A Portrait of Conciliation as Method of ADR: An Analytical Perspective

Pankaj Sevta, Research Associate

Art. 1(3) of the UNCITRAL Model Law on International Commercial Conciliation 2002 defines Conciliation to mean “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 relationship1. The definition of conciliation formulated by the International Labour Organization in 1983 has been followed by ACAS2in the following words it is a process of orderly or rational discussion under the guidance of the conciliator3. The definition of Conciliation is a process in which third party assists the parties to resolve their disputes by agreement. A conciliator may do this by expressing an opinion about the merits of the dispute to help the parties to reach a settlement4. Conciliation is a compromise settlement with the assistance of a conciliator. Conciliation is a process of persuading parties to reach agreement and is plainly not arbitration5. Conciliation had received statutory recognition in India even before enactment of Part III of Arbitration and Conciliation Act 1996. Order XXXII-A of CPC 1908, Sec. 23 of Hindu Marriage Act 1955 and Sec. 3 of Industrial Dispute Act 1947 provided for conciliation. These provision were not however, exhaustive furnishing detailed framework for conduct of conciliation proceedings. It was only in part III of arbitration and Conciliation Act 1996 that the legislature for the first time provided for a detailed statutory framework for the conduct of conciliation proceedings outside court6.

Advantages of Resolution of a Dispute by Conciliation

It is pertinent to note that following are the advantages of resolution of dispute by conciliation:

(i)                 It offers a more flexible alternative, for a wide variety of disputes, small as well as large;

(ii)               It obviates the parties from seeking recourse to the court system;

(iii)             It reserves the freedom of the parties to withdraw from conciliation without prejudice to their legal position inter se at any stage of the proceedings;

(iv)             It is committed to maintenance of confidentiality throughout the proceedings and thereafter, of the dispute, the information exchanged, the offers and counter offers of solutions made and the settlement arrived at;

(v)               It is cost effective and produces quicker resolution of dispute;

(vi)             It facilitates the maintenance of continued relationship between the parties even after the settlement is attempted at. This feature is of particular significance to the parties who are required to continue their relationship despite the dispute, as in the case of disputes arising out of construction contracts, family relationships, family properties etc.

(vii)           There is no scope for corruption or bias7.

Techniques of Conciliation

There are two methods of conciliation namely the facilitative method and the evaluative method8. The difference lies in the role adopted by the conciliator during the course of the proceedings. In a facilitative mode, the conciliator will refrain from providing his opinions or advice and will merely ensure that the parties do not misunderstand each other9. In an evaluative mode, the conciliator takes a more proactive approach and attempts to get the parties to accept the merits and demerits in their cases thereby leading them to a mutually acceptable solution10. He makes or obtains an assessment and expresses his views on the merits of the rights of the parties in the dispute11.

Role of the Conciliator

Although, like litigation and arbitration, conciliation also often involves an independent third party, the role of a conciliator is basically different from that of a judge or an arbitrator. “He does not impose a decision on the parties but, on the contrary, his role is to assist the parties to resolve the dispute themselves. He may give opinions on the issues in dispute but his primary function is to assist in achieving a negotiated solution12.” At best, he may be described as a neutral facilitator or a catalytic agent. He only endeavors to bring the parties in dispute together and assist them in composing their differences by providing an environment in which the parties can communicate constructively, and then to assist the parties in overcoming their obstacles to settlement. He can suggest terms upon which a settlement can be arrived at, but cannot impose a settlement conceived by him on the parties. His role is merely advisory and not creative or decisive, like the role of an arbitrator or an adjudicator13.

Framework for conciliation Proceedings: An Over view to the Scheme under 1996 Act

Conciliation is initiated by a party sending to other party a written invitation to conciliate. Once the other party accepts in writing the invitation to conciliate, the conciliation proceedings start14. It is for the parties to agree as to the number of conciliators. Unless the parties agree that there should be two or three conciliators, there will be only one conciliator. The conciliator will in the conduct of conciliation, as a general rule, act jointly15. Where the parties have not enlisted the assistance of a suitable institution or person, the parties themselves can agree on the name of a sole conciliator. Where the conciliation is with two conciliators, each party may appoint one conciliator. Section 66 of the Act specifically provides that the conciliator is not bound either by the Code of Civil Procedure 1908 or Indian Evidence Act 1872. The conciliator is to be guided by the principles of objectivity, fairness and justice16. He should also give consideration to the usage of the trade concerned, the circumstances surrounding the dispute, including any previous business practices between the parties17. The manner of conducting the conciliation process is left to the conciliator. After taking into account the wishes of the parties, he may allow a party to present oral statement, if the party so wishes18. At any stage of the conciliation proceedings, the conciliator may make proposals for settlement of the dispute. Moreover the proposal need not be in writing and need not be accompanied by reasons19.

The conciliator after his appointment may call upon the parties to present a written summary of their respective cases together with any relevant documents20. After going through the summary of the case filed by the each party, the conciliator may hold a joint meeting with the parties, where each party may make a brief oral presentation of its case. Thereafter the conciliator may also hold a private meeting, often referred to as caucuses with each party separately21. By doing so he tries to bring parties closer to an agreement22. Where parties are so inclined, he may even suggest a settlement for acceptance by the parties23. Each party may also submit to the conciliator suggestions for the settlement of the disputes24. If the conciliator receives factual information from any party, he may disclose the substance of the information to the other party so that it may have an opportunity to present its explanation, if any. However if any information required by the party to be kept confidential, shall not be disclosed by conciliator to the other party25. If the conciliator is of the view that there is no scope for agreement between the parties or any of them indicates its unwillingness to pursue conciliation, the conciliator may terminate the proceedings26. Where the parties reaches an agreement on settlement, the conciliator may hold a final joint setting for drawing up and signing a settlement agreement by the parties27. When the parties sign the settlement agreement, it becomes final and binding on the parties and persons claiming under them. The conciliator also authenticates the settlement agreement and furnishes a copy thereof to each of the parties28.

