CLINICAL PROJECT

NATURE,SCOPE OF
CONCILIATION
PROCEEDINGS
11-Oct-2017

SUBMITTED TO: DR. PROF. NUZHAT PARVEEN KHAN

SUBMITTED BY: SHUJA HAIDER RIZVI, SEC-A, 5TH YEAR
CONTENTS

BACKGROUND
UNCITRAL MODEL LAW ON INTERNATIONAL COMMERCIAL ARBITRATION
OVERVIEW OF ALTERNATIVE DISPUTE RESOLUTION
DEVELOPMENT OF ADR INTERNATIONAL EXPERIENCE
ADVANCEMENTS OF ADR IN INDIA
MAKING ADR COMPULSORY IN INDIA RECOMMENDATIONS OF LAW
COMMISSION
RECOMMENDATIONS OF JUSTICE MALIMATH COMMITTEE
THE CODE OF CIVIL PROCEDURE (AMENDMENT) ACT, 1999
ADVANTAGES OF ADR
THE ARBITRATION AND CONCILIATION ACT, 1996 AN ANALYSIS
CONCILIATION
SCOPE OF CONCILIATION
COMMENCEMENT OF CONCILIATION AND APPOINTMENT OF CONCILIATOR
PROCEDURE IN CONCILIATION AND ROLE OF CONCILIATOR
THE SETTLEMENT AGREEMENT
TERMINATION OF CONCILIATION PROCEEDINGS
ADVANTAGES OF CONCILIATION
ENFORCEABILITY OF CONCILIATION SETTLEMENT AGREEMENT
CONCLUSION
REFERENCES
 If longevity of litigation is made an item in Olympics, no doubt the Gold will come to
India.1

1. BACKGROUND

It is a known fact that a man is a social animal, due to the inherent desire to
communicate and express his thoughts, man invented language. Though he did not
perceive that this language would be the instrument of misunderstanding, it did help
bring out his desire to complain.

It is not surprising when we say that every person has his own way of doing things, this
is due to the fact that people have different levels of understanding. Due to this different
level of understanding their wants and needs are different, excluding the basic needs
which are similar to everyone. This different level of understanding and way of doing
things has made man to invent the word CONFLICT.

There are conflicts in each and every home. A conflict is just an assertion of different
views of people. The question which now arises is how to resolve this conflict.

2. UNCITRAL MODEL LAW ON INTERNATIONAL COMMERCIAL

ARBITRATION

Model law owes its origin to a request in 1977 by Asian-African Legal Consultative
Committee (AALCC) for a review of operation of the New York Convention in respect
of enforcement of arbitral awards. The suggestions advanced by the AALCC led to a

1
Eminent Jurist Nani Palkiwala
 Report of the Secretary General of UNCITRAL which felt the need for harmonization
of the enforcement of the practices of States and judicial control of arbitration
procedure by way of promulgation of uniform law. The policy objectives adopted by
UNCITRAL in the preparation of Model law were described by the Secretary Generals
Report as follows:

(i) The liberalization of international commercial arbitration by linking the role of

national Courts, as by giving effect to the doctrine of autonomy of the will, allowing
the parties freedom to choose how their disputes should be determined;

(ii) The establishment of a certain defined core of mandatory provisions to ensure

fairness and due process;

(iii) The provision of a framework for the conduct of international commercial

arbitrations, so that in the event of the parties being unable to agree on procedural
matters the arbitration would nevertheless be capable of being completed; and

(iv) The establishment of other provisions to aid the enforceability of awards and to
clarify certain controversial practical issues.

The UN General Assembly adopted UNCITRAL Model Law on Arbitration on

December 11, 1985, advising all states to give due consideration to the Model Law in
view of the desirability of uniformity of the law of arbitral procedures and the specific
needs of international commercial arbitration practice.

3. OVERVIEW OF ALTERNATIVE DISPUTE RESOLUTION

ADR gives people an involvement in the process of resolving their dispute that is not
possible in a public, formal and adversarial justice system bristled with abstruse procedures
and recondite language of the law. It offers a wide range of choices in method, procedure,
 cost, representation and location. It is often quicker than judicial proceedings and helps to
ease burdens on the courts.

