Business disputes are inevitable. Whether a supplier misses deliveries, a joint venture unravels, or a services agreement breaks down, conflict can drain leadership time, strain relationships, and disrupt cash flow. Litigation is familiar, but it is slow, public, and difficult to predict. Two alternatives, mediation and arbitration, offer structured ways to resolve disputes outside of court. This executive guide explains how each process works, compares them on speed, cost efficiency, control, and relationship impact, and provides practical steps so your team can choose the right path and manage risk with confidence.

Dispute resolution is not a back office decision, it is a strategy decision. The method you choose affects time to outcome, legal spend profile, confidentiality, enforceability, and the health of critical partnerships. Thinking about mediation and arbitration as tools in an enterprise risk framework leads to better decisions, because the goal is not only to win a dispute, it is to protect capital, preserve supply resilience, and maintain a reputation for fairness with counterparties and regulators.

Mediation is a facilitated negotiation. A neutral mediator helps parties clarify interests, surface options, and test tradeoffs. The mediator does not decide the case, the outcome is voluntary unless the parties sign a settlement agreement.

• Speed: Often scheduled quickly, typically completed in a single session or over a short series of sessions.
• Cost profile: Lowest relative cost, limited discovery, shared neutral fees.
• Control: Maximum party control, creative solutions are possible, such as schedule changes, payment adjustments, or transition services.
• Best when: An ongoing relationship matters, facts are disputed but compromise is realistic, business timing is critical.

For a neutral overview of mediation practice and preparation ideas, see the American Bar Association’s resources on mediation here.

Arbitration is adjudication outside of court. A neutral arbitrator, or a panel, hears evidence and argument, then issues a written award. Awards are generally binding, with very limited grounds for appeal, and can be confirmed in court for enforcement.

• Speed: Faster than court in most commercial settings, timeline depends on case complexity and procedural choices.
• Cost profile: Moderate relative cost, more structured than mediation, neutral and administrative fees apply.
• Control: Procedural flexibility at the front end, once an award is issued control is low, finality is high.
• Best when: Finality and enforceability are priorities, confidentiality matters, subject matter expertise is valuable.

For process rules, fee structures, and case administration guidance, see the American Arbitration Association AAA and JAMS resources.

Executives usually weigh three questions first, how quickly can we resolve this, what spend profile will we face, and how much control do we retain over outcome and publicity. The table summarizes practical differences without assigning fixed dollar amounts, because actual spend depends on dispute size, jurisdiction, and discovery scope.

For neutral context on timelines and process design, see AAA’s commercial rules and time standards here, and JAMS procedural guides here. For litigation process length, the American Bar Association’s litigation resources provide general orientation here.

Mediation maximizes autonomy, because parties can trade nonessential points for core outcomes, and can craft solutions courts rarely order, such as phased transition services, revised delivery calendars, or temporary exclusivity. Arbitration prioritizes finality and enforceability, which is valuable for cross border contracts and high value intellectual property disputes. Many arbitration awards are enforceable internationally, which reduces the risk of a hollow victory in a foreign jurisdiction.

Disputes do not happen in isolation, they affect supply continuity, customer confidence, and investor perception. Mediation emphasizes interests rather than positions, which often protects partnerships that both sides still need. Arbitration is private and structured, which limits publicity, yet the winner and loser dynamic can make continued cooperation difficult. We advise clients to ask a simple question early, is the relationship as valuable as the remedy, then choose a path that aligns with that answer.

• Construction and real estate: Arbitration is common for complex schedules and change orders, where a binding, technical decision is needed.
• Technology and intellectual property: Arbitration protects trade secrets through confidentiality, and allows selection of subject matter experts as neutrals.
• Professional services and healthcare: Mediation helps resolve performance and billing disputes while preserving reputation and continuity of service.
• Global supply chains: Arbitration supports cross border enforcement and predictable remedies when parties sit in different legal systems.

• Define business objectives: Prioritize continuity, cash timing, or reputational repair, then translate that into proposed terms.
• Select the mediator: Choose a neutral with subject expertise and a pragmatic style. Many mediator directories are available through the ABA, AAA, and JAMS.
• Deliver a concise brief: Clarify facts, key exhibits, prior offers, and areas where flexibility exists.
• Plan concessions in advance: Decide which points can move if core protections are accepted, such as payment timing in exchange for performance assurances.
• Document outcomes clearly: If agreement is reached, reduce it to a signed writing the same day, avoid ambiguity.

• Choose the decision maker: Select a neutral or panel with industry experience and availability, review disclosures for conflicts.
• Design procedure early: Agree on schedules, page limits, and discovery scope to prevent cost creep.
• Streamline the record: Focus on dispositive issues and essential documents, avoid unnecessary expert work.
• Budget with milestones: Map fees to phases, such as pleadings, exchanges, hearing preparation, and hearing.
• Plan for enforcement: Preserve a clear record on remedies and interest, so the award can be confirmed and executed efficiently.

For practical checklists and rule sets, review AAA’s commercial arbitration materials here and JAMS arbitration rules here.

• Unclear dispute clauses: Vague escalation steps lead to fights about process. Use plain, staged language that sets deadlines and decision points.
• Overbroad discovery in arbitration: If you import court style discovery, costs will mirror litigation. Limit requests to what is proportional and necessary.
• Confidentiality gaps: Address who may attend sessions, how documents are handled, and what may be shared with auditors or investors.
• Wrong neutral for the dispute: Technical cases require technical neutrals. Review bios and prior awards when available.
• Failure to align with business timing: Mediation scheduled after seasonal peaks or financing events often unlocks options that were not available earlier.

• Use an escalation ladder, negotiation, then mediation, then arbitration if needed, with clear timelines.
• Specify seat of arbitration, governing rules, number of arbitrators, and language.
• Address confidentiality, data handling, and permitted disclosures to auditors, regulators, and investors.
• Define limits on discovery, page counts, exhibit volumes, and hearing length to control cost.
• Preserve equitable remedies and interim relief in court when necessary to protect assets or information.

Mediation and arbitration are not interchangeable, they solve different problems. Mediation prioritizes speed, flexibility, and relationship health. Arbitration provides finality, confidentiality, and expert decision making with streamlined procedure. Litigation remains available when public precedent or full appeal rights are essential. The right choice depends on your objectives, your tolerance for risk, and the value of the relationship. Treat the decision as part of enterprise risk management, and you will protect capital, accelerate outcomes, and sustain the partnerships that enable growth.

If your company is considering its options, Relevant Law can help design a resolution strategy, prepare you for mediation or arbitration, and draft model clauses that align future contracts with your business goals.

• American Bar Association, dispute resolution and litigation resources, ABA
• American Arbitration Association, rules and time standards, AAA
• JAMS, mediation and arbitration rules and guidelines, JAMS

External links are provided for general background. Specific timelines and costs vary by case complexity, jurisdiction, and party decisions about scope and procedure.