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What is the difference between arbitration and mediation?

by | Sep 23, 2022 | Business Law

Business disputes are almost never good for business, particularly if they end up going to court. Litigation is time-consuming and expensive. Even worse, if the litigation process turns hostile, it can ruin valuable relationships with other entities.

This is why it is advisable to explore alternative dispute resolution before taking a dispute to litigation. Two popular routes of alternative dispute resolution are arbitration and litigation. According to FindLaw, mediation is usually a non-binding process, while arbitration is binding.

The facts on mediation

Mediation is more similar to counseling as compared to litigation. With mediation, a chosen mediator helps to guide the conversation between the feuding entities. Mediation attempts to have both parties come to a consensus regarding the dispute.

Mediation is usually “non-binding.” This means that if one party is unhappy with the results of mediation, the dispute may still end up in court.

The facts on arbitration

Arbitration is more similar to litigation in its look and process. Instead of a “judge,” arbitration usually involves a “panel” of arbitrators. Typically, one party will select one arbitrator, the other will select the other, and then both parties will compromise on the third. However, it is also possible for both parties to agree on a single arbitrator, if desired.

Once the parties select the arbitration panel, both sides present their “case.” Then, like litigation, the panel will discuss the dispute and issue a “ruling.” Arbitration is typically binding, which means that neither party can take the case to litigation after an arbitration ruling.

Depending on the scope and nature of your dispute, it is possible that arbitration or mediation is an option. Alternative dispute resolution methods can save your precious time and money.