What is the difference between arbitration and mediation?
The difference to mediation and arbitration is really the formality and the finality of each individual proceeding. For example, mediation can be either voluntary or could be court ordered. And what is required in mediation is both parties come to mediation and attempt to resolve their dispute in good faith. Now, any outcome that that comes out of it will be ultimately signed as some sort of settlement agreement that can be enforced. However, it is not obligatory to come to a resolution in mediation. There’s the obligation to try in good faith and to have the settlement authority, but there’s no obligation to settle, and the mediator has no ability to impose a result on the parties or to order the parties to have a settlement.
Now arbitration is a little bit more formal. Generally, it is with an arbitrator who does have the authority to make a decision – a binding decision. There could be both binding and non-binding arbitration, but most is binding. And both parties come in and informally work through the issues through the problem that they’re having and then they present both sides of their case, they talk it through with the arbitrator, and that ultimately the arbitrator will make a decision which could be binding upon the parties. Both processes take place outside of the courtroom and without the formality of having to go to court.
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