Sometimes it is necessary for a business owner to litigate, but not always. Generally speaking, it is best practice to exhaust all other avenues before going to court.

Instead of litigation, some business owners turn to mediation or arbitration to solve disputes. According to FindLaw, the biggest difference between most arbitration and mediation is that arbitration is a binding decision whereas mediation is not.

How are arbitration and mediation the same?

Both arbitration and mediation are ways to attempt to resolve disputes before taking them to court. In many cases, arbitration and mediation can help you maintain valuable business relationships while solving disputes without too much conflict.

Both arbitration and mediation can also help you decrease the amount of time and money sunk into the legal process. Additionally, you have much more say when choosing a mediator or an arbitrator as compared to choosing a judge while litigating.

How are mediation and arbitration different?

With mediation, typically there is a single mediator that is guiding the conversation between both parties and attempting to help the parties come to an amicable solution on the issue. Mediation is typically not binding. Thus, if one or both parties are not satisfied by the outcome of mediating they retain the right to take the case to court.

Arbitration involves selecting either a single arbitrator or multiple arbitrators if the parties desire a panel. In arbitration, the arbitrators hear both sides of the case, very similarly to litigation. Then, the arbitrators will make a decision on the case based on the evidence at hand. Arbitration is usually binding, which means that the decision will stand no matter how the parties feel about the decision in the aftermath.