What is conciliation?
Conciliation is an alternative out-of-court dispute resolution instrument.
Like mediation, conciliation is a voluntary, flexible, confidential, and interest based process. The parties seek to reach an amicable dispute settlement with the assistance of the conciliator, who acts as a neutral third party.
The main difference between conciliation and mediation proceedings is that, at some point during the conciliation, the conciliator will be asked by the parties to provide them with a non-binding settlement proposal. A mediator, by contrast, will in most cases and as a matter of principle, refrain from making such a proposal.
Conciliation is a voluntary proceeding, where the parties involved are free to agree and attempt to resolve their dispute by conciliation. The process is flexible, allowing parties to define the time, structure and content of the conciliation proceedings. These proceedings are rarely public. They are interest-based, as the conciliator will when proposing a settlement, not only take into account the parties' legal positions, but also their; commercial, financial and / or personal interests.
Like in mediation proceedings, the ultimate decision to agree on the settlement remains with the parties.
- Conciliation ensures party autonomy.
The parties can choose the timing, language, place, structure and content of the conciliation proceedings.
- Conciliation ensures the expertise of the decision maker.
The parties are free to select their conciliator. A conciliator does not have to have a specific professional background. The parties may base their selection on criteria such as; experience, professional and / or personal expertise, availability, language and cultural skills. A conciliator should be impartial and independent.
- Conciliation is time and cost efficient.
Due to the informal and flexible nature of conciliation proceedings, they can be conducted in a time and cost-efficient manner.
- Conciliation ensures confidentiality.
The parties usually agree on confidentiality. Thus, disputes can be settled discretely and business secrets will remain confidential.
German Law does not provide for a statutory legal framework for conciliation. Therefore parties are free to set up and agree on a set of rules which shall govern the conciliation.
In practice, the parties are usually provided with a set of conciliation rules, established either by the conciliator themselves, or by a specialized conciliation institution. For example the conciliation rules of the Hamburg-Beijing Conciliation Centre.
Conciliation proceedings usually involve the following steps:
To begin with, the parties will create an agreement by which they agree (to attempt) to solve their dispute by means of conciliation. Such an agreement can be decided upon before or after the dispute has arisen. Several institutions offer so-called "model clauses", which assist the parties in drafting the conciliation agreement.
Subsequently, the parties must choose their conciliator. In Germany, the term "conciliator" is not a legally protected term. Therefore, in principle, any person may act as a conciliator. Hence the task is to find a person who displays the qualities required to assist the parties in solving their individual dispute. There are several institutions able to assist the parties with this selection. Some of them publish lists of conciliators on their websites. These sites may or may not indicate individual competences and experience of the listed persons.
Once established, it is up to the conciliator to time, prepare, structure, and conduct the conciliation proceedings. In doing so, different conciliators will take varying approaches. This will depend on the characteristics and type of dispute, as well as the background and expectations of the parties involved. The conciliator shall seek to ensure that the proceedings are conducted in accordance with both parties' expectations at all times.
Like a mediator, the conciliator will try to guide the parties to an amicable settlement. However, the conciliator will be prepared to provide the parties with a non-binding resolution proposal. The parties are free to accept or to decline the proposal. If they accept the proposal, it will typically be written up as the settlement agreement. While the settlement agreement itself is not enforceable, it can become enforceable in Germany by having it notarized and/or in other countries by having it put into an arbitral award.