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Both keep an injury case away from a jury. Only one of them takes the decision out of your hands. Here is how mediation and arbitration differ, and how North Carolina uses each.
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Also called: alternative dispute resolution, ADR, mediated settlement conference
Mediation and arbitration are both forms of alternative dispute resolution, meaning ways to resolve a case without a trial. They are often mentioned together and often confused, but they are opposites in the way that matters most. In mediation, the parties decide; the mediator has no power to rule, and a case that does not settle simply goes back on the trial calendar. In arbitration, the arbitrator decides; the parties present evidence as they would at a trial, and the arbitrator’s award resolves the dispute, subject to whatever review the law allows.
North Carolina uses both, but in different places and with different consequences. Every superior court injury case goes to a mediated settlement conference before trial, and the great majority of settled injury cases settle there. Arbitration appears in district court as a non-binding court-ordered step, and in private contracts, including many insurance policies, as a binding one. Joshua E. Palmer, Attorney at Law prepares every North Carolina case for mediation as if it were the trial, because in practice it usually is. This page explains the two processes, the North Carolina rules for each, a worked example, and why the difference matters under the state’s contributory negligence rule.
Mediation is facilitated negotiation. A trained neutral, usually a lawyer or retired judge, meets with both sides, typically in separate rooms, carries offers back and forth, tests each side’s view of the evidence, and helps them find a number both can accept. Nothing said in mediation is evidence, the mediator makes no findings, and the process ends either in a signed settlement agreement or in an impasse. The parties keep complete control of the outcome.
Arbitration is a private trial. The parties present witnesses, documents, and argument to one arbitrator or a panel, who then issues a written award deciding liability and damages. Court-ordered arbitration in North Carolina is non-binding: a party who dislikes the award may demand a trial. Contractual arbitration is usually binding: the award is final, and court review is limited to narrow grounds. The parties give up the jury and most of the right to appeal in exchange for speed and privacy.
| Feature | Mediation | Arbitration |
|---|---|---|
| Who decides | The parties themselves | The arbitrator or panel |
| Neutral’s role | Facilitates; cannot impose a result | Hears evidence and issues an award |
| Outcome | Settlement agreement or impasse | Award (binding or non-binding) |
| Evidence | Informal; nothing is evidence at trial | Formal presentation, relaxed rules |
| If you disagree | Case proceeds to trial | Trial de novo if non-binding; very limited review if binding |
| When required in North Carolina | Superior court civil cases (§ 7A-38.1) | District court civil cases, non-binding (§ 7A-37.1); or by contract (§ 1-569.6) |
| Cost | Mediator’s fee, split equally unless ordered otherwise | Court-ordered: statutory fee split; private: arbitrator fees per the agreement |
General comparison. Rules of the North Carolina Supreme Court and local rules add detail on scheduling, attendance, and fees.
N.C. Gen. Stat. § 7A-38.1 makes the mediated settlement conference a required step in superior court civil actions. The parties must attend unless excused by the court’s rules or by order of the senior resident superior court judge, and the statute extends the attendance requirement to attorneys and to any person or entity with authority, by law or by contract, to settle the claims, which in an injury case means the insurance company’s representative with settlement authority. The parties have the right to choose their mediator; if they do not choose one within the time allowed, the senior resident superior court judge appoints one. The mediator’s fee is paid in equal shares unless the court orders or the parties agree otherwise, and the statute provides a procedure for a party who cannot pay.
The mediator is a neutral who encourages and facilitates a resolution and does not make an award or render a judgment on the merits. The conference usually takes a day. It begins with a joint session in which each side summarizes its case, then breaks into private caucuses. The injured person’s lawyer presents the evidence developed in discovery, the demand, and the risks the defense faces at trial; the adjuster responds with the insurer’s evaluation. If the parties agree, the terms are put in writing and signed before anyone leaves. If not, the case continues toward trial with nothing lost.
