Arbitration vs. Mediation vs. Litigation: What Is the Difference? – Written By Naphtal
When two or more parties are engaged in a legal battle, they have several different options for resolving their dispute. They can go to trial, which is the process of having a judge or jury hear both sides of the case and render a verdict. However, going to trial can be costly, time-consuming, and stressful.
An alternative to going to trial is arbitration or mediation. These two terms form the basis of the alternative dispute resolution (ADR) process, which is a way for parties to resolve their differences without going to court.
Although many of us use these terms interchangeably to mean the same thing, there are some critical distinctions between arbitration and mediation.
This article discusses the key differences between arbitration, mediation, and litigation. Read on to find out everything you need to know.
What Is Arbitration?
Arbitration is a form of ADR in which an impartial third party, called an arbitrator, hears both sides of the case and makes a binding decision. The arbitrator’s decision is final and cannot be appealed.
Both sides in the dispute must agree to arbitration, and they must also agree on who the arbitrator will be. Once both sides have agreed to arbitration, they are bound by the arbitrator’s decision.
An arbitral decision can be registered in a court of law and enforced like a court judgment. Although arbitration may feel like litigation, the process is more flexible and informal.
The most significant advantage of arbitration is that it is binding, meaning that both sides have to accept the arbitrator’s decision. This can be a disadvantage, however, if the arbitrator makes a decision that is not favourable to one of the parties.
What Is Mediation?
Mediation is another form of ADR in which an impartial third party, called a mediator, helps both sides in the dispute to reach a mutually-agreeable resolution.
The mediator does not make a binding decision; instead, they facilitate communication between the two parties and help them to come to an agreement on their own.
Both sides in the dispute must agree to mediation, and they must also agree on who the mediator will be. Once both sides have agreed to mediation, they are not bound by the mediator’s decision.
Some of the advantages of mediation are that it is usually faster and cheaper than going to trial, and it can help preserve relationships between the parties.
What Is Litigation?
Litigation is the process of going to trial. In litigation, both sides in the dispute present their case to a judge or jury, who then renders a verdict. The verdict is final and cannot be appealed.
Litigation can be costly, time-consuming, and stressful. It is also the most formal of all the dispute resolution options.
Key Differences Between Arbitration, Mediation, and Litigation
Now that we’ve defined arbitration, mediation, and litigation, let’s take a closer look at the key differences between these three dispute resolution options.
1. Who Hears the Case?
In arbitration, an arbitrator hears the case. In mediation, a mediator helps the parties to resolve their dispute. In litigation, a judge or jury hears the case.
2. What Is the Role of the Person Hearing the Case?
The arbitrator’s role is to make a binding decision in the case. The mediator’s role is to facilitate communication and help the parties reach a resolution on their own. The judge or jury’s role is to render a verdict.
3. Is the Decision Final?
The arbitrator’s decision is final and cannot be appealed. The mediator does not make a binding decision; instead, they facilitate communication between the two parties and help them to come to an agreement on their own. The verdict in litigation is final and can only be appealed in a higher court.
4. How Formal Is the Process?
Arbitration is less formal than litigation but more formal than mediation. Mediation is the least formal of all three dispute resolution options. Litigation is the most formal of all three dispute resolution options.
5. What Are the Costs Associated with Each Process?
The costs of arbitration can be high, as both sides must pay the arbitrator’s fees. Mediation costs are typically lower, as the mediator’s fee is often split between the parties.
The costs of litigation can be very high, as litigation is often time-consuming and requires the use of attorneys.
6. What Is the Timeframe for Each Process?
The timeframe for arbitration can be shorter than the timeframe for litigation, as arbitration is typically less time-consuming and does not require the use of attorneys.
The timeframe for mediation can be shorter than both arbitration and litigation, as mediation often results in a resolution more quickly.
The timeframe for litigation can be very long, as litigation is often time-consuming and can take months or even years to resolve.
7. What Is the Outcome of Each Process?
In arbitration, the arbitrator makes a binding decision in the case. In mediation, the parties reach a resolution on their own. In litigation, the judge or jury renders a verdict.
Arbitration, mediation, and litigation are all dispute resolution options.
The key differences between these three options include who hears the case, the role of the person hearing the case, how formal the process is, the costs associated with each process, and the timeframe for each process.
It is essential to weigh all of these factors when choosing a dispute resolution option.
Naphtal writes this article. He is the brand manager at Legal Giant and a highly experienced content writer. Legal Giant is a leading lawyer referral site with clients all over the U.S. When Naphtal is not working, he enjoys spending time with his son and exploring nature