APPOINTMENT AND TERMINATION OF

CONCILIATOR

INTRODUCTION

APPLICATION AND SCOPE – SECTION 61

NUMBER AND QUALIFICATIONS OF CONCILIATORS-

SECTION 63

APPOINTMENT OF CONCILIATOR- SECTION 64

PRINCIPLES OF PROCEDURE

PROCEDURE OF CONCILIATION

SETTLEMENT

TERMINATION OF CONCILIATOR- SECTION 76

CONCLUSION
INTRODUCTION
Part 3rd of the Act deals with conciliation. Conciliation means the settling of disputes
without litigation. Conciliation is a process by which discussion between parties is kept
going through the participation of a conciliator. The main difference between arbitration and
conciliation is that in arbitration proceedings the award is the decision of the Arbitral
Tribunal while in the case of conciliation the decision is that of parties arrived at with the
assistance of the conciliator.

The law relating to conciliation has been codified for the first time in India on the pattern of
UNCITRAL Conciliation Rules.

APPLICATION AND SCOPE - SECTION 61

1. This part shall apply to conciliation of disputes arising out of legal relationship,
whether contractual or not and to all proceedings.
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.
Section 61 points out that the process of conciliation extends, in the first place, to disputes,
whether contractual or not. But the disputes must arise out of legal relationship. It means that
the dispute must be such as to give one party the right to sue and other party the liability to be
sued. The process of conciliation extends, in the second place, to all proceedings relating to
it. But Part 3rd of the Act does not apply to such disputes as cannot be submitted to
conciliation by virtue of any law for the time being in force.

NUMBER AND QUALIFICATYON OF CONCILIATOR -

SECTION 63
Section 63 fixes the number of conciliators. There shall be one conciliator. But the parties
may by their agreement provide for two or three conciliators. Where the number of
conciliators is more than one, they should as a general rule act jointly1.

1
LACHOOMAL V. RADHEY SHYAM AIR 1971 SC 2213
APPOINTMENT OF CONCILIATOR – SECTION 64
If there is one conciliator in a conciliation proceeding, the parties may agree on the name of a
sole conciliator.
1. If there are two conciliators in a conciliation proceeding, each party may appoint one
conciliator.
2. If there are three conciliators in a conciliation proceeding, 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.
Sub- section (2) of section 64 provides for the assistance of a suitable institution or person in
the appointment of conciliators. Either a party may request such institution or person to
recommend the names of suitable individuals to act as conciliators, or the parties may agree
that the appointment of one or more conciliators be made directly by such institution or
person.
Once the number of conciliators and the method of their appointment have been determined,
the conciliator(s) may be appointed. If the parties are unable to appoint all members of the
Commission pursuant to the established method of appointment, the ICSID default
mechanism may apply.2

Parties are not required to select conciliators from the ICSID Panel of Conciliators, although
they are welcome to do so.

The Convention sets forth certain requirements regarding the qualifications of appointees to
ICSID conciliation Commissions, but the parties are otherwise free to choose whomever they
wish.

Requirements for Appointees

All ICSID conciliators must be persons:

 of high moral character;
 of recognized competence in the fields of law, commerce, industry or finance; and
 who may be relied upon to exercise independent judgment (Article 14(1) and Article
31(2) of the Convention).
There is no nationality requirement in conciliation cases.

Additional Considerations for Selecting Conciliators

In addition to the requirements established by the Convention, there are several practical
2
Fakirchand V Bancilal AIR 1955 Hyd 28FB
considerations that parties should reflect upon when selecting a conciliator. Although these
may vary depending on the specific characteristics and demands of each case, the following
factors are generally among the most important:

 Knowledge of the relevant law(s)

 Absence of conflict of interest
 Experience as a conciliator
 Language proficiency
 Availability of conciliator / manageability of current caseload
 Timeliness
 Cohesiveness of the Commission
 Other areas of expertise

Appointing a Conciliator

The parties should provide ICSID with the following information in respect of a conciliator
appointment:

 complete name;
 contact information (i.e., mailing address, telephone and fax numbers, email); and
 a current curriculum vitae.
Once a conciliator is appointed, ICSID seeks the appointee’s acceptance of the nomination.
The Secretary-General then notifies the parties of the appointee’s acceptance or refusal.

