20+ Differences Between Arbitration And Mediation (Explained)

The traditional dispute mechanism system involved hefty court proceedings. However, in order to reduce the pendency of disputes with the court of law, a new system of dispute resolution has been proposed. 

This involves the processes of Arbitration and Mediation, among other forms of dispute settlement. Oftentimes, Arbitration and Mediation are confused with being a singular method of dispute settlement.

Thus, to resolve this issue, the instant article will discuss the differences between the processes of Arbitration and Mediation.

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Key Differences:

Arbitration

1. The process of Arbitration is formal and private, just like a usual courtroom proceeding.
2. The process of Arbitration is adversarial in nature, i.e., the arbitrator is solely depended on in order to resolve the dispute.
3. One dispute can be represented by multiple arbitrators if required by the parameters and circumstances of the case. However, one dispute has to be represented by at least one arbitrator.
4. The process of Arbitration depends upon evidentiary hearings, i.e., the evidence that the arbitrator comes across while studying the case, rather than personally contacting the parties to the dispute in order to avoid a biased outcome.
5. The final decision is binding and enforceable in the court of law, i.e., an arbitral award, if not followed, may result in a fine and an injunction.

Mediation

1. The process of Mediation is informal and collaborative.
2. The process of Mediation is facilitative in nature and allows the parties to the dispute to decide the terms, leading to a solution.
3. The process of Mediation ensures that the interests and rights of all parties are considered.
4. One case can only have one mediator.
5. The final decision is always acceptable to both parties.
6. Only when the final outcome is acceptable does the case come to an end and promise a settlement.

Comparison between Arbitration and Mediation

Parameter	Arbitration	Mediation
Meaning	A method of dispute settlement wherein an impartial third party is responsible for resolving the conflict and rendering a just judgment that may be final and binding upon the parties involved in such dispute.	A method of dispute settlement wherein a neutral third party assists the parties in dispute to reach a conclusion that is acceptable to both sides.
Nature	The process of Arbitration is adversarial in nature.	The process of Mediation is collaborative in nature.
Process	The process of Arbitration is considered to be a formal affair.	The process of Mediation is considered to be a rather informal affair.
Role of Expert	The process of Arbitration may be judged by more than one arbitrator if need be.	The process of Mediation may be facilitated only by one mediator solely.
Private Communication	The process of Arbitration strictly forbids private communication separately with the parties, and the arbitrator is only allowed to help the parties reach a just decision through evidentiary hearings.	The process of Mediation allows both meetings to be conducted jointly and privately with each party, i.e., separately (if required in special cases).
Outcome	Only the arbitrator has control over the quality of the outcome. It is based on the facts and evidence available to the arbitrator.	The parties have control over the quality of the outcome. It is based on the rights and interests of the parties involved.
Enforcement of Decision	The decision given by an arbitrator is considered to be final and binding upon the parties who are involved.	Mediation does not involve formal enforcement of a decision but merely a settlement between the parties that is acceptable to all who are involved.

Major Differences Between Arbitration And Mediation

What exactly is Arbitration?

The process of Arbitration refers to a formal method of dispute settlement wherein an impartial third party is contacted and is told to thoroughly investigate the dispute, listen to each of the parties concerned, gather other relevant information, and render a just judgment that may be final and binding upon the parties involved in such dispute.

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Scope of Arbitration

1. The process of Arbitration is formal and private, much like a courtroom proceeding.
2. The process of Arbitration is adversarial in nature, i.e., wherein the arbitrator is solely responsible for the dispute settlement.
3. One dispute can be represented by multiple arbitrators if required.
4. The process of Arbitration depends upon evidentiary hearings, i.e., the arbitrator resolves the dispute without personally communicating with the individual parties and instead remain neutral.
5. The final decisions announced by the arbitrator are binding and enforceable in the court of law.

What exactly is Mediation?

Mediation refers to a method of dispute settlement wherein the parties in dispute are not mandated to go to the court to look for a solution but can resolve their conflict through the informal process of ‘mediation.’

Thus, Mediation is a method of dispute settlement wherein a neutral third party assists the parties in dispute to reach a conclusion that is acceptable to both sides.

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Scope of Mediation

1. The process of Mediation is rather informal and is not considered a part of the traditional dispute resolution system.
2. The process of Mediation addresses the interests of all the parties who are involved in the dispute.
3. The process of Mediation is collaborative in the sense that parties in dispute can discuss amongst themselves their interests.
4. The process of Mediation favors an ultimate settlement that is acceptable to both parties rather than a binding decision.
5. The process of Mediation ensures no enmity in the future.

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The Contrast Between Arbitration And Mediation

History

• Arbitration: The process of Arbitration was introduced as a modern means to resolve the conflict between parties in dispute.
  
  Since the judiciary noticed an increase in the pendency of cases and its inability to resolve conflicts within a favorable time, it formulated a system to which disputing parties may refer in order to resolve conflicts faster.

