Key Differences Between Arbitration and Mediation

Arbitration and mediation are both popular methods of alternative dispute resolution, offering ways to resolve conflicts and settle disputes outside of traditional legal proceedings. However, there are key differences between the two approaches:

1. Neutral Third Party

In arbitration, a neutral third party, known as an arbitrator, listens to both sides and makes a decision to resolve the dispute. In contrast, a mediator in mediation facilitates communication between the parties to help them reach a mutually acceptable resolution.

2. Decision-Making Power

In arbitration, the arbitrator has the authority to make a binding decision that both parties must adhere to. On the other hand, in mediation, the parties themselves retain the decision-making power and can choose whether or not to accept the proposed solution.

3. Impartiality

Arbitrators are typically neutral individuals with expertise in the subject matter of the dispute. Mediators, while also neutral, focus on guiding the parties towards a resolution rather than imposing a decision.

4. Binding vs. Non-Binding

Arbitration results in a binding decision, while mediation outcomes are non-binding unless the parties agree to make them legally enforceable.

5. Dispute Resolution Methods

Arbitration is more structured and formal, resembling a mini-trial, while mediation is known for its flexibility, informality, and emphasis on collaboration.