediator is someone who is known to and respected by all of the lawyers involved, if not the parties themselves. The mediator has to have credibility with everyone at the table in order to function well and facilitate a settlement.
Choosing when to mediate or arbitrate, and choosing with whom to mediate or arbitrate, are both parts of intelligent litigating.