Certified Human Resource Professional (CHRP) Practice Exam

What is the term for parties no longer being able to negotiate settlements without third-party assistance because of the frequent use of arbitration?

1. Distributive settlement.

2. Dependency effect.

3. Chilling effect.

4. Deferred settlement.

The correct answer is: Chilling effect.

The term that describes the situation where parties cannot negotiate settlements without third-party assistance due to the frequent use of arbitration is known as the "chilling effect." This concept refers to the discouragement of parties from engaging in negotiations or reaching out to each other, often because they anticipate that any disputes will be resolved through arbitration rather than direct discussion. As a result, the parties may become reliant on external arbiters, which can stifle open communication and negotiation. In contexts such as labor relations or contract negotiations, the chilling effect signifies how the expectation of arbitration may lead to a breakdown in informal negotiation processes. It emphasizes the impact of the arbitration environment on the willingness of parties to engage with one another. In contrast, other terms like "distributive settlement" refer to negotiation techniques utilized in resolving conflicts over a fixed resource, while "dependency effect" is not a widely recognized term in this context. "Deferred settlement" generally involves postponing the resolution of a disagreement but does not encapsulate the reliance on arbitration and third-party involvement as the chilling effect does. Thus, "chilling effect" is the most appropriate term to describe this phenomenon.