Litigation, arbitration, mediation, negotiation—so many legal terms, yet they all seem to have something to do with settling a legal dispute with some sort of third-party help. Here is a brief look at the differences between these common terms.
You are probably most familiar with the term litigation, as litigation is what you imagine when you picture two parties attempting to settle a dispute. Litigation involves two parties going before a judge and presenting evidence, at which point the judge will decide who wins and who loses. You can think of litigation as the most formal means for settling a dispute. Some see litigation as something to avoid when settling disputes, but it may very well be necessary to settle certain cases. Some parties resort to litigation after attempting to settle the dispute outside of court, while others decide to go straight to litigation in the first place. Some parties will even decide after beginning the litigation process that they would like to attempt to negotiate first before going to court.
Negotiation, arbitration, and mediation are all alternatives to traditional litigation. (Sometimes, however, two parties will attempt to arbitrate or mediate before deciding to go to court, in which case these methods are used in conjunction with litigation.) Negotiation is when both parties settle their differences on their own, without enlisting the help of a third party. Some people, however, use the term negotiation to refer to arbitration and mediation more generally, since they both involve an alternative to litigation.
Arbitration is mandatory in some cases, as state laws require certain types of cases filed in state courts to go to arbitration. In other cases, both parties may voluntarily agree to arbitration. Arbitration refers to the process of two sides presenting their evidence to an arbitrator, where the arbitrator then decides who wins and who loses. It is like a trial, only less formal and without a judge present. Often there will be only one arbitrator present, but in voluntary arbitration, both parties may decide to have a panel of arbitrators present.
Mediation is similar to arbitration, but it is less formal and less binding. Mediation is generally conducted with a single mediator, who does not judge the case but rather facilitates the discussion until both parties can reach an agreement. This is a scenario in which both parties will likely have to make compromises in order to come to some sort of an agreement.