The Arbitration and Conciliation Act, 1996 organizes and updates rules for domestic arbitration, international commercial arbitration, and conciliation. This Act helps settle disputes outside regular courts in a friendly and efficient way. While arbitration gets more attention because its decisions are binding, conciliation is just as important. It’s a flexible, voluntary process. Lawyers need to understand conciliation’s meaning in this Act because it offers a cooperative way to resolve disputes. This article explores conciliation meaning under the Arbitration and Conciliation Act, 1996. It covers its definition of conciliation, appointment and roles of conciliator and how conciliation is different from arbitration.
Why argue when you can arbitrate? Unlock a global career in dispute resolution with our immersive 6-month Advanced Certification in Alternate Dispute Resolution (ADR), built for litigators, peacemakers, and future legal changemakers. Real cases. Real mentors. Real transformation.
Defining Conciliation Meaning
Conciliation meaning, a peaceful process where a neutral person who is called a conciliator, helps two parties agree on a solution to their dispute. Unlike arbitration, which ends with a binding decision, conciliation focuses on talking and finding a compromise.
The meaning of conciliation comes from Part III, especially Section 61. This section says conciliation applies to disputes from legal relationships, like contracts or other matters.
Section 61(1) explains: “Unless another law says otherwise or the parties agree differently, this Part applies to conciliation of disputes from legal relationships, whether they involve contracts or not, and to all related proceedings.” This scope means conciliation can be used for many civil and commercial disputes. However, it doesn’t apply to disputes banned by law, like criminal cases or those under specific laws, such as the Industrial Disputes Act, 1947.
The conciliation meaning highlights its voluntary nature and privacy. Nobody forces the parties to participate; they join willingly. The conciliator helps guide discussions but doesn’t decide the outcome. This fits the Act’s goal of reducing court cases by encouraging parties to settle disputes themselves.
Understanding conciliation’s meaning helps when advising clients about alternative dispute resolution (ADR) options. It’s a less formal choice that can keep business relationships strong.
Commencement and Appointment in Conciliation
Conciliation starts with a clear process, as explained in Section 62 of Arbitration and Conciliation Act, 1966. One party sends a written invitation to the other, briefly describing the dispute. The process begins only when the other party accepts in writing.
If the invitation is rejected or there’s no response within 30 days (or another agreed time), conciliation doesn’t happen. This rule shows how conciliation depends on both parties agreeing willingly.
Once started, Sections 63 and 64 cover the number and selection of conciliators. Usually, there’s one conciliator, but parties can agree on two or three, who work together. Parties can choose the conciliator together.
If they can’t agree, an institution can help pick one. For three conciliators, each party picks one, and those two choose a third to lead. The Act ensures conciliators are independent and fair. In international disputes, it suggests considering nationality to keep things neutral.
These steps show how conciliation values party freedom. Lawyers should note that unlike arbitration, where courts can step in under Section 11 to appoint arbitrators, conciliation depends mostly on the parties’ actions, with little court involvement.
Read about Mediation and Arbitration Lawyers
Role of the Conciliator and Procedural Flexibility
Section 67 describes the conciliator’s job: help both parties reach a friendly agreement fairly and objectively. The conciliator looks at the parties’ rights, duties, business practices, and the situation. Section 66 says the conciliator doesn’t have to follow the Code of Civil Procedure, 1908, or the Indian Evidence Act, 1872. This allows the process to be flexible.
After appointment, Section 65 says parties must submit statements about the dispute, including facts and evidence. Copies are shared with everyone. The conciliator can ask for more details at any time. Section 69 allows communication to be spoken or written, together or separately, to encourage open talks.
Conciliation is a helpful process. The conciliator can suggest solutions under Section 72, but the parties make the final decision. If they agree, Section 73 says they sign a written settlement. This settlement acts like an arbitral award and can be enforced as a court decree under Section 74. This makes the process strong even though it’s not binding until settled.
