Arbitration and conciliation are alternative dispute resolution (ADR) mechanisms that provide parties a way to settle disputes outside of traditional courts.
Arbitration involves parties agreeing to refer their disputes to one or more arbitrators, whose decision (award) is usually binding and enforceable by law. It is often chosen for its speed, confidentiality, and flexibility compared to litigation.
Conciliation is a more informal process where a neutral third party, the conciliator, helps the disputing parties reaches a mutually acceptable solution. Unlike arbitration, conciliation does not result in a binding decision unless the parties agree to it.
These processes aim to reduce the burden on courts, encourage amicable settlements, and provide quicker, cost-effective resolutions. Both are recognized under the Arbitration and Conciliation Act, 1996 in India, which governs the procedures and enforceability of arbitration and conciliation agreements.
Objectives:
Efficient Dispute Resolution: To provide a faster and less formal alternative to litigation.
Confidentiality: To resolve disputes privately, safeguarding business secrets and reputations.
Flexibility: To allow parties to tailor procedures according to their convenience and needs.
Binding and Enforceable Decisions: In arbitration, ensure that awards are legally enforceable.
Amicable Settlement: In conciliation, promote compromise and maintain business or personal relationships.
Reducing Court Burden: To alleviate the caseload on judicial forums by resolving disputes outside courts.
