Even if you have never been involved in a lawsuit, you have probably heard the terms “mediation” and “arbitration”. What you may not know is how they differ from one another.
Arbitration services and mediation services are both forms of alternative dispute resolution (ADR). ADR refers to any process of settling disputes outside of the courtroom. In some cases, it is a viable alternative to litigation.
What is Mediation?
Mediation is an informal process in which a neutral third-party, known as the mediator, works with the opposing parties to agree upon a mutually satisfactory resolution to their dispute. The mediator guides the individuals toward a settlement by helping them clarify their arguments and encouraging compromise.
Mediators are not authorized to make legally binding decisions; therefore, it is not within their power to impose a resolution upon the parties. The resulting settlement does not have the same legal weight as an “award”; rather, it is a signed agreement similar in nature to any other contract.
Mediation is most suited for cases in which disputing parties have a somewhat amicable relationship and are able to negotiate.
What is Arbitration?
Arbitration is a procedure that involves an unbiased third-party to act as judge and jury. This person, known as the arbitrator, has the authority to resolve the dispute outside of the public judicial system. It is essentially a simplified version of a court trial, involving less complicated rules. The arbitrator has more flexibility to decide upon the proceedings and how to analyze any given evidence.
The parties can agree before the proceedings take place to abide by “binding arbitration”. This makes it so that the decision of the arbitrator, known as the “award”, is enforceable by law.
Many consumer contracts include a clause that requires any disputes to be resolved by alternative dispute resolution as opposed to litigation. This allows companies to keep legal costs low as well as keep their legal issues private.