Conciliation

Conciliation is one of the non binding procedures where an impartial third party, known as the
conciliator, assist the parties to a dispute in reaching a mutually agreed settlement of the dispute.
As per the Halsbury Laws of England, conciliation is a process of persuading parties to each an
agreement. Because of its non judicial character, conciliation is considered to be fundamentally
different from that of litigation. Generally Judges and Arbitrators decide the case in the form of a
judgment or an award which is binding on the parties while in the procedure of the conciliation
,the conciliator who is often a government official gives its report in the form of
recommendations which is made public.

Definition and Meaning of conciliation-

The simplest meaning of conciliation is the settlement of the disputes outside the court .It is a
process by which the discussion between the parties are kept going through the participation of a
conciliator. Conciliation is one of the non binding procedures where an impartial third party,
known as the conciliator, assist the parties to a dispute in reaching a mutually agreed settlement
of the dispute. As per the Halsbury Laws of England, conciliation is a process of persuading
parties to each an agreement. Because of its non judicial character, conciliation is considered to
be fundamentally different from that of litigation. Generally Judges and Arbitrators decide the
case in the form of a judgment or an award which is binding on the parties while in the procedure
of the conciliation ,the conciliator who is often a government official gives its report in the form
of recommendations which is made public.

Application and Scope-

Section 61 of the Arbitration and Conciliation Act of 1996 provides for the Application and
Scope of Conciliation. Section 61 points out that the process of conciliation extends, in the first
place, to disputes, whether contractual or not. But the disputes must arise out of the legal
relationship. It means that the dispute must be such as to give one party the right to sue and to the
other party the liability to be sued. The process of conciliation extends, in the second place, to all
proceedings relating to it. But Part III of the Act does not apply to such disputes as cannot be
submitted to conciliation by the virtue of any law for the time being in force.

Number and qualification of conciliators-Section 63 fixes the number of conciliators. There shall
be one conciliator. But the parties may by their agreement provide for two or three conciliators.
Where the number of conciliator is more than one ,they should as general rule act jointly.

Appointment of conciliators-

Section 64 deals with the appointment of the conciliators.When the invitation to the conciliation
is accepted by the other party, the parties have to agree on the composition of the conciliation
tribunal. In the absence of any agreement to the contrary ,there shall be only one conciliator. The
conciliation proceeding may be conducted by a sole conciliator to be appointed with the concent
of both the parties, failing to which the same may be conducted by two conciliators (maximum
limit is three), then each party appoints own conciliator ,and the third conciliator is appointed
unanimously by both the parties. The third conciliator so appointed shall be the presiding
conciliator. The parties to the arbitration agreement instead of appointing the conciliator
themselves may enlist the assistance of an institution or person of their choice for appointment of
conciliators. But the institution or the person should keep in view during appointment that, the
conciliator is independent and impartial.

Principles of Procedure

1) Independence and impartiality [Section 67(1)]-

The conciliator should be independent and impartial. He should assist the parties in an
independent and impartial manner while he is attempting to reach an amicable settlement of their
dispute.

2) Fairness and justice[Section 67(2)]-

The conciliator should be guided by the principles of fairness and justice. He should take into
consideration ,among other things , the rights and obligations of the parties, the usages of the
trade concerned ,and the circumstances surrounding the dispute ,including any previous business
practices between the parties.
3) Confidentiality [Section 70]-

The conciliator and the parties are duly bound to keep confidential all matters relating to
conciliation proceedings. Similarly when a party gives a information to the conciliator on the
condition that it be kept confidential , the conciliator should not disclose that information to the
other party.

4) Disclosure of the information[Section 70]-

When the conciliator receives a information about any fact relating to the dispute from a party ,
he should disclose the substance of that information to the other party.The purpose of this
provision is to enable the other party to present an explaination which he might consider
appropriate.

5) Co-operation of the parties with Conciliator [S. 71]-

The parties should in good faith cooperate with the conciliator. They should submit the written
materials , provide evidence and attend meetings when the conciliator requests them for this
purpose.

Procedure of conciliation

1) Commencement of the conciliation proceedings [Section 62]-

The conciliation proceeding are initiated by one party sending a written invitation to the other
party to conciliate. The invitation should identify the subject of the dispute. Conciliation
proceedings are commenced when the other party accepts the invitation to conciliate in writing.
If the other party rejects the invitation, there will be no conciliation proceedings. If the party
inviting conciliation does not receive a reply within thirty days of the date he sends the invitation
or within such period of time as is specified in the invitation, he may elect to treat this as
rejection of the invitation to conciliate. If he so elects he should inform the other party in writing
accordingly.
2) Submission of Statement to Conciliator [Section 65] –

The conciliator may request each party to submit to him a brief written statement. The statement
should describe the general nature of the dispute and the points at issue. Each party should send a
copy of such statement to the other party. The conciliator may require each party to submit to
hima further written statement of his position and the facts and grounds in its support. It may be
supplemented by appropriate documents and evidence. The party should send the copy of such
statements , documents and evidence to the other party. At any stage of the conciliation
proceedings , the conciliator may request a party to submit to him any additional information
which he may deem appropriate.