The technique of ADR is an effort to design a workable and fair alternative to our
traditional judicial system. It is a fast track system of dispensing justice. There are various
ADR techniques viz. arbitration, mediation, conciliation, mediation-arbitration, mini-trial,
private judging.

These techniques have been developed on scientific lines in USA, UK, France, Canada,
China, Japan, South Africa, Australia and Singapore. ADR has emerged as a significant
movement in these countries and has not only helped reduce cost and time taken for
resolution of disputes, but also in providing a congenial atmosphere and a less formal and
less complicated forum for various types of disputes.

The advantage of ADR is that it is more flexible and avoids seeking recourse to the courts.
In conciliation/mediation, parties are free to withdraw at any stage of time. It has been seen
that resolution of disputes is quicker and cheaper through ADR. The parties involved in
ADR do not develop strained relations; rather they maintain the continued relationship
between themselves.

ADR techniques are extra judicial in character. They can be used in almost all contentious
matters which are capable of being resolved, under law, by agreement between the parties.
They have been employed with various encouraging results in several categories of
disputes, especially civil, commercial, industrial and family disputes. In particular these
techniques have been shown to work across the full range of business disputes : banking
,contracts, performance and interpretation; construction contracts, Intellectual property
rights, insurance coverage, joint ventures ,partnership differences, personal injury, product
liability, professional liability , real estate and securities .ADR offers the best solution in
respect of commercial disputes of an international character.2 The traditional attitude of

2
P.C.Rao : Alternative to litigation in India , ADR-Edited by P.C Rao and William Sheffield.
 our courts towards arbitration had been paternalistic almost school-masterly; and with
international arbitration there was a generally a lurking suspicion of a revival of foreign
dominance in India.3

4. DEVELOPMENT OF ADR INTERNATIONAL EXPERIENCE.

Back in 1980s, the American experts and executives alike heralded alternative dispute
resolution as a sensible, cost effective way to keep corporations out of Courts and away
from kind of litigation that devastates winners almost as much as losers. Thus, the
concept of resolving disputes through mediation or conciliation, in a different form under
the title Alternative Dispute Resolution was developed in the United States to avoid
increasing cost and complexity of litigations.

In the United States, ADR is offered by various organizations and individuals including
the Centre for Public Resources (CPR) which has established a registry of a number of
major corporations pledged to exploring ADR before litigating. In addition to private
sector, ADR processes have also been introduced in the Court systems of a number of
states and the concept of multi-door Court house is developing, providing for the Court to
be a focal point for all dispute resolution services, both litigation and alternative.

Consequent to the success of ADR in United States, the acceptance of ADR processes
extended to many countries including United Kingdom, Canada, Australia, Hong Kong,
South Africa, New Zealand, Japan, China and India.

3
F.S.Nariman : Arbitration and ADR in India.
 5. ADVANCEMENTS OF ADR IN INDIA.

In Roman law, there was no struggle to establish the jurisdiction of ordinary courts as
against rival tribunals .Accordingly, contracts for submissions of disputes to the decision
of persons were recognized, and there were rules as to their effect and enforcement.4

Disputes were settled by the method of arbitration in Greece during the sixth century B.C.
The disputes included boundary fixation, title to colonies and land, assessment of damages
that occurred due to hostile invasion monetary claims between states and religious matters.5

In India, The techniques of Alternative Dispute Resolution (ADR) are not alien to the
justice dispensing system of India. The concept of parties settling their disputes by
reference to a person or persons of their choice or private tribunals was well known to
ancient India. Long before the king came to adjudicate on disputes between persons, such
disputes were quite peacefully decided by the intervention of the Kulas (family or clan
assemblies), Srenis (guilds of men following the same occupation), Perishads (assemblies
of learned men who knew law) and such other autonomous bodies. There were Nyaya
Panchayats at grass root level before the advent of the British system of justice.

