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Conciliation: Definition, Example and Related Terms

What is Conciliation ?

Conciliation is a process used to resolve disputes by reducing hostility, improving communication, and finding mutually acceptable solutions between parties involved in a disagreement. Unlike more formal processes such as litigation or arbitration, conciliation aims to preserve the relationship between parties and reach an amicable solution with the help of a conciliator, who facilitates discussions but does not impose a decision.

In a commercial setting, conciliation can be especially beneficial as it allows businesses to resolve conflicts without extensive legal proceedings, saving both time and costs. The process can be initiated voluntarily by the parties or may be mandated by contract clauses that require disputes to be addressed through conciliation before any formal legal measures are taken.

For example, two businesses in a contract dispute over service deliverables may choose conciliation to explore all facets of the disagreement, consider each party's needs, and develop a mutually satisfying agreement. This promotes long-term cooperation and goodwill between the businesses, unlike adversarial litigation which may damage business relationships.

Professionals such as contracts managers or legal advisors play a crucial role in steering conciliation discussions effectively to achieve a successful resolution. They must have strong negotiation and communication skills and an understanding of both legal principles and the commercial objectives of the parties involved.

Example(s)

  • Scenario Description
    Supplier Dispute A manufacturing company and its supplier enter into conciliation after disagreeing on product quality standards. Through conciliation, they are able to agree on stricter quality checks and revised terms that satisfy both parties, thus avoiding costly legal action.
    Partnership Agreement Conflict Two partners in a business venture use conciliation to address conflicts arising from unequal profit distributions. A neutral conciliator helps them understand each other's perspectives and reach a consensus on how profits will be shared moving forward.