What is the distinction between arbitration and mediation?

Running a business can be fulfilling, but it is inevitable that you will encounter challenges at some point. Some of these challenges may result in a court summons. However, resorting to the court system is typically a last option, as there are more cost-effective and efficient methods of resolving disputes. Two alternatives to litigation that you may be familiar with are arbitration and mediation. Although these terms are often used interchangeably, they are actually distinct procedures.

What are the main differences between arbitration and mediation?

Formality vs. informality

Arbitration is somewhat similar to a court hearing, but on a smaller scale. The process is still largely controlled by attorneys and the arbitrator, and it may even take place in a courtroom-like setting. On the other hand, mediation aims to create a different atmosphere. The process is designed to be less formal, allowing participants to feel comfortable and encouraged to actively engage.

Levels of participation

In arbitration, attorneys present their cases and an arbitrator makes a legally binding decision based on the facts. As you can see, this is quite similar to a court case. In mediation, however, the participants have a much more active role. The mediator is present to facilitate negotiations and constructive conversations, with the ultimate goal of reaching a fair compromise between the parties. Both parties are actively encouraged to address the issues themselves, with the mediator acting as a facilitator.

If you are facing a potential lawsuit, it is worth considering whether mediation or arbitration may be suitable for your situation. These alternative methods can save you time and money. We specialize in assisting businesses dealing with legal disputes. Contact us for a consultation.