Mediation and arbitration are two of the most familiar types of A.D.R. Mediation permits the parties in dispute to come before a neutral facilitator (the mediator) in an effort to reach a mutually satisfactory resolution. Essentially, the role of the mediator is threefold: to enable each party to identify their respective interests; to explore a variety of alternatives that might accommodate the interests of all parties; and to reach an agreement on a voluntary basis that satisfies all parties. The mediator does not impose a solution. If the parties do not come to a settlement, then the mediation process is over.

Arbitration is more akin to a "private court". The parties in dispute present their cases before a neutral authority (the Arbitrator), who makes a decision for the parties. The arbitrator's decision may be binding or non-binding, based on the agreement of the parties prior to submitting the dispute to arbitration.

In the past, mediation has tended to be a voluntary process and it will continue to expand on that basis because the traditional lawsuit in the civil courts has become extremely costly, time consuming and often a frustrating pursuit. In certain areas of the Province, it is now mandatory that all non-family civil lawsuits must be referred to at least one session of mediation before that lawsuit can continue. To date, this mandatory mediation aspect of a civil lawsuit is not mandatory with respect to suits commenced in Peterborough.

What are the advantages of mediation? In these economic times, the cost of settling a dispute is foremost on most people's minds. Even the simplest civil suit may cost both parties several thousand dollars. Generally speaking, the costs associated with mediation will be substantially less than the costs of even the preliminary stages of a civil lawsuit. Another advantage to mediation is the savings in time. Lawsuits often take years to resolve, while mediation can occur within days or weeks of the dispute arising. During the course of a lawsuit, individuals and businesses may find it difficult to make short and long-term decisions, pending the outcome of the suit. The uncertainty of a lawsuit increases the level of stress for all parties. Obviously, there are advantages for parties who can "get on with their lives" if a dispute is resolved within a relatively short time frame.

A distinct advantage of mediation over court proceedings is that mediation allows for greater flexibility and creativity in resolving disputes. There are several limitations to be mindful of in the court room. First, litigation is usually a win-lose situation where the winner takes all, whereas mediation provides an opportunity for compromise. Although compromise may not be one hundred percent satisfactory to all parties, it is often better than the risk of losing everything in court. Secondly, the court is limited in the type of remedies that can be granted. For example, a court may impose an injunction to stop someone from doing something or award the successful party a monetary judgment. However, the Court has no jurisdiction to, in effect, rewrite an agreement between the parties to implement a compromise. The solutions resulting from successful mediation can be as varied and innovative as the creativity of the mediator and the parties.

In most cases, lawsuits destroy the relationship between the parties. In a typical suit, the other side quickly becomes the enemy and the parties do battle with the fervour of ancient gladiators. Mediation attempts to avoid the "positional-based" bashing of one side against the other. Instead, there is an attempt to get individuals to focus on interests and solutions. As a result, there is a much better chance of preserving the relationship between, for example, business partners or companies and their customers.

When parties in dispute are unable to resolve their difference and an impasse has arisen, the mediation process is initiated in one of two ways. Either both parties jointly approach a mediator to arrange a session, or one of the parties contacts a mediator, asking the mediator to request the other party participate. The willingness of both sides to participate is a prerequisite of voluntary mediation.

Once hired, the mediator will forward a mediation agreement to all parties. The agreement provides for a number of matters, including the guarantee of confidentiality of all sessions and that the proceedings and discussions of each session shall not be used in a subsequent legal proceeding in the event the mediation does not produce a settlement. This agreement also provides a further provision requiring the parties to provide the mediator with a brief summary of the controversy, prior to the first mediation session.

At the opening of the first session, the ideal situation requires the presence of all parties in the same room, with the mediator chairing the sessions. In some circumstances it may be necessary to keep each party in a separate room and the mediator engages in a form of shuttle diplomacy. There is a rough format to the sessions. Initially, each party describes their respective positions. It is at this point the mediator attempts to ascertain the true interests of the parties. It is important to understand the difference between "position-based" negotiations and "interest-based" negotiations. "Positions" are what you want. "Interests" are why you want it. The distinction is perhaps best illustrated by an example from "Getting to Yes: Negotiating Agreement Without Giving In" by Roger Fisher (Penguin, 1992).

The author describes a case of two school children who ask their mother for an orange. The mother only has one orange. Each child gives a number of reasons why he/she should receive the orange. This is positional bargaining. In frustration, the mother cuts the orange giving each child half. One child eats the fruit and throws away the rind. The other child discards the fruit, wanting only the rind for a cooking experiment. Had the mother ascertained what the "interests" of each child was, as opposed to their "positions" a more satisfactory result could have emerged.

While the orange example is simplistic, it is fundamental to understanding the importance of identifying the parties' interests as opposed to their positions. Once interests are determined, the mediator then encourages a brainstorming discussion, listing all of the options or alternatives that might be used to address the interests. The parties then proceed to examine the legitimacy and viability of the various options.

In successful mediation, parties will hopefully select an option or combination of options that will resolve the dispute. When the parties commit to a resolution, the mediator's role ends. The parties or their lawyers prepare a formal settlement agreement implementing the resolution. In the future, potential litigants will opt for the advantages of A.D.R. The next time you find yourself involved in a dispute, consider the benefits of A.D.R.

John D. Nichols is a corporate/commercial lawyer dealing with the full range of issues affecting small business, and a partner at the Howell Fleming Law Firm.