During the British Raj, the Panchayat system undergone considerable changes. A number
of statutes were enacted providing for arbitration as a mode of dispute settlement. The first
statute providing substantive law on arbitration - The Indian Arbitration Act, was passed
in 1899, however its application was restricted to Presidency towns of Calcutta, Bombay
and Madras. In 1908, the Code of Civil Procedure (CPC) was re-enacted and provisions
relating to arbitration were set out in the Second Schedule. Ultimately in 1940, the
Arbitration Act was passed repealing the Indian Arbitration Act of 1899 and provisions
relating to arbitration in CPC. Additionally, the Arbitration (Protocol and Convention) Act,

4
Jurisprudence by Pound , 1959 Edition, Vol 5 p.360

5
ADR Edited by P.C. Rao and William Sheffield.
 1937 and Foreign Awards (Recognition and Enforcement) Act, 1961 were also enacted to
meet the need of domestic and certain aspects of international arbitration.

The Arbitration Act, 1940 though was an attempt to provide a comprehensive code on
arbitration, could not meet the expectations of the legislators. In this context the Supreme
Court in M/s Guru Nanak Foundation v. M/s Ratan Singh & Sons6 observed that the way
in which the proceedings under the Act are conducted and, without exception, challenged
in Courts, has made lawyers laugh and legal philosophers weep. Experience shows and law
reports bear ample testimony that the proceedings under the Act have become highly
technical, accompanied by unending prolixity, at every stage providing a legal trap to the
unwary. Informal forum chosen by the parties for expeditious disposal of their disputes has
by the decisions of the Courts, being clothed with legalese of unforeseeable complexity.

In these underpinnings and based on the UNCITRAL Model Law, The Arbitration and
Conciliation Act, 1996 has been enacted to consolidate and amend the law relating to
domestic arbitration, international commercial arbitration and enforcement of foreign
arbitral award as also to define the law relating to conciliation and for matters connected
therewith and incidental thereto.

6. MAKING ADR COMPULSORY IN INDIA RECOMMENDATIONS OF LAW

COMMISSION

The Law Commission in its 124th Report on the High Court Arrears - A Fresh Look
(1988) and the 129th Report on Urban Litigation - Mediation as Alternative to
Adjudication (1988) emphasized the desirability of the Courts being empowered to
compel parties to a private litigation to resort to arbitration or mediation.

The Law Commission in its 129th Report examined at length the nature of litigation In
urban areas and highlighted the staggering pendency of cases in various Courts of urban
areas. The Report pointed to a huge arrears of cases pending in Sessions Courts,

6
(AIR 1981 SG 2075).
Magisterial Courts, cases in Civil Courts of Original Jurisdiction and the Appellate side.
Special attention was given in the Report to house rent / possession litigation in urban
areas and as an alternative to the present method of disposal of disputes under the Rent
Acts, following four distinct modes were considered:

(i) Establishment of Nagar Nyayalaya with a professional Judge and two lay
Judges on lines similar to Gram Nyayalaya and having comparable
powers, authority, jurisdiction and procedure;

(ii) Hearing of cases in Rent Courts by a Bench of Judges, minimum two in

number, with no appeal but only a revision on questions of law to the
district Court;

(iii) Setting up of Neighborhood Justice Centers involving people in the

vicinity of the premises in the resolution of dispute; and

(iv) Conciliation Court system working with full vigor in Himachal Pradesh.

In respect of suits involving disputes as to inheritance, succession, partition, maintenance

and those concerning wills, which are generally blood relations, the Law Commission
recommended that Conciliation Court system must be made compulsory by an effective
amendment to the Code of Civil Procedure on the lines of Rule 5B, order XXVII. Rule
5B of order XXVII of the CPC makes it obligatory for the Court in a suit against the
Government or public officer, to assist in arriving at a settlement in the first instance.

In respect of all other kinds of suits, it was recommended that an attempt should be made
at the pre-trial stage by the lawyers of respective parties for a reasonable settlement of the
dispute through negotiations and that in case the dispute is not resolved, litigation may be
resorted to but in that case the matter should be referred to the Conciliation Court and if
such Court finds that its persuasion to the parties to go in for an amicable settlement has
 failed, the party who was recalcitrant and unjust in approach must be fined with heavy
costs.

