DR.

RAM MANOHAR
LOHYA NATIONAL LAW
UNIVERSITY

FINAL DRAFT- ALTERNATE DISPUTE

RESOLUTION

ADVANTAGES AND
DISADVANTAGES OF
NEGOTIATION
Submitted to Mr. Prasanjeet Kundu
Faculty of Law.

Submitted by- Abhisht Hela

Semester VIII
Roll no. 07
 TABLE OF CONTENTS

Introduction
Meaning of Negotiatio
Essentials of Negotiation
Phases of Negotiation
Characteristics of Negotiation
Why parties choose to negotiate
Why parties refuse to negotiate

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 Advantages of Negotiation
Disadvantages of Negotiation
Online Dispute Resolution
Assisted Negotiation
Advantages
Disadvantages
Conclusion
Bibliography

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 INTRODUCTION

Negotiation is the dominant element in the mediation process and almost of every other
dispute resolution processes. Negotiation, the important component of which is dialogue,
is seen as one of the most important legal methods of resolving conflicts at any level,
especially when alternative dispute resolution methods are applied in settling
international disputes.

MEANING OF NEGOTIATION

Negotiation is primarily a common mean of securing ones expectations from others. It is

a form of communication designed to reach an agreement when two or more parties have
certain interests that are shared and certain others that are opposed. Ginny Pearson Bames
says that negotiation is a resolution of a disagreement using give and take within the
context of a particular relationship. It involves sharing ideas and information and seeking
a mutually acceptable outcome.1

The Pepperdine University of USA has developed an explanatory definition for

negotiation:

Negotiation is a communication process used to put deals together or resolve conflicts. It

is a voluntary, non-binding process in which the parties control the outcome as well as the
procedures by which they will make an agreement. Because most parties place very few
limitations on the negotiation process, it allows for a wide range of possible solutions
maximizing the possibility of joint gains.2

ESSENTIALS OF NEGOTIATION
1
Ginny Pearson Bames, Successful Negotiating
2
Institute for Dispute Resolution, Pepperdine University (USA), Mediation, the art of facilitating
settlement.

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The following are the essential elements of negotiation:
1. It is a communication process.
2. It resolves conflicts.
3. It is a voluntary exercise.
4. It is a non-binding process.
5. Parties retain control over outcome and procedure.

M. Antsey explains the core elements of negotiation as follows:

o A verbal interactive process
o involving two or more parties
o who are seeking to reach agreement
o in which they seek, as far as possible, to preserve their interests, but to adjust their
views and positions in the joint effort to achieve an agreement.3

PHASES OF NEGOTIATION

There are four phases of negotiation and all negotiations are generally characterised by
these four phases. They include: preparation, opening, bargaining and closing. The
preparation involves information collection. The opening phase involves both sides
presenting their initial positions to one another. The third phase, bargaining, aims to
narrow down the gap between the two initial positions and persuade the other party to
accept less than they expected since their case is weaker. Lastly, the capitalisation of the
work done reflects in the closing phase.

CHARACTERISTICS OF NEGOTIATION

By nature, it is a voluntary communication process. Its purpose is to achieve a deal or

agreement, or to resolve conflict. Its procedure is as evolved by the parties. The basis of
3
M. Antsey, Negotiating Conflict, 1991

5
negotiation is agreement, or consensual, or voluntary understanding of the parties. The
parties retain control over procedure and outcome. The solutions are neither fixed, nor
limited, they are of wide range. And the result is possibility of maximising joint gains.

The principle adopted is that nothing is beyond negotiation. One can pursue an
established course or negotiate a change based on reasoned argument, and sustained
efforts or offering concessions. Thus, negotiation operates as a primary device to resolve
any problem, conflict or court litigation. It may or may not be quick, depending upon the
commitment and conditions of negotiated subject, but it is inexpensive, private, and less
complicated than any other dispute resolution process.

