How is Arbitration Different from Mediation?

Alternative Disputes Resolution (ADR) methods basically refer to different modes of resolving disputes between the parties outside of traditional Courts. These modes include arbitration, conciliation, mediation, negotiation, etc. The Arbitration and Conciliation Act, 1996 states certain provisions that define the process of conducting arbitration and conciliation proceedings. There is also a provision for mediation in commercial matters in the Commercial Courts Act, 2015. However, this may be subject to certain exceptions.

It must be noted that although the ultimate goal for all forms of ADR is to provide a solution to disputing parties without going through the usual Court proceedings, such methods are subject to different rules and regulations.

ADR methods are meant to be less conflicting and intended to be more viable substitutes for other traditional methods of dispute resolution.

However, there are certain types of disputes that cannot be resolved through ADR mechanisms, such as:

• Conflicts related to public office elections.
• Disputes related to serious allegations of fraud, forgery, fabricating documents, etc.
• Disputes related to prosecuting for criminal offenses.
• Cases where authority is granted by the Courts after some enquiry.

Arbitration vs. Mediation

Although they are both methods for alternative dispute resolution that offer a more flexible approach to resolve conflicts, there are several differences between the two.

Neutral Third Party

While an arbitrator plays the role of an adjudicator in arbitration proceedings, in case of mediation, a mediator aims to provide for a settlement. In addition, while one party is not allowed to contact the arbitrator unilaterally in arbitration cases, mediation does not state any limitation as such.

Procedure to Appoint a Neutral Third Party

In the case of arbitration, the arbitration agreement signed between parties usually defines the process for appointing an arbitrator. As such, if any party to the agreement does not comply to this process, the other party may approach the Courts to appoint an arbitrator under Section 11 of the Arbitration Act.

On the other hand, mediation proceedings are generally held before the Court. However, if the Court believes that the dispute can be resolved without being adjudicated or the disputing parties mutually agree for mediation, the Court shall refer to them for mediation.

Decision

The decisions in arbitration cases are referred to as ‘awards’ and are binding by nature for all parties involved. The arbitrator shall take the facts of the case and the evidence provided for the same into consideration before arriving at a decision. It must be noted that disputing parties have no control over the results of the arbitration.

On the other hand, in case of mediation, the settlement can only be reached through mutual agreement of all the parties involved. As such, these parties have complete control over the results of such proceedings. Besides, unlike the arbitrator, the mediator is not interested in knowing the facts and reviewing the evidence of the case but rather aims to facilitate a settlement between the parties without having to go through the merits of the conflict.

Applicable Law

While laws provided in the Arbitration and Conciliation Act, 1996 govern arbitration proceedings, there are no statutes for mediation.

Process Flexibility

While arbitration proceedings are entirely governed by certain laws, it does allow parties to be flexible in some aspects of the case. On the other hand, mediation is a completely flexible process.

Time Involved

Although the Arbitration and Conciliation Act, 1996 states a certain timeline within which proceedings must be completed, they often last longer than that. However, when it comes to mediation, the proceedings are relatively quicker.

Costs

Though it was once considered an inexpensive method for dispute resolution, arbitration proceedings can now cost quite a lot. When it comes to mediation, it is inarguably more cost-effective, and the overall costs are much less compared to arbitration.

How is Arbitration Different from Negotiation & Conciliation?

As mentioned above, even though arbitration is a form of ADR that provides for dispute resolution outside of Courts, it is quite different from mediation. Similarly, arbitration is different from two other types of ADR – negotiation and conciliation.

Negotiation

It must first be noted that unlike arbitration, no third party is involved in negotiations. Further:

• Disputing parties sit down together and try to come up with an apt solution.
• The process is not governed by any laws or regulations.
• Merits of the dispute may not be relevant to come up with a solution.
• This is a process of given-and-take.

Conciliation

There is a neutral third party involved in Conciliation proceedings.

• Conciliation proceedings are first initiated when one party invites the other to conciliate. However, if the invitation is rejected, no conciliation proceedings shall be conducted.
• Unlike arbitration which requires an odd number of arbitrators, an even number of conciliators can be appointed for conciliation proceedings.
• Conciliation proceedings are governed by the provisions provided in the Arbitration and Conciliation Act, 1996.
• The conciliator enables communication and negotiation between the disputing parties and helps them reach a common conclusion.
• The conciliator does not decide the solution for the disputing parties but rather helps them arrive at one themselves.
• Unlike arbitrators, conciliators offer probable solutions to resolve disputes. They act as a facilitator, evaluator as well as an intervener.
• Unlike arbitration, the conciliator is permitted to individually communicate with any party of the case.
• Parties may choose to go for conciliation for dispute resolution without the need for any prior agreement between them.
• The solution arrived upon through conciliation is enforceable like Court orders.

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Conclusion

Although there are several types of ADR mechanisms available, most disputing parties prefer to go through arbitration as it helps them arrive at a solution through legal methods. While the result of the arbitration is enforceable, if any party is unsatisfied, they may approach the Courts and make an appeal before them.