---
title: Arbitration vs Mediation
description: A legal reference on the key differences between arbitration and mediation as alternative dispute resolution mechanisms.
keywords: [alternative dispute resolution, arbitration, mediation, negotiation, binding, non-binding]
category: law
---

## Introduction to Alternative Dispute Resolution

Alternative Dispute Resolution (ADR) encompasses various mechanisms for resolving legal disputes outside of the traditional court system. Two of the most common forms of ADR are arbitration and mediation. While both arbitration and mediation offer parties an alternative to litigation, they differ significantly in their legal framework, process, and outcomes.

## Arbitration

Arbitration is a private, adjudicative process in which a neutral third-party arbitrator or panel of arbitrators hears arguments and evidence from the disputing parties and renders a final and binding decision. The Federal Arbitration Act (FAA), 9 U.S.C. §§ 1-16, governs the enforceability and procedures of arbitration agreements in transactions involving interstate commerce. Under the FAA, arbitration clauses in commercial contracts are "valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2.

The decision of the arbitrator, known as the "award," is generally final and binding on the parties. Courts will only vacate an arbitration award in limited circumstances, such as where the award was procured by corruption, fraud, or undue means; where there was evident partiality or corruption in the arbitrators; or where the arbitrators exceeded their powers. 9 U.S.C. § 10(a). The grounds for challenging an arbitration award are narrower than the grounds for appealing a court judgment. See, e.g., Oxford Health Plans LLC v. Sutter, 569 U.S. 564, 569 (2013).

Arbitration offers several potential advantages over traditional litigation, including greater efficiency, lower costs, increased privacy, and the ability to select arbitrators with specialized expertise in the subject matter of the dispute. However, arbitration also has drawbacks, such as the limited ability to appeal the arbitrator's decision and the potential for arbitrators to make errors of law that are not easily correctable.

## Mediation

Mediation is a voluntary, non-binding process in which a neutral third-party mediator facilitates negotiations between the disputing parties to help them reach a mutually agreeable resolution. Unlike arbitration, mediation does not result in a final and binding decision by the mediator. Instead, the mediator's role is to assist the parties in identifying their interests, exploring potential solutions, and negotiating a settlement.

Mediation is often governed by state laws and court rules, which can vary significantly across jurisdictions. For example, the Uniform Mediation Act, adopted by several states, provides a framework for the confidentiality of mediation communications and the enforceability of mediated settlement agreements. See, e.g., Cal. Evid. Code §§ 1115-1128.

The mediation process is typically more flexible and informal than arbitration or litigation. The mediator does not have the power to impose a decision on the parties, but rather facilitates the negotiation process to help the parties reach a mutually acceptable resolution. If the parties are unable to reach an agreement, the mediation ends without a binding outcome.

Mediation offers several potential benefits, including the preservation of ongoing relationships, the ability to craft creative, tailored solutions, and the opportunity for the parties to have more control over the outcome. However, mediation also has limitations, such as the non-binding nature of the process and the potential for power imbalances between the parties.

## Key Differences between Arbitration and Mediation

The primary differences between arbitration and mediation can be summarized as follows:

1. **Decision-Making Authority**: In arbitration, the arbitrator(s) have the authority to render a final and binding decision on the dispute. In mediation, the mediator facilitates negotiations but does not have the power to impose a decision on the parties.

2. **Formality and Procedure**: Arbitration is a more formal, adjudicative process, often following rules of procedure and evidence similar to those used in litigation. Mediation is generally a more informal, flexible process focused on negotiation and problem-solving.

3. **Confidentiality**: Mediation communications are typically confidential and not admissible in subsequent legal proceedings, unless the parties agree otherwise. Arbitration proceedings and awards are generally less confidential than mediation.

4. **Enforceability**: Arbitration awards are generally enforceable by the courts, with limited grounds for challenge. Mediated settlement agreements may require court approval or separate enforcement proceedings to be legally binding.

5. **Expertise of the Neutral**: Arbitrators are often selected for their subject matter expertise, while mediators are typically chosen for their facilitation and negotiation skills.

6. **Costs and Efficiency**: Arbitration is generally faster and more cost-effective than traditional litigation, while mediation can be even more efficient and less expensive than arbitration.

## Choosing between Arbitration and Mediation

The choice between arbitration and mediation will depend on the specific circumstances of the dispute and the parties' goals and preferences. Factors to consider include the nature of the dispute, the relationships between the parties, the need for confidentiality, the desire for finality, and the parties' willingness to compromise.

In some cases, the parties may agree to pursue both processes sequentially, with mediation first followed by arbitration if the mediation is unsuccessful. This approach, known as "med-arb," can leverage the benefits of both processes to find a resolution.

Ultimately, the decision to pursue arbitration or mediation should be made with a clear understanding of the legal framework, process, and potential outcomes of each method of alternative dispute resolution.

## Conclusion

Arbitration and mediation are two distinct forms of alternative dispute resolution, each with its own legal framework, process, and potential outcomes. While both offer alternatives to traditional litigation, the key differences between the two processes should be carefully considered when selecting the appropriate method for resolving a legal dispute.