Mediation and Arbitration: The Difference
Mediation and Arbitration: The Difference
Mediation and arbitration are processes that are commonly used for conflict resolution. They are an alternative method to court settlements that are cost-effective and time-saving. Both of them may be the same.
However, certain factors set them apart from each other. This blog aims to help you understand the difference between the two so you can get your facts straight.
Understanding Arbitration
Just like mediation, arbitration is a process used to solve conflicts. A neutral third party, also known as the arbitrator, helps to settle the dispute among the participating parties. In arbitration, the arbitrator listens to the perspectives of each party and makes a decision based on all the evidence and statements that the parties provide during the session. The decision applies and is binding to both parties.
The process is quick and less costly than hiring a lawyer and taking things to court. There are two types of arbitration processes:
- Voluntary arbitration is the type of arbitration when both parties agree to the decision made by the arbitrator.
- Mandatory arbitration is the type of arbitration in which the participants agree upon a contract presented by the law.
The arbitration outcome may be binding or non-binding:
A binding arbitration is legally binding on all the participants involved in the decision made by the arbitrator.
A non-binding arbitration does require the legal binding of participants. The participants may accept or reject the decision made by the arbitrator.
Difference Between Mediation and Arbitration
Let us take a dig into the mediation and arbitration pros and cons along with their differences:
Mediation
Arbitration
Communication is carried out by a neutral third party, a mediator
Legal processes are put to use to resolve conflict outside of court by an arbitrator
The mediator gives full control of decision-making to the parties involved
The decision is made by an arbitrator after gathering statements and evidence from both parties
Less formal as compared to arbitration
More formal as compared to mediation
It is less expensive as compared to arbitration
More expensive as compared to mediation
Parties can maintain a relationship after the outcome
Parties are distant and hesitant to stay in contact or maintain a relation
Mediation is not legally binding. Parties can agree or disagree with the outcome
Arbitration is a legally binding process. The arbitrator makes the decision, and the parties have to follow it whether they are pleased with the decision or not
Advantages of Mediation
There are various advantages of mediation in dispute resolution:
Confidentiality: The mediation process requires all discussed in the session to be confidential. Nothing must be discussed or disclosed in front of anybody. This provides a safe environment for participants so that they can discuss freely.
Mediation is less costly and takes up less time to reach an outcome.
Mediation gives the parties full control and lets them decide on a solution that works for all.
Mediation promotes effective and open communication and tries to create a good understanding between the parties involved so that no relationships may be harmed because of the discussions and outcomes.
Advantages of Arbitration
Let us go over the advantages of arbitration:
Arbitration is also a confidential process. The parties involved are required to keep the discussion confidential.
It is faster than going to court as the disputes are resolved quicker than in court. This helps to save both time and money.
Arbitration is a flexible process. Parties involved can make amends to make the process according to their needs. They can decide the time, location, and language they want the session to be conducted in.
Arbitration is a comparatively less adversarial process as compared to the court. The process reduces hostility between the parties.
Situations where mediation is preferred: As we discussed above, mediation is a process that involves a mediator to commence dialogue between two parties. It allows them to figure out a solution for their dispute and communicate effectively.
Let us look at the situations where mediation is best applied:
Mediation is best for divorce cases. It helps the husband and wife sit together and discuss issues such as child custody, alimony, and other issues. Family disputes must also be resolved with mediation. The mediator would help establish effective communication and preserve the relations as well.
Mediation is proven to be great for workplace conflicts. Effective communication is always best to resolve a simple conflict that can negatively impact a positive workplace environment.
Situations where arbitration is preferred: Arbitration, a similar process to mediation, is conducted in the presence of an arbitrator. After listening to all the statements and looking at the evidence, the arbitrator makes a decision that has to be followed by the parties involved, no matter what. Let us look into the scenarios where arbitration would prove to be a better option as compared to mediation:
Arbitration is used for legal proceedings where the law must take the decisions. The arbitrator takes the decision and resolves the dispute out of court. If a decision requires final binding, parties involved consider using arbitration to seal the deal as no one, even the higher authorities, can raise any appeals.
The process is widely used in industries where disputes are due to financial issues or construction issues.
Conclusion
To conclude, mediation and arbitration are alternative dispute resolution processes used by parties who want a quick and an out of court settlement for their conflicts. Mediation is an excellent option for parties wanting to resolve conflicts while maintaining and preserving their relations. On the other hand, arbitration is more suitable for legal proceedings where a final and binding decision must be made.
Before choosing what methodology you want to move forward with for your issue, ensure you have a clear-cut concept of the processes and how they work.
