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If, at one end of the dispute resolution process sits negotiation and at the other is full-blown litigation – mediation is the step following negotiation and arbitration is the step before litigation.
Both processes employ a neutral third party ─ usually appointed by the parties involved ─ who is either a highly-skilled facilitator (in the case of mediation) or an expert in the field of law in which the dispute has arisen (in the case of arbitration).
A mediator cannot impose a decision upon the parties but instead uses their facilitation and technical skills to assist the parties explore the issues in depth and reach the best possible joint decisions in the circumstances.
Arbitration on the other hand, is a process very close to judicial determination and is often conducted in a more adversarial fashion. Arbitrators are chosen for their expert knowledge of the field of the dispute and are charged with making a considered determination based on the facts provided.
The main differences between arbitration and litigation are that arbitration proceedings and decisions are private, and the arbitrator is an expert specifically chosen by the parties.
Both mediation and arbitration are private and confidential and the outcomes are final and enforceable.
While litigation remains the most common form of dispute resolution in Australia, the majority of cases are settled out of court – making the less formal and less costly options of mediation and arbitration often more satisfactory.
44 Martin Place