By Eric R. Finn, Associate
Those who analyze dispute resolution methodologies often refer to a continuum of approaches ranging from a form of “struggle”, where the parties wage war on each other with the intent that might will eventually win out, to negotiation, where the parties by themselves or with the assistance of consultants resolve the issues involved in the dispute. In between the two extremes on the continuum, three other approaches, involving a third party, are generally referred to as adjudication, arbitration and mediation. A brief description and discussion of these five dispute resolution mechanisms follows.
Struggle
Authors have defined struggle as process or procedure that “can take the form of physical combat (military battles, strikes), wars of words (shouting matches), political contest (vying for allies) or taking unilateral advantage (theft).” In the international arena and throughout history, wars, including civil wars, have been used as a means of resolving disputes. Domestic examples of struggle include strikes, gang warfare, family arguments and commercial disputes, involving parties with unequal bargaining power.
Being on the continuum of dispute resolution, can “struggle” be seen as producing an agreement. Again, authors, believe that the result of a struggle is an “agreement”. A war, upon its conclusion, will lead to a victor and peace. A strike or lockout can eventually lead to an agreement once the parties have felt the impacts of the withdrawal of the work force.
More commonly, the presence of a “struggle” may lead to an agreement because of the knowledge that third parties may intervene. Police forces may intervene to stop violence. Those involved in a labour dispute may be aware that a government may intervene to impose binding arbitration or back to work legislation. Governments have already intervened with consumer legislation and class action remedies to balance the bargaining positions between consumers and those provided goods and services. Courts are becoming more and more involved in resolving family disputes and domestic violence. The greater the possibility of a third party intervening, the greater the likelihood the parties will be able to reach an agreement to end the struggle.
Negotiation
While struggle may eventually result in an agreement, the terms may not be conducive to a durable settlement. We have all seen that unilateral action by one party, such as the seizing of land, may result in peace for some time but often the seizure will result in further conflict at a later date when interests shift. Where the consequences of a struggle are unacceptable and the parties do not want to involve a third party, negotiation is the favoured dispute resolution remedy. Negotiation is often chosen when both parties:
- Believe they cannot get what they want unilaterally
- Have some conflicting and some shared interests
- Are in a stalemate that harms them both, and
- Perceive negotiation to be the best way of attempting to end the conflict.
Negotiating techniques can take the form of positional bargaining or principled negotiation. In the former, the primary goal of each party is to reach an agreement but the technique invariably favours the more powerful party. The process involves a successive taking on and then giving up on a sequence of positions. Consider the type of haggling that goes on at international bazaars as an example.
Principled negotiation, while also aimed at reaching an agreement, is intended to reconcile interests, avoid damaging and perhaps improve relationships and have relatively low transaction costs such as time, stress and money. The four principles of this technique are:
- Separate the person from the problem.
- Reconcile interests, not positions.
- Create options for mutual, not personal, gain.
- Use objective standards.
As will be seen, when parties decide to involve a third party mediator to resolve disputes, they will find that most mediators today are trained in the art of principled negotiation.
Adjudication
Moving along the continuum away from struggle, to those options for dispute resolution involving third parties, the approach where the parties have least input into the dispute resolution process is adjudication. Adjudication or litigation is a process in which a third-party judge, authorized by legislation, compares the parties information (evidence) presented in court or in a tribunal, according to the procedures of those bodies, and then renders a binding judgment that favours one party over the other. There is a winner and a loser and the decision is binding.
The strengths of adjudication include the ability to predict an outcome where specific legislation or precedents are involved, the process results in a binding enforceable decision and the proceedings are transparent and, generally, open to the public. The weaknesses include that fact that there is always a winner and a loser and therefore fewer satisfied participants than may result from mediation or prini9cpled negotiation, decisions have lower compliance rates than mediation and the oprocess offers the participants minimal control.
The issue of costs raises some debate. Adjudication because of time involved from commencement to conclusion and the procedural steps along the way, general leads to higher transactional costs even. In mediation or arbitration, the procedures are general designed to reduce costs. The variable in the debate is the cost of the mediator or arbitrator as compared to a government funded court. Where a lengthy hearing before an arbitrator is required the cost of the private arbitration weigh the scale of costs in favour of adjudication.
Arbitration
With arbitration, the parties still present evidence and arguments to a neutral third party who makes a binding decision. Unlike adjudication, however, the parties choose the private arbitrator and decide on the procedure to be used. Arbitration also provides decisions based on objective standards . If the parties agree, arbitration could be non-binding but by far the most preferable result is to have a binding decision which can be enforced pursuant to the parties’ agreement or government regulation. As noted above, the parties pay for the services of the arbitrator.
Mediation
The form of dispute resolution closest to the negotiation end of the continuum is mediation. Where mediation is used to resolve a dispute, a third party is involved to facilitate an agreement but the parties formulate the terms. As with arbitration, the parties choose and pay the mediator and agree on the procedures to be used. Because the aim of mediation is a consensual agreement, there is no binding effect on what takes place at a mediation or the views expressed by the mediator. If an agreement is reached, the parties have contractual remedies of enforcement.
Two types of mediation have developed – rights based mediation and interest based mediation. In the former process, the mediator is concerned with whether the rights of a party has been infringed and will generally result in the mediator expressing an opinion as to such infringement. This type of mediation is primarily found in statute based mediation, for example, human rights disputes or motor vehicle accident benefits cases.
More commonly, mediation is interest based which is “a process whereby a third party facilitates understanding and mutual decision making on outcomes by parties involved in conflicts of interest.” From this definition, it can be seen how interest based mediation will have significant success where the parties are involved in principled negotiation. Mediators are trained to apply the four principles of principled negotiation to achieve an agreement which is in the interest of all parties.