CONCILIATION

UNIT- 2, TOPIC-3
 CONCILIATION
• Conciliation is governed in India under Arbitration and Conciliation Act, 1996.
• Conciliation is a voluntary process in comparison to Arbitration and Litigation
in courts. Conciliation is a compromise settlement between the parties with
the assistance of a Conciliator.
• In it, a third party assists parties to resolve their dispute by conciliation. The
third party is called the conciliator. He facilitates talking between parties.
• Under section 61, conciliation is provided for disputes arising out of legal
relationships, whether contractual or not.
• Conciliator can talk to parties involved separately or jointly so that the parties
can arrive at a mutually acceptable solution through facilitating talks between
the parties.
 CONCILIATOR
• The conciliators can be one generally, but if parties want, there can be
2 or 3 conciliators. Appointment process is provided under Section 64
• Conciliator is appointed by consent of both parties to the dispute.
• A Civil Court may also refer both parties to dispute to a Conciliator.
• The Conciliator does not take any decision on the dispute before him.
He can express an opinion to the parties about the merits of the
dispute to help the parties to reach a settlement.
• No evidence is recorded by the Conciliator nor are any arguments
heard. Both the parties may discuss their respective points of view
and with the help of the Conciliator resolve their differences.
 CONCILIATOR
• The proceedings before the Conciliator are CONFIDENTIAL, But in
exceptional circumstances it can be disclosed.
• Conciliator is NOT BOUND by CPC, 1908 or IEA, 1872.
• He shall assist the parties impartially and will be guided by the
principles of natural justice
• The conciliator has to bring the parties into such a state of mind as to
facilitate them to come to an acceptable compromise.
• Conciliator may express an opinion about merits of dispute to parties.
 POWERS GIVEN TO THE PARTIES
• Any party may terminate the conciliation proceedings at any time
without assigning any reason.
• The parties control the process and outcome of the dispute.
 SETTLEMENT AGREEMENT
• When it appears to the conciliator that there exists an element of
settlement, which could be acceptable to the parties, he shall
formulate it and submit to the parties for observations.
• Suggestions of parties  reformulate
• Signed by parties and conciliator
• Once signed: final and binding
 • PART- 3, SECTION- 61 TO 81 OF THE ARBITRATION AND CONCILIATION ACT,
1996 DEALS WITH CONCILIATION
• SECTION 61: APPLICATION AND SCOPE: (1) Save as otherwise provided by
any law in force and unless parties have otherwise agreed, this Part shall
apply to conciliation of disputes arising out of legal relationship, whether
contractual or not and to all proceedings relating thereto.
(2) This Part shall not apply where by virtue of any law for the time being in
force certain disputes may not be submitted to conciliation.
• All the disputes which arise out of any legal relationship, whether it is
contractual or not.
• Not applicable: law do not allow conciliation, parties agree to not refer the
matter to conciliation.
• Criminal matters are not resolved through conciliation.
SECTION 62: COMMENCEMENT OF CONCILIATION PROCEEDINGS:
(1) The party initiating conciliation shall send to other party a written
invitation to conciliate, briefly identifying the subject of the dispute.
(2) Conciliation proceedings shall commence when the other party accepts
in writing the invitation to conciliate.
(3) If other party rejects invitation, there will be no conciliation proceedings.
(4) If the party initiating conciliation does not receive a reply within thirty
days from the date on which he sends the invitation, or within such other
period of time as specified in the invitation, he may elect to treat this as a
rejection of the invitation to conciliate and if he so elects, he shall inform
in writing the other party accordingly.
• SECTION 63: NUMBER OF CONCILIATORS
(1) There shall be one conciliator unless the parties agree that there
shall be two or three conciliators.
(2) Where there is more than one conciliator, they shall act jointly.
IF THE PARTIES DO NOT AGREE, THEN CONCILIATORS MUST BE EVEN IN
NUMBER.
• SECTION 64: APPOINTMENT OF CONCILIATORS:
(1) (a) in conciliation proceedings, with one conciliator, the parties may
agree on the name of a sole conciliator; (b) in conciliation proceedings
with two conciliators, each party may appoint one conciliator; (c) in
conciliation proceedings with three conciliators, each party may appoint
one conciliator and the parties may agree on the name of the third
conciliator who shall act as the presiding conciliator.
