What Is the Difference Between Arbitration and Mediation?

What is the Difference Between Arbitration and Mediation

Both arbitration and mediation are two separate alternative dispute resolution (ADR) methods to resolve legal issues between parties outside of a traditional court hearing. While both methods are aimed to resolve and/or settle a legal issue, there are distinct and key differences between the two.

What Are Arbitration and Mediation?

Arbitration is a formal proceeding, like a court trial, where an impartial third-party (the arbitrator) reviews evidence and listens to arguments from the parties. In many cases, arbitration rules may not follow the same rules of evidence as a traditional court trial. Instead, arbitrators may have their own set of rules for determining what evidence is admissible and what is not. For example, in some arbitration proceedings, hearsay evidence may be admissible, whereas it would not be allowed in a court trial.

Additionally, the standard of proof required in arbitration may be different from a court trial, and arbitrators may be given more discretion in determining the relevance and weight of the evidence. Thus, once the parties have presented their case, the arbitrator issues a ruling that is binding and enforceable.

Generally, the decision of the arbitrator cannot be appealed. However, prior to arbitration, the parties may have agreed to specific conditions in the arbitration agreement that allow for an appeal. Contracts and arbitration are closely connected because many contracts include arbitration clauses. These clauses require parties to resolve disputes through arbitration. In some contracts, there may be arbitration clauses that decide the location of arbitration and methods to select the arbitrator.  Therefore, it is important for businesses and individuals to understand terms and conditions of a contract, as well as arbitration and mediation.

The Difference Between Arbitration and Mediation

Mediation, on the other hand, is a less formal process where a neutral third party (the mediator) helps parties prior or during ongoing litigation reach a settlement. The mediator does not make a binding decision, but rather facilitates the communication between the parties, helps them identify their interests, and works with them to develop solutions to resolve the case. While the agreement reached in mediation is not legally binding, it can be made into a legally binding contract if the parties choose to do so.

Generally, mediation is a voluntary process, and the parties control the outcome of the mediation. However, if the parties are in the midst of litigation, the court may order the parties to attend mediation. If arbitration and mediation are ordered, it is important to understand your case history, including but not limited to, motions filed, and discovery requested to resolve your case.

In summary, the main difference between arbitration and mediation is that arbitration results in a binding decision made by a third-party, while mediation results in a mutually agreed upon settlement reached with the help of a neutral third party. Overall, the choice between mediation and arbitration will depend on the specific circumstances of the dispute and preferences of the parties involved.