If a conciliator refuses or fails to accept the appointment within 15 days, ICSID will invite
the appointing party to nominate another conciliator.

Default Mechanism for Appointing a Conciliator

If the parties are unable to appoint all members of the Commission within 90 days of the
registration of the request for conciliation, either party may request that the Chairman of the
ICSID Administrative Council appoint the conciliator(s) not yet appointed (Article 30 of the
ICSID Convention).

When a party makes such a request in respect of the Sole Conciliator or President of the
Commission, ICSID first conducts a ballot procedure:
 ICSID provides the parties with a ballot form containing the names of several
candidates, who may or may not be members of the ICSID Panel of Conciliators.
 Each party is given a short time limit to return its completed ballot form, indicating
the candidates it accepts or rejects.
 A party is not required to share its ballot with the other party.
 If the parties agree on a candidate from the ballot, that person will be deemed to have
been appointed by agreement of the parties.
  If the parties agree on more than one proposed candidate, ICSID selects one of them
and informs the parties of the selection.
A successful ballot is considered an appointment by agreement of the parties under the
established method of constituting the Commission.

If there is no agreement by the parties, ICSID names a person from the Panel of Conciliators,
pursuant to Article 30 of the Convention. Before the person is appointed, the parties are given
the opportunity to raise any circumstance showing that the person lacks the required qualities
under the ICSID Convention (Article 14(1) of the Convention).

Until the process is completed, the parties may appoint conciliators under the established
method of constitution or by agreement.

The Centre endeavours to complete the appointment process within 30 days of the request for
appointment.
PRINCIPLES OF PROCEDURE
1. Independence and impartiality Sec 67(1)
The conciliator should be independent and impartial. He should assist the parties in an
independent and impartial manner while he is attempting to reach an amicable settlement of
their dispute.

2. Fairness and justice Sec 67(2)

The conciliator should be guided by principles of objectivity, fairness and justice. He should
take into consideration, 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. Confidentiality Sec 75, 70, proviso

The conciliator and the parties are duly bound to keep confidential all matters relating to the
conciliation proceedings. Similarly, when a party gives an information to the conciliator on
the condition that it be kept confidential, the conciliator should not disclose that information
to the other party. (Sec 70, proviso)

4. Disclosure of information Sec 70

When the conciliator receives an information about any fact relating to the dispute from a
party, he should disclose the substance of that information to the other party. The purpose of
this provision is to enable the other party to present an explanation which he might consider
appropriate.

5. Cooperation of parties with conciliator Sec 71

The parties should in good faith cooperate with the conciliator. They should submit the
written materials, provide evidence and attend meetings when the conciliator requests them
for this purpose.

