Note: The DearEsq free 'ask a lawyer' site is offered as a free informational service to the public and is not intended as legal advice. Laws vary from state-to-state, and in addition every situation is unique, and relevant facts may not be known. The answer to the question posed below may not apply to in your state or to your situation. For legal advice in your state and your situation you should consult with an attorney in your state who is familiar with the rules and laws in your state.
Arbitration and mediation are two forms of alternative dispute resolution (ADR) which can keep people out of court, which is almost always a good thing. Divorce mediation, for example, can keep two parents from an escalating court battle in which the only winners are the lawyers. Nearly any legal issue can be resolved through arbitration or mediation instead of going to trial.
With arbitration the parties go before a neutral evaluator of fact, not unlike a judge. In fact, arbitrators are often retired judges, although they don’t have to be.
During the arbitration the parties will present their facts, evidence, and other information to the arbitrator, who will then make a decision. Again, this is not unlike what a judge does, however without the formality of a Court and without having to dot quite as many “I”s or cross quite as many “T”s as one does when going to court. In addition, the rules of evidence are often relaxed, allowing the parties to share what is important and relevant to their case without having to worry about the legal intricacies and ‘gotchas’.
After the parties present all of their information to the arbitrator, the arbitrator will make a decision – a ruling – as to what will be the outcome of the case.
The decision of the arbitrator can either be final (known as “binding arbitration”) or provisional (this is known as “nonbinding arbitration”, and the parties can choose to accept the arbitrator’s decision, or one of them can choose to take their chances in court rather than accepting the arbitrator’s decision).
Mediation, by contrast, is typically performed by someone who has training as a counsellor or alternative dispute resolver, but is not usually performed by someone with a judicial or even a legal background (although attorney-mediators are becoming more common).
Where arbitration is intended to provide a decision about the issues made by a neutral third-party, mediation is designed to help the parties to reach their own decision. Thus a mediator will help to facilitate discussion between the parties, and try to help them to reach some sort of equitable middleground to which they can both agree.
Whether arbitration, mediation, or some other method, alternative dispute resolution is almost always preferable to leaving your fate to the Court, as it leaves the outcome much more in your own hands, rather than in those of a single stranger on the bench, or a jury of twelve strangers.