Conciliation: What It Is, and How Proceedings Begin

In one line

Conciliation is a neutral third person helping two parties reach their own settlement, and in India it has a complete statutory code of its own in Part III of the arbitration Act.

In exam wording: Part III of the Arbitration and Conciliation Act 1996, sections 61 to 81, applies to the conciliation of disputes arising out of legal relationships, whether contractual or not, section 62 governing the commencement of proceedings and sections 63 and 64 the number and appointment of conciliators.

What conciliation is, and how it differs from what surrounds it

Conciliation is a process in which a neutral third person, the conciliator, assists the parties to reach an amicable settlement of their dispute. The conciliator decides nothing. Whatever emerges is what the parties themselves agree.

Set that against the two things it is most often confused with.

Against arbitration. An arbitrator adjudicates: he hears both sides and makes an award that binds them whether they like it or not. A conciliator cannot impose anything. Chapter 10 makes the general distinction.

Against mediation. This is harder in India than elsewhere, and chapter 590 works it through properly. In the international literature a mediator is often described as purely facilitative, helping the parties talk, while a conciliator may be more active and propose terms. Indian law reflects that: section 67(4) expressly permits a conciliator to make proposals for a settlement at any stage. But the two words have also been used interchangeably in Indian statutes for decades, so do not build too much on the label alone.

The reason Part III matters is that it makes conciliation worth doing. A settlement reached in an unstructured negotiation is a contract; a settlement reached under Part III has, by section 74, the same status and effect as an arbitral award on agreed terms, which means it is enforceable as a decree. Chapter 570 works that through.

Section 61: what Part III applies to

Section 61(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.

Section 61(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.

Three points.

"Whether contractual or not" matches section 7(1) for arbitration agreements. The relationship need not be a contract.

"Unless the parties have otherwise agreed" makes Part III a default code. Parties may adopt their own conciliation rules, or an institution's.

Section 61(2) is the conciliation counterpart of section 2(3), chapter 250. Just as some disputes cannot be arbitrated, some cannot be conciliated, and the Act defers to other laws rather than making its own list.