This Article has been written by Aakriti Singh, a 3rd Year student of LLB (Hons.) from Amity Law School, Amity University Noida. 

INTRODUCTION 

Dispute resolution is a critical instrument for preserving social tranquility. Ever since human civilisation began and people started engaging with one another, rights disagreements brought forth discord. Thus, a way to address such clashes was mandatory. Dispute resolution mechanism serves to both resolve and manage differences, facilitating cooperation between persons and groups. Consequently, it is argued that such balance is necessary for people to peacefully co-exist. Commercial trading has amplified significantly in the current era.  Alternative Dispute Resolution (ADR) is an expression utilised to describe the various strategies by which legal confrontations are addressed. The business realm and public alike have realised that filing lawsuits and attaining timely justice can be an unworkable plan for many. The court system is overloaded with pending cases, leading to a period of one year or more before the two parties are heard and the conflict is solved. Thus, in reaction to the delay in legal recourse, the ADR Mechanism was put into effect.

Arbitration is a type of Alternative Dispute Resolution (ADR) that provides a solution to conflicts outside the court system. In this process, both parties of a disagreement appoint one or more people known as arbitrators who are intended to make a legally binding decision on their behalf. The rights to appeal and review are limited for the arbitration award. It is not to be confused with civil and mediation proceedings, and can either be voluntary or compulsory. In India, when matters are referred to arbitration, the provisions of the Arbitration and Conciliation Act, 1996 will apply. The various types of ADR are Voluntary Arbitration, Compulsory Arbitration, Ad-hoc Arbitration, Institutional Arbitration, Statutory Arbitration, and Domestic or International Arbitration. All of these arbitrations involve two parties mutually agreeing to refer any present or future disputes to a third party without knowing the disputes that will eventually arise.

When two parties attempt to come to a resolution by talking with one another while utilising persuasive tactics and influence to make the other accept conditions closer to what they want, it is referred to as negotiation. This resembles bargaining, like when a purchaser negotiates with a seller to buy fruit at a cheaper price than what was asked for. Companies negotiating terms of a trade is also a form of negotiation, as each endeavour to attain their own gain. Even in legal proceedings, where the opposing sides designate representatives who attempt to secure their objectives through negotiation. Negotiation involves an agreement to disagree policy, where the parties provide some give-and-take by granting compromises in some aspects while trying to secure an advantage in others.

ARBITRATION V. NEGOTIATION 

Arbitration and negotiation are two forms of dispute resolution processes, falling under the umbrella of appropriate dispute resolution (ADR) methods. The lengthy process of court cases and the long-standing backlog of cases in court gave rise to the use of such measures as alternative approaches to litigation. In addition, two other processes exist – mediation and conciliation.

Arbitration and negotiation come with many advantages over litigation in court, namely in terms of cost and time consumed in settling disputes. What is more, proceedings are conducted in a private and confidential manner, with decisions remaining confidential between both parties.

The formats of arbitration and negotiation are different from each other. For arbitration, both sides agree to appoint a third party arbitrator or arbitrators – often, the number of arbitrators is an odd number, such as one or three, to prevent a tie in decisions. Arbitrators can be chosen from either existing arbitrators, parties involved in the dispute, or even external entities, like courts. Once chosen, arbitrators must listen to both sides and determine all terms of dispute, the results of which are presented in the form of an award – a legally binding document that details the decision. As far as the cost of the arbitrator goes, the award may include these, though it is also possible that both parties have already agreed upon these. As for negotiation, it is quite literally a process of discussing and resolving the dispute between the two sides involved. This time, a facilitator is appointed, who allows for conversation between both sides and records all related data, such as their positions, discussions, and any agreements made. Once the negotiation has come to an end, the parties usually have a memorandum of agreement, spelling out the nature of the dispute, the way it was resolved, and the conclusion of the matter between the two. 

Furthermore, both parties often share the cost for the negotiation. Although resolution in negotiation is not as legally binding as it is in arbitration, it can still be very effective in resolving conflicts.

CONCLUSION

Arbitration and negotiation are both forms of appropriate dispute resolution (ADR) and serve as alternatives to court litigation. These processes are private, expeditious, cost-effective, and guarantee confidentiality. Conciliation and mediation are other types of ADR.

Negotiation and arbitration are dissimilar in purpose and the persons who are involved in each. Arbitration entails appointing an arbitrator, who hears both sides of the dispute and renders a final, legally binding decision known as an award. In comparison, a facilitator presides over a negotiation to allow the two parties to talk about the conflict and to reach a settlement. This agreement is recorded in a memorandum of agreement that is not as legally binding as an award.

Both arbitrators and facilitators are generally third-parties, although the arbitrator has a direct influence on the outcome of the dispute, while a facilitator is more of a passive participant. The costs for arbitration can either be decided by the arbitrator or the two parties, whereas the negotiator’s fees are commonly split between the disputants.

It is also noteworthy that an award from an arbitration process cannot be challenged in court. Conversely, a court can review and overturn a memorandum of agreement established from a negotiation. Arbitrators usually have a law background or some other connection to the legal field, but facilitators do not necessarily have to have legal experience.

REFERENCES

Difference between negotiation and Arbitration Difference Between Similar Terms and Objects, http://www.differencebetween.net/miscellaneous/legal-miscellaneous/difference-between-negotiation-and-arbitration/ (last visited Feb 28, 2023) 

Latest news DIFFERENCE BETWEEN NEGOTIATION , MEDIATION AND ARBITRATION | VIA Mediation Centre, https://viamediationcentre.org/readnews/OTI5/DIFFERENCE-BETWEEN-NEGOTIATION-MEDIATION-AND-ARBITRATION (last visited Feb 28, 2023) 

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