In the field of criminal cases, Law Commission recommended, the reintroduction of the
system of Honorary Magistrates who should be drawn from amongst the retired personnel
of the judiciary. Such Honorary Magistrates should be empowered to do any work which
a Stipendiary Magistrate can undertake and they should take over all the old cases. The
recommendation of Law Commission regarding service related matters was that State
Government must take steps for setting up State Administrative Tribunals under the
Administrative Tribunals Act, 1985.

The Law Commission in its 126th Report on Government and Public Sector Undertaking
Litigation recommended that the Central Government should issue a binding directive to
the Public Sector Undertakings regarding reference of disputes inter se between them or
between them on the one hand and the Government on the other, to arbitration. The
introduction of conciliation procedure in Writ matters, and the establishment of the
Grievances Cell to deal with disputes and complaints of employees of Public Sector
Undertakings and the Government in regard to service matters and reference to
compulsory arbitration of issues involving law points in certain eventualities was also
recommended by the Law Commission.

7. RECOMMENDATIONS OF JUSTICE MALIMATH COMMITTEE

The Malimath Committee on Alternative Modes and Forums of Dispute Resolution

endorsed the recommendations made in the 124th and the 129th Report of the Law
Commission to the effect that the lacuna in the law as it stands today, arising out of the
want of power in the Courts to compel the parties to a private litigation to resort to
arbitration or mediation, requires to be filled up by necessary amendment. The
conferment of such power on Courts would to a large extent result in reducing not only
the burden of trial Courts but also of the revisional and appellate Courts, since there
 would be considerable divergence of work at the base level and the inflow of work from
trial Courts to the revisional and appellate Courts would thereby diminish.

8. THE CODE OF CIVIL PROCEDURE (AMENDMENT) ACT, 1999

Following the recommendations made, by Justice Malimath Committee, and Law

commission in its 129th Report and the Committee on Subordinate Legislations (11th Lok
Sabha), the Code of Civil Procedure (Amendment) Bill, 1997 was introduced in the
Parliament keeping in view, among others, that every effort should be made to expedite
the disposal of civil suits and proceedings so that justice might not be delayed. After the
assent of the President the Amendment Act came into effect on July 1, 2001. The Code of
Civil Procedure (Amendment) Act, 1999 inserted a new section 89 providing for
settlement of Disputes outside the Court and also inserted Rules 1A, 1B and 1C to Rule 1
of Order 10.

New Section 89 which deals with settlement of disputes outside the court provides that
where it appears to the Court that there exist elements of a settlement, which may be
acceptable to the parties, the Court shall formulate the terms of settlement and give them
to the parties for their observations and after receiving the observations of the parties, the
Court may reformulate the terms of a possible settlement and refer the same for
arbitration; conciliation; judicial settlement including settlement through Lok Adalat; or
mediation.

Sub - section (2) of Section 89 which deals with the application of specific legislation in
respect of arbitration, conciliation, judicial settlement or mediation provides that in the
case of
(i) Arbitration or Conciliation

The provisions of the Arbitration and Conciliation Act, 1996 shall apply as
if the proceedings for arbitration or conciliation were referred for
settlement under the provisions of that Act.
 (ii) Lok Adalat

The Court shall refer the same to the Lok Adalat in accordance with the
provisions of sub-section (1) of section 20 of the Legal Services Authority
Act, 1987 and all other provisions of that Act shall apply in respect of the
dispute so referred to the Lok Adalat.

(iii) Judicial Settlement

The Court shall refer the same to a suitable institution or person and such
institution or person shall be deemed to be a Lok Adalat and all the
provisions of the Legal Services Authority Act, 1987 shall apply as if the
dispute were referred to a Lok Adalat under the provisions of that Act.

(iv) Mediation

The Court shall effect a compromise between the parties and shall follow
such procedure as may be prescribed.

9. ADVANTAGES OF ADR

(i) It can be used at any time, even when a case is pending before a Court of
law, though recourse to ADR as soon as the dispute arises may confer
maximum advantage on the parties; it can be used to reduce the number of
contentious issues between the parties; and it can be terminated at any
stage by any of the disputing parties.

