explained the conciliation and arbitration, and also explained the procedure relating to conciliation

1. What do you mean by
conciliation? Also discuss
distinction between conciliation
and arbitration. Discuss the law
relating to procedure for
conciliation.
By
Sumeet Pal Singh Brar
Visiting Assistant Prof. – Punjabi
University, Patiala, Department of Law
UGC – NET, B.A.LL.B, LLM

2. Introduction
Purpose of Arbitration Act is to provide quick redressal
to commercial dispute by private Arbitration. Quick
decision of any commercial dispute is necessary for
smooth functioning of business and industry.
Internationally, it is accepted that normally commercial
disputes should be solved through arbitration and not
through normal judicial system. Hence, the need of
Alternate Dispute Resolution. (ADR). There are four
methods of ADR - negotiation, mediation, conciliation
and arbitration. 'Negotiation' is cheapest and simplest
method. If it does not work, mediation through a
mediator can be tried. If it does not work, conciliation
and arbitration will be useful. Arbitration Act makes
provision for conciliation and arbitration as ADR
mechanisms .

3. Meaning and Definition of Conciliation
Part 3rd of the act deals with conciliation. Conciliation means “the
setting of disputes without litigation” Conciliation is a process by
which discussion between parties is kept going through the
participation of conciliator. The conciliator only brings parties
together and tries to solve the dispute using his good offices. The
conciliator has no authority to give any award. He only helps
parties in arriving at a mutually accepted settlement. After such
agreement they may draw and sign a written settlement
agreement. It will be signed by the conciliator. However after the
settlement agreement is signed by both the parties and the
conciliator, it has the same status and effect as if it is an arbitral
award. The basis of conciliation is mutual compromise and
agreement and reciprocal understanding to decide and arrive on
an acceptable solution through mediation and persuasion. In court
,the decision is thrust upon the parties ,in conciliation it comes in
b/w parties through amicable negotiation initiated by a conciliator

4. Acc. To Black law dictionary , conciliation as a settlement of
dispute in an agreeable manner in which a neutral person
meets with the parties to a dispute and explore how the dispute
might be resolve.
Acc. to Halsbury law of England “Conciliator is described as a
person persuading party to reach in agreement .
Some jurists take the term to mean a form of shuttle mediation,
as this extract from Commercial Dispute Resolution:
"Conciliation: the neutral ... conciliator performs shuttle
diplomacy, talking to each party separately, discussing
animosities and identifying common ground."
Acc. To law dictionary, A form of alternate dispute resolution
(ADR) in which a neutral third-party hears both sides and then
issues a non-binding suggested resolution

5. Distinction between Conciliation
and Arbitration
 1. In case of arbitration, a prior agreement in writing to submit to arbitration
disputes which have arisen or which may arise in future, is necessary. But
conciliation may be resorted to without the existence of such prior
agreement and it generally relates to disputes which have already arisen.
 2. for adopting the method of conciliation, there is no need for a prior
agreement for resorting to this method, but in arbitration, a prior agreement
for arbitration between the parties is required
 3. The conciliation proceedings start by sending a written invitation and a
written acceptance thereof in between the parties. The invitation may be
accepted or rejected by the other party as it has no binding effect, being an
invitation only. The prior written agreement in arbitration commands a
binding effect upon the parties and its breach by resorting to court, compels
court to refer the matter to the arbitration and parties are bound by the
arbitral agreement.
 4. While the role of conciliator is to help and assist the parties to reach an
amicable settlement of their disputes, the arbitrator does not merely assist
the parties but he also actively arbitrates and resolves the dispute by

6. 5.In case of conciliation a party may require the conciliator to keep the
factual information confidential and not disclose it to the other party. But it is
not so in arbitration as an information given by a party is subjected to
scrutiny by the other party. Thus there is no question of confidentiality in
case of arbitration awards.
.
6.In conciliation, the settlement agreement may be formulated by the parties
themselves or the conciliator may assist in its formulated or himself may
draw it up. The authentication by the conciliator on settlement agreement is
also necessary. An arbitration award on the other hand is not merely a
settlement agreement but it is a judgment duly signed by the arbitrator
7.The conciliation proceedings may be unilaterally terminated by a written
declaration by a party to the other party and the conciliator, but arbitration
proceedings cannot be so terminated
8.Conciliator is subjected to certain disabilities under Section 80 of the Act
and he cannot act as arbitrator or as a council or a witness in any arbitral or
judicial proceedings but there are no such disabilities imposed on an
arbitrator or parties to arbitral proceedings.
.

