Arbitration Versus Mediation

Arbitration and mediation are both forms of alternative dispute resolution (ADR), a method for resolving disputes outside of the courts. While they are closely linked, the main difference is that an arbitrator is appointed to make a final decision, while a mediator simply facilitates the resolution of a dispute.
 
Parties involved in mediation are not required to reach a final decision. However, binding agreements can be made if participants choose to contract an "agreement settlement."

Differences Between Mediation and Arbitration

The main difference between mediation and arbitration is that an arbitrator can make a final decision, while a mediator cannot. An arbitrator acts as the judge and jury in a case, listening to both sides of a dispute, reviewing all the relevant information and then making a judgment on who should win. Mediators simply discuss settlement opportunities with the mediating parties and encourage them to come to a voluntary agreement on their own.
 
Decisions made by an arbitrator are legally binding, unless a "non-binding" arbitration is specifically requested. Conversely, settlements reached through mediation are always non-binding. If the mediating parties wish to make their settlement legally binding, they can arrange an "agreement settlement."
 
Another difference between arbitration and mediation is in the ability of the parties to withdraw from the process after it has begun. In arbitration, the disputing parties can mutually agree to withdraw from the arbitration in two cases:
  1. before a final decision is made
  2. if no arbitration clause has been signed.
Arbitration clauses within a signed contract require that all parties use arbitration to make a decision according to the stated stipulations.
 
In contrast, parties are not generally bound by a contract in mediation. While a contract can require initial participation in the mediation process, if either party finds that they do not want to settle after mediation has begun, they are free to quit the process without coming to a resolution.

How Mediation and Arbitration are Alike

Mediation and arbitration have some key similarities. First, because they are both forms of alternative dispute resolution (ADR), each can be used for any legal case. Mediation or arbitration may be used instead of the traditional court system when the disputing parties want to avoid bureaucracy, save money and keep the resolutions or awards of the proceedings off the record.

Some examples of cases that move to ADR include:

  • business disputes, such as a claim of unfair or illegal treatment in the workplace
  • consumer disputes, such as a faulty product
  • family disputes, such as child custody.

Additionally, mediation and arbitration both use an unbiased third party (the mediator or arbitrator). In both cases, the third party listens to the dispute and reviews the relevant information presented by each party.

Another similarity between mediation and arbitration is that each of these proceedings can only move forward if both of the disputing parties agree to participate. If either side of the dispute refuses to engage in mediation or arbitration, the case will likely have to proceed through the courts.

If you are currently in a dispute, do some research to determine if arbitration or mediation is a viable option for your situation. Either proceeding may save you from having to go through a more painful, expensive court case.
 
Resources
 
Advice Company (1995-2008). Litigation – Arbitration Center. Retrieved March 10, 2008, from the FreeAdvice Web Site.

Belknap, Thomas H., Jr. (2003). Drafting A U.S. Arbitration or Mediation Clause. Retrieved on March 7, 2008, from Blankrome.com Web site.

Melamed, James (n.d.). What is Mediation? Retrieved March 10, 2008, from the Mediate.com Web site.

National Arbitration Forum (2008). What Is the Difference Between Arbitration and Mediation? Retrieved March 6, 2008, from Arb-Forum.com Web site.

Pedreira, Tom (n.d.). Arbitration. Retrieved on March 7, 2008, from the Research.lawyers.com Web site.

United States Arbitration and Mediation (1991-2001). Arbitration Services. Retrieved on March 7, 2008, from USAM.com Web Site.