What’s the Difference Between Arbitration and Mediation?

There’s a lot of confusion when it comes to the terms arbitration and mediation. The processes are similar, but with some specific differences. Both techniques are designed to solve differences and create a fair resolution when two parties are in dispute. When two parties can’t come to an agreement, the services of an arbitrator or a mediator may be used.

Arbitration

During arbitration, a single individual known as an arbitrator will hear evidence and testimony before rendering a final decision. The process is similar to going before a judge, but it’s slightly less formal, and can binding or non-binding. Many individuals don’t even realize that they’ve been tied to a mandatory arbitration clause should a dispute arise.

The clauses are written into a wide range of contracts with phone and credit card companies, health insurance, home repair contractors, and vehicle financing resources, along with employee hiring agreements. Where a mandatory clause doesn’t demand arbitration, the two parties can enter into the agreement voluntarily.

Mediation

When mediation is required, a neutral third-party negotiates a deal or settlement that’s mutually agreeable to both disputing parties. A mediator doesn’t collect evidence, hear testimony or render a decision, and it’s a less formal procedure. He/she facilitates communication, listens to relevant information, and develops potential solutions to which both parties may be willing to agree. It’s not binding until both parties legally sign off on the resolution.

Civil cases are most likely to be mediated and can include disputes between landlords and tenants, over divorce and child custody, on business-related issues and contract disagreements, small claims, and problems with neighbors. Mediation is a good solution if the two parties want to maintain a relationship, whatever that might be.

Know the Facts

When individuals have a choice, they should consider carefully which would be most likely to result in the best outcome for them. One method may incur less cost, be more expedient, and even set terms that require the settlement remain confidential. It can be beneficial for individuals to engage an attorney that can advise them on their best course of action.


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