Conciliation is a non-adjudicatory dispute resolution process in which a neutral conciliator assists the parties in reaching a mutually acceptable settlement, with the power to propose terms of settlement and make recommendations for resolving the dispute. Under Indian law, conciliation is governed by Part III (Sections 61-81) of the Arbitration and Conciliation Act, 1996, and applies to disputes arising out of any legal relationship, whether contractual or not.
Legal definition
Section 61 of the Arbitration and Conciliation Act, 1996 defines the scope of conciliation:
Section 61 — Application and scope: 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.
Section 67 prescribes the role of the conciliator:
Section 67(1): The conciliator shall assist the parties in an independent and impartial manner in their attempt to reach an amicable settlement of their dispute.
Section 67(4): The conciliator may, at any stage of the conciliation proceedings, make proposals for a settlement of the dispute.
Section 73 provides that when the parties reach a settlement:
Section 73(3): 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.
How courts have interpreted this term
Haresh Dayaram Thakur v. State of Maharashtra [(2000) 6 SCC 179]
The Supreme Court observed that conciliation is a distinct process from arbitration. While an arbitrator adjudicates the dispute and imposes a binding award, a conciliator facilitates settlement by proposing solutions and helping the parties negotiate. The conciliator has no power to impose a decision; the settlement must be consensual.
Mysore Cements Ltd. v. Svedala Barmac Ltd. [(2003) 10 SCC 375]
The Supreme Court held that a settlement agreement reached through conciliation under Section 73 has the same status and effect as an arbitral award under Section 30 of the Act. This means it is final, binding, and enforceable as a decree of the court under Section 36.
Types of conciliation
- Voluntary conciliation (Part III): Initiated by a written invitation from one party to the other under Section 62. The other party is free to accept or reject the invitation. The process is entirely consensual and can be terminated by either party at any time.
- Court-referred conciliation: Under Section 89 CPC, a court may refer a dispute to conciliation if it identifies elements of settlement. The parties are referred to a conciliator, but the process remains voluntary — no settlement can be imposed.
- Labour conciliation: Under the Industrial Disputes Act, 1947, conciliation by government-appointed Conciliation Officers is a mandatory first step before most industrial disputes can be referred to adjudication.
Why this matters
Conciliation occupies a middle ground between mediation and arbitration. Unlike a mediator, a conciliator can propose specific settlement terms and make recommendations. Unlike an arbitrator, a conciliator cannot impose a binding decision. This makes conciliation particularly suitable for disputes where the parties need assistance not just in communicating but in evaluating their positions and considering creative solutions.
For practitioners, the most significant feature of conciliation under Part III is the enforceability of the settlement agreement. Under Section 73(3), a conciliation settlement has the same status as an arbitral award on agreed terms — it is final, binding, and enforceable as a decree. This gives conciliation an enforcement mechanism that private negotiation lacks.
A practical advantage of conciliation over litigation is confidentiality. Section 75 provides that the conciliator and the parties must keep confidential all matters relating to the conciliation proceedings, including the settlement agreement (unless disclosure is necessary for implementation or enforcement). This is particularly valuable in commercial disputes where the parties wish to preserve their business relationship and reputation.
Related terms
Alternative dispute resolution:
Opposite:
Frequently asked questions
What is the difference between conciliation and mediation?
The primary difference lies in the role of the neutral third party. In mediation, the mediator facilitates communication but does not propose solutions. In conciliation under Part III of the Arbitration Act, the conciliator can actively propose terms of settlement and make recommendations. In practice, however, the line between mediation and conciliation is increasingly blurred, and the Mediation Act, 2023 includes conciliation within its definition of mediation.
Is a conciliation settlement enforceable?
Yes. Under Section 73(3) of the Arbitration and Conciliation Act, 1996, a settlement agreement reached through conciliation has the same status and effect as an arbitral award on agreed terms under Section 30, and is enforceable as a decree of the court under Section 36.
Can conciliation be initiated without an agreement?
Yes. Unlike arbitration, which requires a pre-existing arbitration agreement, conciliation under Part III can be initiated by a unilateral invitation from one party under Section 62. However, the other party must accept the invitation for conciliation to proceed — the process cannot be compelled.
This entry is part of the Veritect Indian Legal Glossary, a comprehensive reference of Indian legal terminology grounded in statutory text and judicial interpretation.
Last updated: 2026-03-27. Veritect provides this content for informational purposes and does not constitute legal advice.