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What is the Difference Between Mediation and Arbitration?

While mediation involves facilitated negotiation from a third party, arbitration involves a third party making a decision – similar to a Court, but in a private setting

Author: James Welch 

20 December 2022

Mediation and arbitration are both processes designed to help parties resolve disputes outside of court. While mediation involves facilitated negotiation from a third party, arbitration involves a third party making a decision – similar to a Court, but in a private setting. The circumstances and nature of the dispute usually determine which of these options are better suited to resolving a dispute.

At Access Law Group, we provide mediation and arbitration services in Sydney, Wollongong and Camden for a variety of legal matters, whether you need a business lawyer to settle a contract dispute or a divorce lawyer to help determine parenting arrangements.

How Mediation Works

Mediation involves parties engaging in negotiation to resolve the issues in dispute. An independent third party, the mediator, will assist in identifying the key issues and offer options and alternatives to settle the matter fairly. Mediation can be voluntary, court ordered or required as part of a dispute resolution clause in a contract. Mediation focuses on the interests of the parties, not their positions.

Depending on the situation, judges or senior business or family lawyers can act as mediators, facilitating discussions between the disputing parties. In most cases, the parties will discuss the issues with the mediator separately. While the mediator offers potential compromises and solutions, they will not take sides or make decisions.

How Arbitration Works

Arbitration involves an independent third party making a binding decision regarding the dispute based on the evidence presented by each party. It works similarly to litigation, except that it takes place outside of court, it is private, and confidential.

Arbitration can arise as part of a dispute resolution clause in a contract or where parties voluntarily decide to go to arbitration. The arbitrator is chosen by agreement between the parties or be appointed by another impartial individual or body.

What Approach is Best?

Mediation processes have the benefit of being less formal and more cost effective than arbitration or litigation. It also allows for more creative settlements that go beyond usual monetary offers. It can also occur over a short space of time (usually within a day). Mediation may not be suitable where a familial or commercial relationship has completely broken down and there is a sense that one or both parties is not willing to negotiate.

Unlike mediation, arbitration has a more structured and formal process that can include hearings, witness statements and cross examinations. Unlike mediation, the arbitration process is guaranteed to produce an outcome. Of course, that outcome can leave one or even both parties unhappy with the decision. It’s also a more costly and lengthy process.

Business and Family Lawyers in Wollongong, Camden and Sydney

Get in touch with a family or business dispute resolution lawyer at Access Law Group to find out if mediation or arbitration is right for your circumstances. For quality legal advice and services in Wollongong, Camden and Sydney, call us on 02 4220 7100 or contact us online.