Monday, 1 July 2013

[Dispute Resolution] Negotiation; Principled and Competitive types of negotiation

Successful negotiation


Gifford (1989) defines negotiation as a process in which the two parties attempt to reach a joint decision on matters of common concern in situations where  they are in actual or potential disagreement or conflict
Types of negotiation: Principled v. Competitive

There are two main types of negotiation: 1) competitive, positional negotiation and 2) integrative, principled negotiation. The first negotiation involves two or more hard negotiators who are psychologically against each other’s wills. They are less inclined to make concessions and provide substantially limited information and facts. Secondly, the principled negotiations involves two parties who are both willing to make concessions and mutually understand each other’s interests and differences in order to come to the best resolution. Whereas the first type of negotiators are believers of zero sum game, this principled type of negotiators believe in win-win solution.

Criticisms of the two types of negotiation

There is no best type of negotiation because it fundamentally depends on the nature of the dispute that arose between the parties. The competitive model is criticised because of its inability to effectively conclude an agreement since parties are more likely to offer high-standard terms rather than acceptable, reasonable terms. The ongoing dispute between hard negotiators may deteriorate the relationship and the relationship will be built on mistrust and ongoing hostility. Furthermore, the adverse consequences of hard negotiations are that there could be potential impasses in the process which produce cost-ineffective and time-consuming dispute resolution.

The principled and integrative approach is also not free from scholarly and judicial criticisms. The whole notion of principled approach is based on the assumption that there is a win-win solution. Furthermore, it ignores the reality of power imbalances and also the principle of positional bargaining.

Successful negotiation: negotiating in good faith?

A pre-condition for a successful negotiation is the parties’ willingness to negotiate in good faith. Hacock SDP in Re Australian Rail explained duty to negotiate in terms of the parties’ preparedness in considering seriously the offers and options made by the other party and to take into account of arguments. It appears that following this requirement, a negotiation involving competitive bargaining powers are exempt from being a successful negotiation. However, it must be acknowledged that a successful negotiation depends not on the two parties’ perspective but in practice, the eye of the winning team. Despite this limitation, the courts have occasionally recognised such duty and the most relevant case is United Rail Group Services.

Barriers to successful negotiation: Bad faith, competitive negotiation

The biggest barrier obviously involves a party’s unwillingness to negotiate in good faith. The court in Western Australia Taylor  identified some indicia of bad faith including stalling negotiations, communication failures, unexplained delays, failure to respond, adopting non-negotiable negotiations, refusal to sign an agreement etc. Again, it is a failure to do what a reasonable would do in the position.

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