Mediation and arbitration are two popular alternative dispute resolution (ADR) methods used to settle civil legal disputes.
Many conflicting parties use the two ADR methods because they help them avoid unpredictable, expensive, lengthy, and emotionally draining court battles.
One of the primary distinctions between mediation and arbitration is that in mediation, the parties involved in a legal dispute rely on a neutral third party (mediator) to assist them in negotiating a settlement to their legal matter, whereas in arbitration, the parties grant an independent adjudicator (arbitrator) the right to make a final decision on their dispute based on the evidence presented by the parties.
This means that if negotiations fail during a mediation hearing, the parties involved must seek alternative means of resolving their legal dispute, like moving to court, while in arbitration, because the arbitrator makes a final decision on their legal issue, the parties must abide by it as they would a court judgment or appeal the arbitrator’s decision.
Other key differences between arbitration and mediation include:
Mediation Has One Mediator While Multiple Arbitrators Are Involved in Arbitration
As I have mentioned above, arbitration and mediation both use an unbiased third party to govern the process.
In mediation, this is a single mediator, preferably a retired judge or an experienced attorney.
The mediator’s key role is to facilitate communication between parties in a legal dispute with the hope that the discussions will end in an amicable solution to the legal tussle.
During the mediation process, the mediator cannot take sides, offer legal advice to any of the parties involved, or force a settlement.
Arbitration can also be conducted with one arbitrator, but in most cases, each of the parties involved in the legal dispute chooses an arbitrator, and then the arbitrators choose a third neutral party.
The parties will then present the facts of their case to these arbitrators, who will then look at who is legally right or wrong and make a decision on the case by majority vote.
Like in mediation, arbitrators can also be retired judges or individuals with experience in the disputing parties industry.
Mediation Is Faster than Arbitration
A skilled mediator can help conflicting parties discuss and resolve their differences in a day.
The arbitration process, however, can take weeks or even months because plea hearings, discovery, preparation of witness statements, witness testimony, cross-examination of parties, and other time-consuming legal processes may take place to enable an arbitrator make a legal sound judgment.
Mediation Is Cheaper than Arbitration
In California, a day of mediation costs between $3000 and $5000, and the cost is split 50-50 between the conflicting parties.
You also don’t have to have an attorney at the mediation hearing, which can help you avoid paying legal fees.
Arbitration, on the other hand, can cost you tens of thousands of dollars because you have to hire an attorney to help with the legal processes involved, pay expensive arbitration filing fees, adjudicator fees, transcript fees, and much more.
The duration of the legal process can also significantly increase the costs involved and you could be asked to pay the other parties’ legal fees if you lose in the arbitration.
Mediation Concludes with an Agreement or Impasse, While Arbitration Concludes When a Judgment Is Rendered
Parties involved in mediation do it voluntarily, and during the process, a party can pull out if they feel it’s not going their way or for any other reason.
For mediation to be successful, however, conflict parties are advised to do it in good faith, which means they must be genuine in their desire to find a solution to their disagreement.
Once you agree to arbitration, you cannot abandon the process willfully because before it starts you’ll most likely have set out terms of engagement. One of the terms would be an arbitrator should decide on your case to conclude it.
Also, when an arbitrator decides on your legal issue, you may be required to adhere to it even if you don’t agree with the judgment. Failure to do so could lead to more legal problems for you.
In mediation, consensus between conflicting parties on how to resolve a dispute is not legally binding until they sign an agreement requiring them to live up to their settlement.
Other differences between mediation and arbitration are.
- Conflicting parties decide how their issue ends in mediation, while an arbitrator decides the outcome in arbitration.
- Mediation is very informal, while arbitration will include testifying under oath, evidentiary hearings, etc.
- Mediation allows for creative problem solving of a legal tussle while evidence, facts, and law determine the outcome in arbitration.
- Mediation is private and confidential, and while arbitration is also private, the arbitrator’s decision is made public.
Mediation or Arbitration Which One Should You Choose?
If you have just gotten involved in a legal conflict, I recommend you try talking it out with the parties involved to see if you can quickly sort it out.
If this fails, you should move to mediation if you believe you can resolve the matter amicably on your terms with the help of a neutral third party.
Mediation should also be an option if one or all parties cannot afford to pay for legal services and if the issue causing problems is small.
If mediation also fails, arbitration should be your last resort before moving to court.
Arbitration can also be an option if the conflict parties’ relationship has irreparably broken down and they believe they can’t have a cordial discussion during mediation to sort out their legal problem.
If there are huge amounts of money, serious allegations, or complex issues involved in the legal tussle, choosing arbitration over mediation may also be preferred.
Gallagher Krich, APC: Experienced California Alternative Dispute Resolution Attorneys
If you’re interested in knowing more about mediation vs. arbitration, or you believe you’re involved in a legal conflict that can be resolved using either of the alternative dispute resolution methods, contact us online or call (858) 926-5797.
Our attorneys with 30+ years of experience can successfully help you avoid a costly and time-consuming court process through mediation or arbitration.