Mediation vs Arbitration: Difference and Comparison

Mediation and arbitration are two very different methods of dispute resolution. It is important to understand the differences between arbitration and mediation before entering into either process.

Understanding the difference between Mediation and Arbitration can help you choose the best method for your situation.

Arbitration is a way to resolve disputes outside of court. However, unlike mediation, which is non-binding, involved parties will have to adhere to an arbiter’s decision.

Mediation also takes place outside of court, but it is not binding – that means that both parties do not have to accept or adhere to a mediator’s decision.

Key Takeaways

1. Mediation is a voluntary, non-binding process in which a neutral third party helps disputing parties reach a mutually acceptable resolution. At the same time, arbitration is a more formal, binding process in which an arbitrator decides after reviewing evidence and hearing arguments.
2. Mediation focuses on communication, collaboration, and finding common ground, whereas arbitration is more similar to a court trial and results in a legally binding decision.
3. Mediation offers more flexibility and control over the outcome for the parties involved, while arbitration provides a more definitive resolution with limited options for appeal.

Mediation vs Arbitration

Mediation is a voluntary and non-binding process in which a mediator facilitates communication between parties to help them reach an agreement. Arbitration is a binding process which involves an arbitrator making a decision to settle a dispute after hearing arguments from both sides.

Arbitration is an alternative to litigation, resolving disputes in court. If the disputing parties cannot reach an agreement through negotiation or mediation, they can get arbitration.

Arbitration can make claims go much more quickly than litigation because you do not have to wait for a trial date in court.

Arbitrators are experts in their field of business and can bring knowledge of business law and practice to the proceedings. A lawyer may be helpful to you at arbitration if you choose to hire one.

The role of the mediator is to foster conversation and aid the parties in achieving voluntary agreements on as many topics as possible without imposing his or her views or values on either side.

He or she does not make judgments; rather, they foster discussion between the participants to reach their conclusions.

The mediator will assist the parties in identifying issues, brainstorming possibilities, and weighing options. He or she may, if necessary, recommend resources for more information on legal rights or other matters.

Comparison Table

Parameters of comparison	Mediation	Arbitration
Meaning	Mediation is a method of settling disputes in which a third party assists the parties in reaching a mutually acceptable solution.	Arbitration is a non-judicial alternative to a public trial in which an impartial third party assesses the entire circumstances and renders a judgement that is binding on both parties.
Nature	Mediation is a collaborative process in which two parties collaborate to resolve.	The nature of the decision is Adversarial.
Process	The process of mediation is Informal.	Mediation is a formal process that is similar to a courtroom session.
Role of expert	Facilitator	Judge
Number of experts	One	One or more
Communication	Communication that is kept private Meetings between the parties and their attorneys take happen both together and separately.	There will be no private discussions with the arbiter, just evidentiary hearings.
Decision	The mediator does not decide; instead, only the parties consent to a settlement.	The arbitrator’s ruling is final and irrevocable for both parties.

What is Mediation?

Mediation is a process in which the parties address their disagreements with the help of a skilled neutral third party who helps them achieve an agreement. The mediator does not render a decision for the parties.

Instead, the mediator helps them solve that all sides consider acceptable. The parties decide whether or not to mediate, when and how to resolve their disputes, and what form their resolution will take.

Mediation helps parties deal constructively with conflict, whether in court or outside of court. In litigation, mediation can be used at any time during proceedings.

A mediator may also be hired before a dispute arises as part of a contract negotiation process. This is sometimes referred to as “preventative mediation.”

Mediation is private and confidential. A mediator does not have the authority to make decisions for anyone other than him- or herself or serve as an expert witness for either side.

Mediation can be used in many different kinds of disputes. The most common is divorce and child custody.

However, mediation can also be helpful in any conflict, including business disputes, landlord-tenant problems, family squabbles, neighbourhood conflicts, and many others.

What is Arbitration?

Arbitration is a process in which an impartial third party investigates the issue in-depth, listens to all parties involved, gathers pertinent material, and then renders a final ruling and binding on all parties.

Arbitration can be used in almost any context where two or more parties disagree on the terms of their relationship.

Businesses frequently use arbitration to settle disputes between themselves — particularly large companies that know they are likely to keep doing business with one another over the long term.

Arbitration is sometimes called “private court” or “private judging.” The arbitrator can be a retired judge or an attorney with experience in law that is at issue in the dispute.

The arbitrator’s role is similar to that of a judge, except that the parties voluntarily agree to arbitration rather than through the court system. Arbitrators are referred to as arbiters.

Arbitration is almost always less formal than a trial or court hearing. It does not require many procedural steps, such as discovery and filing motions, making litigation expensive and time-consuming.

For this reason, arbitration can be much faster than litigation, and it costs less too. Arbitration is different from litigation because a judge or jury does not decide it.

Rather, the disputing parties select their arbitrator, who will decide the matter based on the facts presented. Regarding debt collection practices, arbitration is one of the most efficient forms of dispute resolution available.

The process takes less time than litigation and can be handled by an arbitrator with specialized knowledge of debt collection practices.

Main Differences Between Mediation and Arbitration 

1. The mediation procedure and its conclusion are completely at the hands of the parties involved. In contrast, the arbitrators have complete authority over the procedure and the decision in arbitration.
2. The outcome of mediation is determined by the parties’ needs, rights, and interests, but the arbitration decision is based on the facts and evidence submitted to the arbitrator.
3. The mediator does not make any decision; instead, he or she negotiates a solution with the parties’ consent. Unlike arbitration, the arbitrator’s ruling is final and binding on the parties.
4. When the parties achieve an agreement, or the mediation process comes to a halt, the parties are said to have reached a deadlock. When the decision is issued, the arbitration is over.
5. In mediation, a neutral third party acts as a facilitator to help the parties reach an agreement. On the other hand, the arbitrator acts as a judge when it comes to making a decision.
6. In any mediation, there can only be one mediator. On the other hand, arbitration might include many arbitrators or a panel of arbitrators.
7. In mediation, the mediators listen to both sides in a private meeting in addition to joint meetings. In arbitration, on the other hand, the arbiter stays impartial, and there is no such private communication. As a result, the decision is based on testimony.

References

1. https://psycnet.apa.org/journals/psp/65/6/1167.html?uid=1994-19842-001
2. https://psycnet.apa.org/journals/apl/56/1/1/

Last Updated : 20 July, 2023