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Mediation Vs. Arbitration

While mediation and arbitration are both forms of alternative dispute resolution (ADR), these twoproceedings do have some key differences. If you are considering using either of these alternatives to

traditional litigation, knowing their similarities and differences can be helpful in choosing the rightprocess for your specific situation.

Mediation is a process used to avoid settling a dispute in court. During mediation, a third, unbiasedparty (the mediator) stimulates discussion between the disputing parties to help the negotiationprocess and move the dispute towards a resolution.

What Does Arbitration Mean?

Like mediation, arbitration is also legal process used to avoid settling a dispute in court. Inthis process, a third, unbiased party (the arbitrator) is appointed to review the case andmake a final decision in favor of one of the parties. Essentially, the arbitrator acts as the

judge and jury, whereas the mediator is more of a facilitator who doesn''t impose a final

resolution on the disputing parties.

How Mediation and Arbitration are Alike

As forms of ADR, both mediation and arbitration allow disputing parties to settle their conflicts outsideof the traditional court system, which usually involves lengthy, costly proceedings. Other similaritiesbetween mediation and arbitration are that they both:

are confidential proceedings in which any resolution made does not become a matter of publicrecord

are informal proceedings with far less technicalities than the traditional court system

invoke a third, neutral party (either the mediator or arbitrator) to oversee the proceedings

may result in legally enforceable resolutions

require voluntary participation from the disputing parties (unless a mediation or arbitrationcontract has been previously signed).

Some examples of cases that can be resolved with ADR include:

business disputes, such as a claim of unfair or illegal treatment in the workplace

consumer disputes, such as a faulty product conflicts

family disputes, such as child custody

international disputes, such as diplomatic conflicts.

While mediation or arbitration may be initiated once a dispute arises, in some cases, these processes

begin because they have been stipulated in a larger contract as the method of resolving disputes.Signing a contract with an arbitration or mediation clause agreement indicates that you agree toparticipate in the stated process should a dispute arise.

Differences Between Mediation and Arbitration

One of the most important differences between mediation and arbitration is that an arbitrator makes afinal decision on a case, while a mediator does not. During an arbitration proceeding, an arbitratorlistens to and considers all relevant information, then deciding which party should win. The winningvote is called an Award.

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On the other hand, a mediator discusses possible settlements and encourages the disputing parties toarrive at a decision on their own. In a way, the mediator acts as a sort of middleman that facilitatesdiscussions to get the individual parties to agree on a resolution.

When an arbitrator makes a final decision, it is legally binding. Appeals are only accepted underspecial circumstances. In contrast, mediation settlements are never legally binding unless both partiesspecifically request binding mediation. In most cases, if disputing parties sign a mediation clause, theyare required to participate in mediation, but none of the settlements or decisions reached are legallybinding.

If the disputing parties wish to make their agreements binding, they can arrange an "agreementsettlement." An agreement settlement is a written contract stating the terms of the agreements. Inorder for it to be legally binding, a judge must sign the mediation agreement settlement.

Another difference between mediation and arbitration is in the ability to withdraw from the process.While a mediation agreement can require persons to participate initially, because mediationagreements are not legally binding, neither party is required to complete the process nor find aresolution if (s)he doesn't want to.

Conversely, parties involved in arbitration can only withdraw before a final decision is made and only ifno arbitration clause has been signed. Arbitration clauses require that all parties use arbitration to

make a decision according to the stated stipulations.Mediation and arbitration can both be effective ways of settling disputes outside of court. However,because their inherent differences can affect the outcome of a dispute, choosing the right form of ADRfor your situation is key to getting the most favorable outcome.