Many times, the term Arbitration or Mediation is inserted into a contract or agreement to handle the situation where the parties no longer agree and the relationship is broken. This clause is meant to establish a less expensive alternative to litigation, which would include extensive attorney time and potentially even a trial in a Court of Law. The terms Arbitration and Mediation may seem to be used interchangeably, but they do not mean the same thing.
An Arbitrator is credentialed and acts like a Judge, who after hearing the details of the case, will make their own decision on what the outcome should be (a Judgement). This Judgement is final, and may not be wholly in the favor of either the Plaintiff (the party bringing the case) or the Respondent (the defending party).
A Mediator, on the other hand, is usually credentialed and acts like a Neutral (a third party with no bias or opinion about the details of the case). Their function is to facilitate the negotiations between the parties of the case, pointing out areas of agreement, and applying various techniques to encourage the parties to come to a mutually agreed-to negotiated settlement. The actual details of the final binding agreement are determined completely by the parties to the case. In many situations, a failure of a mediation to resolve a disagreement can result in continued litigation and trial.
So the major difference between an Arbitration and a Mediation is that in the former, someone else decides the outcome of the case, whereas in the latter, the parties themselves determine what the best decision should be to resolve the conflict.
Irene P. Zucker, TCAM
IN Mediation Services
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