The Different Meanings of International Commercial Conciliation

Abstract

The meanings of legal textual objects, such as laws, legal principles, concepts, and judgments, change over time. New meanings are proposed by legislators, courts, lawyers, and other legal actors, and are then argued over in courts. In this article, based on my 2011 Master’s thesis, I discuss some of the different meanings proposed for conciliation1 in the context of international commercial dispute resolution. On the basis of contemporary legislative material, caselaw and jurisprudence, I identify three distinct legal meanings. The first meaning is that of a blanket denial of any legal effect of conciliation agreements. Under this meaning, courts simply leave conciliation agreements unenforced. The second meaning is that of applying a restrictive interpretation on conciliation agreements. Under this meaning, conciliation agreements must be drafted in a particular form and any deficiency in them may cause the agreement to be denied legal meaning. The third meaning is that of applying a liberal interpretation to conciliation agreements. Under this meaning, any clearly expressed intention to conciliate is given independent legal effect, if necessary through a constructive interpretation that overcomes deficiencies in form. Lacking any binding international legislation on conciliation, I reflect on these three different meanings of conciliation in light of the brocard pacta sunt servanda; agreements must be kept. A key problem is that no single content can be identified for pacta sunt servanda itself; courts use this brocard to represent not only different interpretive paradigms, but also the more general principles of equity. Agreements are enforced to the extent that their content is understandable and acceptable to the relevant legal system. Discourse over this acceptability takes place through the principle of pacta sunt servanda and all the concepts and ideas used to clarify that principle. Thus, identifying the true motives of courts that apply different kinds of meaning to conciliation agreements is difficult. Therefore, I argue that the only meaning that can reasonably be attributed to conciliation in the international commercial context is that of a liberal interpretation seeking to assign legal effect to all agreements to conciliate. Doing so would alleviate paradigmatic confusion when courts interpret conciliation agreements and better protect the true intentions of the parties. Another compelling reason for adopting a liberal interpretation of conciliation agreements is the inherent value of conciliation for international dispute resolution in general. It has been recognised by business actors, international dispute resolution institutes, international and national legislation, and courts of law. In practice, while leading authorities view preparing for a restrictive interpretation of conciliation agreements as a “safe choice”, business actors should also acknowledge that courts have increasing possibilities for applying a liberal interpretation to conciliation agreements. Thus, business actors should avert negative consequences, for example in relation to the validity of arbitral awards, by acting to uphold any contractual intention to conciliate prior to commencing litigation. Section 2 provides an overview of the legal and practical contexts of international commercial conciliation. In Section 3, I review a number of legal instruments and caselaw on conciliation and, based on these, identify three different meanings given to conciliation in different legal contexts. Finally, in Section 4, I evaluate the three different meanings of conciliation in light of their legal and practical implications. Section 4.4 provides an overview of the key findings on a general level and particularly in relation to Finnish law.