Characteristics of the Process |
Arbitration |
Mediation |
Litigation |
| The source of decision-making authority |
Parties decide to submit their dispute to arbitration (often through contractual arbitration clause). Once parties agree to arbitration, their agreement is usually binding. |
Parties mutually agree to take dispute to mediation or may be court mandated. However, mediation is always voluntary. Even court mandated mediation requires only that the parties participate, not that they reach agreement. |
Jurisdiction determined by law |
| Parties choose the state or city where the arbitration is to occur. Actual location of the hearing is in a neutral location. |
Often takes place in neutral territory. |
Jurisdiction is determined by the circumstances of the case |
| Arbitrators decide the disputes submitted to them. |
Mediators decide whether or not to take cases submitted to them. |
Courts are limited to cases that fall within their jurisdiction |
| Decisions made by arbitrator(s) |
Decision made by parties |
Decisions made by judge or jury |
| Rarely can be appealed |
Parties can decide not to settle |
Result of the case is a judgment |
| Procedure |
Confidential |
Confidential |
Open to the public |
| Adversarial |
Goal is to be Cooperative |
Adversarial |
| Flexible process |
Flexible process |
Process determined by procedural laws |
| Parties choose the "rules of the game" |
Parties and mediators determine ground rules |
State statutes determines ground rules |
| Characteristics of third party involved |
Arbitrators are selected by the parties |
Parties select a mediator |
Judges are pre-appointed |
| Arbitrators can be experts in particular fields or areas of law |
Mediators are process experts, may or may not be substance experts |
Judges often lack technical expertise |
| Arbitration panels can include partial as well as non-partial arbitrators or One non-partial arbitrator |
Mediators can be outsider-neutrals or insider partials. If insider partials, they often work with an outsider-neutral. |
Judges are a neutral third party |
| Type of Result |
Parties can determine an end date (fast track arbitration) |
Ends once cooperative agreement is reached, or parties decide not to settle |
Where the parties cannot negotiate, there is a significant power imbalance or abuse, or where a precedential decision is important, perhaps by appeals. |
| Often Win-lose solution |
Win-win solutions or No Result |
Often Win-lose solution |
| Enforcement |
National regulations provide enforcement mechanism
Absent a binding treaty, International arbitrations may lack an enforcement mechanism
Can be entered as a court order |
Implementation of agreement depends largely on the parties' good will, but the court may enforce in some circumstances |
Established enforcement mechanism |
| Award conclusive, final and binding (right of appeal is very limited) |
No appeal once settled; other process can be used if no settlement is reached. |
Decision subject to revision (unless decision by the Highest Court) |
| Cost |
Substantially higher- may be even higher than the litigation process because in addition to discovery, motions and a trial, you are paying out of pocket for the judge. On the other hand the parties, or arbitrator, can issue rules to limit these expenses. |
Lowest. Mediation services can cost as little as a few hundred dollars; however, mediation costs in the low four figures are more realistic. Great way to keep the decision-making in your hands by avoiding litigation or arbitration. |
Usually very expensive. Litigation and litigation support can cost multiples of thousands of dollars. There are few cost controls when it comes to a litigation trial. |
| Time for Resolution |
You set the schedule with the private judge (the “arbitrator”), but with briefs, discovery and a trial, legal arbitration can be lengthy. Usually appeals are not available. |
Quickest form of alternative dispute resolution- sometimes takes only a few hours. |
Can be years. First discovery must be completed, motions filed, heard and decided, then a judge must be available to hear and decide the case, and then possible appeals. |
The major difference between mediation, arbitration and litigation is the decision-making party:
