New York Real Estate Lawyers Blog
Recently, New York Courts, especially in those in Westchester County, where our offices are located, are encouraging the use of mediation to resolve disputes which have been filed as lawsuits in the Court. What is mediation, and how does it differ from arbitration? Mediation is the use of an independent third party, known as a mediator, in an attempt to resolve a dispute that initially commenced in Court. Many Courts now have a mediation program, and are referring cases to mediation, and, in some cases, ordering that the parties use a mediator to attempt to resolve a Court dispute.
Legally, a mediation is different from arbitration. In arbitration, the parties usually are contractually obligated to use an arbitrator (also an independent third party) by the terms of a previously executed document such as a lease to resolve a dispute. There are organizations such as the American Arbitration Association (AAA) whose purpose is to provide arbitrators to resolve disputes. The main difference between arbitration and mediation is that arbitration, when contractually mandated, results in a binding decision reached by the arbitrator after he hears the case. Once the arbitrator makes a ruling, either party (usually the prevailing party) can file a motion in the appropriate Court to enforce the arbitrator’s decision as a judgment. For example, if the arbitrator rules, after hearing the evidence from all parties, that one party owes the other $50,000.00, that decision can be entered in Court as a binding judgment, after motion made to enforce the arbitration decision.
Conversely, mediation is generally done on the consent of all parties, and is not binding. It is an attempt to mediate the dispute between the parties, and can often replace discovery, Court hearings and a trial. In general, the parties, after appearing in Court for a preliminary conference, can consent to use a mediator in an attempt to resolve the dispute. More frequently, the Judge in the case may order the parties to use a mediator. In such cases, the Court generally provides the parties with a list of potential mediators, and the parties jointly choose a mediator.
Once a mediator has been chosen, the parties will then set up a meeting (either in person or virtually), to discuss the case with the mediator. The mediator may request that each party provide a written statement summarizing their position in the case prior to the actual mediation. The mediation would then be scheduled, and all parties (the attorneys and the actual litigants) meet separately and together with the mediator, and attempt to settle the case.
Mediation differs from arbitration in an important way: it is simply an attempt to settle the case, and is non-binding. If the mediator cannot “bridge the gap” and have the parties agree on a settlement, the case is returned to the appropriate Court, and litigation goes forward in the Court. The mediator does not have the power to force the parties to settle, nor can he issue a ruling or decision deciding the issues in dispute. Although all parties are expected to negotiate in good faith during mediation, if either or both parties cannot agree on a resolution, the mediator’s job is finished, and the case must then be resolved by the Court.
Our firm has had several positive experiences in settling matters with the assistance of an experienced mediator. We believe mediation is a cost effective and viable alternative to remove some of the “red tape” of Court appearances, including potential trials, and allows the parties and attorneys to “cut to the chase” and achieve a resolution that is fair to all parties.