PROJECT

TOPIC- Conciliation as an Effective Mode

of Alternative Dispute Resolving System

SUBJECT- LA BO U R LA W

Submitted To: Submitted By:

Dr. DIVYA SHARMA DHRUV JADAUN

Institute of Legal Studies & Research

BA LLB (Hons.)
GLA University-Mathura
Roll No: 2251110014

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 ACKNOWLEDGEMENT

The success of any project is largely dependent on the guidance and

support of many others, in addition to my efforts. I am taking this
opportunity to express my gratitude to the numerous others whose
contributions to the project's success have been crucial.

I did like to express my deepest gratitude to Dr. Divya Sharma. I can't

express how grateful I am for his tremendous support and assistance.
Every time I go to his meeting, I feel inspired and encouraged. Without
his support and direction, this project would not have happened.

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 TABLE OF CONTENT

1.Abstract

2. Research Question

3. Introduction
(i) Conciliation Procedure
(ii) How conciliation is better than other alternative modes of dispute resolution?
(iii) Reasons to uplift conciliation in India

4. Procedure of Conciliation
(i) Appointment & qualification of conciliator
(ii) Rules and principles of Conciliation

5. Applicability

6. Termination of proceedings on settlement

7. Advantages of resolution of a dispute by conciliation

8. Problems faced by conciliation in India

9. Conclusion

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Abstract
Conciliation is an alternative dispute resolution (ADR) method aimed at settling disputes without
litigation. It involves the appointment of an independent third party, the conciliator, to facilitate consensus
between disputing parties through persuasion and constructive dialogue. Unlike arbitration, conciliation
focuses on fostering agreement rather than adjudicating rights and liabilities. It is grounded in trust,
confidence, and mutual understanding. Conciliation offers several advantages over other ADR
mechanisms, including speed, cost-effectiveness, and the promotion of harmonious relationships. It also
provides confidentiality, as discussions, proposals, and admissions during conciliation proceedings are
protected from being used in subsequent legal or arbitral processes.1 Additionally, it allows the parties to
retain control over the outcome, as the resolution is reached mutually rather than imposed by a third party.
The procedure of conciliation typically begins with one party inviting the other to resolve the dispute. If
accepted, a conciliator is appointed either by mutual agreement or through an institution. The conciliator
guides the process impartially, formulating settlement terms that the parties may accept or modify. If an
agreement is reached, it is formalized, signed, and may be given the status of an arbitral award in certain
jurisdictions. However, if conciliation fails, the parties may resort to arbitration or litigation. Despite its
benefits, conciliation in India faces challenges such as limited awareness, procedural inefficiencies, and
resistance from parties accustomed to adversarial systems. However, initiatives like the Himachal Pradesh
High Court's pretrial conciliation model have demonstrated success, encouraging other states to adopt
similar practices. The effectiveness of conciliation depends on the willingness of the parties to collaborate,
the skill of the conciliator, and adequate infrastructure. By fostering mutual understanding and preserving
business relationships, conciliation remains a valuable tool for resolving disputes amicably and efficiently,
both domestically and internationally.

Research Question

Q1. What is the concept and definition of conciliation in dispute resolution?

Q2. How does conciliation differ from arbitration?
Q3. What is the role and qualification of a conciliator in dispute resolution?

"The settling of the disputes without litigation" is what conciliation means. It is a procedure wherein the
parties mutually agree to designate an independent person or individuals to resolve their disagreement by
consensus or by employing persuasive methods of a similar kind.

1
Conciliation as a mode of ADR Scribd. Available at: https://www.scribd.com/document/393516249/Conciliation-
as-a-mode-of-ADR (Accessed: 08 November 2024).
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Introduction
Conciliation means „the settling the disputes without litigations‟. 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 is persuasive.
In the HALSBURY‟S LAWS OF ENGLAND2, the terms „arbitration‟ and „conciliation‟ have been
differentiated as under:
“The term ‘arbitration’ is used in several senses. It may refer either to a judicial process or to a nonjudicial
process is concerned with the ascertainment, declaration and enforcement of rights and liabilities, as they
exist, in accordance with some recognized system of law. An industrial arbitration may well have for its
function to ascertain and declare, but not to enforce, what in the parties, and such a function is non- judicial.
Conciliation is a process of persuading parties to reach agreement, and is plainly not arbitration; nor is the
chairman of a conciliation board an arbitrator3”
Confidence, trust & Faith are the essential ingredients of conciliation. This effective means of ADR is
often used for domestic as well as international disputes. Some Significant difference is there while using
it for domestic or international disputes.

