Conciliation Rules

Rules applicable to Conciliation 

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 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 there 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 settlement and make it over to the parties for their observations; and the ultimate step to be taken by a conciliator is 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 affix their signatures to it. The settlement agreement signed by the parties is final and binding on the parties and persons claiming under them. On the basis of notes by the conciliator during the course of conciliation proceedings held separately and jointly with each of the parties to the dispute, and also on the basis of written statements and documentary evidence produced by the parties in support thereof, the conciliator shall reduce to writing the terms of the possible settlement, if he finds that there exists the possibility of a settlement which may be acceptable to both parties. The conciliator shall send the draft settlement to both the parties.

For their consideration and approval. If the parties make any observation on the draft settlement, the conciliator shall reformulate the draft settlements incorporating therein the observations made by the parties. If, after going through the reformulated draft settlement, the parties agree thereon, they shall convey the same to the conciliator, either orally or in writing, that they have no objection to the reformulated draft settlement. They will also make a formal request to the conciliator to either himself draw up the settlement agreement, or assist the parties in drawing up the same. It is not every agreement or arrangement between parties to the dispute arrived at in whatever manner or form during the pendency of the conciliation proceedings that automatically acquires the status of a settlement agreement so as to have the same status and effect as if it were an arbitral award for being enforced or as if it were a decree of the court. It is only that agreement which has been arrived at in conformity with the manner stipulated and form envisaged and got duly authenticated in accordance with this section, alone can be assigned the status of a settlement agreement within the meaning of and for effective purpose of the Act and not otherwise.

If the draft settlement agreement is agreed to the entire satisfaction of the parties, and thereafter they finally draw up the document and sign the same, the said document shall be final and binding, not only on the parties to the controversy, but also on the persons claiming under them. When the parties sign the settlement agreement, the conciliator shall authenticate the same as having been executed in his presence, as a result of their free volition and the conciliator shall hand over a copy of such authenticated settlement agreement to each of the parties and retain a copy thereof in his possession for future reference, if required the settlement agreement arrived at between the parties, and duly authenticated by the conciliator, shall not only be final and binding on the parties, but will have the same effect as if the settlement agreement is an arbitral award on agreed terms on the substance of the dispute rendered by a duly constituted arbitral tribunal under Section 30 of the Act, 1996.

A successful conciliation comes to an 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 this section. But if a conciliator, after holding some meetings with the parties and after having discussions with them, draws up the so-called settlement agreement by himself in secrecy and send the same to the court in a sealed cover (being without the signatures of the parties) cannot be given recognition of a settlement agreement. If a statue prescribes a procedure for doing a thing, that thing has to be done according to the prescribed procedure.

Number of conciliators can be one, or more than one. In case of more than one conciliator, it is necessary that they should all jointly, and in case of one conciliator, he should be independent & impartial and must be guided by principal of objectivity fairness & justices. He is also bound to keep confidential all matters relating to the conciliation from the other party. All the concerned evidence regarding the dispute be disclosed to the other party to enable them to present an appropriate explanation.

There is no specific procedure provided for making proposal for settlement. Conciliator may seek legal opinion from any solicitors firm or lawyer on any point, which involves complicated question of law. No arbitral or judicial proceeding can be initiated in respect of a dispute, which is subject matter of conciliation proceeding between the parties.

There are restrictions on admissibility of evidence in arbitral or judicial proceedings of the proposal & suggestion made by parties of the conciliation during conciliation proceedings If such restriction is not imposed the parties may not come forward with more acceptable proposals or suggestion due to the fear of being trapped in judicial proceeding with admission made earlier. If the parties enter into agreement contrary to these provisions the agreement shall be void.

However if such agreement is for mutual advantage of the parties & is not against Public Policy is valid. In this way generally the conciliation in India works.