In blog post, Divya Kathuria, a student of Raffles University, Neemrana, discusses conciliation as a process to resolve business disputes.
“An ounce of conciliation/mediation is worth a pound of arbitration and a ton of litigation!”- Joseph Gyrnbaum [1]
In all types of Businesses, some or other kinds of problems are bound to arise. Some or many of them can easily be solved through common sense while some may become a dispute, the resolution of which requires a great understanding and therefore, it becomes important to resolve such disputes amicably as well as speedily as lurking on it forever would bring the Business to a standstill.
The regular process of litigation can be costly as well as cumbersome for all the parties involved in the dispute. Also, it would lead to a huge backlog in the Courts. Another important factor to be noted is that if dispute resolution process becomes cumbersome, people will be least interested in any kind of business in our country thus, lowering down the ease of doing a business level or say, it becomes difficult to run such a business.
So, we discuss through this article an alternative method of dispute resolution- Conciliation.
What is Conciliation?
As per Oxford Dictionary, conciliation means; ‘The action of stopping someone from being angry.’ As mentioned above, it is important to solve Business disputes while maintaining the cordial relation between the parties involved.
It has been derived from the word ‘concile.’ Conciliate and reconcile are both employed in the sense of uniting men’s affections but under different circumstances.
Conciliation means ‘bringing of opposing parties or individuals into harmony to settle the dispute.’[2]
Conciliation can easily solve the following types of disputes: commercial, financial, family, real estate, employment, intellectual property, insolvency, insurance, service, partnerships, environmental and product liability. Apart from commercial transactions, the mechanism of conciliation is also adopted for settling various types of disputes such as labor disputes, service matters, antitrust matters, consumer protection, taxation, excise, etc
It is a confidential, voluntary and private dispute resolution process in which a neutral person helps the parties to reach a negotiated settlement. This method provides the parties with an opportunity to negotiate, converse and explore options aided by a neutral third party, the conciliator, to exhaustively determine if a settlement is possible.[3]
Conciliator
Conciliator, also called conciliating officer tries to resolve the dispute between parties by lowering down the tensions between them or say, in a way, calms both the parties by talking to them separately. They try to improve communications between both by interpreting the key issues that caused the conflict and encourage them to explore the solutions which are beneficial to all the parties involved, that is, he tries to create a win-win situation and arrive at a mutually acceptable outcome.
However, the conciliator does not have any power to impose the settlement arrived at. All he does is to try to break the deadlock and encourage the parties to reach an amicable settlement by acting as a conduit for communication, filtering out the disturbing elements and allowing the parties to focus on the underlying core objectives.[4] In all, conciliator doesn’t decide; he just helps the parties to arrive at a decision.
Conciliation as process to resolve disputes
It is the fastest growing alternate dispute resolution (ADR) mechanism in today’s world and is commonly used in the U.S., U.K. and Europe as an effective way of settling disputes, be it commercial, contractual or personal.
However, it is not necessary to have a prior conciliation clause in the agreement to refer the dispute to resolution. Cases may be referred for conciliation with the consent of both the parties. The process is risk-free, and parties are not bound by it till they arrive at and sign the agreement. Once a solution is reached between the disputing parties before a conciliator and signed by them, the agreement has an effect of the arbitration award and is legally enforceable in any court in the country.
India is already familiar with the system of panchayats where the panchs usually try to solve the dispute in a friendly manner between the parties. So, it is slowly gaining ground and awareness of its merits is developing in India. However, ADR is still in the experimental stages in India.
Legislations on Conciliation in India
The Arbitration & Conciliation Act, 1996
This Act consolidates and brings the law relating to Arbitration in India by bringing it under one statute when the various provisions relating to arbitration were spread over three separate Acts. It was drafted as per the UNCITRAL Model Arbitration Law and the UNCITRAL Conciliation Rules and for the first time statutorily recognized conciliation by providing elaborate rules of engagement.
