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TOPIC:CONCILLIATION- CONCEPT, POLICY AND CHALLENGES

INTRODUCTION:It may be remembered that the UNCITRAL Model Law on arbitration and Rules on
Conciliation were both made in the context of growing international trade and
commercial relations against the back-drop of liberalization, privatization and
globalization. UNCITRAL Rules on Conciliation of 1980 adopted by the General
Assembly of the United Nations stated at the very outset that the General Assembly
recognized “the value of conciliation as a method of amicably settling disputes
arising in the context of international commercial relations” and that adoption of
uniform conciliation rules by “countries with different legal, social and economic
systems would significantly contribute to the development of harmonious
international economic relations.” However, the Indian Arbitration and Conciliation
Act in substantially adopting the UNCITRAL Model Law and Rules on international
commercial arbitration and conciliation, has also covered “the law relating to
domestic arbitration, international commercial arbitration and enforcement of
foreign arbitral awards and also to define the law relating to conciliation.”
(Preamble). Parts I, II and III of the Act dealt respectively with arbitration,
enforcement of foreign awards and conciliation. As with arbitration so with
conciliation, the Act covered both domestic and international disputes but
international arbitration was confined only to disputes of “commercial” nature
because of the reservations made by India to the relevant international conventions
on international arbitration (See S. 2, Cl. (1)(f) , S. 44, S.53) and the same
reservation was extended to international conciliation also, though there were no
applicable international conventions on conciliation (See S. 1,Cl. (1). In fact, it was
for the first time in the history of Indian legislation that a comprehensive legislation
was made on the subject of conciliation.
CONCEPT OF CONCILIATION:In order to understand what Parliament meant by ‘Conciliation’, we have necessarily
to refer to the functions of a ‘Conciliator’ as visualized by Part III of the 1996 Act. It
is true, section 62 of the said Act deals with reference to ‘Conciliation’ by agreement
of parties but sec. 89 permits the Court to refer a dispute for conciliation even
where parties do not consent, provided the Court thinks that the case is one fit for
conciliation. This makes no difference as to the meaning of ‘conciliation’ under sec.
89 because, it says that once a reference is made to a ‘conciliator’, the 1996 Act
would apply. Thus the meaning of ‘conciliation’ as can be gathered from the 1996
Act has to be read into sec. 89 of the Code of Civil Procedure. The 1996 Act is, it
may be noted, based on the UNCITRAL Rules for conciliation. Now under section 65
of the 1996 Act, the ‘conciliator’ may request each party to submit to him a brief
written statement describing the “general nature of the dispute and the points at

with or without the consent or in spite of dissent. fairness and justice. Sec. Subsection (1) states that he shall assist parties in an independent and impartial manner. to the other party. But that does not make any practical difference as the . states that the conciliator can formulate terms of a possible settlement if he feels there exist elements of a settlement. make it clear that the ‘Conciliator’ under the said Act. there is no such express provision in Part III regarding conciliation. Subsection (3) states that he shall take into account “the circumstances of the case. (1) When it appears to the Conciliator that there exist elements of a settlement which may be acceptable to the parties. The conciliator may. He is also entitled to ‘reformulate the terms’ after receiving the observations of the parties.issue”. sec. the judge and the arbitrator render their verdicts and impose them. It states as follows: “Section 67(4). while S 7(2) of the Act requires that “an arbitration agreement shall be in writing”. Subsection (4) is important and permits the ‘conciliator’ to make proposals for a settlement. including any previous business practices between the parties. Subsection (2) states that he shall be guided by principles of objectivity. barring some non-derogable provisions.” The above provisions in the 1996 Act. Sec. 73. which is important. conciliation is more privatized than arbitration. the wishes the parties may express. they have no control over the decision making process except in the case of award on agreed terms. on the part of the parties. 72 deals with suggestions being submitted to the conciliator by each party for the purpose of settlement. apart from assisting the parties to reach a settlement. the usages of the trade concerned and the circumstances surrounding the dispute. to the rights and obligations of the parties. As judicial settlement and arbitration are species of adjudication. Conciliation vis-a-vis Arbitration under the 1996 Act:While arbitration is more privatized than judicial settlement. he shall formulate the terms of a possible settlement and submit them to the parties for their observations. Section 69 states that the conciliator may invite parties to meet him. While the parties to arbitration are given considerable freedom to regulate the modalities. After receiving the observations of the parties.” I shall briefly refer to the other provisions before I come to sec. Such proposals need not be in writing and need not be accompanied by a statement of the reasons therefor. He can ask for supplementary statements and documents. the Conciliator may reformulate the terms of a possible settlement in the light of such observations. This is indeed the UNCITRAL concept. 70 deals with disclosure by the conciliator of information given to him by one party. giving consideration. at any stage of the conciliation proceeding. Sec. Subsection (1) of sec. 73(1) settlement agreement. at various stages of the arbitral proceedings. 71 deals with cooperation of parties with the conciliator. Section 67 describes the role of a conciliator. Finally. including a request for oral statements”. make proposals for a settlement of the dispute. Secondly. is also permitted to make “proposals for a settlement” and “formulate the terms of a possible settlement” or “reformulate the terms”. 73 reads thus: “Sec. 73. among other things.

