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FAQs
ON ARBITRATION
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INTRODUCTION TO LAW RELATING TO
CONCILIATIONS
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Conciliation:
Mutual Conciliation of Civil Disputes has always been permissible in law.
But it has been given a statutory form for the first time by the said Act,
that is, the Arbitration and Conciliation Act, 1996 (Sections 61 to 85).
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Q.49. |
How a conciliation proceeding is commenced ? |
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A. |
(a) |
The party initiating conciliation shall send to
the other party a written invitation to conciliate under Part III of the
said Act, briefly identifying the subject of the dispute.
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(b) |
The conciliation proceedings shall commence when
the other party accepts in writing the invitation to conciliate.
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(c) |
If the other party rejects the invitation, there
will be no conciliation proceedings.
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(d) |
If the party initiating conciliation does
not receive a reply within 30 days from the date on which he sends the
invitation, or within such other period of time as specified in the
invitation, he may elect to treat this as a rejection of the invitation to
conciliate and if he so elects, he shall inform in writing the other party
accordingly. (Section 62)
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Q.50. |
What would be the number
of conciliators and how they are to be appointed ?
What would be the number of conciliators and how they are to be appointed
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A. |
There will one
conciliator unless the parties agree that there shall be two or three
conciliators. Where there is more than one conciliator, they ought, as a
general rule, to act jointly.
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In
conciliation proceeding with one conciliator, the parties may agree on the
name of a sole conciliator. In conciliation proceedings with two
conciliator each party may appoint one conciliator. In conciliation
proceedings with three conciliators, 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.
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Alternatively the parties may enlist the
assistance of a suitable institution or person in connection with the
appointment of conciliators, and in particular,
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(a)
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A party may request such an institution or person
to recommend the names of suitable individuals to act as conciliator or |
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(b) |
the parties may
agree that the appointment of one or more conciliators be made directly by
such an institution or person.
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This
is subject to the provision that in recommending or appointing individuals
to act as conciliator, the institution or person shall have regard to such
considerations as are likely to secure the appointment of an independent
and impartial conciliator and, with respect to sole or third conciliator,
shall take into account the advisability of appointing a conciliator of a
nationality other than the nationalities of the parties. (Sections 63
& 64).
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Q.51. |
What is the procedure to be followed before the
conciliator ?
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A. |
(a) |
The conciliator upon his
appointment may request each party to submit to him a brief written
statement describing the general nature of the dispute and the points at
issue. Each party shall send
a copy of such statement to the other party.
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(b) |
The conciliator may
request to each party to submit to him further written statement of his
position and the facts and grounds in support thereof, supplemented by any
documents and other evidence that such party deems appropriate. The party
shall send a copy of such statement, document and other evidence, to the
other party.
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(c) |
At any stage of the
conciliation proceedings, the conciliator may request a party to submit to
him such additional information as he thinks appropriate.
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Any reference to
conciliator in this part includes reference to a sole conciliator, two or
three conciliators as the case may be. (Section 65)
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Q.52. |
What about the law
applicable to the proceedings before the conciliator ? |
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A. |
As
in the case of an arbitrator, the conciliator also is not bound by the
code of Civil Procedure, or the Indian Evidence Act. (Section 66)
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Q.53. |
What
is the role of the conciliator ? |
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(a) |
The conciliator
shall assist the parties in an independent and impartial manner in their
attempt to reach an amicable settlement of their dispute.
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(b) |
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 trade
concern and the circumstances surrounding the dispute including any
previous business practices between the parties. |
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(c) |
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. (Section
67)
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Q.54. |
Can
the conciliator take administrative assistance from other institutions or
person ?
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A. |
Yes, in order to
facilitate the conduct of the conciliation proceedings, the parties, or
the conciliator with the consent of the parties, may arrange for
administrative assistance by a suitable institution or person. (Section
68)
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Q.55. |
What about the communication between conciliator
and parties ?
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A. |
The conciliator may invite the parties to meet
him or may communicate with them orally or in writing. He may meet or
communicate with the parties together or with each of them separately. |
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Unless the parties
have agreed upon the place where meetings with the conciliator are to be
held, such place shall be determined by the conciliator, after
consultation with the parties, having regard to the circumstances of the
conciliation proceedings. (Section 69)
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Q.56. |
Is the conciliator bound to disclose the
informations that he receives to
the other side ?
