Conciliation

Lecture by Dr. Saltanat Sherwani

Conciliation.—It is a non-binding process in which an impartial person

settles the dispute amicably and make recommendations pertaining to
dispute. Such person is called ‘conciliator’. The Industrial Disputes Act,
1947 and the Family Courts Act, 1984 provide settlement of disputes by
conciliation.

Meaning of conciliation-
The simplest meaning of conciliation is the settlement of the disputes
outside the court .It is a process by which the discussion between the
parties are kept going through the participation of a conciliator.
Conciliation is one of the non binding procedures where an impartial third
party, known as the conciliator, assist the parties to a dispute in reaching a
mutually agreed settlement of the dispute.

Who is conciliator
According to the Chambers 21st Century Dictionary—the expression
"conciliate" means to win over someone, to overcome the hostility of
someone, to reconcile (people in dispute) etc.

Black’s Law Dictionary, 7th Edition defines—"conciliation as a settlement

of a dispute in an agreeable manner, a process in which a neutral person
meets with the parties to a dispute (often labour) and explore how the
dispute might be resolved."

According to Halsbury’s Laws of England, 4th Edition—"Conciliator" is

described as a person persuading parties to reach an agreement.

It is to be noted that whereas decision of the arbitrator is binding on the

parties, the finding of a conciliator is recommendatory in nature.

PART III OF ARBITRATION AND CONCILIATION ACT

1996, DEALS WITH CONCILIATION

Section 61 Application and scope.—(1) Save as otherwise provided by

any law for the time being in force and unless the parties have otherwise
agreed, this Part shall apply to conciliation of
disputes arising out of legal relationship, whether contractual or not and
to all proceedings relating thereto.

(2) This Part shall not apply where by' virtue of any law for the time being
in force certain disputes may not be submitted to conciliation.

Application and Scope-

Section 61 of the Arbitration and Conciliation Act of 1996 provides for the
Application and Scope of Conciliation. Section 61 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 such as to give one party
the right to sue and to the other party the liability to be sued. The process
of conciliation extends, in the second place, to all proceedings relating to
it. But Part III of the Act does not apply to such disputes as cannot be
submitted to conciliation by the virtue of any law for the time being in
force.

Section 61 deals with application and scope of conciliation machinery.

Sub-section (1) states that provision of this sub-section applies to all
disputes whether such disputes are contractual or non-contractual,
however, if the provision of any other law being applied for conciliation of
dispute, the provisions contained in Part III would not be applied, thus
leaving it open to the special law. The words "save as otherwise provided
by any law for the time being in force" under sub-section (1) clearly state
that where any other law is being applied for conciliation of disputes, the
provision of Part III will not apply.

Further, sub-section (1) states "unless the parties have agreed" which
means the parties have been given freedom to follow the provision of Part
III or may not adopt such provisions. Thus, the parties may bring the
agreement to an end.

Section 61(2) provides that where by operation of law for the time being
in force specified disputes may not be submitted to conciliation, Part III
shall not be applied.

Section 62 INVITATION

Section 62 emphasises that the invitation or the acceptance must be

made in writing for obvious reason to avoid communication gap and for
records purpose.

Section 62(1) provides that any party to dispute wishing to initiate

conciliation has to fulfil the following conditions—•
1. The party initiating conciliation should send a written invitation to other
party. Such a written invitation should mention the subject of dispute.
2. The party initiating conciliation should state that the invitation is under
Part III.
3. The invitation must briefly identify the subject of dispute.

Section 62(2) states that "Conciliation proceedings shall be commenced

when the other party accepts in writing the invitation to conciliation".
Thus,
verbal or oral acceptance has not been recognised under Section 62(2).
Under this sub-section (2) when the other party accepts the invitation in
writing to
conciliation he makes an agreement to conciliate. However he may refuse
in writing, not to conciliate, in such a case conciliation proceedings will
not be
commenced.

