Mediation and arbitration are alternatives to court for resolving legal disputes. Mediation is less formal and involves a neutral third party guiding the parties towards a mutually beneficial solution. Arbitration is more formal and involves a referee making a legally binding decision. Mediation is best for civil disputes, while arbitration is for more complicated legal disputes.
Few people welcome the idea of taking a dispute to court. A formal hearing can be very expensive and time consuming, and one party could find themselves devastated by a judge or jury’s ruling. For this reason, many people try to resolve legal disputes in one of two ways: mediation and arbitration. While both of these efforts have the same goal in mind, a fair resolution of the issues at hand, mediation is generally a little less formal than arbitration, it is almost never binding. What actually happens in mediation meetings is often different from what also happens in arbitration.
Mediating a dispute involves using a neutral third party as a guide or negotiator. This person may or may not be a legal professional, although a number of law firms offer mediation services as an alternative to court. A qualified mediator agrees to hear both sides of a dispute objectively, but the primary focus remains on the two parties as they work toward a mutually beneficial solution. During sessions, the mediator often meets with each party privately, then schedules face-to-face meetings.
Arbitration, on the other hand, is generally more formal than mediation. An arbitrator might be a retired or active judge, or a very experienced lawyer. During the sessions, both sides have the opportunity to explain their positions in front of the referee. Just like a normal court proceeding, attorneys can also cross-examine witnesses from both sides. During the arbitration, there is usually little or no out-of-court negotiation between the parties. The arbitrator has the power to issue a legally binding decision that both parties must honor.
During the mediation process, the mediator may express opinions on the best course of action, but often tries to get the parties involved to reach an agreed solution on their own. The mediator’s suggestions may be based on legal principles, but his or her opinions are not considered legally binding. In more traditional forms of mediation, the mediator typically does not offer an opinion. This often works best in civil disputes, such as landlord and tenant matters or divorce proceedings. Arbitration is usually reserved for more complicated legal disputes, such as negotiations of employment and management contracts and product liability issues, although it can also sometimes be non-binding.
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