(ii) It can provide a better solution to disputes more expeditiously and at less
cost than litigation. It helps in keeping the dispute a private matter and
 promotes creative and realistic business solutions, since parties are in
control of ADR proceedings.

(iii) The ADR is flexible and not governed by the rigors of rules of procedures.

(iv) The freedom of parties to litigation is not affected by ADR proceedings.

Even a failed ADR proceeding is never a waste either in terms of money
or time spent on it, since it helps arties to appreciate each others case
better.

(v) The ADR can be used with or without a lawyer.

(vi) ADR helps in the reduction of the work load of the Courts and thereby
help them to focus attention on other cases.

(vii) The ADR procedure permit parties to choose neutrals who are specialists
in the subject matter of the dispute.

10. THE ARBITRATION AND CONCILIATION ACT, 1996 AN ANALYSIS

The Arbitration and Conciliation Act, 1996 aims at streamlining the process of
arbitration and facilitating conciliation in business matters. The Act recognizes the
autonomy of parties in the conduct of arbitral proceedings by the arbitral tribunal and
abolishes the scope of judicial review of the award and minimizes the supervisory role
of Courts. A significant feature of the Act is the appointment of arbitrators by the Chief
Justice of India or Chief Justice of High Court. The Chief Justice may either appoint the
arbitrator himself or nominate a person or Institution to nominate the arbitrator. The
autonomy of the arbitral tribunal has further been strengthened by empowering them to
decide on jurisdiction and to consider objections regarding the existence or validity of
the arbitration agreement.
 The Act has been divided into four Parts and contains three Schedules. Part one deals
with Arbitration (Section 2 to 43); Part two deals with enforcement of certain Foreign
Awards (Section 44 to 60); Part three deals with conciliation (Section 61 to 81); and
Part four contains supplementary provisions (Sections 82 to 86). Similarly Schedule
one contains provisions relating to convention on the Recognition and Enforcement of
Foreign Arbitral Awards; Schedule two deals with Protocol on Arbitration Clauses and
Schedule three contains provisions relating to Execution of Foreign Arbitral Awards.

11. CONCILIATION

Part III of the Arbitration and Conciliation Act 1996 deals with conciliation. Conciliation
means the settling of disputes without litigation. Conciliation is a process by which
discussion before parties is kept going through the participation of a conciliator. The
main difference before arbitration and conciliation is that in arbitration proceedings the
award is the decision of the Arbitral Tribunal while in the case of conciliation the
decision is that of the parties arrived at with the assistance of the conciliator.

12. SCOPE OF CONCILIATION

The settlement of disputes through conciliation covers a wide range of issues. Among
others they include commercial and civil disputes and claims for breach of obligations.
These may be factual, legal or technical disputes that can range from simple disagreement
to complex and substantial technical or commercial disputes. They may arise in relation to
virtually any kind of disputes e.g. issues arising under contracts; commercial or corporate
disputes; torts and breach of duty including negligence allegation and insurance claims;
consumer disputes; disagreements in business or professional relationships such as
partnership, principal and agent, franchiser/ franchisee and many others. Industrial and
Labor disputes, family disputes including issues arising on separation and divorce,
 Community and Neighborhood issues, Public Policy issues and social conflicts may also
be taken up under mediation/conciliation.

S.61 points out that the process of conciliation extends to disputes, whether contracted or
not. But the disputes must arise out of the legal relationship. It means that the dispute must
be such as to give one party the right to sue and the other party the liability to be sued.

There are many other fields in which conciliation is being used for settlement of disputes
for example, mediation in academia, hospitals and health care systems for consumer
disputes, to deal with farmer/ lender debt issues and for many other purposes.

