Difference Between Civil and Commercial Conciliation

What is Conciliation?

Conciliation is a procedure under which the disputing parties agree to have a neutral third party, known as conciliator, facilitate the discussion that would help them reach an agreement. The conciliator will not decide on an outcome that would be binding on the parties. His job is to lead the parties into an agreement by improving communication, giving people an opportunity to understand what they have mistakenly misconstrued, and providing possible solutions. In case of mutual agreement, it is formalized and becomes effective.

Conciliation, of course, is preferred to litigation on account of its much less adversary nature, lesser costs and most importantly, its confidentiality. Between mediation and conciliation, there is not too much difference; in conciliation, however, solutions can even be suggested by the conciliator, while a mediator simply facilitates conversation without positing resolutions.

Civil Conciliation in India

Civil conciliation typically deals with cases that are characterized with personal or social issues. These cases are usually those involving two parties or parties seeking resolution concerning property, family affairs, contracts, or civil rights matters. Civil conciliation is practiced in the majority of the cases whereby disputes are not of a commercial nature and can be decided extrajudicially without requiring judgment by a court of law.

For instance, in family cases such as divorce, child custody, or disputes over property involving relatives, civil conciliation is very effective.

Key Characteristics of Civil Conciliation:

• Non-commercial nature: Civil conciliation is personal or civil disputes that do not contain any business or financial element.
• Voluntariness: The parties must be willing to participate in the process and can withdraw at any time if the parties feel that it is not productive.
• Non-binding unless formalized: Whereas the process is non-binding, an agreement arrived at through this process can be formally put into writing and becomes binding on both parties.
• Confidential process: The discussions and agreements reached through civil conciliation will remain confidential and cannot be produced as evidence if the matter proceeds to litigation.
• Helps relations: Civil conciliation is less confrontational than litigation. So, it helps maintaining the relationship between the parties involved, especially in family laws.

Commercial Conciliation in India

Commercial conciliation aims at the settlement of disputes which arise from commercial transactions, financial agreements, or relationships. The parties may be corporate houses, business partners, suppliers, and clients. Commercial conciliation is mainly used in terms of contract-related disputes, trade agreements, construction projects, and other business matters where maintaining a good relationship between the parties is of the importance so that future problems are avoided.

In commercial conciliation, which the Arbitration and Conciliation Act, 1996 offers, arbitration again undergoes a structured framework, so disputes would be legally recognized and can be made enforceable. Commercial conciliation really presents an alternative to much litigation that literally eats time and money while keeping their business operations uninterruptedly intact to businesses.

Key Features of Commercial Conciliation:

• Business-oriented: Commercial conciliation has especially been formulated for those disputes arising out of business and financial transactions.
• Cost and time saving: Compared to litigation, commercial conciliation is faster and cheaper than litigation and has fewer legal costs on businesses, thereby saving what would otherwise go to lawyers.
• Confidentiality: Like civil conciliation, the discussion in commercial conciliation is confidential, as it is very sensitive to discuss some of the issues relating to business.
• Expert participation: In the majority of cases, the conciliator of commercial conciliation will be an expert in the relevant industry or field so that both parties understand the technical aspects of the dispute.
• Agreements enforceable: If parties reach an agreement, this can be formalized and then enforced as a legal contract; thus it becomes enforceable under Indian Law.

Arbitration vs Conciliation - A comparison

Conciliation and arbitration may both be categorized under alternative dispute resolution, but they have different significant aspects. Recognizing arbitration and conciliation would, therefore, help determine which is the suitable means of resolving a dispute.

Arbitration is more formal ADR process and provides the parties with the opportunity to have their case presented before an arbitrator, who then dresses in the robes of a judge and returns a binding decision. An arbitrator's decision is called an "award," which may be enforced in court. Arbitration is very much like a trial in a courthouse setting except it is usually faster and less formalistic.

On the other hand, conciliation is a process that is of voluntary and non-binding nature, during which the conciliator assists both parties to engage in dialogue and also come up with a mutually acceptable solution. A conciliator does not enjoy the power to make a binding decision as the conciliation process will only become binding and adhering when the parties have agreed on an item.

Arbitration is usually conducted in an arbitration room, a formal setting where both parties make their submission of evidence and arguments. Conciliation, on the other hand, typically tends to be conducted in less formal settings that afford the parties open discussion.

Key differences between arbitration and conciliation:

• Nature of the process: The process of arbitration is adjudicatory in nature. The decision of the arbitrator is binding. On the other hand, the conciliatory process is non-adjudicatory. A conciliator only helps the parties to negotiate but does not enforce a decision.
• Role of the neutral party: In arbitration, the arbitrator has the power to decide the outcome. However, in a conciliatory process, the conciliator only mediates among the parties so that they can reach a consensus.
• Binding nature: Arbitration results in a binding award, whereas conciliation results in a binding agreement only if the parties agree voluntarily to the terms.
• Formality: Arbitration is more formal and indeed almost like court proceedings which take place mostly in an arbitration room. Conciliation is generally informal because it focuses on dialogue and negotiation.
• Enforceability: Arbitration awards are enforceable as a decree of the court; while conciliation agreements need to be formalized before they become legally binding.

Import of Conciliation in Arbitration Room

Parties may first attempt conciliation and resort to arbitration only in case it does not work out in some cases. These parties first attempt the conciliation process and enter into arbitration as a last resort because both parties would want to keep the relationship intact and also not entrust arbitration, which is adversarial in nature to itself. They start with conciliation because through this, a win-win situation may also be found for both parties without calling upon the discipline of the arbitration room.

Even at the arbitration stage, conciliatory actions may still be taken to facilitate the resolution of the case. This is particularly the case with commercial conciliation as the businesses concerned might like their amicable relationship to be undisrupted even if the dispute submitted necessitates arbitration. Such arbitration rooms become not only adjudicatory venues but also those meant for conciliation.

The most fundamental difference between civil and commercial conciliation in India is the nature of dispute that they settle. Civil conciliation deals with personal, family, and non-commercial disputes, but commercial conciliation has been designed to settle disputes in connection with business transactions and commercial relationships. Both in a way provide another possible alternative to litigation as they are less contentious, cost-effective, and time-saving ways to deal with disputes.

However, for the right choice of a suitable ADR method, clearly, there should be understanding about the differences between arbitration and conciliation. While arbitration provides a formal binding resolution in a structured environment, such as an arbitration room, conciliation is based on negotiation and voluntary agreement. Whether in civil or commercial disputes, choosing the most appropriate method can lead to efficient and peaceful outcomes.