Mediation vs. Arbitration: Who Decides Your Dispute

Both resolve workplace and consumer disputes outside a courtroom. An arbitration clause in a job or account agreement can decide which one you face and whether court is still open to you.

The Short Answer

The difference in mediation vs arbitration comes down to who decides. In mediation, a neutral mediator helps the two sides negotiate and cannot impose an outcome. In arbitration, one or more impartial arbitrators decide the dispute, and the result is generally final and binding.

At LawfareClaims.org, we publish guides on workplace and consumer claims, and an arbitration clause is the most common surprise readers describe. A signed arbitration agreement can send a claim to arbitration instead of court. The paperwork you signed when you took a job or opened an account can shape where your dispute is heard.

Mediation leaves you free to walk away and keep your other options. A binding arbitration award can be enforced in court and vacated only on limited grounds, according to the American Arbitration Association (AAA).

Mediation vs. Arbitration at a Glance

How Mediation Works

Mediation is a voluntary, confidential, non-binding process in which a mediator helps the two sides negotiate. The mediator may suggest ways to resolve the dispute but may not impose a settlement. You and the other side decide whether any proposal is acceptable.

Because nothing is imposed, either side can decline to settle. You can explore a deal without committing to a result unless you sign a written settlement agreement.

The binding moment comes at the end. If both sides sign a written settlement agreement, that agreement is generally legally binding and enforceable in court, according to the AAA mediation page. Read any draft settlement in full before you sign it, and have an attorney review it if you can.

The AAA describes mediation as typically faster and more efficient than arbitration. We do not quote a time frame or a cost for mediation.

How Arbitration Works

Arbitration is the submission of a dispute to one or more impartial persons for a final and binding decision, according to the Cornell Legal Information Institute (LII). The arbitrator, or a panel of arbitrators, decides.

The AAA says arbitration awards are generally final and binding and can be enforced in court. An award can be vacated, meaning overturned, only on limited grounds.

Arbitration is private. Discovery, the exchange of documents and information between the sides, is typically narrower than in court. Arbitration fees and who pays them vary by the agreement and the provider's rules, so read the fee terms in whatever agreement you signed.

In employment, the AAA employment page lists four ways employers structure arbitration programs. They are pre-dispute voluntary final-and-binding, pre-dispute mandatory non-binding, pre-dispute mandatory final-and-binding, and post-dispute voluntary final-and-binding arbitration.

Pre-dispute means the agreement was made before any problem arose. Post-dispute means both sides chose arbitration after the disagreement started.

What an Arbitration Clause Does to Your Right to Sue

A signed arbitration agreement can require a claim to go to arbitration instead of court. Under the Federal Arbitration Act (FAA), a written arbitration provision in a contract involving commerce is "valid, irrevocable, and enforceable." The text is at Title 9 of the United States Code (U.S.C.), section 2. The exceptions are grounds that exist at law or in equity for revoking any contract, such as fraud or unconscionability, or as otherwise provided in chapter 4 of the Act.

An agreement may also contain a class-action waiver. Where it does, class-wide claims may be barred. Our comparison of starting vs joining a class action explains how class claims work when they are available.

One federal carve-out applies to a narrow set of claims. The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 was signed March 3, 2022 (Pub. L. 117-90) and is codified at 9 U.S.C. §§ 401-402. At the election of the person alleging a sexual harassment or sexual assault dispute, a pre-dispute arbitration agreement or pre-dispute joint-action waiver is not enforceable as to that dispute.

The named representative of a class or collective action alleging that conduct can make the same election. The carve-out does not reach other claim types. See our workplace harassment guide.

Binding arbitration as a condition of employment has continued to produce litigation, according to the AAA, and the law on these clauses varies. We cannot tell you whether a clause in your contract is enforceable, because that depends on its wording, your claim, and the state and federal law at the time. Have a licensed attorney read the agreement; our find a lawyer page is the place to start.

Arbitration vs Litigation

Litigation takes a dispute to court, where it is public, decided by a judge or jury, and subject to appeal rights. Arbitration is private, is typically decided by an arbitrator or panel, and allows very limited appeal. Discovery is typically narrower in arbitration than in court.

