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Difference Between Negotiation and Arbitration

Negotiation vs Arbitration

Arbitration and negotiation are two forms of processes involved in dispute resolutions between two parties. These two forms of dispute resolutions are part of the appropriate dispute resolution (also known as ADR) measures used as alternatives to court action or litigation. Backlog cases in courts and a very long court process gave rise to these forms of dispute resolutions. There are also two additional processes – mediation and conciliation.

The advantages of arbitration and negotiation are that they are less costly and time-consuming in comparison to court litigation. Furthermore, the process and documentation of the proceedings are private and confidential. Decisions made for both arbitration and negotiation are privy to concerned parties only.

The formats and nature of arbitration and negotiation are different from each other. In arbitration, both parties appoint a third party arbitrator or arbitrators. The number of arbitrator/s is usually an odd number of one or three to deter tied decisions.

Arbitrators are usually appointed by parties, existing arbitrators or an external party like a court.

The job of the arbitrator is to hear both parties and decide on all terms of dispute. The decision is often promulgated in an ‘award’ – a document which gives and explains the decision. An award is as legally binding as a court verdict. Arbitration is under the state and federal law – which is why the award is as binding and legal. A decision or award is usually not appealed to a court.

The costs of arbitrators are usually included in the award, unless both parties already negotiated the costs between themselves.

On the other hand, negotiation, as its name implies, involves two parties and a facilitator. The facilitator allows both sides talk and negotiate their disputes. The facilitator records the whole process including the parties’ positions, their agreements and discussions.

Negotiation results in a memorandum of agreement. The agreement spells out the dispute, the methods of resolving the said dispute and the conclusion of the dispute of parties.

The parties involves usually spilt the costs for the negotiation.

Unlike arbitration, the resolution in negotiation is not as legally binding.

Summary:

  1. Both arbitration and negotiation are two forms of appropriate dispute resolutions (ADR) and alternative processes to court litigation. Both are private, speedy, less costly and ensure confidentiality. Other forms of ADR are conciliation and mediation.
  2. Negotiation and arbitration differ in function and the people who play a part in each process. In arbitration, an arbitrator is appointed by both parties while a facilitator oversees a negotiation.
  3. In arbitration, the arbitrator decides on the outcome of the dispute after hearing both sides. The resolution is called an award, which is final and legally binding. Meanwhile, a facilitator allows both parties talk to each other about the dispute and aids in making a settlement. The result of a negation is called a memorandum of agreement. This document is not as legally binding as an award.
  4. Both facilitators and arbitrators are usually third parties. The arbitrators solely and directly decide on the outcome of the dispute while the facilitators let both parties come into their own agreement. To sum up, a facilitator is a non-direct party in the process.
  5. The costs of arbitration can be decided by the arbitrator or by both disputing parties, depending on the situation. Meanwhile, the negotiator’s fee is usually split between the two parties.
  6. An award (in arbitration) cannot be appealed to a court. On the other hand, a court can question or overturn a memorandum of agreement that transpired as a result of negotiation.
  7. Arbitrators are usually lawyers or people associated with the law while facilitators may not have a law background.


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1 Comment

  1. My mother was on hospice and was in a long term facility for 5 days while I, her sole caregiver went with my daughter on a short trip. My mother’s hands and fingers were contracted and she frequently complained of pain even when trying to wash her hands and fingers. She had some dementia but wanted to wear her rings that my late father gave to her. One of these rings was a 1.5 carat solitaire diamond which was filed out of the prongs and replaced with by glue in the setting with a cubic zirconia of approximate size. The fake CZ stone came out almost minutes after the ambulance drivers brought her back from the respite stay in the nsg home. I had a witness to this and immediately called law enforcement and the nsg home where she was during the respite stay. When I asked the lady who was helping me turn my mother in her hospital bed my mother asked if the stone that I was referring to was the one in her diamond ring. She then on three separate occasions said that she had told ” that woman to quit filing on her ring because her diamond might fall out”. She said she did not listen and kept on filing. After investigating the incident the law enforcement officer said that no one admitted to doin this. Obviously no one would want to go to jail, lose their job, and lose their licensure or certification as a healthcare professional and he agreed that it would have been unusual for someone to have admitted such. I signed an arbitration agreement as I was told that I had to do this if she was to be in the facility. The nsg home is not wanting to admit that anything such as described above could happen at their facility. I am on disability, my mother has since died, and I do not have money to replace the stone or pay an arbitrator because I amcslreafy paying to see an Atty to help me which I will see next week. Can you advise if most times in arbitration the person with the grievance gets any assistance or is it a one sided deal usually? Thank you

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