However, there are certain prerequisites for negotiation which can also be considered as
its limitations. The process of negotiation works only when

The parties are willing to co-operate and communicate to meet their goals;
The parties can mutually benefit or avoid harm by influencing each other;
The parties know that they have time constraints;
The parties realise that any other procedure will not produce desired outcome;
The parties can identify the issues to be sorted out;
The parties also agree that their interests are not incompatible to each other;
The parties knew that it is preferable to participate in private co-operative
process, rather than go through severe external constraints like loss of
reputation, excessive cost, and possibility of adversarial decision.

Negotiation therefore depends upon the following factors:

Goals and interests of the parties
Perceived independence between the parties
History that exists between the parties
Personalities of the people involved
Persuasive ability of each party

WHY PARTIES CHOOSE TO NEGOTIATE

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The list of reasons for choosing to negotiate is long. Some of the most common
reasons are to:

Gain recognition of either issues or parties;

Test the strength of other parties;
Obtain information about issues, interests and positions of other
parties;
Educate all sides about a particular view of an issue or concern;
Ventilate emotions about issues or people;
Change perceptions;
Mobilize public support;
Buy time;
Bring about a desired change in a relationship;
Develop new procedures for handling problems;
Make substantive gains;
Solve a problem.

WHY PARTIES REFUSE TO NEGOTIATE

Even when many of the preconditions for negotiation are present, parties often choose
not to negotiate. Their reasons may include:

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 Negotiating confers sense and legitimacy to an adversary, their goals and
needs;
Parties are fearful of being perceived as weak by a constituency, by their
adversary or by the public;
Discussions are premature. There may be other alternatives available--
informal communications, small private meetings, policy revision,
decree, elections;
Meeting could provide false hope to an adversary or to one's own
constituency;
Meeting could increase the visibility of the dispute;
Negotiating could intensify the dispute;
Parties lack confidence in the process;
There is a lack of jurisdictional authority;
Authoritative powers are unavailable or reluctant to meet;
Meeting is too time-consuming;
Parties need additional time to prepare;
Parties want to avoid locking themselves into a position; there is still
time to escalate demands and to intensify conflict to their advantage.

ADVANTAGES OF NEGOTIATION

A jury is not involved. Juries are unpredictable and often amplify or decrease damage
awards purely according to whether they like the parties. Juries have awarded claimants
damages that are well above what they would have received through alternative dispute

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resolution; and they have also done the opposite. Basically, avoiding juries means that
both parties are likely to get reasonable damages if damages are due.

Expenses are kept down. Attorneys and witnesses are expensive, meaning litigating a
case can easily run up obscene bills. Alternative dispute resolution offers the benefit of
getting the issue resolved quicker than would occur at trial and that means less money
spent for both sides.

Negotiation is speedy. Trials are lengthy, without exception. In many jurisdictions it could
take years before one even gets to begin arguing ones case before a judge, much less get
a verdict. For many routine business disputes, litigation procedures under the rules of
court are simply too cumbersome and slow to produce cost-effective results. The
discovery process is not based on the notion of obtaining the most relevant information at
a reasonable cost, but provides for the discovery of all information likely to lead to the
discovery of admissible evidence. Although courts will restrict discovery that is
burdensome to a party, often they do so long after any balance between cost and benefit
has been lost.

Various studies on negotiations, including an important study by Roger Fisher and

William Ury of the Harvard Negotiation Project, confirm that the later in the process
settlement is reached, the higher the cost. As the parties dig in their heels, attempt to
justify, prove, and bolster their respective positions, they consume more and more time
and expense preparing for trial, and the cost of settlement invariably rises. Resolution
through negotiation frequently enables the parties to eliminate or minimize the expenses
of discovery and motion practice -- the greatest expenses in litigation -- and reach an
acceptable resolution earlier in the process.

The results can be confidential. The parties agree that information disclosed during
negotiations cannot be used in later proceedings. The final outcome can also be made
private if the parties so wish. Courts do not offer this, trains are open to the public, which
means everyone will know your business. This is the main reason why so many high
profile cases have out of court settlements..

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.

DISADVANTAGES OF NEGOTIATION

The basic disadvantages of negotiation are:

Unequal Bargaining Power - In certain situations one side is able to dominate the other,
for example, employment and divorce cases, making the courts a better option for a weak
party.

