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Conciliation: A form of Alternate Dispute

Resolution

Project Submitted to:


Mr. Manoj Kumar
(Faculty of Alternate Dispute Resolution)

Project Submitted by:


Rohit Dongre
Semester VI, Section B
Roll no. 132

Submitted on:
15.02.2016

Hidayatullah National Law University, Naya Raipur, Chhattisgarh


Declaration

I hereby declare that the project work entitled Conciliation: A form of Alternate Dispute
Resolution submitted to Hidayatullah National Law University, Raipur, is record of an
original work done by me under the able guidance of Mr. Manoj Kumar, Faculty of
Alternate Dispute Resolution, HNLU, Raipur.

Rohit Dongre

Semester- VI

Section B

Roll no-132
Acknowledgements

I feel highly elated to work on the topic Conciliation: A form of Alternate Dispute
Resolution The practical realization of this project has obligated the assistance of many
persons. I express my deepest regard and gratitude for Mr. Manoj Kumar, Faculty of
Alternate Dispute Resolution. His consistent supervision, constant inspiration and
invaluable guidance has been of immense help in understanding and carrying out the
nuances of the project report.
I would like to thank my family and friends without whose support and encouragement,
this project would not have been a reality.

I take this opportunity to also thank the University and the Vice Chancellor for providing
extensive database resources in the Library and through Internet.
Some printing errors might have crept in, which are deeply regretted. I would be grateful
to receive comments and suggestions to further improve this project report.

Rohit Dongre

Semester- VI

Section B

Roll no-132
Contents
Declaration.......................................................................................................................................................2

Acknowledgements..........................................................................................................................................3

Contents............................................................................................................................................................4

Introduction......................................................................................................................................................5

Objectives.........................................................................................................................................................6

Research Methodlogy.......................................................................................................................................6

The Concept of Conciliation............................................................................................................................7

History of Conciliation in India........................................................................................................................8

Process of Conciliation...................................................................................................................................10

2.1Commencement of conciliation and appointment of conciliator..........................................................10

2.2 Procedure in conciliation and role of conciliator..................................................................................11

2.3 The settlement agreement.....................................................................................................................13

2.4 Termination of Conciliation proceedings.............................................................................................14

Advantages of Conciliation............................................................................................................................17

3.1 Cost effective and expeditious process.................................................................................................17

3.2 Autonomy and convenience of parties.................................................................................................17

3.4 Party satisfaction and harmony............................................................................................................18

3.5 Confidentiality......................................................................................................................................19

3.6Enforceability of conciliation settlement agreement.............................................................................20

Disadvantages of Conciliation........................................................................................................................20

No Binding Decision:.................................................................................................................................20

Conciliator Involvement:............................................................................................................................20

Conclusion......................................................................................................................................................21

Bibliography...................................................................................................................................................22

Webliography..................................................................................................................................................22
Introduction

Conciliation is a confidential, voluntary and private dispute resolution process in which a


neutral person helps the parties to reach a negotiated settlement. This method provides
the parties with an opportunity to negotiate, converse and explore options aided by a
neutral third party, the conciliator, to exhaustively determine if a settlement is possible.
His function is to try to break any deadlock and encourage the parties to reach an
amicable settlement by acting as a conduit for communication, filtering out the disturbing
elements and allowing the parties to focus on the underlying core objectives

It is the fastest emerging alternate dispute resolution (ADR) mechanism in the present
day world and is extensively used in the U.S., U.K. and Europe as an effective way of
settling disputes, be it commercial, contractual or personal. It is a means by which the
parties re-learn the basis of communication with which they can then resolve future
disputes. It is slowly gaining ground and awareness of its merits is developing in India, a
country which is already familiar with the concept of panchayats. However, ADR is still
in the experimental stages in India.1

Promulgated initially as an Ordinance, this Act (the 1996 Act) consolidates and
streamlines the law relating to Arbitration in India by bringing under one statute the
various provisions relating to arbitration which were earlier spread over three separate
Acts. It is drafted on the lines of the UNCITRAL Model Arbitration Law and the
UNCITRAL Conciliation Rules and for the first time statutorily recognizes conciliation
by providing elaborate rules of engagement.

