What do you understand from the phrases ‘Model Conciliation Clause’ and ‘Model Arbitration Clause’?

1. Introduction

In both of our personal as well as professional life we need the appropriate maintenance of the legal term. If we tried to classify the law then we mainly found two basic types of law. One is called as “Divine Law” – given by almighty and another one is “Human Law” made by the human. Divine Law is surely for the betterment of the mankind and it can be distinguished as Perpetual, Natural or Positive. On the other hand, Human law can be considered as Secular or non- perpetual and these laws are mainly made to run the society smoothly.[1] So the ‘Model Conciliation Clause’ and ‘Model Arbitration Clause’ both of them are under the human law. However, at below I am going to discuss my understanding about the above two terms.

To understand the meaning of the Model Conciliation Clause and Model Arbitration Clause first I had to understand the detail meaning of the Clause in terms of law. Actually Clause refers the requirement or condition in a formal document. On the other hand, in a brief explanation of Clause generally mean the “portion of a contract that speaks to a specific issue”. [2] Here the contract refers the promise between two or more parties which is enforceable by law. For more deep understanding about the word clause we can say that Clause is prerequisite and section, which simplifies, defines or explains about the specific subject material. “Clauses are the ‘ifs,’ ‘buts,’ and ‘ands’ of a contract.”[3] Here ifs, buts, and ands refer the consideration of a contract more elaborately formal documentation.

2. Model Conciliation Clause

 a.                        The Meaning of Conciliation

The Dictionary meaning of Conciliation is “the settlement of a dispute by mutual and friendly agreement with a view to avoiding litigation”.[4] In another word it can be expressed as “the practice of bringing together the parties in a dispute with an independent third party, so that the dispute can be settled through a series of negotiations”.[5]

1. b.                        Definition:

When there is any contract arises between two or more parties we may found the existence of a conciliation clause there. Conciliation is necessary to avoid the conflicts between or among the parties. In other word, “Conciliation means bringing two opposing sides together to reach a compromise in an attempt to avoid taking a case to trial.”[6] This is actually a friendly or amicable resolution to adjust the dispute through an extra judicial way.

In a brief explanation we can say that Model Conciliation Clause is a marginal way of solving raised disputes between parties by assigning a third party who will work as a general conciliator but need not to be neutral while performing the conciliation. This third party will meet both of the parties; discuss about their arguments help them to find the best solution to settle down their current disputes.[7]

1. c.                        Model Conciliation Clause in Terms of Business:

In business there huge numbers of contract take place each and every day that’s why dispute can arise anytime between the parties. But to run the company smoothly and profitably it is very necessary to resolve those arguments as early as possible with a minimizing of the expense plus avoiding meet the court for atrial. According to the model conciliation clause “the parties in dispute are not in the same room. A conciliator meets with each party separately in an attempt to narrow the differences and convince the parties to agree to a general meeting”.[8]

1. d.                        Necessity of Model Conciliation Clause

The best way to make sure that the conflict will be resolved normally through including a model conciliation clause while signing the contract. Actually, as these clauses are legally enforceable that’s why it needs no arbitration or mediation through lawsuit. On other hand, by utilize these model conciliation clauses parties can avoid the hassle while a contract is going on and also can escape themselves from the extra expense of the secular legal system.[9]

3. Model Arbitration Clause

 a)                        The Meaning of Arbitration:

According to the meaning of the online business dictionary Arbitration refers, the settlement of a dispute whether this argument can be based on some sorts of fact, regulation or method of the contract between or among parties need to be resolve  by a neutral third party generally called as the Arbitrator without meeting the court for a litigation.[10] In other word we can say “An arbitration is a setting in which two parties submit their differences to an impartial third party to determine a solution or negotiation to a problem”.[11]Actually the Model Arbitration clause is usually like unprofessional but it is legally enforceable plus sometimes it is required by law based on the level of disputes between parties.

b)                        Example of Arbitration:

I think by providing an example of arbitration the idea about the Model Arbitration Clause will be clearer. Suppose a married couple want to get divorce between them but failed to come to agree on the terms and condition, so they can let a third party to involve between them for the best negotiation.[12]

c)                        The Legal Definition:

According to the legal definition Arbitration Clause is a technique of alternative argumentative determination beside a dispute between parties. While this arbitration is taking place obviously there should be agreement of all the parties, and they will submit their all sorts of disputes to a neutral person or group for a better decision. Here this whole process typically including full evidentiary hearing and presentations by lawyers for the both parties. In other word we can say “Arbitration Clause in a contract requiring the parties to submit all disputes arising from the contract to an arbitrator or group of arbitrators rather than to proceed with litigation. Usually, a breach or repudiation of a contract will not nullify the clause.”[13]

d)                        Model Arbitration on Business Activity:

While running the company any disputes can be arisen anytime. So if we going to define the arbitration in terms of business then we would find Arbitration is “a process for settling disputes between parties. For example, arbitration is often used between securities firms and their customers when the parties submit their differences to the judgment of an impartial third party or parties. Many brokerage firms require their customers to sign an agreement for binding arbitration to resolve disputes”.[14] Arbitration Clause is necessary almost in every business contract. By using Arbitration the raised dispute can be settled out of court. As in arbitration the two parties in argument agree in advance to accept the decision made by a third party that’s why business transaction can go on easily.