13. COMMENCEMENT 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.7

Thus conciliation agreement should be an ad hoc agreement entered by the parties after
the dispute has actually arisen and not before.8Even 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 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 arisen.9

7
S. 62, Arbitration and Conciliation Act, 1996.
8
V. Nageswara Rao, Conciliation Proceedings under the Indian Arbitration Conciliation Act of 1996 and CPC
An Overview, available at: http:// lawcommissionofindia.nic.in/adr_ conf/nageswararao.pdf (last visited on
08.08.2011).
9
Visa International Ltd. v. Continental Resources (USA) Ltd., AIR 2009 SC 1366.
 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.10

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.11

14. 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.12At any stage of the conciliation proceedings the conciliator may request a
party to submit to him such additional information as he deems appropriate.13

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.14 A conciliator assists
parties by helping them to initiate and develop positive dialogue, clarify
misunderstandings, create faith upon one another and generate a congenial atmosphere

10
See Commentary on Draft UNCITRAL Conciliation Rules.
11
S. 64, Arbitration and Conciliation Act, 1996.
12
S. 65, Arbitration and Conciliation Act, 1996.
13
S. 65, Arbitration and Conciliation Act, 1996.
14
S. 67, Arbitration and Conciliation Act, 1996.
 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.15 The process of conciliation, inter alia,
involves creating a constructive bonding between the parties to a dispute to steer them
towards resolution.

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.16 The conciliator is not bound by the Code of Civil Procedure, 1908
or the Indian Evidence Act, 1872.17 He 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.18

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.19 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.20This shows that depending upon the requirement from case
to case basis the conciliator may or may not adopt a structured process in conciliation.

15
M. K. Sharma, Conciliation and Mediation, available at: www.delhimediationcentre.gov.in (last visited on
05.09.2010).
16
P.M. Bakshi, Conciliation for Resolving Commercial Disputes, 1 Comp. L. J. (Journal) 19 (1990); See also
Haresh Dayaram Thakur v. State of Maharashtra, AIR 2000 SC 2281.
17
S. 66, Arbitration and Conciliation Act, 1996.
18
S. 67, Arbitration and Conciliation Act, 1996.
19
S. 69, Arbitration and Conciliation Act, 1996.
20
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).
 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 mound 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
proceedings, the parties, or the conciliator with the consent of the parties, may arrange for
administrative assistance by a suitable institution or person.21

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.22 In the Indian context the conciliator therefore plays an
evaluative23 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.24 The conciliator, in this manner plays a more proactive and
interventionist role in persuading the parties to arrive at a final settlement.25 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

21
S. 68, Arbitration and Conciliation Act, 1996.
22
S. 67, Arbitration and Conciliation Act, 1996.
23
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. See Anirudh Wadhwa and Anirudh Krishnan (Eds.), R.S. Bachawats Law
of Arbitration and Conciliation (Lexis Nexis Butterworths Wadhwa, Nagpur, 5th Edn., 2010).
24
See O.P. Malhotra and Indu Malhotra, The Law and Practice of Arbitration and Conciliation (LexisNexis
Butterworths, Delhi, 2nd Edn., 2006).
25
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.
 of conciliation is to succeed as a proficient ADR mechanism professional training of
conciliators needs to be a mandatory requirement.26

15. 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.27 The statutory provisions28 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.29 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.30

The settlement agreement must also bear the signatures of the parties.31Once the parties
sign the settlement agreement, it shall be final and binding on the parties and persons
claiming under them respectively.32

26
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).
27
S. 73(1), Arbitration and Conciliation Act, 1996; See also United India Insurance Co. Ltd. v. Ajay Sinha, AIR
2008 SC 2398.
28
S. 73(2), Arbitration and Conciliation Act, 1996.
29
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).
30
Mukul Mudgal, Conciliation: An Indian Perspective, II (2) Nyaya Kiran (April 2003).
31
Haresh Dayaram Thakur v. State of Maharashtra, AIR 2000 SC 2281.
32
S. 73(3), Arbitration and Conciliation Act, 1996.
 The settlement agreement drawn up in conciliation proceedings has the same status and
effect as if it is an arbitral award44 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.33 Therefore a
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.34

16. 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.35

33
Mysore Cements Ltd. v. Svedala Barmac Ltd., (2003) 10 SCC 375.
34
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.
35
S. 76, Arbitration and Conciliation Act, 1996.
17. ADVANTAGES OF CONCILIATION

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. 36 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.37 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.38 The end result in conciliation is a
negotiated settlement which is treated to be an arbitral award on agreed terms, thereby
obviating the possibility of successive appeals and finally resolving the dispute in an
expeditious and cost effective manner.

