Arbitration or Mediation: Which is Right for Me?

Many people confuse arbitration and mediation, and use the words interchangeably, but the two processes are totally distinct, and the goals and processes for each are different. Let’s take a brief look at each of these conflict resolution options and compare them so you can decide which route is best for your situation.

What is Arbitration?

Arbitration involves using a neutral to settle a dispute. At first glance, it may not seem 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 are chosen by the disputing parties, or they can be appointed by a court or an agency that administers an arbitration program. Arbitration is generally a creature of contract. The guidelines and rules for arbitration are part of the contract. For example, when you accept the use of a credit card you are agreeing that any disputes arising out of that business relationship are going to be resolved through arbitration. 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.

Unlike a judicial hearing which is public, the arbitration hearing is private and confidential. This is one of the reasons parties often elect to go to arbitration.

What is Mediation?

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 must 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 incorporate into a document filed in court, then such an agreement is legally binding and valid.

Mediation can be ordered by a court, as with arbitration, and the court can appoint a mediator if the parties can’t choose or agree between themselves on an appropriate individual. The clerk of court office in many jurisdictions maintains a list of mediators who have met the court’s training and experience requirements. In general, mediation is less costly, less time-consuming, and less stressful than litigation.

If you find yourself in need of conflict solutions, consider whether arbitration or  mediation is more appropriate to your needs and the desired outcome, and contact a professional for more information.

Ellen F. Kandell is a certified professional mediator and attorney with over 30 years of public and private sector experience. She is one of eight Maryland mediators featured on a statewide demonstration video of good mediation practice. Ellen is certified by the International Mediation Institute.  She provides mediation, group facilitation and training to diverse clients in Washington, DC and the US. Get in touch with her via email, and follow her on LinkedIn, and Twitter.