7. 9.While conciliation proceedings are in progress, there is a bar on
parties from initiating arbitral or judicial proceedings as per Section 77
of the new Act 1996.In arbitration, the arbitral agreement itself
suggests for redressal of disputes through arbitration and if any party
approaches Court the other party may request the court to refer the
matter to arbitration and Court is bound to refer such matter to arbitral
Tribunal
Likewise pendency of arbitration proceedings is not
bar for initiating conciliation proceedings which can be initiated at any
stage of arbitral proceedings.
10. In case of arbitrators, there is no bar on their maximum numbers
but the total should not be an even number. But in case of conciliation
maximum number of conciliator cannot exceed three, parties may
agree for two or three conciliator.
11. In arbitration, the proceedings are conducted according to law, but
in conciliation the matter may be settled without strict following of the
law

8. Procedure for conciliation proceeding
Sec 62-Commencement of conciliation
proceedings:-
S.62(1)The party initiating conciliation shall send to the
other party a written invitation to conciliate under this
part, briefly identifying the subject of the dispute.
Sub Sec(2) Conciliation proceeding shall commence
when other party accepts in writing the invitation to
conciliate
Sub Sec.(3) If the other party reject the invitation, there
will be no conciliation proceedings
Sub Sec(4) If the party initiating conciliation does not
receive a reply within thirty days from the date on which
he sends 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

9. Sec 65-Submisssion of
statements to conciliate-
Sub Sec(1) The conciliator upon his appointment, may request each
party to submit to him a brief written describing the general nature of
the dispute and the points at issue .Each party shall send a copy of
such settlement to the other party.
Sub Sec(2) 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 other evidences to the other
party.
Sub Sec(3) At any stage of conciliation proceedings the conciliator
may request the party to submit to him suc additional information as
he deems appropriate .
Sec 66-Conciliator not bound by
certain enactment :- the conciliator is not bound
by the code of civil procedure, 1908 or the Indian Evidence Act,1872

10. Sec 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 principle of objectivity , fairness
and justice, giving consideration to, among other things, the rights
and obligation of the parties, the usages of the trade concerned and
the circumstances surrounding the dispute, including any previous
business between the parties.
(3)The conciliator may conduct the conciliation proceedings in such a
manner as he consider appropriate, taking into account the
circumstances of the case, the wishes the parties may express,
including any request by a party that the conciliator hears 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 dispute,. Such proposals need
not be in writing and need not be accompanied by a settlement of
the reasons therefore.

11. Sec 69 Communication between
conciliator and parties
 Sub S(1) The 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
 Sub S(2) Unless the parties have agreed upon the
place where meetings with the conciliator are to be
held, such place the parties, having regard to the
circumstances of the conciliation proceedings

12. Sec 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 amicable institution or
persons
Sec 70-Disclosure of information- When the
conciliator receives factual information concerning the disputes
from a party, he shall disclose the substance of that information to
the other party in order 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’ the conciliator shall not disclose that information to
the other party

