This article is written by Shaily Garg, a Fourth year B.Com. LLB (Hons.) Student of University Institute of Legal Studies, Panjab University, Chandigarh.
ADR or ‘Alternative dispute resolution’ is an endeavor to provide a mechanism that should be proficient in providing an alternative to conventional methods of resolving disputes. This article discusses in detail ‘Conciliation’ as a mode of ADR.
Conciliation is a non-binding process by which discussion between the disputing parties is kept going through the participation of a conciliator. The conciliator is an impartial third party that assists the parties to a dispute in reaching a mutually agreeable settlement to a dispute. Part III of the Arbitration and Conciliation Act, 1996 deals with the technique of Conciliation which means “the settling of disputes without litigation”.
The law relating to conciliation has been codified for the first time in India on the pattern of the United Nations Commission on International Trade Law (UNCITRAL) Conciliation Rules. A conciliation procedure aims at bringing the parties together before a third neutral person whom they have chosen for settling their dispute. Where it is successful, a settlement agreement is recorded and signed by the parties and conciliator.
Scope of Conciliation
Conciliation may be most appropriate in cases in which there are technical issues that require special expertise to resolve. However, it may not be appropriate where there are significant personal or emotional barriers to resolve the dispute. Section 61 of the Arbitration and Conciliation Act, 1996 points out that the process of conciliation extends, in the first place, to disputes, whether contractual or not, but the disputes must arise out of the legal relationship.
It means that the dispute must be of such nature as to give one party the right to sue and the other party the liability to be sued. The process of conciliation extends, in the second place, to all proceedings covering it. However, Part III of the Act does not apply to such disputes as cannot be submitted to conciliation by any law for the time being in force.
Advantages of Conciliation
The following are the advantages of resolution of the dispute by conciliation:
- It offers a more flexible alternative, for a wide variety of disputes, whether small or large.
- It precludes the parties from seeking recourse to the court system.
- It secures the liberty of the parties to withdraw from conciliation without prejudice to their legal position inter se at any stage of the proceedings.
- It is committed to the maintenance of confidentiality throughout the proceedings and thereafter, of the dispute, the information exchanged, the offers and counteroffers of a solution made and the settlement arrived.
- It is cost-effective and produces a quicker resolution of disputes.
- It facilitates the maintenance of the continued relationship between the settlement is attempted. This attribute is of particular significance to the parties who are required to continue their relationship despite the dispute, as in the case of disputes arising out of construction contracts, family relationships, ancestry possessions, or quarrels between members of any business or other organizations.
- There is no opportunity for corruption or bias in the conciliation process.
Difference Between Mediation and Conciliation
There is a shrewd difference between mediation and conciliation. In mediation, the third party, neutral intermediary, termed as the mediator plays a passive role. His role mainly is to bring the parties together in a frame of mind to forget their animosities and be prepared for an acceptable compromise on terms midway between the stands taken before the commencement of mediation proceedings. On the other hand, in conciliation, the conciliator plays an active role by giving independent compromise formulas after hearing both the parties.
Difference between Arbitration and Conciliation
The main difference between arbitration and conciliation is that in arbitration proceedings the award is the resolution of the Arbitral Tribunal while in the case of conciliation the decision is that of the parties arrived at with the assistance or aid of the conciliator. Conciliation is a process of persuading parties to reach a consensus, and is not arbitration; nor is the chairman of a conciliation board an arbitrator.
Appointment of Conciliator
To assist the parties in a dispute, the assistance of a neutral third party is indispensable in the Conciliation process which is appointed by an institution under Section 64 of the Arbitration and Conciliation Act, 1996. The parties either request such institution to recommend the names of appropriate individuals to acts as conciliators, or the parties may approve that the appointment of one or more conciliators is made directly by such institution.
The institution must secure the appointment of an independent and impartial conciliator for a sole or third conciliator. The advisability of appointing a conciliator of a nationality other than the nationalities of the parties should be considered.
Number of Conciliators
Section 63 of the Act of 1996 fixes the number of conciliators. There shall be one conciliator, but the parties may by their agreement allow for two or three conciliators. Where the number of conciliators is more than one, they ought to jointly according to the general rule.
Procedure of Conciliation
- The conciliation proceedings are initiated by one party sending a written invitation to conciliate to the other party. The invitation should clarify the subject of the dispute. The proceedings commenced only when the other party accepts the invitation to conciliate in writing. If the other party rejects the invitation, there will no conciliation proceedings.
- If the party inviting conciliation does not receive a reply within thirty days from the date the invitation was sent or within such period as specified in the invitation, he may treat that as a rejection of the invitation to conciliate. He should also notify the other party in writing about the same.
- After the acceptance of an invitation to conciliate, the conciliator may request each party to submit a brief written statement describing the general nature of the dispute and the points at issue. The conciliator may also require a further written statement of parties’ position and their facts and grounds in its support, supplemented by appropriate documents and evidence.
- Each party should send a copy of such statements, documents, and evidence to the other party.
- The conciliator invites the parties to meet him. He may communicate with the parties either orally or in writing. Also, he may meet the parties together or separately i.e. caucus meeting.
- The parties and the conciliator may also seek administrative assistance by a suitable institution or the person with the consent of the parties. (Section 68 of the Act of 1996)
Settlement of dispute
- The conciliator can make proposals for the settlement of the dispute at any stage of the conciliation proceedings. Such proposals need not be in writing and need not be accompanied by a statement of reasonings. Each party on his initiative or at the invitation of the conciliator, submit the suggestions on the proposals for the settlement.
- Once the terms of a possible settlement are formulated by a conciliator, it is submitted to each party for their observations. After receiving observations of the parties, the conciliator may reformulate the terms of a possible settlement in the light of such observations.
- After settling the dispute, a written settlement agreement will be drawn up and signed by both parties. It should not be drawn in secrecy by the conciliator because that agreement is not binding unless signed by the parties.
- When the parties have signed the settlement agreement, it becomes final and binding on the parties and persons claiming under them respectively. The conciliator shall certify the settlement agreement and furnish its copy to each of the parties.
Principles of Procedure
- The conciliator should be independent and impartial i.e. he should assist the parties independently and impartially to reach an amicable settlement of their dispute.
- The conciliator should be guided by the principles of impartiality, fairness, and justice.
- The conciliator and the parties are duly bound to keep confidential all affairs relating to the conciliation proceedings.
- The conciliator after receiving information about any fact relating to the dispute from a party should disclose the substance of that information to the other party so that they can present an explanation which they might consider appropriate.
- The parties should in good faith cooperate with the conciliator by submitting the written materials, providing evidence, and attending meetings when requested by the conciliator.
Restrictions on the role of conciliator
Section 80 of the Arbitration and Conciliation Act, 1996 places two restrictions on the role of the conciliator in the conduct of conciliation proceedings:
- The conciliator cannot act as an arbitrator or as a representative or counsel of a party in any arbitral or judicial proceeding in respect of a dispute which is subject to the conciliation proceedings.
- The parties are prohibited to produce the conciliator as a witness in any arbitral or judicial proceedings.
In the year 1996, the Arbitration and Conciliation Act, 1996 was passed, Section 30 of the Act provides that an arbitral tribunal may strive to have the disputes resolved by the use of ‘mediation’ or ‘conciliation’. However, the role of a mediator is necessarily restricted to that of a ‘facilitator’, whereas the role of a ‘conciliator’ is pro-active and his powers are larger than those of a mediator as he can suggest proposals for settlement or formulate or reformulate the terms of a possible settlement while a mediator cannot do so.