Ever since the enactment of Arbitration and Conciliation Act 1996 (“Act”), Indian Legislature has been showing it’s intent to keep pace with the growing popularity of Arbitration as preferred mode of dispute resolution in commercial matters. The amendment of 2019, received the assent of the President of India on 9th August, 2019.
Timeline for making the award – Section 29A and Section 23
- The Amendment takes the international commercial arbitrations out of the time limitations provided under Section 29A(1).
- The Amended Act introduces Section 23 (4), which provides that statement of claim and Statement of defense shall be completed within a period of six months from the date the arbitrator received notice of their appointment.
- Time period of one year for making of the award as provided under Section 29 A(1) shall begin from the date of completion of pleadings (statement of claim and statement of defense) only. Therefore, six month is the maximum time permissible for completion of pleading and the time period of one year for making of award shall commence irrespective of non-completion of pleadings within the said period. Conversely, if the pleading are completed before six months, the time period of one year for making of award shall commence forthwith the completion of the pleading.
- Particularly, the time spent in filing of rejoinder [in cases without any counter claims) or rejoinder to counter claim (in cases with counter claims) will not be considered as time spent in completion of pleading under Section 23 (4)].
- The amendment also provides that during the period an application for enlargement of time for making of award is pending before the court under Section 29 (5), the mandate of the arbitrator shall continue till disposal of the application. This amendment will help the Tribunal to continue the proceedings without waiting for court’s decision on enlargement of time for making of award under Section 29(5).
- 2015 amendment shall only apply to arbitration proceedings commenced on or after 23rd October, 2015 and to the court proceedings arising out of or in relation to the arbitration proceedings commenced on or after 23rd October, 2015.
The 2019 amendment acts clearly aims at removing the difficulties which were being faced during the conduct of Arbitration proceedings and the court proceedings arising therefrom. With separate time frame for completion of pleading, arbitral tribunal will have full period of one year for conducting the trail and passing the award.
What is Conciliation?
Conciliation is dispute resolution machinery in which a third neutral party facilitates settlement of dispute amicably. Conciliation in India is governed ad regulated by Arbitration and Conciliation Act, 1996.
Why to use conciliation over litigation?
It is cost and time effective to amicably settle disputes between the parties wherein, once the settlement agreement is signed by the parties as provided under section 73 (3) of Arbitration and Conciliation Act 1996, it acquires the character of an arbitral award as provided under section 74 of the Act. Thus it becomes final and binding.
What is difference between Conciliation and Arbitration?
- Arbitration refers to a method of resolving commercial disputes, wherein the management and their respective positions approaches to the neutral third party, who takes a decision and imposes it.
- Arbitration is an adjudicatory process which results in binding decision. For Arbitration there need to be prior written Agreement for Arbitration between the parties.
- Conciliation is a method of resolving the dispute, wherein an independent person, who meet the parties jointly and severally and helps them to arrive at, negotiated settlement or resolve their differences.
- It is cost and time effective to amicably settle disputes between the parties wherein, once the settlement agreement is signed by the parties as provided under section 73 (3) of Arbitration and Conciliation Act 1996 its acquire the character of an arbitral award as provided under section 74 of the Act. Conciliation proceeding can be started on the invitation in writing by a party to the other party and on the acceptance, in writing, by other party, the procedure may continue.
How does a Conciliation proceeding commences?
Conciliation proceedings can be initiated only by a written invitation. The party sending the invitation shall identify the dispute or disputes in respect to which it is felt that the dispute could be resolved. The invitation shall also contain the necessary particulars, with proper jurisdiction of the same, so that the matter to be considered by the Conciliation is self- explanatory to other party. Either party can initiate conciliation proceedings. The Conciliation proceeding commence only when the other party accepts the invitation in writing. On the receipt of the invitation for Conciliation, the other party has two options:
- Either to accept the invitation
- Reject the invitation
Whether it is acceptance or rejection, the other party has to communicate the same in writing within 30 days, if no time period is specified in the invitation. If any other time limit is specified is specified in the invitation, then the acceptance or rejection should be sent within specified time.
Appointment and Number of Conciliators
Once it is agreed that the dispute will be settled through conciliation, the conciliators are appointed through mutual agreement between the parties in accordance with section 63 and 64.
Section 63 provides as under:-
- There shall be 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.
Section 64 provides for appointment of Conciliators as under:
- Subject to sub section (2),
- In Conciliation proceedings with one Conciliator, the parties may agree on the name of a sole conciliator;
- In Conciliation proceedings with two Conciliators, 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.
- The Parties may enlist the assistance of suitable intuition or person in connection with the appointment of Conciliators, and in particular:-
- A party may request such an intuition or person to recommend the names of suitable individuals to act as a Conciliator; or
- The parties may agree that the appointment of one or more conciliators be made directly by such an institution or person:
Provided that in recommending or appointing individuals to act as Conciliator, the institution or person shall have regard to such consideration 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 conciliators of a nationality other than the nationalities of the parties.
Can Court appoint Conciliators or not?
No, a Court can not appoint conciliators on its own. They are appointed with the consent of the parties.
What is Role of Conciliator?
Under section 67:
- The conciliator shall assist the parties in an independent and impartial manner in their attempt to reach an amicable settlement of their dispute.
- 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.
- 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.
- 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 therefor.
Can Conciliation proceedings be terminated or not?
Under Section 76, Conciliation proceedings can be terminated at any time by any party.
The Conciliation proceedings shall be terminated:-
- By the signing of the settlement Agreement by the parties on the date of the agreement; or
- 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
- 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
- By a written declaration of 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.
Can an Arbitrator act as Conciliator or not?
Arbitrator can act as Conciliator only if agreed by the parties.
Evidence before Conciliators
Section 81 deals with admissibility of evidence in other proceedings and reads that:
The Parties shall not rely on or introduce as evidence in arbitral or judicial proceedings, whether or not such proceedings relate to the dispute that is the subject of the Conciliation proceedings:-
- Views expressed or suggestions made by the other party in respect of a possible settlement of the dispute;
- Admissions made by the other party in the course of the Conciliation proceedings;
- Proposals made by the Conciliator;
- The fact that, the other party had indicted his willingness to accept a proposal for settlement made by the Conciliator.
Conclusion
The conciliation as a means of alternate dispute resolution in the Act is definitely a positive step towards encouraging parties to opt for it. Taking into consideration the time, effort and money involved in pursuing cases before a court or an arbitrator in India, conciliation should act as the perfect means for resolving disputes, especially those of commercial nature. Hence, parties should prior to initiating arbitration or judicial proceedings, opt for conciliation as a means for resolving disputes. In case conciliation proceedings fail, only then should the disputants look at arbitration or litigation to resolve the dispute.