Lack of Legal Expertise - Where a dispute involves difficult legal points a negotiator is
unlikely to have the same legal expertise and knowledge as a judge.

A Court action may still be required - If negotiating fails to resolve the parties' dispute,
court action may still be needed. This adds to the costs and delays compared to taking a
dispute direct to the courts in the first place.

In cases of intractable conflict, parties often will not recognize each other, talk with each
other, or commit themselves to the process of negotiation. They may even feel
committed, as a matter of principle, to not negotiate with an adversary. In such cases,
getting parties to participate in negotiations is a very challenging process. In addition,
both parties must be ready to negotiate if the process is to succeed. If efforts to negotiate
are initiated too early, before both sides are ready, they are likely to fail. Then the conflict
may not be open to negotiation again for a long time.4

Before they will negotiate, parties must be aware of their alternatives to a negotiated
settlement. They must believe that a negotiated solution would be preferable to
4
Saunders, 59

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continuing the current situation, that a fair settlement can be reached, and that the balance
of forces permits such an agreement. Weaker parties must feel assured that they will not
be overpowered in a negotiation, and parties must trust that their needs and interests will
be fairly considered in the negotiation process.

If the parties believe that their ideal solution is not available and that foreseeable
settlement is better than the other available alternatives, the parties have a "Zone of
Possible Agreement" (ZOPA). This means that a potential agreement exists that would
benefit both sides more than their alternatives do. However, it may take some time to
determine whether a ZOPA exists. The parties must first explore their various interests,
options, and alternatives. If the disputants can identify their ZOPA, there is a good chance
that they will come to an agreement. But if they cannot, negotiation is very unlikely to
succeed. In addition, each side must believe that the other side is willing to compromise.
If the parties regard each other with suspicion and mistrust, they may conclude that the
other side is not committed to the negotiation process and may withdraw.5

When there is little trust between the negotiators, making concessions is not easy. First,
there is the dilemma of honesty.6 On one hand, telling the other party everything about
your situation may give that person an opportunity to take advantage of you. However,
not telling the other person anything may lead to a stalemate. The dilemma of
trust concerns how much you should believe of what the other party tells you. If you
believe everything this person says, then he or she could take advantage of you. But if
you believe nothing this other person says, then reaching an agreement will be very
difficult. The search for an optimal solution is greatly aided if parties trust each other and
believe that they are being treated honestly and fairly.7

In many cases, the negotiators' relationship becomes entangled with the substantive issues
under discussion.8 Any misunderstanding that arises between them will reinforce
their prejudices and arouse their emotions. When conflict escalates, negotiations may take
on an atmosphere of anger, frustration, distrust, and hostility. If parties believe that the

5
Saunders, 67
6
Lewicki, Saunders and Minton, 12
7
Ibid, 13
8
Fisher and Ury, 20

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fulfillment of their basic needs is threatened, they may begin to blame each other and
may break off communication. As the issue becomes more personalized, perceived
differences are magnified and cooperation becomes unlikely. If each side gets locked into
its initial position and attempts to force the other side to comply with various demands,
this hostility may prevent negotiators from reaching agreement or making headway
toward a settlement.9 In addition, parties may maintain their commitment to a course of
action even when that commitment constitutes irrational behavior on their part. Once they
have adopted a confrontational approach, negotiators may seek confirming evidence for
that choice and ignore contradictory evidence.10 In an effort to save face, they may refuse
to go back on previous commitments or to revise their position.

If the "right" people are not involved in negotiations, the process is not likely to succeed.
First, all of the interested and affected parties must be represented. Second, negotiators
must truly represent and have the trust of those they are representing. If a party is left out
of the process, they may become angry and argue that their interests have not been taken
into account. Agreements can be successfully implemented only if the relevant parties
and interests have been represented in the negotiations, in part because parties who
participate in the negotiation process have a greater stake in the outcome.11 Similarly, if
constituents do not recognize a negotiator as their legitimate representative, they may try
to block implementation of the agreement. Negotiators must therefore be sure to consult
with their constituents and to ensure that they adequately deal with constituents' concerns.

