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During business disputes, cases do not immediately go to trial. All good business attorneys will advise you to opt for alternative dispute resolution methods like arbitration and mediation before going to court. This is because ADRs can be effective in solving a problem without the time-consuming and expensive process of filing a lawsuit. 

If you have a dispute going on in your company, it helps to know how arbitration and mediation can help. From breach of obligations to suspicions of fraud, business conflicts can arise from various situations. ADR methods can speed up and ease dispute settlement. Click here to learn more about how to hire an attorney. 

Key differences between mediation and arbitration 

1. Differences in the role of the neutral party. 

Even though both processes employ a neutral party, the roles of the neutral party are different. In mediation, the mediator is a neutral third party who helps facilitate communication between the two parties and offers solutions that work best for them. They do not impose on the decision-making process. Whereas in arbitration, the neutral party has the power to make the end decision and acts more like a judge. 

2. Control over the process. 

In mediation, the parties fighting the case have complete control over the process. The neutral party is only there to facilitate communication and help them find solutions. However, they cannot decide on their behalf. In arbitration, the parties fighting the case have no control over the process and decision, much like a court case. 

3. Informal vs. formal process. 

Mediation is more of an informal process than arbitration. Mediation allows parties to communicate about their needs and be emotional if they want to. The process can be conducted by even those who are not professional mediators. Arbitration is more formal and resembles a trial. Both parties are required to present their evidence, arguments, and witnesses, much like a courtroom process. 

4. Binding nature of the decision. 

The outcome of mediation is not legally binding. The parties can discuss whether they like the solution offered by the mediator and mutually decide if they want to pursue it. They are not legally required to obey the outcome. On the other hand, the decision made by the arbitrator is legally binding and must be followed by the parties. Once a decision is made, it becomes enforceable by the law and can only be challenged under specific circumstances. 

These are some of the key differences between mediation and arbitration. Remember that the procedure may vary depending on your state, but the overall processes look like this.