What distinguishes mediation from arbitration?

Mediation is characterized by its focus on facilitating a collaborative process where both parties are encouraged to communicate and negotiate to reach a mutually acceptable agreement. This process is inherently non-binding; the mediator does not impose decisions but instead helps guide the conversation, ensuring that both parties can express their interests and concerns fully. The goal of mediation is to create a solution that is acceptable to all involved, thereby promoting cooperation.

In contrast, arbitration is a more formal process where a neutral third party, known as the arbitrator, reviews evidence and arguments presented by both sides and then makes a binding decision that the parties must adhere to. This process removes the negotiation aspect for the parties, as the arbitrator's decision is final and legally enforceable.

The distinction around the binding nature of decisions is crucial; mediation's effectiveness relies on the voluntary agreement of the parties, while arbitration results in a decision determined by the arbitrator. Hence, the importance of mediation lies in its ability to produce outcomes that are agreeable to all rather than being dictated by an outside authority, making it a distinct method of resolving disputes compared to arbitration.