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A. |
When the conciliator
receives factual information concerning the dispute from a party, he shall
disclose the substance of that information to the other party in order
that the other party may have the opportunity to present any explanation
which he considers appropriate. This is subject to the Proviso that when a
party gives any information to the conciliator subject to a specific
condition that it be kept confidential, that conciliator shall not
disclose that information to the other party. (Section 70)
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Q.57. |
What
are the other duties of the parties in a conciliation proceeding to
facilitate a conciliation ?
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A. |
The parties shall in good faith cooperate with the conciliator and in particular, shall endeavour to comply with request by the conciliator to submit written materials, provide evidence and attend meetings. |
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The parties may on their own initiative or at the invitation of the conciliator, submit to the conciliator suggestions for the settlement of the dispute. (Sections 71 & 72)
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Q.58. |
How and in what manner a settlement is to be or may be arrived at ? |
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When it appears to the conciliator that there exists elements of settlement which may be acceptable to the parties, he shall formulate the terms of a possible settlement and submit the same 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. |
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If the parties reach agreement on a settlement of a dispute, they may drop and sign a written settlement agreement. If requested by the parties, the conciliator may drop or assist the parties in drawing up, the settlement agreement. |
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When the parties sign the settlement agreement, it shall be final and binding on the parties and persons claiming under them respectively. |
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The conciliator shall authenticate the settlement agreement and furnish a copy thereof to each of the parties. (Section 73)
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Q.59. |
What is the status and effect of settlement agreement ? |
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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. (Section 74)
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Q.60. |
Is there any duty cast upon the parties and the conciliator to keep the matters relating to conciliations as confidential ? |
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Yes, that is so. The confidentiality also extends to the settlement agreement except where its
disclosure is necessary for purposes of implementation and enforcement. (Section 75)
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Q.61. |
When do the conciliation proceedings terminate ? |
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The conciliation proceedings shall be terminated in the manner as follows :- |
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a) |
By the signing of the settlement agreement by the parties on the date of the agreement; or |
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b) |
By a written 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; or |
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c) |
By a written declaration of the parties addressed to the conciliator to the effect that the conciliation proceedings are terminated on the date of the declaration; or |
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d) |
By a written declaration by a party to the other party and the conciliator, if appointed, to the effect that the conciliation proceedings are terminated, on the date of the declaration. (Section 76)
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Q.62. |
Can a party or parties resort to arbitration or judicial proceedings during the course of the conciliation proceedings ? |
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The parties shall not initiate, during the conciliation proceedings, any arbitration or judicial proceedings in respect of a dispute that is the subject matter of the conciliation proceedings except that a party may initiate arbitration or judicial proceedings where, in his opinion such proceedings are necessary for preserving his rights. (Section 77)
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Q.63. |
What about the costs regarding conciliation proceedings ? |
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Upon termination of the conciliation proceedings, the conciliator shall fix the cost of the conciliation and give written notice thereof to the parties. The word 'costs' here means reasonable costs relating to
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1) |
the fees and expenses of the conciliator and witnesses requested by the conciliator with the consent of the parties; |
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2) |
any expert advice requested by the conciliator with the consent of the parties; |
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3) |
any assistance provided to the conciliator in the manner as provided in sections 64 and 68; for any other expenses incurred in connection with the conciliation proceedings and the settlement agreement. |
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The costs shall be borne equally by the parties, unless the settlement agreement provides for a different apportionment. All other expenses incurred by a party shall be borne by that party. |
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Regarding costs the conciliator may direct each party to deposit an equal amount as an advance for the costs which he expects will be incurred. |
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During the course of the conciliating proceedings the conciliator may direct supplementary deposits in an equal amount from each party. |
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If the required deposits are not paid in full by both parties within 30 days, the conciliator may suspend the proceedings or may make a written declaration of termination of the proceedings to the parties effective on the date of that declaration. |
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Upon termination of the proceedings, the conciliator shall render an accounting to the parties of the deposits received and shall return any unexpended balance to the parties. (Section 78 & 79).
