What is the difference between mediation and arbitration?

Mediation is a voluntary, non-binding process where a neutral mediator helps the parties work toward a settlement. Most Texas civil cases require mediation before trial. Arbitration is a private adjudication process where a neutral arbitrator hears both sides and issues a binding decision. Many commercial contracts include mandatory arbitration clauses. Both processes are alternatives to full trial, but they differ significantly in how they work and what the outcome means for each party.