13. Sec 71 Co-operation of parties with conciliator-
The parties shall in good faith co-operate with the conciliator and, in particular,
shall Endeavour to comply with requests by the conciliator to submit written
materials, provide evidence and attend meetings
 Sec 72 Suggestion by parties for settlement
of dispute- Each party may, on his own initiative of the conciliation,
submit to the conciliator suggestions form settlement of the dispute.
Sec 73 Settlement agreement- (1) When it appears to
the conciliator that there exist element 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
observation of the parties, the conciliator may reformulate the terms of a
possible settlement in the light of such observation.
(2)If the parties reach agreement on a settlement of the dispute ,they may
draw up and sign a written agreement . If requested by the parties, the
conciliator may draw up, or assist the parties in drawing up, the settlement
agreement.
(30When the parties sign the agreement, it shall be final and binding on
parties and person claiming under them respectively.
(4)The conciliator shall authenticate the settlement agreement and furnish a
copy thereof to each of the parties

14. Harish Dayaram Thakur v/s
State of Maharashtra
In this case Supreme Court refused to accept the settlement
agreement drawn up by the conciliator as legally valid on the
ground that the provisions of Sec 73 and consequently Sec 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 sent the same to the court
in a sealed cover. Naturally, the settlement agreement did not
bear the signature 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.

15. The Supreme court observed in this case 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 settlement agreement. Keeping it secret from
the parties and sending it to the court without obtaining their
signature on the same. Therefore, there was blatant violation
off procedure laid down in Sec73 and 74 of the Act and hence
the settlement agreement drawn up by the conciliator was
wholly untenable

16. Sec 75 Confidentiality:-
 This sec imposes a duty upon the conciliator to keep
confidential all matters relating to conciliation proceedings
including settlement agreement except where disclosure is
necessary for the purpose of implementation and
enforcement of the settlement agreement .
Sec 76 Termination of conciliation
proceedings:-
The conciliation proceedings shall be terminated;
(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 conciliation, after consultation with the
parties, to the effect further efforts of conciliation are no longer justified on the
date of the declaration; or
(c) By a written declaration of the parties addressed to the conciliation to the
effect that the conciliation proceedings are terminated, on the date of the
declaration; or

17. Sec 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 judicial proceedings where, in his opinion, such proceedings are
necessary for preserving his rights
(d) By a written declaration of a party to the other party and the conciliation, if
appointed to the effect that the conciliation proceedings are terminated on the
date of the declaration
Sec78 Costs;-
When the conciliation proceedings are terminated due to the reason
mention in sec 76, the conciliator shall fix the costs of conciliation and
the amount of costs shall be borne equally by the parties unless the
settlement agreement provides for a different apportionment with the
consent of the parties

18. Sec 79 Deposits:-
(a)The conciliator may direct each party to deposit
an equal amount as an advance for the costs
referred to in sub sec (2) of sec 78 which he
expects will be incurred.
(b)During the course of the conciliation
proceedings, the conciliator may direct
supplementary deposits in an equal amount from
each party .
(c)If the amount is not paid mention above within
thirty days, the conciliator may suspend the
proceedings
(d)Upon termination of the conciliation proceedings
t, the conciliator shall render an accounting to the
deposits received and shall return any
unexpected balance to the parties

19. Sec 81 Admissibility of evidence
in other proceedings:-
 This section prohibits admissibility of
evidence in respect of conciliation
proceedings in any other proceedings,
whether judicial or arbitral, relating to the
dispute that is the subject matter of
conciliation. The object of such
prohibition is to ensure confidentiality of
the conciliation proceedings which is a
vital and most essential for the success
of conciliation as a measure of disputes
resolution mechanism

20. Conclusion:-The Arbitration and Conciliation Act 1996
comprehensively covers both domestic and international
commercial arbitration and conciliation and makes provision for
conciliation procedure which is fair, efficient, and is capable of
meeting the needs of different kinds of conciliation. The
procedure of conciliation is easier and cheaper. Earlier
arbitration was considered to be a cheap and efficacious The
Indian Parliament passed the Arbitration and Conciliation Act of
1996 mainly to implement the UNCITRAL Model Law on
International Commercial Arbitration of 1985 and UNCITRAL
Rules on Conciliation of 1980 and to improve upon the
Arbitration Act of 1940 to make the arbitration law more in
conformity with the changed global investment and commercial
climate.