Disputes are inevitable and can arise in any setting, between individuals, businesses, or even countries. Parties can reach resolutions through alternative dispute resolution methods instead of going to court. Two of the most common approaches are mediation and arbitration. While their main goal is to resolve disputes, they differ significantly in various aspects, as discussed in this article.
What is Mediation?
Mediation is a dispute resolution approach where a neutral third party, known as a mediator, works to help disputing parties reach a mutually agreeable solution. The mediator only facilitates communication and helps the parties explore possible solutions to the dispute but does not impose a decision.
What is Arbitration?
Arbitration, like mediation, involves a neutral third party. The neutral party, known as an arbitrator, listens to arguments and evidence presented by each side and then decides on behalf of the disputing parties. The arbitrator, often a lawyer, can decide which parties must abide by.
Key Differences Between Mediation and Arbitration
Mediation and arbitration differ substantially from each other, as discussed below:
Role of Mediator vs. Arbitrator
In mediation, the mediator facilitates communication between the disputing parties and helps them arrive at possible solutions. On the other hand, an arbitrator listens to the arguments and evidence that each side presents and grants an award.
Formality of Process
Mediation is typically less formal and more flexible than arbitration. The mediation process is less structured and not bound by formal rules of procedure. For instance, the mediator can meet the disputing parties together and separately, while in arbitration, the arbitrator cannot hold separate hearings.
Arbitration is a more formal process governed by specific rules of procedure. The parties typically present their case in a formal hearing, and a decision is made based on the evidence.
While active participation of the parties in mediation is encouraged, in arbitration, the arbitrator controls participation and limits it to facts and evidence of the case.
One of the primary differences between mediation and arbitration is the decision-making process. In mediation, the parties are involved in a negotiation where they can offer creative solutions to their dispute. However, arbitration involves the arbitrator making the final decision, and the parties must abide by it.
In mediation, parties can find solutions that work for everyone involved. If the proposed solutions are unacceptable, a resolution must not be reached. In arbitration, however, the outcome is guaranteed, typically a clear decision that may or may not be satisfactory to both parties.
Degree of Satisfaction
Mediation is often more satisfying to the parties than arbitration because the parties have more control over the outcome. Mediation provides a safe space for parties to communicate with each other to find a mutually acceptable agreement. Active participation in the decision-making process typically makes the parties more satisfied.
Arbitration can be less satisfying because the parties have less control over the outcome. The parties only present their case then the arbitrator makes the final decision. The final decision may not be satisfactory to both parties, and they may feel like they have been forced to accept the outcome. However, parties can request a trial in court if they disagree with the arbitrator’s decision, provided the arbitration is non-binding.
Mediation is generally less expensive than arbitration as it involves fewer formal procedures and less time. Arbitration costs more than mediation because it is more formal and structured and may involve multiple hearings and a longer process. Furthermore, an arbitrator can order one party to pay additional costs to the other party.
Which Approach is Appropriate?
Mediation and arbitration are viable and effective alternatives to the traditional court system. The choice between mediation and arbitration depends on the case’s circumstances and the parties’ preferences.
If you want to have control over the outcome, incur fewer costs, maintain the relationship with the other party, and feel like you can work together to reach a mutually acceptable solution, mediation may be the best option.
However, arbitration may be appropriate if you cannot negotiate a settlement with the other party but still prefer to keep the matter private.
Contact an Experienced Mediator in California Today
If you have a situation that you would prefer to be resolved through mediation, the experienced mediator attorney in Encinitas at Blue Sky Mediation Centre in California can help. You can contact us at 760.454.7277 to schedule a free consultation today.