Arbitration and Mediation
Arbitration and mediation are two forms of alternative dispute resolution (ADR), where “alternative” means alternative to court litigation. In this context, ADR is commonly defined as any process or procedure for resolving a dispute other than adjudication by a judge in a statutory court. They are not the only kind of dispute resolution processes, but they are the most common, specially is arbitration, which is more and more used in many jurisdictions around the world, specially is in an international context. Mediation, on the other hand, is not so practised.
Both arbitration and mediation have the same goal in mind, which is a fair resolution of the issues in question, and they are both private dispute resolution procedures based on party agreement, but they differ in a number of important aspects. As a general idea, under mediation, the parties communicate with a neutral third party who makes a non-binding recommendation, meanwhile under arbitration, both parties commit to conform to the third party recommendation.
Voluntary processes
Most arbitrations take place pursuant to an agreement between the parties. However, it is not voluntary in the sense that once the parties have validly agreed to submit a dispute to arbitration, the process from that point becomes compulsory. Thereafter the determination of all issues, procedural or otherwise, is in the hands of the arbitrator.
On the other hand, mediation is a voluntary process which depends on the continuing cooperation of both parties, who can unilaterally withdraw from the procedure at anytime. Some jurisdictions order compulsory mediation, but no result can be imposed on them without their mutual consent. In this fundamental respect, mediation differs from arbitration.
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Arbitration |
Mediation |
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Parties |
Once they have agreed to submit a dispute to arbitration, neither party can unilaterally withdraw from the procedure |
Either party can unilaterally withdraw from the procedure, but first shall meet the mediator |
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3rd Party |
The arbitrator has the authority to render a final award |
The mediator is a settlement facilitator, which means he cannot impose a settlement on the parties |
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Basis |
The tribunal addresses the parties legal positions on the basis of the applicable substantive law |
Any settlement can be agreed by the parties based on their own interests, which may be broader than their legal positions |
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Outcome |
Awards are binding on the parties, final and enforceable on a par with court decisions |
Any settlement agreement is binding between the parties as a matter of contract law |
Reference:
Gide to WIPO Arbitration
http://www.wipo.int/edocs/pubdocs/en/arbitration/919/wipo_pub_919.pdf
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