1 http://www.ficci-arbitration.com/htm/whatisconcialation.htm
Objectives

To know the history of Conciliation in India


To understand the Process of Conciliation in India
To understand the Advantages and Disadvantages of Conciliation

Research Methodlogy
This Research Project is Descriptive in nature as it uses descriptive language for the
explanation of various topics and subjects discussed in this project.
The Concept of Conciliation
The Halsburys Laws of England defines Conciliation as a process of persuading the
parties to reach an agreement, and is plainly not an arbitration, nor is the chairman of a
Conciliation Board an Arbitrator.2
Arbitration is less formal than litigation, and Conciliation is even less formal than
Arbitration.
The terms conciliation and mediation are interchangeable in the Indian context.
Conciliation is a voluntary process whereby the conciliator, a trained and qualified
neutral, facilitates negotiations between disputing parties and assists them in
understanding their conflicts at issue and their interests in order to arrive at a mutually
acceptable agreement. Conciliation involves discussions among the parties and the
conciliator with an aim to explore sustainable and equitable resolutions by targeting the
existent issues involved in the dispute and creating options for a settlement that are
acceptable to all parties. The conciliator does not decide for the parties, but strives to
support them in generating options in order to find a solution that is compatible to both
parties. The process is risk free and not binding on the parties till they arrive at and sign
the agreement. Once a solution is reached between the disputing parties before a
conciliator, the agreement had the effect of an arbitration award and is legally tenable in
any court in the country.
Most commercial disputes, in which it is not essential that there should be a binding and
enforceable decision, are amenable to conciliation. Conciliation may be particularly
suitable where the parties in dispute wish to safeguard and maintain their commercial
relationships.
The following types of disputes are usually conducive for mediation: commercial,
financial, family, real estate, employment, intellectual property, insolvency, insurance,
service, partnerships, environmental and product liability. Apart from commercial
transactions, the mechanism of Conciliation is also adopted for settling various types of

2 Halsburys Laws of England (2) 502 (Butterworths, London, 4th Edn., 1991).
disputes such as labour disputes, service matters, antitrust matters, consumer protection,
taxation, excise etc

History of Conciliation in India

Conciliation is not a new concept as far as India is concerned. Kautilyas Arthashastra


also refers to the process of conciliation.3 Various legislations4 in India have also
recognized conciliation as a statutorily acceptable mode of dispute resolution and
conciliation was in fact being frequently resorted to as a mode of dispute resolution under
these specific legislations. However, apart from these statutory provisions dealing with
specified categories of cases, conciliation in general as a mode of ADR lacked proper
legislative framework and statutory backing.5

In 1984 faced with the problem of surmounting arrears the Himachal Pradesh High Court
evolved a unique project for disposal of cases pending in courts by conciliation. This was
also been recommended by the Law Commission of India in its 77th and 131st reports
and the conference of the Chief Justices and Chief Ministers in December 1993. 6The
Malimath Committee had also inter alia recommended the establishment of conciliation
courts in India.7
3 V.A. Mohta and Anoop V. Mohta, Arbitration, Conciliation and Mediation 535 (Manupatra, Noida, 2nd
Edn., 2008).
4 Section 12 of the Industrial Disputes Act, 1947 contemplates settlement of disputes through conciliation
effected through conciliation officers appointed under the Act; Section 23 of the Hindu Marriage Act, 1955
and Order XXXII A, Code of Civil Procedure, 1908 enable the judge to effect settlement between the
parties by recourse to conciliation.
5 See Anirudh Wadhwa and Anirudh Krishnan (Eds.), R.S. Bachawats Law of Arbitration and Conciliation
(Lexis Nexis Butterworths Wadhwa, Nagpur, 5th Edn., 2010).
6 Sarvesh Chandra, ADR: Is Conciliation the Best Choice in P.C. Rao and William Sheffield (Eds.),
Alternative Dispute Resolution 82 (Universal Law Publishing Company Pvt. Ltd., Delhi, 1997); See also
O.P. Motiwal, Development of Law of Conciliation in India, XLIX ICA Arbitration Quarterly 2 (January
- March 2011).
7 H.R. Bhardwaj, Legal and Judicial Reforms in India, available at: http://
icadr.ap.nic.in/articles/articles.html
For the last several decades, India's court system has suffered from an overwhelming
backlog of cases. An average civil case takes almost a decade to be adjudicated. In 1996,
the Indian Legislature recognized that, in order to lessen the burden on the courts by
introducing a more efficient case management system, conciliation would have to be
integrated as a dispute resolution option in appropriate civil and commercial matters. So
as a consequence, in 2002, the CPC was amended to make ADR an integral part of the
judicial process. In terms of the newly inserted Section 89 of CPC, if it appears to the
court that there exist elements, which may be acceptable to the parties, the court may
formulate the terms of a possible settlement and refer the same for arbitration,
conciliation, mediation or judicial settlement.

