Conciliation under Part III: Sections 61 to 81

Part III of the Arbitration and Conciliation Act, 1996 contained a complete statutory code of conciliation, drawn from the UNCITRAL Conciliation Rules of 1980. It regulated how a conciliation begins, how the conciliator is appointed, how he must behave, what protection attaches to what is said, and what status the settlement has. Its distinctive feature was that the conciliator could formulate and propose terms of settlement, which is what separated him from a facilitative mediator. Section 61 of the Mediation Act, 2023, read with its Sixth Schedule, has substituted these provisions, so that a reference to conciliation is now read as a reference to mediation; the old learning survives for proceedings already begun and for the many statutes that still use the word.

1. Application and Scope: Section 61

Section 61 provided that Part III applied to conciliation of disputes arising out of a legal relationship, whether contractual or not, and to all proceedings relating thereto, save as otherwise provided by any law for the time being in force and unless the parties had otherwise agreed. It did not apply where by virtue of any law certain disputes could not be submitted to conciliation. Three points follow. The relationship need not be contractual. The Part was largely default law, so the parties could agree otherwise. And conciliability, like arbitrability, was governed by the general law: a dispute the law reserves to a court could not be conciliated into a binding settlement having the force of an award.

The sequence from the invitation to the settlement, with the governing section at each step

2. Commencement: Section 62

The scheme is consensual at both ends. There is no compulsion to accept an invitation, and silence for thirty days may be treated as a rejection, though the initiating party must then inform the other in writing. The date of acceptance matters, because it is the date on which the proceedings commence and from which the protections in Sections 75 to 81 begin to operate.

3. Number and Appointment: Sections 63 and 64

• Number. There is to be one conciliator unless the parties agree that there shall be two or three. Where there is more than one, they ought as a general rule to act jointly.
• Sole conciliator. The parties may agree on the name of a sole conciliator.
• Two conciliators. Each party may appoint one.
• Three conciliators. Each party may appoint one, and the parties may agree on the name of the third, who acts as the presiding conciliator.
• Institutional assistance. The parties may enlist the assistance of a suitable institution or person in connection with the appointment, and may request it to recommend names or to appoint directly. The institution must have regard to considerations likely to secure an independent and impartial conciliator and, in the case of a sole or third conciliator in an international conciliation, to the advisability of appointing a conciliator of a nationality other than those of the parties.

4. Conduct of the Proceedings: Sections 65 to 69

Section 65 permitted the conciliator to request each party to submit a brief written statement describing the general nature of the dispute and the points at issue, with a copy to the other party, and thereafter a further statement of facts and grounds with supporting documents and evidence; he could request further information at any stage. Section 66 provided that the conciliator is not bound by the Code of Civil Procedure, 1908 or the Indian Evidence Act, 1872, now the Bharatiya Sakshya Adhiniyam, 2023.

Sub-section (4) is the provision that distinguished conciliation from mediation as the two were then understood. A mediator facilitated the parties' own negotiation; a conciliator could put a solution on the table. The freedom is nevertheless bounded by sub-sections (1) and (2): the conciliator assists independently and impartially, and is guided by objectivity, fairness and justice, having regard to the rights and obligations of the parties. He is not an adjudicator, and his proposal binds nobody until it is accepted and signed.

Section 68 permitted the parties, or the conciliator with their consent, to arrange for administrative assistance by a suitable institution or person, in terms parallel to Section 6. Section 69 permitted the conciliator to invite the parties to meet him or to communicate with him orally or in writing, together or separately, and left the place of meeting to the agreement of the parties, failing which to the conciliator after consultation.

5. Information, Cooperation and Suggestions: Sections 70 to 72

Section 71 required the parties in good faith to cooperate with the conciliator and, in particular, to endeavour to comply with requests to submit written materials, provide evidence and attend meetings. Section 72 permitted each party, on his own initiative or at the invitation of the conciliator, to submit to him suggestions for the settlement of the dispute. Neither obligation was enforceable in the sense that a court would compel performance; the sanction for non-cooperation was that the conciliation would fail.

6. The Settlement Agreement: Sections 73 and 74

Section 74 provided that the settlement agreement shall have the same status and effect as if it is an arbitral award on agreed terms under Section 30. The consequence is that such a settlement was enforceable under Section 36 in the same manner as a decree of the court, without any suit and without any proceeding to convert it. This is what made conciliation under Part III more valuable than an ordinary compromise, which would have to be sued upon if broken.

7. The Protections: Sections 75, 77, 80 and 81

The four protections, and the position after the Mediation Act, 2023

1. Confidentiality, Section 75. Notwithstanding anything contained in any other law, the conciliator and the parties shall keep confidential all matters relating to the conciliation proceedings. Confidentiality extends also to the settlement agreement, except where its disclosure is necessary for purposes of implementation and enforcement.
2. No parallel proceedings, Section 77. 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, except that a party may initiate such proceedings where, in his opinion, they are necessary for preserving his rights.
3. The conciliator is kept out, Section 80. Unless otherwise agreed, 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, and shall not be presented by the parties as a witness in any such proceeding.
4. Inadmissibility, Section 81. The parties shall not rely on or introduce as evidence in arbitral or judicial proceedings, whether or not those proceedings relate to the dispute that is the subject of the conciliation, views expressed or suggestions made by the other party in respect of a possible settlement; admissions made by the other party in the course of the proceedings; proposals made by the conciliator; or the fact that the other party had indicated his willingness to accept a proposal for settlement made by the conciliator.

The four provisions are the statutory expression of the without prejudice principle. Their purpose is to make candour safe: a party who makes a concession in a conciliation that fails must not find it produced against him in the arbitration that follows. Section 80 adds a structural protection by preventing the conciliator from changing sides or becoming the decision maker, which is the objection that also besets med-arb.

8. Termination, Costs and Deposits: Sections 76 to 79

• Termination, Section 76. The proceedings terminate by the signing of the settlement agreement, on its date; by a written declaration of the conciliator, after consultation with the parties, that further efforts at conciliation are no longer justified, on the date of the declaration; by a written declaration of the parties addressed to the conciliator that the proceedings are terminated; or by a written declaration of a party to the other party and the conciliator to the same effect.
• Costs, Section 78. On termination the conciliator fixes the costs and gives written notice to the parties. Costs means reasonable costs relating to the fees and expenses of the conciliator and of witnesses, expert advice, assistance under Sections 64 and 68, and any other expenses incurred in connection with the proceedings and the settlement agreement. The costs are borne equally by the parties unless the settlement agreement provides otherwise, and all other expenses incurred by a party are borne by that party.
• Deposits, Section 79. The conciliator may direct each party to deposit an equal amount as an advance for the costs he expects to incur, and may direct supplementary deposits. Where the required deposits are not paid in full within thirty days, the conciliator may suspend the proceedings or make a written declaration of termination. On termination he renders an accounting and returns any unexpended balance.

9. Conciliation Compared

10. The Position Today

Section 61 of the Mediation Act, 2023, read with its Sixth Schedule, substitutes Sections 61 to 81 of the Arbitration and Conciliation Act, 1996 with two new sections. The new Section 61 provides that any provision in any other enactment providing for the resolution of disputes through conciliation in accordance with the 1996 Act shall be construed as a reference to mediation under the Mediation Act, 2023, and that conciliation as provided under the 1996 Act and under the Code of Civil Procedure, 1908 shall be construed as mediation within Section 3(h) of the Mediation Act. The new Section 62 provides that any conciliation proceeding initiated under Sections 61 to 81 as they stood before the commencement of the Mediation Act shall continue as such, as if that Act had not been enacted.

11. Related Topics and Provisions