What are the differences between arbitration and mediation? All you need to know about arbitration and mediation

In response to the costly and lengthy traditional court proceedings, alternative dispute resolution (ADR) methods have been developed in an attempt to settle disputes.

Traditionally, the different kinds of processes that make up ADR include arbitration, mediation, negotiation, conciliation, and ombudsman.

Amongst these processes, arbitration has emerged during time as the most developed, advanced, and structured method of resolving disputes involving states, individuals, and corporations.

In recent years, more and more parties have resorted to arbitration instead of the traditional court proceedings given its faster, cheaper, and less complex nature compared to litigation.

However, as time passed by and arbitration became more and more expensive, parties have resorted to other methods of ADR, and particularly, mediation.

Nowadays, it is common practice to include in dispute resolution provisions a requirement that, before a dispute is referred to arbitration, it must first be referred to some sort of structured mediation between the parties (generally under a multi-tiered dispute resolution clause).

Although both are part of the umbrella term of ADR, these two processes present key significant differences, which this post aims to examine.

So, what are the differences between arbitration and mediation? The main differences between arbitration and mediation are summarized below

Procedure FormalityFormal and StructuredInformal
ChoiceAs per the ContractUsually Voluntary
OutcomeBindingUsually non-binding
StagesFormal hearings (Usually Five stages)Usually Two stages
TimingBy Contract Clause / Arbitration ClauseAny TIme
LegalityQuasi-legal (Not Judicial but governed by a set of laws)Flexible – Not subject to a set of laws
SettlementDecision – Similar to court judge (Win or lose scenario)Amicable
Role of Arbitrator and mediatorJudge
(Examines evidence and draws conclusions)
(Help and initiates proposal)
Comparison between Arbitration and Mediation

Many factors influence the expected time and overall cost for resolving dispute arbitration or mediation. Factors affecting the arbitration or mediation cost include:

  • Type of dispute.
  • Complexity of dispute.
  • Value of the dispute.
  • Involvment of other stakeholders
  • Willingness of the parties for concluding the dispute.
  • Relation and future prospects between the parties.

So, how long does arbitration take? The expected time for a domestic dispute arbitration award is 7 months to 7.3 months.

As for Internation arbitration, The expected time for international arbitration is 12 months while ranging from 9 months to 16 months or more.

Based on data gathered from the LCIA London Court of International Arbitration” Arbitration TIme in comparison to the case value is tabulated below:

Dispute ValueAverage Time for the final award
Less than USD 1 million9 months
1 million to 10 million16 months
10 million to 100 million18 months
Greater than 100 million29 months
Average arbitration costs and time for award

One would ask, so how long does mediation take? On average mediation take 30 days to be settled. Depending on the complexity and type of dispute it could range from several hours to a couple of months.

And, how much does mediation cost? A mediator charges between $300-$500 per hour, but this rate can go upper depending on the complexity of the case and the mediator.

You might be also interested to read about the Arbitration and Mediation hybrid “Mid-Arb” in Can arbitrators mediate? All you need to know about Mid-Arb, Arbitration and Mediation

In particular, this post explains the nature of these proceedings, their different stages, the role of an arbitrator compared to that of a mediator, as well as the outcome of the proceedings.

However, before dwelling on the substantive part, this post will explain, in general terms, the general characteristics of this arbitration and mediation.

To learn more about arbitration and mediation, you may refer to our posts on Arbitrability, Binding arbitration, and mediation.


Arbitration is a private and confidential process, where the parties to a dispute agree to submit the dispute before a single arbitrator, or sometimes a panel of three arbitrators (commonly known as the Arbitral Tribunal).

During the arbitration, the arbitrator or arbitrators hear the evidence and arguments presented by the parties, take them into consideration, and render a decision (known as the arbitral award).

In general, arbitration commences as a result of a contract between the parties, the so-called arbitration agreement in which the parties indicate the procedure to be followed during the proceedings.

Hint: Our worldwide map for arbitration costs can assist you in estimating your arbitration fees.


The term mediation is used to describe an informal process where parties in a dispute request a third person or persons to assist them in their attempt to reach an amicable settlement.

This third person is referred to as a mediator and he/she has received training in the field. Mediation is most common voluntarily or entered into as part of a multi-tiered dispute resolution clause, but it may be, in certain cases, court-ordered.

Mediation can be initiated at any time before arbitration commences and even during an arbitration case before it concludes.


Format of the proceedings

The essential difference between arbitration and mediation lies in their format.

Arbitration is a structured and formal process. Even though not a judicial process in nature, arbitration is still governed by a set of laws, which apply at different stages of the proceedings. First and foremost, the law governing the recognition and enforcement of the arbitration agreement.

Second, the lex arbitri, the law that governs the actual arbitration proceedings themselves.

This, and generally, the most important, there is the law or set of rules that the arbitrator must apply to the substantive matters in the dispute.

And finally, there is the law that governs the international recognition and enforcement of the award rendered by the Arbitral Tribunal.

Therefore, arbitration works efficiently because it is governed by a complex public system of national laws and international treaties.

On the other hand, mediation is a more flexible process, where the mediator assists the parties to the dispute to identify and consider options for the amicable settlement of the matter at hand.

Essentially, in mediation, the parties to the dispute are prompted to have an open discussion and narrow their differences in order to reach a common solution.

Mediation is not subject to any comprehensive system of national or international law. In a mediation, the parties seek to solve their settlement through an amicable dispute.

For this reason, parties to mediation would often find innovative solutions, which do not result in a ‘win or lose scenario’, unlike in arbitration, where the award is essentially the same as the decision of a court judge.

