In today’s fast-paced world, resolving legal disputes quickly, efficiently and cost-effectively has never been more important. The traditional Court system that we all respect offers a structured and worthy path to justice by way of full-blown trial and pre-trial procedures. However, resolving disputes by litigation all the way to a trial (and any appeal) involves very lengthy timelines, disproportionally high costs, and sometimes unnecessarily adversarial processes. There is now a widely-held view in the legal profession that mediation and arbitration are very valuable alternative ways to bring already-commenced litigation to a satisfactory, earlier and cheaper resolution than going to trial.
Both mediation and arbitration are valuable methods to resolve disputes, but they have distinct approaches and advantages, and each applies best to differing types of claims. Understanding the differences between mediation versus arbitration can help parties and their legal counsel choose the path that best suits their needs, leading to quicker, less costly, and mutually satisfactory outcomes.
What is Mediation?
Mediation is a voluntary, collaborative process where a neutral third party, known as the mediator, helps both sides communicate and negotiate a resolution. The parties to the dispute (or more accurately, their legal coounsel) select the mediator based on the mediator’s area of experience and expertise that fits the case. Most mediators are respected and experienced senior counsel or retired judges.
Unlike a judge in a trial, mediators do not impose a decision on the parties. Instead, they rely on their own knowledge and past experience in similar cases, to identify and assess the underlying factual and legal issues, and facilitate discussions and constructive dialogue to allow the parties to reach a voluntary agreement that is mutually-acceptable. The goal of mediation is to create a solution that benefits all parties involved, fostering a cooperative spirit rather than an adversarial one, so that the mediation results in a compromise between the opposing parties and not a “winner-take-all” outcome.
Mediation is often preferred for conflicts where relationships need to be preserved, such as in corporate shareholder relationships, business partner arrangements, workplace situations, contested estates of a deceased family member or even family disputes. The process is completely confidential and informal. That allows parties to express themselves openly without fear of their statements or positions being used against them in a court of law. Mediation sessions can be scheduled flexibly, and the outcomes are typically reached in the course of a single day , depending on the complexity of the issues.

What is Arbitration?
Arbitration, on the other hand, is a more formalized process that shares some similarities with a court proceeding. In arbitration, the parties agree to present their case to an arbitrator, who is a neutral third party, or a panel of arbitrators. Again, the parties to the dispute (or more accurately, their legal counsel) select the single arbitrator or the panel of arbitrators based on their area of experience and expertise that fits the case. These arbitrators act in the same way as judges, weighing evidence and applying the law, ultimately issuing a binding decision. Unlike mediation, arbitrations conclude with a determination or award of the single arbitrator (or panel of arbitrators) that the parties are required to adhere to, as the arbitrator’s decision or award is legally binding and enforceable.
Arbitration is often most effective in commercial and contractual disputes where a quick, binding resolution is needed. Arbitrations also work well in areas such as complex construction disputes where technical or professional expertise is required in order to understand the matters in dispute. The parties to the dispute (or more accurately, their legal counsel) select the arbitrators based on their area of experience and expertise that are valuable for the purpose of the facts and law in that are in dispute. While most arbitrators are respected and experienced senior lawyers or retired judges, the parties can also appoint a non-lawyer professional in another more relevant fields like engineers, quantity surveyors or architects who can rely on their own professional knowledge and skill and their own past experience in similar cases, to identify and assess the underlying factual and legal issues.
The arbitration process is less formal than a courtroom trial but still follows a structured procedure, including presenting and challenging evidence and the making of considered factual and legal arguments. Arbitration is usually a lot faster and less expensive than litigation, making it attractive for business and professional-related disputes. Depending on the body of evidence required to be introduced and the complexity of the issues, arbitrations can often continue for a number of days, weeks or even (in rare cases) months. There is also a period of time to await the arbitrator’s written decision or award.
Key Differences: Mediation Versus Arbitration
MEDIATION | ARBITRATION | |
Role of the third party | The mediators engage with both sides, facilitate negotiations, give their impressions of the parties’ cases, guide the parties to a middle ground, but do not make a decision. | The arbitrators, who have specific expertise and experience in the area of the dispute, hear evidence and arguments from both sides and issue a binding decision. |
Control Over the Outcome | Mediation allows the parties themselves to craft an agreement that is acceptable to them. If both parties cannot agree, they can walk away and still pursue other legal options. | Arbitration leads to a binding decision made by the arbitrator, limiting further legal recourse, such as an appeal to the courts or otherwise. |
Formality and Structure | Mediation is informal and focused on open communication. Its main feature is the free and open exchange of positions and the desire to find a middle ground. | Arbitration is more structured, with formal presentations of evidence and arguments. The formality though is less than the longer, more expensive process of litigation. |
Confidentiality and Privacy | Both processes are private, but mediation is especially valued for its confidentiality, as nothing said in mediation can under any circumstances be used in any later proceedings. | Arbitration hearings are also private, although the arbitrators’ decisions may sometimes be made public if brought into court for enforcement. |
Mediation and arbitration are both powerful tools for resolving legal disputes without the time, cost, and adversarial nature of courtroom battles. By understanding the distinctions between the two, individuals and businesses (with help from their legal counsel) can make informed choices about which process best suits their needs. Mediation offers a collaborative path to mutual resolution, ideal for preserving relationships, while arbitration provides a binding decision, suitable for disputes that require expert input and finality.
While both methods provide efficient, confidential, and effective solutions, your legal counsel will be the best advisor to help make the decision between mediation versus arbitration. Regardless of the preferred method for the case, both are excellent alternatives for dispute resolution in today’s complex world.