Difference Between Negotiation and Arbitration

Negotiation vs Arbitration

Since ages, there have been different means of dispute resolution to mitigate chances of loss to parties involved. War between kingdoms and tribes was often avoided using these means of dispute resolution. Down the ages, these alternative dispute resolution mechanisms are being employed in different settings and contexts, to minimize losses to all parties concerned. Negotiation and arbitration, though similar techniques to resolve disputes, have differences that will be identified in this article.

Negotiation

When two parties are trying to reach an agreement through direct discussion in which both use persuasive techniques along with influence to make the other agree to terms closer to his, the process is known as negotiation. This looks like bargaining as when a buyer negotiates with a vendor to sell fruits at prices lower than the asking price. Negotiation between companies over trade terms is also an example of negotiation as both try to maximize their own profits. Even in courtroom litigation, opposing parties appoint attorneys who try to secure their interests through negotiation. Negotiation involves give and take policy where parties give concessions on some aspects while trying to gain concession on other aspects.

Arbitration

When both parties try but fail to resolve their difference talking to each other, arbitration is resorted. This is a mechanism where dispute resolution is sought through the use of an impartial third party who is usually a lawyer or a retired judge. He listens to grievances of both parties and gives his decision that is binding on both parties. This takes place in much the same manner as would take place in a court of law, but the process is simpler and less expensive. To understand, consider the situation where two employees have an issue and to resolve, they take the matter up to their boss who listens their problems and then passes his judgment. In a complex situation, such as two nations on the verge of war, the matter goes up to UN where the voting takes place, and a judgment is passed. Arbitration is a very good mechanism to resolve disputes between two companies out of court.

What is the difference between Negotiation and Arbitration? • Negotiation involves direct talking between two parties at loggerheads while, in arbitration, parties talk through their representatives in front of an arbitrator • Negotiation involves some give and take whereas there is no lost ground in arbitration • Negotiation is less costly than arbitration that requires services of attorneys and arbitrator • Negotiations may be cheaper, but it is often hard to bring warring parties to a negotiating table • Negotiation is speedier than arbitration if parties decide to talk to each other