When California families facing trust disputes consider alternatives to probate court litigation, they often focus on mediation as the primary option. But arbitration is another alternative dispute resolution mechanism that is available in some trust dispute contexts, and it presents a fundamentally different risk-benefit profile than mediation. Understanding the distinction between mediation and arbitration, when trust disputes are subject to binding arbitration agreements, and when each process is better suited to the specific dispute gives trust dispute parties the complete picture of their alternative dispute resolution options.
The Fundamental Difference Between Mediation and Arbitration
Mediation is a facilitated negotiation in which a neutral third party helps the disputants reach a voluntary agreement. The mediator has no authority to impose a decision, and nothing that happens in mediation binds the parties unless they voluntarily agree to it. If mediation fails to produce a settlement, the parties are free to proceed to court litigation with the same rights they had before mediation began. Arbitration, by contrast, is an adjudicative proceeding in which a neutral third party, the arbitrator, hears evidence and arguments from both sides and then renders a decision. When arbitration is binding, the arbitrator’s decision is final and enforceable as a court judgment, with very limited grounds for appeal. When arbitration is non-binding, the arbitrator’s decision is advisory but can be powerful as a signal of how a court might rule.
Trust Document Arbitration Clauses in California
Some California trust documents include mandatory arbitration clauses requiring that disputes among the trust’s parties be resolved through arbitration rather than court proceedings. The enforceability of these clauses against trust beneficiaries who did not sign the trust document has been litigated extensively in California. California courts have generally held that arbitration clauses in trust documents are enforceable against beneficiaries who had notice of the clause and who accepted benefits under the trust, but the specific enforceability depends on the clause’s language, whether the claim at issue falls within the clause’s scope, and whether the clause satisfies California’s general contract law requirements for valid arbitration agreements.
When Arbitration May Be Preferable to Court Litigation in Trust Disputes
Even when arbitration is not mandated by the trust document, parties in a California trust dispute can voluntarily agree to submit their dispute to binding arbitration. Arbitration may be preferable to court litigation when the parties want a decision maker with specific trust law expertise, since arbitrators in trust disputes can be selected specifically for their trust and probate knowledge; when the parties want a faster decision than the Los Angeles Superior Court’s crowded docket provides; or when the confidentiality of the arbitration process is important to parties who want to keep the family dispute out of the public court record. Against these advantages, the limited appeal rights in binding arbitration and the possibility that the arbitrator’s decision will be unfavorable and unreviewable must be weighed carefully. The California Legislature’s Code of Civil Procedure Section 1280 governs arbitration agreements and proceedings in California. Working with an experienced trust mediation attorney who understands both mediation and arbitration gives trust dispute parties the complete analysis of which ADR process best serves their situation.
