THE ARBITRATION AND CONCILIATION ACT 1996 (India)

 

THE ORIGINAL ACT

Indian Arbitration Act of 1940 is a very old enactment and needs modification so as to meet with the challenges that are to be faced in the context of the economic liberalisation policy adopted by the Govt. of India. The Arbitration Act of 1940 arbitration matters pending prior to the date to be notified shall continue to be governed by the Indian Arbitration Act -1940 has now become outdated. The Law Commission of India and several other bodies involved in trade and industry have opined that the law in this regard needs to be amended, so as to make it responsive.

The United Nations Commission on International Law, adopted in 1995, the Model Law of lnternational and Commercial Arbitration. The General Assembly of the United Nations had also recommended that all countries give due consideration to the Model Law so as to make the law on the subject uniform and meet with specific needs of the International Commercial Arbitration.

OBJECTIVE OF THE ARRITRATION & CONCILIATION BILL 1995

With the above general objective in mind, the Government of India had decided to present a bill before the Parliament for amendment of the Arbitration Act (Bill No.XXX of 1995), 'The Arbitration and Conciliation Bill 1995' was introduced before the National Parliament as per the statement of objectives and reasons contained in the bill. The main objectives of the bill were as under;

a) To comprehensively cover international commercial arbitration and conciliation; as also domestic arbitration and conciliation.

b) To make provision for an arbitral procedure which is fair, efficient and capable of meeting the needs of the specific arbitration.

c) To provide that the arbitral tribunal gives reasons for its arbitral work

d) To ensure that the arbitral tribunal remains within the limits of its jurisdiction.

e) To minimise the supervisory role of courts in the arbitral process.

f) To permit an arbitral tribunal to use mediation, conciliation or other procedures during the arbitral proceedings to encourage settlement of disputes.

g) To provide that every final arbitral award is enforced in the same manner as if it were a decree of the court.

h) To provide that a settlement agreement reached by the parties as a result of conciliation proceedings will have the same status and effect as an arbitral award on agreed terms on the substance of the dispute rendered by an arbitral tribunal, and

i) To provide that for purposes of enforcement of foreign awards, every arbitral award made in a country to which one of the two international conventions relating to foreign arbitral awards to which India is a party applies, will be treated as a foreign award.

PART I – ARBITRATION

Section 1 - Short title, extent and Commencement

Section 2 - Definition

Section 3 - Written Communication

Under the arbitration and conciliation ordinance 1996, very specific provision, as regards receipt of written communication, has been made. The section prescribes that any written communication shall be deemed to have been received, if it is delivered to the addressee personally or at his place of business, habitual residence or mailing address. This would mean that if the written communication is sent by a registered or by any other means, which provides a record of the attempt to deliver it, it would be deemed that the communication is received by the party to which it is delivered.

The engineers/owners dealing with contracts should, therefore, in the event of disputes with the contractor ensure that all communications with the contractor are:

1) Written

2) Unambiguous and specific

3 ) Clear in words and construction.

4) Sent by registered post.

SECTION 7 ARBITRATION AGREEMENT

Section 7 of the ordinance deals with the matter of arbitration agreement. It defines arbitration agreement as the agreement between the parties to submit to arbitration all or certain disputes, which have arisen or which may arise, between them in respect of a defined legal relationship, whether contractual or not. The section also specifies that arbitration agreement may be in the form of an arbitration clause contained in the original contract or in the form of a separate agreement. Thus, even if the main contract does not have a specific clause relating to submission of disputes for arbitration, the parties to the contract can mutually decide and agree to submit their disputes for arbitration by a separate and independent contract.

The section requires that the arbitration agreement shall be in writing and can be contained in;

a) A document signed by the parties,

b) An exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement; or

c) An exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other.

Thus, if the main contract does not have a specific clause relating to arbitration, but subsequently the contractor requests the owner/engineer, by a registered communication, to refer the matter for arbitration and the owner/engineer, in response to such a request confirms by a letter or a telegram or a telex, that the contractor's request has been agreed to, it would be concluded that an independent agreement has been executed between the parties, for referring the matter for arbitration.

Thus, if a clause, as given hereunder is provided in a contract, it would be contrued that a valid arbitration agreement exists between the parties.

