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How are arbitration and mediation different?

Business owners are aware that litigation has a variety of downsides. Not only is litigation expensive, but it can also ruin valuable relationships. While dispute is an inevitability with business, litigation does not have to be.

The most common varieties of alternative dispute resolution is mediation and arbitration. According to FindLaw, mediation is generally non-binding, while arbitration is binding.

The unique properties of mediation

Generally, with mediation there is a single mediator, while arbitration typically involves a panel. A mediator also does not make any final decisions regarding the dispute. Instead, the mediator will guide both parties through the dispute and ensure that the conversation stays level-headed and focused. Mediators can help keep disputes from turning into fights.

The results of mediation are mostly non-binding. This means that if one of the parties is unhappy with the results of the mediation, there is still a chance of the dispute going to court.

The unique properties of arbitration

As stated above, generally arbitration involves a panel. This is typically a panel of three. One party chooses one arbitrator, the other the second, and then both parties compromise on the third. Arbitration looks more like litigation. Both sides will present their “case” to the panel, and then the panel debates the dispute among themselves. The panel then hands down a verdict.

Arbitration is usually binding. This means that the parties will not have the right to litigation after the arbitration process.

Both mediation and arbitration often take less time and cost less money as compared to traditional litigation. It is worth considering these alternative measures in the face of your next business dispute.