Of the two, arbitration has the longer pedigree and, as a result, is addressed in international treaties and conventions and, in the United States, by federal and state statutes. Mediation, on the other hand, is designed to lead the parties to a negotiated resolution that is usually embodied in an agreement, which can itself be the subject of an action for enforcement if breached. Ordinarily, mediation is a form of dispute resolution in which the parties' participation is voluntary. Commercial entities often give their consent to mediate disputes at the time they form their relationship. In those instances, the consent to mediate is usually embodied in a clause in a formal agreement between the parties.
Parties can also agree to mediate a dispute at the time it arises.
Where a party has agreed to mediate a dispute, that agreement can, in certain circumstances, be enforced through a judicial action, although the likelihood of a successful mediation where one of the parties is an unwilling participant is extremely small. These types of mediations are becoming more frequent, as courts with crowded dockets try to develop ways for resolving more cases through settlements. Court annexed mediations are really no more than mandatory settlement negotiations led by a non-party neutral who is skilled as a mediator. In light of the voluntary nature of mediation, the parties are free to agree upon the procedures they will follow, including the identity or manner of selecting the mediator or mediators. Nevertheless, parties to mediations have available a number of national and international organizations, such as the American Arbitration Association , that have developed procedural rules and can provide mediators experienced in a variety of substantive areas.