Mediation vs. Arbitration:

When I mention to people that I am a mediator, people always think of arbitration. So I decided to write this simple description of the differences between the two.

The Main Difference

Mediation and arbitration are both ways to resolve disputes without going to court, but they operate quite differently. Mediation is a process where two or more parties work together with the assistance of a neutral mediator to communicate with each other and create their own agreement. The mediator does not make any decisions for the parties involved—the parties maintain complete control of the agreement they create through mediation.

Arbitration is a very different process. An arbitrator hears evidence presented by both parties and makes a decision based on that evidence. The arbitrator’s decision is similar to a judge’s decision. Arbitration can be either binding or non-binding.

Control and Flexibility

Mediation offers you the opportunity to create an agreement that meets your unique needs. You may want to develop a payment plan that allows you to pay off your debt over time or an agreement that preserves a strong relationship between you and your spouse. Many of these agreements would not be available to you through the court system or would not be enforceable as judgement.

With arbitration, you give up your ability to create your own solutions. Once you have presented your dispute and the arbitrator renders a decision regarding how to resolve your dispute, you are subject to the arbitrator’s decision without any alternatives available to you.

Cost and Time

Mediation typically costs much less than arbitration. Mediation sessions are generally shorter than arbitration sessions, and the collaborative nature of mediation allows parties to avoid preparing extensive amounts of evidence or using expensive expert witnesses to testify. Most disputes can be settled through several mediation sessions.

Arbitration is certainly less expensive than going through the court system. But there are still substantial costs associated with hiring an arbitrator and utilizing the formal process of arbitration. It is faster than litigation but slower than mediation. Arbitration typically takes months rather than years, whereas mediation typically takes weeks rather than months.

Privacy

Both mediation and arbitration are private processes. Neither are typically made public unlike most disputes that are resolved in a court of law. This is particularly valuable for businesses that want to protect trade secrets, get through family matters, and for individuals trying to protect their reputations.

Impact on Relationships

Mediation can positively impact the relationship between the parties. Working together to reach a resolution to their problems creates better communication and understanding between the parties, which leads to a greater commitment from both parties to make the agreement work. Resolutions made thru mediation are often better enforced and long lasting.

On the other hand, arbitration creates winners and losers. It is an adversarial process whose goal is not preserving the relationships between the parties. Unlike mediation, the result can be very disappointing for one side or the other.

How to Make Your Decision

You should consider mediation when you want to maintain control over the resolution process and preserve the relationship between you and the other party. Mediation is especially effective for family disputes, business partnerships, or workplace conflicts where there are ongoing business relationships.

You should choose arbitration when you require a binding decision, have been unable to negotiate a settlement, or the contract requires arbitration to resolve disputes. Arbitration works best when the dispute has clear-cut facts and law.

Best Practice

Obviously, I suggest that you start with mediation. It is less risky and less expensive than arbitration. The benefit of mediation is that if it does not fully resolve your dispute, arbitration or court will still be available options. Working collaboratively through mediation will not hurt your case and can result in creative solutions that neither party would have previously contemplated.

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