"All disputes relating to this contract shall he referred for arbitration in accordance with the arbitration and conciliation act 1996, "

SECTION 8 POWERS OF JUDICAL AUTHORITY

Section 8 empowers a judicial authority to refer the parties to arbitration in the following circumstances.

1) An action is brought in a matter which is the subject of an arbitration agreement.

2) A party applies for the purpose before submitting his first statement on the substance of dispute.

3) The application to the judicial authority shall be entertained only if it is accompanied by the original arbitration agreement or a duly certified copy.

Hear judicial authority would mean the principal court of original civil jurisdiction and includes the High court in exercises of its original civil jurisdiction to decide the questions forming the subject matter of the arbitration.

SECTION 10 & 11: APPOINTMENT OFARBITRA TION TRIBUNAL

Section 10 of the act deals with the matter of appointment of arbitrators. The parties are free to determine the number of arbitrators, provided that such number shall not be even.

Under Section 11 of the ordinance, the parties to the contract can appoint a person of their choice and of any nationality as an arbitrator to hear and settle the disputes relating to the contract. The parties also get a right under this section of the law to decide and agree upon the procedure for appointing the arbitrator or arbitrators.

Sub Section 3 of Section 11 prescribes that each party shall appoint one appoint and the two arbitrators so appointed, shall appoint the third arbitrator, who shall act as a presiding arbitrator. In the act of 1940, similar provision - exists but the third arbitrator is called as the 'umpire'.

It may happen that the parties fail to appoint arbitrators as contained in sub section 3 above, or appointed arbitrators, fail to appoint the third arbitrator. The law now provides a remedy for this eventuality also under sub section 4 of Section 11.

Under this sub section, if a party fails to appoint a arbitrator within a period of 30 (thirty) days from the receipt of a request to do so, from the other party or the two arbitrators appointed by the parties fail to agree on the third arbitrator, within 30 days from the date of their appointment the Chief Justice of the concerned High Court shall have the power to make the appointment of the arbitrators upon request of a party. The Chief Justice of the High Court shall also have the power to designate any person or institution to appoint the arbitrator. Likewise, a sole arbitrator can also be appointed by the Chief Justice of the High Court or any person or Institution designated by him, if parties to a contract, fail to select and appoint the sole arbitrator.

The sub section 7 of the said section 11 also prescribes that the decisions as regards the appointment of arbitrators by the Chief Justice of the High Court or person or institution designated by him shall be final and binding to the parties.

The Chief Justice while appointing an arbitrator shall have due regard to;

a) Any qualification required of the arbitrator by the agreement of the parties; and

b) Other considerations as are likely to secure the appointment of an independent and impartial arbitrator.

In case of international arbitration, the Chief Justice of India shall be competent to appoint an arbitrator of a nationality, other than the nationalities of the parties, where the parties to a contract belong to different nationalities.

SECTION 12 GROUNDS FOR CHALLENGING THE APPOINTEMENT OF ARBITRATORS

The appointment of an arbitr8.tor can be challenged under section 12 of the ordinance only on following grounds

a) Circumstances exist that give rise to justifiable doubts as to his independence or impartiality' or,

b) He does not possess the qualifications agreed to by the parties.

c) A party may challenge an arbitrator appointed by him, or in whose appointment he has participated, only for reasons of which he becomes aware after the appointment has been made.

SECTION 13 PROCEDURE OF CHALLENGE

a) Parties are free to agree on a procedure for challenging the arbitrator.

b) The party who intends to challenge the arbitrator, shall within 15 (fifteen) days after becoming aware of the constitution of the arbitration tribunal or after becoming aware of the circumstances mentioned in Section 12, send a written statement of the reasons for the challenge to the arbitral tribunal.

c) The tribunal shall decide upon the challenge if;

i) The arbitrator withdraws from office,

ii) The other party agrees to the challenge,

d) If the challenge is not successful the tribunal shall continue the proceedings and make an award.

e) The party challenging the arbitrator may apply for setting aside the award under Section 34. .