9
Wertheim [available at: http://web.cba.neu.edu/~ewertheim/interper/negot3.htm]
10
Lewicki, Saunders and Minton, 157
11
Rubin, 8

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 ONLINE DISPUTE RESOLUTION

Online dispute resolution (ODR) is a branch of dispute resolution which uses

technology to facilitate the resolution of disputes between parties. In this respect it is
often seen as being the online equivalent of alternative dispute resolution (ADR).
However, ODR can also augment these traditional means of resolving disputes by
applying innovative techniques and online technologies to the process.

AUTOMATED NEGOTIATION

Automated Negotiation relates to those methods in which the technology takes over
(aspects of) a negotiation. Most of the ODR services in this area are so-called 'blind-
bidding' services. This is a negotiation process designed to determine economic
settlements for claims in which liability is not challenged. The blind bidding service may
be thought of as a type of auction mechanism where some or all information about the
players' bids is hidden. There are two forms of automated negotiation, Double Blind
Bidding, which is a method for single monetary issues between two parties, and Visual
Blind Bidding, which can be applied to negotiations with any number of parties and
issues.

DOUBLE BLIND BIDDING

Double Blind Bidding is a negotiation method for two parties where the offer and
demand are kept hidden during the negotiation. It commences when one party invites the
other to negotiate the amount of money in dispute. If the other party agrees, they start a
blind bidding process whereby both parties make secret offers or bids, which will only be
disclosed if both offers match certain standards. They can usually submit up to three
offers and if the bids of both parties come within a predetermined range or a given
amount of money, then the technology automatically settles the dispute in the mid-point
of the two offers.

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 VISUAL BLIND BIDDING

The primary distinction of Visual Blind Bidding is in what is kept hidden from the other
parties. In traditional Double Blind Bidding, the offers and demands are kept hidden,
whereas with Visual Blind Bidding what is kept hidden is what each party is willing to
accept.

Visual Blind Bidding commences when all parties agree to negotiate with one another.
They start the process by exchanging visible optimistic proposals, which define
bargaining ranges. The system then generates suggestions that fall within the bargaining
ranges. Parties may continue to exchange visible proposals or contribute their own
suggestions to the mix. Suggestions contributed by the parties remain anonymous.

A resolution is declared by the system at the end of a negotiating session if all parties
have accepted one or more packages (of one or more proposed decision values) at the end
of that session. Which of those packages becomes the agreement may be determined by
an algorithm that rewards the party that moves soonest into the Zone of Agreement.

Automated negotiation has proven to be particularly successful with insurance

compensations and commercial activities. It is also a valuable tool for lawyers because
they too can use it without revealing what theyre willing to accept (unless an agreement
is reached) and more importantly, without waiving their right to access the court, in the
case that the negotiation is unsuccessful.

ASSISTED NEGOTIATION

In Assisted Negotiation the technology assists the negotiation process between the
parties. The technology has a similar role as the mediator in mediation. The role of the
technology may be to provide a certain process and/or to provide the parties with specific
(evaluative) advice.

SQUARE TRADE

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The leading ODR provider for consumer mediation was until recently SquareTrade. It
was contracted by a number of market places, the largest of which was eBay.
SquareTrade did not handle disputes between users and eBay, only between sellers and
buyers on eBay. SquareTrade offered two levels of dispute resolution: assisted
negotiation and mediation.

The advantage of dealing with large number of disputes is that the same issues arise many
times, thus it is possible to divide the disputes into different sections. The SquareTrade
process started when a buyer or a seller filed a complaint. To do so, the claimant was
asked to fill out a web-based standard claim form that identified the type of dispute and
presented a list of common solutions, from which the claimant selected the ones that he
agreed to. The other party was contacted by email where he was informed about the
SquareTrade process, and asked whether he wished to participate. The other party filed
the response, selecting the resolutions. If both parties agreed on the same resolution, the
dispute was resolved. When an agreement could not be reached, parties were put into a
negotiation environment. A web interface was used to shape communications into a
constructive and polite negotiation.

