A Few Distinctions between Mediation and Arbitration

Doug Federspiel is an experienced lawyer who owns Problem Solver Law, PLLC. Although into commercial litigation, Doug Federspiel also handles disputes bordering on mediation and arbitration.

Arbitration and mediation are branches of alternate dispute resolution because they are mechanisms that seek to resolve legal conflicts outside the court of law, avoiding the various bureaucracies and time wastage that comes with litigation. However, these two methods of conflict resolution have specific differences.

Similar to mediation, arbitration uses an impartial third party — the arbitrator — to settle disputes outside the court. But in contrast to mediation, the arbitrator acts as a private judge to hear the evidence and render decisions to settle the disagreement.

Consequently, although the opposing parties retain authority in mediation, the private judge in arbitration controls both the process and the decision. However, the parties to an arbitration can decide to challenge the appointment of the private judge.

Settlements reached through mediation are not legally binding unless the parties have formalized them into an agreement or court order in the presence of a legal counsel. The parties may leave mediation anytime and pursue arbitration or litigation instead. However, the decisions reached during arbitration are binding, and parties cannot opt out of the process after agreeing to be bound by the decisions.