In the mean time the UNCITRAL had adopted the UNCITRAL Conciliation Rules, 1980
and the General Assembly of the United Nations had recommended the use of these rules,
therefore, the Parliament of India found it expedient to make a law respecting
conciliation, and the Arbitration and Conciliation Act, 1996 was enacted. 8 Conciliation
was afforded an elaborate codified statutory recognition in India with the enactment of
the Arbitration and Conciliation Act, 1996 and Part III of the Act comprehensively deals
with conciliation process in general. The chapter on conciliation under the Arbitration and
Conciliation Act, 1996 is, however, essentially based on the UNCITRAL Conciliation
Rules, 1980.9

8 See Preamble to the Arbitration and Conciliation Act, 1996.


9 P.C. Rao, Arbitration and Conciliation Act, 1996: The Context in P.C. Rao and William Sheffield
(Eds.), Alternative Dispute Resolution 82 (Universal Law Publishing Company Pvt. Ltd., Delhi, 1997).
Process of Conciliation

2.1Commencement of conciliation and appointment of conciliator

The conciliation process commences when the disputing parties agree to conciliate and a
neutral conciliator is appointed. The party initiating conciliation sends a written invitation
to conciliate to the other party briefly identifying the subject matter of the dispute.
Conciliation proceedings commence when the other party accepts in writing the
invitation to conciliate.10 If the other party rejects the invitation, there will be no
conciliation proceedings also if the party initiating conciliation does not receive reply
within thirty days from the date on which he sends invitation, or within such other period
of time as specified in the invitation, he may elect to treat this as q rejection of the
invitation to conciliate and if he so elects, he shall inform in writing the party
accordingly.11
Thus conciliation agreement should be an ad hoc agreement entered by the parties after
the dispute has actually arisen and not before.12

Even if the parties incorporate conciliation clauses in their agreements, still conciliation
would commence only if the other party accepts the invitation of one party to conciliate
in case of a de facto dispute. Thus unlike in the case of an arbitration agreement, Part III

10 S. 62, Arbitration and Conciliation Act, 1996.


11 Clause 3 and 4 of S.62 Arbitration and Conciliation Act, 1996.
12 V. Nageswara Rao, Conciliation Proceedings under the Indian Arbitration Conciliation Act of 1996 and
CPC An Overview,
of the Arbitration and Conciliation Act, 1996 does not envisage any agreement for
conciliation of future disputes. It only provides for an agreement to refer the disputes to
conciliation after the disputes have arise13
In conciliation proceedings ordinarily there is one conciliator unless the parties agree that
there shall be two or three conciliators. Even in case of plurality of conciliators they are
supposed to act jointly. An uneven number of conciliators is not necessary in conciliation
since the task of the conciliators is to make recommendations for a settlement and not to
render binding decisions.14
In conciliation proceedings with one conciliator, the parties may agree on the name of a
sole conciliator and in conciliation proceedings with two conciliators, each party may
appoint one conciliator. The parties may also request any institution or person to
recommend suitable names of conciliators or directly appoint them and such person or
institution while discharging this responsibility should have regard to aspects as are likely
to secure the appointment of an independent and impartial conciliator.15

