When legal disputes arise, parties have several options to resolve them. Often, parties need to resolve their disputes without having to go to court, as court litigation can be too costly, time-consuming, and emotionally draining. In such cases, parties may choose mediation or arbitration as alternative dispute resolution (ADR) methods.
Mediation and arbitration are two of the most common forms of ADR, both aiming to resolve disputes with the involvement of a neutral third party. However, the two processes are quite different in their approach, procedures, and outcomes. Understanding the distinctions between mediation and arbitration is essential for any party considering them as a dispute resolution option.
Mediation refers to the process of resolving disputes by bringing parties together in a neutral setting, with the help of a neutral third-party mediator. The mediator acts as a facilitator, helping parties to communicate openly, understand each other’s positions, and reach a mutually acceptable agreement. In a mediation process, the mediator does not decide the outcome, but rather supports the parties to identify their needs and interests and to find a solution that meets their mutual interests and needs.
Arbitration, on the other hand, is more of a formal adjudicatory process where parties engage a neutral third-party, known as an arbitrator, who acts like a judge and makes a binding decision. Arbitration involves presenting evidence and arguments to the arbitrator, who then makes a final decision on the disputed matter. Unlike mediation, in arbitration, the arbitrator’s decision is final and binding and can only be challenged under certain limited circumstances.
Another significant difference between mediation and arbitration is in terms of time, cost, and complexity. Mediation tends to be a faster and less expensive process compared to arbitration. Mediation can typically be concluded within a day or two, while arbitrations have a formal process, including discovery and evidential hearings, which can take a few months to years to finalize. Moreover, the cost of a mediator is usually shared by the disputing parties, while parties bear the full cost of hiring the arbitrator.
The level of control that parties have over the dispute resolution process is another difference between mediation and arbitration. In mediation, parties have full control over the outcome of the dispute resolution process. They can choose to agree or not to agree to any proposed resolution, and nothing is binding until they both agree. However, parties, in Arbitration, are subject to the decision of the arbitrator, which is final and enforceable.
Finally, mediation and arbitration differ in terms of the nature of their outcomes. In mediation, parties are empowered to create their resolutions, which more often than not, leads to better relations between parties and reduces the likelihood of future disputes. Conversely, in arbitration, parties rely on a third-person judgment, which creates a winner and a loser.
In conclusion, the difference between mediation and arbitration is vast. Parties need to weigh each method’s pros and cons when deciding which ADR method is most appropriate for their particular situation. Mediation often creates a lasting solution to disputes, while arbitration creates a final and legally binding resolution. Both mediation and arbitration have their place in the dispute resolution toolbox and which one is appropriate will depend on the circumstances of the dispute.