Arbitration reaches an injury case in two ways. The first is court-ordered arbitration under N.C. Gen. Stat. § 7A-37.1, which applies to civil actions in district court unless all parties waive it. An arbitrator hears the case in an abbreviated proceeding and issues an award, and a statutory fee is divided equally among the parties. The award is non-binding: any dissatisfied party may have a trial de novo, meaning a fresh trial as if the arbitration had never happened. Court-ordered arbitration is a settlement tool with a preview of the result, not a final decision.
The second is contractual arbitration under North Carolina’s Revised Uniform Arbitration Act, beginning at N.C. Gen. Stat. § 1-569.1. Under N.C. Gen. Stat. § 1-569.6, an agreement in a record to arbitrate existing or future disputes is valid, enforceable, and irrevocable except on grounds that would revoke any contract. The court decides whether an agreement to arbitrate exists; the arbitrator decides most other threshold questions. Injured people meet these clauses most often in their own insurance policies: many uninsured and underinsured motorist provisions allow either side to demand arbitration of the claim against the insurer. Read the policy, and have a lawyer review it, before agreeing to or demanding arbitration of a UM or UIM claim.
A Greenville nurse is rear-ended at a light on Memorial Drive and needs two cervical injections and months of therapy. She sues in Pitt County Superior Court. Discovery closes; the driver has admitted in his deposition that he was reaching for a dropped phone, and the nurse’s records show no prior neck complaints. The lawyers select a mediator, and the conference is set in a conference room near the courthouse. The nurse, her lawyer, the driver’s defense lawyer, and an adjuster with settlement authority attend.
In the opening session the nurse’s lawyer lays out the bills, the treating physician’s opinion on future care, and the deposition admission. The adjuster’s first offer reflects a discount for what the defense calls the nurse’s “delayed braking,” its contributory negligence theory. Over five caucuses the mediator tests that theory against the deposition and the police report, and the offer climbs. By late afternoon the parties sign a memorandum of settlement. The case never sees a jury, and the nurse never has to bet her recovery on how twelve strangers view a contributory negligence argument.
North Carolina is an all-or-nothing fault state: if the injured person’s own negligence contributed to the injury, the claim fails, and the defendant bears the burden of proving it under N.C. Gen. Stat. § 1-139. That rule makes every trial a gamble, because a jury that believes the injured person was even slightly careless returns a verdict of zero. Mediation lets the parties price that risk themselves. A defense with a thin contributory negligence argument pays more; a plaintiff with a real exposure accepts less; both avoid the coin flip.
Arbitration handles the same risk differently. A binding arbitrator applies North Carolina law, including contributory negligence, and there is no jury to persuade and almost no appeal if the arbitrator gets it wrong. In some cases that is an advantage: an experienced arbitrator may be less swayed by a weak fault argument than a jury would be. In others it is a trap, especially when a policy clause forces arbitration on the injured person’s own UM or UIM claim. The North Carolina contributory negligence guide explains how the defense works and the exceptions that defeat it; how those exceptions play in front of a mediator, an arbitrator, or a jury is a judgment call your lawyer should make with you.
Managing Partner · Joshua E. Palmer, Attorney at Law
Attorney Palmer concentrates in personal injury law and trained in North Carolina law at North Carolina Central University School of Law in Durham. This glossary explains the terms he uses with clients every day, in plain English and with the North Carolina rule that applies.
Mediation or arbitration scheduled in your North Carolina injury case? Call for a free case review and a plan for the day that usually decides it.
Responsible attorney: Joshua E. Palmer, Managing Partner · 106 Moran Dr #5106, Bonaire, GA 31005 · (478) 887-3734. Attorney advertising. This page is general legal information about North Carolina law, not legal advice for your situation; contacting the firm does not create an attorney-client relationship.
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Each case is different. Any results, settlement figures, or benefit amounts described on this page depend on the specific facts of that case and do not guarantee or predict a similar outcome in yours. Statutes and benefit rates cited are current as of September 2026; confirm current law with an attorney before relying on it.