The Code of Civil Procedure (CPC)
For the past several decades, India’s court system has suffered from an overwhelming backlog of cases. An average civil case takes almost a decade to be adjudicated. In 1996, the Indian Legislature recognized that to lessen the burden on the courts by introducing a more efficient case management system, mediation/conciliation would have to be integrated as a dispute resolution option in appropriate civil and commercial matters. As a consequence, in 2002, the CPC was amended to make ADR an integral part of the judicial process. Regarding the newly inserted section 89 of CPC, if it appears to the court that there exist elements, which may be acceptable to the parties, the court may formulate the terms of a possible settlement and refer the same for arbitration, conciliation, mediation or judicial settlement.
Conciliation procedure
The first step is to decide unanimously between the parties that they want to resolve their dispute through conciliation. Next step is to choose a conciliator as agreed by the parties together and he must be neutral to the parties involved.
Initially, in the first session, a decision is taken as to who will attend the conciliation and what will be the cost. The cost is shared equally between both the parties. The process is explained to both parties, and the conciliator is introduced. Ground rules of courtesy and propriety are laid down and scrupulously followed.
In the next session, parties explain their case and not just the legal aspect of it but, also their feelings. At this stage, the conciliator will only listen for the purpose of identifying the key issues. These sessions are private and confidential and at a time, only one party is there.
After this, a deliberation session follows, and creative solutions are explored. Joint sessions further follow this. If parties are reluctant to disclose certain information in joint sessions, the conciliator may request them to join him/her in a private session. In this, the conciliator will skillfully draw out relevant information. This can also be kept confidential, should the party wish so. The final stage is when the parties reach a consensus which is usually a win-win situation for both, and a written agreement is drafted to be signed by both the parties. Monitoring and reviewing the case is very important in the end.
Advantages
- Conciliation offers a more flexible alternative to arbitration as well as litigation, for resolution of disputes in the widest range of contractual relationships, as it is an entirely voluntary process.
- In conciliation proceedings, the parties are free to withdraw from conciliation, without prejudice to their legal position, at any stage of the proceedings.
- The matter is settled at the threshold of the dispute, avoiding protracted litigation efforts at the courts. As conciliation can be scheduled at an early stage in the dispute, a settlement can be reached much more quickly than in litigation.
- Parties are directly engaged in negotiating a settlement.
- The conciliator, as a neutral third party, can view the dispute objectively and can assist the parties in exploring alternatives which they might not have considered on their own.
- Parties save money by cutting back on unproductive costs such as traveling to court, legal costs of retaining counsels and litigation and staff time.
- The parties may carefully choose conciliators for their knowledge and experience.
- Conciliation enhances the likelihood of the parties continuing their amicable business relationship during and after the proceedings.
- Creative solutions to special needs of the parties can become a part of the settlement.
- Confidentiality is maintained throughout the proceedings on information exchanged, the offers and counter offers of solutions made and the settlement arrived at. Also, information disclosed at a conciliation meeting may not be divulged as evidence in any arbitral, judicial or another proceeding.[5]
Conclusion
It is more important to be able to execute a law than to keep on enacting a plethora of legislations and that is the main problem with Indian Legislations. Though, we have the law that is, ADR Act but still, is not very popular for commercial disputes in India when developed countries like Japan can use it for almost all kinds of civil disputes.
We have the law, but machinery is still not effective and perfect that the business community can trust it. Also, it is not as popular as normal litigation. When we see the backlog of crores of cases in Indian courts today, it is not just essential for commercial disputes but also for civil disputes which take 10-20 years to reach their destiny. This is one kind of urgent judicial reform that is needed today in India. Not only this, but it will also ease the doing of business in India for it’ll attract investors to invest in our country. ADR can be the monosyllabic solution for many economic problems for India and at the same time is necessary to curb the menace of the backlog of cases which the foremost concern and worry of Indian judiciary today.
Footnotes:
[1] Principal Mediator and Engineer, Mediation Resolution Int’l, LLC
[2] P Ramanatha Aiyar’s Concise Law Dictionary, 4th edition, 2012; LexisNexis Butterworths Wadhwa, page no. 247
[3] http://www.ficci-arbitration.com/htm/whatisconcialation.htm
[4] Ibid
[5] Id
