People generally avoid litigation. It’s expensive, time consuming, emotionally draining, and unpredictable. Because litigation is so inefficient, people have been seeking alternative ways to resolve disputes for almost as long as they have been litigating them. Arbitration and mediation are two forms of alternative-dispute resolution that have become increasingly popular.
Arbitration and mediation are similar, but there are important differences. Arbitration is generally conducted with a panel of arbitrators who are much like judges. The parties may call witnesses and introduce evidence. The arbitrators hear the evidence, weigh arguments, and issue decisions. Those decisions can be binding or non-binding. Most people don’t realize that popular television shows like Judge Judy and The People’s Court are actually binding arbitration proceedings, not judicial proceedings.
Although arbitration is sometimes conducted with a single arbitrator, the most common procedure is for each side to select an arbitrator. Then, those two arbitrators select a third arbitrator, at which point the dispute is presented to the panel. Decisions are made by majority vote.
Mediation, on the other hand, is a process in which a neutral third party, called a mediator, tries to help the parties resolve their dispute. Mediation is an informal and non-adversarial process. The objective is to help the disputing parties reach a mutually acceptable agreement between themselves on all or any part of the issues in dispute. Decision-making authority rests with the parties, not the mediator. The mediator assists the parties in identifying the issues, fostering joint problem solving, exploring settlement alternatives, and assists in other ways consistent with these activities.