Question

Use the above record label and band scenario. After coming to an agreement in principle, the record label seemingly reneges on the decision to share the merchandising royalties evenly. The band is infuriated and also very worried about the value of the contract without those additional payments. However, they don't want to sue - they are happy with the rest of the contract and have spent significant time working out a promotional and creative strategy that they're very excited about executing with the label. Given the situation, they consider two options for dispute resolution: arbitration  and mediation. Which should they choose and why? What is a risk of that choice?

Answer 1

MEDIATION- THE PREFERRED ALTERNATIVE FOR DISPUTE RESOLUTION

Mediation is an effective tool in settling disputes in which a third party neutral (mediator) assists the parties to resolve their conflict. Mediation is a form of alternative dispute resolution in which two people or parties meet out of court to resolve their argument with the help of the mediator.

REASONS FOR CHOOSING MEDIATION FOR DISPUTE SETTLEMENT

There are so many benefits in using mediation as a dispute resolution mechanism;

• The process is non-adversarial.
• Less expensive
• Assures confidentiality, impartiality, and neutrality.
• Avoids delays.
• Flexible
• It avoids confrontation and facilitates the reconstruction of the relationship.
• Enhances sustainable peace.

RISKS INVOLVED IN MEDIATION

• The common risk involved in mediation is the danger of the rouge mediator. A poor mediator may be biased towards one party and this may derail the mediation process.
• Mediation has no formal rules. If one party is timid and the other is aggressive, the latter is at the risk of losing some of what is legally owed to him.
• If the mediator approaches the dispute to achieve the settlement at all costs, he may pester the one or both parties into making a deal which they later regret.
• Lastly, mediation may not be successful and parties may not able to resolve their dispute. In this case, the parties will have to go through a process of trial which is expensive and time-consuming.