Although mediation and arbitration have the same goal in mind, a fair resolution of the issues at hand, there are some major differences which both parties must understand beforehand.
The main difference between arbitration and mediation is that in arbitration the arbitrator hears evidence and makes a decision. Arbitration is like the court process as parties still provide testimony and give evidence similar to a trial but it is usually less formal. In mediation, the process is a negotiation with the assistance of a neutral third party. The parties do not reach a resolution unless all sides agree.