Arbitration and Mediation: Two different areas of ADR
In order to correctly differentiate between these two methods of alternative dispute resolution first we have to understand the meaning of both the methods separately.
Arbitration refers to the alternative dispute resolution method in which the parties to the dispute present their problem to the third parson known as arbitrator or a panel of private, independent and qualified third party “arbitrators.” The arbitrator is given the duty of settling the dispute. Advantages that arbitration offers are that it is less expensive and more accessible ass compared to trial, but this process has its own disadvantages which problems like bound the decision passed by the arbitrator which results in loss of control of the parties over the dispute once it is given to the arbitrator. By employing arbitration, the parties lose their ability to participate directly in the process. This process is also seen as traditional method of solving the dispute which might not work in modern scenarios.
Mediation is an alternative dispute resolution method where a neutral and impartial third party who is known as mediator, facilitates dialogue in a structured multi-stage process to help parties reach a conclusive and mutually satisfactory agreement. A mediator assists the parties in identifying and articulating their own interests, priorities, needs and wishes to each other. Mediation is a “peaceful” dispute resolution tool that is complementary to the existing court system and the practice of arbitration.
Very often mediation and arbitration are used as synonyms due to several reasons whereas in reality both are different form each other in many aspects. First major difference lies in the process of arbitration and mediation. When parties opt to resort to the option of arbitration for resolving the dispute, the decision taken by the third party i.e. the arbitrator is binding on both the parties whereas in the mediation, role of third party is limited to the extent of giving suggestions to both parties to the dispute so that they can reach to some settlement or they can settle the dispute. Basically the mediator tries to persuade the parties to come to a settlement, unlike the arbitrator. Then the second difference which can be seen is that arbitration is almost similar to adjudication system except the fact that arbitration takes place outside the court but under mediation mediator has no power to decide the dispute so it cannot be seen at par with the adjudication system. Thirdly, the mediation can be through order of court or voluntarily and it did not bar the option of parties to the dispute to resort to other mode of dispute resolution in case the mediation fails, but as far as arbitration is concerned if any or both parties to the dispute are not satisfied with the decision of the arbitrator then they have to appeal against the order of the arbitrator.
Some scholars suggest that mediation is better mode of dispute settlement as it is flexible because it does not bind the parties to the dispute and. Unlikely, some scholars think that arbitration is better than mediation as its results are binding and based on the evidences produced before the arbitrator by both the parties. It mainly depends on the nature of the problem and several other aspects related to the dispute, which determines the best mode of dispute resolution which can be used to solve the dispute.
The only similarity which can be seen in both methods of dispute resolution is that Arbitration and mediation both promote the same ideals, such as access to justice, a prompt hearing, fair outcomes and reduced congestion in the courts.