With the ever-expanding world and the humans’ ever-increasing needs, the need for an alternate legal system soon arouses as the current system of Courts lacked the manpower to curtail to the general public alone. Especially in countries as densely populated as India, where a single case may take over a decade to be resolved, alternate resolutions for the current judicial system became a primary concern – especially in case of commercial and civil matters dealing with property and businesses that may affect the economy of the nation if not addressed within a given time period.
In such cases, time is the essence and thus, Alternate Dispute Resolutions (ADR) were introduced as the means to solve this issue. ADR, as its name suggests, is the alternate measure to the traditional legal system through which the parties settle their dispute between themselves with the help of a third party. This method usually takes place outside the Court, but the parties involved can still opt for litigation if no settlement is reached between them.
ADR is mostly an ‘external’ matter to the Court in which the parties involved have the complete autonomy of choosing the method of their proceedings as well as the appointment of the third party to facilitate the communication if they wish as such. However, there is also an Arbitration Tribunal established in the cases where the parties may not reach an agreement in deciding the aforementioned factors.
There are three known types of ADR; arbitration, meditation and conciliation. While they may be interconnected to one another, each type is distinct from the other based on their different method of proceedings. While arbitration is quite formal with its proceedings, conciliation is a bit more informal and less strict; mediation is even more so. In this blog, we will focus more on conciliation and its role in the field of labour law and industrial disputes.
In a nutshell, conciliation is an alternate dispute resolution instrument in which the parties seek settlement outside the Court with the help of a third party; in this case, it is the conciliator. The primary duty of the conciliator consists of facilitating communication between the parties and helping them arrive at a settlement by resolving the dispute and addressing the issue raised.
It is more informal than usual Court proceedings as well as arbitration, giving the parties the flexibility to exercise full autonomy and decide the time, structure and manner of the proceedings according to their own preference. And while it is similar to mediation concerning its flexibility, the conciliator is more involved than a mediator during the proceedings and actively helps the parties to arrive at a settlement by the end of the proceedings.
This settlement will be proposed by the conciliator on the basis of both the party’s interest, financial status as well as any other factor that may play a role in the resolution of the dispute in concern. After this, the settlement then shall be finalized in the Court and given the power as a Court Order upon the parties’ approval.
The conciliator usually is a person trained to handle such disputes and acts as a neutral party during the whole process; thus, giving both parties an equal chance to present their issues and resolve them without any unfair favourability. This becomes especially beneficial during cases concerning industrial disputes and labour law as most of the time the parties involved are in an employer-employee relationship which may cause a power imbalance during the whole process.
To avoid such uneven and unilateral resolution, conciliation becomes exceedingly necessary.
Role in Industrial Disputes
With the field of labour law being as fickle and ever-changing as it is, the number of cases from this area increases day by day due to the arising disputes between employers and employees. In such a scenario, alternate dispute resolutions help a lot in providing a faster and comparatively cheaper alternative to the traditional and lengthy Court system; thus, providing them with an option to approach a settlement on equal grounds.
The conflict dynamic in most of the cases concerning industrial disputes is generally based on uneven ground due to one party having more authority than the other – that is, during the cases between employer and employees. In such cases, it becomes important to not only level the field by giving both the parties equal opportunity to represent but also the need for proper communication and resolution of the dispute by discussing the issues and interests of the parties is also needed.
And conciliation is the best ADR method for these types of cases as it helps the parties reduce the extent of their differences while also arriving at a settlement that will be mutually beneficial to both parties. That is, of course, the conciliation process is deemed to be successful.
A successful labour conciliation can help to facilitate a cooperative relationship between the parties while solving the pressing dispute in an efficient manner that will be in the interests of both parties. And since both the parties would have to agree to come to a settlement instead of a decision being imposed on them by a third party, the terms and procedure would be satisfactory to both as they would have the discretion to choose and thus, would be much easier to enforce.
In the end, an effective conciliation would help in the betterment of the relationship between the parties and also maintain social peace – something that is quite beneficial and necessary in the field of labour law as the employment of one party often depends on the other. And while there are cases between two employer parties as well, the numbers become quite insignificant when compared to the cases between employer-employee.
While the procedure of conciliation may vary from case to case at the complete discretion of the parties, some established steps can be found common in each.
The procedure starts with the scope of whether the dispute in question is contractual or not while extending to the existence of a legal relationship between the two parties, as per section 61 of the Arbitration and Conciliation Act, 1996. Once this is established, a notice is sent to the other party, inviting them to conciliate the issue under section 62 (1) of the aforementioned Act. If the other party accepts the invitation then the conciliation proceedings may proceed as such. In case of rejection, no proceedings would be initiated, and the matter may be referred back to the Court. While in case of no answer within the thirty days of such a notice being sent to the other party, it shall also be considered as a case of rejection.
Formally, there are two types of conciliation; one is voluntary conciliation in which both the parties actively or voluntarily seek and participate in conciliation, while the other one is compulsory conciliation in which one or both the parties do not actively seek conciliation but are referred to do so either by the Court or the proceedings in concern. In the case of labour law, the latter one rings truer as conciliation stands as a formal procedure to resolve the arising industrial dispute.
In compulsory conciliation, if one party refuses to initiate the proceedings then the other can resort back to arbitral or judicial proceedings to further the case. However, this can only be done in case of failed conciliation, refusal to conciliate, or after the termination of conciliation, if so necessary; one cannot resort the same dispute matter to arbitral or judicial proceedings during the conciliation proceedings, as given under section 77 of the Arbitration and Conciliation Act, 1996.
