Application and Scope of Conciliation 


The term conciliation is not defined in the Arbitration and Conciliation Act. However, in simple terms, conciliation is a confidential, voluntary and private dispute resolution process in which a neutral person helps the parties to reach a negotiated settlement. This method provides the disputing parties with a chance to take into consideration options facilitated by an objective third party to effectively explore if a settlement is possible. Like arbitration, the Act covers both domestic and international disputes with regard to conciliation. International conciliation is confined only to disputes of “commercial” nature. The Act defines international commercial conciliation as the conciliation proceedings relating to a dispute between two or more parties where at least one of them is a foreign party. The foreign party can be (1) an individual who is foreign national, (2) a company incorporated outside India, or (3) the government of a foreign country.[1]

Conciliation is a method by which an attempt is made to resolve disputes without resorting to traditional form of litigation. It is a process in which independent person or persons are appointed by the parties with mutual consent by agreement to bring about a settlement of their dispute through consensus or by using of the similar techniques which are persuasive.[2]

It is important to note that – The UNCITRAL Rules on Conciliation, 1980 acknowledged “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.” As a result, the Indian legislators took a note of the UNCITRAL notes and hence, they worked to formulate conciliation rules under Part III of the Act.

The procedure laid down in Part III of the Act reflects the following broad principles: [3]

(1) The conciliation proceedings is non-adversary in nature – meaning that there is no claimant or plaintiff in conciliation proceedings,

(2) The proceedings are voluntary in nature – any party can begin and terminate the proceedings,

(3) The method contains a flexible procedure – the conciliator has the discretion to adopt any procedural law to ensure speedy and inexpensive conduct of proceedings, and

(4) The decisions given by conciliator are recommendatory in nature – disputes are settled by mutual agreement and not imposed upon them.

In the Arbitration and Conciliation Act, 1996 Sections 61-81 lays down the provisions with respect to Conciliation. It has a detailed set of guidelines such as the commencement of the proceeding with the selection of the conciliator to the principals of confidentiality and privacy to be maintained and later the provisions of the termination of judicial proceedings. The office of the conciliatory officer is specifically established under Section 12 of the Industrial Disputes Act, 1947. The powers and functions of the officer are also laid down in the said section.[4]

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.

== Section 61 == [5]

section 61 (Arbitration and Conciliation Act, 1996) lays down that, application and scope of application of conciliation-

1. This part shall apply to conciliation of disputes arising out of legal relationship, whether contractual or not and to all proceedings. 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.

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 legal relationship. It means that the dispute must be such as to give one party the right to sue and other party the liability to be sued. The process of conciliation extends, in the second place, to all proceedings relating to it. But Part 3rd of the Act does not apply to such disputes as cannot be submitted to conciliation by virtue of any law for the time being in force.[6]

It is important to note that the dispute should arise within the legal relationship whether contractual or not, and to all proceedings related thereto, for example, issues arising under contracts, torts and breach of duty including negligence, consumer disputes, differences arisen in partnership, etc. But excludes all disputes which need not be taken up before a conciliator due to any other law applicable for the time being in force. Industrial disputes, family disputes, including disputes arising due to separation and divorce, social conflict, etc. may also be taken for conciliation.

Case laws relating to Conciliation-

 Haresh Dayaram Thakur v. State of Maharashtra and Ors.[7] while dealing with the provisions of Sections 73 and 74 of the Arbitration 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”.


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.








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