A critical study of Principles and Procedure of conciliation under Arbitration and Conciliation Act 1996.
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. As per the Halsbury Laws of England, conciliation is a process of persuading parties to each an agreement. Because of its non judicial character, conciliation is considered to be fundamentally different from that of litigation. Generally Judges and Arbitrators decide the case in the form of a judgment or an award which is binding on the parties while in the procedure of the conciliation ,the conciliator who is often a government official gives its report in the form of recommendations which is made public.
Definition and 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. As per the Halsbury Laws of England, conciliation is a process of persuading parties to each an agreement. Because of its non judicial character, conciliation is considered to be fundamentally different from that of litigation. Generally Judges and Arbitrators decide the case in the form of a judgment or an award which is binding on the parties while in the procedure of the conciliation ,the conciliator who is often a government official gives its report in the form of recommendations which is made public.
History and Evolution-
The history and evolution of ADR is visible from 12th century in China , England and America. And in the Indian perspective it has been seen that the practice of amicable resolution of the disputes can be caught from the historic times , when in the villages disputes were resolved between members of a particular relations or occupations or between members of the same family was in practice in the ancient times. In the villages still the panchayat decides approximately all the disputes between the people as in earlier times the disputes were resolved by the elders. The concept of Conciliation was introduced in the statute of Industrial Disputes Act, 1947. The Conciliation is generally conducted by an officer appointed by Government under Industrial Disputes Act, 1947. Industrial Disputes Act, 1947 provides provisions for the parties to settle disputes through Negotiation, Mediation and Conciliation, for example Section 12 , Section 18 , etc. Alternate Dispute Resolution plays a major role in the family disputes settlement. Section 5 of the Family Court Act, 1984 provides provisions for the association of social welfare organizations to hold Family Courts under control of government. Section 6 of the Act provide for appointment of permanent counselors to enforce settlement decisions in the family matters. Further Section 9 of the Act imposes an obligation on the court to make effort for the settlement before taking evidence in the case . In addition to all provisions referred above, Indian Contract Act, 1872 most importantly gives a mention about Arbitration Agreement as an exception to Section 28 that renders an agreement void if it restrains a legal proceeding. Alternate Dispute Resolution whether sorted for or not can be easily inferred from presence or absence of the ‘Arbitration clause'.
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.
Number and qualification of conciliators-Section 63 fixes the number of conciliators. There shall be one conciliator. But the parties may by their agreement provide for two or three conciliators. Where the number of conciliator is more than one ,they should as general rule act jointly.
Appointment of conciliators-
Section 64 deals with the appointment of the conciliators.When the invitation to the conciliation is accepted by the other party, the parties have to agree on the composition of the conciliation tribunal. In the absence of any agreement to the contrary ,there shall be only one conciliator. The conciliation proceeding may be conducted by a sole conciliator to be appointed with the concent of both the parties, failing to which the same may be conducted by two conciliators (maximum limit is three), then each party appoints own conciliator ,and the third conciliator is appointed unanimously by both the parties. The third conciliator so appointed shall be the presiding conciliator. The parties to the arbitration agreement instead of appointing the conciliator themselves may enlist the assistance of an institution or person of their choice for appointment of conciliators. But the institution or the person should keep in view during appointment that, the conciliator is independent and impartial.
Principles of Procedure
1) Independence and impartiality [Section 67(1)]-
The conciliator should be independent and impartial. He should assist the parties in an independent and impartial manner while he is attempting to reach an amicable settlement of their dispute.
2) Fairness and justice[Section 67(2)]-
The conciliator should be guided by the principles of fairness and justice. He should take into consideration ,among other things , 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.
3) Confidentiality [Section 70]-
The conciliator and the parties are duly bound to keep confidential all matters relating to conciliation proceedings. Similarly when a party gives a information to the conciliator on the condition that it be kept confidential , the conciliator should not disclose that information to the other party.
4) Disclosure of the information[Section 70]-
When the conciliator receives a information about any fact relating to the dispute from a party , he should disclose the substance of that information to the other party.The purpose of this provision is to enable the other party to present an explaination which he might consider appropriate.
5) Co-operation of the parties with Conciliator [S. 71]-
The parties should in good faith cooperate with the conciliator. They should submit the written materials , provide evidence and attend meetings when the conciliator requests them for this purpose.
