As a mediator, I am frequently asked “What is the difference between mediation and arbitration?” Both are so called “alternative dispute resolution” methods. In other words, both are an alternative to protracted and costly full blow litigation in a court of law in the proper jurisdiction. In a traditional Court of Law proceeding, often one side is drug into the courthouse against his or her will. Participation is essentially compulsory. Some courts will then require litigants to arbitrate or mediate certain matters. On the other hand, arbitration and mediation can be voluntarily entered into without the necessity of a lawsuit being filed.
Arbitration proceeds as a sort of “mini” lawsuit in the sense that the march to resolution is accelerated and has less side tracts. Rules of evidence are somewhat relaxed and the eventual arbitration hearing is more informal than a Court of Law trial. However, as in the case of a trial, a third party decides who is the winner and who is the loser. In a Court of Law trial, the so called “trier of fact” assigned may be a judge or a jury. Then, based on the facts that the trier of fact favors, the law will be applied. Based on that law, it will be determine what will allowed (or dictate) as damages (if any) to flow to the winning party.
In an arbitration hearing, the parties have some influence as to who is selected to hear their matter. Often it is a three arbitrator panel where each side has select one and then those two select the third. As in a Court of Law, based on their view of the facts and applicable law, a decision will be rendered and obedience compelled. Both trials and arbitration hearings are subject to appeal. Appeals are also protracted and costly, but post arbitration appeals are generally allowed under a reduced set of circumstance and in a streamlined manner compared to appeal of Court of Law decisions.
The hallmark of mediation is that it is voluntary. Even where a court has order the parties to mediate, attendance is all that has been compelled. Once there, the parties are free to participate in any way and to whatever extent they may choose. Should the parties reach an agreement, it will be of their own design. The parties are not limited in their means of resolution to the meager list of solutions the law may provide. Most importantly, no one can compel any party to accept a resolution that they oppose. Any final agreement must be voluntarily accepted and entered into by all parties. Once a voluntary agreement has been entered, there is no appeal and the agreement can only be set aside under very limited circumstances.
As discussed more fully in my eBook: ADVANTAGES OF USING MEDIATION IN CIVIL DISPUTES, there are numerous other benefits in using mediation to resolve a disagreement. In brief, those include confidentiality, privilege, informality, promptness, certainty, and expense.