Mediation vs. Arbitration

Mediation. Mediation is a non-binding form of dispute resolution that works well for minor disputes. The mediator engages in shuttle diplomacy to formulate a solution that is acceptable to both sides. It has one major disadvantage. If the mediator fails to find a common ground, the dispute moves back to the litigation track. As a result, it works well for minor disputes. It doesn't work as well with intractable disputes or unreasonable parties.

Arbitration. Arbitration is a binding form of dispute resolution. It permits parties to submit their dispute to an independent third party who functions much like a judge. The arbitrator listens to the facts and then renders a judgment. It has one drawback, the arbitration is conducted much like a trial, and isn't as conducive reaching a reasonable business compromise to a business dispute.

Binding Mediation. This one's our favorite, a melding of mediation and arbitration. It starts out with non-binding mediation. If the parties are unable to reach a mutually satifactory compromise, it converts to binding arbitration. The mediator can continue on as the arbitrator... one who has been educated on the true needs and wants of the parties, as well as who is being reasonable and who is not. The prospect of this escalation encourages reasonableness at the mediation stage. The background information permits the mediator/arbitrator to better construct fair and reasonable remedies, taking into account practical business realities.

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