conciliation key points
Conciliation is a voluntary, non-binding alternative dispute resolution (ADR) process where a neutral third party (conciliator) assists parties in settling disputes amicably.
Covered under Part III of the Arbitration and Conciliation Act, 1996.
Based on UNCITRAL Conciliation Rules.
Key Features:
1. Initiated only with consent of all parties (
2. 1 or 3 conciliators; parties may agree on procedure
3. Conciliator:Facilitates communication, proposes solutions
4. Proceedings and proposals are strictly confidential
5. If agreed, recorded and signed binding like a contract
Focus is on cooperation, not fault-finding
Conciliation under the 1996 Act provides a flexible, cost-effective, and non-adversarial method for dispute resolution
Role of the Conciliator
neutral third party who helps disputing parties reach a mutually agreeable settlement. Unlike an arbitrator or judge, a conciliator does not impose a decision but facilitates dialogue and understanding.
- The conciliator shall assist the parties independently and impartially in reaching an amicable settlement.
- The conciliator shall be guided by principles of objectivity, fairness, and justice,
- Encouraged to make proposals for settlement at any stage — even without being asked by the parties.
- May hold meetings with parties jointly or separately,
5.May request full disclosure of documents and facts to facilitate understanding and resolution. - Bound to keep all matters confidential
- At any point, parties may submit settlement proposals, which the conciliator may help revise and refine.
A conciliator is a guide, mediator, and facilitator — not a judge
define arbitration
procedure by which dispute is referred to one or more arbitrators, by agreement of concerned parties, who makes biding decision on the same
An ‘arbitration agreement’
with respect to existing
disputes, may or may not be in
the form of an Arbitration
clause in the main contract.”
Explain
The Arbitration and Conciliation Act, 1996 (Section 7) recognizes that an arbitration agreement may exist independently of the main contract. It may be prospective (for future disputes) or retrospective (for existing disputes).
Section 7: An arbitration agreement is a “written agreement” between parties to submit disputes — whether contractual or not — to arbitration.
-> The agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.
-> Allows flexibility in what constitutes a “written” agreement — including letters, telecommunication, exchange of statements, etc.
Types of Arbitration Agreements
1.Clause in Main Contract
2. Separate Agreement
3. Post-dispute Agreement
4. inferred from exchange: Formed through letters, emails, or pleadings exchanged between parties.
This flexibility enhances party autonomy and enables dispute resolution even where original contracts are silent.
How is an Arbitral Tribunal
constituted?
I. Constitution of Arbitral Tribunal
✅ Number of Arbitrators (Section 10)
Parties are free to decide how many arbitrators they want (but must be an odd number to avoid deadlock).
✅ Appointment Procedure (Section 11)
Parties can decide how arbitrators will be appointed.
Parties can decide how arbitrators will be appointed.
If no agreement:
For sole arbitrator: If parties can’t agree → either party may apply to court or arbitral institution for appointment.
For three arbitrators:
–> Each party appoints one.
–> The two appointed arbitrators appoint the third (presiding arbitrator).
If either side fails → court/arbitral institution steps in.
II. Grounds for Challenging Appointment of Arbitrator
On what grounds
and under what procedure can
an appointment of an arbitrator
be challenged
Grounds for Challenge: sec 12
Lack of independence/impartiality (e.g. arbitrator is a relative of one party).
Incapacity or disqualification under law.
Failure to disclose relevant circumstances.
📌 Schedule V and VII of the Act list specific disqualifying relationships (e.g., if the arbitrator has advised one party earlier, it may raise doubts).
Procedure for Challenge (Section 13)
Party challenges arbitrator by sending a written statement with reasons within 15 days of becoming aware of:
-Appointment, or
- Grounds for challenge.
If arbitrator doesn’t withdraw, the tribunal itself decides on the challenge.
If the challenge fails, proceedings continue. The challenging party can later raise the issue under Section 34 when challenging the final arbitral award.