SECTION 16 JURISDICTION OF THE ARBITRATION TRIBUNAL

Section 16 of the Law deals with the jurisdiction of the arbitration tribunal. The arbitral tribunal is vested with the authority to rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement and for that purpose:

a) An arbitration clause which forms part of a contract shall be treated & as an agreement independent of the other terms of the contract and

b) A decision by the arbitral tribunal, that the contract is null and void shall not mean, that the arbitration clause also stands to be invalid Section 16 prescribes the following principles relating to the jurisdiction of the arbitral tribunal;

1) A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence.

2) A plea that the arbitral tribunal is exceeding the scope of it s authority, shall be raised as soon as the matter is alleged to be beyond the scope of its authority is raised during the arbitral proceedings.

3) The tribunal shall have the power to admit the pleas mentioned above at a later time also if it considers the delays to be justified.

SECTION 17 INTERIMMEASURES

Section 17 is a noval incorporation of law. It gives power to the arbitral tribunal to order interim measures of protection in respect of the subject matter of dispute. The tribunal may require a party to provide appropriate security in connection with the measure ordered under this section.

SECTION 19 APPLICATION OF CODE OF CIVIL PROCEDURE AND INDIAN EVDENCE ACT

Under Section 19 of the ordinance, it has been categorically laid down that the code of civil procedure 1908 or the Indian Evidence Act 1972 shall not be binding upon the arbitral tribunal. The parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting its procedures. The power of the tribunal also includes the following;

1) Conduct the proceedings in the manner which the tribunal considers appropriate, if the parties fail to decide upon the procedure to be followed.

2) Determine the admissibility of claims.

3) Determine the relevance of the claims and evidence.

4) Materiality and weight of any evidence.

SECTION 26 APPOINTMENT OF EXPERTS BY THE TRIBUNAL

The Section 26 of the new act deals with the appointment of experts by the arbitral tribunal. The tribunal shall have the power to appoint one or more experts to report to it on specific issues to be determined by the arbitral tribunal and require a party to provide the expert with any relevant information or produce or to provide any relevant document, goods or other property for his inspection. The expert shall on request of a I party make available to that party, for examination all documents, goods or other property in the possession of the expert which he was provided in order to prepare his report.

SECTION 27 COURT'S ASSISTANCE IN TAKING EVIDENCE

In the earlier act of 1940, there was a provision for. f stating a case before the civil court for decision relating to the matters referred to the arbitrator which required specific interpretation of law and evidence. In the same manner, the new, law under section 27 also authorises the arbitral tribunal, or the party, to apply to the court for assistance in taking evidence. The court within its competency and according to its rules, on taking evidence, execute the requests by ordering that the evidence be provided directly to the arbitral tribunal.

SECTION 28 RULES FOR SUBSTANCE OF DISPUTE

The section 28 of the ordinance provides for the decision making by the arbitrators as under;

1) In an arbitration other than an international commercial arbitration, the arbitral tribunal shall decide the dispute submitted to the arbitrator in accordance with the substantive law in force in India.

2) In case of an international commercial arbitration the arbitral tribunal shall decide the dispute in accordance with the rule of law designated by the parties as applicable to the substance of the dispute.

3) In all cases the tribunal shall decide in accordance with the terms of the contract and shall take into account the usage of the trade applicable to the transaction.

SECTION 30 SETTLEMENTS OF DISPUTES

Under section 30 of this enactment, use of mediation, conciliation or other procedures of dispute resolution, has been permitted to the tribunal with the agreement of the parties, with to encourage the settlement of the disputes. If during the continuation of the arbitral proceedings, the parties settle their dispute, the arbitral tribunal shall terminate the proceedings and if requested by the parties and not objected to by the arbitral tribunal, record the settlement in the form of an arbitral rd on agreed terms. This provides more flexibility in dispute resolution and avoids loss of time as was happening in case of Indian Arbitration Act, 1940.

SECTION 31 BITRATIONA WARD

Section 31 of the ordinance deals with the arbitration award which enunciates following principles:

1. The award shall be made in writing and shall be signed by the members of the arbitral tribunal.

2. The award shall state the reasons upon which it is based unless the parties have agreed that no reasons are to be given or the award is an arbitral award on agreed terms under Section 30.

