This article is written by Priyanka Kumar. This article explores the principle differences between mediation and conciliation by making comparisons on various grounds. With the increasing popularity of both these procedures, it is important to understand the distinction between the two, to select the right option accordingly.
It has been published by Rachit Garg.
Table of Contents
Introduction
The mechanism of Alternate Dispute Resolution (ADR) stands on the three pillars of arbitration, mediation and conciliation. While arbitration is an understood concept, wherein parties appoint a third neutral party as arbitrator, who adjudicates upon the disputes and delivers an award which is equivalent to the order/ judgement of a court, the concept of mediation and conciliation remains a blur. In other words, mediation as well as conciliation are two distinct concepts yet they are often seen in a similar light. The difference between the two concepts are not quite known or understood, especially in comparison to arbitration. This is perhaps due to the larger use and acceptance of arbitration as compared to mediation and conciliation. Moreover, the concept of mediation and conciliation were accepted by the legislation much later than arbitration. Therefore, while the concept of arbitration is well-known, mediation and conciliation remain to be seen as clubbed together, on the other side.
Arbitration, mediation and conciliation are all private proceedings. However, the outcome of mediation and conciliation is rather informal as compared to that of arbitration. This is the reason why it is often misunderstood that mediation and conciliation are the same. There are, in fact, many factors differentiating the two dispute resolution mechanisms of mediation and conciliation. This article covers the difference between mediation and conciliation, in terms of their meanings, process of dispute resolution, practical requirements and outcomes as provided in the Indian legislation. The article concludes by making a comparison as to which method has become more prevalent in recent times and why.
Difference between mediation and conciliation
Meaning
Mediation
Mediation is a dispute resolution process in which the disputing parties select one or more neutral persons, who can bring them together to discuss and deliberate on the dispute and reach an agreement. In the case of mediation, the neutral person is called the “mediator” and he merely acts as a medium of facilitating the mediation process between the parties.
The intention behind mediation is to amicably settle the dispute by cordial negotiations between the parties themselves. Here, the mediator does not have any active role to play in persuading the parties to settle or resolve their disputes. The mediator merely acts as a facilitator and makes sure all procedural aspects are met and all the aspects that may enable a successful mediation are brought out. The decision-making power to resolve the disputes is entirely with the parties. Upon successful conclusion, the mediator, with the help and suggestion of the parties, draws an ‘agreement’ or a ‘mediated settlement agreement’ and this agreement becomes final and binding on the parties. On the other hand, if the parties are not able to reach a settlement, then the mediation process is said to have failed. In any case, the mediator is required to give a report. This entire procedure is called mediation.
Definition of Mediation
- Under Section 3 of the Singapore Mediation Act, 2017, “mediation” means –
a process comprising one or more sessions in which one or more mediators assist the parties to a dispute to do all or any of the following with a view to facilitating the resolution of the whole or part of the dispute:
(a) identify the issues in dispute;
(b) explore and generate options;
(c) communicate with one another;
(d) voluntarily reach an agreement.
- According to Article 1(2) of the UNCITRAL Mediation Rules, 2021, “mediation” is a process –
whether referred to by the term mediation, conciliation or an expression of similar import, whereby parties request a third person or persons (“the mediator”) to assist them in their attempt to reach an amicable settlement of their dispute. The mediator shall not have the authority to impose upon the parties a solution to the dispute.
- As per Section 3(h) of the Indian Mediation Act, 2023, “mediation” means-
the process, whether referred to by the expression mediation, pre-litigation mediation, online mediation, community mediation, conciliation or an expression of similar import, whereby parties attempt to reach an amicable settlement of their dispute with the assistance of a third person referred to as mediator, who does not have the authority to impose a settlement upon the parties to the dispute.
Conciliation
Conciliation is that private mode of settlement of disputes, wherein the parties appoint a neutral third party called the “conciliator”, who not only facilitates the dispute but also actively participates in the process and assists the parties in reaching a middle ground. In other words, conciliation is a way to resolve disputes by deriving a compromise between the parties. Here, the parties are free to appoint more than one conciliator.
