Conciliation as an ADR Mechanism Under the Arbitration & Conciliation Act,1996


"The main object of conciliation lies in reaching a solution to a case based upon morals and with a warm heart." — Confucius

ADR i.e. Alternate Dispute Resolution plays a crucial role in overcoming the drawback of the conventional mechanism of dispute resolution i.e., court proceedings. The various modes of dispute resolution under the ADR mechanism are: Arbitration, Conciliation, Mediation, Negotiation, and Lok-Adalats. Thus, Conciliation is one of the non-adversarial alternative dispute resolution mechanism which is designed to resolve a dispute among the disputant parties through a non-adjudicatory and non- antagonistic way. And because of its non-judicial character, conciliation is considered to be fundamentally different from that of litigation.

It stresses on the power of diplomacy and of mental acuteness as contrasted with the judicial process and decision making aspect of adjudication and arbitration. It is an unstructured process of facilitating communication between the parties but it facilitates easy access of communication between the disputants during conciliation proceedings. The following types of disputes are usually conducive for conciliation: commercial, financial, family, real estate, employment, intellectual property, insolvency, insurance, service, partnerships, environmental and product liability. Apart from commercial transactions, the mechanism of Conciliation is also adopted for settling various types of disputes such as labour disputes, service matters, antitrust matters, consumer protection, taxation, excise etc.

The Arbitration & Conciliation Act, 1996,[1] for the first time in India, provides for recognition of conciliation in commercial disputes. Conciliation has been inserted in Part III of the Act and it has been adopted as one of the efficient means of settlement of disputes. It is drafted on the lines of the UNCITRAL Model Law on International Commercial Arbitration, 1985[2] and the UNCITRAL Conciliation Rules, 1980[3] and it is the first time that the process of conciliation has been given statutory recognition by providing elaborate rules of engagement. It is a non-binding procedure in which an impartial and neutral third party i.e., conciliator assists the parties to a dispute in reaching a mutually satisfactory & agreed settlement. Section 61 to 81 of the Arbitration & Conciliation Act, 1996 provides for the Conciliation Proceedings.


Though the Act does not define the term “Conciliation”, yet Section 30 of the Act, provides that “an arbitral tribunal may try to have the dispute settled by “mediation” or “conciliation”, for reaching a settlement.”

Definition of Conciliation

According to Halsbury’s Laws of England , “Conciliation is a process of persuading parties to reach an agreement.”

– Halsbury’s Laws of England, 4th ed., Vol.2, paragraph 502.

According to Black’s Law Dictionary , “Conciliation is a settlement of 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.”

– Black’s Law Dictionary, 7th ed.

According to the UNCITRAL Rules on Conciliation, “Conciliation is a method of amicable settlement of disputes.”

– UNCITRAL Conciliation Rules (1980) (a resolution 35/52 adopted by the General Assembly 0n 4 December 1980).

According to UNCITRAL Model law on International Commercial Conciliation, “Conciliation means a process, whether referred to by the expression conciliation, mediation or an expression of similar import, whereby parties request a third person or persons (the conciliator) to assist them in their attempt to reach an amicable settlement of their dispute arising out of or relating to a contractual or other legal relationship.”

– UNCITRAL Model Law on International Commercial Arbitration (1985) (as adopted by the United Nations Commission on International Trade Law on 21 June 1985).

According to Simkin, “Conciliation is a mild form of intervention limited primarily to scheduling conferences, trying to keep the disputants talking, facilitating other procedural niceties, carrying messages back and forth between the parties, and generally being a “good fellow‟ who tries to keep things calm and forward looking in a tense situation.”

– William E. Simkin, Mediation and the Dynamics of Collective Bargaining, (1971), p- 21.

Scope of the Conciliation Proceedings

1. According to Section 61, the parties competent to contract can seek conciliation and resort to an amicable settlement of their disputes. They may belong to the same or different nationalities. The dispute, which has either arisen or may arise in future between the parties can be settled. The dispute may be in respect of the defined legal relationship, whether contractual or not, can be settled by conciliation.

2. The Act covers both domestic and international disputes in the context of conciliation. International conciliation is confined only to disputes of “commercial” nature. According to the Explanation to Section 1 of the Act, the definition of international commercial conciliation is exactly similar to that of international commercial arbitration given under Section 2(1)(f). Accordingly, the Act defines international commercial conciliation as “conciliation proceedings relating to a dispute between two or more parties where at least one of them is a foreign party.” The foreign party may be: (a) an individual who is foreign national; (b) a company incorporated outside India; or (c) the government of a foreign country.

3. The conciliation proceedings are also given under the Industrial Disputes Act, 1947[4] whereby an officer is appointed by the government to conciliation.


There are two kinds of conciliation mechanism which are given as follows:

1. Voluntary Conciliation: In this method parties can voluntarily participate in the process of conciliation for resolving their dispute.

2. Compulsory Conciliation: In this method, if the parties do not want to meet the other party to resolve the dispute then the process is said to be compulsory. This method is commonly used in labour cases.


