Mediation and arbitration are both methods of alternative dispute resolution (ADR). ADR are methods where dispute resolutions take place outside the courts. The two forms of dispute resolution are closely related although the arbitrator is given the responsibility of making the final decision but a mediator only facilitates dispute resolution process. At the same time, the parties who are involved in the process of mediation are not supposed to reach the final decision but the binding decision can be made in case the participants decide to contract an agreement settlement.
Mediation provides a better resolution of disputes as it is less costly and faster compared to arbitration. It is therefore better to have mediation than take arbitration process. Mediation is an interactive and voluntary process which usually involves a third party who is neutral and trained to facilitate all communications. The person is trained and has all the required negotiation skills to help both parties to reach a mutually agreed dispute resolution. This way, the arbitrator will not have the right to make the final decision just like in arbitration.
In arbitration, the arbitrator has the capacity to make a final decision and act as a jury and judge of the case listening to both sides and making judgments. Dispute parties in mediation process start by making non-binding decisions and if binding decisions are required, they can be requested after. In mediation, all settlements are always non-binding although when the parties request that their settlement be legal-binding, they may always arrange for an agreement settlement.
This is the flexibility that is needed in dispute resolution. The lack of flexibility in arbitration process makes it to be less preferred to that of mediation procedures. The non-binding option allows minor disputes to be resolved and most businesses and individuals can seek mediation type of dispute resolution. Mediation thus provides a dual function where it can act as arbitration and mediation. It is a meld of the two dispute resolution processes and can have both binding and non-binding forms of dispute resolution.
Other specific advantages that apply to mediation include the confidentiality guarantee. All the documents that are presented in the process of mediation are not used in later proceeding and this allows for maximum privacy. Mediation has also been considered to be cost effective where high expenses are eliminated as the fee associated with the process of litigation is not necessary. In arbitration, the litigation process is part of the dispute resolution process.
The involvement of litigation process in arbitration makes the process to be expensive for most individuals and small business who may seek dispute resolution by arbitration. The exchange of information in mediation is done in a voluntary manner. It has also been argued that mediation takes a shorter time to reach an agreement than the arbitration process. The reduction of time taken to reach an agreement also has an impact in reducing the cost of the entire procedure.
Generally, the decision to take either arbitration or mediation procedure as a method of dispute resolution depends on the parties involved. However, most parties will love to have their disputes resolved in a faster way or other will still prefer that their disputes be resolved in a cost effective manner. Of the two alternative dispute resolution methods, mediation has been preferred to arbitration because of the shorter time arbitration requires and the reduced costs since it does not require litigation process.