Dispute Resolution Mechanism – Conciliation
1. Meaning of Conciliation
Conciliation is a voluntary, non-binding dispute resolution process where a neutral third party, called a conciliator, helps the disputing parties to reach a mutually acceptable settlement. The conciliator does not have the authority to impose a decision like in arbitration or litigation. The goal is to facilitate communication, clarify issues, and propose solutions.
Key Features:
Voluntary: Parties must agree to conciliation.
Non-binding: Parties are free to accept or reject the proposal.
Flexible: No strict procedural rules; parties can define their own process.
Confidential: Discussions and documents are usually private.
Assisted negotiation: The conciliator assists but does not decide the dispute.
2. Legal Framework in India
In India, conciliation is recognized under various laws:
The Arbitration and Conciliation Act, 1996
Part III of the Act deals with conciliation.
Sections 61 to 81 specifically provide for conciliation:
Section 61: Parties can agree to refer disputes to conciliation at any time.
Section 65: Appointment of conciliator.
Section 73: Settlement agreement becomes enforceable as a contract.
Section 74: Confidentiality of conciliation.
Other Laws Encouraging Conciliation
Companies Act, 2013: Promotes conciliation in corporate disputes.
Industrial Disputes Act, 1947: Conciliation proceedings before labor disputes go to arbitration.
Consumer Protection Act: Mediation/conciliation is encouraged before litigation.
3. Process of Conciliation
Initiation
One party requests conciliation either through written notice or mutual agreement.
Appointment of Conciliator
Parties may appoint a single conciliator or a panel (as per the agreement or institution rules).
Preliminary Meeting
The conciliator explains the process, ensures confidentiality, and identifies key issues.
Exchange of Information & Negotiation
Parties present their claims, and the conciliator may suggest solutions or compromises.
Proposals for Settlement
The conciliator can suggest terms but cannot impose them.
Settlement Agreement
If parties agree, a conciliation settlement agreement is drafted.
It is legally enforceable as per Section 73 of the Arbitration and Conciliation Act, 1996.
Failure to Settle
If no agreement is reached, parties may pursue arbitration or litigation.
4. Advantages of Conciliation
Cost-effective compared to court proceedings.
Faster resolution of disputes.
Maintains business or personal relationships.
Confidential and non-adversarial.
Parties retain control over the outcome.
5. Case Law Illustrations
Case 1: Salem Advocate Bar Association vs. Union of India (2005) 6 SCC 344
Facts: The Supreme Court recognized the role of conciliation and mediation in reducing the burden of litigation in courts.
Principle: Conciliation is an effective tool to resolve disputes amicably and should be encouraged wherever possible.
Case 2: Oil & Natural Gas Corporation Ltd. vs. Saw Pipes Ltd., (2003) 5 SCC 705
Facts: The dispute involved a commercial contract. The court observed that arbitration or conciliation should be preferred over litigation for commercial disputes.
Principle: Conciliation provides a flexible and speedy alternative to litigation and is a recognized mode under the Arbitration and Conciliation Act, 1996.
Case 3: Bharat Petroleum Corporation Ltd. vs. Great Eastern Shipping Co. Ltd., (2000) 1 Arb LR 147
Facts: Parties tried conciliation before initiating arbitration.
Principle: Courts emphasized that conciliation can be an effective method to settle disputes and that failure in conciliation does not affect subsequent legal remedies.
6. Conclusion
Conciliation is a voluntary and non-adversarial dispute resolution mechanism aimed at facilitating amicable settlement. It is particularly useful in commercial, labor, and corporate disputes. Courts in India have recognized conciliation as a flexible, confidential, and cost-effective alternative to litigation. Proper use of conciliation can save time, money, and relationships.
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