In many cases, the disputing parties seek a settlement out of court, using the Alternative Dispute Resolution (ADR) method which is not only fast, but also affordable. One of these methods is mediation. This is an assisted negotiation in which a mediator is appointed by the parties concerned to listen to both parties and assist them in finding a better solution.
Now you must be wondering, what is negotiation? Negotiation is a process in which parties with conflicting interests come together to discuss and decide on outcomes that can be taken to manage and resolve disputes.
Alternative Dispute Resolution (ADR), as the name implies, is a mechanism by which out-of-court dispute resolution occurs between the parties. It is classified into legal action and non-legal action. One of the best things about ADR is that it is a private and confidential technique.
What is Negotiation?
Negotiation refers to a systematic process based on bipartite dialogue between conflicting parties who seek to reach a mutual agreement by seeking mutually beneficial solutions for both. Here, the term conflict does not mean contention, unrest, or disturbance, but rather implies disagreement between the parties regarding their interests and rights.
However, it requires compromise from both sides to be effective. So both sides have to gain and lose something.
In the case of negotiations, the focus is made on issues related to the conflict rather than the relationship as a whole. Moreover, the agreement reached by negotiation can be in the form of an agreement, code, or contract.
Negotiation arises when there are alternative outcomes of a situation, in which the disputing parties are interested, but there is disagreement over the final outcome.
Example: Suppose you go to the market to buy some fruit, and you ask for the price of 1 kg of wine and the shop owner replies Rp. 120,000. Then you bid the wine at a price of Rp. 100,000 per kg, but the shop owner negotiated and settled it at a price of Rp. 110,000 per kg. This process is called Negotiation.
There are three possible outcomes of the negotiations:
- Win-Win: A result in which both sides win
- Win-lose: The result where one side wins while the other loses
- Inefficient but fair : A result in which all items are evenly distributed.
What is Mediation?
Mediation is a non-binding industrial relations dispute settlement system. In this method, an independent and impartial third party is called upon by the disputing parties to help them reach a mutually agreed solution for both.
During mediation, the mediator appointed by the parties seeks to bring about an agreement between the parties concerned by initiating communication and offering some solutions to the stand-off problem. Furthermore, it creates an environment that facilitates interaction between the parties.
Mediation is required when:
- The parties seek a negotiated outcome.
- Keep confidential
- The party wants to control the outcome.
- Quick resolution required.
- The parties wish to maintain and strengthen their relationship in the future.
Who is the Mediator?
Mediator refers to a professional and experienced outside party appointed for the purpose of dispute resolution. He must have integrity, independence and impartiality.
The mediator’s role is more like an advisor to both parties. That is, a mediator does not have decision-making power, but rather helps the parties to reach a settlement, by listening to problems, suggesting solutions, communicating with and persuading the parties.
Therefore, any solution proposed by the mediator in this case, is not binding on the parties concerned, that is, it is up to them to accept it or not.
Now that we have talked about the basic concept of the two terms, here are some of the differences between negotiation and mediation that we can conclude:
Difference between Negotiation and Mediation
- Negotiation is a way to resolve industrial disputes through self-deliberation and discussion between party members or representatives of the parties where mutually acceptable agreements are sought. In contrast, mediation is a non-legal dispute resolution act, in which an independent third party is invited to facilitate discussion and suggest alternative solutions to bring about an agreement.
- While negotiations do not involve the intervention of a neutral third party in the mediation process, the mediator is invited or consent is given by both parties to discuss the problem with the mediator to come up with a suitable alternative solution.
- In negotiations, representatives of the parties to a conflict meet to express their interests, demands, and discuss their rights. On the other hand, in mediation, the mediator meets the conflicting parties either jointly or separately to discuss issues and suggest solutions.
- In negotiations, interests are represented either by the party members themselves or by representatives appointed by them. On the other hand, in the case of mediation, a mediator represents the interests of the parties concerned.
- In negotiation, the parties discuss and decide on a possible outcome that is acceptable to both, whereas in mediation, the mediator proposes a solution to resolve the issue, but it is up to the parties to adopt the same or not.
- In negotiations, the outcome is based on the relationship between the parties. In contrast, in mediation, the outcome is controlled by the parties to the conflict.
In short, we can say that the parties to a conflict can choose any ADR method to resolve their dispute, without going to court. In both methods discussed above, the parties can control the outcome taking into account their interests and preferences.