Conciliation is one step more than mediation. In conciliation, the conciliator is duty-bound to act in a just and impartial manner and give both parties a fair hearing. If, at any point in time, the conciliator thinks there is a possibility of settlement of disputes, the conciliator can make the proposal for settlement to the parties. Based on the parties suggestions, the conciliator prepares a settlement agreement which becomes binding on the parties and enforceable in a court of law as a ‘settlement agreement’. This entire process is called conciliation.
The term ‘conciliation’ is not defined under the Arbitration and Conciliation Act, 1996 or under the UNCITRAL Conciliation Rules, 1980. The definition of conciliation is to be understood from the provisions that explain the procedure followed by it.
When is mediation required
Mediation gives an opportunity for the disputing parties to come together and make an attempt to bring their respective terms to the table and negotiate. By opting for mediation, the parties save their disagreements from turning into disputes and going to court. Thus, mediation is essentially required for enabling long-term relations between parties and upholding the confidentiality of sensitive cases. Sometimes, when huge sums of money is involved in a dispute between parties, an attempt at mediation first can restrain the parties from taking the dispute to court or arbitration and affecting the goodwill of the parties. Thus, even when the goodwill and reputation of parties are at stake, mediation becomes a requirement.
For example, in the Indian legislative set-up, it can be seen that under Section 12A of the Commercial Courts Act, 2015, in disputes over Rs. 3 lakhs, the parties are required to first go for a mediation proceeding, and only if such mediation fails, the parties can continue the case before the court. Many times, in litigations and arbitrations, the judges and arbitrators respectively, also refer the disputes to mediation, to give a chance to parties to settle their disputes. This is done in order to help the parties maintain long-term relations, prevent litigation and protect the confidentiality of such corporate disputes.
When is conciliation required
The requirement of conciliation comes through when the demand or disagreement involves a considerably high number of people on one side and a few, but powerful people on the other side. The agenda behind conciliation is for the demands or claims of the party having less bargaining power to be heard and to be met with. Conciliation is also an informal and flexible process, but since here the conciliator makes an effort to make sure a settlement is reached, it can be understood that conciliation is required in cases or scenarios where a settlement is essential to continue with contractual relations.
For example, it can be seen through the Indian legislation that in order to settle mass demands of trade union workers against the company, the legislature has mandatorily provided the recourse of conciliation, which can be brought by the trade union workers before the Regional Labour Commissioner (RLC) of the respective state (in case the company is under the central government), or before the Labour Court (in case the company is under the state government). This recourse is laid down under Section 4 of the Industrial Disputes Act, 1947.
Who should opt for mediation
A very important aspect of mediation is that parties negotiate among themselves and strive to reach a settlement. It is, thus, a mechanism adopted by parties upon mutual agreement, for the best interest of a long-term relationship between them, such that the disputes get resolved and the parties can continue their future obligations towards each other. Therefore, parties interested in maintaining long-term relationships, or parties having heavy amounts at stake, like in commercial disputes, can opt for mediation, such that, if any disagreements or disputes arise between business relations, the same can be cordially resolved and the parties can continue like before. In addition to this, since the confidentiality of mediation proceedings are very well intact, it is a method which can be used for disputes like family disputes, matrimonial disputes and employer-employee disputes.
Under certain circumstances, court can also exercise the power to refer disputes to mediation, and such power of the court can be exercised either mandatory or directory. Due to the large acceptance and high effectiveness of mediation, mediation has become a compulsory pre-requisite for parties initiating commercial suits, over Rs. 3 lakhs, as seen earlier. While the former was an example of directory exercise of the power of courts, the latter is an example of mandatory exercise of the power of courts.
Who should opt for conciliation
The disputes, whether litigation or arbitration, which seem to show possibilities of settlement, can be referred to as conciliation. Here too, the idea of keeping long-term relations intact is given prime importance. Employers opting for conciliation for disputes that arise between the employer and employees is an apt representation of who should opt for conciliation. Another example is a pending litigation, of whatever nature, wherein the courts feel that a settlement can be derived and it is best to refer it to a conciliation commission to fasten the process as well as lessen the burden of the courts.
