Board of Legal SpecializationPractice Exam

Mediation is distinguished from arbitration primarily by its nature and the outcomes it generates. In mediation, a neutral third-party mediator assists the conflicting parties in negotiating a resolution to their dispute. The essence of mediation lies in facilitating dialogue and reaching a mutually agreeable solution, rather than imposing a decision on the parties. Thus, the outcome of mediation is non-binding, meaning the parties are not obligated to follow any agreement reached unless they choose to formalize it into a contract.

In contrast, arbitration culminates in a binding decision made by an arbitrator who acts similarly to a judge. The arbitrator reviews evidence and arguments presented by both sides and then issues a ruling that is generally enforceable by law, thus concluding the dispute.

This clear divide—mediation's role as a facilitator of negotiation versus arbitration's role as a decision-maker—underscores the correct answer. The other options do not appropriately capture the fundamental differences between these two dispute resolution processes, notably regarding their binding nature and the roles of the parties involved.