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
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
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
THE INDIAN LEGISLATURE
& 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.
WHAT IS CONCILIATION
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.
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
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.
ADVANTAGES OF 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
- 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.
may be carefully chosen by the parties for their knowledge
enhances the likelihood of the parties continuing
their amicable business relationship during and after
- Creative solutions
to special needs of the parties can become a part
of the settlement.
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