under 4 ( c ) should be taken as complied with. briefly identifying the subject of the dispute. This is particularly so in the light of the fact that the Act treats the conciliation settlement agreement authenticated by the conciliator on par with award on agreed terms which in turn is treated on par with any arbitral award. SS 74 and 30). except for the purpose of “preserving” their rights. The arbitrator would record the settlement in the form of an arbitral award. Article 16 emphasizes the value of serious conciliation effort by expressing the idea that. (See. S. in arbitration.tion to conciliate. 62 that it would not be possible for the parties to enter into conciliation agreement even before the dispute has arisen. for not permitting the parties to enter into a conciliation agreement regarding the settlement of even future disputes ousting the jurisdiction of the courts. The term “initiation” in S 77 clearly supports the provision in S. 2.16 of the Draft) were given in the “Commentary on the Revised Draft UNCITRAL Conciliation Rules: Report of the Secretary General” as follows: “74. the requirement of S. The party initiating conciliation shall send to the other party a written invitation to conciliate under this part. there can be no objection.process of conciliation starts with the written offer and written acceptance to conciliate on the part of the parties. Article 16 deals with the delicate question whether a party may resort to court litigation or arbitration whilst the conciliation proceedings are under way…. the parties are even encouraged to initiate conciliation proceedings but when the conciliation proceedings are on they are barred from initiating arbitral or judicial proceedings. even in the absence of a prior written agreement. The above provision clearly requires that the conciliation agreement should be an ad hoc agreement entered into after the dispute has arisen and not before. Conversely. 30. court or arbitration proceedings should not be initiated as might adversely affect the . while it would be possible to parties to enter into an arbitration agreement even before the dispute has arisen under S. when the arbitral or judicial proceedings are on. That is. it would appear from the language of S. After the enactment of the 1996 Act covering both arbitration and conciliation. A conciliation agreement entered into before the dispute has arisen may have the effect of ousting the jurisdiction of the Courts in relation to the subject matter of the dispute and such an agreement can be saved only by making an amendment to S 28 of the Indian Contract Act as it was done in 1972 to save the arbitration agreement. Thirdly. The raisons de etre of the provision (S. They may do so on their own and settle the dispute through conciliation or authorize the arbitrator himself to use mediation or conciliation and settle the dispute. 75. if the parties appoint the arbitrator and proceed with the submission of written claim and defense and continue with the proceedings till they culminate in the award. Conciliation proceedings shall commence when the other party accepts in writing the invita. S 30 of the 1996 Act permits the parties to engage in conciliation process even while the arbitral proceedings are on. 62 provides: 1. either theoretical or practical. 7(2).77 of the Act bars the “initiation” of any arbitral or judicial proceedings in respect of a dispute which is the subject matter of conciliation proceedings.7 (1) (“all or certain disputes which have arisen or which may arise”). under normal circumstances. Fourthly. However S.

