The Difference Between Mediation and Arbitration
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The Difference Between Mediation and Arbitration
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Don’t be surprised if the courts divert your next lawsuit to mediation or to non-binding arbitration. Since the trend toward alternative dispute resolution cuts costs for the court as well as for the parties, it shows no sign of slowing. In this Tip, we discuss the difference between mediation and arbitration.
Court-ordered arbitration is a private and informal adjudicatory process similar to a court trial. An impartial attorney appointed by the court listens to presentations made by the disputants, and then issues a decision that (hopefully) settles the conflict. In some court-ordered arbitrations, the award of the arbitrator is legally binding and enforceable upon the parties, unless one or the other petitions the court for trial de novo (which means as though the arbitration never happened) and pays the required fee to do so.
The arbitration hearing is much less formal in procedure than a court trial, but each party has the right to present proofs and arguments as in a court of law. Unlike mediation, in arbitration the parties give up the power to create their own solution, and place resolution of their problem in the hands of the arbitrator, but as a matter of practice, many cases settle once dialogue opens at the hearing.
Mediation is an alternative form of dispute resolution in which a neutral third party tries to find a way for the parties to come to agreement of settlement. It is non-binding, and different from a trial or an arbitration because the goal is not a resolution ordered down in the form of an award by an arbitrator or judgment by a judge. There is no “decision” because there is no “contest” in mediation. Instead, the mediator tries to find a common ground and draw the parties toward an agreement.
Mediation is often successful in cases where hard feelings over nonpayment act as a roadblock to dialogue, or where the amount of a claim of offset is open to reasonable debate (such as where the appropriate fix for a problem must be chosen from competing approaches). If no agreement is reached, the case goes back on the track to trial.
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