Mediation vs arbitration: What’s the difference and why it matters

India Today

From Donald Trump brokering a ceasefire to Indian courts resolving family and property disputes, mediation is everywhere. But how is it different from arbitration?

Transcript

00:00This will be my eighth war that I've solved, because I'm good at solving wars, I'm good at making peace.

00:08U.S. President Donald Trump recently mediated the ceasefire agreement between Israel and Hamas.

00:13In Indian courts, many divorce cases or property cases get referred to a mediator.

00:18And even the contentious Ayodhya Ram Mandir Babri Masjid land dispute

00:22was sent for mediation before the Supreme Court heard the matter.

00:26But what is mediation and why is it important?

00:30Remember, mediation is a voluntary process where a neutral third person who is the mediator

00:39helps the people in the dispute talk, negotiate and find a solution that works for everyone.

00:45The mediator does not decide the outcome, the parties do.

00:49And in India, courts actively encourage mediations.

00:52Section 89 of the Civil Procedure Code calls on judges to suggest mediation as an alternative

00:58to reduce the backlog and save time.

01:00But does that mean that the quarreling parties must agree to the mediation?

01:04No.

01:05Mediation provides a platform for both sides to reach a settlement,

01:09whether it's a divorce, child custody, commercial contract worth crores, or an international dispute.

01:15Mediation only works if both sides agree.

01:18It is only the Commercial Courts Act in India that makes it mandatory for commercial disputes

01:23to undergo pre-litigation mediation before any case is filed in court.

01:27All other cases, the parties can choose to go for mediation or not.

01:31So how does mediation actually work?

01:33Here's the process.

01:34First, of course, is the referral or request.

01:37The court may refer your case for mediation,

01:39or you can request mediation even before filing a suit.

01:42Then a mediator is appointed.

01:44These are trained mediators, whether lawyers, paralegals, or even former judges,

01:49who are chosen by the parties to guide the process.

01:52Then there is the joint session.

01:53All parties meet with the mediator to outline the issues,

01:57set ground rules, and ensure confidentiality.

02:00Then comes the negotiation.

02:02The mediator helps parties discuss their interests,

02:05explore options, and work towards a mutually acceptable solution.

02:08Sometimes private meetings may be held separately with each party by the mediator as well.

02:13Finally, the settlement agreement.

02:16If both parties agree, a written settlement is drafted,

02:19capturing the terms of the negotiated settlement.

02:22And the final step, of course, is the court's approval.

02:25In cases which have been referred by the courts,

02:27the settlement is submitted to the court and becomes a binding order,

02:31enforceable like a judgment because the judge signs off on it.

02:34But if there is no settlement, the mediation fails,

02:37and the dispute then moves back to the court,

02:40or in case of commercial disputes, it can even go for arbitration.

02:44So, how is arbitration and mediation different?

02:47Remember, both of these are alternative dispute resolution methods,

02:50which serve different purposes.

02:52If you look at mediation, it can be for any parties in a civil dispute.

02:56Ordinary people, industries, companies, even governments.

02:59Mediation is voluntary and informal,

03:02and a mediator facilitates only.

03:04He does not impose any decision.

03:06The parties control the outcome.

03:08So, it is confidential and a little faster.

03:10And settlement and a mediation is only binding if both agree.

03:13In an arbitration, however, the arbitrator can decide.

03:17And arbitration is usually done for resolving contractual disputes

03:21between companies, industries.

03:23And it is very, very rare for individual disputes.

03:25Arbitration is also more formal and binding.

03:28In fact, contract between the parties may include

03:31mandatory arbitration clauses.

03:33The arbitrator acts like a private judge,

03:35which means that he alone will decide on the dispute between these parties.

03:40And it's usually faster than the court process, but it is also costlier.

03:44The award of an arbitrator is enforceable by law under the Arbitration Act.

03:49Basically, mediation helps you find a win-win solution together,

03:52while arbitration is more like a private court decision.

03:55But alternative dispute resolution mechanisms save time, money and relationships.

04:01Plus, it keeps things confidential, unlike courtrooms, which have to be public documents.

04:07No.

04:08No.

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