Contractual provisions that have arbitration and mediation clauses provide individuals with alternative approaches of resolving a dispute without going to court. The two parties that are bound by such contractual provisions do not have to go to court to resolve their dispute. Most businesses prefer such contractual provisions as opposed to litigations due to the speed and informal nature of the arbitration and mediation process (Knickle et al., 2012). As a result, the resolution process in this case is much shorter and can be less costly if the two parties can resolve the issues without the intervention of an attorney. Additionally, the parties involved have the power to select an arbitrator of their choice, which is different from the court process where the judge and jury selection process is beyond the two parties.
On the other hand, the use of arbitration and mediation as a conflict resolution process can have drawbacks since they lack the formal structure. This means that the two parties involved are forced to depend on the expertise and experience of the arbitrator to examine the evidence provided. Furthermore, in the concerned party is not satisfied with the decision of the arbitrator they do not have the formal appeal process. Compulsory arbitration and mediation clauses often favor the needs of the company rather than the consumer. Hence, the consumer may be disadvantaged when using such contractual provisions.
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Most people presume that arbitration is less costly that litigation; however, many companies are forced to hire attorneys for the arbitration process; thus the cost of arbitration can be relatively higher. Studies show that arbitration was more expensive and lengthy compared to litigation (Knickle et al., 2012). For instance, the arbitration process can take up to two months if the two parties do not reach an amicable agreement.
References
Knickle, K., McNaughton, N., & Downar, J. (2012). Beyond winning: mediation, conflict resolution, and non-rational sources of conflict in the ICU. Critical care (London, England) , 16 (3), 308. doi:10.1186/CC11141
