Author: Brian Bond, chartered civil engineer, arbitrator and conciliator/adjudicator
Arbitration and litigation are very expensive, slow and uncertain methods of dispute resolution. Arbitration, originally promoted to avoid litigation, has become as bad or worse. In many cases, the cost is quite disproportionate to the size of the dispute.
The quest for an alternative to arbitration began in Ireland and in the UK in the mid 1980s. Various alternatives were tried, with ‘conciliation’ favoured and progressively incorporated in contracts from 1988 onwards. In 1994/1995, the Institution of Engineers of Ireland (IEI – now Engineers Ireland) and the Institution of Civil Engineers (ICE) collaborated in producing a Conciliation Procedure, with the ICE publishing first in 1994 and the IEI in 1995.
The 1995 IEI Conditions of Contract for Civil Engineering Works (fourth edition) introduced conciliation as a mandatory step before arbitration, which remained as a fall-back.
[caption id="attachment_13295" align="alignright" width="744"] Latham Report[/caption]
In 1990, the ICE published the New Engineering Contract (NEC), which introduced adjudication. In 1994, the UK Latham Report1, which favoured the NEC, advocated adjudication as the best alternative dispite resolution (ADR) method. So, the UK Housing Grants, Construction and Regeneration Act (1996) created a statutory right to refer any construction contract dispute to adjudication.
Although conciliation remained in UK contracts, it was often struck out by employers and has virtually disappeared from use. The UK construction industry has adopted adjudication as the standard way to resolve disputes, with possible appeal to the courts or arbitration.
In 1997, the Irish Strategic Review of the Construction Industry (SRCI)2 reached the opposite conclusion: it recommended “the industry should use conciliation as a favoured mechanism for dispute resolution”. And the industry did. From the late 1990s, mandatory conciliation was incorporated in all the standards forms of building and civil engineering contract and it has become the standard way to resolve disputes.
WHAT IS CONCILIATION?
Conciliation was originally entirely consensual and did not involve a recommendation (it was, in effect, what we now call mediation). Conciliation procedures introduced the conciliator’s recommendation: the primary purpose is to assist the parties to reach an agreed settlement but, if that is not achievable, the conciliator is to write a recommendation stating how the dispute should be resolved.
The recommendation was to “state the conciliator’s opinion as to how the parties can best dispose of the dispute … not necessarily based on any principles of common law or equity”. A limited time (usually two weeks) is then allowed for either party to reject the recommendation. If neither does, it becomes final and binding. If is rejected, it is null and void. It is also confidential, so the next attempt (usually arbitration) has to start from scratch.
Conciliation is – or should be: