Resolving contestations over resource management rights around coastal villages remains a focal challenge for co-management initiatives in remote coastal zones. Contemporary socio-political settings increasingly see local people having to negotiate between local long-standing (horizontal) relationships and new emerging (vertical) relationships which involve collaborations with outside actors who try to assume neutral mediating positions. Using two conflicts, this article examines the rise and fall of a participatory coastal resource management program in eastern Indonesia involving a fishing community engaged in a co-management arrangement with a conservation non-government organisation (NGO). An actor-oriented approach is applied to analyse how these conflicts shape, drive and direct collaborations across the community–NGO interface. We discuss how these impact the implementation of the conservation ethics and sustainable natural resource management practices, and show how particular mediating capacities of an NGO may overcome, and even build forth on, conflict in some contexts but fall short in others. We argue that local resource user groups and conservation teams operate according to strong local relationships that are entrenched in cultural–historical hierarchies of power. We moreover note that these local relationships significantly influence the extent of neutrality of external groups in their mediating, coordinating and technical advisory roles. The effectiveness of co-management partnerships hinges on the ability to balance actors’ mediating capacity with their local dependence for operation.