How conciliation is better than other alternative modes of dispute resolution?

Gone are the days when arbitration was considered to be a cheap and efficacious remedy. Now the situation
is completely reversed. Arbitration proceedings have become too technical and expensive. In this context,
reference may be made to judgment of the Supreme Court of India. In Guru Nanak Foundation V. Rattan
Singh & Sons, it was observed:
“Interminable, time consuming, complex and expensive court procedures impelled jurists to search for an
alternative forum, less formal more effective and speedy for resolution of disputes avoiding procedural
claptrap and this led to Arbitration Act, 1940. However, the way in which the proceedings under the Act
are conducted and without an exception challenged in the courts has made lawyers laugh and legal
philosophers weep. Experience shows and law reports bear ample testimony that the proceedings under
the Act have become highly technical accompanied by unending prolixity at every stage providing a legal
trap to the unwary. Informal forum chosen by the parties for expeditious disposal of their disputes has by
the decisions of the court been clothed with” legalese‟ of unforeseeable complexity.” Broadly speaking,
there are at least three advantages if the parties are able to reasonable settlement of their disputes through

2
Halsbury’s Laws of England LexisNexis. Available at: https://www.lexisnexis.co.uk/products/halsburys-laws-of-
england.html (Accessed: 08 November 2024).

3
What is conciliation IDRC. Available at: https://theidrc.com/content/adr-faqs/what-is-
conciliation/#:~:text=Dispute%20Resolution%20by%20Conciliation&text=Just%20like%20another%20ADR%20
method,help%20of%20the%20neutral%20Conciliator. (Accessed: 08 November 2024).

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conciliation, viz.
1) Quickness. The parties can devote their time and energy for better and useful work.
2) Economic. Instead of spending hard earned money on litigation, one can invest it for better dividends.
3) Social. The parties go happily to their respective places and stand relieved from bickering, enmity,
which in certain cases might have lingered on for generations.

To overcome the ordeals involved, the best course available to the parties is to look to reasons, appreciate
the viewpoint of the opposite party, not to stand on false prestige and resolve the controversy in an
amicable manner. It does not help either party to pursue litigation – Whether in courts or before an arbitral
tribunal. Both parties are losers, at least in terms of time, at the time of final outcome of litigation. It is at
this stage the parties appreciate that they would have been better off had they taken the path of conciliation.
It is not only the fees of lawyers but also of the arbitrators, which have started pinching the parties. Though
presently the number is small but nevertheless a serious beginning has been made in some cases to settle
the matter outside arbitration to avoid unnecessary expense. The other advantage of choosing conciliation
is that though the amicable settlement in conciliation could not be reached then the evidence leaded, the
proposal made during the conciliation proceedings cannot be disclosed in any other proceedings (in
arbitration also) This protection has been provided by the Arbitration & Conciliation Act itself.
Therefore parties can attempt Conciliation without any risk.4 It is a non-binding procedure in which an
impartial third party assists the parties to a dispute in reaching a mutually agreed settlement of the dispute.
For effective conciliation, it is necessary that the parties to dispute should be brought together face to face
at a common place where they can interact with each other & with the conciliator to arrive at a settlement
of the dispute. The importance of conciliation is that in other proceeding decision is given by the presiding
authority & it is binding accordingly. But in conciliation there is amicable settlement where parties
themselves have reached to the decision i.e. settlement & which is binding as per their decision. Third
party i.e. conciliator is just helping to arrive at settlement & not dictating the term or decision

Conciliation Procedure
Either party to the dispute can commence the conciliation process. When one party invites the other party
for resolution of their dispute through conciliation, the conciliation proceedings are said to have been
initiated. When the other party accepts the invitation, the conciliation proceedings commence. If the other
party rejects the invitation, there are no conciliation proceedings for the resolution of that dispute.
Generally, only one conciliator is appointed to resolve the dispute between the parties. The parties can
appoint the sole conciliator by mutual consent. If the parties fail to arrive at a mutual agreement, they can
enlist the support of any international or national institution for the appointment of a conciliator. There is

4
High Court of Assam, Nagaland, Mizoram and Arunachal Pradesh. Available at: https://ghconline.gov.in/
(Accessed: 08 November 2024).