Conduct of proceedings
Mediation
The Mediation Act, 2023, has prescribed the rules and procedures towards the conduct of a mediation proceeding, thereby making the people aware, as well as, bringing uniformity in the manner of conducting a mediation proceeding as mediation is a fairly new legislation for India.
Mediation can be effectively of two kinds, first, which the parties voluntarily agree to in their contracts or agreements or in the course of their business, and second, which the courts initiate by referring a dispute to mediation, either before starting the litigation proceedings or in the middle of it. In the former, the parties can agree to refer the disputes to an institution for facilitating the mediation process or mediation can be conducted ad hoc. In the latter, where the court refers the dispute to mediation, the same usually goes to the mediation service centre of the court or a mediation service provider empanelled with the court. In any case, the procedure to be followed for conducting the mediation proceedings is provided under Chapter V of the Mediation Act, 2023. The procedure can be classified into – commencement of mediation, conduct of mediation and mediated settlement agreement.
- Commencement of mediation: Mediation proceedings commence from the date on which the party receives notice of mediation from the party initiating mediation. In court initiated medications, the proceedings begin from the day on which the mediator is appointed.
- Conduct of mediation: There is no specific manner or procedure laid down under the 2023 Act for conducting mediation. This means that the parties are free to decide on the procedure they want to follow and can convey the same to the mediator.
- Mediated Settlement Agreement: Under the 2023 Act, the mediation proceedings should be completed within 120 days from the date of its commencement, failing which an extension will have to be sought. The outcome of a mediation shall be the mediated settlement agreement which will be in the form of an agreement between the parties having terms resulting from the mediation between the parties. This agreement shall be in writing and shall bear the signature of the parties as well as the mediator.
Conciliation
First and foremost, parties to a conciliation proceeding are not bound by any legislation, unless they choose one specifically. Parties can opt to follow the conciliation rules of a particular institution too. Either way, even though the parties have the freedom to follow their own agreed procedure for conciliation, the same is required to be in consonance with the conciliation legislature of that country, so that the outcome of the conciliation can be enforced in the Indian courts, as legal and valid.
The relevant part relating to conciliation proceedings in India is provided under “Part III- Conciliation” of the Arbitration and Conciliation Act, 1996. The entire procedure is divided broadly into – initiation of conciliation, hearings and evidence and settlement agreement.
- Initiation of conciliation: Usually, in the process of conciliation, one of the parties shall send, in writing, an ‘invitation to conciliate’ to the other party. If the other party accepts the same, then the parties mutually appoint one or more third parties, as conciliators.
- Hearings and evidence: The conciliator(s) shall then arrange hearings and provide their input to enable the parties to reach a settlement. If required, the conciliator may even require the parties to the dispute to produce their evidence. During the course of hearings, the parties shall comply with the request of the conciliator(s) if they are asked to provide any documents or materials. The very concept of conciliation provides that conciliator(s) shall make all efforts to convince the parties and actively make suggestions to bring the parties to a middle ground. Thus, at any stage of the hearing, the conciliator(s) may make a proposal for settlement of the dispute, if sufficient grounds are found.
- Settlement agreement: Under the Indian Arbitration and Conciliation Act, 1996, after the entire hearing process, each party may be allowed to make their suggestions, on which the conciliator(s) shall form the terms of settlement. Once the conciliator authenticates the settlement agreement and the parties sign it, the settlement agreement becomes final and binding between the parties. Under Section 74 of the 1996 Act, the settlement agreement shall be enforced in a court of law as an arbitral award.
Outcome
Medication
Usually, a successful mediation results in an agreement drawn between the parties, listing the negotiated or renegotiated terms and settling the disagreements. However, under the Indian Mediation Act, 2023, the result of a successful mediation is a mediated settlement agreement. Whereas, a failed mediation results in a failure report which is made by the mediator.
As per Section 27(2) of the said Act, a mediated settlement agreement holds the same value, in terms of enforcement, as a decree or judgment passed by a civil court. This implies that, if a mediated settlement agreement is breached or violated by any of the parties bound by it, the same shall be treated as a breach of a decree or judgement.
