Arbitration and mediation both provide alternative options for dispute resolution. Learn about the differences between the methods as well as the advantages and disadvantages of each.
updated November 22, 2023 · 4min read
Arbitration and mediation are alternative methods for dispute resolution, allowing people or companies to come to an agreement privately about a situation that might otherwise be litigated through the court system. Each process has its own pros and cons to consider.
Arbitration is a dispute resolution method in which parties appear before an arbitrator, who might be a retired judge or someone with experience in the industry in question. The arbitration process is similar to a court case, but less formal, in that each side has the chance to present evidence, offer witness testimony, and make arguments. Each side might each have lawyers representing them.
The parties agree that the arbitrator decides the outcome of the dispute. Arbitration can be binding, where there is no opportunity to go to court if you are not satisfied with the outcome, or nonbinding, where it does not remove your rights to pursue the matter in court.
Many contracts now include arbitration clauses, requiring the parties to use arbitration to resolve any disputes. These kinds of clauses can be detrimental to small companies and consumers signing a contract with a large company. For example, the clause usually chooses a location for the arbitration, which may be inconvenient and expensive for the consumer. An arbitration clause is also usually a take-it-or-leave-it situation: if the consumer does not agree to the arbitration clause, the deal is over, which can result in an imbalance of power.
There are advantages to arbitration, which include:
There are also some drawbacks:
Mediation is a process in which a mediator, a neutral third party, works with the disputing parties to come to a mutually agreed upon resolution. The mediator usually has received mediation training and may be an attorney, retired judge, or in some cases, such as divorce, a therapist. The mediation process is cooperative and focused on working through issues so as to come to a solution that each party is comfortable with. Mediation is sometimes a required step to move forward with a court proceeding: for example, in California, custody cases must go through mediation before moving to a trial.
Mediation is handled through a series of meetings. There are no formal hearings. The mediator may meet with the parties together and/or separately and, rather than make a decision regarding the dispute, writes up the agreement the parties reach. The agreement is nonbinding until it is converted into a court order or judgment.
There are many advantages to using mediation to resolve a dispute, including:
As with arbitration, mediation also has some drawbacks to consider, including:
Arbitration and mediation both provide expedient and more cost-effective alternatives to a traditional court proceeding. However, they are not one-size-fits-all, so it's important to consider what might work best in your situation.
by Brette Sember, J.D.
Brette Sember, J.D., practiced law in New York, including divorce, mediation, family law, adoption, probate and estat...
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