ARBITRATION AND CONCILIATION ACT, 1996

QUESTION 2ND
• What do you mean by arbitration agreement? Explain its essentials. Is it

necessary that party should sign on it?

• ARBITRATION
Arbitration is like a court procedure because the parties submit evidence similar to a trial where
the third party hear the entire situation and give his decision which is binding upon the parties. In
the case of Collins v Collin, the Court held that “An arbitration is a reference to the decision of
one or more persons, either with or without an umpire, of some matter or matters in difference
between the parties.” an arbitrator listens to the evidence which is brought by both parties and
makes a decision which is generally binding upon both parties. Arbitration means getting an
arbitral award on an ongoing conflict, by the arbitrator. In the process of arbitration, the cause is
heard and determined between the parties in a dispute before the person selected by the parties or
appointed under statutory authority i.e., The Arbitration and Conciliation Act, 1996. The
objective of Arbitration is to settle the dispute which arose between the parties by one or more
arbitrators appointed by them by going through the documents and evidences. According to Kurt
Brenn “The objective of arbitration is not compromise but adjudication through the parties are at
liberty to comprise.” A wise arbitrator would certainly promote such agreement, but as a rule
there is no zest, if there is compromise in arbitral awards. While taking a decision in arbitral
matter, the arbitrator must consider the fact that the decision imparted by him must be in the
interest of principle of natural justice.
Arbitration can be done by voluntary or compulsory method. In Voluntary arbitration, if a dispute
arose between the two Parties and they are unable to resolve their differences by themselves,
thereby the parties agreeing to present their Dispute to the fair authority and the decision will be
binding upon both parties. Whereas Compulsory arbitration, is the method where the parties are
required to accept arbitration without any willingness on their part. When one party in any
industrial dispute feels aggrieved by the act of the other party, it may approach the appropriate
government to refer the dispute to any organization of adjudication for the settlement. The
arbitrator or arbitral tribunal consists of a neutral person or persons responsible for resolving the
dispute that the parties have submitted before them.

The number of arbitrators and their appointments are defined in Section 10  HYPERLINK
"https://indiankanoon.org/doc/1841764/"and 11 of Arbitration and Conciliation Act, 1996.
The person from any nationality can be appointed as arbitrator, unless agreed by the parties. The
number of arbitrators must be in odd number or there can be a sole arbitrator. The parties in
conflict are free to appoint the arbitrator or they can approach the statutory authority for the
same. In arbitration, if there are three arbitrators then each party will choose one arbitrator and
the two appointed arbitrator will choose one arbitrator who will act as presiding officer. If the
parties failed to appoint an arbitrator within 30 days as requested by the other party or the
appointed arbitrators have failed to come on same page in appointing the arbitrator within 30
days or they have any kind of disagreement, then they can approach the chief justice or the other
person or institution nominated by him regarding the appointment..

• ARBITRATION AGREEMENT
The formation of an arbitration agreement takes place when two parties, enter into a contract and
in which, the contract states that any dispute arising between the parties have to be solved
without going to the courts with the assistance of a person, who would be a neutral person, a
third party, appointed by both of the parties, known as the Arbitrator, who would act as a judge.
The arbitrator so appointed should have been previously mentioned in the contract that they
made. They should also state who should select the arbitrator, regarding the kind of dispute the
arbitrator should give decisions on, the place where the arbitration would take place.
Furthermore, they should also state the other kinds of procedures mentioned or that has to be
required during an arbitration agreement. 
The parties are generally required to sign an Arbitration Agreement. The decision taken by the
arbitrator regarding any issue, is binding on both the parties, as stated by the agreement. In any
event, where one party decides that an agreement must be made prior to entering the contract, it
can be stated that the agreement was made to deviate from the hassles of the court. These
agreements are like contingent contracts, which means that these agreements shall only come
into force or become enforceable if any dispute happens, and on the basis of the same dispute
between two parties mentioned in the contract. It also takes place or is enforceable in the light of
any dispute that arises between the parties to the contract. 

• ESSSENTIALS OF AN ARBITRATION AGREEMENTS

• Written Agreement
An arbitration agreement must be in writing. An arbitration agreement is considered to be in
writing if it is:
1. Signed by the parties and is in the nature of a document;
2. It can also be an exchange of letters, telex, telegrams or other means of telecommunication the
essential feature is that it should provide a record of the agreement; or
3. An exchange of statements of claim and defence in which the existence of the agreement is
alleged by one party and not defined by another.

