Litigation is not the only way to solve a dispute: Consider mediation and arbitration too


Imagine that you wanted to add a carport to your house, so you hired some contractors. But the first time a storm hit, the carport came tumbling down, destroying your new truck in the process. What should you do? One choice is to sue the contractor. But that requires hiring (and paying for) a lawyer and then waiting (often years) until a judge or jury renders a verdict. Only then will you know if you won—or lost.

Or consider another scenario: Let’s say business partners disagree over whether one of the partners acted appropriately in a situation. Neither partner wants to break up the partnership over the dispute, but they can’t agree and therefore need an outsider to make a decision so that the business can move forward. If they turned to a judge, it could take years to get an answer even though the partners need a decision now.

Is there an alternative for the homeowner and the business partners? Yes, two actually: Meditation and arbitration.

Mediation is a private, informal way to resolve disputes through a negotiation guided by a neutral third party whose goal is to help the parties reach a mutually agreeable solution. There’s no judge and no jury. There’s also no splashy post in the Saipan Tribune announcing that one party sued the other party.

How does the process work? That’s up to the parties. They get to decide the procedure. But a typical procedure is as follows: The mediator will explain the rules and procedure to the parties. Each party will then describe the dispute. Afterwards, the mediator will ask clarification questions to understand the dispute. At this point, each party will go into a separate room. The mediator will then go back and forth between each room with the goal of understanding each side’s point of view, identifying solutions, and negotiating on behalf of the other party. If a deal is reached, the mediator puts it in writing and then has the parties sign.

Mediation can be a great choice. It’s confidential. It’s faster and less expensive than a lawsuit. And the parties are more likely to be friends at the end of it. Compare that to litigation, which is normally long and nasty, leading to years of bad blood before a judge or jury imposes a solution.

Another bonus: In the CNMI, if you file a lawsuit, the court will require you to engage in mediation early in the litigation anyway, so there’s little harm in trying mediation before a lawsuit is filed. The key risk to delaying a lawsuit in favor of mediation is in situations where a person’s claim must be filed within a certain time limit. In these situations, delay can mean losing the claim altogether.

Mediation does, however, have some drawbacks. For one, it’s not a great way to get the truth. It has no mechanisms for forcing the other side to testify or turn over evidence (unlike litigation). For another, it can reward aggressive personalities. For this reason, mediation is an especially poor choice to resolve family disputes involving an abuser.

Now let’s look at the other option: arbitration. Arbitration in many ways is just a streamlined (and confidential) version of a lawsuit. It goes as follows: The parties agree to arbitrate—usually in a contract well before the actual dispute. Once a dispute arises, a party sends the other party a notice of intent to arbitrate. From there, each party decides who will arbitrate the dispute. In small disputes, one arbitrator is enough. In bigger disputes, each party normally selects an arbitrator and then those arbitrators collectively pick a third arbitrator. After that, the arbitrators set up a timeline for each party to provide written statements. In some cases, the arbitrators will decide the dispute purely using the written statements. In other cases, there will also be a hearing at which the parties present evidence, question witnesses, and make arguments. And then the arbitrators will issue a written decision before a pre-approved deadline.

Why go through all of these steps if you would do much of the same thing during litigation? For at least three reasons.

First, speed. Arbitrations are normally much faster than litigation, especially on Saipan. Arbitrations can wrap up in weeks or months. Litigation typically takes years.

Second, finality. Once an arbitrator issues a decision it is very difficult to overturn it. And, so, if you need a decision that you can rely on quickly, arbitration is a good avenue. Litigation, on the other hand, can drag on for years after the trial is over.

Third, confidentiality. Arbitration happens in private. Litigation is a public record with the trial taking place in open court for anyone to watch. Thus, if a party wants to keep a dispute quiet, arbitration is a better choice than litigation.

But arbitration has some downsides. The main one for our purposes is that if the arbitration is complex, it can be more expensive than litigation. The reason is that in arbitration, you are paying for both your lawyers and the arbitrators. In litigation, however, society shares the cost of solving the dispute by paying for the judge and jury.

The takeaway: If you have a dispute, don’t assume that your only choice is a lawsuit. Sometimes it would be better for you to mediate or arbitrate. To figure out the right choice for you, ask your lawyer.

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