Mediation and Arbitration

Mediation and Arbitration





Mediation and Arbitration

Introduction

Insurance company is selected as a subject for discussion in this paper. Many insurance companies, especially international firms, customary have large scale and complicated organizational structure. Due to the operational needs, an insurance company consists of many departments, which might easily create internal disputes. Internal dispute refers to dispute between individuals who both work within the same department. It can also be either a disagreement between two employees from different departments or between an employee and a manager within the organization (ACAS, 2008, p.234). Alternative dispute resolutions, such as mediation and arbitration, play crucial role in resolving internal disputes. Mediation and arbitration play an integral part in case of any dispute, if the company wants to avoid the case from being taken to the court. Duddington suggest that in case the process of alternative dispute resolution does not succeed to provide a sound solution, the involved parties normally seek litigation in the court of law (Duddington, 2007, p.57). The analysis of this paper will discuss the advantages and disadvantages of using mediation and arbitration to solve internal disputes in an insurance company.

Importance of Mediation and Arbitration in Compared to Litigation

Usually, people are familiar with litigation and what it entails. One of the aggrieved parties hires an attorney and then files a lawsuit calling on other party to also hire an attorney for defending the lawsuit. Any individual who has ever been engaged in litigation understands that it is costly, consumes time, unpredictable and psychologically draining. With litigation, until the judge makes the ruling on who is wrong or right, one is never certain of the outcome. Alternative dispute resolutions for litigation are mediation and arbitration. Mediation is basically referred to the settlement and bringing peaceful compromise between the disputants through the involvement of a neutral third party. On the other hand, arbitration is referred to the situation where both the parties in the dispute present their difference to the judgment of a neutral party selected by mutual consent. Smith suggest that these two alternatives have been gaining popularity as a method for remedying some of the above mentioned setbacks which litigations bring. Nonetheless, there has been mystification by the public in general concerning the differences between mediation and arbitration and which is better than the other (Smith et al 2009, p.49).

Mediation

Mediation is in general undertaken before a single mediator who has not power of judging the case but only helps in facilitating a discussion and the eventual dispute resolution. Many sectors have recently embraced mediation. Typically, mediation enjoys a great rate of success in part due to the fact that the parties are brought together in an environment that is neutral where they can unreservedly and in secret give their position in front of a neutral party who in return tries to limit the issues and put them in a perspective. McIlwrath and Savage suggest that the participants usually feel better after having an opportunity of getting solution to things affecting them ...