• Intention
Intention of the parties is of extreme importance and forms the crux of the agreement. There is
no prescribed manner of making an arbitration agreement and it has been stated nowhere that
term like arbitration, arbitrator are essential prerequisites in an arbitration agreement. The
Supreme Court has recently clarified its stance on in this subject, the intention of the parties to
refer their dispute to arbitration should be clearly discernible from the arbitration agreement.
• Signature
The signature of the parties is essential to constitute an arbitration agreement. It can be in the
form of a signed document by both the parties and comprises all the terms or it may also be a
signed document by one party, which contains the terms and an acceptance signed by the other
party. It will be sufficient if one party puts her signature in the written submission and the other
party accepts that.

• CASE LAWS

R.V. Solutions Pvt. Ltd. v. Ajay Kumar Dixit HYPERLINK

"https://indiankanoon.org/doc/39635336/"& HYPERLINK
"https://indiankanoon.org/doc/39635336/" Ors. In this case, The Delhi High Court held that a
non-signatory or third party can only be subjected to arbitration in exceptional cases without its
consent. The arbitrator is required to form a direct relationship with the signatory party of the
agreement, or between the parties in the agreement or the equality of the subject or the overall
transaction.

Garware HYPERLINK "https://indiankanoon.org/doc/26596259/" Wall Ropes Ltd. v. Coastal

Marine Constructions HYPERLINK "https://indiankanoon.org/doc/26596259/"&
HYPERLINK "https://indiankanoon.org/doc/26596259/" Engineering Ltd, the court states that
The High Court should stop the instrument which has not imposed stamp duty and hand it over
to the authority which will then decide to implement the payment of stamp duty and penalty (if
any) at the earliest, and preferably a period of 45 days. . Within the date on which the instrument
of authority is received. As soon as the stamp duty is paid on the instrument, either party can
bring the instrument to the notice of the High Court which will then proceed to hear and dispose
of the Section 11 application expeditiously.
BHEL v. Uttar Pradesh HYPERLINK "https://indiankanoon.org/doc/23437708/"Rajya
HYPERLINK "https://indiankanoon.org/doc/23437708/" HYPERLINK
"https://indiankanoon.org/doc/23437708/"Vidyut HYPERLINK
"https://indiankanoon.org/doc/23437708/" HYPERLINK
"https://indiankanoon.org/doc/23437708/"Utpadan HYPERLINK
"https://indiankanoon.org/doc/23437708/" Nigam Limited. The Supreme Court held that where
the parties do not insist on the exclusive jurisdiction clause in an agreement or raise such
objection, and by their conduct, waive such condition / submit themselves to the jurisdiction of
another court , It cannot be said that exclusive jurisdiction shall be without jurisdiction except in
the court in which it is vested.

Paschimanchal HYPERLINK
"https://www.casemine.com/judgement/in/5ba637ff9eff436a8838a6d0" HYPERLINK
"https://www.casemine.com/judgement/in/5ba637ff9eff436a8838a6d0"Vidyut HYPERLINK
"https://www.casemine.com/judgement/in/5ba637ff9eff436a8838a6d0" HYPERLINK
"https://www.casemine.com/judgement/in/5ba637ff9eff436a8838a6d0"Vitran HYPERLINK
"https://www.casemine.com/judgement/in/5ba637ff9eff436a8838a6d0" Nigam Limited v. M/S
IL HYPERLINK "https://www.casemine.com/judgement/in/5ba637ff9eff436a8838a6d0"&
HYPERLINK "https://www.casemine.com/judgement/in/5ba637ff9eff436a8838a6d0" FS
Engineering HYPERLINK
"https://www.casemine.com/judgement/in/5ba637ff9eff436a8838a6d0"& HYPERLINK
"https://www.casemine.com/judgement/in/5ba637ff9eff436a8838a6d0" Construction
Company Limited O.M.P The question before the Delhi High Court was whether the provisions
of the Fourth Schedule to the Act relating to fees to be paid to arbitrators would apply to
domestic ad hoc arbitration where the parties have not approached the court to constitute an
arbitral tribunal.
It was held that the provision in respect of fees contained in Section 11 (14) of the Act is only a
competent provision. The concerned High Court has been given to frame the rules, if it chooses
to do so. Since the parties did not approach the court for the formation of the Arbitral Tribunal,
the Court would have no role in deciding the fees of the Arbitral Tribunal as there is no such
power vested in the Court. Further, the provisions of sub-Section (14) of Section 11 clearly show
that the fee prescribed in the fourth schedule of the Act is only suggestive.

