This article has been written by Mr. Sriganesh Ji, a 1st year B.A.LLB Student from Lloyd School Of Law.

Abstract:

Arbitration, conciliation, negotiation, and mediation—all forms of alternative dispute resolution—are rapidly becoming the preferred alternative to traditional court procedures. The UNCITRAL Model Law and Rules on Arbitration and Conciliation, 1985, have given arbitration and conciliation international recognition. The Arbitration and Conciliation Act, of 1996, has largely adopted this model in India. Arbitration and conciliation law is still in its infancy and growing. In this regard, precedents are playing a crucial role. When it comes to arbitration and conciliation, domestic rules frequently diverge from international ones. By conducting in-depth research on the relevant statutes, significant international decisions, and significant domestic decisions of the Supreme Court of India, the purpose of the following paper is to provide an overview of the primary and minor distinctions that exist between conciliation and arbitration.

Introduction

Alternative dispute resolution, or ADR, is a method of dispute resolution that does not require a formal adjudication or decision from a state official and can be used inside or outside of the legal system. The idea that different kinds of disputes may necessitate different processes is expressed by the term “appropriate” dispute resolution. There is no one legal or dispute resolution method that can handle all kinds of human disagreement.

Mediation is a process in which a neutral and impartial third party helps the parties reach a consensual agreement without making a formal decision. A third party or panel of arbitrators, typically chosen by the parties themselves, renders a decision in terms less formal than a court, frequently without a written or reasoned opinion, and without formal rules of evidence being applied, in arbitration, which most closely resembles formal adjudication. A wide range of primary and hybrid processes, including dyadic negotiation, facilitative, advisory, and decisional action by a wide variety of third-party neutrals, are now included in the full panoply of ADR processes. Sometimes, these processes are combined to create new dispute-processing formats.

The conflict between people is a given. The majority of disputes that lead to legal action are settled outside of the courtroom, and many disputes that are resolved by the judges would be best resolved outside of the courtroom. Methods of dispute resolution other than court-based litigation are referred to as alternative dispute resolution (ADR).

Arbitration and conciliation are now widely used as the most common dispute resolution methods around the world. Fundamentally, they are distinct. However, the ARBITRATION AND CONCILIATION ACT of 1996 recognizes these approaches as legitimate alternative methods of dispute resolution for the Union of India.

What is Arbitration?

Arbitration is defined as “any arbitration whether or not administered by permanent arbitral institution” in sub-section (1) (a). Parties should try to resolve their disagreements privately, either through mutual concessions or through the mediation of a third party, as much as possible. Arbitration is generally referred to as when the parties agree to have their disputes resolved through the mediation of a third party with all of the formalities of judicial adjudication. As a result, arbitration refers to the process by which two or more parties submit their dispute to the judgment of a third party known as the “arbitrator,” who is tasked with rendering a judicial decision on the matter.

“Arbitration” is thus defined by Romilly M R in the well-known case of Collins v Collins:

“An Arbitration is a reference to the decision of one or more persons, either with or, without an umpire of a particular matter in difference between the parties.”

The issue in dispute must be of a civil nature, regardless of the type. Arbitration is not an option for criminal matters. Except as provided in the Act, any reference to arbitration in a criminal matter cannot be referred to arbitration because criminal courts cannot be deprived of their authority to prosecute criminals.

The following is an explanation for why arbitration should be preferred by The Supreme Court of India: Due to the high number of pending cases in the courts and the high cost of litigation, arbitration is seen as an important alternative dispute resolution method that should be encouraged. In order for litigants to have faith in the expedient process of resolving their disputes, arbitration needs to be regarded with the utmost respect.

WHAT IS CONCILIATION?

Conciliation is the subject of Part 3 of the Arbitration and Conciliation Act. Conflicts can be resolved through conciliation without resorting to litigation.

The process by which the conciliator keeps the parties’ discussions going is known as conciliation. S. 61 points out that disputes, whether contracted or not, can be resolved through conciliation. However, the legal relationship must be the source of the disagreements. This indicates that the dispute needs to be one that places one party in a position to sue and the other in a position to be sued. The term “difference” was used in the Act of 1940, but the new Act uses the term “dispute” instead.