• (2) Parties may enlist the assistance of a suitable institution or person
in connection with appointment of conciliators and in particular,—
(a) REQUEST: a party may request such an institution or person to
recommend the names of suitable individuals to act as conciliator;
(b) (b) AGREE: the parties may agree that the appointment of one or
more conciliators be made directly by such an institution or person:
Provided that in recommending or appointing individuals to act as
conciliator, the institution or person shall have regard to such
considerations as are likely to secure appointment of an independent
and impartial conciliator and, with respect to a sole or third conciliator,
shall take into account the advisability of appointing a conciliator of a
nationality other than the nationalities of the parties.
• SECTION: 65: SUBMISSION OF STATEMENTS TO CONCILIATOR:
(1) BRIEF WRITTEN STATEMENT: The conciliator, upon his appointment,
may request each party to submit to him a brief written statement
describing the general nature of the dispute and the points at issue.
Each party shall send a copy of such statement.
(2) FURTHER WRITTEN STATEMENT: The conciliator may request each
party to submit to him a further written statement of his position and
the facts and grounds in support thereof, supplemented by any
documents and other evidence that such party deems appropriate. The
party shall send a copy of such statement, documents and evidences to
the other party.
(3) ADDITIONAL INFORMATION: At any stage of the conciliation
proceedings, the conciliator may request a party to submit to him such
additional information as he deems appropriate.
• SECTION 66: CONCILIATOR NOT BOUND BY CERTAIN ENACTMENTS:
The conciliator is not bound by the CPC, 1908 or the Indian Evidence Act, 1872.
• SECTION 67: ROLE OF CONCILIATOR:
(1) The conciliator shall assist the parties in an independent and impartial manner in their
attempt to reach an amicable settlement of their dispute.
(2) The conciliator shall be guided by principles of objectivity, fairness and justice, giving
consideration to, 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) The conciliator may conduct the conciliation proceedings in such a manner as he
considers appropriate, taking into account the circumstances of the case, the wishes of
parties, including any request by a party that the conciliator hear oral statements, and
the need for a speedy settlement of the dispute.
(4) The conciliator may, at any stage of the conciliation proceedings, make proposals for a
settlement of the dispute. Such proposals need not be in writing and need not be
accompanied by a statement of the reasons therefor
• SECTION 68: ADMINISTRATIVE ASSISTANCE: In order to facilitate the
conduct of the conciliation proceedings, the parties, or the conciliator
with the consent of the parties, may arrange for administrative
assistance by a suitable institution or person.
• SECTION 69: COMMUNICATION BETWEEN CONCILIATOR & PARTIES:
(1) Conciliator may invite the parties to meet him or may communicate
with them orally or in writing. He may meet or communicate with the
parties together or with each of them separately. (2) Unless the parties
have agreed upon the place where meetings with conciliator are to be
held, such place shall be determined by conciliator, after consultation
with the parties, having regard to the circumstances of the conciliation
proceedings.
• SECTION: 70: DISCLOSURE OF INFORMATION:
When the conciliator receives factual information concerning dispute from a party,
he shall disclose that information to the other party in order that the other party
may have the opportunity to present any explanation which he considers
appropriate.
Provided that when a party gives any information to the conciliator subject to a
specific condition that it be kept confidential, conciliator shall not disclose that
information to the other party.
• SECTION 71: Co-operation of parties with conciliator:
The parties shall in good faith co-operate with the conciliator and shall endeavour
to comply with requests by the conciliator to submit written materials, provide
evidence and attend meetings.
• SECTION 72: SUGGESTIONS BY PARTIES FOR SETTLEMENT OF DISPUTE:
Each party may, on his own initiative or at the invitation of the conciliator, submit
to the conciliator suggestions for the settlement of the dispute.
• SECTION 73: SETTLEMENT AGREEMENT:
(1) When it appears to the conciliator that there exist elements of a
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 observations. After receiving the observations of the parties, the
conciliator may reformulate the terms of a possible settlement in the
light of such observations.
(2) If the parties reach agreement on a settlement of the dispute, they
may draw up and sign a written settlement agreement. If requested by
the parties, the conciliator may draw up, or assist the parties in
drawing up, the settlement agreement.
