What is the difference between mediation and arbitration?
Both mediation and arbitration are types of alternative dispute resolution (ADR), that offer alternatives to the costly and time-consuming litigation of a prolonged court battle. Although they each have a different approach, mediation and arbitration are similar in that they bring parties involved in a dispute together to try to resolve it outside of court.
Through mediation, parties are brought together to find amicable solutions. In comparison to going to court, mediation offers a variety of benefits for conflict resolution. The parties, with or without legal representation, retain a mediator to help them have a productive conversation and to help each side identify its priorities. The mediation process is entirely at the parties’ discretion, including the structure, who can attend, and how the conflict will be settled. Mediation can take place at any point while the dispute is still pending and is significantly less expensive and quicker than a judicial hearing. In contrast to a courtroom, mediation is a private session that is held there. Instead of what the court may be able to mandate, creative solutions may be more suited to the interests of the parties.
Decisions or rulings are not made by mediators. Instead, they assist the parties in drafting a private, voluntary agreement on their own. The contract becomes legally binding after all parties have signed it. The parties reserve the right to try another type of ADR or take their dispute to court if a settlement cannot be reached during mediation.
Similar to mediation, arbitration uses an impartial third party—the Arbitrator—to settle disputes between the parties outside of court. But in contrast to mediation, the Arbitrator acts as a private judge to hear the evidence and render decisions to settle the disagreement. As a result, although the opposing parties retain authority in mediation, the private judge in arbitration controls both the process and the decision.
Most arbitrators are accommodating and will fit their schedules and needs around those of the parties. Additionally, although an arbitration hearing is typically less formal than a courtroom trial, both parties must follow a set of rules as they get ready for the hearing. The arbitrator’s decision is typically final and enforceable against both parties. After a binding arbitration, there is virtually little room for appeal.