Mediation is a faster, less hostile, less confrontational format for resolving disputes, where parties attempt to resolve their differences between themselves rather than relying on an inefficient, expensive, and time-consuming judicial system.
Mediation results in high success rates because the parties are brought together in an environment where they can freely and confidentially present their position in front of a neutral third party. Mediation can focus on particular issues and put them into proper perspective. Participants often feel much better after having an opportunity to get things "off their chest," and they also benefit from hearing the other party's point of view. The neutrality and more relaxed atmosphere of mediation reduce the desire to continue hostile litigation once both parties have seen all the issues in a fair light and the potential to dispose of them altogether.
Mediation can be used for any kind of dispute; whether a lawsuit has been filed or not. Pre-suit mediation is widely accepted as a sensible way of resolving disputes before they turn into litigation. Besides being confidential and non-binding, mediation is relatively quick and inexpensive compared to litigating a dispute.
Please note that while most certified mediators are attorneys, mediators will not give legal advice during the mediation and are not supposed to make legal conclusions about the merits of either party's position. When the parties come to an eventual agreement, the parties themselves will put the agreement in writing and sign it so that it then becomes a binding contract, fully resolving the dispute.
Arbitration Relies on a Neutral Third Part(ies) to Determine the outcome to a dispute.
Like mediation, arbitration utilizes a neutral third party, called the Arbitrator, to resolve the conflict between the parties outside of a courtroom. However, unlike mediation, the Arbitrator serves as a private judge to listen to the evidence and make rulings to determine the outcome of the dispute.
Rules of procedure and evidence may apply to some degree in these proceedings. In arbitration, the private judge is in control of the process and the outcome, whereas in mediation, the disputing parties maintain control and have a direct role in fashioning the solution to the dispute. Most Arbitrators will be flexible and work around the schedules and needs of the parties, unlike court proceedings. And although arbitration is usually less formal than a courtroom trial, there will be a set of procedures that will apply to both sides as they prepare for the hearing.
In most cases, the award of the Arbitrator is final and binding on both sides. The opportunity to appeal after a binding arbitration is very limited.