What is the difference between Arbitration and Mediation

Concept of Arbitration and Mediation

 In an Arbitration, the arbitral Tribunal considers and weighs the legal rights of a dispute and takes a decision. Once the arbitrator has arrived at a decision, it is binding on parties whether they agree with it or not just as a Court case is decided by a Judge, except that the process does not take place in a court room, and it is not open to the public. 

In a Mediation, the mediator assits and guides the parties in settling their disputes by a process of discussion and bridging their differences. The mediator helps the parties to arrive at an amicable solution. A successful mediation results in an settlement agreement signed by the parties, whereas a contested arbitration results in a decision by the arbitrator himself without the agreement of the parties. In a mediation both sides win, because decision is taken with full consent.

Legal sanctity of Arbitration and Mediation

Dispute resolved by Arbitration and Mediation has the value has the decision passed by court of law. And an Arbitration award and an Mediated settlement if acepted and duly signed by both the parties it is a valid decision.

Nature of process of Arbitration and Mediation

 Arbitration is a formal process and it follows almost same proceeding as in litigation but outside the court whereas, Mediation on the other hand is an informal process.

Need of Evidence in Arbitration and Mediation

Arbitration need steps in evidence. Mediation does not require any kind of evidence.

Cost of process in Arbitration and Mediation

Arbitration is more expensive in so far as it involves a complete trial like process spanning into numerous sittings. On the other hand  Mediation is a less expensive process as it generally bears fruit and concludes within very few sittings.

Party satisfaction in Arbitration and Mediation

Arbitration gives decision under which one party wins and other party loses; after arbitration the relation among parties may be strained. In in mediation the dispute is resolved,  it is win win situation for the party with little compromise so there is a possibility of friendly relation between the parties after the settlement.

Communication between Parties during Arbitration and Mediation

In arbitration, parties have hardly any personal relationship as well as private communication with the arbitrator is prohibited. In Mediation there is as such no restriction.

Court interference in Arbitration and Mediation

Both Arbitration and Mediation help the disputed parties to resolve the dispute without going to the court and it provides efficient and speedy justice to the parties. In Arbitration, there are several occasions when Court's indulgence is sought. Right from seeking interim relief under Section 9 of Arbitration and Conciliation Act, 1996 to appointment of Arbitrator under Section 11 of Arbitration and Conciliation Act, 1996, Section 27 of Arbitration and Conciliation, 1996 for Court assistance in taking evidence, Section 34 of Arbitration and Conciliation Act, 1996 for hearing objections against thr Award and Appeal under Section 37 of Arbitration and Conciliation Act, 1996, apart from seeking Court's indulgence in Execution of Award.

Whereas in Mediation the only indulgence sought is in passing of a Settlement Decree in a pending Suit. As also for Execution of such Decree. Since the Mediated Settlement is always on mutually agreed terms the occasion for Court's interference is minimal.

Consent of Parties in decision making in Arbitration and Mediation

The main difference between arbitration and mediation is that in arbitration the arbitrator hears evidence and makes a decision. Arbitration is like the court process as parties still provide testimony and give evidence similar to a trial but it is usually less formal. In mediation, the process is a negotiation with the assistance of a neutral third party. The parties do not reach a resolution unless all sides agree.

Decision in Arbitration and Mediation

Mediation may or may not reach a solution in so far as it depends on the disputing parties to arrive at an amicable solution. In case parties fail to reach to an consensus the Mediation can fail to bear any result; Arbitration usually does result into a decision as it is akin to a trial done on merits of the case where Arbitrator acts as a Private Judge.

Governing Law in Arbitration and Mediation

Arbitration is governed by  The Arbitration and Conciliation Act, 1996 while Mediation does not have any specfic governing Law but it finds mention in Section 89 Code of Civil Procedure, 1908. Recently the Draft Mediation Bill, 2021 has been published by Govt to invite suggestions from Public.