Conciliation
The outcome of a successful conciliation is a written settlement agreement. The settlement agreement is prepared by the conciliator, anytime during the proceedings, when he thinks that the possibility for settlement has arisen. According to the Arbitration and Conciliation Act, 1996, once the conciliator makes the settlement agreement, he can then submit the same to the parties for their observations. If the parties make any suggestion which requires the conciliator to reformulate the terms of the settlement agreement, then the conciliator reformulates the terms of the settlement agreement, as per the suggestion of the parties. This settlement agreement contains an authentication made by the conciliator that stands final and binding on the parties.
Under the Arbitration and Conciliation Act, 1996, a settlement agreement is recognised as enforceable in a court of law just as an arbitral award. This means that if the terms of the settlement agreement are violated in the future, the parties can challenge such violation in the same manner as an arbitral award is challenged.
Strictness of procedure
Mediation
Mediation is said to be a rather less formal mechanism of dispute resolution as compared to conciliation. The reason is that there is no strict procedure that the mediator is required to follow or imposition of the mediator on the parties. It always remains an agreement between the parties. Likewise, if the mutual negotiations do not lead to any agreement, the mediation fails, however, there is a possibility of the parties initiating mediation proceedings again in the future, on the same dispute. In doing so, no strict procedure of re judicata applies.
Conciliation
On the other hand, conciliation is a stricter procedure in comparison to mediation. Since the conciliator is required to persuade the parties to reach an agreement and also prepare a detailed settlement agreement that is final and binding on the parties, conciliation is stricter, in its procedure and in its outcome. Additionally, the procedure of mediation also involves parties providing evidence and expert witnesses in order to put their case, which is stricter in comparison to mediation.
Summary of differences between mediation and conciliation
| Point of difference | Mediation | Conciliation |
| Definition | It is a process wherein the disputing parties appoint a third neutral party, called the mediator, to help them negotiate and settle the dispute amicably. | It is a process wherein the disputing parties appoint a third neutral party, called the conciliator, to help them negotiate and provide a settlement solution. |
| Role of third neutral party | The mediator merely brings the disputing parties together, thereafter, it is on the parties to talk and negotiate by themselves. | The conciliator has to bring the parties together as well as make an active effort to settle the disputes between the parties. |
| Nature of procedure | It is a less formal mode of dispute resolution. | It is more formal than mediation but less formal than arbitration |
| Governing legislations | It is governed under the Mediation Act, 2023. | It is governed under the Arbitration and Conciliation Act, 1996. |
| Objective | The objective is to enable the parties to talk about their differences and come to a middle ground. | The objective is to attempt to settle the disputes amicably, through the suggestions of a neutral third party, i.e., the conciliator. |
Conclusion
Having made a comparative study between the process of mediation and conciliation, it is quite settled that both procedures form a part of the alternate dispute resolution mechanism and are adopted by parties as a convenient, flexible, voluntary and private form of dispute resolution. It is also settled that both these procedures are slightly informal as compared to the process of arbitration. However, between mediation and conciliation, the main aspect of difference is that while in mediation, the mediator is required to merely act as a facilitator and not provide individual inputs, whereas, in conciliation, the conciliator is required to provide his individual input and make all attempts and persuade the parties to come to a settlement. Thus, mediation is different from conciliation with respect to the powers and functions of the mediator and conciliator.
With this clear point of difference between mediation and conciliation, it also becomes notable to see which procedure is more preferable, when pitted against the other. Conciliation was the first, out of the two procedures, to be codified into legislation in India. However, over the years, it can be seen that the practice of mediation has taken precedence over conciliation. Many ADR institutions have also introduced the concept of arb-med-arb, meaning, the reference of an ongoing arbitration to mediation to explore the possibility of negotiations and settlement between the parties. This is so because mediation is taken as a more flexible and cordial means of dispute resolution. It is also seen that many arbitration clauses have a prerequisite of referring disputes to mediation first and then to arbitration. Over the years, the practice of mediation has fetched great results in resolving disputes and preventing them from coming to court. This way, mediation has found more popularity than conciliation, in practical use, so much so that it is likely to even become a mandatory pre-requisite for all civil and commercial disputes.
