Differences between Arbitration and Conciliation

There are various legal methods to resolving disputes that parties can access before resorting to litigation. Two effective alternative dispute resolution processes are arbitration and conciliation.

Arbitration and conciliation can be utilised for both private and commercial disputes and both employ an impartial person to assist the disputing parties in resolving or narrowing the issues between them.

What is arbitration?

Arbitration is a dispute settlement process in which a third party is appointed to review the facts and merits of a dispute and reach a binding decision on the parties. In order for arbitration to be used, all parties to the dispute must have previously consented to the process; or arbitration may be required under court order or as part of a contract.

When the arbitration is being conducted, both parties have the ability to present evidence and argue their case. This process is quicker then using courts and tribunals and the arbitrator, like a judge, has the power to create a binding decision on the parties and enforce the decision called an ‘award’.

Arbitration is commonly used in employment, building and construction and family law disputes. Each party pays their own costs respective to the arbitration.

What is conciliation?

Conciliation is a process where the parties to a dispute, with the assistance of a dispute resolution practitioner, discuss the issues in disputes, generate ideas and options for possible terms of settlement, consider alternatives and aim to reach a mutual agreement.

The main role of a conciliator is to facilitate the mediation and advocate for a mutual settlement of matters, generate options and consider alternatives.

The benefits of using conciliation is that the conciliator can have input into the discussions between the parties and make suggestions.

Either party can request for a conciliation to take place, however the other parties must consent to the appointment of a conciliator.

Conciliation costs are apportioned between the parties equally.

Conciliations are often used in industrial disputes and family law disputes.

Main differences between arbitration and conciliation

The main differences between arbitration and conciliation are:

  1. Arbitration is primarily a method used to resolve disputes where both parties present their case to a neutral third party who reaches a decision and then enforces that decision. Conciliation, on the other hand, involves an independent third party assisting the parties involved in the dispute to arrive at a mutually agreeable outcome.
  1. The decision made by an arbitrator is enforceable similar to a judgement of a court. A conciliator, however, does not have the right to enforce its decisions.
  1. Arbitration is a formal process and can follow similar procedures to court proceedings where witnesses can be called and evidence can be presented to argue the parties’ respective cases. Conciliation is an informal process and normally involves a ‘round table’ discussion.
  1. Arbitrators are not permitted to discuss the issues directly with the parties or generate options for terms of settlement or negotiation. A conciliator is allowed to discuss issues in dispute, develop options and consider alternatives to help the parties achieve a mutually agreeable outcome.
  1. An arbitral award is final and binding and has the effect of terminating the arbitral proceedings whereas conciliation does not always ensure a mutually agreeable outcome will arise between the parties.

Conclusion

The choice of dispute resolution method is entirely up to the parties in dispute. If there is a possibility that both parties may agree to a mutually agreeable outcome, then conciliation could be considered. If both parties would like an independent party to set a binding and enforceable determination then arbitration may be preferred.

At DSS Law, we understand that our clients’ priorities vary widely depending on the nature of a particular dispute and the parties involved. Our aim is to help our clients resolve conflict as efficiently and effectively as possible and provide practical advice that maximises our clients’ prospects of success.

Dominic Brunet Dominic Brunet 28/03/2017

Disclaimer

DSS Law insight articles are intended to provide commentary and general information. They should not be relied upon as formal legal advice. If you would like specific advice relating to this topic, please contact DSS Law on epost@dsslaw.com.au.