What is the Difference Between Arbitration and Conciliation?

There are several differences between arbitration and conciliation. While both represent a meeting that is assembled to discuss a settlement, they are handled in completely different fashions. In arbitration, each of the parties meets together in one room, while during conciliation, they are kept separate. Arbitration is handled by a representative of the court and any agreement is binding under regional law. Conciliation is much more informal and has no legal significance.

The major difference between arbitration and conciliation is that one is an actual legal proceeding while the other is an informal attempt to settle a matter without the courts. Both methods are alternative dispute resolution procedures designed to help parties settle their differences. During arbitration, each side would gather at a courthouse and discuss the matter in detail, and in many instances, the conversations become quite tense. It is not uncommon in arbitration for the arbitrator to temporarily stop the proceedings because the arguments become counterproductive, and this professional's job is to ensure that negotiations move along in a way that will ultimately create a resolution. The arbitrator has complete authority over the meeting.

During conciliation, both parties are kept separate to avoid the tense moments that occur in arbitration. The conciliator relays messages back and forth between the two sides and steers the conversation towards a settlement that everyone can agree on. While both arbitration and conciliation allow each party to show their case and argue for a favorable verdict, the conciliator is very limited in what he can legally do. For example, he can not subpoena witnesses nor can he make actual recommendations to the court. If a settlement is not reached after the conciliation process, then the meeting was essentially for nothing.

Conciliation and arbitration are also seen differently by the courts. When a contract is signed during an arbitration hearing, it is considered a binding legal document that both parties will be forced to adhere to. A conciliation resolution has much less legal authority and either side is free to change its mind without the other side having legal recourse.

Although arbitration and conciliation have distinct differences in terms of legal authority, both methods have high success rates in settling disputes without involving an actual trial. Each of these methods saves everyone involved legal fees and simplifies the entire process so that an immediate resolution can be obtained. Since both sides are made well aware that a failure in arbitration and conciliation would mean a costly trial, each party is normally willing to negotiate to find an agreeable resolution.