Mediation vs. Arbitration: What's the Difference?

Mediation vs. Arbitration: What's the Difference?

mediation vs. arbitration

When you have disputes, you can try to reach a settlement with or without an attorney by your side, and with or without a local court or judges. There are two main forms of dispute resolution at your disposal: mediation and arbitration.

The biggest difference between mediation and arbitration is the role of the mediator or arbitrator as well as the legally binding nature of any resolution. In either situation, you meet with the other party or parties involved in the dispute process and you can both choose to have attorneys present to help you but it’s not a requirement.

What is Mediation?

So how is mediation different from arbitration? Mediation is a private legal type of dispute resolution where you meet with a certified mediator alongside any other parties involved in the dispute and you talk things over. The National Association of Certified Mediators provides certified professionals whose job it is to help both parties talk, come to an agreement. The mediator is not there to make a decision on your behalf and the outcome of mediation is only legally binding if all parties involved come to an agreement and sign paperwork for that agreement. You could just as easily try mediation for something like a custody battle or a probate settlement and find that no resolution is achieved so now you have to use other legal means.

What is Arbitration?

Arbitration is handled by the American Arbitration Association. When you use arbitration, a neutral, third-party arbitrator is assigned to your case. You present your evidence and information, and the other parties provide their facts and information. Then the arbitrator reviews all of the information and makes a legally binding decision. Arbitration is effectively a microcosm of the court system where the arbitrator is like a judge and they have the legal power to make a decision and enforce it.

What is the Difference Between Arbitration and Mediation?

The difference between a mediator and an arbitrator is that a mediator is there to facilitate a conversation between the parties while an arbitrator functions like a judge and they review all the information in a case and all the evidence and compare it to the rules that are in place and make a decision.

The process is also slightly different. 

Mediation vs. Arbitration

When you move forward with the arbitration, you start by contacting the American Arbitration Association and filling out the necessary paperwork. This organization has private forms that you use to explain what your issue is and upload any additional evidence you have. If you are working with an attorney they can do this on your behalf. When the time comes, the arbitrator will schedule a meeting with all parties involved which can take place in person or over the phone, sometimes even via email depending on the situation. They will explain their findings and the outcome of the dispute resolution process. The arbitrator will then file all the necessary documents with the courts and enforce the resolution. 

When you move forward with mediation you start by contacting your local courts or state-specific mediation organization to find a mediator in your area. The mediator will work with all parties involved and any attorneys to set up a date for mediation. This process takes a few hours, and it can take much more and maybe even multiple meetings if no decision is reached initially. During these meetings, the mediator will use certain language or tactics to try and get everyone to express themselves clearly explaining what went wrong, why it was a violation or why a decision would be in the best interest of one party over the other, and what resolution they want. If an agreement is reached at some point, the mediator will draft the agreement and have everyone sign it and then it gets filed with the courts.

Advantages of Arbitration vs. Mediation

There are similar advantages to arbitration and mediation. For example:

  • If you live in a location far away from the courts, you can still likely use mediation or arbitration closer to home. For this process, all the parties simply meet where it is convenient, and in certain cases, you can even handle the process over the phone.
  • Both options are significantly less expensive. The cost for arbitration or mediation is usually a one-time fee that all parties split and any additional fees for private attorneys you want to be involved. You might incur fees for extra paperwork or court filing if you use arbitration but these are nominal compared to a full lawsuit.

Advantages of Arbitration

Arbitration is sometimes a requirement in customer contracts such as the user agreements you signed with your cable company or your cell phone provider. The fine print of most user agreements for such large companies stipulates that you cannot file regular claims or class action lawsuits against the company but instead have to use arbitration. In these cases if you have a dispute with this provider, you still have rights even if you can’t use litigation.

Another advantage to arbitration is that the outcome is legally binding. The law states that decisions made by an arbitrator are final. If the decision for the case is in your favor, then the issue is settled.

Advantages of Mediation

Mediation gives you a chance to talk with a neutral party without airing private details publicly. If you file lawsuits to try and settle an issue, all the evidence you present in all the information in the case is made public. With mediation, you can avoid lawsuits and meet with someone who is trained to help facilitate a better discussion between you and the other parties privately.

Should I Use a Mediator or Arbitrator?

When deciding between a mediator vs. arbitrator, you have to consider your situation. If, for example, you are trying to get a settlement from a vacation property rental company or delivery company because they failed to honor their agreement or they overcharged you, you might be required by your user agreement to use arbitration. Similarly, if you are not looking for someone to render a decision on your behalf but you just want someone to help guide you through the legal process for something like ending a marriage and determining who gets custody rights, mediation might be a better option for you.

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