When a business partnership dispute arises, going straight to a New York court is not your only option. Alternative Dispute Resolution (ADR) methods like mediation and arbitration can offer efficient, private ways to settle disagreements while protecting your reputation and bottom line. Understanding the nuances between these two paths is essential to determine the best move for your business.
Mediation: The collaborative solution
In a mediation setting, a neutral third party facilitates a discussion to help you and your business partner reach your own voluntary agreement. A key feature with mediation is that neither side is forced to sign anything. Both parties retain total control over the outcome.
Mediation is often best for partnerships where both sides wish to preserve the business relationship. Additionally, this path can provide creative and outside-the-box solutions that a judge cannot grant.
Arbitration: The private trial
This is a confidential dispute resolution process where an arbitrator reviews the evidence presented by both sides and then issues a final decision. The privacy of arbitration can help protect sensitive business information and reputations.
Unlike mediation, arbitration is typically binding for the parties. The awards are final, enforceable and require an extensive process to appeal in New York. If you no longer want to communicate with your business partner, arbitration can provide a definitive end to the dispute without the delays of the public court system.
Considerations for choosing the best path
Both ADR paths are generally faster and less costly than litigation. If you want a final decision, arbitration is usually the better option because it offers a guaranteed conclusion with limited grounds for appeal. On the other hand, if your main priority is keeping costs low, mediation is almost always the least expensive route.
Mediation and arbitration are private and help keep sensitive business information out of the public record. Before making a final decision, you might want to check your partnership agreement, as it may already require mediation or arbitration.
Making the right choice for your business goals
Selecting between mediation and arbitration depends on your priorities and the current state of your partnership. A lawyer can review your business agreement and help you choose the ADR process most suited to your needs. Choosing right can save your business time and money while protecting what you have built.