Online dispute resolution (ODR) in India is in its infancy stage and it is gaining
prominence day by day. With the enactment of Information Technology Act, 2000 in
India, e-commerce and e-governance have been given a formal and legal recognition in
India. Even the traditional arbitration law of India has been reformulated and now India
has Arbitration and Conciliation Act, 1996 in place that is satisfying the harmonised
standards of UNCITRAL Model. Even the Code of Civil Procedure, 1908 has been
amended and section 89 has been introduced to provide methods of alternative dispute
resolution (ADR) in India.

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 ADVANTAGES

Traditionally, lawyers have tended to adopt an adversarial approach that reflects the
litigation model. In this view, resources are limited and must be divided and what one
party gains the other must lose. Information about ones real preferences must be
jealously guarded. If a negotiation fails, the court will declare one party a winner,
awarding money or an injunction. And although a court generally declares one party a
winner, this party may not get everything she requested. Successful negotiations represent
a compromise of each partys position on an ordinary scale of numerical (usually
monetary) value.12

Negotiation processes can be classified as distributive or integrative.

In distributive approaches, the problems are seen as zero sum and resources are
imagined as fixed: divide the pie. In integrative approaches, problems are seen as
having more potential solutions than are immediately obvious and the goal is to expand
the pie before dividing it. Parties attempt to accommodate as many interests of each of
the parties as possible, leading to the so-called win-win or all gain approach.13

In developing principled negotiation, the ADR process should separate the people from
the problem, focus on interests not positions and generate a range of options before
deciding on an outcome. Fundamental to the concept of principled negotiation is the
notion of know your best alternative to a negotiated agreement (BATNA). The reason you
negotiate with someone is to produce better results than would otherwise occur. If you are
unaware of what results you could obtain if the negotiations are unsuccessful, you run the
risk of: (a) Entering into an agreement that you would be better off rejecting; or (b)
Rejecting an agreement you would be better off entering into.14

The result of the negotiation should be based on some objective standard. The model
enhances the number of interests that can be considered, thereby avoiding the need to
12
Meadow 2003
13
Walton and McKersie 1965
14
Fisher et al (1992)

16
divide single, opposing demands.15 The problem-solving model emphasizes diverse
categories of human needs - legal, economic, social, psychological, religious, moral, and
political.16

Numerous researchers describe the potential advantages of online negotiation including

speed, convenience, ease of access, efficiency, cost savings, easy storage of digital data
and easily crossed international borders. Each party may dictate when and where to
respond to an online dispute resolution procedure. One advantage is pre-communication
and re-framing through which a facilitator can assist the parties in framing the dispute in
ways that enhance the other party to comprehend better what is being said. Such re-
framing, when done in front of both parties is much more difficult to achieve.

The time-lag in online dispute resolution also allows participants to absorb the materials
and documents and reflect on a position. A spatial and temporal separation also permits
`distance mediation' where hostility and rage is reduced and forces each of the parties to
focus on the substantive issues at hand. The archive and record keeping component of
digital communication is well suited to the drafting of documents and asynchronous
reflection on positions. Because the dispute resolution is 'stored' it is also possible to
introduce elements of knowledge management and training/mentoring into an online
setting so that the process is constantly improved. For example, because everything is
recorded, it is possible for reflective practice to occur and language that is particularly
effective to be re-used. This same feature permits a mentor to review the dispute
resolution process in an unobtrusive way and give feedback. Multi-party disputes may
benefit from the archiving and asynchronous nature of the medium to build an ongoing
consensus in settings where the issues are complex and parties are numerous.

ODR gives a party a greater degree control of the proceedings that is usually absent in a
face-to-face situation. This enhanced reflection/consideration time allows for honest
communication of thoughts and feelings. The mediator or dispute resolution facilitator
has the opportunity to redress any power imbalance and to control the emotional

15
Meadow 2001
16
Astor and Chinkin (2002)

17
temperature. Moreover, in domestic conflicts, for example, the trauma of personal
involvement is much reduced. The communication media also is useful for keeping
records given that a log of the proceedings is almost always available. Overall, therefore
it is cost effective in time, space and resources. The blind negotiation tools where parties
state their positions and a computer matches the areas of agreement can be useful where
the dispute is one-dimensional and a distributed outcome is the only one possible.

