What is the difference between mediation and arbitration?

Arbitration involves adjudication by a third-party neutral. While it is possible to structure arbitration to be non-binding, most arbitration is designed to be binding. Arbitration will in most instances arise by agreement of the parties, either arising out of a pre-existing agreement or based on the specific terms of an arbitration agreement entered into after the dispute has arisen. The single most important distinction therefore, is that the decision of the arbitrator, unless otherwise agreed, will be binding, and the decision may be entered on the court record.