The Difference Between Mediation and Arbitration

Many individuals who are considering a divorce may believe that the only option is to file a complaint and engage in litigation, ultimately ending with a trial.  However, the vast majority of cases actually resolve long before trial – sometimes even before a complaint for divorce is filed.  Your attorney may be able to reach a resolution with the other party without the need for involving additional individuals.  In some cases, however, it is a good idea to utilize a form of alternative dispute resolution, such as mediation or arbitration.

You may be wondering: What are mediation and arbitration? What’s the difference between the two and which path is right for you? While there are a number of similarities between mediation and arbitration, they serve very different purposes. Today, we will review the differences, highlight the benefits and drawbacks of each, and clear up some common misconceptions.

What Exactly is Arbitration?

Under the Uniform Arbitration Act, N.J.S.A. 2A:23B-1 et seq., (UAA) and New Jersey Court Rule 5:1-5(a), people involved in a divorce may agree to arbitrate their family law dispute, whereby an arbitrator would be used to decide the dispute rather than a judge in a trial.

When entering into an agreement to arbitrate your family law matters, you, in essence, give up your right to a trial with a judge. Instead, you select an arbitrator and consent to the power that the arbitrator has to decide your dispute. You then present evidence, give testimony, and present witnesses to the arbitrator, who will apply NJ law to the facts and evidence presented to decide the dispute. While the arbitrator is not an official judge (typically a lawyer or retired judge), arbitration decisions are binding; there are very limited circumstances under which an arbitrator’s decision can be challenged.

Once parties decide to resolve their case through arbitration, rule 5:5-1(b) states that the parties must:

• Review and sign an Arbitration Questionnaire and Disclosure
• Enter into a consent agreement or court order to arbitrate
• Place the case on the court track assignment for arbitrations

Custody and parenting issues can be arbitrated. However, court rules require a record of all documentary evidence and recorded testimony, with a written statement by the arbitrator that includes his or her findings of fact and conclusions of law.

Mediation: A Popular Option

Mediation is another form of alternative dispute resolution, whereby you select a trained mediator (typically an attorney) to help resolve your case. The mediator does not decide your case or provide legal advice. Rather, he or she is a neutral party who facilitates the settlement discussion with both parties.

Mediation works successfully for many divorcing families. We have found that while cooperative couples are the ones who more readily choose to mediate, families with a high degree of conflict need mediation even more, as the costs of litigation can skyrocket, which often provokes additional conflict.

A mediator can make suggestions about how to resolve conflicts but cannot tell you if a settlement proposal is fair to you. For this reason, we recommend you either have an attorney present or available at a later date to offer legal advice before final agreements are reached. The outcome of a successful mediation can be either a binding marital settlement agreement or a memorandum of essential terms, known as a memorandum of understanding.

When is Mediation Appropriate?

We have developed the following indicators to help clients confirm their decision to attempt mediation. If you find that many of the indicators don’t apply to you, this doesn’t necessarily mean that mediation is not the right choice. But it does indicate a more costly and difficult dispute to settle.

Mediation may be the right option for you if:

• The grieving process is ongoing or complete for both parties.
• The attorneys retained by the parties are experienced in and supportive of mediation.
• There are no acts of hiding assets.
• There are no acts of denying access to the child(ren).
• Both parties agree to total accessibility to documentation regarding assets, liabilities, and income.
• There is no history of violence or abuse.
• The parties have a history of cooperative and successful problem solving on some issues.
• The parties are capable and willing to communicate with each other and with the mediator in a reasonable and civil manner.
• There is some pressure to settle because of time, high attorney costs, or unpredictable outcome.
•  There are adequate resources to find a compromise (limited resources tend to create more competitive relationships and striving for win/lose outcomes).
• The parties’ desire for the settlement of the dispute is high.

