If the negotiation fails to resolve the controversy, other actions can be taken. If the negotiation results in a settlement, the controversy is over. In submitting the controversy to the arbitrator, the parties agree in advance to abide by and be bound to the award determined by the arbitrator. Instead of going to court, the arbitrator determines procedures like the date by which all documents must be exchanged between the parties, and the date when the hearing will be held. In binding arbitration, the arbitrator's award can then be submitted to a court of law for entry as a judgment.
Arbitration is used to avoid the formalities, expense, delay and aggravation of a formal lawsuit.
The parties agree in advance to make a good faith effort to resolve the controversy with the assistance of the mediator. The mediator then works with the parties in an effort to reach an agreement or compromise but does not have the authority to enter an award. The mediator discusses the matter with each party and points out respective strengths and weaknesses of each party's position. Through a give and take process, the parties and the mediator strive to obtain an agreement for resolution of the problem. Like arbitration, mediation is used to avoid the formalities, expense, delay and aggravation of a formal lawsuit.