Conciliation is a separatist-style negotiation and discussion process that involves a dispute between two parties being overseen by an independent and neutral third party, known as the “Conciliator”. A Conciliator has no powers or authority to make any decisions, rulings or awards as they merely form a facilitative role in the negotiated process. In this way, a Conciliator acts as an independent and impartial “go between” for the parties to raise and respond to the relevant points raised by the disputants to the other side. However, it is to be noted that, whereas decision of the arbitrator is binding on the parties, the findings of a conciliator is recommendatory in nature.

In Continental Construction Co. Ltd v. The State of M.P. , the Supreme Court observed that, “if no specific question of law is referred, the decision of the arbitrator on that question is not final. The arbitrator is not a conciliator and cannot ignore the law or misapply it in order to do what he thinks is just and reasonable. The arbitrator is a tribunal selected by the parties to decide their disputes according to law and so is bound to follow and apply it.

– AIR 1988 SC 1166.

According to Section 63, “generally, there is one conciliator for the settlement but there can be more than one conciliator, if the parties have requested for the same. And if there are more than one conciliator then they will act jointly in the matter”. Further, Section 64(1) states that ,“Where there is only one conciliator, the parties may agree on his name; or where there are two conciliators, each party may appoint one conciliator; or where there are three conciliators, each party may appoint one, and the parties may agree on the name of the third conciliator, who shall act as presiding conciliator.” Moreover, Section 64(2) states that, “the parties to the dispute instead of appointing the conciliator themselves may enlist the assistance of an institute or person of their choice for appointment of conciliators.” In addition to this, according to Section 66, “the conciliator is not bound by the Code of Civil Procedure, 1908[5] or the Evidence Act, 1872[6] .”

Role and Duties of Conciliator

1. Under Section 65 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 issue”.

2. Section 67 states that the conciliator shall assist parties in an independent and impartial manner; he shall be guided by principles of objectivity, fairness and justice, taking into accounts the circumstances of the case, including the usages of the trade concerned and previous business practices between the parties.

3. Section 67 (4) states that the conciliator may at any stage of the conciliation proceedings make proposals for the settlement of the dispute, which need not be in writing or be accompanied by statement of reasons therefore.

4. Section 68 states that the conciliator may invite the parties (for discussion) or communicate with them jointly or separately.

5. Section 70 states that when the conciliator receives an information about any fact relating to the dispute from a party he should disclose the substance of that information to the other party.

6. Section 75 & Proviso of Section 70 states that the conciliator and the parties are duly bound to keep confidential all matters relating to the conciliation proceedings.

Restrictions on the Role of Conciliator

Section 80 places two restrictions on the role of Conciliator in the conduct of conciliation proceedings which begins with the words that, “Unless otherwise agreed by the parties:

1. The conciliator cannot act as arbitrator, representative or counsel in any arbitral or judicial proceedings in respect of the conciliated dispute.

2. Nor can he be presented by any party as a witness in such proceedings.”

Thus, according to this section, the conciliator does not decide for the parties, but strives to support them in generating options in order to find a solution that is compatible for both of them, thereby fulfilling the mandate of Section 67 of the Act.

According to the Justice M. Jagannadha Rao, in his paper titled “Concepts of Conciliation and Mediation and their Differences” , he states that “the provisions of the 1996 Act make it clear that apart from assisting the parties to reach a settlement, a conciliator is also permitted to make proposals for a settlement and formulate or reformulate terms of a possible settlement, which therefore shows that if the role of the conciliator is proactive and interventionist, the role of the mediator must necessarily be that of a facilitator. In India, the terms mediation and conciliation tend to be used interchangeably, both terms implying a process which, in contrast to arbitration, involve parties coming together to try and mutually sort out differences in an amicable manner, with gain to each side. There are subtle and minute differences between the two concepts and a mediator may also be called upon to play the role of a conciliator i.e. play more proactive role.”

– Law Commission of India, Concepts of Mediation and Conciliation and their differences’, available at :


In India, Conciliation as an ADR mechanism is gaining popularity and its use has increased dramatically due to its following obvious advantages:

1. Party Autonomy: The principle of “voluntarism” underlies the conciliation process, therefore it ensures party autonomy to a great extent whereby the conciliators are chosen by the parties themselves and they are not bound by the CPC, 1908 or the Evidence Act, 1872. Moreover, the parties can choose the timing, language, place, structure and content of the conciliation proceedings.

2. Time and Cost Efficiency: Conciliation is generally less expensive and time consuming than the court proceedings due to its informal and flexible nature of proceedings. They can be conducted in a time and cost-efficient manner (which is of course entirely dependent on the nature and complexity of the dispute).

3. Confidentiality: Maintaining confidentiality is one of the important aspects of enshrined under Section 75 of the 1996 Act. Conciliation provides for express confidentiality when the parties can be privately summoned for pleading their cases in front of the conciliator. Thus, disputes can be settled discretely and business secrets will remain confidential.

