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Alternative Dispute Resolution (ADR): Negotiation

A commercial dispute could be settled through court proceedings or through alternative dispute resolution (ADR) techniques. The most popular approaches of peacefully resolving disputes are arbitration, mediation (mediation), and negotiations. In this segment, we will go over the details of negotiating as a Procedure. Since it describes in detail one of its primary ADR techniques - bargaining - this article will be helpful to those who have to settle an international commercial conflict.

Alternative dispute resolution refers to any method of resolving financial disputes (ADR). However, there are several major ADR methods:

  • negotiation; 
  • trial; 
  • mediation; 
  • arbitration.

Negotiation is the first step in conflict resolution because it allows the parties to meet to discuss the situation and control the process and outcome. Certain negotiation techniques can be used to resolve a variety of disputes, including international, labor, and other business processes.

Negotiation as an alternative dispute resolution method

Negotiation is a process of communication between parties to achieve their objectives, in which all participants have equal rights in managing the situation and making decisions. Openness, clarity in wording, and respect for one's opponents are all important aspects of this process.

Negotiation is a way to settle in which parties and their attorneys reach an agreement while discussing issues that must be resolved. When the parties discuss potential actions that could lead to the resolution of a commercial dispute, this process occurs. It is also known as a direct or indirect communication procedure. Negotiation is a method of resolving an existing conflict and preparing requirements for the parties' future business relationships.

Advantages of Using Negotiation to Solve Conflict

If you want to resolve a conflict but aren't sure which ADR method to use, consider negotiations and their main advantages:

  • a peaceful method of resolving disputes; 
  • the parties enter into voluntary negotiations; 
  • the absence of judicial institutions; participant control over the process and its outcome;
  • deciding on the best option for both parties;
  • reducing the likelihood of future disputes between participants; 
  • no restrictions on the number of participants; 
  • confidentiality; 
  • business relationship security;
  • it is a private process and agreement between the parties; 
  • participants have the right to accept or reject the final decision; 
  • the solution is tailored to the parties' needs and requirements;
  • you can use the process to resolve both legal and non-legal issues.
  • risk reduction: if the negotiations do not result in a final decision, the participants can use alternative dispute resolution methods; absence of neutral parties during the process;
  • even if an agreement is not reached, assistance in maintaining business relations is provided.

Despite the fact that negotiations are one of the more adaptable forms of dispute resolution, they cannot guarantee success in reaching a final decision because only interested parties participate. In any case, the negotiation process is designed with the parties' needs in mind, and as a result, the likelihood of reaching a mutually acceptable agreement through negotiations is high. It is worth repeating that negotiations are a voluntary process, and thus no one can compel the parties to participate. The parties may participate in the negotiations themselves, or their interests may be represented by specialized specialists.

In contrast to litigation, the final decision reached during the negotiations unites only the parties involved. The accepted agreement should not violate current legal standards. Negotiating a dispute resolution will require fewer resources and lower costs than litigation.

Disadvantages of Negotiation in Dispute Resolution Between Legal Entities

Certain flaws in the negotiation method for resolving commercial disputes in the United States, Asia, or Europe include the following:

  • The weaker party may be disadvantaged; 
  • the final decision may not be enforced; 
  • participants may be unable to agree due to the absence of a neutral participant in the process;
  • loss of time and money as a result of the process's unexpected termination; 
  • the presence of issues that cannot be discussed during the process;
  • The parties may be unable to reach an agreement due to a lack of willingness to make concessions; 
  • a lack of guarantees of good faith and reliability on the part of the parties; 
  • and negotiations may be used as an impediment to asserting their rights by the other party.

Participation in conflict resolution negotiations: Negotiation stages

Before beginning the process of resolving a dispute through negotiations, it is important to understand the following stages:

  1. Training.
  2. Exchange and verification of data
  3. Discussion.
  4. Decision-making and agreement
  5. Completion of the accepted conditions

Preparation for negotiations

This process consists of several major steps that must be followed when resolving a dispute through negotiations:

  • identify and investigate the source of the conflict;
  • make contact with potential participants; 
  • plan and reason

Before beginning the negotiation process, it is necessary to first research the opponents' points of view, potential compromises, and all alternatives to the original solution. In addition, the preparation process entails establishing the fundamental requirements for negotiating a resolution to an international commercial dispute.