But under the newly added S 89 of CPC. mediation etc. Thus. if the . in his opinion.” The Court can formulate the terms of settlement and give them to the parties for their observation and after receiving the observations. As can be seen from the language of the S. the Court can refer the case to arbitration etc “where it appears to the court that there exist elements of settlement which may be acceptable to the parties. contained in some arbitration rules. such proceedings are necessary for preserving his rights. conciliation. to encourage resort to non-formal conciliation in preference to the formal court and arbitral proceedings. article 16 adopts a general and subjective formula: “…except that a party may initiate arbitral or judicial proceedings where. resort to arbitral or judicial proceedings was permitted as an exception to meet the cases of requirements of the general law of limitation or of “time-bar clauses” like the Atlantic Shipping Clause Atlantic Shipping and Trading Company v. under article 15(d). Instead of attempting to set out a list of possible grounds. if a party initiates court or arbitral proceeding. conciliation and mediation to facilitate early and amicable resolution of disputes. Secondly. the recent amendments made in 1999 to the Civil Procedure Code have introduced provisions to enable the courts to refer pending cases to arbitration. an unwilling party may terminate the conciliation proceedings at any time. However. Dreyfus and Company ( (1992) 2 AC 250) or interim measures of protection.prospects of an amicable settlement. 89. Under that Act arbitration and conciliation are purely consensual and not compulsory. it may well be that. because if there is agreement between the parties at the stage of formulation of possible terms of settlement. But once the Court refers the case to arbitration or conciliation. In view of the fact that. the Court may reformulate the terms of a possible settlement and refer the same for arbitration. the initiative and the role of the Court is considerable in the whole process. the Court is not ascertaining the agreement of the parties but only their observations. Here. the Court can as well make it the basis of its judgement and there would be no need for further negotiations under the aegis of arbitration or conciliation. a party may want to prevent the expiration of a prescription period or must meet the requirement. he does so for different reasons. that reference creates a legal fiction that it is deemed to be a reference under the provisions of the 1996 Act and the provisions of that Act would take over from the provisions of the CPC under which the reference was made. Conciliation under the Civil Procedure Code Amendment Act 1999:As mentioned at the out set. 30 and 77 of the Act was. the article also takes into account that resort to courts or to arbitration does not necessarily indicate an unwillingness on the part of the initiating party to conciliate. of prompt submission of a dispute to arbitration. firstly. The 1996 Arbitration and Conciliation Act does not contain any provision for reference by courts to arbitration or conciliation in the absence of the agreement between the parties to that effect.” From the above it can be seen that the real purpose of provisions in SS. 76 For example.

among other things. usages of the trade concerned and the circumstances surrounding the dispute. Who can seek Conciliation ? Any of the parties. CONCILIATION PROCESS : The conciliator. giving consideration to. He is guided by the principles of objectivity. Recourse to conciliation can be had if the other party accepts the invitation to conciliate. How Can Recourse to Conciliation be Sought ? Conciliation is a procedure mutually agreed to by the parties. (ii) even where there is no agreement between the parties to seek settlement of the dispute by conciliation. Number of Conciliators:Normally. The agreement can be entered into either before a dispute has arisen or after the actual dispute arises. or in the form of a clause in the main contract. upon his appointment calls upon the parties to present a written summary of their respective cases together with any relevant documents. There can be no conciliation if the other party rejects the invitation. Recourse to this procedure can be had – (i) by entering into an agreement for seeking a settlement of the dispute by conciliation. including any previous business practices between the parties. It can be an independent agreement. the conciliation proceedings so commenced by Court’s reference under S 89 of CPC can be terminated by the parties or the conciliator under S 76 of the 1996 Act. After . competent to contract can seek an amicable settlement of their dispute through conciliation. a party desiring conciliation may send to the other party a written invitation to conciliate.parties choose to do so. the rights and obligations of the parties. The parties may belong to the same or different nationalities. What Role does the Conciliator Play ? The conciliator assists the parties in an independent and impartial manner in their attempt to reach an amicable settlement of their dispute. there is one conciliator but the parties have freedom to agree that there should be two or three conciliators. fairness and justice.

