Question 1

What is the difference between arbitration and mediation?

Accepted Answer

Arbitration and mediation are both forms of alternative dispute resolution (ADR), but they differ significantly in process and outcome. In mediation, a neutral mediator facilitates discussions between the parties to help them reach a voluntary agreement. The mediator does not make a binding decision—the parties retain full control over whether to settle and on what terms. Mediation is collaborative and often preserves business relationships. In arbitration, the parties present their case to one or more arbitrators (similar to a private judge) who hear evidence, consider arguments, and issue a decision called an award. Arbitration is more formal than mediation but less formal than court litigation. The arbitrator's decision can be final and enforceable by courts. At Smith Butz, we offer both services and help clients determine which approach is most appropriate for their specific dispute.

Question 2

How long does arbitration take compared to litigation?

Accepted Answer

The arbitration is built to be significantly faster than traditional courtroom litigation. The speed advantage comes from several factors: the parties and arbitrator have more control over the schedule, discovery is typically more limited, there are no crowded court calendars to contend with, and (under certain circumstances) the arbitrator's decision can be final without lengthy appeals. However, the timeline depends on the complexity of the dispute, the number of parties involved, and the availability of the arbitrator and participants. At Smith Butz, we work to resolve arbitration matters efficiently while ensuring thorough presentation of clients' cases.

Question 3

Why are oil and gas leases including arbitration clauses?

Accepted Answer

The modern trend for oil and gas leases in Pennsylvania is to include provisions requiring that disputes be resolved through arbitration rather than in court. Oil and gas companies include these clauses for several reasons: arbitration is private (unlike court proceedings which are public record), it allows the selection of arbitrators with specialized knowledge of oil and gas law, it is generally faster and more predictable than litigation, and it limits the potential for large jury verdicts. For landowners, arbitration clauses have both advantages and disadvantages. While the process can be faster and less expensive, you could lose the right to a jury trial, the right to a meaningful appeal, and the potential benefit of public scrutiny. At Smith Butz, when we negotiate oil and gas leases for landowners, we carefully review arbitration clauses and negotiate modifications to ensure the process is appropriate.

Question 4

Can I choose my own arbitrator?

Accepted Answer

Yes, the selection of an arbitrator is typically a collaborative process between the parties, though the specific method depends on the arbitration clause or agreement. Common approaches include: each party selects one arbitrator, and those two select a third neutral arbitrator (forming a three-member panel); the parties agree on a single arbitrator from a list provided by an arbitration organization such as the American Arbitration Association (AAA); or the arbitration clause designates a specific arbitration organization that administers the selection process. Choosing the right arbitrator is critical—you want someone who is experienced in the relevant area of law, has a reputation for fairness, and can commit to a reasonable schedule. At Smith Butz, our attorneys' qualifications make them well-suited for selection on any arbitration panel.

Arbitration & Mediation

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