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Q.64. |
What is the role if any that the conciliator can discharge in other proceedings ? |
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Unless otherwise agreed by the parties, the conciliator shall not act as an arbitrator or as a representative or counsel of a party in any arbitral or judicial proceeding in respect of a dispute that is the subject of the conciliation proceedings. |
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The conciliator shall not be presented by the parties as a witness in any arbitration or judicial proceedings. (Section 80)
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Q.65. |
How far and to what extent the parties can use the evidence given in conciliation proceedins, in other proceedings ? |
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The parties shall not rely on or introduce as evidence in arbitration or judicial proceedings, whether or not such proceedings relate to the dispute that is the subject of the conciliation proceedings to the extent as follow :- |
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i) |
Views expressed or suggestions made by the other parties in respect of a possible settlement of the dispute; |
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admissions made by the other party in the course of the conciliation proceedings; |
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iii) |
proposals made by the conciliator; |
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iv) |
the fact that the other party had indicated his willingness to accept a proposal for settlement made by a conciliator. (Section 81) |
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Notes for general information :- |
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1) |
The High Court may make rules consistent with the said Act as to all proceedings before the Court under the said Act. (Section 82) |
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The Central Government has been given the power to make such provisions by order, published in Official Gazette not inconsistent with the provisions of the said Act as appear to it, to be necessary to expedient for removing the difficulty if any within a period of two years from the period of commencement of the said Act. (Section 83) |
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The Central Government may by notification in the Official Gazette, make rules for carrying out the provisions of the said Act. (Section 84) |
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4) |
The arbitration (Protocol and Convention) Act 1937, the Arbitration Act 1940 and the foreign awards (recognition and enforcement), 1961 are repealed with the commencement of the said Act. However, it may be noted that not withstanding such repeal the provisions of the old enactments which have been repealed shall apply in relation to arbitration proceedings which commenced before the said Act came into force, unless otherwise agreed by the parties, but the said Act shall apply in relation to arbitration proceedings which commenced on or after the said Act came into force. |
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Furthermore all rules and notifications published, under the said enactments shall to the extent to which they are not repugnant to the said Act, be deemed respectively to have been made or issued under the said
Act.
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SCHEME FOR APPOINTMENT OF ARBITRATORS, 1996
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Q.66. |
Has the Chief Justice of the High Court at Calcutta framed any scheme for the purposes of appointment of arbitrators as per the provisions of the said Act of 1996 ? |
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Yes, by Notification number R.353-A-21st January, 1997 the Chief Justice of the High Court at Calcutta notified the scheme framed in exercise of powers conferred by subsection 10 of Section 11 of the Arbitration and Conciliation Act, 1996.
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Q.67. |
What is the procedure, if any,for submission of request to the Chief Justice under subsection 4 or subsection 5 or subsection 6 of Section 11 of the Act ? |
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Such request shall be made in writing to the Chief Justice and shall be accompanied by : |
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(a) |
the
original arbitration agreement or a duly certified copy thereof; |
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(b) |
the
names and addresses of the parties to the arbitration agreement; |
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(c) |
the
names and addresses of the arbitrators, if any, already appointed ; |
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(d) |
the
name and address of the person or institution, if any, to whom or which
any function has been entrusted by the parties to the arbitration
agreement under the appointment procedure agreed upon by them;
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(e) |
the
qualifications required, if any, of the arbitrators by the agreement of
the parties; |
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(f) |
a
brief written statement describing the general nature of the dispute and
the points at issue; |
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(g) |
the
relief or remedy sought; and |
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an
affidavit, supported by the relevant documents, to the effect that the
condition to be satisfied under sub-section (4) or sub-section (5) or
sub-section (6) of section 11, as the case may be, before making the
request to the Chief Justice has been satisfied.
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Q.68. |
What are the other salient features of the Scheme ? |
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The Scheme Inter-alia makes provisions as to the manner of selection of arbitrators, the authority to deal with the request for appointment of arbitrator, circumstances when the request is to be forwarded to designated persons or institutions, circumstances in which the request may be rejected, when notices are to be issued to affected persons, the manner and circumstances in which the authority given to the person or institution may be withdrawn by the Chief Justice, the persons or parties to whom intimation is to be given of action taken on request, costs of processing request etc. A copy of the Scheme may be referred to if and when so required. A copy of the Arbitration and Conciliation Act, 1996 as also the said Scheme for appointment of arbitrators, 1996 are made available herein for the information of the parties.
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