(i) views expressed or suggestions made by the other party in respect of a possible settlement of the dispute. Where the parties reach an agreement of settlement. he discloses the substance of that information to the other party so that it may have an opportunity to present its explanation. the settlement agreement can be enforced in the same manner as an arbitral award on agreed terms. the conciliator is estopped from acting as an arbitrator or as a representative of a party in any arbitral. Where the confidentiality and discipline referred to above are not protected by the law. When a party gives any information to the conciliator subject to the condition that it be kept confidential. The conciliator cannot also be presented by a party as witness in any such proceedings. judicial or other proceedings in respect of a dispute which is or has been subject matter of conciliation proceedings in which he acts as conciliator. The conciliator and the parties keep all matters relating to the conciliation proceedings confidential. Similarly. the parties are estopped from relying on or introducing as evidence in arbitral. . which may pass decree/ arbitral award in terms of such settlement. the conciliator and the parties are bound by certain discipline. if any. Where the parties are so inclined he may even suggest a settlement for acceptance by the parties.going through the summary of the case filed by each party. They may treat the settlement agreement also confidential except where its disclosure is necessary for the purposes of implementation and enforcement. Once the settlement agreement is signed it is final and binding on the parties. the conciliator holds a final joint sitting for drawing up and signing a settlement agreement by the parties. Unless all the parties otherwise agree. Where settlement is reached during the pendency of the arbitral proceedings involving the same dispute and the law so provides. he always tries to bring the parties closer to an agreement. the conciliator terminates the proceedings. as the case may be. guiding the party in respect of the legal position and the requirements to substantiate the claims. If such conciliation succeeds they report to the Court or the arbitral tribunal. While doing so. without prejudice to their respective stand in those proceedings. (iii) proposals made by the conciliator. As a principle inherent in conciliation process. (iv) the fact that the other party had indicated his willingness to accept a proposal for settlement made by the conciliator. the conciliator holds a joint meeting with the parties where each party makes a brief oral presentation of its case. The parties to such an agreement are bound by the settlemernt. (ii) admissions made by the other party in the course of the conciliation proceedings. Thereafter. the conciliator shall not disclose that information to the other party. If the conciliator is of the view that there is no scope for agreement between the parties or where the parties or any one of them indicates its unwillingness to pursue conciliation. If the conciliator receives factual information from the party. the conciliator holds private meetings with each party separately to further clarify its case and to discuss the merits of the case. the parties may enter into contractual arrangement for that purpose. There may be several rounds of such separate meetings. judicial or other proceedings . The parties may initiate conciliation even during the pendency of any Court or arbitration proceeding concerning the same dispute.

(iii) Control of the Process Conciliator must have ability to exercise control of the process at every stage. However. competence. Since the openness requires trust. And it is required of him that he reinforced impartiality by his behaviour at every stage of the process. The indication of any relationship between conciliator and any of the parties disqualifies him from accepting the role of conciliator. (ii) Impartiality and Neutrality There are following two absolute pre-requisites for a valid conciliation process.Hence. because he is never a biased person. conciliator and between parties. Therefore. as it helps create an environment of mutual trust. Hence one of the most important ability required of a conciliator is to earn the trust of the parties. (i) Building Trust Engaging a conciliator by the parties to assist them in reaching a settlement does not necessarily imply at the outset that the parties trust the conciliator or the process. The conciliator is a person permitted by the parties to assist and empower them to reach their own lasting settlement. an impartial attitude and the ability to be neutral denotes that the conciliator is able to separate his personal views about the dispute and its outcome from the viewpoints of each of the parties and is able to concentrate exclusively upon assisting the parties towards settlement without overtly favouring one over the other. integrity and neutrality at every stage of conciliation process. In this context it may be said that the consistant display of neutrality goes a long way in encouraging parties to move towards an agreement. The building of an atmosphere of mutual respect and trust in the conciliation process. the position of a conciliator requires fundamental abilities to act as such. the building of trust depends upon the conciliators ability. clarity and non-defensiveness. consistency. The neutrality during the process requires conciliator to ensure that equal treatment is always accorded to the parties.PRE-REQUISITES FOR CONCILIATOR :A conciliator is employed by the disputing parties to act as catalyst for better communication and problem solving. neutrality does not deny the conciliator to have personal opinions. which are inevitable. The openness and honesty of the parties enhances the chances of the success of conciliation. (a) Impartiality The conciliator must ensure that he has no interest in the ultimate outcome of the conciliation. The control requires conciliator to strike a . is the key to successful conciliation. (b) Neutrality Neutrality refers to the conciliator’s behaviour and attitude during the whole process and the relationship between him and the parties.