Mediation sessions typically last one to three hours each. The mediator helps the parties resolve conflict by:

1. Providing a safe place for the parties to communicate
2. Helping both parties create options for resolutions
3. Offering different perspectives for open issues

All communications during mediation are confidential and can never be used against you in a court of law. Most divorce mediations last between three to six sessions. After the initial orientation to explain the mediation process, parties will meet with the mediator for their first joint mediation session. After the first joint session, the mediator will then conduct individual or joint sessions as agreed until a settlement is reached.

Advantages of Arbitration vs. Mediation

Which is better, mediation or arbitration? Both offer benefits and drawbacks. NJ courts are backlogged, and divorce cases that cannot be resolved through a settlement may wait months or even years for a trial date. Both mediation and arbitration offer an alternative that allows for a quicker resolution. Here are some additional details about mediation and arbitration to inform your decision.

Benefits of Both Mediation and Arbitration:

• Mediation and arbitration are private and confidential, as opposed to the public setting of a court trial
• In mediation and arbitration, you get more flexibility in how the situation is handled and are offered a wider range of solutions

Benefits of Arbitration:

• It is conducted on a set schedule that you select, not the court’s schedule
• Arbitration offers a less formal setting than a court trial

Drawbacks of Arbitration:

• Arbitration decisions are binding and not appealable
• There is limited availability to challenge an arbitrator’s decision
• Arbitration can be costly, as you will be paying for two attorneys plus the arbitrator’s fees

Benefits of Mediation:

• Mediating cases ends disputes faster
• Attorneys bill significantly fewer hours when a case is in mediation
• Attorneys, as well as parties, express a high level of satisfaction
• Parties save significantly on attorney fees and expert witness fees
• Parties are more likely to abide by the terms of a mediation agreement

Recent survey results from NVDRC revealed the following additional benefits:

• 72% of attorneys reported that mediation is less costly for their clients
• Overall costs of mediated agreements are 40% less than matters resolved through litigation
• Over 90% of cases referred to mediation result in written agreements
• Over 80% of the parties are satisfied with the terms of the mediated agreement
• Court cost savings of using mediation is over 50%
• On average, 90% of mediation participants felt the process was clear, they were listened to, and the mediator offered up good ideas
• Over 50% of participants felt they changed the way they handled conflicts from their mediation experience, and 70% of family members reported less arguing and fighting for months following the mediation
• Nearly 60% of participants reported that they better understood the other person’s point of view following the mediation
• 90% of participants felt the mediation process was good. Quicker settlements increase satisfaction levels for both clients and attorneys.
• 77% of participants expressed extreme satisfaction with the mediation process. A substantial portion of those who failed to reach an agreement in mediation believed mediation was useful and would recommend it to others.

Drawbacks of Mediation:

• Mediators cannot give you legal advice
• Mediation does not work where mental illness, domestic violence or abuse, or substance abuse is present
• Mediation does not work with couples who cannot communicate openly and respectfully
• Mediation is not appropriate where dishonesty or hiding of assets or other important facts is occurring
•  Mediation does not guarantee a fair outcome unless your private attorney is also participating

Mediation or Arbitration?

As you weigh the pluses and minuses of mediation and arbitration, we urge you to consider the pros and cons of each in the context of your own personal circumstances. Mediation is a less adversarial process than arbitration, simply because it entails the parties working with one another to reach a resolution of their matter. Mediation also allows parties to be more creative with the ultimate resolution of their matter.  Arbitration is conducted as a more relaxed version of a trial, making it more adversarial than mediation, and the parties are not directly involved in reaching a resolution other than their respective testimonies. Both mediation and arbitration have proven benefits over a costly court trial, but both mediation and arbitration also come with drawbacks.

For more information about mediation and arbitration or for additional guidance, contact our team today.

Rosanne S. DeTorres

Ms. DeTorres is the managing partner and co-founder of DeTorres & DeGeorge Family Law. She is also only one of 150 attorneys in the State of NJ that is certified by the NJ Supreme Court as a Matrimonial Law Attorney. Ms. DeTorres graduated...

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