What are “mediation” and “arbitration?”

Mediation is an informal and confidential way for people to resolve disputes with the help of a neutral third party – a “mediator” – who is trained to help people discuss their differences. The mediator (who often is an attorney or a retired judge) has no power to decide or rule on the dispute.  Instead, the mediator’s goal is to help the parties themselves find the common ground necessary to reach a settlement.  Most civil actions filed in the Superior Court Division of state court or in federal court in North Carolina are subject to court-ordered mediation, which means that the parties are required to attend, pay for, and participate in good faith in a mediation conference with a mediator and the opposing party (and usually their counsel).

Like mediation, arbitration is not a formal judicial proceeding.  Yet, while the goal of mediation is for the parties to reach common ground, arbitration is similar to a court proceeding in that it involves the hearing and determination of the dispute by a neutral third party called an “arbitrator.”  The arbitrator is selected by the parties to review the case and impose a decision that is legally binding on both sides.  Arbitration is less formal than court proceedings, and it likewise may be more flexible, quicker, and less costly than traditional judicial processes.  In some instances, arbitration is required by law or court rules.  Most often, however, it is the result of the parties’ own choice, usually in the form of a provision in a contract entered into by the parties.  (Many people do not realize that the “fine print” contained in agreements they regularly sign  for a host of goods and services often includes provisions mandating the use arbitration instead of traditional court proceedings to resolve disputes that may arise between the parties.)