A swing toward mediation over arbitration

The Economist, Feb. 3, 2007 at 62, discusses how arbitration, because it “often proves no cheaper, fairer or quicker” than courts, even in cross-border commercial disputes, is waning. Waxing at the same time, however, is mediation.

Time to resolution helps explain the swing toward mediation. “In America, from filing a complaint to an arbitration decision takes, on average, 16.7 months.” According to the Centre for Effective Dispute Resolution, one of Europe’s largest mediation organizations, “of the 3,000 or so commercial disputes that are subjected to mediation in London every year around 70-80% reach a settlement within one or two days” and a further 10-15% settle within a few weeks.

Other benefits favor mediation. The Economist explains that while arbitration mimics a court-room setting, with lawyers on both sides and a neutral decision-maker, mediation encourages the top executives to talk to each other and strike a deal (See my post of Dec. 31, 2006 about online settlement offerings; and my post of Feb. 7, 2007 on the cottage industry of ADR providers.).

Some 800 companies, including Time Warner, UPS, General Electric, the Prudential, and Coca-Cola have pledged to explore ADR in any dispute with another pledging company before going to court.

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