In any case, the word ‘Debate’ has not been characterized in the new Demonstration of 1996. Under normal definitions, the term “dispute” implies that one party claims rights and the other party denies them. The term “difference” has a broader meaning, while “dispute” has a more positive connotation, and when the differences between the parties took on a more specific and tangible form, they became a dispute.

Building a positive relationship between the parties is part of conciliation. The conciliator even advises the parties on specific solutions by making proposals for settlement and plays a relatively direct role in the actual dispute resolution. The neutral is typically regarded as an authoritative figure in conciliation who is in charge of determining the most favorable outcome for the parties. The terms of a settlement are frequently developed and proposed by the conciliator, not the parties. The parties seek guidance from the conciliator, and the parties decide on the proposals made by the conciliator.

ARBITRATION V. CONCILIATION: VITAL DIFFERENCES:

• Conciliation is another method of dispute resolution, like arbitration, but they differ in many important ways. The fact that the parties choose or nominate a third party to settle their disputes is the only thing that appears to connect the two.
• The main differences between arbitration and conciliation are as follows: the mode of arbitration can be used for both current and future disputes, whereas the method of conciliation typically applies to disputes that are already in progress. They can include a clause in their contract that allows them to refer any future disputes arising from their contractual relationship to arbitration. The parties are bound by this clause. The doctrine of separability governs an arbitration agreement, meaning that it is a legally binding contract in and of itself and must be executed whenever a dispute arises. According to Section 7(2) of the Arbitration and Conciliation Act of 1996, the parties initiate the conciliation process by sending a written invitation and accepting it in writing. The greeting might be acknowledged. {S. (62), Arbitration and Conciliation Act of 1996, or rejected by the opposing party because it is only an invitation and has no legal force. The earlier composed understanding in discretion orders a limiting impact upon the gatherings and its break by falling back on court, urges court to allude the make a difference to the intervention and gatherings are limited by the arbitral understanding. The arbitration agreement itself suggests that disputes be resolved through arbitration. If one party goes to court, the other party can ask the court to refer the matter to arbitration, and the court is obligated to do so.
• According to section 77 of the New Act of 1996, parties are prohibited from initiating arbitration or judicial proceedings while conciliation proceedings are in progress.
• The act provides for a single arbitrator in the event that the parties are unable to agree on an even number of arbitrators. However, in the event of conciliation, only one arbitrator is required by default. However, the parties may each appoint one conciliator; the other two are not required to appoint the third. Gatherings might concur for a few conciliators and greatest number of conciliators can’t surpass three. In most cases, conciliators should work together when there are multiple conciliators. There is no limit on arbitrators’ maximum number, but their total should not be even.
• When the parties agree to have three arbitrators, one of them will be chosen by each party, and the other two will choose the third arbitrator, who will be in charge of the proceedings. The Arbitration and Conciliation Act of 1996, sections 10 and 63.

The Apex Court explained this provision’s scope in Ethiopian Airlines v. Stic Travels (P.) Ltd., The third arbitrator, who serves as chairman, will be appointed by two arbitrators. Even if one of the party’s nominated arbitrators passes away, he cannot be considered an umpire, and there is no new right to appoint a new chairman.

The court explained once more in Narayan Prasad Lohia v. Nikunj Kumar Lohia that if the parties do not specify the number of arbitrators, section 11 will apply similarly. In addition, the court said in a landmark decision in the same case that it is not necessary to appoint a third arbitrator if the two arbitrators agree on the same award or if the parties to the dispute fail to object to a two-member panel or tribunal under section 16, they are considered to have waived their right.

While the conciliator’s job is to help the parties reach an amicable settlement of their dispute (Section 72), the arbitrator also actively arbitrates and makes an arbitral award to settle the dispute.

Section 62 states once more that a party applying for conciliation must briefly describe the issue at hand. However, the nature of the dispute must be made abundantly clear in an arbitration agreement. Typically, the parties include a clause that states that any dispute arising from the contract must be referred to arbitration and that damages will only be awarded for the purpose of arbitration.

This section is of the utmost significance. However, in the event of conciliation, the existence of such a clause is not required.

