LESSON FROM AN EXPERT

by John Thomson© - The Negotiator

Reference: Thomson 2022.01: Negotiation Bias In Conflict

MEDIATION, NEGOTIATION AND ARBITRATION

What’s The Difference?

Three Strings To The Resolution Bow

Mediation, negotiation, and arbitration are three distinct alternative dispute resolution (ADR) methods used to resolve conflicts and disputes. Unlike rigid textbook definitions, each strategy used varies, influenced by the dispute sector, the participants' willingness and ability to engage in a resolution process, and the skill of the mediator or adjudicator. There is no one-size-fits-all approach.

Effective resolution strategies must be specifically tailored to ensure the chosen method is appropriate for the nature of the conflict and the temperament of the parties involved. While the idea of achieving a win-win situation is appealing, the reality is ,each party must also give up something to achieve a resolution. A facilitators responsibility is to help clients achieve the 'best possible outcome.'

Mediation Explained

Mediation works best when all parties agree to work together to resolve a matter without acrimony or intransigence, focusing on a resolution rather than the causes of the conflict. Mediation can be a ‘game-changer’ in a relationship separation dispute. The mediator highlights the benefits of parties coming to a quick agreement and focusing on their future, not the past. When conflicting parties manage their emotions and create a constructive and collaborative atmosphere, an acceptable solution can be achieved quickly, avoiding the need for expensive litigation processes, and ensuring a clear win for all involved.

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Role of the Mediator

The mediator's role is to organize and facilitate the meetings between the parties. It includes:

establishing the parties' terms of conduct during face-to-face meetings, such as allocating time for each party to speak.
ensuring respect for the mediator's instructions.
providing a final summation of the outcome and drafting settlement proposals.

The mediator is responsible for creating open and respectful communication, setting clear guidelines for behaviour, and guiding the discussion to ensure it remains productive.

Control Over The Outcome

The mediator may make suggestions or respond to questions from either party, but they do not impose a decision. Instead, they guide the parties towards their resolution. They summarize the agreements reached and may outline any further steps, ensuring all parties clearly understand the resolution.

Formality and Structure

During the preliminary assessment stage, the mediator evaluates whether an informal setting, which may foster a more relaxed and open dialogue, is appropriate or if a formal structure with clearly defined procedures and rules is necessary to maintain order and focus. By understanding the parties' attitudes and needs and the context of the dispute, the mediator can tailor the process to enhance its effectiveness, ensuring that both parties feel comfortable and confident in the mediation environment.

Objectives

The primary purpose of mediation is to enhance communication, resolve misunderstandings, and reach a mutually acceptable agreement. While neither side may achieve all their desired outcomes, the goal is for both parties to feel satisfied with a resolution that is fair and balanced for both.

The resolution decision should foster a sense of fairness and equity. It should allow the parties to conclude the mediation with a handshake, symbolizing their willingness to move forward without resentment or unresolved issues. This collaborative approach not only resolves the specific dispute but also helps improve future interactions between the parties.

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one ounce of mediation is worth a pound of arbitration and

one ton of litigation

Joseph Grybaum

Negotiation (Conciliation) Explained:

Many definitions state, 'negotiation is a direct communication process between conflicting parties.' However, they often overlook scenarios that may include high risk environments, language and communication barriers and where parties express anger, stubbornness, and unreasonable demands prohibiting face-to-face conciliation and communication.

Consider a hostage situation. The hostage-taker and the hostage cannot negotiate. It is reassuring to know that law enforcement negotiators take charge, providing a sense of security for the hostage. For the hostage taker, it is surrender or facing dire consequences.

A negotiator's success depends on their ability to navigate the potential risks of a deadlock, or further escalation during face-to-face negotiations. This assessment involves understanding participants' desired outcomes, determination, conviction, and emotional intelligence (E.Q). Other factors include the gravity of the dispute, willingness to find common ground, and conflicting values, beliefs, and cultural differences. Tightly held ideologies and the influences of third-party bias *1 can derail weeks of work, and a participant's changed goals may destroy hard-earned trust.

Where skilled, strong leadership is exercised, there is always a potential for positive outcomes. This underscores the resilience and potential for growth in negotiating with emotional or confrontational parties in face-to-face settings, offering hope for successful resolutions.

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The Role Of The Negotiator

The negotiator must manage the rules and conduct of the negotiation process, determining what the motivations, goals, and aspirations of the participants are and provide guidance to prevent a collapse of the process. While they may document and draft settlement terms and influence outcomes, they do not unilaterally decide the terms of any agreement.

Most negotiators employ a dynamic communication style where parties engage in a give-and-take dialogue to address their differences and reach a practical, mutually agreed-upon decision.*2

The negotiators’ role is to develop the negotiation strategy with an emphasis on risk mitigation. They transparently report offers and counteroffers and maintain a record of all interactions.

Formality and Structure

Negotiation structures usually take one of two forms: 'across the table' negotiation or 'facilitated negotiation,' or a combination of both strategies.

In 'across the table' negotiation, communication occurs face-to-face between the involved parties. Unlike the more informal mediation approach, the negotiator adheres to predetermined guidelines to steer the talks to resolution and maintain discipline between the parties.

In my experience, it is rare for both sides to physically meet at the negotiation table early in the negotiation process. Face-to-face meetings are typically more effective for finalizing agreements rather than for the negotiation process itself.

Facilitated negotiations are effective when one party is highly anxious, making decisions based on emotions like fear, anger, frustration, and betrayal. In such cases, it's best to avoid face-to-face meetings, as they can be impractical, excessively tense, and present risk to participants and the negotiation process.

