This article has been written by Geetika Kaushik, pursuing a Diploma in International Contract Negotiation, Drafting and Enforcement from LawSikho and edited by Shashwat Kaushik.

It has been published by Rachit Garg.


Alternative dispute resolution (ADR), also known as external dispute resolution (EDR), is basically a method to resolve a dispute outside the court, i.e., without any interruption from the court. At this point in time, when there are many cases pending before the court and there are not sufficient judges and time to resolve them all in court, ADR gained widespread acceptance to resolve disputes. There are many methods of ADR, like mediation, arbitration, conciliation and many more.

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Negotiation is also a prominent method of ADR. When two or more parties have different interests and want to come to a mutually acceptable conclusion, they opt for negotiation as an ADR method.

What is negotiation

Negotiation is derived from the Latin word ‘negotiari’ which means ‘to carry on business, do business’. Negotiation is very prominent among Indians; we get to see it from the street while negotiating the price of anything with the big multinational companies while negotiating deals with them. Negotiation is defined as self-counseling between the parties to resolve the dispute. In negotiation, parties, with their own will, by discussing politely and patiently, try to come up with a solution that is acceptable to both parties regarding the issue.

Negotiation is a process of discussion and communication between two or more parties with the aim of reaching an agreement or resolving a dispute. It involves identifying common interests, exploring potential solutions, and finding compromises that satisfy all parties involved.

One of the key reasons why negotiation is important is its ability to preserve relationships. Unlike litigation, which often results in winners and losers, negotiation allows people to work together towards a resolution that meets everyone’s needs. This collaborative approach fosters understanding, builds trust, and maintains positive connections for future interactions.

Moreover, negotiation provides a cost-effective alternative to legal proceedings. Litigation can be time-consuming, expensive, and emotionally draining for all parties involved. By engaging in negotiations instead, individuals can save valuable time and resources while still achieving their desired outcomes.

Additionally, negotiation promotes creative problem-solving. It encourages participants to think outside the box and explore innovative solutions that may not have been considered initially. This flexibility allows for unique agreements tailored specifically to the needs of those involved.

Negotiation empowers individuals by giving them control over the outcome of their disputes. Rather than relying on judges or arbitrators to make decisions on their behalf, negotiators have the opportunity to actively shape the terms of their agreements.

Characteristics of negotiation

Characteristics of negotiation are:

  • Voluntary: This is one of the important characteristics of negotiation, i.e., it should be completely voluntary, and no party can be forced to negotiate with the other party. Whichever party wants to negotiate will send a letter to the other party, asking to negotiate. If the other party agrees to negotiate without any force or threat, only then can both parties take further steps to negotiate.
  • Bilateral/multilateral: Negotiation can be conducted between two or more parties, as many as may be required.
  • Non adjudicative: Negotiation is a process that includes only parties to the issue to get a solution amicably and no third neutral party takes part in the negotiation process. 
  • Informal: unlike other alternative dispute resolutions, negotiation is an informal method. There are no rules defined for negotiation; parties to the issue make their own rules with mutual discussion and acceptance.
  • Flexible: Negotiation totally depends on the choice of parties, i.e., where it will take place, when it will take place, what will be the topic of negotiation, which approach they will take, etc.

Advantages of negotiation

The advantages of negotiation are:

