In the ADR hierarchy, negotiation describes?

• A. It is the first stage of resolving a dispute; only involved the parties; low in cost
• B. It is the final stage; involves a third party; high cost
• C. It is a court process; mandatory
• D. It always results in a binding decision

Answer: (A)

Negotiation is the first step in resolving a dispute, where the parties talk directly to each other to try to reach a settlement. Because no third party is involved, it tends to be informal, flexible, and low cost compared with processes that involve mediators, arbitrators, or courts. This is why it best fits the description: it starts the ADR process, only the parties are involved, and the costs are kept down. It isn’t a court procedure and isn’t mandatory in many systems, and while a successful negotiation can produce a binding settlement, there isn’t a guarantee that a binding decision will result unless the parties formalize an agreement.