6. Rules of procedure Sec 66

The conciliator is not bound by the rules contained in the Code of Civil Procedure, 1908 or
the Indian Evidence Act, 1872. Though the conciliator is not bound by the technical rules of
procedure, he should not ignore the principles of natural justice.
7. Place of meeting Sec 69(2)
The parties have freedom to fix by their agreement the place where meetings with the
conciliator are to be held. Where there is no such agreement, the place of meeting will be
fixed by the conciliator after consultation with the parties. In doing so the circumstances of
the conciliation proceedings will have to be considered.
8. Communication between conciliator and parties - Sec 69(1)
The conciliator may invite the parties to meet him or may communicate with them orally or
in writing. He may do so with the parties together or with each of them separately.
Salem Bar Association v. Union of India, the Supreme Court has directed the constitution
of a committee to frame draft rules for mediation under S. 89(2)(d) of the CPC.
Consequently, the Committee presided over by Mr Justice M. Jagannadha Rao, Chairman of
the Law Commission of India has prepared a comprehensive code for the regulation of ADR
process initiated under S 89 of CPC. which consists of two parts---Part I: ADR Rules 2003
consisting of “the procedure to be followed by the parties and the Court in the matter of
choosing the particular method of ADR” and Part II: Mediation Rules, 2003 consisting of
“draft rules of mediation under section 89(2)(d) of the Code of Civil Procedure”. It is
interesting to note that Rule 2(b), proviso clearly states that the Court in the exercize of its
powers under S.89(1)(a) to (d) read with Rule 1A of Order X “shall not refer any dispute to
arbitration etc without the written consent of all the parties to the suit" and Rule 4 calls this
the exercize of the option by the parties. But, under Rule 5 (f) and (g), the Court is given the
power to refer the parties under certain circumstances to ADR methods even if all the parties
do not agree. This is in consonance with the letter and spirit of S. 89 of CPC. Rule 4 also
requires the Court to do a sort of counseling in enabling the parties to choose the correct
method of ADR depending on the nature of the case and the relationship between the parties
that needs to be preserved. Rule 4(iv) may be reformulated to say ”where parties are
interested in reaching a compromise which might lead to the final settlement”. Unlike the
1996 Act, Rule 4 gives a workable definition of the terms arbitration, conciliation, mediation
and judicial settlement. Under Rule 6(2), if the ADR methods fail and the case is referred
back to the Court, the Court shall proceed with the case in accordance with law. A welcome
feature of these Rules is that they provide for a detailed scheme for the conduct of training
courses in ADR methods for lawyers and judicial officers under the auspices of the High
Courts and the District Courts, and the preparation of a detailed manual of procedure for
ADR. The manual will describe various methods of ADR, the choice of a particular method,
the suitability of a method for any particular type of dispute etc. The Manual shall
particularly deal with the role of conciliators and mediators in disputes which are commercial
or domestic in nature or which relate to matrimonial, maintenance and child custody cases.
With a view to enhancing awareness of ADR procedures and for imparting training in them,
the Rules provide for the conduct of seminars and workshops periodically (Rule 7). Thus
these provisions prepared a blueprint for the building up of a body of trained professionals
who are sensitized to efficiently handle cases in future, as that task requires specialized
training and expertise of a high order.
PROCEDURE OF CONCILIATION
1. Commencement of conciliation proceedings Section 62
The conciliation proceedings are initiated by one party sending a written invitation to the
other party to conciliate. The invitation should identify the subject of the dispute.
Conciliation proceedings are commenced when the other party accepts the invitation to
conciliate in writing. If the other party rejects the invitation, there will be no conciliation
proceedings. If the party inviting conciliation does not receive a reply within 30 days from
the date he sends the invitation, he may elect to treat this as rejection of the invitation to
conciliate. If he so elects he should inform the other party in writing.

2. Submission of statements to conciliator Section 65

The conciliator may request each party to submit to him a brief written statement. The
statement should describe the general nature of the dispute and the points at issue. Each party
should send a copy of such statement to the other party. The conciliator may require each
party to submit to him a written statement of his position and the facts and grounds in its
support. It may be supplemented by appropriate documents and evidence. The party should
send a copy of such statements, documents and evidence to the other party.

3. Conduct of conciliation proceedings Section 69(1), 67(3)

The conciliator may invite the parties to meet him. He may communicate with the parties
orally or in writing. He may meet or communicate with the parties together or separately.
(Sec 69(1))

In the conduct of conciliation proceedings, the conciliator has some freedom. He may
conduct them in such manner as he may consider appropriate. But he should take into account
the circumstances of the case, the express wishes of the parties, a party’s request to be
heard orally and the need of speedy settlement of dispute. (Sec 67(3))

4. Administrative assistance Section 68

Section 68 facilitates administrative assistance for the conduct of conciliation proceedings.
The parties and the conciliator may seek administrative assistance by a suitable institution or
the person with the consent of the parties.
SETTLEMENT
1. Settlement of dispute Sec 67(4), 72, 73
The role of the conciliator is to assist the parties to reach an amicable settlement of the
dispute. He may at any stage of the conciliation proceedings make proposals for the
settlement of the dispute. Such proposals need not be in writing and need not be accompanied
by a statement of reasons. (Sec. 67(4)) Each party may, on his own initiative or at the
invitation of the conciliator, submit to the conciliator the suggestions for the settlement of the
dispute. (Sec. 72)

When it appears to the conciliator that there exist elements of a settlement likely to be
accepted by 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. (Sec 73(1)) If the parties reach agreement on the settlement of a dispute, a
written settlement agreement will be drawn up and signed by the parties.

