Side-by-side comparison
| Feature | Mediation | Arbitration |
|---|---|---|
| Who decides the outcome? | The parties — by agreement | The arbitrator — by determination |
| Process | Facilitated negotiation | Adversarial hearing (evidence, submissions) |
| Binding? | Yes — if a settlement agreement is signed | Yes — the award is binding and enforceable |
| Confidential? | Yes | Yes (unlike court, which is public) |
| Speed | Days to weeks | Months to years |
| Cost | Lower | Higher (closer to litigation) |
| Voluntary? | Yes — parties can walk away | If agreed or ordered, parties cannot stop the process |
When mediation is the better choice
Mediation is generally preferable when:
- Preserving the business relationship matters
- Both parties are open to compromise
- A creative, tailored outcome is more valuable than a win/lose determination
- Speed and cost are priorities
When arbitration is the better choice
Arbitration is generally preferable when:
- The parties cannot agree and need a binding determination
- A legal finding of fact or law is required
- One party is unwilling to negotiate in good faith
- The matter involves international parties (the arbitral award is enforceable internationally under the New York Convention)
Can you do both?
Yes — many commercial contracts include a tiered dispute resolution clause: negotiation first, then mediation, then arbitration (or litigation). This is best practice. Attempting mediation first rarely delays arbitration significantly, and frequently avoids it entirely. See also our guide to arbitration in family law for the family law context.
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