You generally have three choices when it comes to resolving a dispute in small claims court: arbitration, conflict mediation or trial. Your decision will depend on the nature of your claim, the cooperation of the other party and the chances of resolving your claim in a negotiation forum, as opposed to through litigation.
Small claims courts often include a voluntary conflict mediation program, which gives parties an opportunity to resolve their conflicts instead of engaging in litigation. A small claims court may require parties to participate in conflict mediation first, proceeding to trial only if these efforts are unsuccessful.
The conflict mediation process is an informal process, conducive to finding an acceptable solution for both parties. In this forum, each party tells his side of the story and presents evidence to the mediator, who then guides the negotiations toward resolution. One advantage of the mediation process is that the mediator is able to realistically and objectively assess each party's case. If an agreement is reached, each party signs a legally binding settlement agreement.
If the parties can't reach an agreement, however, the case proceeds to trial. Mediation is confidential, so the discussions and conclusions that arise from conflict mediation are inadmissible in court and won't influence the small claims trial proceedings.
Some small claims courts provide an arbitration option to parties. In lieu of a trial, arbitration is a formal proceeding—much like a court trial—in which both parties present evidence and testimony to the arbitrator, who acts as a sort of judge. Unlike in conflict mediation, parties don't need to agree on a solution. Instead, at the conclusion of the arbitration proceedings, the arbitrator issues a legally binding, written decision.
Many small claims court dockets are backlogged and arbitration expedites cases and eliminates the need for repeated court appearances. In addition, since neither party can appeal an arbitrator's decision, this process provides a sense of closure.
Conflict mediation and arbitration each require both parties' participation. If either party refuses to negotiate, resolution through conflict mediation is impossible. In the case of arbitration, the court can't require a party's participation. On the other hand, failing to participate in a small claims court trial may result in the court issuing a judgment—known as a default judgment— against the non-participating party.