The Use of Conciliation as a means Alternative Dispute Resolution

The use of conciliation is at its infancy in Malaysia as with most countries in the South East Asia Region where the term conciliation simply implies a non-binding process where a neutral person attempts to facilitate and find an acceptable solution to a dispute between the parties. Although conciliation has been used in Malaysia for some time in the settlement of disputes in relation to family law and employment the concept of its use for the settlement of construction disputes is still considered foreign. The Industrial Relations Act 1967 and the Law Reform (Marriage and Divorce Act 1976 both refer to conciliation as recognised means to settle disputes.

Conciliation is being promoted by some quarters within Malaysia namely the Chartered Institute of Arbitrators, the Malaysian Institute of Arbitrators and the KLRCA who have published rules for conciliation.

At this point we should consider what conciliation really means. Conciliation is a form of alternative dispute resolution (ADR) process whereby the parties to a dispute agree to utilise the services of a conciliator, who then meets with each of the parties separately in an attempt to resolve their differences. Conciliation differs from arbitration in that the conciliation process, of itself, has no legal standing, and differs from mediation in that the parties seldom, if ever actually face each other across the table in the presence of a conciliator.

A conciliator usually has no authority to require the presentation of evidence or call witnesses; indeed, the conciliator usually writes no decision and makes no award. However, if the conciliator is successful in negotiating an understanding between the parties, then that understanding is almost always recorded in writing, often with the assistance of the respective parties legal advisors, and signed by the parties, at which time it becomes a legally binding agreement between the parties.

Conciliation can be carried out by a conciliator appointed by the parties, being someone that both parties respect and consider able to bring about a resolution of the dispute. Alternatively the parties may prefer to use a professional conciliator, being someone trained in the conciliation process, and best able to assist the parties towards a resolution. Where the parties cannot reach agreement on the conciliator but have agreed the process in accordance with the KLRCA_Conciliation_Rules_2011  the Director of the KLRCA will appoint one.

The Conciliator may choose to attempt to resolve the dispute between the parties using a number of methods the choice of which will be of his choice but at all times he should act impartially.

A common method is termed as shuttle diplomacy, whereby the parties to the dispute are placed in separate rooms and the conciliator goes from one room to the other trying to find common ground in order to bring about a resolution of the dispute.

A variation of that method is where the conciliator asks the parties to independently list their objectives and the outcomes they desire from the conciliation. The conciliator then discusses with the parties their respective lists, requiring them to priorities the items. Thereafter he encourages them to give on the objectives one at a time from the least important upwards, thus reducing the number of issues actually in dispute.

In Malaysia the KLRAC provide dispute resolution services in respect of conciliation. As noted above they have published rules in respect of conciliation and these are based on the UNCITRAL Conciliation Rules 1980 amended.

Where the KLRAC Rules are adopted the parties have to abide by these unless both parties agree otherwise or such rules would be conflict with laws relevant to the dispute. A summary of the rules and procedure to be followed is outlined.

1. The party desiring Conciliation shall submit a written application to the KLRAC Director.

2. The application shall include a brief outline presentation of the facts of the dispute together with the amount involved,  copy of conciliation agreement (if any), and the registration fee.

3. The Director shall notify the other party with the application of Conciliation. The other party shall confirm within 30 days or KLRAC will treat the request for conciliation rejected.

4. The parties shall attempt to agree on a conciliator, in the event they fail to within 14 days of the acceptance then the Director of KLRAC shall appoint and the parties shall be deemed to accept such appointment.

5. At least 7 days prior to commencement of the conciliation sessions both parties shall submit their summaries to the conciliator and the other party

6 The parties agree to co-operate with the conciliator in attempting to reach settlement

7. In the event settlement is reached during conciliation the parties shall record such in writing and inform the Director of KLRAC in writing.

The KLRAC also publish standard forms for use in the process and publish a schedule of fees that shall be payable to the centre dependent upon the value of the dispute.

At this time most standard forms of contract do not provide for conciliation as a step to be taken in the dispute resolution process, were conciliation to be listed as a step to be considered by the parties before bringing the dispute to arbitration then this would no doubt lead to increased interest but it would be wrong in our opinion to include such as a prerequisite to arbitration as conciliation is a form of amicable settlement and as mention above is not legally binding unless any agreement reached is executed between the parties. Conciliation should remain one of the several available forms of alternative dispute resolution; and, if the parties involved in a dispute process consider conciliation to be the most effective way of resolving that dispute, then it is a method that should be retained.