With the exception of the legal proceedings related to the enforcement of a mediation agreement and public policy concerns, this process is subject to practically no legal procedure and few legal limitations.

Stages of the proceedings

Arbitration is similar to a courtroom trial in the sense that it may include: a hearing; a pre-trial process, involving pleadings, discovery, and the preparation of written witness statements; cross-examination of witnesses; and the rendering of the award.

For this reason, arbitration proceedings, particularly in international commercial and investment disputes can take years.

The American Arbitration Association describes arbitration as being composed of five main steps:

  • Preliminary hearing, where the parties meet to discuss substantive case issues, as well as exchange information and the witness lists
  • Information exchange and preparation: parties share information and arbitrators handle any related challenges.
  • Hearings: during this stage, parties present evidence and testimonies before the arbitrator.
  • Post hearing submissions: this stage is not mandatory in nature, but it can occur when the parties need to submit additional information to the arbitrator.
  • Award: the final stage of the arbitration proceedings, when the arbitrator renders a decision (award) and closes the case.

The mediation process, on the other hand, is less lengthy and complicated.

Depending on the complexity and importance of the dispute at hand, the duration of mediation can vary between several hours, days, or even months.

As a general rule, in most mediations, the parties reach a settlement within 30 days since the dispute has been brought to the attention of a mediator.

The mediation process is typically composed of two stages: the joint session and the caucasus, which may also occur simultaneously.

In the joint session, the mediator, a spokesperson for each party (typically a lawyer) and someone with the authority to enter into a binding settlement (it can be the spokesperson or another representative of the parties) have a meeting.

The joint session aims to provide information to the mediator on the dispute at hand, uncover any differing views on the facts, and clarify what each side considers a satisfactory resolution to be.

Sometimes, a joint session would also include other parties which are not necessarily part of the dispute, but they may be interested in the outcome of the process.4

After the joint session, the mediator would typically ask the parties to the dispute in a caucus. The caucus is a separate, confidential session with each party to the dispute, where the mediator collects information about each side’s interests.

Sometimes, mediators will continue discussions in joint sessions parallel to the caucasus, hoping that the open exchange of views will resolve the dispute faster.

Role of arbitration and mediator

The function of an arbitrator is essentially the same as that of a judge in a court of law, i.e. to examine the case put before him or her.

Therefore, an arbitrator examines the documents, evidence, and arguments presented by the parties applies the relevant laws and rules to the arbitration and renders the final award, which is binding upon the parties and legally enforceable.

In certain circumstances, the arbitrator may ask for further documents or explanations with regard to the documents being examined.

A mediator, on the other hand, acts as a facilitator for the parties to help them reach their own agreement that satisfies, at least to some extent, their core preferences.

A mediator would typically ask questions to the parties in order to identify the issues in the dispute and support the parties in developing options to resolve the dispute.

Unlike an arbitrator, the mediator does not decide over the dispute nor does he/she have the power to impose any binding settlement upon the parties.

The mediator is there to facilitate conversations, suggestions, proposals, and counter proposals between the parties.

In addition to their formal role during the proceedings, mediators and arbitrators are also differentiated by the legal skills required to perform their role.

Resolving legal-type disputes is at the heart of arbitration.

An arbitrator needs to draw on his or her knowledge of relevant laws and policies in order to weigh up each party’s case and make a decision.

For this reason, arbitrators would usually have served as lawyers or judges and possess strong decision-making skills.

Mediators, on the other hand, are often people who have been trained in the social sciences such as psychology or sociology and are able to bring the parties to the dispute to a common ground.

The outcome of the proceedings

The final main difference between arbitration and mediation is related to the outcome of the proceedings.

Arbitration will always result in a resolution of the dispute that comes in the form of the arbitral award. On the other hand, mediation does not necessarily have to result in a settlement, even though research has found that more than 80% of the parties to mediation reach a common settlement.

The decision of the arbitrator or arbitrators is binding and legally enforceable upon the parties, whether they agree with it or not.

An arbitral award is very rarely subject to an appeal procedure, and in such circumstances, the issue would be related to the enforcement of the award rather than the proceedings themselves.

Similar to arbitration, any settlement in mediation is binding upon the parties. However, unlike arbitration, any settlement in mediation is subject to the will of the parties and no settlement can be reached without both parties agreeing to one.

At the same time, the settlement in mediation might be enforceable only if the agreement contains an express clause stating so.

Arbitration Vs Mediation Costs

Since mediation and arbitration can be utilized in a variety of disputes, it is not practical to directly compare the overall average expected costs of each.

In theory, arbitration should be less extensive than litigation, given there are few possibilities to appeal an arbitration award.

However, in today’s reality, arbitration may take years and the costs involved are quite high.

There are two main types of costs related to arbitration proceedings:

  • the administrative fees for the institution administering arbitration,
  • Arbitrator compensation,
  • Expenses paid to the arbitrator who decides over the case.

Additional costs may involve expert witnesses and lawyer’s fees.

Depending on the complexity and importance of the dispute at hand, the duration of mediation can vary between several hours, days, or even months.

As a general rule, in most mediations, the parties reach a settlement within 30 days since the dispute has been brought to the attention of a mediator.

As a relatively short process, mediation brings along fewer expenses. On average, a mediator charges between $300-$500 per hour, but this rate can go upper depending on the complexity of the case and the mediator. You can also refer to our article on family disputes mediations for the causes and expected expenses.

In addition, if the dispute is submitted to an official mediation institution (similar to arbitration), this could involve some additional administrative costs.


Avid reader and practitioner of alternative dispute resolution methods.

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