Privacy is a key part of conciliation, as Section 75 states. All information shared stays private, and the conciliator can’t be forced to share it in later cases. This encourages honest talks, which is crucial for sensitive business disputes.
Termination and Effects of Conciliation
Conciliation ends in specific ways, as listed in Section 76: when the parties sign a settlement, when one party withdraws, when the conciliator says the process won’t work, or when both parties agree to stop.
If conciliation ends without a settlement, parties can try arbitration or court cases. Section 77 says they can’t start these other processes during conciliation unless it’s to protect their rights.
Sections 78 and 79 cover costs. The conciliator sets the costs based on whether a settlement was reached. Unpaid deposits can be collected like unpaid taxes.
Section 81 protects privacy further. Things said or admitted during conciliation can’t be used in other cases. This rule helps lawyers plan: a failed conciliation doesn’t harm future claims but keeps evidence private.
Learn about the Indian Council of Arbitration
Differences Between Conciliation Meaning and Arbitration
To understand conciliation fully, compare it to arbitration under the same Act. Arbitration, covered in Part I, is a competitive process that ends with a binding decision, enforceable under Section 36. Conciliation is cooperative, with no forced decision unless the parties agree. Let’s find out more such differences:
Aspect | Arbitration | Conciliation |
Legal Framework | Governed by Part I of the Arbitration and Conciliation Act, 1996. | Governed by Part III of the Arbitration and Conciliation Act, 1996. |
Nature of Process | Formal, adjudicatory, and adversarial, resembling court proceedings. | Informal, facilitative, and consensual, focusing on mutual agreement. |
Binding Nature | The arbitral award is binding on the parties and enforceable as a court decree. | The settlement agreement is binding only if signed by the parties; the process itself is non-binding. |
Prior Agreement | Requires a prior written agreement between parties to resort to arbitration. | No prior agreement is necessary; it can be initiated for existing disputes without one. |
Role of Third Party | The arbitrator acts as a judge, hears evidence, and renders a decision. | The conciliator facilitates discussions, proposes solutions, but does not impose a decision. |
Outcome | Results in an arbitral award, which is final and can be challenged only on limited grounds. | Results in a settlement agreement if parties agree, which has the status of an arbitral award if recorded properly. |
Cost and Time | Generally more expensive and time-consuming due to formal procedures. | Less expensive and quicker, as it is less formal. |
Confidentiality | Proceedings are confidential. | Proceedings are confidential, and information cannot be used in other legal proceedings. |
Applicability | Applicable to both existing and future disputes, but requires agreement. | Primarily for existing disputes; focuses on amicable resolution. |
Summary
Conciliation in the Arbitration and Conciliation Act, 1996, is a friendly and efficient way to resolve disputes. A neutral conciliator helps parties reach a voluntary agreement, complementing arbitration’s stricter approach. Sections 61 to 81 provide clear rules, focusing on freedom, privacy, and fairness. Understanding conciliation helps lawyers advise clients better as disputes increase. With India’s changing legal system, conciliation offers a way to settle conflicts peacefully, reducing court burdens and promoting justice.
Related Post:
Conciliation Meaning: FAQs
Q1. What is conciliation in simple words?
Conciliation is when a neutral person helps two parties talk and agree to solve their dispute peacefully.
Q2. What is the meaning of conciliation?
Conciliation is a voluntary process where a conciliator helps parties reach a mutual agreement to settle their conflict.
Q3. What does the word conciliation mean?
The word conciliation means a friendly approach to settling disputes through discussion, guided by a neutral person.
Q4. What is conciliation vs arbitration?
Conciliation involves a conciliator helping parties agree voluntarily, while arbitration involves an arbitrator making a binding decision after hearing both sides.
Q5. What is conciliation in CPC?
In the Code of Civil Procedure (CPC), conciliation is when courts encourage parties to settle disputes peacefully, often under Section 89, with a neutral conciliator.
