What is Conciliation


CONCILIATION / MEDIATION are often terms used interchangeably. It is a confidential, voluntary and private dispute resolution process in which a neutral person helps the parties to reach a negotiated settlement. This method provides the parties with an opportunity to negotiate, converse and explore options aided by a neutral third party, the conciliator, to exhaustively determine if a settlement is possible. The conciliator is not given any power to impose a settlement. His function is to try to break any deadlock and encourage the parties to reach an amicable settlement by acting as a conduit for communication, filtering out the disturbing elements and allowing the parties to focus on the underlying core objectives

Parties need not have a prior Conciliation clause or Arbitration clause or agreement to refer their dispute to FACT. Cases may be registered on the spot after written consent from both parties.

It is the fastest emerging alternate dispute resolution (ADR) mechanism in the present day world and is extensively used in the U.S., U.K. and Europe as an effective way of settling disputes, be it commercial, contractual or personal. It is a means by which the parties re-learn the basis of communication with which they can then resolve future disputes. It is slowly gaining ground and awareness of its merits is developing in India, a country which is already familiar with the concept of panchayats . However, ADR is still in the experimental stages in India.


The Arbitration & Conciliation Act, 1996
Promulgated initially as an Ordinance, this Act (the 1996 Act) consolidates and streamlines the law relating to Arbitration in India by bringing under one statute the various provisions relating to arbitration which were earlier spread over three separate Acts. It is drafted on the lines of the UNCITRAL Model Arbitration Law and the UNCITRAL Conciliation Rules and for the first time statutorily recognizes conciliation by providing elaborate rules of engagement.

The Code of Civil Procedure (CPC)
For the last several decades, India's court system has suffered from an overwhelming backlog of cases. An average civil case takes almost a decade to be adjudicated. In 1996, the Indian Legislature recognized that, in order to lessen the burden on the courts by introducing a more efficient case management system, mediation/conciliation would have to be integrated as a dispute resolution option in appropriate civil and commercial matters. As a consequence, in 2002, the CPC was amended to make ADR an integral part of the judicial process. In terms of the newly inserted section 89 of CPC, if it appears to the court that there exist elements, which may be acceptable to the parties, the court may formulate the terms of a possible settlement and refer the same for arbitration, conciliation, mediation or judicial settlement.

The Panchayat system has long been an accepted method of conflict resolution, in which respected village elder(s) assists in resolving community disputes.


Arbitration is less formal than litigation, and Conciliation is even less formal than arbitration

The terms conciliation and mediation are interchangeable in the Indian context. Conciliation is a voluntary process whereby the conciliator, a trained and qualified neutral, facilitates negotiations between disputing parties and assists them in understanding their conflicts at issue and their interests in order to arrive at a mutually acceptable agreement. Conciliation involves discussions among the parties and the conciliator with an aim to explore sustainable and equitable resolutions by targeting the existent issues involved in the dispute and creating options for a settlement that are acceptable to all parties. The conciliator does not decide for the parties, but strives to support them in generating options in order to find a solution that is compatible to both parties. The process is risk free and not binding on the parties till they arrive at and sign the agreement. Once a solution is reached between the disputing parties before a conciliator, the agreement had the effect of an arbitration award and is legally tenable in any court in the country.

Most commercial disputes, in which it is not essential that there should be a binding and enforceable decision, are amenable to conciliation. Conciliation may be particularly suitable where the parties in dispute wish to safeguard and maintain their commercial relationships.

The following types of disputes are usually conducive for mediation: commercial, financial, family, real estate, employment, intellectual property, insolvency, insurance, service, partnerships, environmental and product liability. Apart from commercial transactions, the mechanism of Conciliation is also adopted for settling various types of disputes such as labour disputes, service matters, antitrust matters, consumer protection, taxation, excise etc


The first step is to choose a conciliator who is a neutral third party. This can be done by the disputants themselves or with the help of an institution. At the initial session a decision is taken as to who will attend the conciliation and what the cost will be. Usually the cost of this session is shared between the parties. Parties are encouraged to bring their lawyers with them. The process is explained to both parties and the conciliator is introduced. Ground rules of courtesy and propriety are laid down and scrupulously followed.

During the next stage the parties are encouraged to explain their case and vent their feelings. The conciliator merely listens, makes no judgment and identifies issues. One of the big advantages of mediation is that the sessions are private and confidential. A brainstorming session follows and creative solutions are explored. Focusing on interests and moving away from positions is the aim now. If parties are reluctant to disclose certain information in joint sessions, the Conciliator may request them to join him/her in a private session. In this, the Conciliator will skillfully draw out relevant information. This can also be kept confidential, should the party wish so. The final stage is when the parties reach consensus and a written agreement is drawn up. Monitoring and reviewing the case is very important.

What is the success rate of conciliation?

In countries that have adopted mediation/conciliation, the success rate is extremely high. In India, with the enactment of the Arbitration and Conciliation Act, 1996, the Parliament has given recognition to alternative forms of dispute resolution. A settlement reached through mediation or "conciliation" as it is termed in the Act has the same status and effect as an arbitration award, and thus is enforceable as if it were a decree of court. The Act also protects the confidentiality of the proceedings.


  • Conciliation offers a more flexible alternative to arbitration as well as litigation, for resolution of disputes in the widest range of contractual relationships, as it is an entirely voluntary process.
  • In conciliation proceedings, the parties are free to withdraw from conciliation, without prejudice to their legal position, at any stage of the proceedings.
  • The matter is settled at the threshold of the dispute, avoiding protracted litigation efforts at the courts. As conciliation can be scheduled at an early stage in the dispute, a settlement can be reached much more quickly than in litigation.
  • Parties are directly engaged in negotiating a settlement.
  • The conciliator, as a neutral third party, can view the dispute objectively and can assist the parties in exploring alternatives which they might not have considered on their own.
  • Parties generally save money by cutting back on unproductive costs such as traveling to court, legal costs of retaining counsels and litigation and staff time.
  • Conciliators may be carefully chosen by the parties for their knowledge and experience.
  • Conciliation enhances the likelihood of the parties continuing their amicable business relationship during and after the proceedings.
  • Creative solutions to special needs of the parties can become a part of the settlement.
  • Confidentiality is maintained throughout the proceedings with respect to information exchanged, the offers and counter offers of solutions made and the settlement arrived at. Also, information disclosed at a conciliation meeting may not be divulged as evidence in any arbitral, judicial or other proceeding











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