Conflicts are as much a part of business life as contracts and negotiations. Today, companies are faced with the challenge of resolving conflicts not only efficiently, but also in a legally compliant and future-proof manner. Traditional court proceedings are becoming less attractive in the face of increasing complexity, costs and resource commitment. Alternative dispute resolution procedures such as arbitration, mediation and conciliation offer real options for action outside the often lengthy legal process.
But what is the difference between these processes – particularly in terms of costs, practical application options and decision-making in day-to-day business?
Costs of arbitration, mediation and conciliation proceedings
Fundamental differences
The cost structures differ considerably in some cases – both in terms of direct fees and possible follow-up costs.
1. arbitration proceedings
- Fee basis: Arbitral tribunals regularly charge arbitrators’ fees, administrative fees and – in the case of institutional proceedings – costs for the arbitration institution.
- Amount of costs: The fees are usually based on the amount in dispute and can quickly rise into the five- to six-figure range – especially in complex disputes with several arbitrators.
- Additional costs: There are also expert fees, lawyers’ fees and, if necessary, costs for interpreters and translations.
- Allocation of costs: The arbitration tribunal determines the costs; typically the losing party bears the majority, but a pro rata allocation is possible.
2. mediation procedure
- Fee basis: The mediator’s fees are calculated on an hourly or flat-rate basis. At CenaCom, the rates are based on the work involved and the complexity.
- Costs: Significantly more moderate than arbitration or court proceedings. For standard commercial mediations, the fees (depending on the mediator and the amount in dispute) are usually between EUR 150 and EUR 400/hour; the total cost usually remains in four figures.
- Additional costs: Rarely required, but possible for experts or external advice.
- Distribution of costs: The parties agree individually on the distribution (often half); varies according to company practice.
3. conciliation proceedings
- Fee basis: State-recognized conciliation offices such as CenaCom charge fixed and very transparent fees (e.g. in accordance with the schedule of costs, based on the value of the matter).
- Costs: Usually well below court fees; depending on the amount involved, from approx. EUR 200 (low amounts in dispute) up to several thousand EUR (higher amounts in dispute).
- Additional costs: Only if required, e.g. for interpreters or experts – always with prior agreement.
- Special features: In the event of an agreement, the costs can be distributed by agreement; without an agreement, each party bears its own costs. Legal fees are always billed separately.
4. court costs (for comparison)
- According to the RVG and GKG, court costs are based exclusively on the amount in dispute and may be lower than in arbitration proceedings, but often higher than in mediation or conciliation proceedings. In addition, there are high follow-up costs (e.g. legal fees, time spent, damage to image, etc.).
Details on current CenaCom fees and a direct comparison can be found in our comparison publication.
Advantages and disadvantages of the procedures for companies
Arbitration proceedings
Advantages:
- Legally binding decision: Arbitral awards are internationally enforceable.
- Professional competence: Selection of specialized referees.
- Confidentiality: No public negotiations, protection of business secrets.
- Flexibility: Process design can be customized.
Disadvantages:
- High costs: sometimes higher than in state courts.
- Limited legal remedies: Hardly any possibilities of appeal.
- Compulsory enforcement: Voluntary willingness to enforce required first.
Mediation procedure
Advantages:
- Cost-efficient and time-saving: quick solutions, moderate fees.
- Independent solution: parties work out viable results themselves.
- Preservation of business relationships: Ideal option for long-term partnerships.
- Confidentiality: Confidentiality about contents and results.
- High implementation potential: Agreement is supported by all sides.
Disadvantages:
- Voluntariness: No decision “against the will” of a party; blockade possible.
- Legally binding: Final agreements may subsequently have to be made enforceable (e.g. by notarization).
Conciliation proceedings (dispute resolution proceedings pursuant to Section 204 (1) No. 4a BGB)
Advantages:
- Suspension of the statute of limitations: conciliation application immediately suspends proceedings in accordance with Section 204 (1) No. 4a BGB.
- Speed and transparency: clearly structured processes, fast resolution.
- Cost advantage: Very favorable compared to court and arbitration proceedings.
- Enforceability: Contracts can be made enforceable in accordance with Section 794 (1) No. 1 ZPO.
- Low-threshold: Entry is possible even in the event of deadlocked conflicts, without losing face.
Disadvantages:
- Voluntariness: In the event of rejection by one party, a “certificate of unsuccessfulness” is issued (no binding solution can be enforced).
- Limited publicity: Publicity can be created as required, but not by default (can also be an advantage).
Further practical explanations and checklists can be found in our downloads for all types of proceedings. Companies in particular benefit from customizable conflict management systems.
Decision guidance for companies: Which procedure fits when?
The choice of the “right” process depends largely on factors specific to the company:
Decision structure
| Decision factor | Arbitration proceedings | Mediation | Quality procedure |
| Economic relationship | one-off/highly contentious | Long-term partnerships | versatile, also ad-hoc |
| Subject matter of the dispute | highly complex/technical | interest-based | legal, economic |
| Confidentiality decisive? | Yes | Yes | Yes |
| Time required | rather medium/long | short/medium | short/medium |
| Cost control | restricted | high | Very high |
| Enforceability required? | Yes | Downstream if necessary | fully available |
| Voluntariness of the result | restricted | central | possible, possibly enforceable |
Practical tips and recommendations
- Lead time and cost structure: Mediation and conciliation proceedings are preferable if the costs are clearly foreseeable and the amounts in dispute are manageable.
- Long-term relationships: Mediation strengthens and maintains relationships (e.g. suppliers, joint ventures).
- Complex issues and large sums of money: Arbitration proceedings make sense when quick, professionally qualified “judgments” outside of public courts are necessary.
- Suspension of the statute of limitations: Conciliation proceedings are the ideal choice if deadlines are pending and court proceedings are not (yet) being sought.
- Enforceability: Conclusions from conciliation proceedings are, correctly documented, enforceable – a “negotiated judgment” in the best sense of the word.
Every procedure has its justification. Companies should regularly define company-wide decision-making guidelines and train those responsible for conflict management (e.g. compliance officer, legal department) accordingly.
Conclusion
The range of alternative dispute resolution is a powerful tool for companies to resolve conflicts in a cost-efficient, time-saving and sustainable manner. While arbitration scores particularly well in terms of international assertiveness, mediation focuses on understanding and relationship management. The conciliation procedure combines speed, cost control and legal force – with the clear added value of securing claims and bringing about solutions before costs and escalation get out of control.