QUESTION 3RD
• Explain the power of judicial authority to refer parties to arbitration.
• What interim measures can be adopted by the court in this respect?
• POWERS OF JUDICIAL AUTHORITY TO REFERS PARTIES TO
ARBITRATION?

“8: Power to refer parties to arbitration where there is an arbitration agreement.—

Section 8 (1) – A judicial authority, before which an action is brought in a matter which is the
subject of an arbitration agreement shall, if a party to the arbitration agreement or any person
claiming through or under him, so applies not later than the date of submitting his first statement
on the substance of the dispute, then, notwithstanding any judgment, decree or order of the
Supreme Court or any Court, refer the parties to arbitration unless it finds that prima facie no
valid arbitration agreement exists.”
Section 8 (2) – The application referred to in sub-section (1) shall not be entertained unless it is
accompanied by the original arbitration agreement or a duly certified copy thereof:
Provided that where the original arbitration agreement or a certified copy
thereof is not available with the party applying for reference to arbitration
under sub-section (1), and the said agreement or certified copy is retained by
the other party to that agreement, then, the party so applying shall file such
application along with a copy of the arbitration agreement and a petition praying the Court to call
upon the other party to produce the original arbitration agreement or its duly certified copy
before that Court.
Section 8 (3) Notwithstanding that an application has been made under sub-section (1) and that
the issue is pending before the judicial authority, an arbitration may be commenced or continued
and an arbitral award made.”

Section 8 clearly stipulates that whenever a suit is filed in a civil court and the cause of action of
said suit emanates from a contract in which the parties had voluntarily and willingly agreed to
settle the dispute via arbitration, then, if the essentials of section 8 are met, it is the bounden duty
of court to refer the parties to the arbitration.
The position of Section 8 of the act becomes further clear when it is compared with the Uncitral
Model Law as section 8 of the act differs from Article 8 of model law. Article 8 enabled a court
to decline to refer parties to arbitration if it is found that the arbitration agreement is null and
void, inoperative or incapable of being performed. Section 8 has made a departure which is
indicative of the wide reach and ambit of the statutory mandate.
Section 8 uses the expansive expression “judicial authority” rather than “court” and the words
“unless it finds that the agreement is null and void, inoperative and incapable of being
performed” do not find a place in section 8. This distinction clearly dictates that the legislature
has intentionally endowed less power on judicial courts with respect to section 8 applications to
make sure the arbitration process is facilitated and unnecessary intervention by courts be
avoided.
Despite the position being this crystal clear, this section has been subjected to various
interpretation by our courts time and again which has led to a lot of confusion.
There have been instances where Courts have adopted the literal interpretation route and hence
construed the section in the way it is meant to be and has referred the matter to arbitration, when
the essentials of section 8 are fulfilled, irrespective of the prevailing circumstances. Yet, there
had been instances where the courts had completely neglected valid precedents and had
tenuously interpreted the section in a manner it is not meant to be and has denied the reference
thereby deviating from the valid line of precedents. Further, it is not just the deviation alone, in
one matter the SC has actually gone to the extent whereby which it has laid down certain
exceptions to this rule, which in my opinion is wholly erroneous. If there would have been some
need for such exceptions, the legislature would have done that by adding such exceptions in the
act itself.

• WHAT INTERIM MEASURES CAN BE ADOPTED BY THE COURT IN

THIS RESPECT?

• Awards under Arbitration

As per definition of arbitral award appearing in Section 2(e), an arbitral award includes an
interim award within its ambit. Section 31(6) provides that the arbitral tribunal may, at any time
during the proceedings make an interim award on any matters with respect to which it may make
a final award. A question that arises in the minds of everyone is that whether interim measures
can be treated as an interim award especially when such measures of protection are ordered by
the Tribunal. The author is of the view that such measures will amount to granting of interim
award. This view is subscribed from the definition of arbitral award as defined u/s 2 (e) of the
new Act.