A class-action waiver can change the comparison further, because it may bar class-wide claims. Whether it applies depends on the agreement and current law. If you are deciding whether to handle a claim on your own, our self-file vs attorney comparison covers that choice.

Using Mediation and Arbitration Together

Mediation can generally be tried before or alongside either arbitration or a lawsuit.

A failed mediation generally does not waive your right to proceed. If no written settlement is signed, you can generally continue to arbitration or court as your agreements and the law allow.

For discrimination charges, the EEOC runs its own voluntary mediation program, and a charge can be offered mediation. Because the program is voluntary, you decide whether to take part. Our workplace discrimination guide explains discrimination claims.

If your contract requires arbitration, mediation can generally still come first. The AAA covers both processes on its employment arbitration and mediation page and its consumer arbitration and mediation page.

Deciding on Mediation vs Arbitration for Your Claim

Start by finding out whether you signed an arbitration agreement, because that tells you whether arbitration is a choice or a requirement.

Lean toward mediation when you want to keep control of the outcome. You can test a settlement generally without giving up arbitration or court, and nothing binds you until you sign a written agreement.

Expect arbitration when a signed pre-dispute agreement requires it and no exception applies. The sexual harassment and sexual assault carve-out is one exception, and under that law the person alleging such a dispute can elect to make a pre-dispute arbitration agreement unenforceable as to that dispute.

Business-to-business disputes are outside the scope of this comparison. If your dispute is about pay or a firing, our guides on unpaid wages and wrongful termination explain those claims.

Verdict

When you have a choice, mediation can be tried first: it is voluntary and confidential, and it binds you only if you sign a written settlement. Arbitration fits when a signed agreement requires it, or when you want a final decision from a neutral and can accept very limited appeal. Arbitration is not the right fit if you want a judge or jury, a public record, or broader discovery. Ask an attorney whether an arbitration clause applies before you choose. Our answer changes if a signed pre-dispute agreement requires arbitration of your claim, since mediation then becomes an add-on rather than a replacement. It also changes if your claim is a sexual harassment or sexual assault dispute, where the person alleging the dispute, or the named representative of a class or collective action, can elect to make a pre-dispute arbitration agreement or joint-action waiver unenforceable as to that dispute.

Frequently Asked Questions

Is mediation or arbitration better?

Mediation keeps your options open when you have a choice, because nothing is imposed and you can walk away. Arbitration produces a final, generally binding decision that can be vacated only on limited grounds. If a signed agreement requires arbitration, mediation can generally still be tried first.

Is mediation binding?

No, mediation itself is non-binding, and the mediator cannot impose a settlement. If both sides sign a written settlement agreement at the end, that agreement is generally legally binding and enforceable in court. Read it carefully before signing.

Can I sue if I signed an arbitration agreement?

It depends on the agreement, your claim, and the law at the time. The FAA makes written arbitration provisions enforceable except on grounds for revoking any contract, such as fraud or unconscionability. For sexual harassment and sexual assault disputes, the person alleging the dispute can elect to make a pre-dispute arbitration agreement unenforceable as to that dispute. This is a narrow carve-out and does not reach other claim types. Have a licensed attorney read your agreement.

Can I be forced into arbitration by my employer?

An employer can make arbitration part of a pre-dispute agreement, and the AAA lists pre-dispute mandatory final-and-binding arbitration as one structure employers use. Binding arbitration as a condition of employment has continued to produce litigation, and the law varies. Whether a clause binds you depends on its wording, your claim, and current law, so an attorney should review it.

What is the difference between arbitration and litigation?

Litigation happens in a public court with a judge or jury and appeal rights, while arbitration is private and decided by an arbitrator or panel with very limited appeal. Discovery is typically narrower in arbitration. A class-action waiver may bar class-wide claims, depending on the agreement and current law.

What happens if mediation fails?

You generally keep your other options. A failed mediation generally does not waive your right to proceed to arbitration or court. Nothing from the mediation binds you unless both sides signed a written settlement agreement.

Is arbitration cheaper than court?

There is no single answer, because arbitration fees and who pays them vary by the agreement and the provider's rules. We do not quote a fee figure for that reason. Read the fee terms in your agreement and the rules of the provider it names, such as the AAA's consumer arbitration and mediation page, and ask an attorney who would pay what.