If the parties request, the conciliator draw up or assist the parties in drawing up the settlement
agreements. (Sec 73(2)) When the parties have signed the settlement agreement, it becomes
final and binding on the parties and persons claiming under them. (Sec 73(3)) The conciliator
shall authenticate the settlement agreement and furnish its copy to each of the parties. (Sec
73(4)

2. Status and effect of settlement agreement Sec 74

Section 74 provides that the settlement agreement shall have the same status and effect as an
arbitral award on agreed terms under Section 30. This means that it shall be treated as a
decree of the court and shall be enforceable.

Restrictions on Role of Conciliator Section 80

Section 80 places two restrictions on the role of the conciliator in the conduct of conciliation
proceedings:
1. Clause (a) of Section 80 prohibits the conciliator to act as an arbitrator or as a
representative or counsel of a party in any arbitral or judicial proceeding in respect of
a dispute which is subject of the conciliation proceedings.
 2. Clause (b) of Section 80 prohibits the parties to produce the conciliator as a witness in
any arbitral or judicial proceedings.

TERMINATION OF CONCILIATION PROCEEDINGS -

SECTION 76
Section 76 lays down four ways of the termination of conciliation proceedings. These are:
1. The conciliation proceedings terminate with the signing of the settlement agreement
by the parties. Here the date of termination of conciliation proceedings is the date of
the settlement agreement. (Sec 76(a))
2. The conciliation proceedings stand terminated when the conciliator declares in writing
that further efforts at conciliation are no longer justified. Here the date of termination
of conciliation proceedings is the date of the declaration. (Sec 76(b))
3. The conciliation proceedings are terminated by written declaration of the parties
addressed to the conciliator to the effect that the conciliation proceedings are
terminated. Here the date of termination of conciliation proceedings is the date of the
declaration. (Sec 76(c))
4. The conciliation proceedings are terminated when a party declares in writing to the
other party and the conciliator, that the conciliation proceedings are terminated. Here
the date of termination of conciliation proceedings is the date of the declaration. (Sec
76(d))

Resort To Arbitral or Judicial Proceedings Sec 77

As a general rule, the parties cannot initiate arbitral or judicial proceedings during the
conciliation proceedings in respect of a dispute which is the subject matter of the conciliation
proceedings. But in exceptional cases a party may initiate arbitral or judicial proceedings if in
his opinion such proceedings are necessary for preserving his rights.

Costs Sec 78
Costs means reasonable costs relating to the following:
1. The fee and expenses of the conciliator and witness requested by the conciliator with
the consent of the parties
2. Any expert advice requested by the conciliator with the consent of the parties
3. Any assistance provided to sec 64(2)(b) and sec 68
 4. Any other expenses incurred in connection with the conciliation proceedings and the
settlement agreement. (Sec 78(2))
It is the conciliator who fixes the costs of the conciliation proceedings upon their termination
and gives written notice of it to the parties. (Sec78 (1)) The costs are borne by the parties in
equal shares. (Sec 78(3))

Deposits Sec 79
The conciliator may estimate the costs likely to be incurred and direct each party to deposit it
in advance in an equal amount. During the conciliation proceedings, the conciliator may
demand supplementary deposits from each party. If the require deposits are not paid in full by
both parties within 30 days, the conciliator may either suspend the proceedings or terminate
the proceedings by making a written declaration to the parties.

The termination of proceedings become effective from the date of declaration. Upon
termination of the proceedings, the conciliator shall render to the parties accounts of deposits
received and return the unexpected balance to the parties.
Article 11. Termination of conciliation proceedings
61
The conciliation proceedings are terminated:
62
(a) By the conclusion of a settlement agreement by the parties, on the date of the agreement;
63
(b) By a 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;
64
(c) By a declaration of the parties addressed to the conciliator to the effect that the
conciliation proceedings are terminated, on the date of the declaration; or
65
(d) By a declaration of a party to th e other party or parties and the conciliator, if appointed,
to the effect that the conciliation proceedings are terminated, on the date of the declaration.
This the article which defines about the termination of conciliator in international disputes.
this article was clearly defined in UNCITRAL Model Law On International Commercial
Conciliation (2002).
CASE LAWS RELATING TO CONCILIATION
PROCEEDINGS
1. Haresh Dayaram Thakur v. State of Maharashtra and Ors. AIR 2000 SC 22813
While dealing with the provisions of Sections 73 and 74 of the Arbitration and
Conciliation Act of 1996 in paragraph 19 of the judgment as expressed thus the court
held that-
From the statutory provisions noted above the position is manifest that 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 untrammelled by the procedural law 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 their 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 a settlement and make it over to the parties
for their observations; and the ultimate step to be taken by a conciliator is to draw up
a settlement in the light of the observations made by the parties 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 and affix their signatures to it. Under Sub-
section (3) of Section 73 the settlement agreement signed by the parties is final and
binding on the parties and persons claiming under them.

