What is binding mediation

Binding Mediation is a hybrid of both mediation and arbitration. The parties present the facts and argument to a mediator, the mediator attempts to resolve the dispute in a middle ground where all parties are satisfied, and if that does not occur, the mediator will issue a binding decision. Alternative dispute resolution, including arbitration, mediation and binding mediation have many advantages over going to trial. Unless it is part of a mandatory arbitration or mediation rule of the court, the parties get to choose the mediator or arbitrator to hear the case.

This gives the litigants the advantage of choosing someone who has experience and is familiar with the type of law as well as the types of issues in the case. It is private. There is usually no public record other than a recording of the ultimate judgment, and that is only if required by the Court or agreed to by the parties or contract.

It is customized. It can include resolution of non-monetary issues. It is less expensive. More often than not, less discovery is done prior to alternative dispute resolution. The parties usually stipulate to certain records and reports, thereby limiting or abolishing the need for witnesses to testify or appear. It can occur earlier in the litigation and may even occur prior to litigation being filed. One major benefit of mediation is the parties have the final say on whether they will accept the mediator's recommendations and resolve their disputes through mediation or would rather go to trial.

The parties retain the power. Another major benefit is that the parties can resolve non-monetary issues and discuss business type resolutions. This is especially important in the area of commercial disputes and employment litigation. We have been involved in mediations where no or little money has exchanged hands, but the matter has been resolved with business relationships left intact. The most obvious advantage of arbitration is that it is similar to a mini trial, in that the parties present evidence and walk away with their "day in court.

In addition, once the judgment has been issued, it is generally a final decision. There are exceptions depending on the type of arbitration and the agreement establishing the arbitration and the applicable laws that govern the arbitration. However, barring a claim of misconduct or claim that the award exceeded the scope of the arbitration, most arbitration decisions are not reviewable. Binding mediation has the advantage of incorporating all the benefits of mediation and arbitration into one process, including: The parties can customize how they want the proceedings to go.

The parties can agree who will be present, whether parties will be able to state their case or speak through their attorneys, and how long they will mediate before they will concede that the issue be decided by the mediator.

Binding mediation has an advantage over both mediation and arbitration in that the parties are not only given the opportunity to be heard, but also an opportunity to discuss the case with a neutral third party. Binding Mediation may be selected by the Parties through two different methods. It is not unusual to see a mediator have a Binding Mediation Addendum available at the end of a standard mediation in case the Parties are very close to a settlement at the end of the mediation and may elect to empower the mediator to render a final and binding decision so that they will not be required to go on the binding arbitration or litigation to arrive at a final and binding solution to their dispute.

A major advantage that binding mediation offers is that the Parties have the opportunity to directly participate in the binding mediation process from the beginning to the end of the binding mediation session. Another advantage is that the parties, in binding mediation, may represent themselves and do not need the services of an attorney, although many people do utilize attorneys in the binding mediation process.

There is one small negative that can be seen in the binding mediation process. Mediation is based on the premise that the Parties should be able to tell the mediator anything and share private and confidential information with the mediator as the mediator is sworn to secrecy and confidentiality.

If the Parties know that the mediator has been empowered with the responsibility of rendering a final and binding decision on the unresolved issues, the Parties may choose to hold back on certain information that they might have shared with the mediator, with the anticipation that the mediator may ultimately have the responsibility to issue the final decision on an issue. As a result, the mediation process may not be as successful as it would have been if the Parties did share all information with the mediator.

Binding Mediation is typically utilized on small dollar and simple, limited issue cases. The construction industry is probably the largest user of binding mediation especially on residential and small commercial construction projects. It is not only used between project owners and general contractors, it is also used to settle disputes between general contractors and subcontractors, general contractors and material suppliers, etc.

It offers a simplified, expeditious and inexpensive method of dispute resolution. A construction dispute may cause a project to run behind schedule or even shut the project down, which can be very costly to both the owner and general contractor. If the required binding mediation paperwork has been completed in the early stages of the construction project, the binding mediation process can be conducted almost overnight depending on the preparation necessary by the Parties.

It is not unusual for there to be multiple binding mediations on one project before it is completed. The longer a dispute festers, the more harmful it can be to the overall health and success of the project.

Binding mediation is also utilized by Dispute Review Boards on larger construction projects to settle the smaller and simpler construction disputes.

In the construction industry, material suppliers, service providers and other construction-related industries also utilize the binding mediation process as it is a fast and inexpensive method to settle the minor dollar disputes that occur during the construction process. Binding mediation was first utilized by the insurance industry to settle small dollar claims.

It can also be very effective in divorce and family matter cases where the mediator is trained in family matters and is capable of deciding what would be fair and equitable for the Parties. The states of Connecticut and Michigan routinely utilize the binding mediation process to settle divorce and family disputes. There are many other places where binding mediation may be used but are too numerous to list in this article. Information on the binding mediation process including examples of a Binding Mediation Addendum, Binding Mediation Agreement.

You will also find suggested contract language to incorporate binding mediation into a contract on the same website. If you decide to use the binding mediation process, be certain that the mediator has the technical and substantive knowledge to be able to render a fair and equitable decision if called upon to render that final and binding decision.

In selecting a binding mediator, you should exercise the same care and diligence as you would in selecting an arbitrator. In addition to having the technical and substantive knowledge required, it is advisable to make certain that the binding mediator also have mediation skills and experience as the ultimate goal of the binding mediator is to have the Parties come to a full settlement that would not require the mediator to be required to render any final and binding decisions.

Binding Mediation: an Oxymoron? By Harvey J. Corporate Members. Share via. Copy Link. Powered by Social Snap. Copy link. Copy Copied.