Section 62(3) provides—"If the other party rejects the invitation, there
will be no conciliation proceedings". There is no time limit prescribed
under Section 62, however, the party who is initiating conciliation thereby
sends the invitation in writing to the other party, specifying time limit in
the invitation within which the other party has to convey his willingness to
conciliate rather his acceptance to conciliate or rejection not to conciliate
and accordingly conciliation proceedings may or may not be commenced.

62 (4) provides 30 days time from the date on which, the party is
initiating conciliation to receive i reply from the other party or within such
other period of time as may be specified in the invitation.

Section 63. Number of conciliators.—

(1) There shall be one conciliator unless the parties agree that there shall
be two or three conciliators.
(2) Where there is more than one conciliator, they ought, as a general
rule, to act jointly.

This Section states that "there shall be one conciliator unless the parties
agree that there shall be two or three conciliators. Thus sub-section (1)
clearly indicates its preference for a sole conciliator but also provides
freedom to the parties to dispute to appoint two or three conciliators,
however by mutual agreement.

Section 64. Appointment of conciliators.—

Section 64 provides the procedure for appointment of conciliators, there

may be one conciliator or two or three conciliators.
(1) Subject to sub-section (2),—
(a) in conciliation proceedings with one conciliator, the parties may agree
on the name of a sole conciliator;
(b) in conciliation proceedings with two conciliators, each party may
appoint one conciliator;
(c) in conciliation proceedings with three conciliators, each party may
appoint one conciliator and the parties may agree on the name of the
third conciliator who shall act as the presiding conciliator.

(2) Parties may enlist the assistance o f a suitable institution or person in

connection with the appointment of conciliators, and in
particular,—
(a) a party may request such an institution or person to recommend the
names of suitable individuals to act as conciliator; or
(b) the parties may agree that the appointment o f one or more
conciliators be made directly by such an institution or person :

Provided that in recommending or appointing individuals to act as

conciliator, the institution or person shall have regard to such
considerations as are likely to secure the appointment o f an independent
and impartial conciliator and, with respect to a sole or third conciliator,
shall take into account the advisability o f appointing a conciliator o f a
nationality other than the nationalities o f the parties.

Section 64(2) provides freedom to the parties to make an approach with a

request to any institution which has its known reputation for rendering
conciliation services or any eminent person in the field of conciliation to
recommend suitable individuals to conduct conciliation. Under this sub-
section (2), clause (b) the parties are permitted by an agreement in this
respect to appoint one or more conciliators directly by such an institution
a person who is providing expertise services in the area of conciliation.

Section 65. Submission of statements to conciliator.

Section 65 deals with the conduct of conciliation upon appointment of

conciliator or conciliators.

Section 65(1) provides that when the conciliator has been appointed, he
will make a request to each party asking him to submit a written
statement summarily describing the nature of dispute and specified points
of issue.

Under sub-section (1) each party will send a copy of such submission of
statement to the other party. Such submissions of statement by the
parties to the conciliator is intended to provide him informations about
general nature of dispute.

Section 65(2) provides that it is at the discretion of the conciliator to call

upon any parties to submit a further written statement to clarify his
position and also to support his grounds of the facts, it may be
supplemented by any other documents, evidences, if the party thinks
appropriate.

Section 65(3) provides that the conciliator is further enabled to request

for additional informations by the parties at any stage of the conciliation
proceedings, if, the conciliator is of opinion that it is necessary for the
purpose to expedite the conciliation proceedings.

Section 67. Role of conciliator.—

Section 67(1), provides basic role of the conciliator, he has to render

assistance in an independent and impartial manner to the parties who are
putting their own efforts to settle the disputes in a very friendly process
of conciliation. Thus, it becomes the duty of the conciliator to exercise his
skill of conciliation.

Section 67(2) provides fundamental principles of natural justice to the

conciliator with object of fairness and justice besides considerations for
the rights and obligations of the parties. The conciliator also has to take
into account of the present circumstances of the given dispute by
assessing other things like the usage of trade concerned and previous
business practice between the parties, if it so exists. The conciliator while
making settlement of dispute is required to assess every such thing which
relates to the dispute.