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. 39 A very commendable
feature of conciliation is that the parties can withdraw from conciliation at any stage.40
Unless a party consents to the initiation and continuance of conciliation and accepts the

36
Ashwanie Kumar Bansal, Arbitration and ADR 26 (Universal Law Publishing Co. Pvt. Ltd., Delhi, 2005).
37
S. 67(3), Arbitration and Conciliation Act, 1996.
38
Ashwanie Kumar Bansal, Arbitration and ADR 23 (Universal Law Publishing Co. Pvt. Ltd., Delhi, 2005).
39
S. 67(3), Arbitration and Conciliation Act, 1996.
40
Mukul Mudgal, Conciliation: An Indian Perspective, II (2) Nyaya Kiran (April 2003).
 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.41 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. 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.
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

41
Ashwanie Kumar Bansal, Arbitration and ADR 24 (Universal Law Publishing Co. Pvt. Ltd., Delhi, 2005).
 enabling the parties to understand each others versions, positions and aspirations in a
better perspective.

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 guarantee42 which makes conciliation an excellent dispute
resolution mechanism.

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.43

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.44This 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.57 the process of conciliation provides an opportunity for
settlement of disputes without publicity.45 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

42
S. 75, Arbitration and Conciliation Act, 1996.
43
S. 81, Arbitration and Conciliation Act, 1996.
44
S. 70, Arbitration and Conciliation Act, 1996.
45
A.K. Bansal, Conciliation: Quick Settlement of Disputes, (1) Arb. L.R. (Journal) 22 (1999).
 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.46

18. ENFORCEABILITY OF CONCILIATION SETTLEMENT AGREEMENT

The settlement agreement drawn up in conciliation proceedings has the same status and
effect as if it is an arbitral award47 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.48 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.49

19. CONCLUSION

Conciliation is an ADR mechanism where the ADR neutral known as the conciliator steers
the disputant parties towards a negotiated settlement. Conciliation has a well-entrenched
statutory framework In India and is governed by the provisions of part III of the Arbitration
and Conciliation Act, 1996.

Conciliation is strikingly similar to mediation as both the processes can fundamentally be

described as facilitated negotiations and in fact at times the two terms are used
synonymously in various jurisdictions. In India however the introduction of the two terms

46
S. 80, Arbitration and Conciliation Act, 1996; See also Alcove Industries Ltd. v. Oriental Structural Engineers
Ltd., (2008) Arb.L.R. 393.
47
S. 74, Arbitration and Conciliation Act, 1996
48
S. 36, of the Arbitration and Conciliation Act, 1996.
49
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).
separately in section 89 CPC has necessitated the development of a fine line of distinction
between mediation and conciliation.

The conciliator in the process of conciliation as is understood in India plays an evaluative

and interventionist role and is statutorily authorized to make suggestions and propose
plausible solutions to the parties while mediation is regarded as an ADR process which is
primarily facilitative. The principal advantage in conciliation is that a conciliation settlement
agreement is treated to be an arbitral award on agreed terms and is executable as a decree of
the court under the Arbitration and Conciliation Act, 1996.

It is primarily because of this advantage that conciliation overshadows mediation as an

ADR mechanism at the pre-litigation stage in Delhi. There are various institutions operating
in Delhi such as ICA, FACT, ICADR, etc. which provides state of the art infrastructure,
professional conciliators and excellent facilities for conciliation. There are various
companies and PSUs which incorporate conciliation clauses in their contracts and go in for
conciliation at the pre litigation stage, conducted either by ad hoc conciliators appointed by
the parties by mutual accord or by institutions providing conciliation services.

