Arbitration and mediation are very different. Although they are both examples of alternative dispute resolution in that the parties are taking their dispute to a forum other than a court, they are dissimilar in many respects.
During a mediation a neutral party helps the parties negotiate with each other to reach an agreement that will end their dispute. In an arbitration, a neutral party acts as a judge and decides which side should prevail.
For example, let’s say Patrick and David have a contract. Patrick accuses David of breaking the contract. In a mediation, another person, let’s call her Nancy, will help Patrick and David discuss the issue and reach a settlement that will end the argument.
In an arbitration, another person, we’ll call him Ned, will decide whether Patrick’s accusation against David has merit or not. Assuming Ned decides that David broke the contract, Ned could award Patrick a damages award – – meaning David will have to pay Patrick.
One similarity that mediations and arbitrations share is that, generally speaking, they are private and confidential. Unlike disputes in court which are public, parties can mediate and arbitrate without disclosing anything to the public.