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Feasibility of Mediation as a Mechanism for Settlement of Economic and Business Disputes

Feasibility of Conciliation as a Mechanism for Settlement of Economic and Business Disputes

There are a variety of advantages to the use of conciliation, often in the comparative sense relative to litigation or arbitration. Conciliation has myriad benefits as compared to litigation and arbitration. Conciliation is much more cost-effective and is comparatively less rigid and involves fewer formalities. If there is a claim involving lesser costs, conciliation should be favored over litigation as it will be more economical. Like arbitration, party autonomy is emphasized and the disputants usually have considerable freedom to design the conciliation process, including the choice of location and conciliators with expertise in the relevant subject-matter. If the dispute is of a type that warrants a wide-ranging or creative solution, then conciliation, with its ability to design such proposals, would be more appropriate than litigation with the restrictions involved in rendering judgments.

Further, the information and statements generated by the conciliation remain confidential unless the parties agree otherwise. The informal conciliation environment is likely to be warmer than that of the adjudicative forum. The compromissory, "win-win" character of conciliation is of key significance since it assists in the maintenance of a harmonious business relationship, whereas the use of litigation may sever this connection. Henceforth, Conciliation is the better course of action in circumstances where the parties want to perpetuate their professional relationship  For example, conciliation would facilitate the maintenance of a long-term contract or joint venture relationship.  

However, a number of impediments can be posed to the use of conciliation. It has been argued that conciliation, because it results in non-binding recommendations, is likely to be a waste of time, effort, and money since the process may collapse entirely or the recommendations may not be accepted by the disputants. These are possible outcomes. Yet, conciliation can and does result in successful settlement agreements between the parties based on the conciliator's recommendations. Also, if a state or state agency is involved, it may submit to third party dispute settlement only if the conciliation is non-binding conciliation in order to avoid subjection to the binding decision of an adjudicative tribunal. Even if the conciliation fails, the resultant costs will not have been inordinate, and there will be some carry-over benefits that will endure to any subsequent adjudication, such as clarification of facts and issues and completed legal research.

  • Conciliation
  • Feasibility
  • Solving Economic and Business Disputes

BY : Astha Dhawan

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