Conciliation under the Arbitration and Conciliation Act, 1996
Application and Scope of the Act
Part III of the Arbitration and Conciliation Act, 1996 applies to the following [Sec. 61(1)]:
- conciliations arising out of contractual disputes,
- conciliations arising out of other legal disputes.
Part III of the Arbitration and Conciliation Act. 1996 shall not apply to disputes that cannot be submitted to conciliation, because they are prohibited by any law for the time being in force in India [Sec. 61(2)].
Appointment of Conciliators
Number of Conciliators
There shall be one conciliator to conduct the conciliation proceedings (Sec. 63). However, parties can also enter into an agreement to appoint two or three conciliators. If the parties are appointing more than one conciliator, all the conciliators should act jointly, as a general rule.
Manner of Appointment
While appointing the Conciliator(s), the parties may consider the following rules [Sec. 64(1)]:
- If there is only one conciliator for the conciliation proceeding. the parties may together appoint the sole conciliator.
- If there are two conciliators for the conciliation proceeding, then each part may appoint one conciliator.
- If there are three conciliators in a conciliation proceeding, each party may appoint conciliator and the parties may agree on the name of the third conciliator who shall act as the presiding conciliator.
The parties can also take the assistance of a suitable institution or person in the appointment of conciliators in two ways [Sec. 64(2)]:
- The parties may request the institution or person to recommend the names of individuals to act as conciliators; or
- The parties may agree that the appointment of one or more conciliators is to be made by such institution or person directly.
- While recommending or appointing individuals to act as conciliators, the institution or person shall have regard to securing the appointment of an independent and impartial conciliator with respect to a sole or third conciliator. The advisability of appointing a conciliator of a nationality other than the nationalities of the parties should be taken into account.
Role of Conciliator
Independence and impartiality [Sec. 67(1)]: The conciliator should be independent and impartial. He should not be biased or prejudicial towards any party to the dispute. The conciliator should maintain a neutral stand throughout the conciliation proceedings.
Fairness and justice: [Sec. 67(2)]: The conciliator should be guided by principles of objectivity, fairness, and natural justice. The conciliator shall take into consideration, the following aspects of the dispute:
- rights and obligations of the parties to the dispute;
- trade related aspects which govern the transactions and business of both parties;
- the situations and circumstances surrounding the dispute, including any previous business relationship between the parties.
The conciliator is not bound, but may also take into consideration the following aspects of the dispute:
- Circumstances of the case,
- Wishes that the parties may express,
- Request by any party to make oral statements
- Need for speedy settlement of the dispute
Disclosure of Information and Confidentiality – The conciliator should disclose the factual information concerning the dispute, which is given by a party to the dispute [Sec. 70]. The disclosure should be made to the other party, to give him a fair opportunity to present his explanations. On receiving any information about any fact relating to the dispute from a party, he should disclose such information to the other party. The purpose of this provision is to allow the party to present an explanation that he might consider appropriate for the case in issue.
Initiating proposals for settlement – The conciliator may at any stage of the conciliation proceedings, make proposals for settlement of the dispute. The proposal does not have to be in writing [Sec. 67(4)], but need to be accompanied with reasons.
- NALSAR University, Law of Arbitration and Conciliation in India
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