The decision of mediation vs. arbitration can be a challenging one for those who conflate the two terms to mean close to the same thing.  In practice, mediation and arbitration are very different.  About all they have in common is the fact that both provide alternatives to litigation; both mediation and arbitration are alternative methods of dispute resolution.  Sometimes mediation and arbitration are used to end a pending lawsuit, but sometimes they are chosen from the start so that the parties in dispute can avoid court completely.

Mediation vs. Arbitration Differences

Although both of these dispute resolution methods can be used in a binding or non-binding form, it is most common for mediation to be voluntary and non-binding while arbitration is often compulsory and binding.  When arbitration has these features, they have been agreed to in advance by all parties involved; such clauses are common, for example, in employment contracts and in some kinds of consumer contracts such as cellular service agreements. 

Mediation usually takes place before a single mediation attorney who serves as a facilitator, helping the parties involved hold a productive discussion so they can generate their own solution to their dispute.  Arbitration, in contrast, most often takes place before a panel of arbitration attorneys.  The panel hears both sides and then act as judge, issuing a ruling.

Insurance mediation is just one example of this process in practice.