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Difference between Negotiation and Arbitration

Difference between Negotiation and Arbitration

When two or more people cannot come to an agreement, they may need to resort to a third party to help them settle their dispute. This is where the concepts of negotiation and arbitration come in. Though both are methods for settling disputes, there are some key differences between the two. Let’s take a closer look at what those differences are.

What is Negotiation?

  • Negotiation is a process whereby two or more parties attempt to reach a mutually agreeable resolution to a conflict. It is a process of giving and taking, in which each side seeks to find an acceptable middle ground.
  • Negotiation requires both parties to be willing to compromise and to have a clear understanding of their own goals and objectives. The negotiation process can be both formal and informal and can take place in person or online.
  • In order to be successful, negotiators must be able to communicate effectively and build trust with the other party. The most effective negotiations are those in which both sides feel that they have won something and that the outcome is fair. Negotiation is an essential skill in both personal and professional life, and can often mean the difference between success and failure.

What is Arbitration?

Arbitration is a process of dispute resolution in which a neutral third party hears arguments from both sides of a dispute and then makes a binding decision. Arbitration is often used to resolve disputes between businesses or individuals who have a contract that includes an arbitration clause. The Arbitration Act 1996 governs the arbitration process in England and Wales.

Arbitration is an alternative to going to court, and can be faster and cheaper than litigation. Arbitrators are usually experts in the subject matter of the dispute, and their decisions are binding. Arbitration is confidential, and the arbitrator’s decision cannot be appealed.

Difference between Negotiation and Arbitration

Negotiation and arbitration are two ways of resolving disputes between parties. Negotiation is a process in which the parties involved an attempt to reach an agreement through discussion and compromise.

  • Arbitration, on the other hand, is a process in which an impartial third party renders a decision based on the evidence and arguments presented by the parties.
  • While negotiation can be used to resolve any type of dispute, arbitration is typically used in cases where the parties are unable to reach an agreement through negotiation.
  • Arbitration is also often used in cases where one party feels that the other party is not acting in good faith. In general, arbitration is faster and cheaper than litigation, but it is also binding, meaning that the parties are required to accept the arbitrator’s decision.


The difference between arbitration and negotiation is an important distinction to make when deciding how to handle a dispute. Knowing the benefits and drawbacks of each process can help you choose the best option for your needs.

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