I have witnessed instances where meetings spiralled out of control with pens, cups and glasses were thrown. Some people resorted made threats of harm or loss and used offensive language to express their frustrations and grievances. Such volatile behaviours underscore the challenges inherent in negotiating with highly emotional or confrontational parties in face-to-face meetings.

Regardless, the level of formality in negotiations can vary widely, from informal to highly structured based on the participants willingness to find resolution.

Objectives

Negotiated agreements tend to be more formal. The primary objective is to achieve an agreement that binds all parties to resolution or conclusion.

Arbitration Explained

Usually used as a last resort resolution option after other processes have failed, a neutral third party, known as an arbitrator, is appointed to review the evidence and arguments presented by the disputing parties. The Arbitrator then makes a decision that is binding. It is an alternative to court litigation and aims to provide a fair resolution at a significantly lower cost. Unlike mediation and negotiation, arbitration eliminates the parties' capacity to make their own decision due to unreasonable demands or the impairment of one or more parties.

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The Role Of The Arbitrator

Arbitrators must be qualified professionals, usually registered or licensed by regulation or law. Emotions run high in all disputes, but are more common in relationship separation conflicts, particularly when one party feels they have contributed more than the other.

Arbitrators consider all factors including long term probabilities basing their decisions on the broader factual, and balanced context. While their decision may not satisfy all parties demands, they aim to deliver a fair, reasonable ruling, instilling confidence in the process's justice.

Control Over The Outcome

In arbitration, control lies with the arbitrator or panel of arbitrators overseeing the process. Unlike mediation or negotiation, where parties have more direct influence over the final decision, in arbitration, the arbitrator has the authority to decide how to resolve the dispute.

While not conducted in a Court of Law, the rules of submission and weight of evidence are the same, ensuring a rigorous and evidence-based process. Parties involved present their arguments, evidence, and requests, but the arbitrator holds the power to issue a final ruling. The arbitrator's decision is based on the facts presented, consideration given to governing laws or contractual agreements, and their thorough interpretation of the case.

Formality and Structure

Serialized by social TV programs like Judge Judy, Tribunal Justice, and Judge Faith, arbitration TV shows entertain with humour and curiosity. However, while the process is similar to a court proceeding and the arbitrator's decisions are final, arbitrations are rarely conducted in the formal environment of a Court proceeding.

The process may include:

Preliminary Hearings: Setting arbitration scope, addressing procedural matters, and dealing with initial issues.
Opening Statements: Parties present claims, positions, and critical arguments.
Presentation of Evidence: Parties offer evidence and documents to support their positions.
Witness Testimony: Witness testimony is given by parties and the arbitrator, with cross-examination.
Legal Arguments: Parties make legal arguments based on laws, contracts, and precedents.
Deliberations: The arbitrator reviews all evidence before deciding.
Award: The arbitrator issues a written decision outlining the dispute's resolution, including remedies and damages.

Arbitration is a specialist field, the arbitrator controls the outcome, delivering an enforceable and legally binding decision for all parties involved.

Summary

For claimants seeking to resolve conflict and dispute with respondents, it is important to seek advice regarding the resolution options available. Mediation works well where a mutual agreement is likely. Negotiation, a process that brings clarity to ambiguous situations. It is effective where the method of achieving a resolution is unclear or where one party doesn't want to 'face' the other party or has no prior relationship with them and seeks a degree of anonymity.

Arbitration is a final option before a Court determination. To engage in arbitration, you must know that a settlement will be determined in your favour. The decision made by the arbitrator is final.

Note of Caution

Lawyers rate the probability for a favourable outcome in percentage terms. In a recent example, lawyers for both parties rated their clients ‘win probability’ at 70%. However, determination fell entirely in the respondent’s favour, a payment of $420,000 plus interest to be paid within seven days. Not only did the defendants lawyer get it wrong, his fees and cost exceeded $86,000 a total penalty to the claimant of $506,000. This was a reversal of a $250,000 payment the respondents initially offered to settle the conflict in mediation.

Further, in a recent action, a defendant correctly mediated a financial settlement for wrongful arrest with the Police but did not have the charge struck off the register. She pursued the matter further until she had the charge struck off through the High Court and won, but was then charged under "Harrison's Law' for wasting the Courts time and ordered to pay expenses in excess of $200,000. The court ruled the mediated settlement to have constituted the end of the matter.

References:

*1 Five Bias’s That Derail A Deal. What You Must Know: CRMC502 in this series.

*2 "Getting to Yes: Negotiating Agreement Without Giving In" Acclaimed book on negotiation, co-authored by Roger Fisher, William Ury and Bruce Patton.

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About John Thomson

John Thomson is known as 'the negotiator.' A successful mediation and negotiation practitioner since 1985, he has personally closed over 3,000 client contracts across all property, business and proprietary sectors, and has a 94% resolution success rate as a mediator. Utilizing hybrid and unorthodox negotiation and resolution methodologies, John is educated, intuitive and disciplined.

A keynote, session and plenary speaker, mediation and negotiation lecturer and teacher, John is the authour of this lesson note which forms part of the Master Class Training Program. This lesson is provided free of charge to students, practitioners and persons interested in the science of mediation and negotiation.

A Senior Partner at N.Z. Mediation Services and Directors at John Thomson Consulting (Aust). John is a frequent flyer between Australia and New Zealand managing and advising a professional team of qualified mediators, negotiators and arbitrators in both countries.

Lesson notes from THE NEGOTIATOR, are part of the CODE RED Training Program written and published by John Thomson Consulting. All rights reserved. International copyright and trademark laws cover the contents of this publication John Thomson (John Thomson Consulting: ABN 74325624056.) Students of Social Sciences, Law, Negotiation or Mediation may use material extracted from this note for academic use with reference to John Thomson 2020:01

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