If you are confused about arbitration and mediation, you’re not alone. Both are forms of alternative dispute resolution (ADR) meant to keep cases out of the courts or minimize time in court. Both can be cheaper than litigation, give parties more control over the process, and they are confidential whereas litigation becomes public record. However, mediation and arbitration are very different.
Mediation is a negotiation. The mediator is a neutral third party who helps the parties reach an agreement they can both be happy with. Mediation can be used to solve some of the issues in a dispute so that only the issues the parties can’t agree on are decide in court. Mediation is not legally binding unless both parties agree to be legally bound by decisions made in the process. And, it is voluntary. Either party can walk away from mediation at any time.
Arbitration is not a negotiation. The arbitrator is a neutral third party who hears the details of the dispute and issues a decision much like a judge would do. It is legally binding, but you can appeal unless the contract that required arbitration prohibits appeals. The arbitrator typically has expertise in a field relevant to the subject matter of the dispute. Although arbitration is also a voluntary process, it is often entered into because the parties signed a contract with an arbitration clause.
Arbitration and mediation are important legal proceedings. Some companies use arbitration as a vehicle to reduce their legal expenses and to avoid publicity of their conduct that might negatively impact them. If you have questions about either mediation or arbitration, please, contact an experienced attorney for an initial consultation.