Executive Summary
Part III of the Arbitration and Conciliation Act, 1996 governs conciliation, though largely superseded by the Mediation Act 2023:
- Part III (Sections 61-81): Conciliation framework
- Based on UNCITRAL Model Law: International best practices
- Conciliator role: Active role in proposing settlement terms
- Confidentiality: Conciliation communications privileged
- Settlement enforceability: Conciliation settlement has status of arbitral award (Section 74)
- Largely dormant: Rarely used in practice; Mediation Act 2023 now preferred
- Distinction from mediation: Conciliator proposes terms; mediator only facilitates
This guide examines the conciliation procedure, its unique features, and current relevance.
1. Statutory Framework - Part III
Sections 61-81
| Provision | Content |
|---|---|
| Section 61 | Scope of application |
| Section 62 | Commencement of conciliation |
| Section 64 | Appointment of conciliators |
| Section 67 | Conduct of conciliation |
| Section 73 | Termination of conciliation |
| Section 74 | Settlement agreement status |
| Section 75 | Confidentiality |
| Section 81 | Admissibility of evidence |
2. Conciliation vs. Mediation
Key Differences
| Feature | Conciliation (Part III) | Mediation (Mediation Act 2023) |
|---|---|---|
| Role of neutral | Proposes settlement terms | Facilitates, does not propose |
| Active vs. facilitative | Active | Facilitative |
| Legal framework | Part III (dormant) | Mediation Act 2023 (active) |
| Usage | Rare | Increasingly common |
| Settlement status | Status of arbitral award (Section 74) | Enforceable as decree (Section 23) |
3. Commencement - Section 62
Initiating Conciliation
Section 62: Party seeking conciliation sends written invitation to other party.
| Step | Action |
|---|---|
| Invitation sent | Party proposes conciliation |
| Acceptance | Other party accepts (conciliation commences) |
| Rejection | Other party rejects (no conciliation) |
| No response | Deemed rejected after 30 days |
4. Appointment of Conciliators - Section 64
Number of Conciliators
| Option | Application |
|---|---|
| Sole conciliator | Parties jointly appoint one conciliator |
| Three conciliators | Each party appoints one; two conciliators appoint third |
Appointment Procedure
| Method | Process |
|---|---|
| Party agreement | Parties agree on conciliator(s) |
| Institution | Refer to conciliation institution |
| No agreement | Conciliation cannot proceed (no Section 11 equivalent) |
5. Conduct of Conciliation - Section 67
Conciliator's Role
| Function | Description |
|---|---|
| Assist parties | Help parties resolve dispute amicably |
| Propose settlement | Suggest settlement terms |
| Flexible procedure | Not bound by strict procedural rules |
| Communication | May meet parties jointly or separately |
Section 67(3) - Conciliator May Propose
"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."
6. Settlement Agreement - Section 73
When Settlement Reached
| Step | Action |
|---|---|
| Parties agree on terms | Settlement reached |
| Reduced to writing | Settlement drafted |
| Signed by parties | Parties sign |
| Signed by conciliator | Conciliator signs and dates |
Section 73(3) - Binding Settlement
"A settlement agreement signed by the parties is final and binding."
7. Status of Settlement - Section 74
Section 74 - Arbitral Award Status
"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."
| Effect | Application |
|---|---|
| Enforceable as award | Settlement has status of Section 30 consent award |
| Section 36 enforcement | Enforceable as decree under CPC |
| Challenge limitations | Cannot be challenged on merits (limited grounds like consent awards) |
8. Confidentiality - Section 75
Section 75 - Conciliation Confidential
"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."
| Protection | Application |
|---|---|
| Confidential information | Cannot be disclosed |
| Not admissible | Section 81 - Evidence in conciliation inadmissible in arbitral/judicial proceedings |
| Conciliator as witness | Conciliator cannot be called as witness |
9. Termination of Conciliation - Section 76
Grounds for Termination
| Ground | Effect |
|---|---|
| Settlement agreement signed | Conciliation successfully concludes |
| Conciliator declares termination | Conciliator determines further efforts futile |
| Party withdraws | Party notifies withdrawal |
| No settlement within reasonable time | Conciliator or party terminates |
10. Admissibility of Evidence - Section 81
Section 81 - Inadmissibility
"The parties shall not rely on or introduce as evidence in arbitral or judicial proceedings:
- (a) Views expressed or statements or admissions made by a party in the conciliation;
- (b) Proposals made by the conciliator;
- (c) The fact that a party indicated willingness to accept a proposal.