• Mediation: The process of Mediation is relatively newer than the process of Arbitration, although it dates back to the dispute resolution methods that were majorly used in ancient times.
  
  It is, interestingly, not a very popular method of resolving disputes due to the lack of awareness regarding its benefits.

Nature

• Arbitration: The process of Arbitration is adversarial in nature, which means that the arbitrator comes to a just decision without consulting the parties to the dispute and accordingly resolves the conflict based on evidentiary evidence that he/she comes across while resolving the dispute.

• Mediation: The process of Mediation is collaborative in nature, which means that the parties who are involved work together in order to arrive at a decision that all parties are comfortable with and ultimately follow through with a settlement.

Process

• Arbitration: The process of Arbitration is much more formal than the process of Mediation. This means that in the process of Arbitration, the procedure of dispute settlement almost resembles the actual court proceedings, except it is carried out separately in a tribunal rather than a court.

• Mediation: The process of Mediation is much more informal than the process of Arbitration.
  
  The actual formal methods of dispute settlement are not referred to, but the parties in a dispute attempt to resolve their conflict amongst themselves by contacting a neutral third party, i.e., a mediator who may assist them in such proceedings.

Role of Expert

• Arbitration: Arbitration involves the arbitrator as a judge deciding a just outcome after hearing each party involved in the conflict and reviewing all the evidentiary material relevant to the dispute that has been present before the arbitration tribunal.

• Mediation: The process of Mediation involves the mediator as a facilitator of justice who assists the parties present in a dispute to come to a resolution wherein both their needs and interests are addressed, and they are able to come to a happy settlement in which everyone is satisfied.

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How is the conflict resolved?

Arbitration: An arbitrator imposes the terms of an agreement between two or more disputing parties, i.e., Disputing Party’ A’ and Disputing Party’ B.’

Mediation: A mediator merely recommends the terms of an agreement in order to assist the disputing parties in reaching a happy settlement.

Private Communication

• Arbitration: The process of Arbitration does not allow the arbitrator to have any personal meetings with the parties to the dispute.
  
  This is ensured so that the arbitrator does not ultimately deliver a biased judgment that may be enforceable in the court of law. This is done in order to ensure ultimate justice in the interest of the disputing parties.

• Mediation: The process of Mediation involves a separate meeting as well as a joint meeting with the parties to the dispute.
  
  If the mediator in a joint meeting feels that he/she needs to address the needs of a particular party to the dispute, he/she may have a separate meeting with the mediator.
  
  This is done to ensure that the needs and interests of all the parties are considered in order to reach a happy settlement.

Control over Outcome

• Arbitration: The process of Arbitration is completely dependent upon the understanding of the arbitrator. Thus, the final outcome and the control over it will only depend upon the arbitrator who is assigned to the case. If a party to the said dispute is not happy with such a decision, he/she may appeal the arbitral award in the traditional court system.

• Mediation: The process of Mediation is collaborative and facilitative, in the sense that the final outcome and control over the case depends upon the needs and interests of the parties to the dispute.
  
  This is ensured so that all parties needs and interests are considered for reaching a happy settlement that is satisfactory to all.

Basis of Outcome

• Arbitration: The process of Arbitration focuses on the facts and evidence that are presented to the arbitrator aside from any other relevant information that he/she comes across. Based on the same, the final decision is arrived at.

• Mediation: The process of Mediation focuses on the needs, rights, and interests of the parties to the dispute. This is ensured so that the needs and interests of all the parties are considered for reaching a happy settlement that is satisfactory to all.

Probability of Outcome

• Arbitration: The process of Arbitration ensures a fit and final decision at the end that the arbitrator provides. This is known as the ‘arbitral award.’
  
  It is legally enforceable in a court of law. If a party to the said dispute is not happy with such a decision, he/she may appeal the arbitral award in the traditional court system.

• Mediation: The process of Mediation does not ensure that the parties may reach a final decision or a settlement to the dispute. This is because the formal mechanism of dispute settlement is not referred to.
  
  If the parties to the dispute are unhappy with the final outcome, they may appeal directly to the traditional court system for a legal relief or remedy.

Enforcement of Decision

• Arbitration: The process of Arbitration ensures that the final decision given by the arbitrator at the end, i.e., the arbitral award, is final and binding upon the parties to such dispute.
  
  It is legally enforceable in a court of law. If a party to the said dispute is not happy with such a decision, he/she may appeal the arbitral award in the traditional court system.

• Mediation: Mediation does not involve passing an enforceable judgment but encourages a settlement between the parties that all may be satisfied with that covers both their interests and rights. 

Conclusion of Case

• Arbitration: The process of Arbitration is concluded when the assigned arbitrator gives the final decision, and the arbitral award is thus enforced.

• Mediation: The process of Mediation is concluded when a happy settlement agreement is reached by the parties in dispute or the parties come to a nasty deadlock, after which they have an option to approach the traditional courts.

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FAQs (Frequently Asked Questions)

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