Many construction contracts have mandatory mediation and arbitration provisions. So what’s the difference? The key difference is purpose. Mediation involved a third-party facilitator, who tries facilitate a resolution between the parties.
Most mediators use one of two styles; facilitative or evaluative. With facilitative style the mediator does not express opinion on the merits of the dispute, but with evaluative style opinion is given. While parties often want an evaluation, often mediators are loath to do so because they feel it hinders compromise by “picking a side.” So, typically mediators will resort to evaluation as a last resort when it’s apparent the parties would otherwise impasse. But many mediators use variations on both styles, or combinations of them.
For example, a mediator might be evaluative, but keep the evaluation confidential so that it does not taint the other side’s views. In contrast, arbitration is intended to be a decision making process, whereby the arbitrator finds for one side or the other, without concern for possible settlement. I’ll discuss these and other alternative dispute resolution processes in follow on blogs.