Although mediation, conciliation and arbitration have the same purpose, the process differs in the level of formality, responsibility and improvisation. In each case, a third party is involved in the dispute resolution process between the parties.
Mediation is focused on dispute resolution regardless of the outcome of the relationship between parties, whether they will conciliate or not. During conciliation both parties are often motivated to improve the relationship between the parties whereas for mediation and arbitration the most important focus is geared towards resolving a dispute.
In many situations it is compulsory to take part in dispute resolution, it is not voluntary. Depending on the level of dispute, you will have to participate in one of these dispute resolution processes. If you want to get informed and prepare yourself, learn the difference between conciliation, mediation and arbitration.
What is arbitration?
Arbitration is a formal process and may seem like you are in a courtroom where the process of arbitration replaces a trial. The arbitration parties don’t have much control over the outcome, and the arbitrator is the one to decide the outcome of the dispute. Arbitration is more binding than mediation. In some cases,each party can choose one arbitrator and then those two arbitrators will collectively select a suitable arbitrator. Parties may need to testify and give evidence but the process is not formal as in court. Arbitration is more formal than mediation and conciliation.
There are different forms of arbitration depending on the area of law. For instance, in employment law, interest arbitration and rights arbitration are the main forms of arbitration.
Interest arbitration is focused on the terms of the collective agreement, and rights arbitration interprets the collective agreement. Rights arbitration also includes the interpretation of disputes with regards to an employee dismissal.
Difference between conciliation and arbitration
The main difference between conciliation and arbitration is that a conciliator doesn’t have the authority to ask for evidence or witnesses, and as such, conciliation as a process doesn’t have legal standing. On the other hand, the arbitrator needs to make a decision based on evidence and his final verdict is legally binding.
An arbitrator is usually a legal professional or a retired judge, or even an accountant or engineer. Both parties present their cases in front of the arbitrator and they don’t negotiate out of the arbitration session.
The conciliation process is the least formal and there is much space for improvisation. Unlike most arbitrations, this process can be done privately. Conciliation is more amicable and open to bargaining and it doesn’t involve a suit.
In the conciliation procedure an intermediary person will try to determine what are the goals of each party, and then suggest possible solutions. An intermediary person (a conciliator) needs to discuss with each side separately during the whole negotiation process. The goal of conciliation is to find an outcome that is mutually acceptable to both parties. A conciliator has a role to improve communication and lower tensions between two parties.
How is mediation different?
Whereas in arbitration parties cannot make a final resolution, in mediation parties have the power to agree or not agree. The resolution is not reached unless both sides agree. Often, mediation is a required step during a process of litigation.
Mediators have less power than arbitrators, they cannot issue orders, find fault, or make decisions. Instead, mediators can help parties get a settlement by guiding them through communications, collecting necessary information, and developing solutions.
The mediation process is more flexible than arbitration, less formal and both parties can take part in dispute resolution. It is more likely that the disputing parties will be more satisfied with the result of mediation then arbitration because they can impact the end result.
Conciliation and mediation can be highly similar, although the focus of the former is more on the relationship, and the latter on result. Also, because mediation is often a required step in a litigation process, the attempt at mediation, and the recorded result, even if failed, is a more formal process than conciliation.
For less complex dispute resolutions, mediation is a better choice than arbitration whereas arbitration is the smart choice for serious disputes when parties are no longer on good terms.