Arbitration and Mediation – What’s The Difference?

If you or somebody you care about has been injured due to the careless, negligent, or intentional actions of another party, you will likely be entitled to some type of compensation. However, recovering this compensation can be challenging, particularly if a personal injury lawsuit becomes necessary. Many jurisdictions have attempted to move towards various alternative dispute resolution (ADR) methods in an effort to resolve a claim before it has to go before a trial. These methods help keep the courts from becoming clogged up and often get settlements to victims much faster.

There are various types of ADR methods, including arbitration and mediation. Here, we want to discuss the difference between these two types of ADRs so that you have an understanding of your options as you move forward with your case.

What is Arbitration?

Arbitration is a process by which one individual or a panel of individuals (often attorneys) serves as the “judges” who decide the case. To be clear, the attorneys who judge a certain case in arbitration are not the attorneys for the plaintiff or the defendant in that case.

An arbitration is essentially a mini-trial, typically held in a conference room or another neutral third party location. Evidence will be presented to the arbitrators, much like the evidence is presented in a courtroom. However, there are many different arbitration procedures.

Arbitration can be either binding or non-binding. Binding arbitration when the ruling of the arbitrator(s) is final and their finding can become a judgment just as if the case were to have gone before a judge or jury. Many contracts have provisions that require binding arbitration so that if a dispute arises between the parties in a contract that cannot be worked out voluntarily, they have agreed in advance to go through binding arbitration as opposed to a lawsuit.

Non-binding arbitration goes through the same mini-trial process as binding arbitration, but the ruling of the arbitrator(s) does not eliminate the losing party’s right to take their case to court and have the case heard by a judge or jury.

What is Mediation?

Mediation involves both parties using an agreed-upon neutral third party to assist them and bringing about a voluntary resolution to their dispute. In these cases, the mediator is not acting as a “judge,” but rather as a go-between that will help the parties find common ground in their dispute. The mediator will encourage both sides to reach an agreement that is favorable for every party involved. Mediators are often very experienced attorneys or retired judges.

When a mediation occurs, every party in the case will be present (individuals, attorneys, insurance adjusters, etc.). A mediator will typically introduce everybody, allow opening statements, and then separate the two parties. The mediator will then go back and forth between the two parties in an attempt to reach a favorable settlement. Because any resolution reached through mediation is voluntary amongst the parties involved, the outcome will be a binding settlement agreement. However, if the parties involved do not reach a favorable agreement, the case can proceed forward to trial.