  • Negotiation is a flexible process, i.e., it depends on the discretion of the parties as to whether they want to opt for negotiation to resolve the issue or not; if yes, where it should be conducted; in how many meetings the negotiation should be done; and there are no specified rules for negotiation; parties can conduct it in their own way.
  • Unlike other issue resolving processes (e.g., litigation, arbitration, etc.), it is more likely to come to a conclusion that can be favourable for both parties.
  • It is a voluntary process and can only be opted for with the consent of each party. It is the discretion of the parties whether they want to negotiate or not and the decision of any party shouldn’t be forced or manipulated by the other party.
  • Negotiation involves only parties to the issue and there is no interference from any third party for dispute resolution, which is a great advantage for the parties who don’t want to involve any outsiders in the issue.
  • Negotiation is the process that only binds the parties to an issue, unlike other processes (e.g., litigation). For example, in litigation, if a decision is passed by the court, then it will be taken into consideration or, as a   in further similar cases, but in negotiation, there’s nothing like that; if somebody gets into a similar dispute with someone else, then it is not necessary to take their decision into consideration i.e., they can come to a different conclusion.
  • since in negotiations, disputes are resolved amicably, which enhances the relationship between the parties for future interactions.
  • As negotiation is a voluntary process, there will be no court fees or other expenses, which makes it a less expensive dispute resolution process compared to others.
  • Evidently, negotiation is a faster process to resolve any dispute, as there is no interruption by the court or any other third party to keep giving dates for the hearings to resolve the issue.
  • Negotiation is always a good option for any sensitive issue because this is a very private resolution process that only includes the parties to the dispute.

Disadvantages of negotiation

The disadvantages of negotiation are:

  • If the negotiation is conducted between the unequal parties, then there are huge chances that the stronger party will get more benefits as compared to the weaker party, which is morally wrong.
  • Where there are benefits to the absence of the third party, there are also drawbacks. Due to the absence of third party, there are chances in negotiation that the parties will not come to any agreement and all the time and money incurred by the parties will be a waste.
  • If one of the parties doesn’t know about their rights, then due to the absence of this neutral party, there are huge chances that the other party can take advantage of that party.
  • If any party changes its mind, backs off after initiating negotiation, and withdraws itself from the proceedings of negotiation, then the amount of time and money invested in the negotiation will become a waste.

Steps for negotiation

Steps for negotiation are:

  • Preparation: Before becoming a part of the negotiation process, parties need to prepare themselves for what can be the Best Alternative to a Negotiated Agreement (BATNA)  and what can be the Worst Alternative to a Negotiated Agreement (WATNA). They also need to decide whether the other party is willing to resolve the dispute or not.
  • Discussion: Before conducting negotiation, setting ground rules for the negotiation is crucial that what will be the venue of the negotiation, timings, what will be the approach they want to go with etc.
  • Clarification of goals: Parties to the negotiation should have to clarify their goals and viewpoints and resolve any misunderstandings.
  • Bargaining and problem solving: this is the most important part of the negotiation process. Parties to the negotiation share their points of view, adjust according to the situation and come to a conclusion that is acceptable to all parties.
  • Agreement: after coming to a conclusion, an agreement is made according to the decided solution of the dispute  and then signed by the parties to the negotiations.
  • Implementation: After signing the agreement, parties need to implement and operate according to the agreement.
  • Prepare alternatives: It’s important to consider alternative options if an agreement cannot be reached through traditional negotiations. Brainstorm potential alternatives before entering into negotiations so that you have backup plans ready if needed

Types of negotiation

Types of negotiations are:

  • Distributive negotiation: In this type of negotiation, parties negotiate over one topic, which  creates a win-lose situation for the parties due to which one party will get the advantage.
  • Integrative negotiation: In this, parties negotiate over many topics, which creates chances to get a win-win situation for the parties and mutual gain.
  • Team negotiation: In this type of negotiation, the parties negotiate in teams.
  • Multiparty negotiation: In whichever negotiation there are more than two parties, that negotiation becomes a multiparty negotiation.


Alternative dispute resolution (ADR) includes many methods to resolve disputes; one of them is negotiation. When parties to a dispute want to resolve it amicably, they opt for negotiation. In negotiation, there are high chances to reach a conclusion that is good for both parties and get satisfaction with the solution. But sometimes, due to the absence of the third neutral party, there are chances that either party to the negotiation may not get a solution or one party will wrongly use its position or any party can back off at any time. Therefore, negotiation is a great method to resolve disputes, but there are some drawbacks to it.


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