With the above background, it is now appropriate to shift the focus of this article to the interim
measures /relief provided under the New act and their effectiveness. The sections that deal with
interim relief are Section 9 and Section 17. Both these are compared for ascertaining the ground
reality of these measures.

• Interim Relief under Arbitration

Under the Arbitration Act, 1940,a party could commence proceedings in a Court by moving an
application under Section 20 for appointment of an arbitrator and simultaneously it could move
an application for interim relief under the Second Schedule read with Section 41(b) of the old
Act. Under the New Act 1996, Section 9 empowers the court to order a party to take interim
measure or protection when an application is made. Besides this Section 17 gives power to the
Arbitral Tribunal to order interim measures unless the agreement prohibits such power.
• Interim relief under section 9
A plain reading of the section 9 indicates that a party may before or during the arbitral
proceedings or at any time after making of the arbitral award but before it is enforced in
accordance with Section 36, may apply, to the court for interim measure of protection. Prayers
for interim measures of protection may include:
• Appointment of a guardian for a minor or person of unsound mind
• Preservation or interim custody or sale of goods, if goods are of perishable nature
• Securing the amount of claims
• Allowing inspection or interim injunction or appointment of receiver
• Any other relief’s as the court may in its discretion may deem proper considering the
circumstances of the case.

• Interim relief under section 17

Let us now examine the powers of Arbitral Tribunal u/s 17. If the arbitration agreement does not
prohibit, Arbitral Tribunal at the request of a party, may order the other party to take such interim
measures of protection as it may deem necessary in respect of subject matter of dispute. In the
process, it can order for providing appropriate security in exercise of its power. This power also
has to be exercised within the terms of reference or arbitration agreement. It is very strange that
Section 17 although permits Arbitral tribunal to pass interim order, it does not give any power to
Tribunal to enforce its order. Also there is no section in the new Arbitration Act which ensures
enforcement of interim orders passed by the Tribunal or to treat interim order as an enforceable
decree like that of final award. In other words, the power of the tribunal is limited and any
interim award necessarily has to merge with the final award for attaining enforceability.

N. Radhakrishnan V. Maestro Engineers, In the said case, even after finding that the subject
matter of the suit was within the ambit of arbitration, the court refused to refer the dispute to
arbitration by holding that once the contract is held to be void ab initio, the arbitration clause dies
then and there.

QUESTION 4
• Explain the Procedure Related to Appointment of Arbitrator?

• APPOINTMENT OF ARBITRATOR
Section 11 of the Arbitration and Conciliation Act, 1996 deals with the appointment of
arbitrators. A person of any nationality may be appointed arbitrator unless the contrary intention
is expressed by the parties. The parties are free to agree on a procedure for appointment of
arbitrator or arbitrators. Where parties fail to appoint three arbitrators, each party shall appoint
one arbitrator and the two arbitrators shall appoint the third arbitrator. Hence, appointing three
arbitrators is mandatory, with the third one being the presiding arbitrator.
Where a party fails to appoint an arbitrator in accordance with the third arbitrator with the within
thirty days from the date of receipts of a request to do so from the other party or two appointed
arbitrators fail to agree on the third arbitrator within 30 days from the date of their appointment,
the appointment shall be made, upon a request of a party, by the Chief Justice of the High Court
or any person or institution designated by him.

In the absence of any procedure to appoint a sole arbitrator, if the parties fail to agree on the
arbitrator within 30 days from receipt on a request by one party from the other party to so agree,
the appointment shall be made upon request of a party, by the Chief Justice of the High Court or
any person or institution designated by him.
Section 11 of The Arbitration and Conciliation Act, 1996 provides for the appointment of
Arbitrator(s). An arbitrator is appointed under the following means –
(1) Appointment by Parties
(2) Appointment by Court

• In such appointment, two considerations are to be made:

• Required qualifications of the arbitrator as provided in the agreement of the parties, and
• Independent and impartial person as an arbitrator.
These are the circumstances under which the Chief Justice of a High Court can make an
appointment.
In case of appointment of a sole or third arbitrator in international commercial arbitration, the
appointing authority is the Chief Justice of India or a person or institution designated by him.

