Q.
What is the difference between mediation and arbitration?
A.
Mediation is a voluntary dispute resolution process; all parties must consent to participate in good faith and work toward a mutually agreeable resolution. Mediating parties are not bound to resolve their dispute (although mediated settlements, once reached, can be made binding if the parties decide to draft a contract called a settlement agreement). Mediations are not "decided" in favor of one party or another; rather, the mediator simply facilitates the negotiation process. In evaluative mediation, the mediator will counsel parties on the strengths and weaknesses of their case and gauge each party's likelihood of success if the dispute proceeds to arbitration or litigation.
Arbitration, on the other hand, is a dispute resolution process in which a neutral party (the arbitrator) hears a dispute between one or more parties and, after considering all relevant information, renders a final decision in favor of one of the parties. Arbitration decisions may be either binding or non-binding, depending on the terms of the arbitration agreement. Binding arbitration decisions may be confirmed by a court and carry the same significance as a court judgment.
Ref:
Verbatim from National Arbitration Forum at
http://www.adrforum.com/faq.aspx?faq=876