When business relationships hit rough waters, disagreements can quickly grow into full-blown disputes. The big question is: how do you resolve them? You’ll hear three terms over and over—mediation, arbitration, and litigation.

At first, they might sound like legal jargon. But the truth is, these are just three different paths to solving conflicts. Let’s break them down step by step so you know exactly what they mean, when they’re used, and why choosing the right option matters for your business.

Mediation: Talking It Out With Guidance

Think of mediation as a guided conversation.

What it is: A neutral third person, called a mediator, brings both sides together.

How it works: Instead of telling you who’s right or wrong, the mediator helps you and the other side talk through the problem. They encourage cooperation and guide you toward an agreement.

Why it matters: Mediation is private, quicker than court, and much less expensive. Most importantly, it helps save business relationships.

The catch? The mediator doesn’t make the final call. If both sides can’t agree, the process ends without a solution.

Arbitration: A Private Decision

Now imagine a private courtroom, without the long delays of the actual court system. That’s arbitration.

What it is: You and the other party present your case to a neutral decision-maker, called an arbitrator.

How it works: Both sides share their evidence, arguments, and documents. The arbitrator listens carefully and then makes a decision.

Why it matters: Arbitration is faster than litigation, private, and often written into commercial contracts. It’s binding in most cases, meaning both sides must follow the decision.

The limitation? Once the arbitrator decides, it’s very hard to challenge or appeal—even if you feel it was unfair.

Litigation: Taking It to Court

Litigation is the most formal route—and the one people usually imagine when they think of lawsuits.

What it is: Your case is filed in court and heard by a judge (sometimes a jury).

How it works: Each side goes through a structured process that includes filing documents, discovery (sharing evidence), hearings, and possibly a trial.

Why it matters: Courts can enforce rulings, order payments, or even stop a business from taking certain actions. The decision is legally binding and backed by the power of law.

The downside? Litigation can take months or even years, and it can be costly. It’s often used when the dispute is too serious or complicated for mediation or arbitration.

So, Which One Is Right for You?

If keeping the business relationship is important → Mediation is the best first step.

If you want a private but binding decision, → Arbitration offers speed and finality.

If the dispute is big, complex, or needs strong legal enforcement → Litigation is the way forward.

Choosing the right path isn’t always easy. That’s why businesses often turn to professionals. A commercial litigation lawyer in Brooklyn can explain your options and help you choose the approach that saves you time, money, and stress. If you’re based in Manhattan, working with a commercial litigation attorney in Manhattan ensures you get clear guidance on how local courts and laws may impact your case.

FAQs on Arbitration, Mediation, and Litigation

Is mediation legally binding?

No. Mediation only works if both sides agree to the solution. If no agreement is reached, the process ends without a binding result.

Can arbitration decisions be appealed?

In most cases, no. Arbitration is binding, and appeals are very limited. That’s why businesses often choose it only if they’re comfortable with the finality.

When should a business choose litigation?

Litigation is best when the dispute is serious, involves large amounts of money, or when you need the power of a court order to enforce rights.

Why hire a lawyer for these disputes?

Because every case is different, a lawyer helps you understand which path is smarter for your business. At Yassi Law P.C., Reza Yassi and his team provide the guidance you need to handle disputes with confidence.

About the Author

Reza Yassi is the founder of Yassi Law P.C., a trusted law firm serving clients across Brooklyn, Manhattan, and the greater NYC area. With years of experience in personal injury law and commercial litigation, Reza is known for his client-focused approach and strong courtroom advocacy. He is dedicated to helping individuals and businesses resolve disputes effectively—whether through arbitration, mediation, or litigation. When you need clear guidance and reliable representation, Reza Yassi is here to stand by your side.