• PROCEDURE FOR APPOINTMENT

Section 11 only confers power on the High Court to appoint an arbitrator or presiding arbitrator
only when the following conditions are fulfilled:
• Where there is a valid arbitration agreement;
• The agreement contains for the appointment of one or more arbitrators;
• The appointment of the arbitrator is to be made by mutual consent of all the parties to the
dispute.
• Differences have arisen between the parties to the arbitration agreement; or between the
appointed arbitrators;
• The differences are on the appointment or appointments of arbitrators.

• CASE LAWS
In Indian Drugs & Pharmaceuticals Ltd. v. Indo Swiss S. Gem Mfg. Co. Ltd., it has been
held that no retired High Court Judge can be appointed as an arbitrator by the court when the
arbitration clause states categorically that the difference/dispute shall be referred “to an arbitrator
by the Chairman and Managing Director of IPDL who is the appellant in this case.”

In National Aluminium Co.Ltd v. Metalimpex Ltd., a Bangladeshi company failed to

nominate its arbitrator in terms of the arbitration agreement on an application under S.11 of the
Arbitration and Conciliation Act, 1996, the Chief Justice of India nominated an arbitrator to act
on behalf of the Bangladeshi company.

CONCLUSION
The arbitrator should be chosen carefully because of his special knowledge of the subject matter
which is in dispute. He should be able to keep the atmosphere clear at the tribunal and must be
free from forensic eloquence and to see that the evidence in the manner customary in the court of
law and equity. He must give attention to the facts in dispute placed before him and his decision
should be practical and impartial and in the best interest of justice, good conscience, and equity.
QUESTION 5TH
• On What Grounds Appointment of Arbitrators Can Be Challenged?
• INTRODUCTION
Section 12 of the Act lays down the grounds on which an arbitrator can be challenged. The 2015
amendment to the Act, has added a schedule to this section which lays down additional criteria
that may give rise to a challenge of an arbitrator.

• GROUNDS FOR CHALLENGING THE APPOINTMETN OF THE

ARBITRATOR
Section 12(1) of the Act, amended in 2015, compels a prospective arbitrator to provide a written
disclosure of certain circumstances which may give rise to suspicions to his independence or
impartiality. Whether a circumstance is suspicious to the independence of an arbitrator, is to be
decided by the arbitrator himself.
Section 12(1)(a) states that the arbitrator should disclose if he has any direct, indirect, past or
present relationship to the parties, or if he has any financial, business, professional or any other
kind of interest in the subject-matter of the dispute, which would affect his impartiality in the
case.
For example, Company X and Company Z while entering into a particular contract, add an
arbitration clause naming Mr. A as an arbitrator. Mr. A is the owner of Company C. A dispute
concerning payment of bills to Company X by Company Z arose and Mr. A was approached for
presiding as an arbitrator. Company Z is a client of Company C and forms a considerable part of
its income.
In such a scenario, Mr. A would have an interest in the dispute and that might give rise to doubts
to his impartiality.

Section 12(1)(b) similarly points to any circumstances that would affect an arbitrator’s capacity
to devote enough time to finish the arbitration within twelve months.
There are two explanations given under the sub-section. The first one states that the Fifth
Schedule should be referred to understand whether circumstances under Section 12(1)(a) exist.
The second one states that such a disclosure should happen in the format under Sixth Schedule
 • FIFTH SCHEDULE
The fifth schedule deals with following types of relations which might give rise to reasonable
doubts:
• Arbitrator’s relationship with parties or counsel

• Arbitrator’s relationship to the dispute

• Arbitrator’s interest in the dispute

• Arbitrator’s past involvement with the dispute

• Relationship of co-arbitrator’s

• Relationship of the arbitrator with parties and others in the dispute

• Other Circumstances

If the factual scenario of a case falls under any of the above headings, then the arbitrator may be
challenged. These are extensive headings which cover many scenarios to ensure maximum
impartiality. However, ‘Explanation 3’ to this schedule, points out that if it’s a specialized
arbitration involving niche fields, and it’s a custom to appoint same arbitrators from a small
specialized pool, then this should be noted by applying these rules. None of these headings
provides for an immediate bar to the appointment of an arbitrator.
Section 12(2) reinforces sub-section 1, by stating that unless a written disclosure has already
been given, an appointed arbitrator should disclose any conflict of interest as soon as possible.
Section 12(5), inserted by the 2015 amendment, automatically disqualifies any potential
arbitrator who falls in any category under the Seventh Schedule of the Act.

