Conciliation: an Alternative Dispute Resolution

Conciliation is a word that may rarely be heard in public. The increasing number of inter-community interactions also raises problems or disputes that usually occur in various lines, especially in economic and business activities. A dispute may begin with a situation where one party feels aggrieved by the other party, or has differences of opinion and conflicts of interest. Dispute resolution is generally carried out through litigation or the so-called trial process, which begins with the submission of a lawsuit to the district court and ends with the judge’s decision. However, in addition to resolving disputes through the litigation process, there is also Alternative Dispute Resolution (“ADR”) through non-litigation mechanism, one of which is through conciliation. This article aims to provide an overview and further description on the meaning, duties and powers of a Conciliator, the conditions for successful conciliation, the differences between conciliation and other types of ADR and its application in Indonesian regulations.

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A. Legal Basis

Law Number 30 of 1999 concerning Arbitration and Alternative Dispute Resolution (“30/1999”)
Law Number 2 of 2004 concerning Settlement of Industrial Relations Disputes (“Law 2/2004”)

B. Definition of Conciliation

Basically, conciliation is the process of resolving disputes before a neutral and impartial third party. In other words, conciliation is an effort to reconcile the wishes of the disputing parties to reach an agreement. This may refer to a more specific understanding of Conciliation, which can be found in Black’s Law Dictionary:

“Conciliation is the adjustment and settlement of a dispute in a friendly, unantagonistic manner used in courts before trial with a view towards avoiding trial and in labor dispute before arbitration. Court of Conciliation is a court with proposed terms of adjustments, so as to avoid litigation”.

Through this understanding, conciliation can be concluded as the first step for peace before a judicial trial (litigation) is carried out. So, conciliation not only can be carried out to prevent the implementation of the litigation (judicial) process but also can be carried out by the parties at every level of the ongoing judiciary. Current regulations such as Law 30/1999 do not provide any explicit formulation of the meaning of conciliation as found in Article 1 number 10 and paragraph 9 of the General Elucidation of Law 30/1999, which only states that conciliation is an alternative institution in dispute resolution. Dispute resolution through conciliation is carried out with the intervention of a third party or what is called a Conciliator.

C. Duties and Authorities of Conciliator

A Conciliator has a duty to actively conciliate the disputing parties by taking the initiative to outline and formulate settlement steps, which are then offered to the disputing parties so that the Conciliator in the conciliation process has a significant role in conveying his opinion not on behalf of the disputing parties. If the disputing parties cannot formulate any agreement, the Conciliator may propose a way out of the dispute.

However, the Conciliator is not authorized to make decisions in disputes for and on behalf of the parties, but is only authorized to make recommendations, the implementation of which is highly dependent on the good faith of the disputing parties themselves. Thus, the final decision is a conciliation process carried out entirely by the disputing parties as outlined by the Conciliator in the form of an agreement between the parties as stipulated in Article 6 paragraph (7) of Law 30/1999. This provision states that the written agreement to settle disputes or differences of opinion is final and binding on the parties to be implemented in good faith and to be registered at the District Court within a maximum period of 30 (thirty) days from the date of signing.

D. Conditions for Successful Conciliation

Process and conflict control through conciliation will be successful, good and optimal if several conditions are met as applicable in mediation, as follows:

The parties have a comparable bargain;
The parties are concerned about the future relationship;
Regarding issues that allow exchange to occur;
There is an urgency or time limit for completion;
The parties do not have long-standing and deep hostility;
If the parties have supporters or followers, they don’t have much hope, but they can be controlled;
Setting a precedent or defending a right is no more important than solving an urgent problem; and
If the parties are in litigation, the interests of other actors such as lawyers and guarantors will not be treated better than mediation.

E. Differences with Other Types of ADR

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According to Law 30/1999 Article 1 number 10, ADR is an institution for resolving disputes or differences of opinion through a procedure agreed upon by the parties, namely an out-of-court settlement by means of Consultation, Negotiation, Mediation, Conciliation, or Expert Assessment. In practice, ADR is more commonly pursued through Arbitration, Mediation or Conciliation by the disputing parties.

Arbitration is a settlement using the assistance of a third party (Arbiter), where the parties state that they obey the decision taken by the arbitrator. Meanwhile, mediation also uses assistance from a third party (Mediator), but the mediator is only tasked with bridging the parties without providing opinions regarding dispute resolution. Concilliation also uses help from a third party (Conciliator).

In practice, the dispute resolution process through conciliation has similarities to mediation, but has a difference i.e., conciliation has a more formal procedural law when compared to mediation because in conciliation there are several stages that usually must be passed: 1). submission of the dispute to the conciliation commission; 2). the commission listens to the verbal statements of the parties; and 3). based on the verbal facts provided by the parties, the conciliation commission then submits a report to the parties along with the conclusion and proposal for dispute resolution.

F. Application of Conciliation in Indonesian Regulations

ADR pursued through Conciliation can be found in several prevailing regulations in Indonesia, one of which is in Article 1 paragraph 13 of Law 2/2004, which specifically defines Conciliation in industrial relations, as follows:

“Industrial Relations Conciliation, hereinafter referred to as conciliation, is a dispute over interests, a dispute over termination of employment or a dispute between trade unions/labor unions in only one company through deliberation mediated by a neutral person or conciliator”.

In addition, Law 2/2004 provides not only the explanation of Concilliation by definition but also the procedure and timeframe for the practice of Conciliation, particularly in industrial relations disputes. The definition of a Conciliator is also explained as referred to in Article 1 paragraph 14:

“Industrial Relations Conciliator, hereinafter referred to as Conciliator, is one or more persons who meet the requirements as a Conciliator determined by the Minister, who is in charge of conducting conciliation and is obliged to provide written recommendations to the disputing parties to resolve disputes of interest, disputes over termination of employment or disputes between unions, workers/labor unions only in one company”.

Conciliation in the settlement of Industrial Relations Disputes is not much different from conciliation in general, but only differs in the disputes handled. If the conciliation reaches an agreement, the parties then sign a collective agreement made by the Conciliator, which will then be registered with the Industrial Relations Court at the District Court in the area where the parties make the collective agreement.

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