As a principle inherent in conciliation procedure, the conciliator and the parties are bound by certain discipline. Unless all the parties otherwise agree, the conciliator is estopped from acting as an arbitrator or as a representative of a party in any arbitral, judicial or other proceedings in respect of a dispute which is or has been the subject matter of conciliation proceedings in which he acted as conciliator. The conciliator cannot also be presented by a party as a witness in any such proceedings29. There is also a bar on the parties relying on introducing as evidence in any subsequent arbitral or judicial proceedings, the views expressed or suggestions made by either party in the course of conciliation proceedings30. In other words, any information pertaining to the conciliation proceedings, whether it has resulted in a settlement agreement or not, is required to be kept confidential by all the parties and the conciliators31.

The parties may initiate conciliation even during the pendency of arbitration proceedings involving the same dispute, without prejudice to their respective stands in those proceedings. If such conciliation succeeds, they have to report to arbitral tribunal, who may record the settlement in the form of an arbitral award32.

Conclusion

It can be concluded that looking in to the present scenario, it can be said that there can be valid reference to conciliation only if both parties to the dispute agree to have negotiations with the help of third party or parties. There is no shadow of doubt that if parties resort to conciliation there are ample of advantages like cost effective, freedom of parties, no scope of biasness etc. It can be analyzed that a conciliator in advisory capacity, plays a vital role by resorting to techniques like facilitative method and the evaluative method, in order to provide negotiated decision between the parties. Moreover, giving a glimpse on the existing framework under part III of Arbitration and Conciliation Act, 1996 it can be construed that an appropriate chain of procedure and system exists which through act as guideline for conciliator as well as parties.

  1. O.P. Malhotra & Indu Malhotra, The Law and Practice of arbitration and conciliation 1513 (2nd Ed., 2006). []
  2. Brown and Marriott, ADR Principles and Practice 272 (2nd Ed., 1999). []
  3. Karl Mackie, Industrial Relations Disputes: The ACAS Role by the Advisory Service in a Handbook of Dispute Resolution: ADR in Action 104 (1991) . []
  4. Ashwinie Kumar Bansal, Arbitration & ADR 5 (3rd Ed., 2012). []
  5. Halsbury’s Laws of England, 4th Ed., Vol 2, page 255, para 502 []
  6. S.K Chawala, Law of Arbitration and Conciliation including other ADR’s 846 (3rd Ed., 2012). []
  7. Sarbesh Chandra, ADR: Is conciliation the Best Choice p. 91 []
  8. Mackie, Miles, Marsh and Allen, The ADR Practice Guide: Commercial Disputes Resolution 49 (2nd Ed., 2000). []
  9. Justice RS Bachawat’s, Law of Arbitration & Conciliation 2519 (5th Ed., 2012). []
  10. O.P. Malhotra & Indu Malhotra, The Law and Practice of arbitration and conciliation 1521 (2nd Ed., 2006). []
  11. O.P. Malhotra & Indu Malhotra, The Law and Practice of arbitration and conciliation 1521 (2nd Ed., 2006). []
  12. Carrol and Dixon, ‘Alternative Dispute Resolution Developments in London’, The International Construction Law Review, pt 4, 1990, pp 436-37, cited by Redfern and Hunter in Law and Practice of International Commercial Arbitration 36 (4th Ed., 2004). []
  13. O.P. Malhotra, Arbitration of Labour Disputes: Labour Adjudication in India, 2001, Journal of the Indian Law Institute, pp 31-32. []
  14. Arbitration and Conciliation Act 1996, § 62 []
  15. Arbitration and Conciliation Act 1996, § 63 []
  16. S.K Chawala, Law of Arbitration and Conciliation including other ADR’s 847 (3rd Ed., 2012). []
  17. Arbitration and Conciliation Act 1996, § 67(2). []
  18. Ibid, § 67(3). []
  19. Arbitration and Conciliation Act 1996, § 67(4) See also M. Prabhakar, Alternative Dispute Resolution A Practical Approach (2008). []
  20. Arbitration and Conciliation Act 1996, § 65 []
  21. Arbitration and Conciliation Act 1996, § 69 []
  22. S.K Chawala, Law of Arbitration and Conciliation including other ADR’s 847 (3rd Ed., 2012). []
  23. Supra note 9. []
  24. Arbitration and Conciliation Act 1996, §  72 []
  25. Arbitration and Conciliation Act 1996, § 70 []
  26. Arbitration and Conciliation Act 1996, § 76 []
  27. Arbitration and Conciliation Act 1996, § 73(1)(4). []
  28. Arbitration and Conciliation Act 1996, § 73(3)(4). []
  29. Arbitration and Conciliation Act 1996, § 80 []
  30. Arbitration and Conciliation Act 1996, § 81 []
  31. Law Of Arbitration And Conciliation With Exhaustive Coverage Of International Commercial Arbitration And ADR 2509 (5th Ed., 2012). []
  32. Arbitration and Conciliation Act 1996, § 30 []

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