Which Law governs Conciliation

The law which governs Conciliation in India is Arbitration and Conciliation Act,1996

PART III of this Act includes following Sections-
CONCILIATION
61. Application and scope.
62. Commencement of conciliation proceedings.
63. Number of conciliators.
64. Appointment of conciliators.
65. Submission of statements to conciliator.
66. Conciliator not bound by certain enactments.
67. Role of conciliator.
68. Administrative assistance.
69. Communication between conciliator and parties.
70. Disclosure of information.
71. Co-operation of parties with conciliator.
72. Suggestions by parties for settlement of dispute.
73. Settlement agreement.
74. Status and effect of settlement agreement.
75. Confidentiality.
76. Termination of conciliation proceedings.
77. Resort to arbitral or judicial proceedings.
78. Costs.
79. Deposits.
80. Role of conciliator in other proceedings.
81. Admissibility of evidence in other proceedings.

For ready reference the Part III of Arbitration and Conciliation Act,1996 is reproduced hereunder-

Application and scope of Conciliation

(1) Save as otherwise provided by any law for the time being in force and unless the parties have otherwise agreed, this Part shall apply to conciliation of disputes arising out of legal relationship, whether contractual or not and to all proceedings relating thereto. (2) This Part shall not apply where by virtue of any law for the time being in force certain disputes may not be submitted to conciliation.

Commencement of conciliation proceedings

(1) The party initiating conciliation shall send to the other party a written invitation to conciliate under this Part, briefly identifying the subject of the dispute. (2) Conciliation proceedings shall commence when the other party accepts in writing the invitation to conciliate. (3) If the other party rejects the invitation, there will be no conciliation proceedings. (4) If the party initiating conciliation does not receive a reply within thirty days from the date on which he sends the invitation, or within such other period of time as specified in the invitation, he may elect to treat this as a rejection of the invitation to conciliate and if he so elects, he shall inform in writing the other party accordingly.

Number of conciliators

 (1) There shall be one conciliator unless the parties agree that there shall be two or three conciliators. (2) Where there is more than one conciliator, they ought, as a general rule, to act jointly.

Appointment of conciliators

(1) Subject to sub-section (2), (a) in conciliation proceedings with one conciliator, the parties may agree on the name of a sole conciliator; (b) in conciliation proceedings with two conciliators, each party may appoint one conciliator; (c) in conciliation proceedings with three conciliators, each party may appoint one conciliator and the parties may agree on the name of the third conciliator who shall act as the presiding conciliator. (2) Parties may enlist the assistance of a suitable institution or person in connection with the appointment of conciliators, and in particular, (a) a party may request such an institution or person to recommend the names of suitable individuals to act as conciliator; or (b) the parties may agree that the appointment of one or more conciliators be made directly by such an institution or person: Provided that in recommending or appointing individuals to act as conciliator, the institution or person shall have regard to such considerations as are likely to secure the appointment of an independent and impartial conciliator and, with respect to sole or third conciliator, shall take into account the advisability of appointing a conciliator of a nationality other than the nationalities of the parties.

Submission of statements to conciliator

(1) The conciliator, upon his appointment, may request each party to submit to him a brief written statement describing the general nature of the dispute and the points at issue. Each party shall send a copy of such statement to the other party. (2) The conciliator may request each party to submit to him a further written statement of his position and the facts and grounds in support thereof, supplemented by any documents and other evidence that such party deems appropriate. The party shall send a copy of such statement, documents and other evidence to the other party. (3) At any stage of the conciliation proceedings, the conciliator may request a party to submit to him such additional information as he deems appropriate. Explanation. - In this section and all the following sections of this Part, the term conciliator applies to a sole conciliator, two or three conciliators as the case may be.

Conciliator not bound by certain enactments

The conciliator is not bound by the Code of Civil Procedure, 1908 (5 of 1908) or the Indian Evidence Act, 1872 (1 of 1872).