4. Model conciliation Clause vs. Model Arbitration Clause:

Arbitration and Conciliation both is an alternative dispute resolution method to resolve the dispute between or among the parties. In both case the main target is to settle down the argument of the parties. In both term an arbitrator and a Conciliator work like a third party and try to hear from both side to help them to come with a mutual understanding and resolve the disputes. Here one thing I want to mention there is another legal term called Mediation which is almost like the Arbitration. However, here I am not going to discuss about the mediation. Let’s again come to point of Arbitration and Conciliation. Actually the fundamental difference between the arbitration and the conciliation is, Conciliation is a method employed in civil law countries while Arbitration normally can be applied in all legal system.[15]

5. The Arbitration and Conciliation in Bangladesh:

Both in personal as well as business contract we can see the use of arbitration and conciliation but in Bangladesh normally the arbitration process take places to resolve the disputes between the parties. However, in the business of our country we may found the arbitration clause is including when there is a contract is going to sign between labor union and the management. We also may found the arbitration while a married couple is going to get divorce or going to resolve their disputes of marriage if they themselves fail to make a mutual decision.

In our country Bangladesh, the present law of arbitration is mainly based on the Arbitration Act, 1940. As there are three types of arbitration we can found in the Arbitration Act of 1940 that’s why those are applicable in Bangladesh. The three types are;

1.         I.            Arbitration in the course of a suit.
2.      II.            Arbitration with the intervention of the court.
3.    III.            Arbitration otherwise than in the course of a suit and without the intervention of the court in practice.[16]

Here the 3^rd type of arbitration is commonly used in Bangladesh.

6. The rule and procedure of Arbitration in Bangladesh:

According to the rule of Arbitration Act of 1940, an arbitration agreement needs to be in written format. Parties can register it or if they want they can avoid the registering procedure also. While the Arbitration agreement is writing a reference can be made about current and future disputes which can arise between the parties. In absence of the specific legal rules, the rule for arbitration will be assigned by the arbitrator. The arbitrator will hear from the both side of disputes to confirm the equity in decision making. The arbitrator will collect all sorts of necessary evidence related to the disputes. If one party fails to provide appropriately assembled hearing then the arbitrator may proceed in the absence of the party and can try to find solution based on collected evidence but without proper evidence arbitration should not be applied.[17]

7. Conclusion:

So from the above analysis I think the detail understanding about the Model Conciliation Clause as well as the Model Arbitration Clause is very much clear. Even though there are some sorts of similarities plus dissimilarities we have found between these two but the main purpose is almost same, that is resolved the disputes between or among parties signing or signed contract. We also have found some practical example of the terms. On the other hand we have found the position of these two terms in the context of the legal system of Bangladesh plus the procedure of using these terms appropriately. And I think there are necessity of these two terms in both of our personal life and business life to maintain the society and to run company smoothly. Finally we can say that, including Model Conciliation Clause or Model Arbitration Clause while signing any contract can help the parties to resolve the resolved their future disputes easily. And also these two terms can help them for existing contract disputes between the parties. So I think based on the terms and condition of the contract as well as the types of the contract all parties need to agree in conciliation or arbitration to resolve the disputes which has raised or possibly would be raised in future.

 Bibliography

1. Online PDF document, “The Necessity of Law and Right Order”, 3^rd paragraph, Retrieved From: http://www.catholiccanonlaw.com/Law%20and%20Order.pdf
2. Meaning search at online, Retrieved From: http://www.investorwords.com/13039/clause.html
3. Meaning search at online, Retrieved From: http://www.businessdictionary.com/definition/clause.html
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15. Online Document, ‘Arbitration, Mediation and Conciliation: differences and similarities from an International and Italian business perspective’,1^st & 2^nd Paragraph of the title Arbitration, Mediation and Conciliation, Retrieved From: http://www.mediate.com/articles/sgubiniA2.cfm
16. Online html document, ‘Arbitration Law in Bangladesh’, 1^st paragraph, Retrieved From: http://www.vakilno1.com/saarclaw/bangladesh/arbitrationlaw/arbitration_law_in_bangladesh.htm
17. Online html document, ‘Arbitration Law in Bangladesh’, 2^nd & 6^th  paragraph, Retrieved From: http://www.vakilno1.com/saarclaw/bangladesh/arbitrationlaw/arbitration_law_in_bangladesh.htm