2.2 Procedure in conciliation and role of conciliator

The conciliator may request each of the parties to submit a brief written statement
describing the general nature of the dispute and the points at issue, with a copy to the
opposite party.16 At any stage of the conciliation proceedings the conciliator may request
a party to submit to him such additional information as he deems appropriate.17
The conciliator is supposed to assist the parties in an independent and impartial manner in
their attempt to reach an amicable settlement of their dispute.18
A conciliator assists parties by helping them to initiate and develop positive dialogue,
clarify misunderstandings, create faith upon one another and generate a congenial

13 Visa International Ltd. v. Continental Resources (USA) Ltd., AIR 2009 SC 1366.
14 See Commentary on Draft UNCITRAL Conciliation Rules.
15 S. 64, Arbitration and Conciliation Act, 1996.
16 S. 65, Arbitration and Conciliation Act, 1996.
17 S. 65, Arbitration and Conciliation Act, 1996.
18 S. 67, Arbitration and Conciliation Act, 1996.
atmosphere required for harmonious and cooperative problem-solving. In order to justify
his position the conciliator must be an impartial person. The parties should be able to
repose trust and confidence in him so as to enable them to share their secrets and their
thinking process with the conciliator with the belief that the same will not be divulged to
other party without specific instructions in that regard.19
The conciliator may conduct conciliation proceedings in such a manner as he considers
appropriate, taking into account the circumstances of the case and the wishes of the
parties. The conciliator has wide procedural discretion in shaping the dynamic process
towards a settlement. The process of conciliation, inter alia, involves creating a
constructive bonding between the parties to a dispute to steer them towards resolution.20
The conciliator is not bound by the Code of Civil Procedure, 1908 or the Indian Evidence
Act, 1872.21He is to be guided by principles of objectivity, fairness and justice giving due
consideration to 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.22The 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.23
The conciliator may hold several joint or private meetings with the parties so as to enable
the parties to clarify their cases and so as to persuade the parties to arrive at a mutually
acceptable solution.24
Unless the parties have agreed upon the venue of conciliation proceedings the conciliator
is supposed to decide the venue of conciliation proceedings in consultation with the
parties. Thus the conciliator is vested with extensive power to choose and mould the
procedure to be followed by him untrammeled by the procedural laws, albeit in
consultation with the parties. In order to facilitate the conduct of the conciliation

19 M. K. Sharma, Conciliation and Mediation


20 P.M. Bakshi, Conciliation for Resolving Commercial Disputes,
21 S. 66, Arbitration and Conciliation Act, 1996.
22 S. 67, Arbitration and Conciliation Act, 1996.
23 S. 69, Arbitration and Conciliation Act, 1996.
24 Sarvesh Chandra, ADR: Is Conciliation the Best Choice in P.C. Rao and William Sheffield (Eds.),
Alternative Dispute Resolution 82 (Universal Law Publishing Company Pvt. Ltd., Delhi, 1997).
proceedings, the parties, or the conciliator with the consent of the parties, may arrange for
administrative assistance by a suitable institution or person. This shows that depending
upon the requirement from case to case basis the conciliator may or may not adopt a
structured process in conciliation.25

The role of the conciliator is to assist the parties to arrive at an amicable settlement. The
conciliator may, at any stage of the conciliation proceedings, himself make proposals for
a settlement of the dispute.26
In the Indian context the conciliator therefore plays an evaluative 27 role while managing
the process of conciliation as opposed to a mere facilitator. The conciliator assesses the
respective cases of the parties and apart from acting as a facilitator suggests and advices
the parties on various plausible solutions to the parties so as to enable the parties to
choose the best possible and apt solution. He attempts to get the parties to accept the
merits and demerits of their cases thereby leading them to a mutually acceptable
solution.28 The conciliator, in this manner plays a more proactive and interventionist role
in persuading the parties to arrive at a final settlement. 29 In actual practice conciliator
needs to be a person who is not only well-informed and diplomatic but can also influence
the parties by his persona and persuasive skills. However, if the system of conciliation is
to succeed as a proficient ADR mechanism professional training of conciliators needs to
be a mandatory requirement.30

