Cyprus: Negotiation? Mediation? Arbitration? Find Your Preferred Alternative Dispute Resolution Practice Choice!

Negotiation is the fundamental key for the resolution of disputes, both from the point of view of the individual representatives of each party and from the viewpoint of the ADR practitioner who helps the parties in reaching a commonly agreed solution to their dispute. Each particular way of negotiation is governed by objective principals considered as theories but also by subjective matters, relating to the individual negotiator. As a result, given the differences between individual personalities, skills and approaches vary considerably. Some people might adopt a reasonable and principled approached, others might consider negotiation as a sort of competition where they have to be the winner but most of the time negotiation involves a combination of all this.

There have been found different ways of approaching, yet the most important distinction lies between the "problem-solving" approach and the "competitive" approach. The problem-solving approach proved to be very helpful to ADR practice which seeks effective consensual approaches. According to the principles proposed by Roger Fisher and William Ury this should be performed without taking or defending position, but rather focusing on parties' respective interests therefore establishing objective and fair criteria for a resolution and giving as many options as possible, particularly those creating mutual benefit. On the other hand, the competitive approach, places the negotiator in a sort of contest, where he must be tough, powerful and skilful, because any gesture of goodwill could be considered as a sign of weakness. The risk of adopting such a strategy is revealed by Murray, Rau and Sherman's "Process of Dispute Resolution: The Role of Lawyers" to consist in creating: tension, frustration, mistrust, anger, distorted communication, resulting finally in the breakdown of the negotiations and consequent delays, stress and additional costs. Balancing between the competitive and the problem-solving approaches, they offer a new method of analysis in order to establish the optimum settlement strategy to be adopted in any particular case.

A negotiator should understand the realities of power, culture and values and be guided by these in formulating a strategy for the conduct of the negotiations. The issue of good-faith may require, also, specific consideration. The decision of Walford v. Mile, in which the concept of good faith was described as "inherently repugnant" to the adversarial positions of parties in negotiation, was made in the adversarial context. However, most consensual ADR process would be enhanced by an obligation on participants to negotiate in good faith. This could not imply a duty on parties to act against their best interests, but rather a duty to conduct negotiations in a proper and constructive manner.

In order to achieve the best possible resolution, parties have the option of introducing the third party to help and facilitate communication between them, in other words they have the options of arbitration and mediation. Both systems are consensual, resting on agreement between the parties. "Arbitration, in English law, might be defined as a private mechanism for the dispute resolution which takes place in private pursuant to an agreement between two or more parties, under which the parties agree to be bound by the decision which is to be given by the arbitrator, according to law, after a fair hearing, such decision being enforceable at law."1 Mediation differs from arbitration in that the role of the neutral third party in mediation is to assist the parties with their negotiation, and empower the parties to make their own decision. The mediator has no power or authority other than that given expressly or implicitly, by the parties. If any party decides to withdraw power and authority from the mediator, that ends the mediation. Arbitral procedures are often said to have the advantage of the courts informality, but nonetheless they are constrained by the rules of natural justice. Yet the rule of natural justice would not help a mediator who must be free to see the parties together, or separately, with the utmost flexibility as to what is disclosed from one party to other.

Some parties might like to entrust their mediator with the duty of making a binding determination, especially if during the mediation the parties have both come to trust the mediator. In the med-arb process the decision to move to an arbitration mode, if mediation is unsuccessful, is one to which the parties commit themselves in advance, in order to reach a resolution and avoid wasting time or cost in reacquainting a new neutral with the facts and issues of the case. But how exactly the med-arb process will affect the mediator's abilities to function effectively in either mode, as a mediator or as an arbitrator? If the parties know that the mediator is to become an adjudicator if the case does not settle, this may well inhibit the effective negotiation and change the whole dynamic of the mediation process. In this concern, alternative forms of med-arb have been formulated which accept the principle of following of unsuccessful mediation with arbitration, but not necessarily using the same person as mediator and arbitrator, or using the same person but just as an advisory arbitrator who would furnish a non-binding opinion for the guidance of the parties. This process seems to produce highly satisfactory outcomes, with cost and time savings. Med-arb has largely been used in the United States in relation with the employment issues and construction industry, yet the structural shortcomings at the basic level make it a very worrying process to recommend or use.

Mediation practice tends to vary in different fields of activity, each one with its own tradition, culture and way of dealing with conflicts and disputes. Regarding arbitration, according to the opinion expressed by Mustill and Boyd "any dispute or claim concerning legal rights which can be subject of an enforceable award, is capable of being settled by arbitration."2 The growth of commercial arbitration has provoked rapid development towards the harmonization of the law and particularly the practice of international arbitration but also it made possible the achieving of great advantages regarding cost and time. Arbitration is wide spread in maritime and commodity contracts3, in construction industry, the international oil and gas industry and in the United States, use of arbitration in the commercial disputes has expanded into the securities industry as well.

As a closing remark, ADR has also extended into information technology, the Internet and Cyberspace. With the rapid growth of this technology, experimental dispute resolution schemes have been set up, and established organizations have adapted their processes into these fields. This shall be dealt with in a separate article.


1. "Arbitration Law and Practice" P.M.B. Rowland, 1988, p. 1.

2. Mustil & Boyd, The Law and Practice of Commercial Arbitration in England, 1989, p. 149

3. A central theme of much international arbitration in recent years and one of increasing importance is the capacity to fill the gaps and to adapt contracts in case of hardship or changing circumstances, which is of vital importance for long-term contracts.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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