Procedure of conciliation
1) Commencement of the conciliation proceedings [Section 62]-
The conciliation proceeding are initiated by one party sending a written invitation to the other party to conciliate. The invitation should identify the subject of the dispute. Conciliation proceedings are commenced when the other party accepts the invitation to conciliate in writing. If the other party rejects the invitation, there will be no conciliation proceedings. If the party inviting conciliation does not receive a reply within thirty days of the date he sends the invitation or within such period of time as is specified in the invitation, he may elect to treat this as rejection of the invitation to conciliate. If he so elects he should inform the other party in writing accordingly.
2) Submission of Statement to Conciliator [Section 65] –
The conciliator may request each party to submit to him a brief written statement. The statement should describe the general nature of the dispute and the points at issue. Each party should send a copy of such statement to the other party. The conciliator may require each party to submit to hima further written statement of his position and the facts and grounds in its support. It may be supplemented by appropriate documents and evidence. The party should send the copy of such statements , documents and evidence to the other party. At any stage of the conciliation proceedings , the conciliator may request a party to submit to him any additional information which he may deem appropriate.
3) Conduct of Conciliation Proceedings[Section 69(1),67(3)]-
The conciliator may invite the parties to meet him. He may communicate with the parties orally or in writing. He may meet or communicate with the parties together or separately. In the conduct of the conciliation proceedings, the conciliator has some freedom. He may conduct them in such manner as he may consider appropriate. But he should take in account the circumstances of the case, the express wishes of the parties, a party’s request to beheard orally and the need of speedy settlement of the dispute.
4) Administrative assistance [S. 68]-
Section 68 facilitates administrative assistance for the conduct of conciliation proceedings. Accordingly , the parties and the conciliator may seek administrative assistance by a suitable institution or the person with the consent of the parties.
Case laws relating to Conciliation-
1. Haresh Dayaram Thakur v. State of Maharashtra and Ors. while dealing with the provisions of Sections 73 and 74 of the Abbitration and Conciliation Act of 1996 in paragraph 19 of the judgment as expressed thus the court held that-
"19. From the statutory provisions noted above the position is manifest that a conciliator is a person who is to assist the parties to settle the disputes between them amicably. For this purpose the conciliator is vested with wide powers to decide the procedure to be followed by him untrammeled by the procedural law like the Code of Civil Procedure or the Indian Evidence Act, 1872. When the parties are able to resolve the dispute between them by mutual agreement and it appears to the conciliator that their exists an element of settlement which may be acceptable to the parties he is to proceed in accordance with the procedure laid down in Section 73, formulate the terms of a settlement and make it over to the parties for their observations; and the ultimate step to be taken by a conciliator is to draw up a settlement in the light of the observations made by the parties to the terms formulated by him. The settlement takes shape only when the parties draw up the settlement agreement or request the conciliator to prepare the same and affix their signatures to it. Under Sub-section (3) of Section 73 the settlement agreement signed by the parties is final and binding on the parties and persons claiming under them. It follows therefore that a successful conciliation proceedings comes to end only when the settlement agreement signed by the parties comes into existence. It is such an agreement which has the status and effect of legal sanctity of an arbitral award under Section 74”.
2. In Mysore Cements Ltd. v. Svedala Barmac Ltd it was said that Section 73 of the Act speaks of Settlement Agreement. Sub-section (1) says that when it appears to the Conciliator that there exist elements of 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 observation. After receiving the observations of the parties, the Conciliator may reformulates the terms of a possible settlement in the light of such observations. In the present case, we do not find there any such formulation and reformulation by the Conciliator, under Sub- section (2), if the parties reach a settlement agreement of the dispute on the possible terms of settlement formulated, they may draw up and sign a written settlement agreement. As per Sub-section
(3) when the parties sign the Settlement Agreement, it shall be final and binding on the parties and persons claiming under them respectively. Under Sub-section (4), the Conciliator shall authenticate the Settlement Agreement and furnish a copy thereof to each of the parties. From the undisputed facts and looking to the records, it is clear that all the requirements of Section 73 are not complied with.
The process of conciliation as an alternate dispute redressal mechanism is advantageous to the parties in the sense that it is cost effective and expeditious, it is simple,fast and convenient then the lengthy litigation procedure and it eliminates any scope of biasness and corruption. The parties who wish to settle their disputes they can be provided great intensive by the process of conciliation. In order to enable the conciliator to play his role effectively ,the parties should be brought together face to face at a common place where they can interact face to face and with the conciliator, separately or together without any distraction and with only a single aim to sincerely arrive at the settlement of the dispute. Conciliation is a boon and it is a better procedure to settle any dispute as in this process it is the parties who by themselves only come to the settlement of the dispute and the role of the conciliator is to bring parties together and to make a atmosphere where parties can themselves resolve their disputes. Conciliation tries to individualize the optimal solution and direct parties towards a satisfactory common agreement. In conciliation, the conciliator plays a relatively direct role in the actual resolution of a dispute and even advises the parties on certain solutions by making proposals for settlement. Thus I would like to conclude with a saying: Do conciliate, therefore ,whenever there are differences ,and sooner it is done ,the better.
