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Differences Between Negotiation and Mediation from Indonesia Dispute Resolution Law Perspective

“In general, alternative dispute resolution options can be grouped into two, one which uses assistance of a 3rd party and one which doesn’t. Mediation belongs to the first group, while negotiation belongs to the later.”

It is commonly known that when two parties have a legal dispute, they could settle it in court. However, there exist several other dispute settlement options outside the court, or also known as Alternative Dispute Resolution (ADR). In Indonesia, ADR is mainly regulated under Law No. 30 of 1999 on Arbitration and Alternative Dispute Resolution (Arbitration and ADR Law). Aside from Arbitration process, Arbitration and ADR Law also acknowledge and stipulate ADR process in the form of i.e. consultation, negotiation, mediation, conciliation, and expert’s assessment.

Although none are explained deeply in the Arbitration and ADR Law, the mentioned form above can be described as follows:

a. Consultation

Consultation is a personal discussion between a party in dispute and the consultant. Much like the name, it emphasizes on a bilateral consultation, in where a client would ask for advices/suggestions on his/her dispute to a consultant, rather than including both Parties in dispute in trilateral discussion.

b. Negotiation

Negotiation is a settlement of dispute through discussion without any assistance from 3rd Party. The parties in dispute will try to solve the problem by themselves via discussion. Of course, this doesn’t limit the possibility of either party to use a consultant to consult the matter prior to the negotiation.

c. Mediation

Unlike consultation and negotiation, mediation is a trilateral discussion which involves the parties in dispute and a neutral and qualified 3rd party as the mediator. This option is usually preferred when both parties requires an assistance of an intermediary party to settle the dispute.

d. Conciliation

Similar to mediation, conciliation is also a trilateral discussion between the parties in dispute and a neutral 3rd party as the conciliator. The difference in conciliation is that the conciliator plays an active part in the discussion, and not just to mediate the parties. In the event the parties couldn’t reach a settlement, the conciliator is also allowed to give a suggestion. However, the output is a recommendation as a conciliator is not entitled to make a decision.

e. Expert’s Assessment

Similar to consultation, expert’s assessment, simply put is to ask for expert’s opinion to reach a settlement in a dispute. An expert who truly understand the problem is required in order to acquire a technical advice in order to solve the problem.

Negotiation and Mediation

In general, the above-mentioned alternative dispute resolution options can be grouped into two, one which uses assistance of a 3rd party and one which doesn’t. Mediation belongs to the first group, while negotiation belongs to the later. Even from legal perspective, negotiation has quite a literal meaning. Simply put, it is a discussion between 2 (two) parties, which usually but not necessarily have to be in dispute. Negotiation is often used when a party requires an assistance of another party to solve a certain problem they experience. It is a feasible option when both parties are willing to work together to find a solution, hence no mediator is required. On the other hand, mediation is an option more suitable when both parties can’t see eye to eye, hence requires a neutral party to mediate them.

As for the result, both negotiation and mediation have quite a different output. As negotiation is considered more as bilateral discussion between 2 (two) parties, the output is not automatically binding from legal perspective. They could however, make the output to have binding legal power by turning it into a legal product, such as settlement agreement between the Parties. On the other hand, mediation’s output is more formal. The output of a mediation is a settlement agreement which registered to a district court in 30 (thirty) days after the signing and if the settlement agreement complies with the prevailing law, doesn’t harm any 3rd party, and is enforceable, it will be converted into a deed of settlement which has a legal binding power.

Author: Benedictus Giovanni / Arif Gaffar

Gaffar & Co., Indonesian Boutique Law Firm which focusing on Commercial Law Areas include Commercial Dispute Resolution.

For further queries and information, contact us:
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