Although, the conciliator is not bound by the Code of Civil Procedure,

1908 and the Indian Evidence Act, 1872 under Section 66 but he cannot
act arbitrarily in the conduct of conciliation proceedings otherwise it would
damage the concept of conciliation.

Section 67(3) provides discretionary method, which is appropriate in the

view of conciliator, may be adopted by him to conduct conciliation
proceedings, however, the parties to conciliation can express their wishes
freely to the conciliator not only in respect of conduct of conciliation
proceedings but also can make request to the conciliator to record oral
statement to speedup conciliation and early settlement of dispute.

Section 67(4) provides that the conciliator is authorised at his discretion

to make proposals for a settlement of the dispute, at any stage of the
conciliation proceedings and such proposals are not required to be made
in writing and the conciliator is not bound to state reasons for such
proposals.

Section 69 COMMUNICATION
Section 69 deals with procedural communication powers of the
conciliator, which is to take place between the conciliator and the parties
all together or separately, with each party in the conduct of the
conciliation proceedings.

Section 70 provides privilege to the conciliator whether to disclose

information made known to him by one party to the other party. However
the conciliator is not expected to disclose such information except the
substance of the factual information in connection with the dispute,
received
from one party to the other party.

It is to be noted that in conciliation the conciliator is a confidential person

who should win confidence of the parties primarily to conduct the
conciliation proceedings. However, the conciliator may make disclosure of
such factual information to the other party in order that the other party
may have the opportunity to present any explanation, which the
conciliator considers appropriate.

Section 72. Suggestions by p a rtie s fo r s e ttlem en t of dispute

.—

Section 72 provides freedom to each party in respect of the conciliation to

submit his own suggestions to the conciliator or to give suggestion at the
invitation of the conciliator, for the settlement of the dispute. However,
the parties are not bound to submit, it is only an expectation from the
parties to submit their suggestions in the interest of settlement of
dispute.

Section 73. S e ttlem en t agreement.—

(1) When it appears to the conciliator that there exists elements of a
settlement which may be acceptable to the parties, he shall formulate the
terms of a possible settlement and submit them to the parties for their
observations. After receiving the observations of the parties, the
conciliator may reformulate the terms of a possible settlement in the light
of such observations.

(2) If the parties reach agreement on a settlement of the dispute, they

may draw up and sign a written settlement agreement. If requested by
the parties, the conciliator may draw up, or assist the parties in drawing
up, the settlement agreement.
(3) When the parties sign the settlement agreement, it shall be final and
binding on the parties and persons claiming under them respectively.
(4) The conciliator shall authenticate the settlement agreement and
furnish a copy thereof to each of the parties.

Section 73 prescribes procedure for successful completion of conciliation

proceedings.

Section 73(1) provides that when the conciliator is able to formulate and
is of the opinion that acceptable elements of settlement to the parties
exist, then the conciliator will prepare the terms of possible settlement
which shall be subjected to observation by the parties. The conciliator on
receipt of formula which has undergone observation process by the
parties, may reformulate the terms of a possible settlement keeping in
view such
observations.

Section 73(2) provides that in situation, the parties could come to a stage
to accept the settlement proposed by the conciliator, the parties may
draw up and sign a written settlement agreement. It is at the discretion of
the parties to make such agreement in writing or not, however, the
parties
may request the conciliator to draw up or assist in, drawing up, the
settlement agreement.

Section 73(3) provides that the moment the parties sign the settlement
agreement, it attains finality and would be binding on the parties and
persons claiming under them respectively.

Section 73(4) provides that the conciliator is required to authenticate the

settlement and would furnish a copy to each of the parties. If, there is
more than one conciliator, all conciliators are required to authenticate the
settlement agreement.

Section 74. Status and effect o f settlemen t ag reem en t.—

The settlement agreement shall have the same status and effect as if it is
an arbitral award on agreed terms on the substance of the dispute
rendered by an arbitral tribunal under Section 30.