Arbitration vs. Mediation: Choosing the Right Path to Resolution

Thu, Mar 20th, 2025 | by Miles Mediation and Arbitration | Article | Social Share

By Paul Burkhart

As an attorney, you already know that litigation is expensive, time-consuming, and stressful for all involved. Fortunately, alternatives to traditional litigation exist which offer faster, more affordable, and less adversarial routes to resolution. Two of the most common are arbitration and mediation. While both are forms of alternative dispute resolution (ADR), they differ significantly in their process and outcome. Understanding these differences – and their respective advantages and disadvantages – is crucial to choosing the approach best suited to your client’s case.

What is Mediation?

Mediation is a negotiation facilitated by a neutral third party – the mediator. The mediator’s role is to help the disputing parties communicate effectively, understand each other’s perspectives, and explore potential solutions. The mediator does not decide or impose a settlement. Instead, he or she guides the parties toward a mutually agreeable resolution. The parties maintain control over the outcome. If no agreement is reached, the parties are free to pursue other legal options, including litigation or arbitration.

Pros of Mediation:

• Creative solutions: Mediation allows for creative solutions that a court might not be able to impose.
• Control: Parties retain control over the outcome. No settlement is imposed or necessary to conclude the session.
• Confidentiality: Mediation proceedings are typically confidential, protecting sensitive information.
• Cost-effectiveness: Generally, mediation is less expensive than arbitration and litigation.
• Flexibility: The process is flexible and can be tailored to the specific needs of the parties.
• Relationship preservation: Mediation encourages collaboration and can help preserve relationships between the parties, which is especially important in business or family disputes.
• Speed: Mediation resolves a case much more quickly than going to court.
• Choice of mediator: The parties select and agree on a mediator. This isn’t an option in filed court cases as judges are assigned on the appropriate venue and case subject matter.

Cons of Mediation:

• No guarantee of resolution: If parties are unwilling to compromise, mediation will be unsuccessful.
• Reliance on good faith. Mediation requires parties to participate in good faith and be willing to negotiate.
• Enforceability issues: An agreement reached in mediation must be formalized in a written contract to be legally enforceable.
• Power imbalance: If one party has significantly more power or resources, the mediation process may be skewed.
• Unsuitability for all cases. Mediation may not be appropriate for cases involving complex legal issues or where a clear legal precedent is needed. A claim that involves an element of pain and suffering or damages that might benefit from a jury trial might also be unsuitable for mediation.

What is Arbitration?

Arbitration is a more formal process where a neutral third party – the arbitrator – hears evidence and arguments from both sides and then renders a binding or non-binding decision. It’s similar to a trial but is typically less formal. Arbitration has more relaxed rules of evidence although rules, deadlines, and responses are similar to those in trial court.

The parties also conduct discovery is also done, although in a more limited capacity than at trial court. The arbitrator’s decision is called an “award”. If the arbitration is binding, the award is legally enforceable in court, like a judgment. If the arbitration is non-binding, the parties are free to reject the award and pursue other legal options. In some cases, the parties are required to attend arbitration based on binding clauses in contractual agreements subject to the dispute.

Pros of Arbitration:

• Choice of arbitrator: The parties, in most cases, are provided with choices and the parties must agree on the choice of arbitrator.
• Confidentiality: Arbitration proceedings are typically confidential.
• Costs: The cost to the parties tends to be less than trial court due to the quick turnaround and fewer formal deadlines imposed throughout the arbitration process.
• Efficiency: Arbitration is generally faster than litigation.
• Enforceability (if binding): Binding arbitration awards are generally enforceable in court.
• Expertise: Arbitrators often have specialized knowledge of the subject matter of the dispute.
• Finality (if binding): Binding arbitration provides a definitive resolution to the dispute.
• Less formality: Arbitration has fewer formal rules of evidence and procedure than court.
• Predictability: More predictable outcome than mediation, as a decision will always be reached.

Cons of Arbitration:

• Cost: Arbitration can be expensive, especially if the arbitrator is highly specialized or the process is lengthy.
• Discovery limitations: Discovery may be more limited than in litigation.
• Limited appeal rights: Appeals of arbitration awards are very limited, even if the arbitrator made an error of law or fact.
• Loss of control: Parties relinquish control over the outcome to the arbitrator (although this can be a pro if there is contention between the parties).
• Potential for bias: Although most arbitrators stand by unbiased rulings, concerns about arbitrator bias can arise, especially if the arbitrator is repeatedly selected by one party.
• Plack of precedent: Arbitration awards typically do not set legal precedent.

Key Differences Summarized:

Choosing the best approach depends on the specific circumstances of the dispute.

Choose mediation if: You want to maintain control over the outcome, preserve relationships, explore creative solutions, and prioritize confidentiality. It’s a good option when parties are willing to compromise and communicate openly.

Choose arbitration if: You need a definitive resolution, want an expert decision-maker, and are willing to relinquish control over the outcome. It’s a good option when parties are unable to reach an agreement on their own, or when the dispute requires specialized knowledge to resolve.

Conclusion

Both arbitration and mediation offer valuable alternatives to traditional litigation. A thorough understanding of the differences in process, pros, and cons can enable you to make an informed decision about which approach is best suited to resolve your client’s case efficiently and effectively.

*Originally published in the Daily Business Review and reprinted with permission.

About Paul Burkhart

Now a full-time arbitrator and mediator, Paul J. Burkhart established The Law Offices of Paul J. Burkhart, PL, after graduating from the University of Baltimore School of Law in his hometown of Baltimore, Maryland, and moving to Palm Beach Gardens, Florida, in 2004. He was admitted to practice law in Florida on January 24, 2005. As the principal of his firm, he has accumulated over 16 years of business experience, benefiting more than 2,500 entrepreneurs since opening his law practice. He is a member of the American Bar Association, the ABA Section of Dispute Resolution, and the Florida Bar’s Alternative Dispute Resolution Section. Throughout his career of arbitrating more than 200 cases, Burkhart’s main goal is to preside over arbitrations fairly and swiftly, ensuring the parties are heard and avoiding costly litigation while reaching an impartial resolution.