ACCA Applied Skills · Corporate and Business Law (Global) · Alternative dispute resolution mechanisms
Two companies, one in Brazil and one in Germany, have a dispute over late delivery of goods. Their directors meet directly, without any third party, to try to reach a settlement. Which description best fits this process?
This is negotiation. The parties deal with each other directly and try to settle the dispute themselves, with no neutral person involved. Mediation would need an independent third party to help them, and arbitration would involve a third party imposing a binding decision.
- ANegotiationCorrect
- BMediation
- CArbitration
Explanation
Negotiation is a process in which the parties themselves discuss the dispute and try to reach agreement, with no neutral third party. Mediation requires an independent mediator, and arbitration involves an arbitrator who gives a binding decision.
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