Negotiators sometimes begin to rely too heavily on arbitration as a means of settling their contract disputes, rather than working hard to come to their own agreement. This is known as the chilling effect.

Chilling Effect

A chilling effect occurs when the exercise of rights or freedoms is discouraged by the threat of legal sanction or other negative consequences, leading to self-censorship or avoidance of certain actions.

Arbitration

A method of dispute resolution where an impartial third party, the arbitrator, makes a binding decision to resolve a dispute outside of court.

Contract Disputes

Conflicts that arise over the interpretation, fulfillment, or breach of a contract between two or more parties.