Conciliation is a voluntary, confidential, and informal process where a neutral third party (the conciliator) assists the parties in reaching an amicable settlement of their dispute. Unlike an arbitrator, a conciliator does not impose a decision but rather facilitates dialogue and suggests potential solutions.
1. Meaning of Conciliation Proceedings
Conciliation proceedings are a formal yet flexible alternative dispute resolution (ADR) mechanism where the parties seek a mutually acceptable agreement with the aid of a conciliator. In India, these proceedings are governed by Part III of the Arbitration and Conciliation Act, 1996.
The conciliator's role is to act in an independent and impartial manner, attempting to bring the parties to a consensus. Under Section 67 of the Act, the conciliator must be guided by principles of objectivity, fairness, and justice, giving consideration to the rights and obligations of the parties, the usages of the trade, and the circumstances surrounding the dispute.
2. Scope of Conciliation
The scope of conciliation is broad but generally applies to disputes arising out of a legal relationship, whether contractual or not. It is extensively used in:
Commercial Disputes: Breach of contract, joint ventures, and partnership disagreements.
Labour and Industrial Disputes: Often mandated under the Industrial Disputes Act, 1947, to prevent strikes or lockouts.
Family Matters: Disputes involving property partition or matrimonial issues (where the law permits settlement).
However, the scope is limited by Section 61 of the Arbitration and Conciliation Act, 1996, which specifies that conciliation does not apply to disputes which, by virtue of any law for the time being in force, may not be submitted to conciliation. For example, non-compoundable criminal offenses or matters of public interest cannot be settled through this process.
3. Commencement of Conciliation Proceedings
The commencement of the process is strictly based on the consent of the parties and follows a specific statutory procedure:
The Invitation: According to Section 62(1), the party initiating conciliation must send a written invitation to the other party, briefly identifying the subject of the dispute.
Acceptance: Conciliation proceedings officially commence only when the other party accepts the invitation in writing, as per Section 62(2).
Rejection: If the other party rejects the invitation, there will be no conciliation proceedings. Under Section 62(3), if the party initiating conciliation does not receive a reply within thirty days (or the period specified in the invitation), they may elect to treat this as a rejection.
Submission of Statements: Once the proceedings have commenced, the conciliator may request each party to submit a brief written statement describing the general nature of the dispute and the points at issue, as provided under Section 65.
Legal Characteristics
Confidentiality: All matters relating to the proceedings are kept confidential under Section 75.
Admissibility of Evidence: Under Section 81, views expressed or admissions made during conciliation cannot be used as evidence in subsequent arbitral or judicial proceedings.
Settlement Agreement: When the parties sign a settlement agreement, it has the same status and effect as an arbitral award on agreed terms under Section 74, meaning it is final, binding, and enforceable as a decree of a court.
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