• SEVENTH SCHEDULE
This schedule also covers most of the headings under the Fifth Schedule. The list isn’t as
exhaustive as the Fifth Schedule but as stated above, simply acts as a bar to appointment as
arbitrator. However, this bar can be waived by the parties by an agreement in writing.
The Schedule covers:
• Arbitrator’s relationship with the parties or counsel

• Relation of Arbitrator to the dispute

 • Arbitrator’s interest in the dispute.

• CASE LAWS

In this case:- Voestalpine Schienen v. Delhi Metro Rail Corporation

This was the first case adjudicated by the Supreme Court after the 2015 amendment was passed.
It is thus significant in clarifying the scope of this important section.

Facts: The Delhi Metro Rail Corporation (DMRC), a public sector undertaking, had entered into
a contract with M/s Voestalpine. Due to some disputes that arose in the course of business, the
arbitration clause was invoked and as per the contract. In the contract, it was provided that,
arbitration proceedings should be done in compliance of Clause 9.2 of the DMRC General
Conditions of Contract (DMRC GCC) and Clause 9.2 of the special conditions of the contract
(DMRC SCC).
According to these clauses, DMRC was to make a list of arbitrators consisting of serving or
retired engineers with requisite qualifications and professional experience. These engineers were
to be from ‘government departments or public sector undertakings’. Furthermore, DMRC and
Voestalpine were to choose one arbitrator each from this list and both of these arbitrators shall
choose the third arbitrator from the same list.
The petitioner, Voestalpine challenged this provision under Sections 11(6) and 11(8) of the Act.
Issues
• Whether in light of the 2015 Amendment, the above-mentioned clauses become
invalid by virtue of Section 12(5)?

• Whether DMRC being a public sector undertaking cannot appoint former or retired
employees of the government as arbitrators?

• Whether such a clause destroys the very foundation and spirit behind the amendment?

Held
The Supreme Court pointed that the main purpose of amending Section 12 was to maintain a
higher level of arbitrator impartiality. In light of this, it stated that in the event that the arbitration
clause was in contradiction to Section 12 (5), the latter would prevail. In such a case the court
would appoint an arbitrator and a party cannot claim appointment as per the agreement.
However, in the case, the Court held that only because of the fact that the suggested arbitrators
were former or current government employees they won’t be automatically disqualified from
being arbitrators. If they didn’t have any relation to any of the parties, they were not barred under
Section 12(5).
The court differentiated between the concepts of ‘impartiality’ and ‘independence’. Thus, the
court held, any question on impartiality or independence would surface when the arbitrator
discloses any interest in writing. The Court declined jurisdiction in the case.
The Court directed DMRC to delete the clauses from SCC and GCC and asked it to constitute a
broader panel.

In DBM Geotechnics v. Bharat Petroleum Ltd

Facts: In 2003, the respondent BPCL had issued an e-tender for construction works. In 2014,
DBM Geotechnics, the applicant was given the letter of intent and subsequently, an agreement
was concluded.
In October 2015, BPCL abruptly terminated the agreement by alleging performance delays and
appointed another contractor. In June 2016, BPCL initiated arbitration proceedings under the
Agreement. As per the terms of the agreement, the Director of Marketing (DM) was to be the
sole arbitrator or he was to appoint another person as an arbitrator.
Issues  
• Whether such a clause in the arbitration agreement would be rendered ineffective in
light of Section 12 (5) of the Arbitration Act.
Held
The applicants argued that the nomination procedure would be unlawful in light of Section 12.
The Court rejected this argument and held that in spite of the fact that the DM was barred from
presiding as the arbitrator, he could still nominate someone else as the presiding arbitrator.

• CONCLUSION
The 2015 Amendment to the Act is aimed to promote arbitration in India and to provide for
greater transparency and reliability on the same. Section 12 gains more importance in light of the
new amendment and hopefully, it contributes to making arbitration a more popular recourse than
judicial courts.

QUESTION 6th
 • What do you mean by conciliation proceedings? What is its scope? How
does the conciliation proceedings commence?

