Most states invoke some form of third-party dispute resolution to settle contract disputes that occur in the public sector. Explain the main dispute resolution options available to state lawmakers and discuss the degree of control both the third party neutral and the parties themselves have over the process. (10 minutes)

Question

What will be an ideal response?

Answer 1

The three primary third-party dispute resolution mechanisms are mediation, arbitration, and fact-finding. In mediation, the neutral party is a mediator who tries to facilitate an agreement but lacks the power to force an agreement. A mediator has a high level of control over the negotiating process but not the outcome. In arbitration, the neutral third party is an arbitrator who forces an agreement on both parties by issuing a ruling that specifies the exact settlement terms. An arbitrator has a high level of control over the outcome but no involvement in the negotiating process. In fact-finding, the neutral third party is a fact finder who investigates the dispute and makes nonbinding recommendations for a settlement. A fact finder lacks control over both the process and the outcome.