Amendment 2021
- Unconditional stay on enforcement of arbitral award if
–> The arbitration agreement or contract was induced by fraud or corruption, or
–> The making of the award itself was so induced or affected. - removal of Eighth Schedule, which prescribed mandatory eligibility and accreditation criteria for arbitrators, has been omitted.-This opens the door for the appointment of foreign arbitrators and supports party autonom
Challenge
1. Unconditional stay - not pro arbitrary
2. Loser - tool to harass
3. No proper def of fraud or corruption. Reputation of arbitrator
4. Arbitration cannot be strengthened alone.
Arbitration and concilliation amendment 2019
- Arbitration council of india- promotion, policy framing, accreditation of arbitrators, maintain uniform standards
- Appt of arbitrators by SC and Hc designated arbitral inst
- Statement of claim and defence to be completed within 6 months from receipt of the appointment notice
- Arbitral award (for non-international arbitrations) must be issued within 12 months of pleadings completion;
- International arbitral proceedings NEED not be completed within 12 months. But as expeditiously as possible.
- Conditions of confidentiality extended to arbitrators, arbitrary institutes and the parties to arbitration
Appeal against arbitrary awards
Intro - purpose to reduce delay. Hence only under particular circumstance
Rationale - sometime arbitrators fail to deliver justice
- Grounds on virtue of which the arbitral awards can be set aside by the court is mentioned in Section 34(2) (a) of the Arbitration and Conciliation Act, 1996.
The aggrieved Party has to prove either of the following points[i]:
- A party was under some incapacity
- Party was not given proper notice
- Award deals with a dispute not contemplated by agreemen
- Tribunal was not properly constituted
- The arbitration agreement is not valid in accordance with the Law to which the parties to the Agreement have subjected it
Section 34(2) (b) mentions about two circumstances on the satisfaction of which the court may set aside the award granted by the arbitration tribunal:
- The subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force.
- The arbitral award is in conflict with the public policy of India.
Public polic:
- the making of the award was induced or affected by fraud or corruption
- it is in contravention with the fundamental policy of Indian law; or
- it is in conflict with the most basic notions of morality or justice.
Arbitration is party-driven and meant to be final, binding, and faster.
Allowing full appeals would defeat the purpose of arbitration and bring parties back to lengthy court processes.
Ask for setting aside arbitrary award
Venture Global Engineering LLC v Tech Mahindra Ltd.[vii], observed:
The Award of an arbitral Tribunal can be set aside only on the grounds specified in Section 34 of the Arbitration and Conciliation Act and on no other ground. The Court cannot act as an Appellate Court to examine the legality of Award, nor can it examine the merits of claim by entering in factual arena like an Appellate Court.
Arbitration, as an alternate method of adjudication is acceptable to parties largely irrespective of the fact that access to the court by the parties has been curbed drastically under the Arbitration and Conciliation Act, 1996.”
The Arbitration and Conciliation Act, 1996 (ACA) intentionally limits court interference to promote party autonomy and speedy resolution.
- Section 5 Courts cannot interfere except where explicitly permitted.
- Section 8 If there’s an arbitration agreement, courts must refer the matter to arbitration.
- Section 16 Tribunal decides its own jurisdiction; courts cannot intervene at this stage.
- section 34 Only limited grounds to challenge an award — no appeal on merits.
- Section 36 Award becomes enforceable like a decree; courts cannot halt enforcement unless a separate stay is sought.
advantages
–>Timelines are tighter (e.g., 12 months for award after pleadings).
–> finality:No endless appeals like in regular litigation.
–> Expertise : Parties can choose specialists in technical/commercial matters.
–> confidentiality: Arbitration proceedings and outcomes are private (Section 42A).
–>Cost-effective
–> neutrality:Especially in cross-border contracts; allows parties to choose neutral seat/law.
–> Arbitaral autonomy:Arbitral autonomy or party autonomy refers to the freedom of the parties to:
1. Choose how disputes are resolved (arbitration instead of litigation),
1. Choose who resolves them (arbitrator),
1. Decide the seat, language, governing law, and procedure.
What is a Foreign Award?
Defined under Section 44 (New York Convention award) as:
An award made in a country which is a party to the Convention, and
Relating to commercial disputes, and
In a country notified by India under the Convention
Procedure for Enforcement of a Foreign Award.
1. Filing a Petition
Under Section 47, party must apply to the appropriate High Court.
- Under Section 48, court can refuse enforcement only on limited grounds ex:Public policy of India
- If court finds no valid ground for refusal, it enforces the award as a civil court decree (Section 49).
Renusagar Power Co. v. General Electric Co. (1994)
Supreme Court held that enforcement of a foreign award can be refused only if it violates the fundamental policy of Indian law, interest of India, or justice/morality.
