The difference between mediation and arbitration can be drawn clearly on the following grounds:

1. A process of conflict settlement wherein an independent third party, assist the parties involved in arriving at decision, agreeable to all, is known as mediation. Arbitrationis a private trial, wherein a rational third party analyse the dispute, hears the parties involved, gathers facts and pass on decision.
2. Mediation is collaborative, i.e. where two parties work together to arrive at a decision. Arbitrationis adversarial in nature.
3. The process of mediation is a bit informal while Arbitrationis a formal process, which is much like a court room proceeding.
4. In mediation, the third party plays the role of facilitator, so as to facilitate negotiation. On the contrary, the arbitrator plays the role of a judge to render a decision.
5. There can only be one mediator, in the mediation. As against this, multiple arbitrators or panel of arbitrator scan be there in arbitration.
6. In mediation, along with the joint meetings, the mediators hears both the parties in the private meeting. On the flip side, in arbitration, the arbitrator remains neutral, and no such private communication takes place. Thus the judgement is based on evidentiary hearings.
7. The parties concerned, have entire control on the mediation process and the outcome. Unlike, arbitration, where the arbitratorshave full control on the process and the outcome.
8. The outcome in mediation relies on the needs, rights and interest of the parties, whereas, the decision of arbitrationdepends on the facts and evidence presented before the arbitrator.
9. Mediation may or may not result in a solution, but arbitrationdefinitely finds a solution to the matter.
10. The mediator does not pass any kind of judgement rather makes settlement only with the approval of parties. As opposed arbitration, the decision taken by the arbitrator is final and binding upon the parties.
11. The mediation process is ended when the agreement is reached, or parties are deadlocked. The arbitration is concluded when the decision is handed down.