Arbitration & Mediation in Pennsylvania

Not every dispute needs to go to trial. Mediation and arbitration can resolve cases faster, cheaper, and with less collateral damage to business and personal relationships. But they work differently, and picking the wrong one, or agreeing to a bad arbitration clause in a contract, can cost you.

Mediation: Facilitated Negotiation

A mediator is a neutral third party who helps the parties negotiate a settlement. The mediator does not decide the case. They facilitate discussion, identify common ground, and help both sides evaluate their positions realistically. Key features:

• Voluntary: Either party can walk away at any time. Nothing is binding unless both sides agree to a written settlement.
• Confidential: Statements made in mediation generally cannot be used later in court (42 Pa.C.S. § 5949).
• Cost-effective: A half-day mediation session typically costs $1,000–$3,000 total (split between the parties), a fraction of trial costs.
• Preservation of relationships: Particularly valuable in business partner disputes, family matters, neighbor conflicts, and ongoing commercial relationships.

Many Bucks County judges will suggest or order mediation before trial. Orphans' Court Rule 1.6 specifically authorizes mediation in estate and trust disputes. Even when not required, I frequently recommend it. A surprising number of cases that seem intractable settle once both sides hear a neutral evaluation of their positions.

Arbitration: A Private Trial

Arbitration is a more formal process where a neutral arbitrator (or panel) hears evidence and arguments and renders a decision. Unlike mediation, it typically produces a binding result. Key distinctions:

• Binding vs. non-binding: Most arbitration clauses in contracts specify binding arbitration, meaning the arbitrator's decision is final, with very limited grounds for appeal. Non-binding arbitration allows either party to reject the award and proceed to trial.
• Compulsory arbitration in PA: Under Pa.R.Civ.P. 1301 and 42 Pa.C.S. § 7361, Bucks County requires compulsory arbitration for civil cases where the amount in controversy does not exceed $50,000 (set by local rule). Matters involving title to real property are excluded by statute regardless of the amount at stake. A three-member panel of attorneys hears the case. Either party may appeal to a trial de novo within 30 days. The appellant must pay the Prothonotary filing fee of $503.75 plus $300 in arbitration appeal fees under B.C.R.C.P. 1308*(d), both paid upfront at the time of filing. If the appellant improves their position by verdict, bench trial, or settlement by an amount equal to or greater than 10% of the award, the appellant can apply to the court for a refund of two-thirds of the $300 fee.
• Contractual arbitration: Many business contracts, employment agreements, and consumer agreements contain mandatory arbitration clauses. These clauses are generally enforceable under the Federal Arbitration Act (9 U.S.C. §§ 1–16) and Pennsylvania's Revised Statutory Arbitration Act (42 Pa.C.S. §§ 7321.1–7321.31), which governs an agreement to arbitrate made on or after July 1, 2019. An agreement made before that date is generally governed by the older Uniform Arbitration Act (42 Pa.C.S. §§ 7301–7320).

When ADR Makes Sense (and When It Doesn't)

ADR works well for: Business disputes where both parties want to continue working together, estate and trust conflicts among family members, contract disputes with clear dollar amounts, neighbor/property disputes, and cases where the cost of trial would exceed the amount at stake.

ADR may not be appropriate for: Cases involving domestic violence or significant power imbalances, disputes where you need a public precedent or injunctive relief, situations where one party is acting in bad faith and unlikely to negotiate honestly, or cases where the contract's arbitration clause is unconscionable or was imposed without meaningful consent.

Legal and factual content on this page was last verified: Aug. 2026. If you are reading this significantly after that date, confirm key provisions with current statute text or contact our office.