What are the key differences between mediation and arbitration?

Mediation involves facilitated negotiation with non-binding outcomes, while arbitration features formal hearings with binding decisions by arbitrators.

Mediation and arbitration are distinct ADR methods with fundamental differences in process, control, and outcomes.

Decision-Making Authority:

• Mediation: Parties retain full control over the outcome. Mediators facilitate discussion but cannot impose solutions. All agreements are voluntary.
• Arbitration: Arbitrators make binding decisions after hearing evidence, similar to judges in court proceedings.

Process Structure:

• Mediation: Informal, collaborative discussions focused on finding mutually acceptable solutions. Procedures are highly flexible.
• Arbitration: Formal hearings with evidence presentation, witness examination, and legal arguments following structured procedures.

Outcome Binding Nature:

• Mediation: Results in non-binding agreements unless parties voluntarily sign settlement contracts.
• Arbitration: Produces binding awards enforceable through courts with limited appeal rights.

Cost and Time:

• Mediation: Generally faster (days to weeks) and less expensive, requiring minimal preparation.
• Arbitration: Longer process (months) with higher costs due to formal procedures and arbitrator fees.

Relationship Preservation:

• Mediation: Emphasizes collaboration and communication, often preserving business relationships.
• Arbitration: More adversarial, potentially damaging ongoing relationships.

Confidentiality: Both maintain privacy, but mediation discussions are typically privileged and cannot be used in subsequent litigation.

Success Rates: Mediation achieves resolution in 70-80% of cases, while arbitration provides 100% resolution through binding decisions.

Nicola Kerremans at Rawlings Giles often recommends starting with mediation before proceeding to arbitration if voluntary resolution fails.

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