Company Dispute Resolution: Information Sharing, Clarification, and Verification

This is the stage at which the parties express their main concerns, positions, and the final decision they want to receive at the end of the process. At this point, all of the terms of the negotiations have been agreed upon:

  • Election of the chairman; 
  • the need for records; 
  • the length of the meetings; 
  • the agenda and scope of the process; 
  • schedule coordination; venue selection; 
  • language in which the process will be carried out and records kept; 
  • confidentiality.

Dispute Resolution Negotiation: Discussion

This is the stage at which the parties must express their needs and interests, make arguments, and continue the discussion begun in the first stage of the process. At this point, any position must be justified and supported by the necessary data. If the parties are unable to continue the process, they should try another method to restart negotiations.

Negotiation to resolve a conflict between companies: Deal and problem solving

When the participants reach an agreement, we can say that this is the main part of the negotiations. The parties propose new solutions to the problem based on the concessions made by the participants during the negotiation process. Then, compare financial dispute resolution options with the needs of the parties to determine whether the participants can reach a mutually beneficial dispute resolution that meets the parties' basic requirements.

Negotiations have concluded, and the agreement has been implemented.

After reaching an agreement that is acceptable to both parties, the parties thank their opponents for their efforts. Often, the parties formalize their decision to resolve the dispute through negotiations by signing a written contract. After the parties sign it, such an agreement has the legal force of a contract. The contract's terms can be broad or specific, depending on the participants' desires. One of the process's prerequisites is the coordination of the stages and deadlines for implementing the decision. Long-term business relationships are built on successful negotiations. If the parties so desire, the settlement agreement may be registered in court in accordance with applicable practice.

Options for Conflict Resolution Through Negotiation

There are several negotiation styles:

  1. Competitive bargaining entails the parties' primary goal of increasing their profits at the expense of the opponent. The interests of the opposing party are regarded as irrelevant in such a process. Such negotiations are not concerned with finding the best solution for all parties, but rather with the specific positions of the conflicting parties.
  2. Cooperation - this method stipulates that negotiations are based on the parties' mutual interests in mutual cooperation, the search for solutions that benefit all participants, and the willingness to make concessions. Common interests and values are important to the parties, and an objective approach is used in the process, with the main goal being to make a fair and mutually beneficial decision.


Negotiating to resolve a commercial dispute is an acceptable and fairly effective method if the parties are interested in resolving commercial conflicts and are willing to make compromises while considering the interests of their opponents. An important consideration is that no single approach is appropriate for all types of negotiations; thus, each process necessitates a unique concept that takes into account the subject of the conflict.

If you require more detailed information on the above-mentioned topic, please contact our company's specialists and get answers to your questions. IQ Decision UK offers a wide range of support services for international dispute resolution. In addition, during negotiations, our specialized specialists can represent your interests. Fill out the special form below, and one of our experts will contact you as soon as possible.


What exactly is negotiation?

One of the alternative dispute resolution methods is negotiation. Each negotiation is distinct in terms of subject matter, number of participants, and process employed. The parties discuss the form of any joint action that they can take to resolve their dispute during negotiations.

What are the benefits of resolving a disagreement through negotiation?

If you intend to settle the dispute through negotiations, keep in mind that the following are the primary benefits of such an ADR:

  • They can be multilateral (two, three, or more parties can participate in negotiations). 
  • They can be flexible and they can be peaceful.
  • Negotiations are non-judicial proceedings. 
  • They are informal and confidential.
What are the drawbacks of resolving a disagreement through negotiations?

Negotiation disadvantages include:

  1. Optional decision. 
  2. Possibility of party dishonesty.
  3. The absence of a neutral third party.
  4. Negotiations may be terminated at any time by either party.
  5. Negotiation can be used to postpone a decision.
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