I am repeatedly reminded by questions I get asked, that there is a great deal of confusion and misunderstanding about the difference between mediation and arbitration. While they are both branches of a field call alternative dispute resolution (alternative to having a court decide a dispute), they are very different. In an effort to make it more clear to those still confused, here goes:
ARBITRATION: In arbitration, like going to court, a third party (a judge or arbitrator(s)), unconnected to either party or to the dispute, determines the outcome. That, however is where the similarities between a court proceeding and an arbitration ends. Although arbitration usually involves three arbitrators, there can be fewer or, rarely, more.
Unlike in court, the ground rules which govern the arbitration proceeding are determined by the parties. For example, it is up to the parties to determine whether the rules that apply in court regarding discovery shall be followed, or whether the court rules of evidence are to guide the proceeding, or how many arbitrators should there be and how they are to be chosen or how long will be allowed for each stage in the arbitration. In this way the parties can limit the time it takes to complete the proceeding and the costs entailed. They can also decide whether the arbitrators will be required to render an opinion at the end or only give a verdict, unsupported by any reasoning.
Also unlike in court, the decision in an arbitration can be appealed in only the most limited circumstances.
MEDIATION: Mediation, however, bears no similarity to either a court proceeding or to arbitration. Mediation is a process designed to permit the parties to determine their own fates. Neither the mediator nor any other third party decides the outcome. Only the parties can do that. The mediator’s function is to bring the parties together in order to let them reach a decision that is acceptable to both. The decision they reach is rarely exactly what each one wanted but it is an outcome the both can live with.
One of the beauties of mediation is that creative solutions are possible – solutions that no court could ever order. Everything is on the table no matter how far removed from the issues in the dispute, as long as those other things can help the parties reach a solution that makes sense to them.
The mediator acts in part as a facilitator, a coach, one who encourages the parties to think “out of the box” and someone who can help each side see the case from the perspective of the other side. At the end of the day, however, it is only the parties who can decide whether they can find common ground. Often, it is the last best chance for the parties to maintain control of the outcome. Once it goes to a court or to arbitration, a third party will be making the decision – a third party who cannot possibly know the parties’ businesses, their wants and needs, as well as they do themselves.