Mediation and arbitration are terms that are very often confused by the layperson. While both processes are related to resolving disputes, they are two distinctly different approaches.
Are you involved in a dispute that you need to resolve? Before the matter escalates and has to be dealt with in a court of law, you may prefer a less formal solution to the problem.
Don’t be dissuaded by confusing jargon. These processes are easier to understand than at first glance. Read our guide to understand the difference between arbitration and mediation, and you’ll be one step closer to resolution.
Mediation vs Arbitration: The Difference Explained
A conflict or dispute does not always have to end up in a court battle. Mediation and arbitration are two excellent alternatives that can lead to resolution. But how do you know which one applies to your situation?
Both processes allow two or more parties to settle their dispute out of court. However, there are significant differences in these dispute resolution systems.
The main one is that mediation is a non-binding process. It’s essentially a facilitated negotiation with a neutral third-party mediator who helps the involved parties agree.
So, mediators do not control the outcome – the parties involved do. A settlement can only be reached if the parties all approve.
Arbitration, on the other hand, is a binding decision in place of a trial. It usually involves multiple selected people acting in place of a judge and making the final decision.
If any of the parties involved do not agree with the arbitrator’s decision, they are entitled to take the matter to court.
The Role of a Mediator
What is the role of a mediator, and when would you need this form of alternative dispute resolution?
Neutral Third Party
A mediator’s role is to be a neutral third party. Mediators are independent of the opposing parties and their situation.
Mediation involves the facilitation of discussion between these disputing parties.
Mediation is essentially the art of resolving disputes. The process of mediation can be voluntarily sought out to resolve a dispute. But it can also be court-ordered and even recommended by an employer as part of a labour dispute.
The Role Of An Arbitrator
What is the role of an arbitrator, and why would you need this dispute resolution approach?
An arbitrator is an independent adjudicator. Arbitrators make a final decision based on evidence that all parties involved in a dispute have presented.
Arbitration is a more formal process than mediation and involves a hearing with a pre-trial process similar to a court hearing. Parties may even be cross-examined during this process. It is not, however, open to the public.
Much like in civil litigation, there will be a “winning” party and a “losing” party, although the arbitration process is not presided over by a judge in a public courtroom.
Legally Binding Decisions
The arbitrator’s decision is legally binding, and arbitration mirrors the litigation process in many ways. The main difference, though, is that the arbitrator operates outside of the court process.
The disputing parties provide testimony and give evidence much like they would in a trial. But this takes place in a far less stressful environment than a court hearing, as arbitration is a less formal legal procedure.
The Ontario Arbitration Act
The Arbitration Act in Ontario allows arbitrators to make interim orders for inspecting property or documents, security of such, and even detention if necessary. This Act was brought into effect in 1991.
This Act governs most arbitration proceedings conducted in Ontario. The only time this is not the case is whenever its application is excluded by law, or the International Commercial Arbitration Act applies.
Do International Arbitration Laws Apply In Ontario?
International laws may sometimes apply if your arbitration process deals with a commercial or trade dispute.
The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the New York Convention, is an important United Nations treaty on international trade law.
It is the foundation of the international arbitration system and often supersedes any other arbitration process, including here in Canada.
Benefits Of Mediation And Arbitration In Modern Litigation
Both mediation and arbitration offer the disputing parties distinct benefits.
Aside from the obvious one, that of avoiding a formal court case, the following are some top benefits of each of these dispute resolution approaches:
Benefits Of Mediation
- Mediation is voluntary, and as one of the disputing parties, you are not subject to the mediator’s decision.
- Mediators do not have the authority to enforce a decision but will help you negotiate in a neutral environment.
- Everything that is discussed during mediation is confidential.
- More creative solutions to disputes are possible in mediation than in litigation.
- The mediator may have some ideas about resolving the conflict that none of the parties had considered or been aware of.
- It often helps to have an objective, neutral party’s perspective on a matter.
- Mediation does not take as long as a court case would.
- The mediation process is also more cost-effective than a lengthy court case or even the arbitration process.
Benefits Of Arbitration
- An arbitrator is qualified to resolve most disputes as a trained legal expert.
- When arbitration is chosen to resolve a legal issue, a definitive and legally binding decision will be reached far quicker than in a traditional court case.
- Arbitration gives you the security of a legal outcome without the hassle of a trial.
- Although mediation is not guaranteed to result in a resolution, arbitration offers a definitive outcome.
- It can be more cost and time effective than regular litigation.
- Arbitration offers confidentiality that the traditional legal system does not.
- There is more flexibility in reaching of a resolution than in a court case.
- In cases where mediation has failed, but the parties prefer to keep their dispute out of the public domain, arbitration can be the answer.
How Much Control Do The Parties Have Over The Proceedings?
With arbitration and mediation, you will still have a lot of control over the resolution of the dispute, although more in the case of mediation.
You will need to agree on the choice of mediator, and this person will be the neutral voice in ensuing discussions.
If opposing parties cannot calmly discuss the facts, it is possible to sit in separate rooms with the mediator as the go-between until you reach a consensus.
The mediator is often a retired judge or lawyer. But they are there to facilitate discussion and problem-solving, not to make decisions for you. You still have a direct influence on the outcome.
But that does not mean that you have no say in arbitration.
The arbitrator is generally agreed upon by all the parties involved. However, if you cannot reach a consensus, the solution is to allow an independent body to appoint an arbitrator.
You will get to present your case, and can even challenge the final decision if you feel that it did not adequately resolve your complaint.
If you are embroiled in a dispute that you would like to have resolved as quickly as possible, get in touch with us.
We can advise you on the correct course of action for our situation. And if you have already been asked to participate in a mediation process, we can assist you with the best representation in the negotiations.