North Central College students train in mediation.

Mediation vs Arbitration

Reviewed by Jacob Imm

Jul 28, 2021

What Is the Difference between Mediation and Arbitration?

Mediation and arbitration—these are two of the most common practices used when reaching conflict resolution and settling legal disputes. However, many people aren’t familiar with either term or what makes them different.

Only a small percentage of legal cases actually make it to court. Instead, a majority of issues are settled through the processes of arbitration and meditation. Arbitrators and mediators typically have a similar goal: Help two or more parties reach an agreement on a legal matter. That said, each practice is also unique in several ways.

If you are interested in these subjects and want to explore a degree or career in this field, read on for everything you need to know about mediation vs. arbitration.

What Is Mediation?

The term mediation refers to the process of a neutral third party, known as a mediator, helping two other parties discuss and attempt to resolve a legal matter.

Mediation is a voluntary process designed to reach a mutual agreement. Those who use mediation should expect to argue their perspective, provide evidence and be willing to give up certain demands to determine an arrangement that satisfies all parties involved.  

Unlike arbitrators and judges, mediators do not have the authority to make a final decision—but they possess the conflict resolution skills and legal knowledge needed to facilitate legal discussions. Some benefits of choosing meditation for legal issues include:

  • Mediation is collaborative;
  • It’s relatively affordable; and
  • It can be less intimidating as compared to a trial or arbitration.

What Is Arbitration?

The term arbitration refers to the process of a neutral party, known as an arbitrator, being granted the ability to make a final decision on a legal dispute.

Although they are structured similarly to court hearings, arbitrations are generally shorter, more private and performed on a smaller scale. An arbitrator will listen to each party’s argument, examine evidence and ultimately make a final verdict on the issue.

An arbitrator’s decision may be a binding decision or non-binding decision, depending on the conditions of the dispute or lawsuit. Binding verdicts are court-enforced, while non-binding arbitration verdicts must be accepted by all parties to be sustained. An arbitrator may or may not provide reasoning for an arbitration decision.

Some benefits of choosing arbitration for a legal issue include:

  • Faster process
  • Definitive outcome (a decision will be reached one way or another)
  • An arbitrator is usually a trained expert on law or the specific subject involved in the arbitration.

In fact, in cases where the subject is complicated, arbitrators may be required to have experience in the field (e.g., accounting, engineering, construction, patents). This is why some arbitrators perform their job in conjunction with another career.

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The Success of Mediation and Arbitration in Modern Litigation

So, why is conflict resolution important and how do mediation and arbitration fit into the process?

The justice system is complex, which is one of the biggest reasons that mediation and arbitration are used to settle disputes. 

When a legal matter reaches a court of law, the judge may rule that the issue be resolved in mediation or arbitration, but typically these practices are considered voluntary. Arbitration and mediation proceedings are faster, cheaper and more private than a public trial.

For example, non-trial hearings are often used for specific legal issues such as:

  • Divorce mediation
  • Real estate mediation
  • Lawsuits (particularly commercial and workplace lawsuits)

What Is Med-Arb?

In some cases, elements of both mediation and arbitration are needed to reach a successful verdict.

Med-arb is a modern practice that combines both of these legal practices. The process of med-arb begins with both parties attempting to reach an agreement with the help of a mediator. If the parties cannot reach an agreement, the mediator will take over as arbitrator (if qualified) and decide on a verdict.

Where to Use Mediation Over Arbitration

Certain situations may benefit from mediation rather than arbitration. Meditation should be used if both parties believe they can reach an understanding on their own terms. This is often the first step when dealing with a legal matter, and it may or may not escalate to arbitration or a court hearing.

Mediation can also be used if one or more parties cannot afford to pay for a lawyer or arbitrator. If the legal matter is small, or in the early stages of a disagreement, mediation is typically the next logical step. 

Where to Use Arbitration Over Mediation

In other situations—particularly those with higher stakes or more complex disagreements—arbitration is preferred over mediation.

Arbitration is a more formal dispute resolution process than mediation. Therefore, this practice is used when a legal matter has escalated to a more serious issue. Arbitration should be used when both parties cannot settle on an agreement, particularly if time is a factor. If the issue involves large amounts of money or serious accusations, arbitration may be a better option than mediation

Start Your Career in the Justice System

Whether you’re interested in mediation or arbitration, the right school can prepare you for every part of the litigation process. At an accredited college—like North Central College—students can study these important concepts through several programs, including Conflict & Dispute Resolution, Pre-Law, and Leadership Studies. Take the first step toward this exciting career path and request more information about these rewarding programs from North Central College!

Jacob Imm is a communications specialist in the North Central College Office of Marketing and Communications. He has 10 years of collegiate communications experience and has worked with hundreds of college students. He has a bachelor’s degree from the University of Notre Dame and a master’s degree from Northern Illinois University.



Harvard Pon Staff. (2020, October 6). Undecided on Your Dispute Resolution Process? Combine Mediation and Arbitration, Known as Med-Arb. PON - Program on Negotiation at Harvard Law School. 

NonDisclosure Agreement. (2021). Mediation vs Arbitration – Which is Best? NonDisclosure Agreement.Com. 

American Bar Association. (2021a). Arbitration. AmericanBar.Org. 

American Bar Association. (2021b). Mediation. AmericanBar.Org. 

British Columbia International Arbitration Centre. (2021). - Difference between Arbitration and Mediation. BCICAC. 

CareerExplorer. (2020, March 24). What does an arbitrator do?