25 S. 68, Arbitration and Conciliation Act, 1996.


26 S. 67, Arbitration and Conciliation Act, 1996.
27 However Conciliation may be facilitative also. See M. K. Sharma, Conciliation and Mediation,
available at: www.delhimediationcentre.gov.in (last visited on 05.09.2010). The difference lies in the
approach adopted by the conciliator and the level of intervention
28 See O.P. Malhotra and Indu Malhotra, The Law and Practice of Arbitration and Conciliation (LexisNexis
Butterworths, Delhi, 2nd Edn., 2006).
29 Salem Advocate Bar Association v. Union of India, AIR 2005 SC 3353; See also Anirudh Wadhwa and
Anirudh Krishnan (Eds.), R.S. Bachawats Law of Arbitration and Conciliation (Lexis Nexis Butterworths
Wadhwa, Nagpur, 5th Edn., 2010.
30 A.C.C. Unni, The New Law of Arbitration and Conciliation in India, in P.C. Rao and William
Sheffield (Eds.), Alternative Dispute Resolution 68 (Universal Law Publishing Company Pvt. Ltd., Delhi,
1997).
2.3 The settlement agreement

When it appears to the conciliator that there exist elements of a settlement, which may be
acceptable to the parties, he is supposed to 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.31 The statutory provisions32 enjoin upon the conciliator to draw up
and authenticate a settlement agreement. He should ensure that the parties have full
understanding of the settlement terms.33 The agreement must embody the terms and
conditions of the settlement with clarity and precision. It is open to the parties to settle
some of their disputes by conciliation and leave the unresolved disputes between them for
resolution by other modes of adjudication.34

The settlement agreement must also bear the signatures of the parties. 35 Once the parties
sign the settlement agreement, it shall be final and binding on the parties and persons
claiming under them respectively.36
The settlement agreement drawn up in conciliation proceedings has the same status and
effect as if it is an arbitral award 37 on agreed terms on the substance of the dispute
rendered by an arbitral tribunal under section 30 of the Arbitration and Conciliation Act,
1996. However it is only that agreement which has been arrived at in conformity with the
manner stipulated and form envisaged and got duly authenticated in accordance with
section 73 of the Arbitration and Conciliation Act, 1996, which can be assigned the status
of a true settlement agreement and can be enforced as an arbitral award. 38 Therefore a

31 S. 73(1), Arbitration and Conciliation Act, 1996;


32 S. 73(2), Arbitration and Conciliation Act, 1996
33 P.M. Bakshi, ADR in the Construction Industry, in P.C. Rao and William Sheffield (Eds.), Alternative
Dispute Resolution 316 (Universal Law Publishing Company Pvt. Ltd., Delhi, 1997).
34 Mukul Mudgal, Conciliation: An Indian Perspective, II (2) Nyaya Kiran (April 2003).
35 Haresh Dayaram Thakur v. State of Maharashtra, AIR 2000 SC 2281.
36 S. 73(3), Arbitration and Conciliation Act, 1996
37 S. 74, Arbitration and Conciliation Act, 1996.
38 Mysore Cements Ltd. v. Svedala Barmac Ltd., (2003) 10 SCC 375.
settlement agreement arrived in private conciliation proceedings can be enforced by
executing the same in a civil court as if it were a decree of the court.39

2.4 Termination of Conciliation proceedings

A successful conciliation proceeding concludes with the drawing and signing of a


conciliation settlement agreement. The signing of the settlement agreement by the parties,
on the date of the settlement agreement terminates conciliation proceedings.
That apart, any party may terminate conciliation proceedings at any time even without
giving any reason since it is purely voluntary process. The parties can terminate
conciliation proceedings at any stage by a written declaration of either party. A written
declaration of the conciliator, after consultation with the parties, to the effect that further
efforts at conciliation are no longer justified, also terminates conciliation proceedings on
the date of such declaration.40

