Mediation vs. Arbitration vs. Conciliation – Key Differences Explained

Introduction

In today’s legal landscape, Alternative Dispute Resolution (ADR) has emerged as a vital complement to traditional litigation. Among its varied mechanisms, Mediation, Arbitration, and Conciliation stand out as the most widely used. While all three share the goal of resolving disputes outside the courtroom, their procedures, roles of third parties, and legal consequences differ significantly. Understanding these differences is crucial for lawyers, businesses, and individuals alike.

1. Mediation

Mediation is a voluntary, confidential, and non-binding process where a neutral third party, the mediator, facilitates communication between disputing parties to help them reach a mutually acceptable solution.

• Role of the Mediator: The mediator does not impose a decision but assists the parties in identifying issues, exploring solutions, and negotiating terms.¹

• Legal Framework:

  • Internationally, mediation is supported by the UNCITRAL Model Law on International Commercial Mediation (2002, amended 2018).²

  • The Singapore Convention on Mediation (2019) provides enforceability of mediated settlement agreements across borders. ³

  • In India, mediation was initially encouraged under Section 89 of the Code of Civil Procedure, 1908, and is now formally codified under the Mediation Act, 2023.⁴

• Advantages: Preserves relationships, cost-effective, flexible, confidential.

• Case Reference: Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (2010) — Supreme Court of India emphasised mediation as a tool to reduce court congestion.⁵

2. Arbitration

Arbitration is a quasi-judicial process where disputes are referred to one or more arbitrators who deliver a binding decision known as an “award”.

• Role of the Arbitrator: Unlike a mediator, the arbitrator acts like a private judge, hearing evidence and arguments before making a final determination.

• Legal Framework:

  • Governed internationally by the UNCITRAL Model Law on International Commercial Arbitration (1985, amended 2006) and the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958).⁶

  • In India, arbitration is regulated by the Arbitration and Conciliation Act, 1996, modelled on the UNCITRAL framework.⁷

• Advantages: Final and binding decision, globally enforceable awards, neutrality in international disputes.

• Criticism: Costly, sometimes as time-consuming as litigation.

• Case Reference:In Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. (2012) the Indian Supreme Court aligned Indian arbitration law with international standards on seat of arbitration.⁸

3. Conciliation

Conciliation is often described as a “middle path” between mediation and arbitration. It is a voluntary, flexible process where a conciliator assists parties in reaching a settlement, but unlike a mediator, the conciliator may actively suggest solutions.

• Role of the Conciliator: More proactive than a mediator, guiding parties towards specific proposals.

• Legal Framework:

  • Recognised under the UNCITRAL Conciliation Rules (1980).⁹

  • In India, Part III of the Arbitration and Conciliation Act, 1996 provides a statutory basis for conciliation.¹⁰

• Advantages: Less formal than arbitration, more structured than mediation, encourages compromise.

• Case Reference: Haresh Dayaram Thakur v. State of Maharashtra (2000) — The Supreme Court clarified that conciliation proceedings are distinct and cannot be equated with arbitration.¹¹

Key Differences at a Glance

Feature	Mediation	Arbitration	Conciliation
Third Party Role	Facilitator, no decision-making power	Adjudicator, delivers binding award	Proactive facilitator, suggests solutions
Binding Nature	Non-binding (unless agreement signed)	Binding, enforceable award	Settlement binding if signed by parties
Flexibility	Highly flexible	Procedurally rigid	Moderately flexible
Confidentiality	High	High (varies by law)	High
Legal Recognition	Mediation Act, 2023; Singapore Convention	Arbitration Act, 1996; New York Convention	Arbitration & Conciliation Act, 1996 (Part III)

Conclusion

While Mediation, Arbitration, and Conciliation fall under the broad umbrella of ADR, their distinctions are vital. Mediation emphasises collaboration, arbitration ensures a binding resolution, and conciliation provides guided compromise. Choosing the right mechanism depends on the nature of the dispute, the desired outcome, and the relationship between parties.

As the world shifts towards efficient and relationship-preserving mechanisms, understanding these differences ensures parties select the ADR path best suited for their needs.

References

1. Riskin, Leonard L., Understanding Mediators’ Orientations, Strategies, and Techniques, 1 Harv. Negot. L. Rev. 7 (1996).

2. UNCITRAL Model Law on International Commercial Mediation and International Settlement Agreements Resulting from Mediation, 2002 (amended 2018).

3. United Nations Convention on International Settlement Agreements Resulting from Mediation (Singapore Convention), 2019.

4. The Code of Civil Procedure, 1908, § 89 (India).

5. Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co., (2010) 8 SCC 24 (India).

6. Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958).

7. The Arbitration and Conciliation Act, 1996 (India).

8. Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552 (India).

9. UNCITRAL Conciliation Rules, 1980.

10. Arbitration and Conciliation Act, 1996, Part III (India).

11. Haresh Dayaram Thakur v. State of Maharashtra, (2000) 6 SCC 179 (India).