Meanwhile, Section 63 of the said Act sets the rules regarding the number of conciliators to be involved. According to the said section, more than one conciliator can be involved if the parties agree; however, their number should not exceed that of three and they should act unanimously while proposing recommendations and suggestions to the settlement. The appointment of the conciliator should mostly be at the discretion of the parties; they can also seek the help of an institution for the appointment.
Once the conciliator is mutually decided by the parties, the proceedings shall start with the conciliator preparing for the case from their side. At this stage, they can also ask for the parties to submit a written statement regarding the dispute, highlighting the nature of the said dispute along with the issues arising.
The conciliator can further ask for the facts, evidence and any other additional information from the parties if so required. However, the copy of any such statement is to be sent to the other party while submission, according to section 65 of the Arbitration and Conciliation Act, 1996.
Once the written statement is provided, the conciliator now starts facilitating the communication between the parties as per his duty under section 67 of the aforementioned Act. The conciliator has the freedom to conduct the proceedings either jointly with both parties present or one-on-one with each party separately as per section 69 (1) of the Act. The discretion of this conduct solely depends on the parties’ wishes and the judgement of the conciliator, considering the circumstances of the case and the current requirements.
If any administrative assistance is required for the conduction of the proceedings, the parties and/or the administrator may seek such assistance from the suitable institution under section 68 of the Arbitration and Conciliation Act, 1996.
Once communication is established and the dispute is discussed in detail along with the interests of the party, the conciliator would help them reach a ‘middle ground’ or a compromise, where both the parties can mutually gain their interests. After such a ground is reached, the conciliator would formulate the terms of a possible settlement in accordance with section 73 of the Arbitration and Conciliation Act, 1996 and submit it to the parties for further suggestions and changes.
The finalization of the agreement takes place once both the parties are satisfied with the terms and sign the settlement to bind it legally. After finalization, the conciliator shall authenticate the settlement agreement and provide a copy to each party following the procedure established under the Arbitration and Conciliation Act of 1996. With this, the conciliation proceedings are terminated under section 76 (1) of the Act.
While conciliation is both faster and more cost-efficient than the traditional judicial system, it almost gives the whole autonomy to the parties to choose their proceeding as well as conciliator or third party to help facilitate communication. This helps to make the procedure much more flexible and simpler for the parties to follow, making it more advantageous for the parties who may not be accustomed to legal proceedings – like the employees or the unions.
Other than that, the discretionary power to choose one’s own proceedings also helps in resolving the disputes more efficiently as the proceedings vary from case to case and change as per the comfort of the parties involved. The appointment of the conciliator also gives the parties the chance to appoint someone based on their knowledge in the field, availability, etc which may help in the proceedings.
Lastly, the confidentiality in conciliation proceedings is more than that of arbitral or judicial proceedings. According to section 70 of the Arbitration and Conciliation Act, 1996, any information disclosed to the conciliator during the proceedings by either or both of the parties shall be kept confidential and cannot be used against either of the parties in any future proceedings. In fact, if one party discloses any fact to the conciliator, then the conciliator is bound to keep such fact confidential even from the other party if the concerning party wishes as such.
Meanwhile, sections 80 and 81 of the Arbitration and Conciliation Act, limit the usage of any information or fact disclosed during the conciliation proceedings to be used as evidence in any further (related or unrelated to the dispute) arbitral or judicial proceedings. This also includes the conciliator being presented as a witness.
Such maintenance of confidentiality facilitates a trusting environment for the parties involved, giving them an equal platform to conciliate and settle the issue without worrying to be incriminated in any future proceedings.
While the world is advancing faster than ever before, the need for faster resolution of conflict arouses just as urgently. And with the dependency of the economy of the nation on such industrial disputes, it becomes necessary to resolve them as soon as possible. In such a scenario, alternate dispute resolutions help a lot in resolving these issues quickly without judicial intervention. It also ensures that the rights of the parties are not infringed while also irradicating any chances of unfair favourability; thus, giving both the parties an equal stand and an equal chance to achieve their interests through a settlement as fair partners.
 Labour Commissioner, 2018, Conciliation Proceedings, Available at: https://labour.delhi.gov.in/content/conciliation-proceedings [Accessed 21 February 2022].
 Arbitration and Conciliation Act, 1996, Sec 67 (1), Acts of Parliament, 1996 (India).
 Arbitration and Conciliation Act, 1996, Sec 61, Acts of Parliament, 1996 (India).
 Arbitration and Conciliation Act, 1996, Sec 62 (1), Acts of Parliament, 1996 (India).
 Arbitration and Conciliation Act, 1996, Sec 77, Acts of Parliament, 1996 (India).
 Arbitration and Conciliation Act, 1996, Sec 63, Acts of Parliament, 1996 (India).
 Arbitration and Conciliation Act, 1996, Sec 65, Acts of Parliament, 1996 (India).
 Arbitration and Conciliation Act, 1996, Sec 67, Acts of Parliament, 1996 (India).
 Arbitration and Conciliation Act, 1996, Sec 69 (1), Acts of Parliament, 1996 (India).
 Arbitration and Conciliation Act, 1996, Sec 68, Acts of Parliament, 1996 (India).
 Arbitration and Conciliation Act, 1996, Sec 73, Acts of Parliament, 1996 (India).
 Arbitration and Conciliation Act, 1996, Sec 76 (1), Acts of Parliament, 1996 (India).
 Arbitration and Conciliation Act, 1996, Sec 70, Acts of Parliament, 1996 (India).
 Arbitration and Conciliation Act, 1996, Sec 80 & 81, Acts of Parliament, 1996 (India).
Author: Debapriya Biswas,
Amity Law School, Noida (3rd year)