• CONCILIATION
Conciliation means settling disputes without litigation. It is an informal process in which
conciliator i.e. third party tries to bring the disputants to agreement. He overcomes the disputable
issues by lowering the tension, improvement in communication, interpreting issues, providing
technical assistance, exploring potential solutions and bringing the negotiated settlement before
the parties. Conciliator adopts his own method to resolve the dispute and the steps taken by him
are not strict and legal. There is no need of agreement like arbitration agreement. The acceptance
of settlement is needed by both of the parties.
Part III of the Arbitration and Conciliation Act, 1996 deals with conciliation. it is a voluntary
proceeding where parties in dispute agree to resolve their dispute through conciliation. It is a
flexible process which allows the parties to decide the time and place for conciliation, structure,
content and terms of negotiations. In Conciliation, the conciliators are trained and qualified
neutral person who help the conflicting parties to make them understand the issues in dispute and
their interest to reach mutually accepted agreements. The conciliation process includes the
discussion between the parties which is made with the participation of the conciliator. It covers
many disputes like industrial disputes, marriage disputes, family disputes etc. This allows the
parties to control the output of their dispute. The result is also likely to be satisfactory.

• SCOPE OF CONCILIATION
Section 61 of the Arbitration and Conciliation Act of 1996 provides for the Application and
Scope of 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 the legal
relationship. It means that the dispute must be such as to give one party the right to sue and to the
other party the liability to be sued. The process of conciliation extends, in the second place, to all
proceedings relating to it. But Part III of the Act does not apply to such disputes as cannot be
submitted to conciliation by the virtue of any law for the time being in force.

Conciliation proceedings can be used to solve any kind of dispute whether contractual or non-
contractual. Any kind of dispute arising due to contract can be resolved by using conciliation
proceedings. The conciliation proceedings are equally applicable to marriage dispute, labour
dispute, contractual dispute etc. In matrimonial cases especially in divorce cases one or more
third person may help the litigating parties to resolve the dispute. It is sometimes so beneficial to
them that they make up their mind to reunite again. In certain other cases of. matrimonial
matters, conciliation is helpful. Similarly in labour disputes, when any kind of dispute arises
between workers and management inter-se, that can be resolved by conciliation methods and also
completely with expenses. Thus we can say that conciliation proceedings are a boon to resolve
dispute through alternative means of dispute settlement system.

• PROCEDURE FOR CONCILIATION

1) Commencement of the conciliation proceedings [Section 62]

The conciliation proceeding 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 thirty days of the date he sends the invitation
or within such period of time as is specified in 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
accordingly.

2) Submission of Statement 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
hima further 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 the copy of such
statements , documents and evidence to the other party. At any stage of the conciliation
proceedings , the conciliator may request a party to submit to him any additional information
which he may deem appropriate.

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

4) Administrative assistance [S. 68]-

Section 68 facilitates administrative assistance for the conduct of conciliation proceedings.

Accordingly, the parties and the conciliator may seek administrative assistance by a suitable
institution or the person with the consent of the parties.

• CASE LAWS
In Haresh Dayaram Thakur v. State of Maharashtra and Ors. while dealing with the
provisions of Sections 73 and 74 of the Abbitration and Conciliation Act of 1996 in paragraph 19
of the judgment as expressed thus the court held that-
"19. 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
untrammeled 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”.

In Mysore Cements Ltd. v. Svedala Barmac Ltd 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 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
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.

QUESTION 7TH
• Discuss appointment and role of conciliators in bring about the amicable
settlement between the litigating parties.

• APPOINTMENT OF CONCILIATORS
Section 64 deals with the appointment of the conciliators.When the invitation to the conciliation
is accepted by the other party, the parties have to agree on the composition of the conciliation
tribunal. In the absence of any agreement to the contrary ,there shall be only one conciliator. The
conciliation proceeding may be conducted by a sole conciliator to be appointed with the concent
of both the parties, failing to which the same may be conducted by two conciliators (maximum
limit is three), then each party appoints own conciliator ,and the third conciliator is appointed
unanimously by both the parties. The third conciliator so appointed shall be the presiding
conciliator. The parties to the arbitration agreement instead of appointing the conciliator
themselves may enlist the assistance of an institution or person of their choice for appointment of
conciliators. But the institution or the person should keep in view during appointment that, the
conciliator is independent and impartial.