# Hailshree Saksena and Sidhartha Mohapatra, “Understanding Conciliation”.Lawz ,Vol 2009 P 25.
# Hailshree Saksena and Sidhartha Mohapatra, “Understanding Conciliation”.Lawz ,Vol 10,2009 P 25.
# Abhishek Kumar, “Historical Background”.Lawz ,Vol 12,2010 P 16.
# Available at http://www.legalserviceindia.com/article/l312-Alternate-Dispute-Resolution-And-The-Common-Man.html visited on February 10, 2011.
# 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.
# Avtar Singh,Law of Arbitration and Conciliation, (Lucknow: Eastern Book Company) 2007 Pg. 434.
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.
64. Appointment of 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 of a suitable institution or person in connection with the appointment of conciliators, and in particular,-
(a) a party may respect 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 of one or mom 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 of an independent and impartial conciliator and, with respect to a sole or third conciliator, shall take into account the advisability of appointing a conciliator of a nationality other than the nationalities of the parties.
# Hailshree Saksena and Sidhartha Mohapatra, “Understanding Conciliation”.Lawz ,Vol 2009 P 26.
# Section 67(1)- The conciliator shall assist the parties in an independent and impartial manner in their attempt to reach an amicable settlement of their dispute.
# Section 67(2)-The conciliator shall be guided by principles of objectivity, fairness and justice, giving consideration to, among other things, 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.
# Section 70 Proviso.
# Section 70- Disclosure of information. When the conciliator receives factual information concerning the dispute from a party, he shall disclose the substance of that information to the other party in order that the other party may have the opportunity to present any explanation which he considers appropriate: Provided that when a party gives any information to the conciliator, subject to a specific condition that it be kept confidential, the conciliator shall not disclose that information to the other party.
# Section 71- Co- operation of parties with conciliator. The parties shall in good faith co- operate with the conciliator and, in particular, shall endeavour to comply with requests by the conciliator to submit written materials, provide evidence and attend meetings.
# Section 62-Commencement of conciliation proceedings.
(1) The party initiating conciliation shall send to the other party a written invitation to conciliate under this Part, briefly identifying the subject of the dispute.
(2) Conciliation proceedings shall commence when the other party accepts in writing the invitation to conciliate.
(3) If the other party rejects the invitation, there will be no conciliation proceedings.
(4) If the party initiating conciliation does not receive a reply within thirty days from the date on which he sends the invitation, or within such other period of time as specified in the invitation, he may elect to treat this as a rejection of the invitation to conciliate and if he so elects, he shall inform in writing the other party accordingly.
65. Submission of statements to conciliator.
(1) The conciliator, upon his appointment, may request each party to submit to him a brief written statement describing the general nature of the dispute and the points at issue. Each party shall send a copy of such statement to the other party.
(2) The conciliator may request each party to submit to him a further written statement of his position mid the facts and grounds in support thereof, supplemented by any documents and other evidence that such puny deems appropriate. The party shall send a copy of such statement, documents and other evidence to the other party.
(3) At any stage of the conciliation proceedings, the conciliator may request a party to submit to him such additional information as he deems appropriate. Explanation.- In this section and all the following sections of this Part, the term conciliator" applies to a sole conciliator, two or, three conciliators, as the case may be.
# Avtar Singh,Law of Arbitration and Conciliation, (Lucknow: Eastern Book Company) 2007 Pg. 436.
Section 69(1)- The conciliator may invite the parties to meet him or may communicate with them orally or in writing. He may meet or communicate with the parties together or with each of them separately.
# Section 67(3)-The conciliator may conduct the conciliation proceedings in such a manner as he considers appropriate, taking into account the circumstances of the case, the wishes the parties may express, including any request by a party that the conciliator hear oral statements, and the need for a speedy settlement of the dispute.
# Avtar Singh,Law of Arbitration and Conciliation, (Lucknow: Eastern Book Company) 2007 Pg. 436
# AIR 2000 SC 2281
# AIR 2003 SC 3493
# Hailshree Saksena and Sidhartha Mohapatra, “Understanding Conciliation”.Lawz ,Vol 10,2009 P 27.
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