Arbitration vs. Mediation

There's a thing called Alternative Dispute Resolution (ADR) that you're probably more familiar with than you think you are. Maybe you've heard the terms Mediation and Arbitration before? These are the two most common forms of ADR. But what are they exactly? Keep reading to find out!

So what is Alternative Dispute Resolution? Basically ADR is any sort of conflict resolution that happens outside of a courtroom. There are many benefits to trying to resolve a dispute through ADR, the main ones being that it's quicker and cheaper than the traditional legal process. In addition, when you choose ADR, the process is less formal and you're likely to have more involvement in reaching a resolution.

Here's where Arbitration and Mediation fit into this whole thing: they're the most common forms of Alternative Dispute Resolution. So let's jump into the details of how the whole thing works.

The main difference between the two methods is that in an arbitration the arbitrator who oversees it will hand down a decision, just like a judge would in court. In mediation however, the mediator does not make any decisions or give orders, they simply help the parties reach a settlement by assisting communication as a neutral third party.

So this means a mediation ends when the parties come to an agreement or they are deadlocked and cannot proceed. An arbitration ends when the arbitrator renders a decision.

The way arbitration works is similar to a trial in that the parties each give opening statements and present evidence. It is each party's choice as to whether or not they want a lawyer to represent them. Arbitration can also be binding or non-binding, meaning if an arbitrator hands down a decision in a binding arbitration, it cannot be contested (except in some very narrow circumstances). In a non-binding arbitration, the parties do not have to accept the decision and can choose to continue in court.

Mediation procedures can vary but generally it begins with both parties sitting down with the mediator and explaining their side. Often times the mediator will then meet with each party independently. The mediator will then discuss the situation with the parties and offer different possible resolutions. Generally after a mutually acceptable resolution is reached the parties will enter into a written settlement agreement.

Of the two procedures there is generally a higher satisfaction among those who choose mediation because they feel more involved with the resolution process and they have more control of the outcome.

Now let's talk arbitration clauses. You may have seen these in a lot of the contracts you've signed (think: cell phone agreements, employment agreements, etc.) and most arbitration arises from contracts where the parties have agreed to resolve any disputes arising out of the contract through arbitration. Pay extra attention to these clauses. Some simply say that disputes will go to arbitration but others are more complex specifying where the arbitration will take place, who will pay for attorney's fees and even how the arbitrators will be selected.