the termination of the mediation/conciliation and the recording of the settlement agreement signifies the conclusion of the mediator’s role. Costs of Conciliation:After termination of conciliation proceedings the Conciliator fixes the cost of proceedings and gives written notice to the parties. in such situations the conciliator is required to act very tactfully by bringing the parties back on the settlement track. he has to be adaptable and flexible. yet there may be situations when parties are displaying such hostile behaviour that prevent them from moving any further towards settlement. Although it is required of the conciliator not to jump in to stop aggressive interactions between the parties. . The costs also include the cost charged by the institution for appointing conciliator or arranging administrative assistance to facilitate the conduct of the conciliation proceeding in accordance with section 64 or section 68 of the Act.balance and allow parties the freedom to fully express their case. The parties may also agree that any dispute which may arise in the course of execution of settlement agreement will be referred to mediation. it is possible that the mediator. or the ADR institution which arranged the mediation may be asked by the parties to function in relation to the implementation of the settlement terms. There is no straight jacket formula to be followed in conciliation and here lies the advatange of conciliation process as it can be customised by the conciliator to fit the needs of the participants. Section 78(2) of the Act specifically defines the ‘costs’ as reasonable cost relating to fee and expenses of conciliator and witnesses and expert advice requested by the conciliator with the consent of the parties. (iv) Flexibility and Adaptability Acting as conciliator is not at all an easy task and to accomplish this task. associated feelings and preserving conducive atmosphere for negotiations. The parties may wish the mediator or the ADR institution to act as a stockholder in relation to fund to be released on agreed terms or to hold documents pending the implementation of the settlement. The adapatability in relation to conciliation process requires conciliator to adapt appropriately to changing events and act suitably. However. particularly at the initial stages. POST CONCILIATION ROLE OF CONCILIATOR/INSTITUTION :Generally.

1999. Background Paper on International Seminar on Globalisation and Harmonisation of Commercial and Arbitration Laws. Law and Practice of International Commercial Arbitration (1991). 3.Mediation as alternative to Adjudciation (1988). 4. 129th Report of the Law Commission of India on the Urban Litigation . ADR processes tend to help with the empowerment of individuals giving them responsibility for the resolution of their own issues. Alen Redfern and Martin Hunter. 13. dispute resolution is generally in the hands of lawyers. One of the motivations for ADR is commonly said to be the empowerment of the individual. Commercial Laws of East Asia (1997). 7. Under the traditional process. Report of Justice Malimath Committee on Alternative Modes and Forums for Dispute Resolution. Alen Gutterman & Robert Brown. 12. edited by the Legislative Affairs Commission of the Standing Committee of the National Peoples’ Congress of the Peoples’ Republic of China (1997).A Fresh Look (1988). 2. 176th Report of the Law Commission of India . S K Roy Chowdhary & H K Saharay. 1996. 11. ADR . and April 1. Law of Arbitration and Conciliation (1996). who use procedures and reasoning to resolve the issues for the parties. Henry Brown & Arthur Mariott.Principles and Practices (1993). REFERENCES:1. 124th Report of the Law Commission of India on the High Court Arrears . Hand book of Arbitration Practices 1986. 8. Ronald Bernstein. . 6. organised by the Indian Council of Arbitration on March 31. 10. 5. Code of Civil Procedure (Amendment) Act. 9. Arbitration Law of China.1995 at New Delhi. whereas. Arbitration and Conciliation Act.CONCLUSION:The development of Alternative Dispute Resolution (ADR) has its principal origins in the dissatisfaction of people with the way in which the disputes are traditionally resolved.

1995. 1995. paper presented at Seminar on ADR. 15.14. paper presented at Seminar on ADR held at Vigyan Bhawan on October 7. ‘Transnational Commercial Arbitration. Lakshmi Jambholkar. JIL I.Problems and Pitfalls and a Ray of Hope”. p. 18. The Applicable Law in International Commercial Arbitration 31. pp. .” “In the Digest of Commercial Laws of the World” (1982). held at Vigyan Bhawan on October 7. “ADR . Dr. 21. A Critique of Judicial Practice. K K Venugopal. 20. 19. V S Deshpande. P C Rao “Alternatives to Litigation in India”. 17. F S Nariman.1995. Enforcment of Foreign Arbitral Awards in India.1995. held at Vigyan Bhawan on October 7. D C Singhania. “Judicial Reforms and Alternative Dispute Resolution Systems”. 127 (1989). “Conciliation or Mediation during the Arbitral Process. 16. “Journal of International Arbitration. paper presented at Seminar on ADR. George R Delaume. 119-133 (1995). paper presented at Seminar on ADR held at Vigyan Bhawan on October 7. Kenji Tashiro. “Altenative Dispute Resolution in India : New Horizons”.