• Avinder Laroya

Mediation vs. Arbitration : Which Alternative Dispute Resolution Procedure is Right For You and Your

Updated: Feb 8, 2021

When in business, disputes are an unpleasant but often unavoidable consequence. When negotiations fail, you may feel as though you have nowhere to turn to for support and advice, with the threat of litigation through national courts looming.

Fortunately, there are a variety of dispute resolution methods available to companies to avoid unwanted pressures such as the cost, time implication and emotional impact of going through the courts – not to mention the potential for lengthy appeals, too!

Two of the most commonly used commercial dispute resolution procedures in the UK are mediation and arbitration. Each offer a range of benefits compared to jumping straight into litigation. But which one is right for you and your business?

What is Commercial Mediation? Why Would a Business Use Mediation?

Commercial mediation is a form of business dispute resolution whereby the companies involved use an independent trained Mediator to help them settle their differences – an inter-business referee, if you will. The impartial Mediator allows each party the opportunity to resolve any misunderstandings before resorting to arbitration or litigation, although the procedure isn’t legally binding (but, any settlement agreement is).

Key benefits of Commercial Mediation include:

  • Preservation of commercial relationships;

  • Keeping the decision making in the hands of the parties involved;

  • Avoiding the need for litigation proceedings, reducing time and monies spent;

  • Opportunity to speak openly and directly about concerns;

  • Closure – and a large reduction in stress levels for each party, too!

Your Mediator is on hand to facilitate a controlled discussion about the dispute, keeping each party on track to resolution. Although mediation isn’t legally binding in itself, a settlement agreement can be developed, which will be.

What is Commercial Arbitration? Why Should a Company Consider Arbitration?

Commercial arbitration is another form of business dispute resolution procedure, which aims to overcome problems instead of using Court litigation. The appointed Commercial Arbitrators are required to make a final decision on behalf of the involved parties, the result of which (the arbitral award) is final and binding.

The Commercial Arbitration procedure is set out in the Arbitration Act 1996 in the UK. This Act worked to promote the UK as a viable venue for international arbitration. Importantly, the Act seeks to ensure three general principles are construed:

  1. the object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense;

  2. the parties should be free to agree how their disputes are resolved, subject only to such safeguards as are necessary in the public interest; 

  3. in matters governed by this Part, the court should not intervene except as provided by this Part. 

To read more about the Arbitration Act 1996, visit www.legislation.gov.uk.

Key benefits of Commercial Arbitration include:

  • Parties can choose their own Arbitrator with experience in their field;

  • Avoiding the need for litigation proceedings, reducing time and monies spent;

  • Privacy and confidentiality are ensured throughout the arbitration process;

  • Arbitral awards are recognised internationally through the New York Convention 1958

Arbitration allows each party to remain in control of the process to resolve their disputes. The international enforcement of the resulting award is particularly useful in cross-border disputes as well as disputes within the UK.

Mediation vs. Arbitration – Which Alternative Dispute Resolution is Right for You?

Each business dispute is different, and as such, each resolution is different, too. What remains the same is the need for your business to receive the correct legal advice to assist in your decision. Of course, your company may decide to proceed directly to litigation. However, in many cases, the additional costs and time implications involved in partaking in court proceedings are often unnecessary in favour of mediation and arbitration. Serenity Law LLP’s co-founding partner, Avinder Laroya, is experienced and enthusiastic Mediator and Arbitrator. She’s regulated by the Solicitor Regulation Authority (SRA) and a member of the Chartered Institute of Arbitrators (MCIArb). Her knowledge doesn’t end with UK legislation, in fact, Ms Laroya has worked with clients based in multi-jurisdictions, including the USA, Asia and Europe making her the perfect choice when searching for an internationally experience Arbitrator to resolve cross-border disputes. 

Who are we? How can we help?

Serenity Law LLP was founded by Avinder Laroya and Stanley Beckett, with the aim to provide agile legal services to control costs for business clients across the globe to manage legal operations more effectively. When working with corporate clients on advisory services, the team at Serenity Law aim provide practical advice and guidance covering all eventualities in your industry sector. Offering additional services, such as mediation, arbitration and documentation auditing, allow Ms. Laroya, Mr Beckett and their team to provide an all-round commercial law service.

To book a consultation with Ms Laroya to discuss our dispute resolution services click here.