What is the difference between mediation, arbitration and litigation?

If you own and operate a business, it is inevitable that you will encounter disagreements. These disputes can be with suppliers, customers, service providers, or other businesses. To resolve these disputes, you have three options: mediation, arbitration, or litigation.

Mediation involves a neutral third party, known as a mediator, who helps the parties communicate and cooperate to reach a mutual agreement. It takes place outside of the court and is seen as a peaceful way to resolve disputes while preserving working relationships.

Arbitration also takes place outside of the court but differs from mediation. In arbitration, the parties present their case to an arbitrator or a panel of arbitrators who make a decision on the issue. Like mediators, arbitrators are unbiased and do not take sides in the dispute. The results of arbitration can be legally binding or non-binding, depending on the agreement of the parties involved.

Litigation refers to a lawsuit and involves presenting arguments in court to resolve a legal disagreement. It offers the least amount of control to both parties and can permanently damage a business relationship. However, it may be necessary if the other party refuses to negotiate or be reasonable.

To minimize the impact of disagreements on your business, it is important to understand and consider all available methods of dispute resolution.