Difference between Arbitration and mediation

Arbitration and mediation are the most famous conflict resolution methods after the litigation. Unlike the litigation process, these methods resolve conflicts without harming the relationship between conflicted parties. This article discusses the difference between Arbitration and mediation and the similarity between arbitration and mediation.

What is the process of arbitration?

Based on the presented evidence and explanations, the arbitrator can make a final decision, and both parties are bound to accept the arbitrator’s decision. Therefore appointed arbitrator should be an expert on the resolving conflicts reasonable way.

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Appointing of an arbitrator for contractor dispute can happen,

  • The initially agreed agreement (under the contract) by the parties
  • By statue (by government act or law)-Government acts may recommend when and where to resolve disputes using arbitration(The Arbitration Act 1996).
  • By order of the court -Court can order to resolve conflict such as minor claims, by using arbitration

Construction arbitration to resolve contractor dispute- Main characteristics

  1. lesser cost than litigation and arbitrator can decide whom to bear the costs of the process or how to divide the cost of the process,
  2. Because of the arbitrator’s given power he or she can thoroughly make a final decision,
  3. Finality is guaranteed since any of the party has a restricted chance to challenge the decision.
  4. Transparency will be there hence arbitrator should point out the reasons for the final decision made,
  5. All the matters and evidence presented will be confidential,
  6. The final decision will be made based on the presented evidence.
  7. Since appointed arbitrator is an expert of the selective discipline process will have more pace.

Read our full article regarding arbitration with interesting case study summary here

What is the process of Mediation

In mediation, all the parties agree and appoint a neutral third party (person) as a mediator. The mediator should be a qualified and expert person in the industry. Also, the selected mediator has to be acceptable by both parties

key elements/steps of the process of mediation in construction projects

  • First of all, there is no formal procedure to conduct a Mediation.
  • And, Each party will have equal time to present their evidence in joint meetings.
  • The mediator will not express his personal feeling or views regarding the matters.
  • But he can give an opinion or ask a question related to the case.
  • The final settlement will be taken together with all the parties related to the conflict.

Read our full article of mediation with interesting case study summary here

When discussing these two methods there are differences between arbitration and mediation and also the similarities.

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Similarities between arbitration and mediation

  • These methods are less painful than the litigation method
  • No much damages to the existing relationship between all the parties involved
  • Confidentiality is higher than the litigation process.

So above are the most basic similarities of these, below we are going to discuss the difference between arbitration and mediation

Difference between Arbitration and mediation

below table shows key Difference between Arbitration and mediation,

Characteristicin ArbitrationIn Mediation
Formal ProcedureYesNo
Arbitrator or Mediator issuing ordersYesNo
Can give a Final decisionYesCan propose a final resolution
Can harm the existing relationshipHigh possibilityless possibility
Challenging the final decision/Appealless possibilityHigh possibility
Difference between Arbitration and mediation

Below we have stated a more detailed summary of each point included in the above table (Difference between Arbitration and mediation).

  1. Formal procedure- There is no formal procedure to conduct mediation, But there is a formal way of arbitration. That’s why the arbitration process is so similar to the litigation process. It’s almost same as a court hearing.
  2. Issuing Ordres- Arbitrator can issue orders. But a mediator is only acting as a neutral third party.
  3. Final Decision- An arbitrator has the power to grant a final decision. But A mediator can only propose and led both the parties into a final resolution.
  4. The existing relationship between parties- Mediation process is a diplomatic way of finding resolution by bringing all the parties into the same page. Still, the rigid process of arbitration can harm the ongoing relationship between parties.
  5. Challenging the decision or appeal- It’s difficult to appeal against a decision made by an arbitrator.

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