| Protection | Rationale |
|---|---|
| Encourage candor | Parties speak freely without fear of statements being used against them |
| Without prejudice | Conciliation communications are "without prejudice" |
11. Current Status: Part III vs. Mediation Act 2023
Why Part III Rarely Used
| Reason | Explanation |
|---|---|
| No institutional framework | Unlike Arbitration (DIAC, MCIA), no established conciliation institutions |
| Awareness low | Practitioners unfamiliar with conciliation procedure |
| Mediation preferred | Mediation (facilitative) preferred over conciliation (active proposal) |
| Mediation Act 2023 | New comprehensive mediation framework makes Part III redundant |
Impact of Mediation Act 2023
| Aspect | Effect on Part III |
|---|---|
| Overlap | Mediation Act covers similar ground |
| Preference | Mediation Act preferred for new disputes |
| Part III status | Remains in force but dormant |
| No repeal | Part III not repealed; parties can still use if they choose |
12. Comparison: Conciliation (Part III) vs. Section 30 (Consent Award)
Settlement Mechanisms
| Mechanism | Process | Enforceability |
|---|---|---|
| Conciliation settlement (Section 74) | Conciliator assists; parties settle; conciliator signs | Status of arbitral award (Section 30) |
| Consent award (Section 30) | Tribunal records party settlement as award | Enforceable as decree (Section 36) |
| Mediation settlement (Mediation Act Section 23) | Mediator facilitates; parties settle | Enforceable as decree |
Practical equivalence: Section 74 conciliation settlement = Section 30 consent award.
13. International Conciliation
UNCITRAL Model Law on Conciliation
Part III based on UNCITRAL Model Law on International Commercial Conciliation (2002).
| Feature | UNCITRAL Model | Part III |
|---|---|---|
| Scope | International commercial conciliation | All conciliation |
| Confidentiality | Strong protections | Section 75 |
| Settlement enforceability | National law determines | Section 74 - arbitral award status |
| Admissibility | Inadmissible in later proceedings | Section 81 |
14. Practical Guidance
When to Use Conciliation (Part III)
| Situation | Suitability |
|---|---|
| Existing conciliation clause | If contract provides for Part III conciliation |
| International dispute | If parties prefer UNCITRAL framework |
| Active proposal needed | If parties want conciliator to propose terms (not just facilitate) |
When to Use Mediation (Mediation Act 2023)
| Situation | Suitability |
|---|---|
| New disputes (post-2023) | Mediation Act provides comprehensive framework |
| Institutional mediation | Mediation Council, service providers |
| Pre-litigation | Section 4 pre-litigation mediation |
| Facilitative approach | Parties prefer mediator facilitating, not proposing |
15. Compliance Checklist
For Conciliation Under Part III
- Check conciliation clause: Does contract provide for conciliation?
- Send invitation: Written invitation under Section 62
- Await acceptance: 30 days for response
- Appoint conciliator(s): Jointly appoint sole or three conciliators
- Participate in proceedings: Submit to conciliation process
- Consider proposals: Conciliator may propose settlement terms
- Document settlement: Written settlement, signed by parties and conciliator
- Enforce under Section 74: Settlement has status of arbitral award
- Maintain confidentiality: Section 75 obligations
16. Key Takeaways for Practitioners
Part III Dormant: Conciliation under Part III rarely used in practice; largely superseded by Mediation Act 2023.
Conciliator Proposes Terms: Key distinction from mediation; conciliator actively proposes settlement.
Settlement = Arbitral Award: Section 74 gives conciliation settlement status of arbitral award (enforceable under Section 36).
Confidentiality Protected: Section 75 and 81 ensure conciliation communications confidential and inadmissible in later proceedings.
No Institutional Framework: Unlike arbitration or mediation, conciliation lacks robust institutional infrastructure in India.
Mediation Act Preferred: For new disputes, Mediation Act 2023 provides more comprehensive and modern framework.
Historical Significance: Part III important for existing conciliation clauses and international disputes under UNCITRAL framework.
Conclusion
Part III of the Arbitration and Conciliation Act, 1996 provides a structured conciliation framework based on the UNCITRAL Model Law. While conceptually sound, conciliation has seen limited use in India due to lack of institutional infrastructure and practitioner awareness. The distinguishing feature—conciliator actively proposing settlement terms—differentiates it from facilitative mediation. With the enactment of the Mediation Act 2023, Part III conciliation is largely eclipsed, though it remains available for parties with existing conciliation clauses or those preferring the UNCITRAL framework. The enforceability of conciliation settlements under Section 74 (arbitral award status) remains a valuable feature for parties seeking amicable resolution.