• ROLE OF CONCILIATOR
Under section 67 of the Arbitration and Conciliation Act, 1996
1.   The conciliator shall assist the parties in an independent and impartial manner in their
attempt to reach an amicable settlement of their dispute.
2.   The conciliator shall be guided by principles of objectivity, fairness and justice, giving
consideration to, 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.   The conciliator may conduct the conciliation proceedings in such a manner as he considers
appropriate, taking into account the circumstances of the case, the wishes the parties may
express, including any request by a party that the conciliator hear oral statements, and the need
for a speedy settlement of the dispute.
4.   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 masons therefore.

• Conciliators have a variety of roles and responsibilities to ensure that the

parties reach a fair resolution. Here are some examples, as mentione:-
• Hold meetings with each individual party to discuss how the meeting will go
• Review relevant documents and information to help reach conclusions
• Maintain a neutral position within a meeting to ensure both parties receive fair
considerations
• Allow parties involved to reach their own resolution 
• Be prepared to settle disputes by issuing their own resolution, should the parties ask
• Meet with witnesses and other persons related to the parties to obtain statements and
additional information about the dispute in question
• Prepare settlement agreement documents based off of the resolution the parties reached
• Practice confidentiality regarding the parties, their personal information and details
regarding the dispute

QUESTION 8TH
• DIFFERENCE BETWEEN :-
• Arbitration and conciliation
• Arbitration and mediation
• Conciliation and mediation
 • DIFFERENCE BETWEEN ARBITRATION AND CONCILIATION
  ARBITRATION MEDIATION

Arbitration is like a court procedure because

Mediation refers to a process of settling
the parties submit evidence similar to a trial
disputes by independent and impartial third
Meaning where the third party hear the entire situation
party who assists the parties to reach a common
and give his decision which is binding upon
outcome.
the parties.

Procedur It is a formal procedure like court

It is an informal procedure.
e proceedings.

Third
Third party is termed as arbitrator. The third party is termed as mediator.
party

Number
One arbitrator is known as sole arbitrator and
of third One mediator.
there can be more than one arbitrator.
party

Nature of
They are binding upon both the parties. They are non binding in nature.
award

Control The outcome of the arbitration depends upon

The outcome of the mediation depends upon
over the evidence, documents etc the decision
the parties.
outcome depends upon the arbitrators.

Decision During arbitration, both parties are given the Arbitrators do not issue orders, find fault, or
opportunity to present their case to the make determinations. Instead, help the parties
 arbitrator. The arbitrator does not pass any
with communication, obtain relevant
decision, but only disposes with the approval
information and develop alternatives.
of the parties.

DIFFERENCE BETWEEN CONCILIATION AND MEDIATION

  Conciliation Mediation

Conciliation is an alternative dispute Mediation refers to a process of settling

resolution method in which an expert is disputes by independent and impartial
Meaning
appointed to resolve a dispute by convincing third party who assists the parties to reach
the parties to agree upon an agreement. a common outcome.

Regulation By The Civil Procedure Code, 1908. Arbitration and Conciliation Act, 1996.

Number of
One or more conciliator. One mediator.
Third party

In mediation confidentiality depends upon

Confidentiali In Conciliation Confidentiality is determined thrust, and it is advised for all parties to
ty by the law. sign a Confidentiality Clause for extra
measure.

In mediation, the mediator should be

Nature of In conciliation the conciliator plays a more
impartial and objective to the parties’
third party active role.
dispute.

Third party In Conciliation, the conciliator also plays the In Mediation, the mediator does not give
role of evaluation and intervention for
 settling the dispute. any judgement.

DIFFERENCE BETWEEN ARBITRATION AND CONCILIATION

  Arbitration Conciliation

Arbitration is like a court procedure because

Conciliation is
the parties submit evidence similar to a trial
resolution method
Meaning where the third party hear the entire
appointed to resolv
situation and give his decision which is
the parties to agree
binding upon the parties.

That decision made by the arbitrator is However, a conc

Enforceability of decision
binding in the same way as a court decision. enforce his decision

Arbitration is a formal process and follows

similar procedures as court proceedings It is an informa
Nature of process
where witnesses can be called and evidence involves a discussio
can be presented in respective cases.

Prior agreement Prior agreement is required. No need of prior ag

Availability Available for existing and future dispute. Available for only e

Conciliation does
Arbitral award is final and binding upon
Outcome mutually agreed res
parties.
parties.