How do you choose between mediation and arbitration for business disputes?

1 Cost and time

Mediation is usually cheaper and faster than arbitration, as it involves less formal procedures, fewer rules, and more flexibility. Mediators are facilitators who help the parties reach a voluntary agreement, rather than imposing a binding decision. Mediation can also save time by avoiding lengthy appeals or enforcement actions. However, mediation may not work if the parties are too hostile, uncooperative, or unrealistic, or if the dispute involves complex legal issues or rights. In that case, arbitration may be more efficient and effective.

2 Control and finality

Arbitration gives the parties more control over the process and the outcome than litigation, as they can choose the arbitrator, the rules, the evidence, and the law to apply. Arbitrators are experts who render a binding and enforceable award, which can only be challenged on limited grounds. Arbitration can also provide more finality and certainty than mediation, as it avoids the risk of impasse, non-compliance, or renegotiation. However, arbitration may also entail more risks and costs than mediation, as it limits the parties' options, creativity, and flexibility, and may create a winner-loser situation.

3 Confidentiality and relationship

Both mediation and arbitration offer more confidentiality and privacy than litigation, as they are conducted in private sessions, without public records or media exposure. Confidentiality can protect the parties' reputation, trade secrets, and sensitive information, as well as encourage candor and cooperation. However, confidentiality may also vary depending on the agreement, the rules, and the law of the jurisdiction. Mediation may also preserve or improve the relationship between the parties, as it fosters communication, understanding, and mutual respect. Arbitration may also maintain or restore the relationship, but it may also damage or destroy it, depending on the outcome and the conduct of the parties.

4 Quality and fairness

Both mediation and arbitration aim to provide quality and fairness in resolving business disputes, but they may differ in how they achieve it. Mediation relies on the parties' self-determination, satisfaction, and empowerment, rather than on legal standards, precedents, or principles. Mediators do not judge, advise, or represent the parties, but rather assist them in finding their own solutions. Arbitration depends on the arbitrator's expertise, impartiality, and integrity, as well as on the due process, transparency, and consistency of the rules. Arbitrators do not mediate, negotiate, or advocate for the parties, but rather apply the law and the facts to the case.

5 Suitability and compatibility

When deciding between mediation and arbitration for business disputes, it is important to consider the suitability and compatibility of each method for the specific situation. This includes the nature and scope of the dispute, the interests and goals of the parties, the relationship and trust between them, and their resources and constraints. There is no one-size-fits-all answer to this question; each method has its advantages and disadvantages, and each case has its own circumstances. To make the best decision, it is important to carefully weigh all the factors, consult with legal and professional advisers, and communicate with the other party in order to find a suitable option.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?