The Supreme Court in Haresh Dayaram Thakur v. State of Maharashtra and others 41
refused to accept the settlement agreement drawn up by the conciliator as legally valid on
the ground that the provisions of Section 73 and consequently Section 74 of the Act had
been blatantly violated. In this case, the conciliator held some meetings with the parties in
which there was discussion and thereafter drew up the so called settlement agreement by
himself in secrecy and send the same to court in a sealed cover. Naturally, the so-called
settlement agreement did not bear the signatures of the parties
But the High Court in its order had given the said settlement a status higher than an
arbitral award inasmuch as the court refused to even entertain any objection against the
said settlement agreement reiterating the position that the settlement arrived at by the
conciliator will be binding on the parties.
The Supreme Court in this case observed that the conciliator who was a former judge of
the high court and the learned judge who passed the impugned order failed to take note of
the provisions of Section 73 and 74 of the Act and the clear distinction between
39 As an arbitral award on agreed terms is also executable as decree of the court in terms of s. 36,
Arbitration and Conciliation Act, 1996.
40 S. 76, Arbitration and Conciliation Act, 1996.
41 AIR 2000 SC 2281
arbitration proceedings and conciliation proceedings. The court held that the learned
judge of the high court in passing the impugned order failed to notice the apparent
illegalities committed by the conciliator in drawing up the so-called settlement agreement
keeping it secret from the parties and sending it to the courts without obtaining their
signatures on the same. Therefore, there was blatant violation of the procedure laid down
in section 73 and 74 of the act and hence the settlement agreement drawn up by the
conciliator was wholly untenable

The Supreme Court in Mysore Cements Ld. V. Svedala Barmac Ltd.,42 held that a
settlement agreement comes into existence under Section 73 when it satisfies the
requirement stated therein and it gets the status of an Arbitral Award under Section 30 of
the Act. But a compromise signed by both the parties to Conciliation and authenticated
by the Conciliators by itself does not become enforceable unless such a compromise
petition is accepted by the Court and the Court puts it seal of approval for drawing a
decree on the basis of compromise petition. In this case, the Court refused to accept the
Compromise Agreement as Settlement Agreement within the meaning of Section 73
because the procedure and steps contemplated in Section 73 were not adhered to while
arriving at the Memorandum of Conciliation. In courts view it was merely a letter of
comfort which was sought to be enforced as settlement agreement. Therefore it could not
be enforced as an Arbitration Award unless Section 74 read with Section 30 of Arbitration
and Conciliation Act, 1996.

42 AIR 2003 SC 3493


Advantages of Conciliation

3.1 Cost effective and expeditious process

Conciliation is an economical and expeditious mechanism for resolution of disputes in


comparison to litigation and arbitration, which makes it an excellent ADR Mechanism.
The cost management tools and expertise of the conciliator generally prevent
multiplication of actual costs to the parties and seek to make it cost efficient. 43 The
conciliator follows a simplified procedure suited to the aspirations of the parties and
keeping in mind the need for speedy settlement of the dispute. 44 Moreover the time
management tools applied by the conciliator prevent dragging on of conciliation
proceedings for longer periods and ensure its conclusion within a reasonable time
frame.45 The end result in conciliation is a negotiated settlement which is treated to be an

43 Ashwanie Kumar Bansal, Arbitration and ADR 26 (Universal Law Publishing Co. Pvt. Ltd., Delhi,
2005)
44 S. 67(3), Arbitration and Conciliation Act, 1996.
45 Ashwanie Kumar Bansal, Arbitration and ADR 23 (Universal Law Publishing Co. Pvt. Ltd., Delhi,
2005).
arbitral award on agreed terms, thereby obviating the possibility of successive appeals
and finally resolving the dispute in an expeditious and cost effective manner

