Negotiation or Mediation as a First Step Before Arbitration

Alternate Dispute Resolution mainly denotes a wide range of dispute resolution processes that act as a means of disagreeing parties to come to an agreement without using the means of litigation. It is a collective term that refers to the ways in which the parties can settle disputes, with the help of a third party. It has gained widespread acceptance in recent years. Negotiation and mediation are two of the most popular forms of alternative dispute resolution.

Mediation

Mediation is a form of alternate dispute resolution in which a third neutral party attempts to assist the disputing parties in reaching an amicable settlement and a mutually acceptable agreement. This method of dispute resolution requires a third party who acts as a mediator. The mediator tries to resolve the dispute between the parties by using the means of communication and negotiation. In the process, the parties have full control. The mediator is only a medium to facilitate the process. His suggestions are not binding on the parties. Moreover, mediation has attained a statutory status under Indian laws.

Negotiation

Negotiation is any form of direct or indirect communication through which parties having conflicting interests discuss the form of any action which they might take together to manage and ultimately resolve the dispute between them. For instance, it may be opted to resolve an existing problem. The parties are under no obligation to participate in the process. They have the free will to accept or reject the final decision of negotiation. No limitation on the number of participants. Unlike mediation, negotiation does not require a third party. Negotiation is a flexible process and ensures confidentiality at the choice of parties.

Mediation v. Negotiation

Though mediation and negotiation have various similarities they are still different.

• Communication: When a communication gap exists between the parties, mediation should be preferred. When parties are unable to communicate their stance properly, mediation should be done.
• Cost: Negotiation is cheaper and quicker than mediation.
• Prior preparation: Unlike negotiation, mediation requires preparation like supporting information, venue etc. No prior preparation is required in negotiation.
• Flexiblity: Negotiation is the most flexible process to resolve a dispute since parties have full control. The presence of mediator dilutes the aprties control in mediation. Absence of third party in negotiation makes it more flexible.
• Record: The mediator keeps the record of the settlement agreement in mediation whereas it is the parties discretion to record the settlement or not in negotiation.

Thus, negotiation should always be the first step in any dispute resolution i.e. arbitration. Negotiation is quick, cost-effective, and flexible. However, it does not always work. When negotiation fails mediation can be an effective method of settlement. The main aim of these processes is to assist parties in reaching an amicable settlement, irrespective of the method opted.

Conclusion

Both negotiation and mediation are consensual, rather than adversarial, and produce a resolution only if both parties agree thereto. The difference between negotiation and mediation, in brief, is that negotiation involves only the parties, and mediation involves the intervention and assistance of a third party (the mediator) as a facilitator in the parties’ effort to resolve their dispute.