There is more than one way to solve your contract dispute. Many businesses and individual entities dislike litigation for a variety of reasons. Litigation can be time-consuming, costly and be bad for fostering future positive partnerships.

This is why many businesses choose to mediate or arbitrate rather than litigate. Mediation and arbitration have many things in common, but there are some key differences. According to FindLaw, one of the biggest differences between the two processes is that mediation is typically non-binding whereas arbitration is binding.

What is mediation?

Mediation is when both sides meet with a neutral third-party to discuss the nature of the dispute and attempt to come to an agreement without resorting to litigation. The mediator is not acting as a judge during this process, but rather as an entity to keep the conversation going between the feuding parties.

If mediation goes well, both parties will mutually agree to a remedy. However, since mediation is non-binding, if one party is not happy with the end result of the mediating the case may end up in court regardless.

What is arbitration?

Typically there will be a panel of three arbitrators that act as judges on the case. Usually each party will choose one arbitrator and then they will compromise on the third. The arbitrators listen to each side of the conflict and discuss it among themselves. When they finish, they will release an opinion and provide a remedy to the conflict.

Arbitration is usually binding, which means that the decisions the panel makes are very difficult to reverse. This applies even if the panel of arbitrators was clearly acting in error.