What is a key difference between negotiation and arbitration?

A key difference between negotiation and arbitration lies in the nature of the outcomes produced by each process. Arbitration typically results in a binding decision, meaning that the parties who agreed to arbitrate must adhere to the arbitrator's decision as though it were a court judgment. This binding aspect is foundational in arbitration, providing a sense of finality and enforceability, as the arbitrator's decision can be confirmed in court if necessary.

In contrast, negotiation does not inherently lead to a binding resolution. It is a collaborative discussion whereby parties aim to reach a mutual agreement voluntarily. The outcomes of negotiations are generally non-binding unless the parties formalize their agreement through a contract or similar document.

Understanding this distinction is crucial for legal practitioners because it influences how disputes are approached and resolved, and informs clients about the implications of their choices in resolving conflicts.