However the situation is diametrically opposite when it comes to post litigation conciliation.
Though conciliation is resorted to under the Hindu Marriage Act, 1955 and the Family
Courts Act, 1984 for resolution of matrimonial disputes by the courts themselves, however
in general, the process of mediation overshadows conciliation as a dispute resolution process
under section 89 CPC and in fact conciliation has been rendered redundant.

One of the reasons is that the process as it has been interpreted today requires the consent of
both the parties for being referred to conciliation in a sub judice matter by the court.
Secondly, after such reference is made to an external conciliator, the matter moves out of the
realm of the court house requiring the parties to incur extra expenditure on such out of court
conciliation.

The prime reason is, however, the judiciarys choice of mediation over conciliation.
Samadhan at the Delhi High Court is the Delhi High Courts Mediation and Conciliation
Centre. The rules framed by the Delhi High Court are described as the Mediation and
Conciliation Rules, 2004. Despite this conciliation is rarely resorted to at Samadhan. At the
district courts the same Mediation and Conciliation Rules, 2004 are applicable yet there are
no facilities for conciliation and here in fact the centers have been designated as Mediation
Centers only with no reference to conciliation. The Mediation and Conciliation Rules, 2004
contemplate that conciliation should also be offered as a dispute resolution process to the
parties.

The process of mediation has therefore been given wide publicity and recognition in Delhi
as a court sponsored mode of dispute resolution and since both conciliation and mediation
are generically similar, the process of mediation is extensively used at the post litigation
stage and flourishes in Delhi whereas conciliation remains practically unexplored in this
arena although conciliation offers similar advantages and much more at the pre litigation
stage.

Conciliation however, is an excellent ADR mechanism and offers distinct advantages such
as a well-entrenched statutory framework, flexibility of procedure, a more interventionist
role for the conciliator, a settlement which is executable as a decree of the court and
statutory guarantee of confidentiality. In fact the more interventionist role of the conciliator
would prove to be an added advantage in parties who belong to the poor strata or are not
aware of their rights and liabilities. There is absolutely no reason as to why the conciliation
cannot be utilized as an effective ADR mechanism simultaneously with mediation.

The state should endeavor to provide a state sponsored, state funded, court annexed
conciliation mechanism like mediation at the mediation and conciliation centers attached to
the courts in Delhi and give adequate publicity and importance to conciliation as an ADR
mechanism at the post litigation stage. At the pre litigation stage also conciliation can be
utilized at a mode of dispute resolution if the mediation and conciliation centers diversify
and expand their role to offer pre litigation services. In fact it can be of great use specifically
for the ADR centers mooted by the Delhi Dispute Resolution Society.

Conciliation has therefore great potential in Delhi as an ADR mechanism, however, it is not
being utilized in Delhi to its full potential. Therefore there is an urgent need to appreciate the
utility of this ADR process and take necessary measures for advocating, propagating,
popularizing and utilizing conciliation as an ADR process in Delhi.
20. REFERENCES

1. Arbitration and Conciliation Act, 1996.

2. Code of Civil Procedure (Amendment) Act, 1999.

3. 176th Report of the Law Commission of India.

4. 124th Report of the Law Commission of India on the High Court Arrears - A Fresh
Look (1988).

5. 129th Report of the Law Commission of India on the Urban Litigation - Mediation as
alternative to Adjudciation (1988).

6. Report of Justice Malimath Committee on Alternative Modes and Forums for Dispute
Resolution.

7. P.M. Bakshi, Conciliation for Resolving Commercial Disputes, 1 Comp. L. J.

(Journal) 19 (1990).

8. A.K. Bansal, Conciliation: Quick Settlement of Disputes, (1) Arb. L.R. (Journal) 22
(1999).

9. Ashwanie Kumar Bansal, Arbitration and ADR 23 (Universal Law Publishing Co. Pvt.
Ltd., Delhi, 2005).

10. O.P. Malhotra and Indu Malhotra, The Law and Practice of Arbitration and
Conciliation (LexisNexis Butterworths, Delhi, 2nd Edn., 2006).

11. 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).

12. 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).
13. 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).

14. M. K. Sharma, Conciliation and Mediation, available at:

www.delhimediationcentre.gov.in (last visited on 05.09.2010).