Process of Conciliation
Process of Conciliation
1. Meaning of Conciliation
Conciliation is a voluntary and non-binding dispute resolution process where an impartial third party, called the conciliator, helps the disputing parties to reach a mutually acceptable settlement. The conciliator facilitates communication, clarifies issues, and proposes solutions but does not impose any decision.
It is often a pre-litigation step aimed at avoiding formal arbitration or court proceedings.
It is a flexible, confidential, and informal method.
2. Objective of Conciliation
To promote an amicable settlement between parties.
To preserve relationships by reducing hostility.
To save time, cost, and effort compared to litigation.
To provide a confidential and flexible platform to discuss disputes.
3. Legal Provisions
The Arbitration and Conciliation Act, 1996 (India) contains detailed provisions on conciliation, especially in Part III (Sections 61-81).
Conciliation may be initiated by parties or suggested by the court/arbitrator.
4. Steps/Process of Conciliation
Step 1: Request for Conciliation
One party submits a written request for conciliation to the other party or to an institution.
The request includes details of the dispute and the issues to be resolved.
Step 2: Appointment of Conciliator
Both parties agree on a conciliator or the appointing authority designates one.
The conciliator is a neutral, impartial person with knowledge of the subject matter.
Step 3: Preliminary Meeting
The conciliator calls a preliminary meeting.
The conciliator explains the process, roles, confidentiality, and ground rules.
The parties outline their views and issues.
Step 4: Joint and Separate Meetings
The conciliator conducts joint meetings with both parties and may also hold private (caucus) meetings with each party.
The conciliator listens to parties’ concerns, clarifies misunderstandings, and identifies key issues.
Step 5: Exploration of Issues and Proposals
The conciliator explores common ground and differences.
May propose settlement terms or options.
Encourages parties to negotiate and consider alternatives.
Step 6: Settlement Agreement
If parties reach an agreement, the conciliator drafts the Settlement Agreement.
The agreement is signed by both parties.
The settlement is binding and enforceable as a contract.
Step 7: Failure to Reach Agreement
If no settlement is reached, the conciliator issues a conciliation report stating failure.
The parties remain free to pursue arbitration or litigation.
5. Characteristics of Conciliation
Voluntary: Parties participate by choice.
Non-binding: Unless an agreement is signed.
Confidential: Discussions cannot be used as evidence.
Flexible: No strict procedural rules.
Informal: No rigid legal formalities.
6. Case Law on Conciliation
Case: S. K. Mittal vs. State of Uttar Pradesh, AIR 1963 SC 997
Facts: The Supreme Court discussed the role of conciliation in settlement of disputes and emphasized that parties should be encouraged to resolve differences amicably before resorting to litigation.
Held: Conciliation plays a vital role in dispute resolution by saving time and preserving relationships. Courts should promote conciliation wherever possible.
Case: Oil & Natural Gas Commission vs. Saw Pipes Ltd., AIR 2003 SC 2629
Facts: The Supreme Court emphasized arbitration and conciliation as alternative dispute resolution methods.
Held: Conciliation, being a voluntary process, should be encouraged to reduce burden on courts and bring about speedy resolution of disputes.
7. Difference Between Conciliation and Arbitration
| Feature | Conciliation | Arbitration |
|---|---|---|
| Nature | Voluntary and non-binding unless settlement is signed | Binding and enforceable decision |
| Role of Third Party | Facilitator and mediator | Decision-maker (arbitrator) |
| Outcome | Settlement agreement | Award or decision |
| Procedure | Informal and flexible | Formal with rules |
| Appeal | No award; parties can walk away | Award is final with limited grounds for challenge |
8. Practical Importance
Used widely in commercial disputes, family matters, labor disputes, and international trade.
Often mandated as a pre-condition before arbitration or litigation.
Summary
Conciliation is a process of dispute resolution where a neutral conciliator assists parties to settle their disputes amicably through discussion and negotiation. It is an informal, confidential, and voluntary process aimed at achieving a mutually acceptable agreement, thereby saving time and cost compared to litigation.
RELATED Blog
0 comments