Although mediation and arbitration have the same goal in mind, a fair resolution of the issues at hand, there are some major differences which both parties must understand beforehand.

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.

Mediators do not issue orders, find fault, or make determinations. Instead, mediators help parties to reach a settlement by assisting with communications, obtaining relevant information, and developing options. Although mediation procedures may vary, the parties usually first meet together with the mediator informally to explain their views of the dispute. Often the mediator will then meet with each party separately. The mediator discusses the dispute with them, and explores with each party possible ways to resolve it. It is common for the mediator to go back and forth between sides a number of times. The main focus remains on the parties as they work towards a mutually beneficial solution. Most disputes are successfully resolved and often the parties will then enter into a written settlement agreement. Many people report a higher degree of satisfaction with mediation than with arbitration or other court processes because they can control the result and be part of the resolution.

Arbitration, on the other hand, is generally a more formal process than mediation. An arbitrator could be a retired judge, a senior lawyer or a professional such as an accountant or engineer. During arbitration, both parties are given an opportunity to present their cases to the arbitrator. Much like a regular court proceeding, lawyers can also question witnesses from both sides. During arbitration, there are usually little if any out-of-court negotiations between parties. The arbitrator has the power to render a legally binding decision which both parties must honour and the award is enforceable in our courts and the courts of 142 countries.