Arbitration vs. Mediation: The Benefits, Similarities and Differences

By Teo Spengler ; Updated June 13, 2017
Lawyer and clients in arbitration

Litigation is a Pandora's box of surprises for the unwary, many of them unpleasant. A "see you in court" moment can cost you far more than you ever dreamed in lawyer fees, court fees, jury expenses and money damages if you lose.

Courts urge and sometimes require you to consider alternative dispute resolution (ADR), which includes various methods of resolving disputes without going to court. Two of the most popular ADRs are arbitration and mediation.

If you don't understand how these processes work or how they are different from each other, you aren't alone. Until you've gone through an ADR, it's easy to feel anxious about it. The remedy is to read up on these alternatives and learn which one fits your needs. Both have significant benefits but they are very different options.

Mediation Provides Information and Room to Compromise

Mediation looks and feels a little like couple's therapy. You and the person you are going to court against show up and discuss disputed issued with a neutral person who has experience in the area and knowledge about the law. The mediator may meet with each person separately or both together in an attempt to help you find a compromise.

Divorcing couples often try to work through hotly contested issues with a mediator. While the mediator doesn't offer legal advice, she may advise both parties on which way a court is likely to rule on particular issues. In some states, the courts require that divorcing couples with child custody issues participate in mediation before rushing to trial. But mediation is not limited to divorce matters. You can mediate any civil dispute and it's often worth it, since there is usually a middle ground in which neither party wins but both come away satisfied.

If the parties agree on a compromise in the mediation, the agreement is written up and may be reviewed by the parties' attorneys. Then it is presented to the judge for approval.

Arbitration Offers a Simplified Trial Procedure

Arbitration is an alternative dispute resolution that looks something like a court trial. You prepare your evidence and present your case but not at trial – before one neutral arbitrator or a panel of arbitrators. Often each side picks one arbitrator and the two arbitrators pick a third. The panel is charged with making the types of motion rulings a court ordinarily would make (about evidence and procedure). When the arbitration hearing is over, the arbitrators rule on the case.

Although arbitration looks a lot like court, it has significant differences that may appeal to you. Court is expensive; arbitration is less expensive. Litigation can last for years; arbitration is quicker. Court trials can go to a jury; arbitration is heard and decided by the arbitrators.

Differences Between Mediation and Arbitration

While both mediation and arbitration are ADRs, useful at reducing the money and time you have to invest in court proceedings, they are decidedly distinct procedures. The differences may assist you in selecting the ADR that would work best in your situation.

Here is a short list of some major differences between mediation and arbitration:

  • Decision maker: in arbitration, the arbitrators decide; in mediation, the parties decide
  • Binding decision: an arbitration ruling usually binds the parties, mediation only helps the parties seek a solution
  • Costs: arbitration is more expensive than mediation
  • Formality: arbitration is more formal, with motions and evidentiary hearings; mediation is informal
  • Attorneys: attorneys often represent parties in arbitration; in mediation parties often represent themselves
  • Length: an arbitration may involve months of work while a mediation usually occurs over a handful of visits

Combine Mediation and Arbitration With Med-Arb

If you see advantages in both ADR procedures but can't decide which might work better for you, consider Med-Arb, a relatively new and increasingly popular way to resolve disputes. In this hybrid procedure, the parties to a dispute start by attempting to find a compromise solution with a mediator.

If it turns out that they cannot settle all issues, the parties move into arbitration mode. The mediator becomes an arbitrator (or another person is named arbitrator) to resolve the issues conclusively with a binding decision.

The fact that decisions not you cannot resolve will be made by an arbitrator may increase the likelihood of agreement during mediation. Most people would rather have a hand in the ultimate outcome.

About the Author

Living in France and Northern California, Teo Spengler is an attorney, novelist and writer and has published thousands of articles about travel, gardening, business and law. Spengler holds a Master of Arts in creative writing from San Francisco State University and a Juris Doctor from UC Berkeley. She is currently a candidate for a Master of Fine Arts in fiction.