Under the Indian Arbitration Act, 1940, there was no provision for giving reasons for the award. The Supreme Court of India had in a series of cases held, that it is not necessary for the arbitrator to support their award with reasons unless the parties to the agreed contract specifically require that the award should be with reasons. The Supreme Court has also opined that it may not be fair and advantageous to give reasons as that would lead to challenge of the award on the grounds of one or more reason given, not being justified or in accordance with the law. However, in most of the engineering contracts the experience has been that awards without reason were not reasonable and involved huge financial loss specifically in case of the Govt. Contracts.

3) The arbitral tribunal may at any time, during the arbitral proceedings, make an interim arbitral award on any matter with respect to which it may make a final award.

4) The arbitral tribunal may, unless otherwise agreed by the parties, where and In so far as an arbitral award is for the payment of money, the arbitral tribunal may include, in the sum for which the award is made, interest at such rate as it deems reasonable, on the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made.

SECTION 33 CORRECTIONS IN THE AWARD

Section 33 empowers the arbitral tribunal to make corrections in the award or give interpretation of the award and to make additional award under certain conditions.

SECTION 34 POWERS OF THE COURT TO SET ASIDE THE AWARD

Section 34 deals with the powers of the court to set aside the arbitral award. This fundamentally defers from the enactment made under the Indian Arbitration Act, 1940. This is because the powers of the civil court are restricted. The court has the power to set aside the award under the following cases only:

1) A party was under some incapacity.

2) The arbitration agreement is not valid under the law to which the parties have subjected it.

3) The party making application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case.

4) The arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the admission to arbitration. If the decision .I Ion matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside.

5) The composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this law from which the parties cannot derogate.

6) The subject matter of the dispute is not capable of settlement by arbitration under the law for the time being in force.

7) The arbitral award is in conflict with the public policy of India.

8) The arbitral award shall be final and binding on the parties and persons claiming under them respectively (Section 35).

9) After expiry of time for making an application to set, aside the arbitral award under Section. 34 or if such application is refused, the award shall be enforced under the code of civil procedure, 1908 as if it is a decree of the court (Section. 36).

The Indian Arbitration Act 1940 required that the award should be filed before a civil court, if so desired by the parties (Section -14), to make it a rule of the court under the new Act of 1996 this provision has been deleted and instead section 36 provides that the award shall be enforced under code of civil procedure, 1908, in the same manner as if it were a decree of the court (Section -36).

SECTION 37 APPEALS

The section 37 of the Ordinance provides that appeal shall lie from the following Orders;

a) Granting or refusing to grant any measure under section 9.

b) Setting aside or refusing to set a side an arbitral award under Section 34.

c) Granting or refusing to grant an interim measure under Section 17.

However, the appellate provision is restricted to first appeal only. No second appeal is permitted. Right to appeal to Supreme Court is reserved.

APPLICABILITY

The ordinance shall apply to all arbitrations coming up after the date of effect of the new Law. Arbitration pending prior to this date shall be governed by the old law.

PART II

ENFORCEMENT OF CERTAIN FOREIGN AWARDS

SECTION 44

In this Chapter, unless the context otherwise requires, “foreign award” means an arbitral award on differences between persons arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India, made on or after the 11^th day of October, 1960.

a. in pursuance of an agreement in writing for arbitration to which the Convention set forth in the First Schedule applies, and

b. in one of such territories as the Central Government, being satisfied that reciprocal provisions have been made, may, by notification in the Official Gazette, declare to be territories to which the said Convention applies.

SECTION 45: Power of Judicial authority to refer parties to arbitration.

Notwithstanding anything contained in Part I or in the Code of Civil Procedure, 1908, a judicial authority, when seized of an action in a matter in respect of which the parties have made an agreement referred to in section 44, shall, at the request of one of the parties or any person claiming through or under him, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed.

SECTION 46: When foreign award binding

Any foreign award which would be enforceable under this Chapter shall be treated as binding for all purposes on the persons as between whom it was made, and may accordingly be relied on by any of those persons by way of defence, set off or otherwise in any legal proceedings in India and any references in this Chapter to enforcing a foreign award shall be construed as including references to relying on an award.

