Conflict Resolution: Mediation vs. Arbitration Simplified

What is Arbitration vs Mediation?

When legal disputes arise, heading to court is not always the most effective solution. Going to court can be slow, costly, and adversarial, often leading to strained relationships between the parties involved. For this reason, alternatives like arbitration and mediation have gained popularity over the years. Both processes offer a more a private, flexible and efficient way to resolve conflicts outside of traditional court proceedings, yet they differ greatly in structure, role of the neutral party, and outcomes.

Arbitration Explained

Arbitration is a formal and structured process where disputing parties agree to submit their case to an arbitrator or a panel of arbitrators. Unlike a judge in court, arbitrators are often chosen based on their expertise in the subject matter of the dispute. For example, in a commercial arbitration involving complex financial transactions, the parties may select arbitrators with specialised knowledge in finance or international trade. This ability to select arbitrators based on expertise is a key advantage of arbitration, ensuring that the decision-maker is well-versed in the relevant issues. Once the arbitrators are selected, usually one or three arbitrators, the arbitration process begins much like a court trial. Both parties present their arguments, submit evidence, and call witnesses. However, arbitration tends to be more flexible than litigation. The rules of evidence are often less rigid, and the process can be tailored to fit the needs of the parties. The arbitrators will then render a decision, known as an "award" which is final and legally binding. This means that once the arbitrator issues a ruling, the parties are required to comply with the decision, similar to a court judgment. Arbitration awards can be enforced internationally under conventions like the New York Convention, making it particularly useful for resolving cross-border disputes.

Because of its binding nature, arbitration is frequently used in commercial disputes, especially those involving international trade, investment agreements, and business contracts. It offers parties a private, efficient way to resolve complex disputes without the delays often associated with courts. Furthermore, the confidential nature of arbitration is attractive to businesses that prefer to keep their disputes and resolutions private, as opposed to court cases, which are typically public record.

Understanding Mediation

Mediation, in contrast, is a much less formal and more collaborative process. Mediation focuses on helping the parties find a mutually agreeable solution through negotiation, with the assistance of a neutral third party called a mediator. Unlike an arbitrator, the mediator does not make a binding decision or impose a solution. Instead, the mediator’s role is to facilitate communication between the parties, helping them explore their underlying interests, generate options, and negotiate an agreement that satisfies both sides.

Mediation is voluntary and non-binding, meaning that the parties retain control over the outcome. They are not obligated to agree to any terms unless they both find the resolution acceptable. This makes mediation particularly valuable in situations where maintaining an ongoing relationship is important, such as family disputes, employment conflicts, or disputes between business partners. By encouraging open dialogue, mediation aims to create a win-win outcome, rather than the win-lose result often associated with litigation.

Mediation also tends to be more cost-effective and faster than arbitration or litigation. Because it is less formal, the parties are free to craft their own solutions and timelines, rather than adhering to strict procedural rules. If an agreement is reached, it can be formalised in a settlement contract, which is legally enforceable. However, if mediation fails, the parties still have the option to pursue arbitration or litigation to resolve the dispute.

While mediation is non-binding, it is increasingly recognised as a useful tool in resolving a wide range of disputes, from commercial to community conflicts. Many courts now require parties to attempt mediation before proceeding to trial, recognising that mediation can often resolve disputes more amicably and at a lower cost.

Overall, both arbitration and mediation offer advantages over traditional litigation, particularly in terms of time, cost, privacy and flexibility. However, the choice between them depends on the nature of the dispute and the parties' goals. Arbitration is suitable when a binding resolution is needed, while mediation is preferable when preserving a relationship and reaching a negotiated settlement is the priority.

At Middlesex University Dubai, the Department of Law & Politics has established itself as a leader in dispute resolution education offering academic and professional courses on international arbitration and mediation.  These courses are often some of the most popular with students reflecting the increasing relevance of these fields in the global legal landscape. The Department’s teaching team is composed of experts actively engaged in international arbitration and mediation, many of whom have strong industry connections and practical experience. At Middlesex University Dubai, law students are provided the opportunity to participate in a wide range of initiatives in this field including the Vis Moot, a prestigious global arbitration competition which further enriches students' learning experience. These initiatives enhance students’ skillset in legal advocacy, research, and analysis, preparing them for careers in international arbitration and dispute resolution generally.

For more information about the law department at Middlesex University Dubai, click here: https://www.mdx.ac.ae/courses/law