Many people confuse arbitration and mediation, and use the words synonymously, but the two processes are quite distinct, and the goals and mechanics for each are different. Let’s take a brief look at each of these conflict resolution options and compare them.
Arbitration is simply defined as “the use of an arbiter to settle a dispute.” When put that way, it doesn’t sound that different from mediation. However, arbitration is considered a judicial determination and usually holds the same binding effect as a legal hearing. The results of an arbitration hearing may not be appealed, except in limited circumstances.
Arbiters can be chosen and appointed by the disputing parties or they can be appointed by a court or an agency that administers an arbitration program, such as the American Arbitration Association or the Financial Industry Regulatory Authority. Arbitration holds legal force and courts don’t interfere once a hearing has been ordered or an arbiter chosen. Unlike in mediation, the neutral third party has legal authority to make a decision to resolve the dispute that both parties must then abide by.
In an arbitration hearing, both parties have the ability to present evidence and arguments and provide witness testimony to the arbitrator or panel of arbitrators. In this way, it’s a formal process that shares more similarities with a judicial hearing. It is governed by rules of procedure similar to the rules in court. If the arbitration is through an administered program they have a similar set of procedural rules governing the conduct of the process.
In some cases, arbitration can be non-binding, and may be used as a precursor to legal action or an attempt to resolve a dispute with a neutral third party making a ruling without that decision being binding.
Similar to mediation, arbitration involves the use of a neutral third party to hear a dispute. The hearing is private and confidential, and the disputing parties have the ability to choose their arbiter or arbiters. In arbitration, parties generally choose either one arbiter or three. Also similar to mediation, the action can be used to resolve a conflict without resorting to expensive and time-consuming legal proceedings.
Mediation is defined as a process where a neutral third party helps the individuals work through a conflict and find an appropriate solution that serves everyone’s needs. Mediation may take one session or it may require several, depending on factors such as the number of parties involved, the complexity of the dispute, and the willingness of the participants to work through the conflict with the mediator.
A mediation session is non-binding, and the mediator does not make a decision. Neither party has to necessarily agree to anything by the end of mediation; rather, the goals are generally to help both sides resolve or discuss a conflict in a healthy, safe, confidential manner. A mediator is the facilitator of the dialogue and helps both sides discuss difficult subjects. Unlike in arbitration, the parties make their own decision regarding the dispute, and the neutral third party is only there to assist. But it is important to note that if the parties make a decision in mediation and that decision is memorialized in an agreement that they sign or incorporated into a d