Mediation v Arbitration
As an alternative means to resolving commercial disputes, parties can try mediation or arbitration – but what is the difference between these two processes?
Mediation is where an impartial third party (usually trained in mediation) acts as a facilitator of discussion or negotiation between disputing parties. The goal of mediation is to find a solution that both parties can agree on. Mediation is voluntary, and can work well when parties want to play an active role in determining the outcome of the dispute. Mediators try to keep the parties talking and the discussions moving but they are not able to give legal advice, adjudicate on the issue(s) or impose a decision. At the conclusion of mediation the parties may choose to be bound by an agreement or they can use other processes to attempt to resolve the dispute.
Arbitration is where the impartial third party acts as an adjudicator and resolves the dispute outside of the court system. In arbitration the rules are less rigorous than those of a court. Arbitration can be non-binding or binding. Non-binding arbitration is not enforceable by a court and parties are able to continue court action despite the result. Binding arbitration is usually enforceable by a court if a party does not adhere to the decision.
Mediation and arbitration are both confidential, can resolve disputes more quickly than the court system and are voluntary. They are ‘alternative dispute resolutions’ or ADRs. Other ADRs are facilitation, conflict management and dispute counselling.