Arbitration and Mediation:

Arbitration is less official than court, though you and the other party may appear at hearings, present evidence, or call and question each other's witnesses. Unlike mediation, an arbitrator or panel makes a decision or award once you've presented your case. The decision may be legally binding.

Finding a Dispute Resolution Program

The following organizations can help you locate programs in your area:

• your state attorney general or local consumer protection agency;
• small claims courts and court systems;
• nonprofit dispute resolution organizations;
• bar associations and law school clinics;

Several dispute resolution programs are completely voluntary. Whether to use them is your decision. In some states, however, a court may order you to try arbitration or mediation. Some companies require consumers to arbitrate their disputes and waive their right to go to court. Check your contract or product packaging for details.

Mediation requires meetings; arbitration uses hearings. Either may take place in person, by phone, or by video conferencing. However, some programs resolve disputes based solely on written statements sometimes called "desktop" arbitrations. In some cases, you'll begin with mediation, and if no decision is reached, you'll progress to arbitration.

Many programs offer lists of neutral third parties from which to choose. Be aware that your state may have ethics rules for third parties to assure neutrality. For instance, the third party cannot get personally involved in the dispute or benefit from the resolution. Ask the program administrator for a copy of the rules.

Some programs are free. Others charge a flat fee or a rate based on your ability to pay. Of course, if you have an attorney or other representation, you also pay their fees.

Mediation is nonbinding; arbitration may be binding on the company, either parties, or neither. If the arbitrator's decision is nonbinding, you can reject it and try other avenues, including small claims court in some areas.

If a dispute resolution program does not settle the problem, you may want to sue. If the right to sue is important to you, check contracts carefully — before you sign — to see if they waive your right to sue. If you enter into an arbitration program that's binding on both parties, you've given up your right to sue. Agreements to resolve disputes through binding arbitration are generally enforceable, even if you did not sign a contract and the agreement to arbitrate is on the product packaging. Time constraints also can be a problem. Know the jurisdiction's time limitations on filing a suit.

Not every case is suitable for mediation or arbitration. It is important to seek legal advice as to whether participation in a mediation or arbitration is advisable in your particular case, always taking into account your long-term objectives.

Because unconventional dispute resolution, such as arbitration and mediation, can often resolve difficult disputes at a cost far less than the cost of litigation, it is often important that provisions for this type of dispute resolution be included in estate planning and business planning documents.

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