Negotiation, Mediation, Arbitration – What Are The Differences?

ArbitrationMay 19, 2022

Negotiation, mediation, and arbitration are different legal processes. Negotiation takes place between two or more parties who get involved in a conversation and try to arrive at a mutual agreement. There can be a negotiation between a woman and a man on how to use their mutual finances, between a car buyer and a car salesman, the president of a country and another country to ward off threats, etc. Arbitration is used to resolve any legal conflict out of court. A neutral third party or simply, an arbitrator, will preside over the arbitration and hear out what conflicting parties have to say. Eventually, they will pass their judgment in favor of one party as per the law. Mediation is arbitration where a mediator will take the place of an arbitrator. Get to know more in detail.

Negotiation

Negotiation is a legal process where two or more parties involved in a dispute or conflict come to a settlement between themselves. Negotiations are done based on discussions between the parties or those who are representing them. As compared to arbitration and mediation, no third party is involved during negotiation.

The conflicting parties can consult or hire a lawyer before they arrive at a settlement. This helps the parties to be aware of their respective rights and duties in the conflict that they are trying to negotiate on.

Mediation

Mediation is a legal process in which a neutral third party, known as the mediator, helps the conflicting parties come to a common solution. The job of a mediator is to facilitate smooth communication between the parties involved in the dispute. The mediator also ensures that the communication between the two parties is fair, honest, and impartial. A mediator can’t support, offer legal advice, or act as a counselor for any party, nor can they act as a judge or arbitrator.

Their main responsibility is to clarify the issues on which the parties are in a conflict with each other and seek out the underlying concerns. They help one party to realize the interests of the other. Mediators make the parties come face to face with each other. If not, they might have to attend each party separately. They also play a role in finding a solution to the problem but do not impose it. Mediation is a private process. Even the decisions taken during it are private as well.

An MOA or Memorandum of Agreement is written between the conflicting parties and according to the co-operative agreement, the parties will co-operate on the terms and conditions they have agreed on. The mediator writes the MOA and outlines the details.

Each party is needed to have legal counsel of their own. A legal counsel will represent their respective parties in a dispute. The parties should be aware of their legal rights, therefore, should have a detailed discussion with their attorney before mediation. In mediation and negotiation, an agreement between the conflicting parties is always encouraged. If an agreement is not reached, the parties have the right to resort to other legal processes.

Arbitration

Arbitration is a legal process where the final decision is taken by a third party, known as the arbitrator. The main job of an arbitrator is to hear the case as presented by the conflicting parties and pass a judgment or awards a decision just like a judge. The decision or judgment is considered final and binding. Arbitration is a common legal procedure in commercial and labor disputes.

Arbitration can also be used in family and divorce, insurance claims, as well as oil and gas disputes. To determine the matter of conflict, an arbitrator calls for a meeting between the two conflicting parties. A hearing is held where the parties present whatever details and information they have to support their side of the case. They might also be asked to submit their case in writing, either pre or post-hearing.

Costs of ADR

Negotiation as well as mediation is less expensive and doesn’t take as much time as court action. Arbitration can also be less costly. However, the cost can depend on the fees of the arbitrator.

Negotiation, mediation, and arbitration are the modes of Alternative Dispute Resolution and are widely accepted over the world.