Conciliation: Meaning, Nature and Scope

Conciliation is a process in which a neutral third person assists the parties to arrive at an amicable settlement, and may go further than a mediator by formulating and proposing terms of his own. It is consensual at both ends: it begins only if the invitation is accepted, and it ends in a settlement only if the parties sign. Its distinctive attraction in Indian law was that the settlement carried the status and effect of an arbitral award on agreed terms, which made it enforceable as a decree. The Mediation Act, 2023 has since absorbed conciliation into mediation, so the distinctions drawn here are matters of doctrine and of pending proceedings rather than of daily practice.

1. Meaning

Neither the Arbitration and Conciliation Act, 1996 nor the Mediation Act, 2023 defines conciliation in substance. The content of the concept came from Part III, and principally from Section 67, under which the conciliator assists the parties in an independent and impartial manner, is guided by principles of objectivity, fairness and justice, and may at any stage make proposals for a settlement which need not be in writing and need not be accompanied by reasons. From that the working definition follows: conciliation is the resolution of a dispute by agreement of the parties, reached with the assistance of a neutral who may recommend terms but cannot impose them.

2. The Essential Features

1. Consent to enter. Section 62 required a written invitation and a written acceptance. Silence for thirty days could be treated as a rejection.
2. A neutral without power to decide. The conciliator assists; he does not adjudicate, and nothing he proposes binds until the parties sign.
3. An interventionist neutral. Section 67(4) permitted proposals for settlement at any stage. This is the feature that separated conciliation from mediation as those terms were used in Indian law.
4. Freedom from procedure. Section 66 freed the conciliator from the Code of Civil Procedure, 1908 and from the law of evidence; Section 69 allowed him to meet the parties jointly or separately.
5. Protected communication. Sections 75, 77, 80 and 81 made what was said confidential and inadmissible, barred parallel proceedings and kept the conciliator out of any later arbitration or litigation.
6. An enforceable outcome. By Section 74 the settlement agreement had the same status and effect as an arbitral award on agreed terms under Section 30, and was therefore enforceable under Section 36 as a decree.

3. Nature of the Process

Conciliation is consensual in origin and non-adjudicatory in operation, which places it alongside negotiation and mediation and away from arbitration. Within that family it sits at the evaluative end: the neutral is expected to have regard to the rights and obligations of the parties, the usages of the trade and their previous dealings, and to say what he thinks a reasonable settlement looks like. The process is private, flexible, and directed at an outcome the parties can live with rather than at a determination of who is right. Its weakness is the weakness of every consensual process: it produces nothing if either party withholds agreement, and it depends on both sides wanting a resolution.

Conciliation placed between mediation and arbitration on the points that matter

4. Scope

Section 61 applied Part III to the conciliation of disputes arising out of a legal relationship, whether contractual or not, and to all proceedings relating thereto, save as otherwise provided by law or agreed by the parties, and excluded disputes which by virtue of any law could not be submitted to conciliation. The limits are the same as those on arbitrability: a dispute the law reserves to a court or a statutory tribunal cannot be turned into a settlement carrying the force of an award, however the parties describe the process.

Beyond the general law, conciliation was and remains built into a number of statutes, and those references are now to be read as references to mediation under the Mediation Act, 2023.

5. Conciliation and Arbitration

6. Conciliation and Mediation

In classical usage the difference lay in the activity of the neutral. A mediator confined himself to managing the process and facilitating the parties' own negotiation; a conciliator could formulate a solution and put it to them. Three qualifications were always attached to that distinction. International usage employed the two words interchangeably, and the UNCITRAL instruments treated them as one. Indian practice in court-annexed centres was facilitative even where the statute said conciliation. And the distinction described a spectrum of technique rather than two separate processes, since an evaluative mediator and a restrained conciliator behave identically.

7. Assessment

The strength of conciliation as Part III designed it was the combination of an interventionist neutral with an enforceable outcome. A party unwilling to move often will move when a respected neutral says what he thinks the case is worth, and Section 74 ensured that the resulting settlement did not have to be sued upon. Its weaknesses were the absence of any time limit, the absence of any regulator or standard for conciliators, and the fact that a process requiring a written invitation and a written acceptance was easy for an unwilling party to avoid. The Mediation Act, 2023 addresses each of these, which is the practical justification for absorbing conciliation into mediation rather than maintaining two regimes.

8. Related Topics and Provisions