Principles and Applications of Conciliation

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Principles and Applications of Conciliation

Date: 05/12/2020

Author: Shadab Mohammad Shah

Institute of Author: NLIU, Bhopal

Year: 3rd

Conciliation is a form of Alternate Dispute Resolution (hereinafter to be referred to as ADR); therefore all the proceedings and sessions of conciliation are done outside the court. How is conciliation different from other forms of ADRs? What are the principles of conciliation? Is the outcome of conciliation binding on the parties? Who appoints the conciliator? Who has the final say in conciliation proceedings? Can the decision of conciliation be challenged in the court of law? These are the few questions we’ll be dealing with in this article.

Conciliation and other forms of ADR

There are many forms of ADR, majorly used and most popular are, Arbitration, Mediation, Med-Arb, Conciliation, and Negotiation. Only common thing among the former four forms is the presence of third party, by virtue third party is neutral; negotiation on the other hand does not necessarily involve a presence of third party and it is usually done by the parties-in-dispute.

  1. Arbitration: this form of ADR very closely resembles the proceedings of the court, though not formal enough. An appointed arbitrator, who is a neutral third party, will facilitate a dialogue between the parties-in-dispute and at the end of the arbitration proceedings arbitrator gives a binding decision known as Arbitral Award.
  2. Mediation: A mediator is chosen or appointed by the court; function of the mediator is to facilitate smooth conversation between the parties-in-dispute and bring them to an understanding. Unlike arbitrator, mediator does not deliver any binding award, and it is totally on the parties to come to a conclusion.
  3. Med-Arb: Abbreviation of Mediation and Arbitration denotes the unique feature of this form of ADR, it starts as mediation and when the parties-in-dispute fail to come to a mutual understanding mediator takes up the role of an arbitrator and gives a binding award.
  4. Conciliation: This process is very similar to that of mediation, the subtle difference is the behaviour of mediator and conciliator; unlike mediator, conciliator is free to give, inter alia, advice, course of action, remedy, solution, whereas the mediator’s job is to facilitate the conversation between the parties and help them come to a mutual conclusion.

Principles of Conciliation

Part III of the Arbitration and Conciliation Act, 1996 governs the functioning of Conciliation in the territory of India.

  1. Scope of Conciliation (§ 61): Unless the parties-in-dispute have agreed otherwise or by virtue of any law in force, the option of conciliation is restricted, parties shall to conciliation of disputes arising out of any legal relationship, contractual or not.
  2. Role of Conciliator (§67): Conciliator is bound to assist the parties in an independent and impartial manner. S/he shall be guided by the principles of objectivity, fairness and justice, and should also consider, inter alia, 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 (§70 & §75): The conciliator shall disclose the substance of any information, to the other party, so that the parties involved have an opportunity to present appropriate explanation. In case the information furnished by a party is ordered to be kept confidential, the conciliator shall abide by it. Not only the conciliator but the parties are also bound by confidentiality, unless disclosure of information is required by law, or when disclosure is necessary for enforcement and implementation.
  4. Conciliation Proceedings: The proceedings of conciliation shall work in accordance with the conciliator; his/her actions must be appropriate and in good faith of the parties. Conciliator decides appropriate way for the session; session could be separate or together, though the conciliator shall take into account wishes of the parties [§67(3)].
  5. Good Faith (§71): Parties shall co-operate with a conciliator in good faith, they shall comply with the requests of the conciliator.
  6. Law Boundation (§66): The conciliator carrying the responsibility of the dispute resolution shall not be bound by the Code of Civil Procedure, 1908 or The Evidence Act, 1872.

Application and Procedure of Conciliation in India

The Arbitration and Conciliation Act, 1996 describes the process of conciliation in part III of the act. Procedure is as follows:

  1. Offer and Acceptance (§62): Under Section 62 of the act, a party interested in conciliation shall write to the other party communicating their request for conciliation in writing; the invitation shall briefly identify the subject of the dispute. Conciliation commences when the other party responds in affirmative to the invitation, if the other party fails to respond within 30 days, after sending the invitation, or within the time stipulated in the invitation, then the party may elected rejection of the invitation and accordingly communicate it to the other party.
  2. Appointment (§64): Once the invitation is accepted the disputed parties may choose the number of conciliators, conciliators can be one or more (§63), in case of more than one conciliator all the conciliators shall act jointly.
  • Parties jointly can approach an institution or a person to recommend a conciliator/s. The institution or the person appointing conciliator shall put into consideration of appointing an independent or impartial conciliator, and it is also advised to appoint a sole or third conciliator of a nationality other than that of the parties.   
  • Parties have a right to choose their conciliator; in case of one conciliator both the parties shall agree to the appointment; in case of 2 conciliators either may appoint a conciliator of their choice; in case of three conciliators both party appoints a conciliator of their choice and choose the third conciliator jointly, the third conciliator shall preside the proceedings.
  1. Information for conciliation (§65): The conciliator/s is at the liberty of requesting the parties in dispute to submit a brief written statement that describes the general nature of the dispute and the points at issue, such copy shall also be sent to the other party. The conciliator may also request additional information or evidence to aid in conciliation; the parties-in-dispute are mandated to provide appropriate proof/evidences to the conciliator and a copy to the other party.
  2. Administrative Assistance (§68): If the parties or conciliator, with the consent of the parties, deems fit to call for administrative assistance, they may arrange it from a suitable institution or person.
  3. Settlement Agreement (§73): If the conciliator is of the opinion that there is an appropriate settlement option, then the conciliator shall formulate the terms of the proposed settlement and submit it to the parties. Parties are free to either accept the proposed settlement or present their observation pursuant to which the conciliator may alter the former proposed settlement.
  • If the parties come up with a settlement and wish to formulate an agreement they may do so, or ask the aid of the conciliator to either draw up an agreement or help the parties formulate an agreement. Once a settlement agreement has been signed it becomes binding on the parties and people concerned. Final work is of the conciliator to authenticate the settlement agreement and furnish a copy to the concerned parties.
  1. Termination (§76): Either parties or the conciliator may terminate the conciliation proceeding by a written declaration. If the conciliator proposes the termination s/he after consultation with the parties may declare that further efforts at conciliation are no longer justified; if parties submit a written declaration for termination of proceedings then the declaration shall be addressed to the conciliator; if a single party submits a written declaration for termination it shall be with respect to the other party and the conciliator. Conciliation proceedings come to termination on the date of the declaration.

Once the settlement agreement has been authenticated the process of conciliation comes to an end; the settlement agreement has the same status as that of an arbitral award rendered by the Arbitral Tribunal.

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