It is a common practice in South Carolina for business contracts to stipulate that the parties involved will settle legal disputes through arbitration instead of litigation. Arbitration is usually faster and less expensive than taking a case to court.
Contracts may not mention mediation, but it is often a viable first step in resolving business disputes. A neutral third party listens to both sides of the issue and offers creative suggestions for how the two conflicting parties may reach an acceptable compromise. Depending on the level of hostility, the mediator may lead a joint discussion with everyone sitting around a table in a conference room, or the mediator may decide that it’s more productive to meet with both sides individually. If the disputing parties agree, a video conference is another possible option.
The decision of the mediator is not binding. However, it is an excellent way to resolve a problem. Because the parties are reaching a satisfactory compromise, they may continue their business relationship without further disruptions.
Arbitration is a more formal process than mediation, and the arbitrator’s decision is usually binding. Because of this, attorneys are often present to present their client’s case and cross-examine witnesses. Both sides must agree on the choice of an arbitrator, who is often an attorney or retired judge. Hearings usually occur in a conference room, and the arbitrator has much more leeway than a judge when deciding what testimony and evidence are acceptable. Appeals are possible only in rare situations, and the stress of the process may destroy the business relationship.
Your business disagreement may eventually result in arbitration, but remember that mediation may offer an inexpensive way to settle disputes, even if the contract doesn’t mention it.