What is the difference between mediation and arbitration?

Mediation uses an impartial third-party mediator who helps the parties to a dispute work through their issues. Similar to a court of law, mediation occurs according to a set of rules and procedures, such as those of the American Arbitration Association (AAA) or the Judicial Arbitration and Mediation Service (JAMS).

The mediator is not a decision-maker and does not issue any sort of binding resolution. Instead, the mediator may make recommendations to settle disputes, which the parties may agree to voluntarily accept. Mediation is often faster and less expensive than arbitration, which is more similar to formal court. However, if mediation fails to reach a resolution, the parties typically proceed to arbitration.

Arbitration, like mediation, proceeds according to a set of predefined rules and procedures, such as those mentioned above. However, instead of a mediator, one or more arbitrators are empowered to make binding resolutions to a dispute. Therefore, an arbitrator is more similar to a judge than a mediator. All parties to the arbitration process must agree beforehand to accept whatever decision the arbitrator reaches. Again, arbitration is normally much faster and less costly than pursuing a claim in court.

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