DISADVANTAGES

Negotiation and dispute resolution is fundamentally a "people" oriented task. The use of
E-DR may miss out on non-verbal clues: body language, touch, smell. It is not as holistic
or interactive as face-to-face. The nuances of expression, timing, communication,
framing and persuasion often make the difference between success and failure in
bargaining and mediation17. Some of these shortcomings may be overcome through the
use of high bandwidth, but this is not yet readily available. Moreover, the withdrawal of
the parties is too easy.

While the technology has given a high degree of flexibility of delivery, there are practical
problems of process. Legal representation and input, for example, are difficult to build in
during the entire mediation or other e-DR process. Moreover, in terms of confidentiality
and privacy issues there is no assurance that the material will not be forwarded to other
interested parties or copied without authorisation. These matters involve policy and
regulatory issues.

The lack of physical cues, including those of race and gender, pose great challenges to
ODR. To date however, the environment remains uncertain there being no certain fixed or
familiar boundaries with which to meet a person's emotional needs. Also this lack of
personal relationship diminishes the act of cooperative problem-solving where the
17
Perritt, HH (1996) `Electronic dispute resolution' NCAIR Conference

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mediator or facilitator traditionally builds trust through agenda setting, discussion,
enforcing the rules and reacts positively by observing body language and tone and
inflection of voice.

Firstly, a lack of face-to-face interaction means that parties and the neutral cannot process
non-verbal cues or behavior. Since every bit of communication needs to be typed out by
the neutral and the parties, the communication becomes much more deliberate and
calculated. Some have argued that videoconferencing will adequately address this
concern. However, videoconferencing may actually complicate nonverbal cues because
even with this technology, it is not possible to make eye contact properly as the camera
and the display screen cannot be in the same spot.18

Another cultural issue arises through the extensive use of text in communication. In fact,
email relies entirely on written language, as does IM or discussion environments.
Language may divide communicators into the in group of those who understand and the
out group of those who do not. To the extent that language differences increase,
mistrust, concealment, and inflexibility also increase, as does the risk of communication
breakdown.19 Given that text is the only means of communication, as we have seen
earlier, while a low-context person will have no difficulty articulating in great detail her
point of view or demands, a party from a high-context culture is likely to be at a
disadvantage because of the lack of ease of using text.

Yet another area of potential impediment in ODR is how the parties and the mediator
process time. Where one party is monochronic and the other is polychronic, the mediator
will be faced the issue of how to effectively manage issues of time. It has been suggested
that online mediation permits the mediator to create an environment that mediates
between these two orientations. For example, email allows for multiple topics to be
discussed simultaneously, yet threading the topics focuses each thread on only one issue.

18
Jaron Laner, Virtually There, Scientific American, April 2001, at 66
19
Llewellyn Joseph Gibbons, Robin M. Kennedy & Jon Michael Gibbs, Cyber-Mediation: Computer-
Mediated Communications, Medium Massaging The Message, 32 N.M.L. Rev. 27 at 32

19
While this may be so, the issue becomes more complicated when parties from different
time orientations are made to engage in dispute resolution across time-zones.

20
 CONCLUSION

Discussion is a virtue of democratic life and a symbol of civilian attitude. The culture of
discussion or intellectual discourse is a virtue of a developed society and encompasses
methods of negotiation for resolution of conflicts.

Disputes can be resolved at three levels, namely power level, rights level and interests
level. The power level reflects the might is right phenomenon. At the rights level, the
party who has law and social standards on his side wins. At the interests level, parties
negotiate their way to an agreed settlement.

Therefore, in my opinion, the alternative dispute resolution reflected by the interests level
viz. negotiation, is less costly and more beneficial than a rights or a power approach.

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 BIBLIOGRAPHY

PRIMARY SOURCES

Alternative Dispute Resolution: Mediation and Negotiation, Dr. Madhibhushi

Sridhar
Redford and Hunter On International Arbitration
International & Commercial Arbitration: Cases, Materials and Notes, Micheal
Reismen
International Arbitration and Mediation: A Practical Guide, Michael Mclwrath

SECONDARY SOURCES

www.legallyindia.com
www.wikipedia.com
www.worldadrblogs.com

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