SECTION 47: Evidence

1. The party applying for the enforcement of a foreign award shall, at the time of the application, produce before the court--

a. the original award or a copy thereof, duly authenticated in the manner required by the law of the country in which it was made;

b. the original agreement for arbitration or a duly certified copy thereof; and

c. such evidence as may be necessary to prove that the award is a foreign award.

2. If the award or agreement to be produced under Sub-section (1) is in a foreign language, the party seeking to enforce the award shall produce a translation into English certified as correct by a diplomatic or consular agent of the country to which that party belongs or certified as correct in such other manner as may be sufficient according to the law in force in India.

Explanation: In this section and all the following sections of this Chapter, “Court” means the principal Civil Court of original jurisdiction in a district, and include the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction over the subject-matter of the award if the same had been the subject matter of a suit, but does not include any civil court of a grade inferior to such principal Civil Court, or any Court of Small Causes.

SECTION 48: Conditions for enforcement of foreign awards:

1. Enforcement of a foreign award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the court proof that -

a. the parties to the agreement referred to in section 44 were under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or

b. the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or

c. the award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration:

Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be enforced; or

d. the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law f the country where the arbitration took place; or

e. the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.

2. Enforcement of an arbitral award may also be refused if the Court finds that-

a. the subject matter of the difference is not capable of settlement by arbitration under the law of India; or

b. the enforcement of the award would be contrary to the public policy of India.

Explanation :- Without prejudice to the generality of clause (b) of this sub-section, it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption.

3. If an application for the setting aside or suspension of the award has been made to a competent authority referred to in clause (e) of sub-section (1) the Court may, if it considers it proper, adjourn the decision on the enforcement of the award and may also, on the application of the party claiming enforcement of the award, order the other party to give suitable security.

SECTION 49 : Enforcement of foreign award.

Where the Court is satisfied that the foreign award is enforceable under this Chapter, the award shall be deemed to be a decree of that Court.

SECTION 50 : Appealable Orders

1. An appeal shall lie from the order refusing to—

a. refer the parties to arbitration under section 45:

b. enforce a foreign award under section 48, to the court authorized by law to hear appeals from such orders.

2. No second appeal shall lie from an order passed in appeal under this section, but nothing in this section, shall affect or take away any right to appeal to the Supreme Court.

SECTION 51 : Saving

Nothing in this Chapter shall prejudice any rights which any person would have had to enforcing in India of any award or of availing himself in India of any award if this Chapter had not been enacted.

SECTION 52 : Chapter II Not to Apply

Chapter II of this Part shall not apply in relation to foreign awards to which this Chapter applies.

SECTION 53 : Interpretation

In this Chapter “foreign award” means an arbitral award n differences relating to matters considered as commercial under the law in force in India made after the 28^th day of July 1924, --

a) in pursuance of an agreement for arbitration to which the Protocol set forth in the Second Schedule applies, and

b) between persons of whom one is subject to the jurisdiction of some one of such Powers as the Central Government, being satisfied that reciprocal provisions have been made, may by notification in the Official Gazette, declare to be parties to the Convention set forth in the Third Schedule, and of whom the others is subject to the jurisdiction of some other of the powers aforesaid, and

c) in one of such territories as the Central government, being satisfied that reciprocal provisions have been made, may, by like notification, declare to be territories to which the said Convention applies, and for the purposes of this Chapter an award shall not be deemed to be final if any proceedings for the purpose of contesting the validity of the award are pending in the country in which it was made.

SECTION 54 : Power of Judicial authority to refer parties to arbitration

Notwithstanding anything contained in Part I or in the Code of Civil Procedure, 1908 (5 of 1908), a judicial authority, on being seized of a dispute regarding a contract made between persons to whom section 53 applies and including an arbitration agreement, whether referring to present or future differences, which is valid under that section and capable of being carried into effect, shall refer the parties on the application of either of them or any person claiming through or under him to the decision of the arbitrators and such reference shall not prejudice the competence of the judicial authority in case the agreement or the arbitration cannot proceed or becomes inoperative.