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no bar to the appointment of two or more conciliators. In conciliation proceedings with three conciliators,
each party appoints one conciliator. The third conciliator is appointed by the parties by mutual consent.
Unlike arbitration where the third arbitrator is called the Presiding Arbitrator, the third conciliator is not
termed as Presiding conciliator. He is just the third conciliator. The conciliator is supposed to be impartial
and conduct the conciliation proceedings in an impartial manner. He is guided by the principles of
objectivity, fairness and justice, and by the usage of the trade concerned and the circumstances surrounding
the dispute, including any previous business practices between the parties. The agreement so arrived at is
signed by the parties and authenticated by the conciliator. In some legal systems, the agreement so arrived
at between the parties resolving their dispute has been given the status of an arbitral award. If no consensus
could be arrived at between the parties and the conciliation proceedings fail, the parties can resort to
arbitration.
A conciliator is not expected to act, after the conciliation proceedings are over, as an arbitrator unless the
parties expressly agree that the conciliator can act as arbitrator. Similarly, the conciliation proceedings are
confidential in nature. Rules of Conciliation of most of the international institutions provide that the parties
shall not rely on or introduce as evidence in arbitral or judicial proceedings,
(a) the views expressed or suggestions made for a possible settlement during the conciliation proceedings;
(b) admissions made by any party during the course of the conciliation proceedings;
(c) proposals made by the conciliator for the consideration of the parties;
(d) the fact that any party had indicated its willingness to accept a proposal for settlement made by the
conciliator; and that the conciliator shall not be produced or presented as a witness in any such arbitral or
judicial proceedings.

Reasons to uplift conciliation in India

The importance of conciliation in the present Indian court system is increased as courts are facing with the
problem of mounting arrears of pending cases & there is a serious need of disposing of them & for that
amicable settlement, conciliation is the best alternative. The Himachal Pradesh High court under took the
project of disposing of the pending cases by conciliation & insisting on pretrial conciliation in fresh cases.
This idea was based upon the mediation in Canada & Michigan. The said project had great success in
Himachal Pradesh.5 The Law commission of India in its various reports (77th & 13th) has appreciated the
project in Himachal Pradesh and recommended the other States to follow same path. The other important
point to uplift the Conciliation is that, it has got statutory recognition as included in Arbitration &
Conciliation act 1996 which is based on UNCITRAL Model & because of that it has Universal familiarity
& can be used for settlement of domestic disputes as well as international commercial disputes. The
Concept of conciliation has received new dimension because of successful Himachal experiment .The

5
Rai, D. (2024) Arbitration, conciliation and mediation in a Nutshell, iPleaders. Available at:
https://blog.ipleaders.in/arbitration-conciliation-and-mediation/ (Accessed: 09 November 2024).

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movement of conciliation of awareness of conciliation has started long before, the only difference is,
previously parties were willingly coming together & opting for conciliation but now, the conciliation on
Himachal pattern is a court induced conciliation, making it mandatory for the parties to attempt a
conciliation for settlement of their dispute & approach the court if conciliation fails. In Maharashtra also
Mumbai High court is taking initiative for Himachal pattern i.e. pre- trial conciliation Therefore it is
necessary to study conciliation as an organized procedure for settlement of dispute through formal
proceedings.

Procedure of Conciliation
Appointment & qualification of conciliator
Conciliator can be appointed by the parties themselves of their own choice with consensus i.e. both should
agree upon the appointment of the conciliator. The parties follow any of the following methods. (a) The
parties themselves may name a conciliator or conciliators.
(b) Each party may appoint one conciliator & may mutually agree on the third conciliator.
(c) The parties may enlist the assistance of a suitable institution a person in connection with the
appointment of conciliators.
In the case of family court, or labour court etc, before referring the matter to the court it is compulsory to
consult with the councilor i.e. conciliator, who are appointed by the government for making settlement
between the parties before the trial & on the report of the councilor only, matter is put forth for trial. Here,
Conciliator should not be of a specific qualification, but he should also not be ignorant of the subject
matter. He can be a expert person of the subject matter of dispute for e.g. if there is a dispute regarding
construction cost of a building in that case a person can be a civil engineer, who has the knowledge of
building construction. The important thing, which cannot be ignored, is that conciliation is not the person
who will decide the matter; rather he is a person who assists the parties to arrive at amicable settlement,
where the decision is of the parties themselves.