Role of Conciliator

(1) The conciliator shall assist the parties in an independent and impartial manner in their attempt to reach an amicable settlement of their dispute. (2) The conciliator shall be guided by principles of objectivity, fairness and justice, giving consideration to, among other things, the rights and obligations of the parties, the usages of the trade concerned and the circumstances surrounding the dispute, including any previous business practices between the parties. (3) The conciliator may conduct the conciliation proceedings in such a manner as he considers appropriate, taking into account the circumstances of the case, the wishes the parties may express, including any request by a party that the conciliator hear oral statements, and the need for a speedy settlement of the dispute. (4) The conciliator may, at any stage of the conciliation proceedings, make proposals for a settlement of the dispute. Such proposals need not be in writing and need not be accompanied by a statement of the reasons therefor.

Administrative assistance

In order to facilitate the conduct of the conciliation proceedings, the parties, or the conciliator with the consent of the parties, may arrange for administrative assistance by a suitable institution or person.

Communication between conciliator and parties

(1) The conciliator may invite the parties to meet him or may communicate with them orally or in writing. He may meet or communicate with the parties together or with each of them separately. (2) Unless the parties have agreed upon the place where meetings with the conciliator are to be held, such place shall be determined by the conciliator, after consultation with the parties, having regard to the circumstances of the conciliation proceedings.

Disclosure of information by Conciliator

When the conciliator receives factual information concerning the dispute from a party, he shall disclose the substance of that information to the other party in order that the other party may have the opportunity to present any explanation which he considers appropriate: Provided that when a party gives any information to the conciliator subject to a specific condition that it be kept confidential, the conciliator shall not disclose that information to the other party.

Co-operation of parties with Conciliator

The parties shall in good faith co-operate with the conciliator and, in particular, shall endeavour to comply with requests by the conciliator to submit written materials, provide evidence and attend meetings.

Suggestions by parties for settlement of dispute by Conciliation

Each party may, on his own initiative or at the invitation of the conciliator, submit to the conciliator suggestions for the settlement of the dispute.

Settlement agreement by Conciliation

(1) When it appears to the conciliator that there exist elements of a settlement which may be acceptable to the parties, he shall formulate the terms of a possible settlement and submit them to the parties for their observations. After receiving the observations of the parties, the conciliator may reformulate the terms of a possible settlement in the light of such observations. (2) If the parties reach agreement on a settlement of the dispute, they may draw up and sign a written settlement agreement. If requested by the parties, the conciliator may draw up, or assist the parties in drawing up, the settlement agreement. (3) When the parties sign the settlement agreement, it shall be final and binding on the parties and persons claiming under them respectively. (4) The conciliator shall authenticate the settlement agreement and furnish a copy thereof to each of the parties.

Status and effect of settlement agreement under Conciliation

The settlement agreement shall have the same status and effect as if it is an arbitral award on agreed terms on the substance of the dispute rendered by an arbitral tribunal under section 30.

Confidentiality under Conciliation

Notwithstanding anything contained in any other law for the time being in force, the conciliator and the parties shall keep confidential all matters relating to the conciliation proceedings. Confidentiality shall extend also to the settlement agreement, except where its disclosure is necessary for purposes of implementation and enforcement.

Termination of Conciliation proceedings

The conciliation proceedings shall be terminated (a) by the signing of the settlement agreement by the parties on the date of the agreement; or (b) by a written declaration of the conciliator, after consultation with the parties, to the effect that further efforts at conciliation are no longer justified, on the date of the declaration; or (c) by a written declaration of the parties addressed to the conciliator to the effect that the conciliation proceedings are terminated, on the date of the declaration; or (d) by a written declaration of a party to the other party and the conciliator, if appointed, to the effect that the conciliation proceedings are terminated, on the date of the declaration.

Resort to arbitral or judicial proceedings in Conciliation

The parties shall not initiate, during the conciliation proceedings, any arbitral or judicial proceedings in respect of a dispute that is the subject-matter of the conciliation proceedings except that a party may initiate arbitral or judicial proceedings where, in his opinion, such proceedings are necessary for preserving his rights.

