Mediation and arbitration are both means of resolving conflicts or legal issues (also called alternative dispute resolution) outside of the courtroom. Typically, both are used to help two parties reach an agreement without a lengthy legal battle.1
Both mediation and arbitration can be used during a divorce, custody disputes, landlord-tenant disagreements, and other interpersonal conflicts.
The main distinction between the two is who makes the final decision. With mediation, the final decision is a reached agreement between the two conflicting parties, while arbitration calls on an arbitrator to analyze the case details and reach a verdict.
Let’s dig a little deeper into each and the differences between the two.
What is mediation?
Mediation is a conflict resolution method that involves a neutral third party, called a mediator, who helps the other two parties resolve their issues collaboratively. Mediators work to help both parties reach an agreement on their own, rather than hearing each side and coming to a conclusion themselves.
Mediation is a non-binding process. This means that while they’re highly qualified with conflict resolution skills and legal knowledge, mediators don’t have the power to make a final decision. That is ultimately left to the two arguing parties, who must voluntarily agree to a resolution.2
Benefits of mediation
Mediation can be appealing for a number of reasons. In addition to getting a conflict resolved, it may provide freedom to clients who want to solve their issues largely on their own. Additionally, mediation:
- Typically costs less than litigation and arbitration
- Doesn’t bind participants to a specific outcome
- Is often less cumbersome than having a case argued in court
What is arbitration?
Like mediation, arbitration is the process of settling a conflict with the help of a neutral third party, aka an arbitrator. However, arbitration grants an arbitrator the authority to make a final decision about the issue. Depending on the stipulations of the arbitration contract, this decision can be binding or non-binding.
The arbitration process is more structured and similar to a court case. Each party makes an opening statement and presents their side to the arbitrator — though less formally than a court case. Once each party has presented their case, the arbitrator will consider both sides and then come to a conclusion.3
Benefits of arbitration
There’s usually less back and forth with arbitration than with mediation, so the process typically moves faster. Some additional benefits include:
- Reaching a definitive outcome
- Getting assistance from a trained, impartial party
- Typically being a less complicated procedure (e.g., relaxed evidence and case presentation)
- Often costing less and being less involved than arguing a case in court
What is med-arb?
There are some cases when both mediation and arbitration are necessary to reach a solution. This is called med-arb. In this process, the two conflicting parties first attempt to resolve the issue on their own with the help of a mediator. If they can’t come to an agreement, the mediator transitions into an arbitrator role and decides on an outcome.
For example, if a couple is going through a divorce and can’t come to an agreement on spousal support or division of assets, they may need to transition from using a mediator to letting an arbitrator make the final decision.
Mediation vs. arbitration: which is right for you?
Whether mediation or arbitration is the right choice for you depends on your specific circumstances and the relationship between you and the opposite party.
Typically, mediation is a good choice if both parties believe they can work together to come to an agreement on their own. In cases where this doesn’t seem possible, arbitration may be a better choice.
If you’re not sure which option is best for you, consider talking to a lawyer. With a legal insurance plan, you may have access to legal advice from professionals who can help you choose between mediation and arbitration for your unique situation.