Rules and principles of Conciliation

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 like
the Code of civil Procedure or the Indian Evidence Act, 1872.6 When the parties are able to resolve the
dispute between them by mutual agreement and it appears to the conciliator that there 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 settlement and make it over to the parties for their observations;

6
The indian evidence act, 1872. Available at:
https://www.indiacode.nic.in/bitstream/123456789/15351/1/iea_1872.pdf (Accessed: 09 November 2024).

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and the ultimate step to be taken by a conciliator is 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 affix their signatures to it. The settlement agreement signed by the parties is final and binding on the
parties and persons claiming under them. The conciliator shall send the draft settlement to both the parties.
For their consideration and approval. If the parties make any observation on the draft settlement, the
conciliator shall reformulate the draft settlements incorporating therein the observations made by the
parties.
It is not every agreement or arrangement between parties to the dispute arrived at in whatever manner or
form during the pendency of the conciliation proceedings that automatically acquires the status of a
settlement agreement so as to have the same status and effect as if it were an arbitral award for being
enforced or as if it were a decree of the court.7 It is only that agreement which has been arrived at in
conformity with the manner stipulated and form envisaged and got duly authenticated in accordance with
this section, alone can be assigned the status of a settlement agreement within the meaning of and for
effective purpose of the Act and not otherwise. If the draft settlement agreement is agreed to the entire
satisfaction of the parties, and thereafter they finally draw up the document and sign the same, the said
document shall be final and binding, not only on the parties to the controversy, but also on the persons
claiming under them. The settlement agreement arrived at between the parties, and duly authenticated by
the conciliator, shall not only be final and binding on the parties, but will have the same effect as if the
settlement agreement is an arbitral award on agreed terms on the substance of the dispute rendered by a
duly constituted arbitral tribunal under section 30 of the Act.
A successful conciliation comes to an 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 this section. But if a conciliator, after holding some meetings with the parties and after having
discussions with them, draws up the so-called settlement agreement by himself in secrecy and send the
same to the court in a sealed cover (being without the signatures of the parties) cannot be given recognition
of a settlement agreement. If such restriction is not imposed the parties may not come forward with more
acceptable proposals or suggestion due to the fear of being trapped in judicial proceeding with admission
made earlier. If the parties enter into agreement contrary to these provisions the agreement shall be void.

Applicability
The parties competent to contract can have the benefit of conciliation. Though the conciliator is appointed
by the parties of their own choice he is an independent & impartial person, who assists the parties in
independent & impartial manner in their attempt to reach an amicable settlement of their dispute He is
guided by the principles of objectivity, fairness & Justice. He takes into consideration circumstance

7
Rai, D. (2024) Arbitration, conciliation and mediation in a Nutshell, iPleaders. Available at:
https://blog.ipleaders.in/arbitration-conciliation-and-mediation/ (Accessed: 09 November 2024).

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surrounding the dispute, including any previous business practices between the parties. The councilor can
hold separate meeting with each party to further clarity its case & to discuss the merits of the case, & to
give the clear idea to the requirement to substantiate the claims. The main aim should be to give clear idea
of the lacunas in the case to each many on their side. & to encourage them for settlement. Conciliator can
hold required separate meetings as well as required joint meetings, with the consent of both the parties.8
The dispute is resolved in terms of the agreement. Where the settlement is reached in pretrial proceedings
of the family court or labour court the settlement agreement can be enforced in the same manner as the
judgment, decision of the court. In the case of a matter referred for conciliation, during the pendency of
the arbitral proceedings & the law so provides the settlement agreement can be enforced in the same
manner as an arbitral award on agreed terms.
The settlement agreement, notwithstanding anything contained in any law for the time being in force, shall
be treated as a confidential document and all the written statements, documentary and other evidence
procedure and relied upon by the parties, minutes of the conciliation meeting etc. shall also have immunity
from being produced elsewhere as a piece of evidence. In conciliation procedure, parties & conciliator are
bound by certain inherent principles & 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 judicial or other proceeding
in respect of a dispute which is or has been the subject matter of conciliation proceedings in which he acts
a conciliator9. The conciliator cannot be presented by a party as a witness in any such proceedings
Similarly, parties cannot rely on the followings as evidence in arbitrate judicial or other proceedings.
a) views expressed or suggestions made by the other party in respect of a possible settlement of the dispute.
b) admissions made by the other party in the course of the conciliation proceedings
c) proposals made by the conciliator.
d) the fact that the other party had indicated his willingness to accept a proposal for settlement made by
the conciliator.
For this confidentiality & discipline parties may enter into contractual agreement in a case where there is
no provision under the Act. Parties are free to withdraw at any stage of conciliation proceedings &
conciliator may also terminate the proceedings, if he finds that there is no scope for settlement. But in
some cases some points of dispute are resolved, though not the whole dispute. Thus, even where an attempt
to conciliate fails it helps in narrowing the issue in dispute.