It follows therefore that a successful conciliation proceedings comes to 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
Section 74.
2. Mysore Cements Ltd. V. Svedala Barmac Ltd. AIR 2003 SC 34934
It was said that Section 73 of the Act speaks of Settlement Agreement. Sub-section
(1) says that when it appears to the Conciliator that there exist elements of 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 observation. After receiving the
observations of the parties, the Conciliator may reformulates the terms of a possible
settlement in the light of such observations.

In the present case, we do not find there any such formulation and reformulation by
3
AIR 2000 SC 2281
4
AIR 2003 SC 3493
 the Conciliator, under Sub- section (2), if the parties reach a settlement agreement of
the dispute on the possible terms of settlement formulated, they may draw up and sign
a written settlement agreement. As per Sub-section
3. When the parties sign the Settlement Agreement, it shall be final and binding on the
parties and persons claiming under them respectively. Under Sub-section (4), the
Conciliator shall authenticate the Settlement Agreement and furnish a copy thereof to
each of the parties. From the undisputed facts and looking to the records, it is clear
that all the requirements of Section 73 are not complied with.
4. . In Guru Nanak Foundation V. Rattan Singh & Sons,5 it was observed:
“Interminable, time consuming, complex and expensive court procedures impelled
jurists to search for an alternative forum, less formal more effective and speedy for
resolution of disputes avoiding procedural claptrap and this led to Arbitration Act,
1940. However, the way in which the proceedings under the Act are conducted and
without an exception challenged in the courts has made lawyers laugh and legal
philosophers weep. Experience shows and law reports bear ample testimony that the
proceedings under the Act have become highly technical accompanied by unending
prolixity at every stage providing a legal trap to the unwary. Informal forum chosen
by the parties for expeditious disposal of their disputes has by the decisions of the
court been clothed with” legalese‟ of unforeseeable complexity.” Broadly speaking,
there are at least three advantages if the parties are able to reasonable settlement of
their disputes through conciliation, viz. 1) Quickness. The parties can devote their
time and energy for better and useful work. 2) Economic. Instead of spending hard
earned money on litigation, one can invest it for better dividends. 3) Social. The
parties go happily to their respective places and stand relieved from bickering, enmity,
which in certain cases might have lingered on for generations.

5
AIR 1981 SC 2075
CONCLUSION
 The process of conciliation as an alternate dispute redressal mechanism is advantageous to
the parties in the sense that it is cost effective and expeditious, it is simple, fast and
convenient then the lengthy litigation procedure and it eliminates any scope of biasness and
corruption.

The parties who wish to settle their disputes they can be provided great intensive by the
process of conciliation. In order to enable the conciliator to play his role effectively ,the
parties should be brought together face to face at a common place where they can interact
face to face and with the conciliator, separately or together without any distraction and with
only a single aim to sincerely arrive at the settlement of the dispute.

Conciliation is a boon and it is a better procedure to settle any dispute as in this process it is
the parties who by themselves only come to the settlement of the dispute and the role of the
conciliator is to bring parties together and to make an atmosphere where parties can
themselves resolve their disputes. Conciliation tries to individualize the optimal solution and
direct parties towards a satisfactory common agreement.

In conciliation, the conciliator plays a relatively direct role in the actual resolution of a
dispute and even advises the parties on certain solutions by making proposals for settlement.
 BIBLIOGRAPHY AND WEBLIOGRAPHY
BIBLIOGRAPHY
ALTERNATIVE DISPUTE RESOLUTION SYSTEM – DR. S.C. TRIPATHI
LAW RELATING TO ARBITRATION AND CONCILIATION IN INDIA
- DR.N.V.PARANJAPE
LAW OF ARBITRATION AND CONCILIATION - AVATAR SINGH
WEBLIOGRAPHY
WWW.IBCLAW.IN
WWW.ADVOCATEKHOJ.COM
WWW.JUS.UIO.NO