ACCA Applied Skills · Corporate and Business Law (Global) · Alternative dispute resolution mechanisms
Marlow Ltd and Tevane Inc. have a supply dispute. They agree to appoint a neutral person who will help them talk and reach their own settlement, but the neutral person will not impose any decision. Which ADR mechanism are they using?
They are using mediation. A mediator is a neutral person who helps the parties negotiate and reach their own settlement, but cannot impose a decision. This differs from arbitration, expert determination and litigation, where a third party or court decides the outcome.
- AArbitration
- BMediationCorrect
- CLitigation
- DExpert determination
Explanation
In mediation a neutral third party facilitates negotiation, but the parties keep control and reach their own agreement. The mediator has no power to impose a decision. Arbitration and expert determination both involve a third party giving a decision, and litigation is court-based.
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