8
Conciliation as a mode of ADR Scribd. Available at: https://www.scribd.com/document/393516249/Conciliation-
as-a-mode-of-ADR (Accessed: 09 November 2024).

9
What is conciliation IDRC. Available at: https://theidrc.com/content/adr-faqs/what-is-
conciliation/#:~:text=Dispute%20Resolution%20by%20Conciliation&text=Just%20like%20another%20ADR%20
method,help%20of%20the%20neutral%20Conciliator. (Accessed: 09 November 2024).

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Advantages of resolution of a dispute by conciliation
In contrast to arbitration, conciliation is nonbonding and confidential. If successful, conciliation results in
a settlement of the dispute. Like arbitration, conciliators are selected by and serve at the expense of the
parties. Conciliation is less formal than arbitration, but is more evaluative than the facilitative process of
most forms of mediation. Conciliators may be retired judges, senior advocates, or non-lawyers with
expertise in the subject matter. The court plays no formal role in sponsoring conciliation. Conciliation is
becoming increasingly popular, as an alternative to other formal and informal modes of dispute resolution
due to its obvious advantages:
a) It offers a more flexible alternative, for a wide variety of disputes, small as well as large;
b) It obviates the parties from seeking recourse to the court system;
c) 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.
d) It is cost-effective and produces quicker resolution of dispute.

Problems faced by conciliation in India

Although conciliation services are available to civil litigants through the innovation of Lok Adalats (panels
of conciliators) and Conciliation Committees, several problems remain unsolved. First, India generally
lacks obligatory mediation such as early neutral evaluation utilized in the United States which is especially
useful when imposed shortly after litigation is filed. Conciliation processes in India require the consent of
both parties, or the request of one party and the decision by the court that the matter is suitable for
conciliation. Second, the subject matter of disputes that may be sent to Lok Adalats is limited to auto
accidents and family matters. Third, the conciliation process normally involves the lawyers, not the
disputing parties themselves. This problem is particularly acute in writ proceedings in which the
government is the responding party, since counsel frequently claims to lack authority to make decisions
about terms of settlement.10 Fourth, current conciliation processes do not require the parties to meet and
confer prior to entering either traditional litigation venues or their alternatives. No joint statement of the
specific points of disagreement is required. The absence of meeting, conference and/or joint statements
requirement is required. The absence of meeting, conference or joint statement requirements allows
competing sides to remain insulated from one another. Fifth, the Lok Adalats themselves have experienced
backlog, and some defendants agree to conciliation as a way of further delaying the litigation process.
Finally, there is no set time or point within the litigation process at which a decision is made, by the courts,
the parties or otherwise regarding referral of the case to some form of alternative dispute resolution.

10
Conciliation as a mode of ADR Scribd. Available at: https://www.scribd.com/document/393516249/Conciliation-
as-a-mode-of-ADR (Accessed: 09 November 2024).

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Conclusion
However, the success of conciliation depends on the mental attitude of the parties, the skill of the
conciliator and the proper environment, backed by infrastructure facilities for servicing the conciliation
procedure. The mental attitude required for conciliation ranges, on the one end from the inclination of all
the parties to arrive at a mutually agreed settlement, though there may be mental reservation in making
the first move, to the absence of any objection to such settlement, so that the conciliator may have scope
to induce the parties to attempt conciliation. On ultimate analytical observation, reciprocity is the hallmark
of conciliation process. For healthy business relationship mutual understanding & to solve the dispute
through settlement are the eventual qualities or eventual base. When party is having healthy business
relationship, he is bound to succeed in conciliation. The need is therefore to develop a will to accommodate
other party’s genuine interest, a faith in the other’s objects & capacity to reason to evolve cultivates the
wish to sit together & reciprocate & to solve out the difference amicably. Therefore it is always preferable
to resolve the dispute by conciliation.

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