Law Relating to Conciliation as a Mode of Alternative Dispute Resolution

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The most important feature of the Arbitration and Conciliation Act, 1996 (“Act”) is that it provides an exhaustive and detailed framework for the conduct of conciliation proceedings. In Part – III of the Act, the legislature for the first time provided for a detailed statutory framework for the conduct of conciliation proceedings outside the Court.

The Conciliation Rules adopted in the year 1980 by the UNCITRAL were comprehensive enough and were conceived primarily in the context of dispute resolution in international commercial relations. The provisions in Part – III of the Act took the said Conciliation Rules 1980 as a Model for conciliation Rules, irrespective of whether the conciliation was domestic or international.

Part – III will apply to the conciliation of any dispute between the parties arising out of a legal relationship, whether contractual or not, where the parties agree to seek an amicable settlement of that dispute by conciliation; except where the conciliation of any particular dispute is barred by any law for the time being in force.[i]

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A conciliation proceeding is initiated by a party sending to the other party a written invitation to conciliate. Once the other party accepts in writing the invitation to conciliate, the conciliation proceedings start.[ii] It is for the parties to agree as to the number of conciliators. Unless the parties agree that there should be two or three conciliators, there will be only one conciliator. The conciliators will in the conduct of conciliation, as a general rule act jointly.[iii]

Where the parties have not enlisted the assistance of a suitable institution or person, the parties themselves can agree on the name of a sole conciliator. Where the conciliation is with two conciliators, each party may appoint one conciliator. Where the conciliation is by three conciliators, each party may appoint one conciliator and the parties may agree on the name of the third conciliator, who will act as the presiding conciliator.[iv] Section 66 of the Act specifically provides that the conciliator is not bound either by the Code of Civil Procedure, 1908 or the Indian Evidence Act, 1872.

The role of the conciliator is to assist the parties independently and impartially in their attempt to reach an amicable settlement of their dispute.[v] The conciliator is to be guided by the principles of objectivity, fairness, and justice. He should also consider the usage of the trade concerned, the circumstances surrounding the dispute, including any previous business practices between the parties.[vi] The manner of conducting the conciliation process is left to the conciliator. After taking into account the wishes of the parties, he may allow a party to present an oral statement if the party so wishes.[vii] At any stage of the conciliation proceedings, the conciliator may make proposals for the settlement of the dispute. The proposal need not be in writing and need not be accompanied by reasons.[viii]

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The conciliator after his appointment may call upon the parties to present a written summary of their respective cases together with any relevant documents.[ix] After going through the summary of the case filed by each party, the conciliator may hold a joint meeting with the parties, where each party may make a brief oral representation of its case. Thereafter, the conciliator may also hold private meetings, often referred to as caucuses, with each party separately.[x] While doing so, he always tries to bring the parties closer to an agreement. Where the parties are so inclined, he may even suggest a settlement for acceptance by the parties. Each party may also submit to the conciliator suggestions for the settlement of the dispute.[xi] If the conciliator receives faculty information from any party, he may have an opportunity to present its explanation, if any.

However, any information required by the party to be kept confidential shall not be disclosed by the conciliator to the other party.[xii] There may be several rounds of separate meetings. If the conciliator is of the view that there is no scope for agreement between the parties or where the parties or any of them indicate its unwillingness to pursue conciliation, the conciliator may terminate the proceedings.[xiii] Where the parties reach an agreement on a settlement, the conciliator may hold a final joint sitting for drawing up and signing a settlement agreement by the parties.[xiv] When the parties sign the settlement agreement, it becomes final and binding on the parties and persons claiming under them. The conciliator also authenticates the settlement agreement and furnishes a copy thereof to each of the parties.[xv]

The conciliator and the parties keep confidential all matters relating to conciliation proceedings. They may treat the settlement agreement also as confidential except where its disclosure is necessary for implementation and enforcement.[xvi]

As a principal inherent in conciliation procedure, the conciliator and the parties are bound by certain discipline. Unless all the parties otherwise agree, the conciliator is stopped from acting as an arbitrator or as a representative of a party in any arbitral, judicial or other proceedings in respect of a dispute which is or has been the subject matter of conciliation proceedings in which he acted as a conciliator. The conciliator cannot also be presented by a party as a witness in any such proceedings.[xvii] There is also a bar on the parties relying on or introducing as evidence in any subsequent arbitral or judicial proceedings, the views expressed or suggestions made by either party in the course of conciliation proceedings.[xviii] In other words, any information about the conciliation proceedings, whether it has resulted in a settlement agreement or not is required to be kept confidential by all the parties and the conciliators.

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The parties may initiate conciliation even during the pendency of arbitration proceedings involving the same dispute, without prejudice to their respective stands in those proceedings. If such conciliation succeeds, they have to report to the arbitral tribunal who may record the settlement in the form of an arbitral award.[xix]

Concluding the above-mentioned we can say that Conciliation is a non-adjudicatory ADR process, which is also governed by the provisions of the Act. There can be a valid reference to conciliation only if both parties to the dispute agree to have negotiations with the help of a third party or third parties either by an agreement or by the process of invitation and acceptance provided in Section 62 of the Act followed by the appointment of conciliator/s as provided in Section 64 of the Act. If both parties do not agree to conciliation, there can be no ‘conciliation’. As a consequence, as in the case of arbitration, the court cannot refer the parties to conciliation under Section 89, in the absence of consent by all parties. As contrasted from arbitration, when a matter is referred to conciliation, the matter does not go out of the stream of court process permanently. If there is no settlement, the matter is returned to the court for framing issues and proceeding with the trial.

[i] Section 61.

[ii] Section 62.

[iii] Section 63.

[iv] Section 64.

[v] Section 67(1).

[vi] Section 67(2).

[vii] Section 67 (3).

[viii] Section 67 (4).

[ix] Section 65.

[x] Section 69.

[xi] Section 72.

[xii] Section 70.

[xiii] Section 76.

[xiv] Section 73 (1) and (2).

[xv] Section 73(3) and (4).

[xvi] Section 75.

[xvii] Section 80.

[xviii] Section 81.

[xix] Section 30.


The Authors of this article, Sanjeev Kumar is a Partner and Anshul Sehgal is a Managing Associate in the Litigation & Dispute Resolution Team at L&L Partners Law Offices, New Delhi. They can be reached out at [email protected] and [email protected] The views expressed are personal.


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L&L Partners Law Officeshttps://www.llpartners.com/
Since its inception in 1990 which coincides with India’s economic liberalization, L&L, formerly Luthra & Luthra Law Offices, has assisted numerous multinational corporations to set up their presence in India, and navigate the complex Indian legal system. Our new identity reaffirms inclusiveness and recognizes the contributions of its founder, partners, associates and support staff in creating a leading institution.
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