ACCA Applied Skills · Corporate and Business Law (Global) · Alternative dispute resolution mechanisms
Alpha Ltd and Beta Ltd have a dispute over a delivery contract. They appoint a neutral third party who helps them talk and explore a settlement but who has no power to impose a decision. Which method of dispute resolution is this?
This is mediation. A neutral third party facilitates negotiation and helps the parties reach their own settlement but has no power to impose a decision. Arbitration involves a binding award by an arbitrator, and litigation involves a court judgment.
- AArbitration
- BMediationCorrect
- CLitigation
Explanation
In mediation a neutral person facilitates discussion and helps the parties reach their own agreement, but cannot impose a solution. An arbitrator, by contrast, makes a decision (an award) that binds the parties. Litigation involves a court judgment.
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