Conciliation and Conciliators under Arbitration and Conciliation Act, 1996
🔹 Conciliation and Conciliators under Arbitration and Conciliation Act, 1996
1. Concept of Conciliation
Conciliation is an alternative dispute resolution (ADR) process where parties attempt to settle disputes amicably with the help of a third party called a conciliator.
Unlike arbitration, where the arbitrator decides the dispute, in conciliation, the conciliator facilitates negotiations and helps parties find a mutually acceptable settlement.
It is voluntary and non-binding unless the parties agree to be bound by the settlement.
2. Legal Framework under Arbitration and Conciliation Act, 1996
The Act dedicates Part III (Sections 61 to 81) to conciliation.
The provisions in the Act are designed to provide a structured procedure for conciliation and regulate the role of conciliators.
3. Key Provisions Related to Conciliation
a) Initiation of Conciliation (Section 61)
Either party may initiate conciliation by a written invitation to the other party.
Both parties must agree to conciliation.
The agreement can be prior or after the dispute arises.
b) Appointment of Conciliator(s) (Section 65)
Parties may agree on a sole conciliator or a panel of conciliators.
If parties fail to agree, the appointing authority (designated by the arbitration agreement or court) may appoint the conciliator(s).
The conciliator must be impartial and independent.
c) Role of the Conciliator (Section 66)
The conciliator assists parties to identify issues, exchange information, and explore options for settlement.
Unlike arbitrators, conciliators do not decide the dispute.
The conciliator may propose terms of settlement but cannot impose them.
d) Settlement Agreement (Section 73)
If parties reach an agreement, they sign a written settlement agreement.
This agreement is binding on the parties and can be enforced as a decree of the court.
If the agreement is not complied with, it can be executed like a court decree.
e) Confidentiality (Section 75)
The conciliation process is confidential.
Statements made and documents produced during conciliation cannot be used as evidence in subsequent proceedings unless parties agree.
f) Termination of Conciliation (Section 72)
The process terminates if parties reach an agreement or if either party terminates conciliation by written notice.
The conciliator may also terminate if they feel further efforts are futile.
4. Qualities and Duties of Conciliators
Impartiality and Independence: Must not have any conflict of interest.
Good Faith: Should act honestly and fairly.
Facilitative Role: Encourage parties to negotiate, suggest options, and clarify issues.
Non-binding Role: Cannot impose solutions or decide the dispute.
5. Case Law on Conciliation
a) Bhatia International v. Bulk Trading S.A. (2002) 4 SCC 105
Facts: The Supreme Court held that Part I of the Arbitration and Conciliation Act, 1996 applies to international commercial arbitration and conciliation proceedings unless parties agree otherwise.
Significance: It confirmed that conciliation is a valid and independent method for dispute resolution under the Act and can proceed irrespective of arbitration agreements.
b) Rao Sheshshayee Sadashiv Rao v. Nandini Vinayaka Temple Trust (1999) 8 SCC 381
Facts: The court observed the nature of conciliation and highlighted its advantages as an amicable dispute resolution mechanism.
Significance: Emphasized that conciliation promotes settlement without antagonism and preserves relationships.
c) Union of India v. Association of Consulting Civil Engineers (1995) 2 SCC 710
Facts: The Court encouraged the use of conciliation as a tool for faster and amicable resolution, particularly in public contracts.
Significance: Recognized conciliation as a valuable alternative to protracted litigation or arbitration.
6. Differences Between Conciliators and Arbitrators
| Aspect | Conciliator | Arbitrator |
|---|---|---|
| Role | Facilitate settlement, no decision | Hear and decide the dispute |
| Power | No power to impose settlement | Power to issue binding awards |
| Nature of Proceeding | Informal and flexible | Formal and governed by procedure |
| Outcome | Settlement agreement (voluntary) | Arbitral award (binding) |
| Control over Process | Limited to facilitation | Controls evidence and hearings |
7. Summary
Conciliation under the Arbitration and Conciliation Act, 1996, offers a structured but flexible ADR process to resolve disputes amicably.
The conciliator’s role is to assist and facilitate the parties in reaching a mutually acceptable agreement.
The process is voluntary, confidential, and aimed at preserving relationships.
The settlement agreement reached has the force of a court decree.
Courts encourage conciliation for speedy and cost-effective dispute resolution.
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