Special attention should be paid to dispute resolution methods when concluding business agreements. In this blog post, we offer an overview of the most common methods - negotiation, arbitration and mediation as peaceful methods of resolving disputes.
Negotiation as a method of conflict resolution
Negotiations are a compromise that can resolve a dispute between the parties. In particular, negotiations can be used to make decisions based on the current business interests of the parties, and not only on legal rights and obligations.
We do not rule out the fact that negotiations can be difficult and lengthy. But one advantage is that they are usually more cost-effective and time-efficient than other alternative ways of resolving conflicts. Negotiations and their results are usually confidential, which plays an important role for many entrepreneurs. For these reasons, negotiation is almost always one of the best mechanisms for resolving disputes.
Of course, the disadvantage of negotiating a peaceful resolution of conflicts is the compromise that the parties must reach, and it is not always beneficial to each of the parties involved. Since both parties must agree on a decision, each of them also has the right to veto this decision.
Mediation as an alternative way of resolving conflict situations
Mediation is a negotiation conducted by a neutral party - usually a trained and experienced mediator.
In this case, the parties should be able to agree on a solution to the problem with the help of a mediator. In situations where the parties cannot reach a mutual agreement, a mediation process is a useful tool for reaching a negotiated settlement. Involving the neutral side in the conflict resolution process greatly facilitates the resolution of the dispute, so, compared to traditional negotiations, an acceptable outcome for both parties is more likely. The mediator is chosen by the conflicting parties themselves.
Arbitration as a conflict resolution practice
Arbitration is a different kind of dispute resolution mechanism. In arbitration, the conflicting parties agree to give the neutral party the authority not to promote an amicable settlement of their dispute, as in mediation, but to insist on a legally binding resolution of the conflict, regardless of whether the parties agree or not.
Arbitration is, in essence, "private litigation," and in the hands of an experienced lawyer it can take precedence over litigation. Arbitration is usually based on the legal rights and obligations of the parties, not on their business interests.
The arbitrators find the facts based on the evidence and apply the relevant law to those facts. The arbitrators then determine the legal rights and obligations of the parties and resolve the dispute, as required by law, on the basis of these facts. This process allows the party to win the dispute immediately. Like negotiation and mediation, arbitration is usually confidential.
Although arbitration is a flexible and efficient process, it is more like litigation than alternative ways of resolving conflicts.
Negotiation and mediation, on the one hand, and arbitration, on the other, are fundamentally different methods of resolving disputes. Everyone has their advantages and disadvantages.
Contact our team for comprehensive advice on choosing an alternative dispute resolution method which is optimal in your business case. IQ Decision UK specialists have vast experience in mediation and will provide you with mediator services to resolve conflict situations.