3.2 Autonomy and convenience of parties

Conciliation is flexible and convenient. The parties are free to agree on the procedure to
be followed by the conciliator, the time and venue of the proceedings and thus eventually
control the process. The conciliator may conduct the conciliation proceedings in such a
manner as he considers appropriate, taking into account the circumstances of the case,
convenience of the parties and the wishes the parties may express.46 A very commendable
feature of conciliation is that the parties can withdraw from conciliation at any stage. 47
Unless a party consents to the initiation and continuance of conciliation and accepts the
resultant settlement agreement he cannot be said to be bound by the process, and he may
walk out from conciliation proceedings at any time. This is unlike arbitration and
litigation where decisions can be made even if a party walks out. 48 The parties therefore
not only control the procedure in conciliation proceedings but also the final outcome of
the proceedings. Indeed party autonomy is a very laudable feature of conciliation.

3.3 Creative solutions/ remedies


In litigation or arbitration what solution or resolution would be contained in the judgment
or award is not within the control or prior knowledge of the parties and moreover the
ultimate decision is based on a straightforward decision on merits keeping in view the
rights and positions of the parties. In conciliation however the parties control the outcome
and can incorporate terms and conditions in the settlement agreement as per mutual
agreement. They can devise creative solutions for their disputes at one go which may not
have been within the contemplation of an arbitrator or a judge. They can also decide how
their rights and liabilities are going to be actually worked out on resolution of the dispute
and chalk out ingenious modalities for complying with the basic terms of settlement.

46 S. 67(3), Arbitration and Conciliation Act, 1996.


47 Mukul Mudgal, Conciliation: An Indian Perspective, II (2) Nyaya Kiran (April 2003).
48 Ashwanie Kumar Bansal, Arbitration and ADR 24 (Universal Law Publishing Co. Pvt. Ltd., Delhi,
2005).
3.4 Party satisfaction and harmony

Unlike litigation and arbitration where one party wins and the other loses, in conciliation
both parties are winners as the decision is acceptable to both. Both parties are in favour of
the decision, as until both parties agree to a proposal, the settlement or agreement does
not take place. Therefore it is a win-win situation for both the parties as both the parties
are satisfied with the agreement. Such win-win situation enables them to retain good
relationship for times to come unlike litigation and arbitration where the parties on
account of the win-loss equation are not able to continue or rebuild their relationship.
Even where the conciliation proceedings do not fructify into a settlement, they prove to
be useful by enabling the parties to understand each others versions, positions and
aspirations in a better perspective.

3.5 Confidentiality

In contradistinction to judicial proceedings conciliation is a private closed door affair and


therefore offers privacy and confidentiality. In fact confidentiality in conciliation
proceedings is a statutory guarantee49
The conciliator and the parties are supposed to keep confidential, all matters relating to
the conciliation proceedings. The parties are also precluded from relying upon or
introducing as evidence in subsequent arbitral or judicial proceedings views expressed or
suggestions made by the other party in respect of a possible settlement of the dispute,
admissions made by the other party in the course of conciliation proceedings, proposals
made by the conciliator and the fact that the other party had indicated his willingness to
accept a proposal for settlement made by the conciliator. which makes conciliation an
excellent dispute resolution mechanism.50

49 S. 75, Arbitration and Conciliation Act, 1996.


50 S. 81, Arbitration and Conciliation Act, 1996.
Even during the course of conciliation proceedings where a party gives any information
to the conciliator subject to a specific condition that it be kept confidential, the conciliator
is not supposed to disclose that information to the other party.51 This ensures that even in
the eventuality of failure of conciliation proceedings neither party is able to derive undue
benefit out of any proposal, view, statement, admission, etc. made by the opposite party
during conciliation proceedings.52 The process of conciliation provides an opportunity for
settlement of disputes without publicity.53 The conciliator is also precluded from acting 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 nor
can he be presented by the parties as a witness in any arbitral or judicial proceedings.54

