Conciliation is a form of amicable dispute resolution (ADR) that generally involves a third party (a sole conciliator or a conciliation commission) receiving submissions from the disputing parties, providing a non-binding, independent and impartial evaluation of their rights and obligations, and proposing non-binding recommendations on how the dispute should be settled. It is offered as an alternative to arbitration in the ICSID Convention and many bilateral investment treaties, investment contracts, and investment laws.
A. Conciliation v. Mediation
The terms "conciliation" and "mediation" are often used interchangeably. This is unsurprising as there are considerable overlaps between the two concepts (especially concerning the practice of evaluative mediation or facilitative conciliation). However, mediation is usually understood to be more interest-based (as opposed to rights-based) and facilitative, with the mediator assisting the parties to understand their interests and to encourage a dialogue between them in order to reach a mutually beneficial settlement. Conciliation rules tend to be more procedurally detailed than mediation rules but still leave considerable flexibility for the conciliator to adopt approaches associated with mediation.
II. Conciliation Rules
Much like arbitration, procedural issues in conciliation are often governed by a pre-established set of rules.1 Conciliation and arbitration rules are similar because they adopt comparable registration and appointment procedures.2 However, procedural rules in conciliation and arbitration diverge, particularly as the former gives conciliators more flexibility than arbitrators to interact with the parties. For example, conciliation commissions may hold separate meetings or caucuses with each of the parties, and make recommendations at any stage of the proceedings orally or in writing.3 In contrast, a fundamental rule of arbitral due process prohibits an arbitrator from conducting private communications with one party without the presence of the other. Conciliation rules also require the parties to keep views, statements, or offers confidential4 and without prejudice5 in order to facilitate a settlement.
The ICSID Conciliation Rules are the most detailed of all the conciliation rules. At the time of writing, ICSID is in the process of amending these Rules, as well as proposing new voluntary Mediation Rules. UNCITRAL is also in the process of updating the 1980 UNCITRAL Conciliation Rules, with a view towards modernising and aligning them with the UNCITRAL Model Law on Mediation and the Singapore Convention on Mediation. The revised UNCITRAL Rules will be renamed as Mediation Rules. These developments within ICSID and UNCITRAL indicate that in practice the approach to terminology is not entirely consistent: under the ICSID system conciliation and mediation are regarded as distinct concepts, with each having a separate set of rules; but in UNCITRAL's regime the same two terms are treated as interchangeable and governed by one set of "Mediation Rules".
III. General treaty practice
According to ongoing mapping conducted by UNCTAD, approximately 24% of investment treaties contain references to voluntary ADR procedures, including conciliation and mediation (and excluding arbitration).6 These include:
Investment treaties or domestic laws on foreign investment that do not mention conciliation but provide advance consent to ICSID jurisdiction have been held to provide advance consent to conciliation and arbitration.9 For example, many of France’s BITs contain clauses providing consent to the jurisdiction of ICSID without specifying whether this applies to arbitration or conciliation.10 Investment treaties that do not provide advance consent to conciliation nevertheless do not prevent the parties from agreeing to initiate conciliation proceedings.
Agreement between the United States of America, the United Mexican States, and Canada, 30 November 2018, entry into force 1 July 2020, ANNEX 14-D, Art. 14.D.2(1); Agreement between BLEU (the Belgian-Luxemburg Economic Union) and the United Arab Emirates on the reciprocal promotion and protection of investments, 5 March 2004, entered into force 22 November 2007, Art. 12.1.
A. Does engaging in conciliation preclude arbitration?
B. Compulsory conciliation requirements
A few investment treaties appear to require the parties to engage in compulsory conciliation before there can be recourse to arbitration.12 Arbitral tribunals are divided on this issue,13 and on whether an amicable settlement obligation is a jurisdictional requirement14 or a procedural rule that may be ignored in some cases (see also Cooling-Off Periods).15
Itisaluna Iraq LLC, Munir Sukhtian International Investment LLC, VTEL Holdings Ltd., VTEL Middle East and Africa Limited v. Republic of Iraq, ICSID Case No. ARB/17/10, Award, 3 April 2020, para. 190; Hesham Talaat M. Al-Warraq v. The Republic of Indonesia, Award on Respondent's Preliminary Objections to Jurisdiction and Admissibility of the Claims, 21 June 2012, para. 79.
IV. Enforcement of conciliation settlement agreements
Practitioners should also note that for conciliation settlement agreements to be enforceable under the SCM, they must meet the scope17 and form requirements18 of the SCM. The State party to the dispute must have ratified the SCM19 and not have made an applicable reservation under Article 8(1) of the SCM.20 Reservations under Article 8(1)(a) of the SCM enable the State to exclude conciliation settlement agreements with certain or all government agencies, while reservations under Article 8(1)(b) of the SCM enable the State to require that conciliation settlement agreements include a specific term agreeing to enforcement under the SCM.21
United Nations Convention on International Settlement Agreements Resulting from Mediation, 7 August 2019, Arts. 1-2; Schnabel, T., The Singapore Convention on Mediation: A Framework for the Cross-Border Recognition and Enforcement of Mediated Settlements, Pepperdine Dispute Resolution Law Journal, 2019, pp. 1-60.
Apter, I. and Muchnik, C.H., Reservations in the Singapore Convention - Helping to Make the "New York Dream" Come True, in Abramson, H. (ed.), Singapore Mediation Convention Reference Book, 1001, 2019, pp. 1267–81; Appel, M., A done deal for states and investors: the new UNCITRAL Convention on International Settlement Agreements Resulting from Mediation, Journal of Enforcement of Arbitral Awards, 2018, pp. 1-12.