SECTION 55 : Foreign awards when binding

Any foreign award which would be enforceable under this Chapter shall be treated as binding for all purposes on the persons as between whom it was made, and may accordingly be

CONCILIATION

GENERAL

Conciliation is a method of dispute resolution between parties. Under this method, the parties to a contract take the help of independent person/persons. Such a third person usually known as a conciliator examines the matters relating to disputes and helps and guides the parties to arrive at an acceptable settlement of the disputes. In olden days, merchants, and traders had the practice of consulting independent and neutral persons of repute in the society to settle the disputes between the parties. Family disputes were also settled by involving such reputable persons. These methods are similar to arbitration and conciliation. So far in India there was no Law governing "Conciliation". Now, the new ACT 1996 to consolidates and amend the Law relating to domestic and I international arbitration Part -III of the Act deals with) conciliation.

SECTION 62 PROVISIONS OF LAW

Conciliation is a procedure of dispute resolution adopted by the parties on their mutual agreement Section 62 of the ordinance provides for the commencement of the conciliation procedure. The party who desires to adopt conciliation procedure has to invite the other party in writing to conciliate. If the other party agrees, the conciliation procedure commences.

SECTION 63 NUMBER OF CONCILIATORS

The parties to a contract are free to decide the number of conciliators. Section 63 empowers the parties to appoint one or more conciliators. If there are more than one conciliators, they have to act, jointly.

SECTION 64 APPOINTMENT OF CONCILIATORS

Parties to a contract have to appoint their own conciliators. Section 64 deals with this. If there is only one conciliator, both the parties have to appoint a person on mutual agreement. In case if two conciliators are to be appointed, each party has to appoint one conciliator. The parties may also request a suitable institution or person to recommend names of I suitable individuals to work as conciliators. The parties may I also empower, on mutual agreement, such an institation or person to appoint a conciliator/ conciliators on their behalf. The persons to be appointed as conciliators should be impartial and independent.

ROLE OF CONCILIATOR

Section - 67 of the ordinance specifies the role of the conciliator, as under:

1) To assist the parties in an impartial and independent manner to amicably settle their disputes.

2) To follow the principles of objectivity, fairness and natural justice giving consideration to rights & obligations of the parties and the circumstances surrounding the disputes.

3) To conduct conciliation proceedings in such a manner as he may consider appropriate, taking into account the circumstances of the case, the: wishes and specific requests made & expressed by the parties and the need for speedy settlement of disputes.

4) To make, during the course of conciliation, at any .stage, proposals for settlement of a dispute. Such proposal need not be in writing and accompanied by reasons.

The conciliator, as clarified in Section. 66, is not bound by the code of civil procedure and Indian Evidence Act.

POWER AND AUTHORITIES OF THE CONCILIATOR

The new law now specifies the powers and authority of the conciliator as discussed below.

1) To arrange for administrative assistance with the consent of the parties (Section -66).

2) To invite the parties to meet with or may communicate with them either orally or in writing, jointly or separately (Section -69).

3) Disclose the factual information received from one party, to the other party, in order to facilitate the other party to present appropriate explanation.

4) Invite suggestions for settlement from the parties (Section -72).

5) Formulate the terms of a possible settlement and submit them to the parties for their observations. On receiving observations from the parties, the conciliator may reformulate the terms (Section-73).

6) On request from the parties, the conciliator may draw up or assist the parties in drawing up, the settlement agreement

7) Authenticate the settlement agreement.

STATUS AND EFFECTS OF SETTLEMENT AGREEMENT

The settlement agreement shall have the same status and effects as if it is an arbitration award on agreed terms on the substance of the dispute rendered by an arbitral tribunal under section 30 when the parties give the settlement agreement, it shall be final and binding on the parties.

COSTS OF CONCILIATION

The costs and expenses incurred for conciliation shall be borne equally by the parties unless the settlement agreement provides for a different aportionment (Section -78).

CONCLUSION

Thus, conciliation is a process, which provides enough flexibility and opportunity to the parties to ponder over the contractual disputes, with the help of an independent and impartial third person and reach to an amicable solution leading I to a settlement. This method needs to be encouraged by providing a specific clause in the contract. It relieves the parties from loss of time resulting from judicial and semijudical methods of dispute resolution. In the context of liberalisation and opening up of the economy, it would be advantageous to adopt this method, so as to boost up and maintain the speed of implementation of developmental projects.