3.6Enforceability of conciliation settlement agreement

The settlement agreement drawn up in conciliation proceedings has the same status and
effect as if it is an arbitral award 55 on agreed terms on the substance of the dispute
rendered by an arbitral tribunal under section 30 of the Arbitration and Conciliation Act,
1996. Thus the settlement agreement in conciliation is executable as a decree of the civil
court.56 It is open to any party to apply for execution of the settlement agreement by filing
an execution petition before the civil court. The expeditious enforcement of a conciliation
settlement agreement in a summary manner i.e. by way of execution proceedings in a
civil court is the principal advantage attached with conciliation.57

51 S. 70, Arbitration and Conciliation Act, 1996.


52 S. 70, Arbitration and Conciliation Act, 1996.
53 A.K. Bansal, Conciliation: Quick Settlement of Disputes, (1) Arb. L.R. (Journal) 22 (1999).
54 S. 80, Arbitration and Conciliation Act, 1996; See also Alcove Industries Ltd. v. Oriental Structural
Engineers Ltd., (2008) Arb.L.R. 393.
55 S. 74, Arbitration and Conciliation Act, 1996.
56 S. 36, of the Arbitration and Conciliation Act, 1996.
57 Ss. 74, 30 and 36, Arbitration and Conciliation Act, 1996; See also Avtar Singh, Law of Arbitration and
Conciliation (Eastern Book Company, Lucknow, 7th Edn, 2005).
Disadvantages of Conciliation

No Binding Decision:

If no agreement can be made between the parties, each will be left in the same position as
they started. There is no binding decision handed down which can be frustrating to parties
who have invested time, money and effort into the process.

Conciliator Involvement:

Although the conciliator is meant to be an impartial third party, the ability for them to
involve themselves in the proceedings through their active involvement can question the
unbiased nature of the conciliator.

Conclusion

Alternative Dispute Resolution (ADR) refers to all those methods of resolving a dispute
which are alternatives for litigation in the courts. It is a decision making process to
resolve disputes that does not involve litigation or violence.
Conciliation is a well-accepted method of Alternative Dispute Resolution. It is a method
by which the parties to a dispute use the services or take the assistance of a neutral and
impartial third person or institution, called a conciliator as a means of helping them to
reduce the extent of their differences and to arrive at an amicable settlement or agreed
solution according to a compromise rather than by law.

Conciliation may thus be defined as a non-contentious and non-binding procedure in


which an impartial third party, the conciliator, assists the parties by understanding the
pros and cons of the respective positions taken by them and help them in reaching a
mutually agreed settlement of the dispute. Unlike courts, tribunals and arbitrators, the
conciliator does not give a decision; his function is to induce the parties in the dispute to
come to a settlement Conciliation is as old as the Indian history. In Mahabharata when
both parties were determined to resolve the conflict in battle fields, Lord Krishna made
efforts to resolve the conflict.

The best example where conciliation played an integral role is of the highly politically
sensitive case of the Beagle channel dispute over the ownership of certain islands in the
entrance to the channel between Chile and Argentina. The mediator was the Vatican. The
process was remarkable because it was flexible enough to accommodate the changing
political environments in both countries and the mediator used a range of tools to great
advantage. This process served to protect a fragile peace between the countries and
ultimately allowed them to create an agreement that has lasted until this day.
So from the above set of findings and study we can say that it is one of the best method of
ADR, to solve the dispute between the parties, due to its unique advantages, which we do
not get in arbitration, its success rate is high, in the coming years people might not solve
their dispute by arbitration but conciliation.

Bibliography
Law Relating to Arbitration and Conciliation in India, By Dr. N.V.Paranjpe (5th Edition)

O.P. Malothra, The law and practice of Arbitration & Conciliation (2nd edn, LexisNexis
Butterworths , New Delhi 2006).
Arbitration and Conciliation Act, 1996 By Avtar Singh.

Webliography

shodhganga.inflibnet.ac.in/bitstream/10603/26666/.../11_chapter%205.pdf
http://indialawjournal.com/volume1/issue_3/article_by_isha.html