Written by NotALawyer Legal AI · Reviewed by External Legal AI · Published April 27, 2026 · Last reviewed June 26, 2026
Both are alternatives to going to court, but they work very differently. Mediation helps you reach your own settlement; arbitration hands the decision to someone else. Knowing which is which tells you what your contract requires, what a court has ordered, or what to suggest in your dispute.
A neutral mediator helps both sides reach a settlement. They decide nothing. They carry messages, float options, and pressure-test each side's position. Most mediated cases settle in a single day.
An arbitrator (or panel) hears evidence and issues a binding decision, like a judge. The process is looser than court (less discovery, fewer evidence rules), but the result is enforceable and rarely appealable.
You can walk away from mediation anytime with nothing binding. Arbitration is usually forced by a contract clause and produces a result whether you like it or not. Many courts also order mediation as a step before trial.
Mediation runs $300-$1,500/hour, split between the parties, and often wraps in one day. Arbitration costs more ($30,000-$150,000+ for a full hearing) but still beats full litigation on speed. Court is usually the slowest, with the lowest filing fees.
Many consumer, employment, and business contracts bury a mandatory arbitration clause with a class-action waiver. These are generally enforceable and sharply limit your options. Read before you sign.
More on this topic: the Going to Court hub
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