4. Appease/Overcome Hostility: This process, as the name suggests, seeks to “conciliate” between the parties, which means to appease or overcome hostility or distrust through a conscious gentle touch that is focused on party feelings. Conciliation is, therefore very effective at easing any tensions between the parties, which can help to improve the relationship between the disputants and foster a connection that is more conducive to assisted and harmonious agreement.

5. Non-binding Process: It means that the advice given by the conciliator is not binding on the parties and therefore, the parties are free to consider other options or continue with the advice given by the conciliator.

6. Informality and Flexibility: The resolution of dispute under conciliation is done through a settlement agreement that is signed by both parties to the dispute which will than only have a binding effect. This makes the party bound by a decision through the contractual terms and obligation, unlike arbitration where an arbitral award is pronounced by the arbitrator that has the force of law. This makes the settlement procedure much more relaxed and flexible as well as gives the party a say in the final resolution of dispute.

7. Transparent Procedure: There is little scope of manipulation and corruption due to the obvious transparency in the dispute resolution method. Thus, its procedure is less formal in essence but it is more engaging, evaluative and oriented towards the benefit and growth of the parties.


Even though it is concluded that the process of conciliation is much preferred by parties due to its flexible, confidential and friendly nature yet it suffers from certain disadvantages which are given as follows:

1. Non-Finality of Outcomes: The process of conciliation can break down where the parties cannot reach an agreement. Equally, a conciliator is not a legally qualified person for resolving disputes therefore ,there can be no authoritative or enforceable decision made by the Conciliator and the parties are free to litigate or pursue other avenues for resolution in case of no settlement.

2. Weaknesses Revealed: The active role of the Conciliator can be a drawback as they are able to identify and articulate any weaknesses with each party’s case. This has the potential for either party to attempt to exploit the other side’s weaknesses and leverage the disproportionate positions outlined by the Conciliator. This may result in further disagreement or a propensity to litigate and assert legal rights.

3. Disclosure of Information: Although parties agree to resolve their disputes through conciliation under the duty of good faith, yet there is a possibility that one or both parties may choose not to disclose all or some of the information in relation to the dispute. This can distort the perceived positions formed by the Conciliator and result in disproportionate agreements or outcomes.

4. Miscommunication of Information: The Conciliator may misconstrue what was said by one party and convey this to the other party. Additionally, information can be taken out of context and this has the potential to be incorrectly interpreted by the other party.


The introduction of Conciliation as a means of alternate dispute resolution in the Arbitration & Conciliation Act, 1996 is definitely a positive step towards encouraging parties to opt for it. Conciliation tries to individualize the optimal solution and direct parties towards a satisfactory common agreement. It would be the most suitable resolution process where a dispute exists and the relationship between the parties is rather hostile or strained. It would also be useful in situations where the parties seek to be involved in a process that is informal, flexible and able to be tailored to their needs. Parties who require an alternative, unbiased and independent opinion would also benefit from conciliation. Thus, taking into consideration the time, effort and money involved in pursuing cases before a court or for an arbitration proceedings in India, conciliation should act as the perfect means for resolving disputes, especially those of commercial nature. Hence, parties should prior to initiating arbitration or judicial proceedings, opt for conciliation as a means for resolving disputes. In case conciliation proceedings fail, only then should the disputants look at arbitration or litigation to resolve the dispute.


1. The Arbitration and Conciliation Act, 1996 (26 of 1996).
2. UNCITRAL Model Law on International Commercial Arbitration (1985) (as adopted by the United Nations Commission on International Trade Law on 21 June 1985).
3.UNCITRAL(The United Nations Commission on International Trade Law) Conciliation Rules (1980) (a resolution 35/52 adopted by the General Assembly 0n 4 December 1980).
4. The Industrial Disputes Act, 1947 (Act No. 14 of 1947).
5. The Code of Civil Procedure, 1908 (Act No. 5 of 1908).
6. The Indian Evidence Act, 1872 (Act No. 1 of 1872).

• Dr. S.C. Tripathi, Alternative Dispute Resolution (ADR), 3 rd edn., 2018, Central Law Publications, Allahabad.
• Avtar Singh, Law of Arbitration and Conciliation, 11th edn., 2018, Eastern Book Company, Lucknow.

• Vish S. Subha Rao, “Conciliation” Under the Industrial Disputes Act, 1947: Should it Necessarily Remain “A Fifth Wheel to the Coach”?, 29 JILI (1987) 236.
• Sidhika Dwivedi & Madhvendra Singh, Conciliation: A Perusal within the ADR Regime, Indian Politics & Law Review Journal (IPLRJ) ISSN 2581 7086,Volume 5 – 2020.

• “Concept of Conciliation and Role of Conciliator”, available at: (last visited on 05/03/2022).
• “Meaning and Scope of Conciliation”, available at: (last visited on 05/03/2022).
• “Principles and Procedure of Conciliation under Arbitration & Conciliation Act, 1996”, available at: (last visited on 05/03/2022).
• “Arbitration, Conciliation and Mediation in a nutshell”, available at: (last visited on 05/03/2022).

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