Frequently Asked Questions (FAQs)
Can both, conciliation and mediation be used to resolve a dispute?
Usually, out of the two, only one is taken to be a preferred mode of dispute resolution because once the procedure is done and the final outcome is achieved, it becomes binding on the parties and enforceable in a court of law.
How is mediation different from arbitration?
In mediation, the disputing parties appoint a neutral third party to facilitate the dispute resolution, informally, and give the final settlement agreement or failure report. However, in arbitration, the disputing parties appoint a neutral third party, formally, by sending a notice, and once the hearing starts, the parties produce evidence and arguments based on which the arbitrator passes an award. In mediation, the mediator facilitates the proceedings while in arbitration, the arbitrator adjudicates the entire dispute.
How is conciliation different from arbitration?
In conciliation, the disputing parties appoint a neutral third party to facilitate and actively suggest settlement to parties, as and when he sees grounds for settlement. Whereas, in arbitration, the arbitrator necessarily adjudicates over the dispute and provides an outcome which could favour only one party, and not be a settlement.
Do mediation and conciliation cases get reported?
Usually, mediation or conciliation proceedings happen inside closed doors of a conference room. They seldom result in settlement. This is why these cases are unreported on public platforms. However, if after coming up with a settlement the parties refer more disputes to arbitration or the courts, then it has a likelihood of being reported.
Can the parties refer disputes to mediation after signing a contract?
Yes, the parties can refer any dispute to mediation at any point of time, through mutual agreement. If the contract has already been signed, the parties can include mediation by way of amendment or even through an email exchange. Even if the dispute is at the stage of trial, the parties can make a request to the court to refer the disputes to mediation.
Can a mediator/ conciliator be a known person to the disputing parties?
A mediator/ conciliator can be a known person to the parties, however, he should not have a direct or indirect interest in any of the parties. Usually, such a person is chosen as a mediator or conciliator who is unknown to the parties, such that, impartiality and unbiased conduct are assured from his side.
Why is mediation more popular than conciliation?
Mediation is looked at as a very friendly and flexible form of dispute settlement, where the mediator does not force his opinion or suggestions on the parties. As against this, in conciliation, the moment the conciliator finds an aspect or aspects for settlement, he makes those suggestions in a manner which is more formal and compellable to the parties. Moreover, in practice, it has been seen that mediation has been very successful in resolving disputes and preventing them from going to court. This is why mediation has become more popular.
Who can be the third neutral party in mediation and conciliation?
In both proceedings, the third neutral party can be any person, not having any direct interest in the dispute or either of the disputing parties. The main objective of the mediator and conciliator is that they should be unbiased and independent while performing their roles as mediator and conciliator respectively.
References
- https://blog.ipleaders.in/role-of-mediation-in-international-disputes/
- https://www.jamsadr.com/mediation-defined/
- https://fmacs.org.uk/is-there-a-difference-between-mediation-and-conciliation/#:~:text=Mediation%20is%20an%20alternative%20form,and%20help%20settle%20their%20disputes.
- https://www.linkedin.com/pulse/difference-between-arbitration-mediation-conciliation/
- https://viamediationcentre.org/readnews/MjAz/Difference-between-Mediation-and-Conciliation
- https://blog.ipleaders.in/arbitration-conciliation-and-mediation/
- https://www.positivesolutionsgrp.com/conciliation-and-facilitation/
- https://www.directmediationservices.co.uk/mediation-same-as-conciliation/
- https://keydifferences.com/difference-between-mediation-and-conciliation.html
- https://www.in.gov/icrc/file-a-discrimination-complaint/mediation-and-conciliation/#How_likely_is_it_for_a_conciliation_session_to_be_successful_
- https://mediate.com/is-conciliation-in-the-resolution-of-labour-disputes-a-waiting-room-before-adjudication-an-indian-perspective/#_ftn5
- https://labour.delhi.gov.in/labour/conciliation-proceedings
- https://www.moneycontrol.com/europe/?url=https://www.moneycontrol.com/news/opinion/why-the-mediation-act-2023-is-a-great-leap-forward-11738231.html
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