What is the difference between mediation and arbitration?

Mediation is a process wherein the parties meet with a mutually selected impartial and neutral person who assists them in the negotiating, and settling their dispute. Arbitration is a procedure in which a dispute is submitted, by agreement of the parties, to one or more arbitrators who make a binding decision on the dispute.

Mediation involves hiring a neutral third person, a mediator, into a dispute to assist the parties in negotiating acceptable resolutions for all parties. Arbitration is a procedure in which a dispute is submitted, by agreement of the parties, to an arbiter who makes a decision on a dispute. Arbitration is the most traditional form of private dispute resolution. Arbitration is a binding procedure. In this article, Nakase Wade’s civil litigation attorney in Los Angeles discusses the difference between arbitration vs mediation.

What Is The Difference Between Mediation and Arbitration?

In mediation, the mediator helps the parties define and understand the issues and each side’s interests. In arbitration, arbitrator listens to facts and evidence and renders an award; the parties present case, testify under oath. Mediators help parties try to come to an agreement. Arbitrators have the power to make a binding decision. Both mediation and arbitration utilize a neutral third party, called the Arbitrator, to resolve the conflict outside of a courtroom.

Difference between arbitration and mediation.

	Mediation	Arbitration
Purpose and Goal	Negotiating settlement	Dispute adjudication
Who has authority?	Parties control the resolution.	Arbiter decides the outcome.
Power	Mediator has no power to decide the outcome. Each party has the power to control the settlement outcome.	Arbiter has the power to decide the outcome.
What costs more, mediation or arbitration?	Mediations are more affordable in general than arbitration. A one-day mediation cost between $500 to $10,000, depending on the mediator’s fee.	Arbitration is expensive. The arbiter’s fee starts at $450 per hour. Arbitration cost starts at $18,000 per day.
Outcome	The parties decide on the outcome.	A decision is based on witnesses, law, and facts.
Evidence	Joint and private meetings between individual parties and their counsel.	Evidentiary hearings. No private communication with the arbitrator.
Process and procedure	The process is informal. Parties are active participants. Parties vent feelings, tell the story and engage in creative problem-solving.	The process is formal. Attorneys control party participation. Parties present case and testify under oath.
Exchange of information; discovery	The exchange of information and discovery is voluntary.	Extensive discovery
Arbitrator vs mediator	The mediator assists the parties in defining and understanding the issues and each side’s interests.	The arbitrator listens to facts and evidence and renders an award.

In mediation, the mediator will ask questions and moderate the discussion to ensure each party gets a chance to speak. They can make suggestions and propose options for resolution, but their suggestions are not legally binding. The mediator may require a number of meetings with the parties, both individually and together in order to reach a resolution. Mediation allows people to be a part of the solution and makes them feel like they have a choice. It also helps to resolve personal differences, so can be useful in family court when two people divorcing will still need to remain on good terms in order to co-parent their children.

Arbitration is more like a court trial. Each party can bring witnesses and present evidence to the arbitrator, but there is no jury. The arbitrator will make a decision after they have heard all of the evidence and that decision is legally binding. During arbitration, the arbitrator may ask questions of each party and witnesses. Both sides can have attorneys who will conduct the presenting of evidence and questioning of witnesses. An arbitration decision is legally binding, and the courts will enforce it if one of the parties fails to honor the decision.

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