(3) When the parties sign the settlement agreement, it shall be final and
binding on the parties and persons claiming under them respectively.
(4) The conciliator shall authenticate the settlement agreement and
furnish a copy thereof to each of the parties.
• SECTION 74: STATUS AND EFFECT OF SETTLEMENT AGREEMENT:
The settlement agreement shall have the same status and effect as if it
is an arbitral award on agreed terms on the substance of the dispute
rendered by an arbitral tribunal under section 30.
• SECTION 75: CONFIDENTIALITY:
Conciliator and the parties shall keep confidential all matters relating to
the conciliation proceedings. Confidentiality shall extend also to the
settlement agreement, except where its disclosure is necessary for
purposes of implementation and enforcement.
• SECTION 76: TERMINATION OF CONCILIATION PROCEEDINGS:
(a) by the signing of the settlement agreement by the parties, on the
date of the agreement; or
(b) by a written declaration of the conciliator, after consultation with
the parties, to the effect that further efforts at conciliation are no
longer justified, on the date of the declaration; or
(c) by a written declaration of the parties addressed to the conciliator
to the effect that the conciliation proceedings are terminated, on
the date of the declaration; or
(d) by a written declaration of a party to the other party and the
conciliator, if appointed, to the effect that conciliation proceedings
are terminated, on the date of the declaration.
• SECTION 77: RESORT TO ARBITRAL OR JUDICIAL PROCEEDINGS:
The parties shall not initiate, during the conciliation proceedings, any
arbitral or judicial proceedings in respect of a dispute that is the
subject-matter of the conciliation proceedings except that a party may
initiate arbitral or judicial proceedings where, in his opinion, such
proceedings are necessary for preserving his rights.
• SECTION 78: COSTS:
(1) Upon termination of proceedings, the conciliator shall fix the costs
of the conciliation and give written notice thereof to parties.
(2) For the purpose of sub-section (1), “costs” means reasonable costs
relating to: (a) the fee and expenses of conciliator and witnesses
requested by the conciliator with the consent of the parties; (b) any
expert advice requested by conciliator with the consent of the
parties; (c) any assistance provided pursuant to clause (b) of sub-
section (2) of section 64 and section 68. (d) any other expenses
incurred in connection with the conciliation proceedings and the
settlement agreement.
(3) The costs shall be borne equally by the parties unless the
settlement agreement provides for a different apportionment. All
other expenses incurred by a party shall be borne by that party.
• SECTION 79: DEPOSITS:
(1) The conciliator may direct each party to deposit an equal amount as
an advance for the costs referred to in sub-section(2) of section 78
which he expects will be incurred. (2) During the course of conciliation
proceedings, the conciliator may direct supplementary deposits in an
equal amount from each party. (3) If the required deposits are not paid
in full by both parties within thirty days, the conciliator may suspend
the proceedings or may make a written declaration of termination of
the proceedings to the parties, effective on the date of that declaration.
(4) Upon termination of the conciliation proceedings, the conciliator
shall render an accounting to the parties of the deposits received and
shall return any unexpended balance to the parties
• SECTION 80: ROLE OF CONCILIATOR IN OTHER PROCEEDINGS:
Unless otherwise agreed by the parties,
(a) the conciliator shall not act as an arbitrator or as a representative or
counsel of a party in any arbitral or judicial proceeding in respect of a
dispute that is the subject of the conciliation proceedings; (b) the
conciliator shall not be presented by the parties as a witness in any
arbitral or judicial proceedings.
• SECTION 81: ADMISSIBILITY OF EVIDENCE IN OTHER PROCEEDINGS:
The parties shall not rely on or introduce as evidence in arbitral or
judicial proceedings, whether or not such proceedings relate to the
dispute that is the subject of the conciliation proceedings,— (a) views
expressed or suggestions made by the other party in respect of a
possible settlement of the dispute; (b) admissions made by the other
party in the course of the conciliation proceedings; (c) proposals
made by the conciliator; (d) the fact that other party had indicated his
willingness to accept a proposal for settlement made by the
conciliator.
• When will the conciliation proceedings comes to an end?
Conciliation proceedings comes to an end when the settlement
agreement between the parties comes into existence.