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Differences Between Arbitration and Mediation

Arbitration is sometimes referred to as "private judging". Generally the arbitrator hears evidence under oath and then renders a binding decision. (It is possible to have non-binding arbitration, although that is not common.) The advantages of arbitration are that is usually much quicker and less expensive than litigation. It is also private: There is no public court record, which can be an advantage if the parties prefer to keep the dispute quiet.

Often arbitration begins because an agreement contains a provision requiring arbitration. Even if that is not the case, parties can always agree to arbitration.

Arbitrations are generally held in a conference room and the proceedings are less formal that court proceedings. It is rare for there to be a court reporter. In some circumstances witnesses are allowed to testify by declaration, videoconference or telephone, particularly if they are located far away.

There are few grounds for appealing an arbitration decision; this can be an advantage if the parties prefer to avoid the risk of years of court appeals.

Mediation is different in that the mediator usually acts only as a facilitator, seeing whether it is possible to persuade the parties to reach a settlement agreement. The mediator does not issue a binding decision, although in some cases the mediator may provide his/her evaluation of the matter. Still, no one can force the parties into settlement. Despite the fact that a mediator has no binding authority, a high percentage of the cases taken to mediation settle.

Mediations frequently start with the parties and the mediator all talking together. Frequently at some point the mediator asks the parties to go to different rooms and conducts "shuttle diplomacy" by going back and forth between the separate party groups. The purpose is to enable the parties to tell the mediator things confidentially that they may not want the other side to hear. The mediator not only talks with the parties but transmits any authorized settlement offers to the other side. The process continues until either the matter settles or it is clear that no settlement is possible, at least at that time. As the process proceeds, at some point the mediator may tell each party his/her evaluation of the case, particularly if the mediator believes a party is being unrealistic.

Some contracts contain provisions requiring mediation of disputes, or the parties may all agree to mediation. Frequently courts will order mediation of a dispute as well.