Costs of Conciliation

(1) Upon termination of the conciliation proceedings, the conciliator shall fix the costs of the conciliation and give written notice thereof to the parties. (2) For the purpose of sub-section (1), costs means reasonable costs relating to (a) the fee and expenses of the conciliator and witnesses requested by the conciliator with the consent of the parties; (b) any expert advice requested by the conciliator with the consent of the parties; (c) any assistance provided pursuant to clause (b) of sub-section (2) of section 64 and section 68; (d) any other expenses incurred in connection with the conciliation proceedings and the settlement agreement. (3) The costs shall be borne equally by the parties unless the settlement agreement provides for a different apportionment. All other expenses incurred by a party shall be borne by that party.

Deposit of advance cost in Conciliation

(1) The conciliator may direct each party to deposit an equal amount as an advance for the costs referred to in sub-section (2) of section 78 which he expects will be incurred. (2) During the course of the conciliation proceedings, the conciliator may direct supplementary deposits in an equal amount from each party. (3) If the required deposits under sub-sections (1) and (2) are not paid in full by both parties within thirty days, the conciliator may suspend the proceedings or may make a written declaration of termination of the proceedings to the parties, effective on the date of that declaration. (4) Upon termination of the conciliation proceedings, the conciliator shall render an accounting to the parties of the deposits received and shall return any unexpended balance to the parties.

Role of conciliator in other proceedings

Unless otherwise agreed by the parties, (a) the conciliator shall not act as an arbitrator or as a representative or counsel of a party in any arbitral or judicial proceeding in respect of a dispute that is the subject of the conciliation proceedings; (b) the conciliator shall not be presented by the parties as a witness in any arbitral or judicial proceedings.

Admissibility of evidence in other proceedings

The parties shall not rely on or introduce as evidence in arbitral or judicial proceedings, whether or not such proceedings relate to the dispute that is the subject of the conciliation 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.

Sepatare Conciliation Institutions can have their own Conciliation Rules as well.

Indian Dispute Resolution Centre, IDRC has its own set of Conciliation Rules

The Indian Dispute Resolution Centre, IDRC has its own set of Conciliation Ruleswhich are reproduced hereunder-

Rules applicable to 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. 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; 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. On the basis of notes by the conciliator during the course of conciliation proceedings held separately and jointly with each of the parties to the dispute, and also on the basis of written statements and documentary evidence produced by the parties in support thereof, the conciliator shall reduce to writing the terms of the possible settlement, if he finds that there exists the possibility of a settlement which may be acceptable to both parties. 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. If, after going through the reformulated draft settlement, the parties agree thereon, they shall convey the same to the conciliator, either orally or in writing, that they have no objection to the reformulated draft settlement. They will also make a formal request to the conciliator to either himself draw up the settlement agreement, or assist the parties in drawing up the same. 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. 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. When the parties sign the settlement agreement, the conciliator shall authenticate the same as having been executed in his presence, as a result of their free volition and the conciliator shall hand over a copy of such authenticated settlement agreement to each of the parties and retain a copy thereof in his possession for future reference, if required 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, 1996.

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 a statue prescribes a procedure for doing a thing, that thing has to be done according to the prescribed procedure.

Number of conciliators can be one, or more than one. In case of more than one conciliator, it is necessary that they should all jointly, and in case of one conciliator, he should be independent & impartial and must be guided by principal of objectivity fairness & justices. He is also bound to keep confidential all matters relating to the conciliation from the other party. All the concerned evidence regarding the dispute be disclosed to the other party to enable them to present an appropriate explanation.

There is no specific procedure provided for making proposal for settlement. Conciliator may seek legal opinion from any solicitors firm or lawyer on any point, which involves complicated question of law. No arbitral or judicial proceeding can be initiated in respect of a dispute, which is subject matter of conciliation proceeding between the parties.

There are restrictions on admissibility of evidence in arbitral or judicial proceedings of the proposal & suggestion made by parties of the conciliation during conciliation proceedings 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.

However if such agreement is for mutual advantage of the parties & is not against Public Policy is valid. In this way generally the conciliation in India works.