What is the difference between mediation and arbitration in Ontario?

Mediation and arbitration are both forms of alternative dispute resolution (ADR) used in Ontario, but they work very differently. In mediation, a neutral third party helps the disputing parties reach their own voluntary settlement. The mediator has no authority to impose an outcome — if the parties cannot agree, the dispute is unresolved and can still go to court.

In arbitration, the parties present their evidence and arguments to a neutral arbitrator (or panel), who then issues a binding decision called an award. Arbitration is more like a private trial. The parties agree in advance, usually through a contract clause or a separate arbitration agreement, to be bound by the arbitrator's decision. Under Ontario's Arbitration Act, domestic arbitration awards are enforceable in the same way as court judgments.

Many commercial contracts include arbitration clauses that require disputes to go to arbitration rather than court, which means the parties may have no choice about the process. Mediation is typically faster, less formal, and less expensive than arbitration because there are no hearings and no decision — just a facilitated conversation. Some disputes use a hybrid approach called med-arb, where the neutral first mediates and, if no settlement is reached, issues a binding decision as arbitrator.