Georgia Adjuster Practice Test

How binding is mediation compared to arbitration in dispute resolution?

1. Both are equally binding

2. Mediation is binding, arbitration is not

3. Mediation is not binding, arbitration's decision is final

4. Neither are binding

The correct answer is: Mediation is not binding, arbitration's decision is final

Mediation and arbitration are two distinct methods of dispute resolution, and they have different characteristics regarding binding nature. In arbitration, a neutral third party, known as the arbitrator, makes a decision after hearing both sides of the dispute, and this decision is typically binding on both parties. This means that the outcome of the arbitration process is final and enforceable in a court of law, offering a decisive resolution to the dispute. On the other hand, mediation involves a facilitator, the mediator, who assists the parties in negotiating a mutually acceptable solution. The mediator does not have the authority to impose a resolution or make binding decisions. Any agreement reached during mediation requires the cooperation and acceptance of both parties to be effective. If a resolution is not reached, the parties may still pursue other legal avenues, underscoring that mediation itself is not binding. Therefore, the distinction lies in the binding nature of the decisions made in each process, making it clear that mediation is not binding, while arbitration leads to a final and enforceable decision.