In conciliation, one party may ask the conciliator to keep factual information confidential and not disclose it to the other side. However, this is only a requirement if the other party asks, as the conciliator is required to share all such information with the other side to help it better represent its case and clarify its positions regarding any allegations made against it. S.72.}

However, in arbitration, the information provided by one party is scrutinized by the other. As a result, the confidentiality of arbitration awards is unaffected. There is no privacy entomb se the gatherings, be that as it may, all ADR frameworks are classified methods, they are not accessible to the general population as points of reference as referable records of case regulations.

The conciliator is responsible for authenticating any settlement agreement that is made by the parties themselves. In contrast, an arbitration award is a judgment properly signed by the arbitrator and is not just a settlement agreement. Because of this, arbitration is referred to as having the most in common with a courtroom litigation process.

A written declaration from one party to the other party and the conciliator can end the conciliation process unilaterally, but it cannot end the arbitration process. S.32 and S.76: S.76 specifies four methods for concluding conciliation proceedings. These are: (i) The parties’ signing of the settlement agreement brings an end to the conciliation process.

(ii) The conciliator’s written declaration that further conciliation efforts are no longer justifiable marks the end of the conciliation process.

(iii) A written declaration from the parties to the conciliator stating that the conciliation proceedings have ended is sufficient to bring an end to them.

(iv) When one party notifies the other party and the conciliator in writing that the conciliation proceedings have ended, the proceedings are considered to have ended.

When it comes to a dispute that is the subject of the conciliation proceedings, the parties cannot generally initiate arbitration or judicial proceedings during those proceedings. There is a distinct procedure for concluding arbitration proceedings. Section 32 of the 1996 Arbitration and Conciliation Act contains them.

Arbitral proceedings must be ended either by the final arbitral award or by an order of the arbitral tribunal in accordance with subsection (2).

In the event of any of the following: (a) the claimant withdraws his claim (unless the respondent objects to the order and the arbitral tribunal recognizes a legitimate interest on his part in obtaining a final settlement of the dispute), (b) the parties agree on the termination of the proceedings, or (c) the arbitral tribunal finds that the continuation of the proceedings has become necessary or impossible for any other reason, the arbitral tribunal shall issue an order for the termination of the arbitral proceedings.

(3) The arbitral proceedings will bring an end to the arbitral tribunal’s mandate, subject to section 33 and subsection (4) of section 34.

In the case of Maharashtra State Electricity Board v. Datar Switch Gear Ltd., the court noted that it is impossible to list the circumstances under which the arbitral tribunal might decide that the arbitration proceedings should not go on. In most cases, it might include a party’s consistent behavior that makes the proceedings physically impossible to carry out.

Section 80 of the act imposes limitations on the conciliator, preventing him from serving as an arbitrator, a council, or a witness in any arbitration or judicial proceeding; however, no such restrictions apply to arbitrators or parties to arbitration proceedings.

The conciliation proceedings cannot be used as evidence in any arbitration or judicial proceeding, but the arbitration proceedings or awards may be used as evidence in any judicial proceeding. Section 81 of the act also makes provision for this.

Last but not least, an arbitrator must follow the law; if they don’t, the award can be overturned or appealed by the wronged party, but a conciliator can work without following the law. He is not bound by certain laws, like the Evidence Act and Civil Procedure Code. S.66}

CASES CITED

1. Collins v. Collins 28 LJ CH 186: (1858) 26 Beav 306
2. Ethiopian Airlines v. Stic Travels (P.) Ltd., AIR 2001 SC 2659
3. Narayan Prasad Lohia v. Nikunj Kumar Lohia AIR 2002 (1) (RAJ) SC 381 at 390-391
4. Maharashtra State Electricity Board v. Datar Switch Gear Ltd AIR 2003 (2) RAJ. LRJ 3135

BIBLIOGRAPHY: 

[1] B.P. Saraf and M. Jhunjhunuwala, Law of Arbitration and Conciliation (2000),Snow white, Mumbai. 

[2] Gerald R. Williame (ed.), The New Arbitration and Conciliation Law of India, Indian Council of Arbitration (1998), New Delhi 

[3] A.K. Bansal, Law of International Commercial Arbitration (1999), Universal Law Publications, Delhi 

[4] P.C. Rao & William Sheffield, Alternative Disputes Resolution-what it is And How it works? (1997) Universal Law Publications, Delhi

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