3) Conduct of Conciliation Proceedings[Section 69(1),67(3)]-

The conciliator may invite the parties to meet him. He may communicate with the parties orally
or in writing. He may meet or communicate with the parties together or separately. In the
conduct of the conciliation proceedings, the conciliator has some freedom. He may conduct them
in such manner as he may consider appropriate. But he should take in account the circumstances
of the case, the express wishes of the parties, a party’s request to beheard orally and the need of
speedy settlement of the dispute.

4) Administrative assistance [S. 68]-

Section 68 facilitates administrative assistance for the conduct of conciliation proceedings.

Case laws relating to Conciliation-

1. Haresh Dayaram Thakur v. State of Maharashtra and Ors. while dealing with the provisions of
Sections 73 and 74 of the Abbitration and Conciliation Act of 1996 in paragraph 19 of the
judgment as expressed thus the court held that-

"19. From the statutory provisions noted above the position is manifest that a conciliator is a
person who is to assist the parties to settle the disputes between them amicably. For this purpose
the conciliator is vested with wide powers to decide the procedure to be followed by him
untrammeled by the procedural law like the Code of Civil Procedure or the Indian Evidence Act,
1872. When the parties are able to resolve the dispute between them by mutual agreement and it
appears to the conciliator that their exists an element of settlement which may be acceptable to
the parties he is to proceed in accordance with the procedure laid down in Section 73, formulate
the terms of a settlement and make it over to the parties for their observations; and the ultimate
step to be taken by a conciliator is to draw up a settlement in the light of the observations made
by the parties to the terms formulated by him. The settlement takes shape only when the parties
draw up the settlement agreement or request the conciliator to prepare the same and affix their
signatures to it. Under Sub-section (3) of Section 73 the settlement agreement signed by the
parties is final and binding on the parties and persons claiming under them. It follows therefore
that a successful conciliation proceedings comes to end only when the settlement agreement
signed by the parties comes into existence. It is such an agreement which has the status and
effect of legal sanctity of an arbitral award under Section 74”.

2. In Mysore Cements Ltd. v. Svedala Barmac Ltd it was said that Section 73 of the Act speaks
of Settlement Agreement. Sub-section (1) says that when it appears to the Conciliator that there
exist elements of settlement which may be acceptable to the parties, he shall formulate the terms
of a possible settlement and submit them to the parties for their observation. After receiving the
observations of the parties, the Conciliator may reformulates the terms of a possible settlement in
the light of such observations. In the present case, we do not find there any such formulation and
reformulation by the Conciliator, under Sub- section (2), if the parties reach a settlement
agreement of the dispute on the possible terms of settlement formulated, they may draw up and
sign a written settlement agreement. As per Sub-section

(3) when the parties sign the Settlement Agreement, it shall be final and binding on the parties
and persons claiming under them respectively. Under Sub-section (4), the Conciliator shall
authenticate the Settlement Agreement and furnish a copy thereof to each of the parties. From the
undisputed facts and looking to the records, it is clear that all the requirements of Section 73 are
not complied with.
Conclusion-
The process of conciliation as an alternate dispute redressal mechanism is advantageous to the
parties in the sense that it is cost effective and expeditious, it is simple,fast and convenient then
the lengthy litigation procedure and it eliminates any scope of biasness and corruption. The
parties who wish to settle their disputes they can be provided great intensive by the process of
conciliation. In order to enable the conciliator to play his role effectively ,the parties should be
brought together face to face at a common place where they can interact face to face and with the
conciliator, separately or together without any distraction and with only a single aim to sincerely
arrive at the settlement of the dispute. Conciliation is a boon and it is a better procedure to settle
any dispute as in this process it is the parties who by themselves only come to the settlement of
the dispute and the role of the conciliator is to bring parties together and to make a atmosphere
where parties can themselves resolve their disputes. Conciliation tries to individualize the
optimal solution and direct parties towards a satisfactory common agreement. In conciliation, the
conciliator plays a relatively direct role in the actual resolution of a dispute and even advises the
parties on certain solutions by making proposals for settlement.