Conciliation Clause explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Conciliation is a voluntary process in which an independent person helps parties reach a settlement. Part III of the Arbitration and Conciliation Act, 1996 (sections 61 to 81) sets the framework. You can build conciliation into a contract with a short clause or agree to it after a dispute arises with a stand-alone agreement. This article gives model clauses, a stand-alone specimen and an explanation of the statutory provisions behind them.
A conciliation clause says that disputes will first go to conciliation under Part III, how the conciliator is appointed and what happens if conciliation fails. Conciliation proceedings begin only when the other party accepts in writing the invitation to conciliate (section 62), and a settlement agreement signed by the parties is final and binding and has the same status and effect as an arbitral award on agreed terms (sections 73 and 74). The Mediation Act, 2023 is a separate statute for mediation; see our mediation articles.
When you need a conciliation clause or agreement
Use a clause in a commercial contract when you want a structured, confidential first step before arbitration or court. Use a stand-alone agreement when a dispute has already arisen and both sides want to try a settlement with a neutral person. Conciliation suits disputes arising out of a legal relationship, contractual or not, unless a law provides that a dispute may not be submitted to conciliation (section 61).
For other routes, see our arbitration support and mediation services pages. A comparison with arbitration appears in the arbitration agreement format.
Model conciliation clauses and stand-alone agreement
MODEL CLAUSE 1: CONCILIATION AS A FIRST STEP If a dispute arises out of or in connection with this Agreement and the parties wish to seek an amicable settlement by conciliation, the conciliation shall be conducted under Part III of the Arbitration and Conciliation Act, 1996 as in force from time to time. MODEL CLAUSE 2: SOLE CONCILIATOR AND APPOINTING INSTITUTION If a dispute arises between the parties out of or relating to this Agreement, or any legal relationship associated with it, the parties shall first refer it to a sole conciliator for an amicable settlement. (a) The party initiating conciliation shall send a written invitation to conciliate identifying the subject of the dispute. (b) The parties shall appoint the conciliator by mutual consent within of the other party's acceptance of the invitation. Failing agreement, the conciliator shall be appointed by . (c) The conciliation shall be conducted under Part III of the Arbitration and Conciliation Act, 1996. (d) If the dispute is not settled within of the appointment of the conciliator, or the conciliation is terminated earlier, either party may refer the dispute to . (e) The costs of the conciliation shall be shared equally, unless the settlement agreement provides otherwise. STAND-ALONE AGREEMENT TO CONCILIATE AGREEMENT TO CONCILIATE This Agreement is made on at BETWEEN , (the First Party) AND , (the Second Party). RECITALS A. The parties are parties to dated (the Contract). B. A dispute has arisen concerning (the Dispute). C. The parties wish to attempt to settle the Dispute by conciliation under Part III of the Arbitration and Conciliation Act, 1996 (the Act). THE PARTIES AGREE AS FOLLOWS: 1. Invitation and acceptance. The First Party's written invitation to conciliate dated is accepted by the Second Party, and conciliation proceedings commence on the date of this Agreement. 2. Conciliator. The parties appoint , , as the sole conciliator (the Conciliator) . 3. Statements. The Conciliator may ask each party for a brief written statement describing the general nature of the Dispute and the points at issue, and further statements and documents. Each party shall send a copy to the other. 4. Conduct. The Conciliator shall assist the parties independently and impartially, guided by objectivity, fairness and justice, and may hold joint or separate meetings. The place of meetings shall be unless the Conciliator decides otherwise after consulting the parties. 5. Co-operation and disclosure. The parties shall co-operate in good faith with the Conciliator. Information given to the Conciliator without a condition of confidence may be disclosed to the other party; information given subject to a condition of confidence shall not be. 6. Confidentiality. The parties and the Conciliator shall keep confidential all matters relating to the conciliation and any settlement agreement, except where disclosure is needed to implement or enforce it. 7. No reliance in other proceedings. The parties shall not rely on or introduce as evidence in arbitral or judicial proceedings any views, suggestions, admissions or proposals made in the conciliation. 8. Other proceedings. During the conciliation neither party shall initiate arbitral or judicial proceedings on the Dispute, except where a party considers it necessary to preserve its rights. 9. Settlement. If the parties reach agreement, they shall sign a written settlement agreement, which the Conciliator shall authenticate and give a copy of to each party. 10. Termination. The conciliation ends on the signing of the settlement agreement, or on a written declaration by the Conciliator, by both parties or by either party as the Act provides. 11. Costs and deposits. The Conciliator's fee is . The costs shall be borne equally unless the settlement provides otherwise. Each party shall deposit as an advance. 12. Role of the Conciliator afterwards. Unless the parties agree otherwise, the Conciliator shall not act as arbitrator or as representative or counsel of a party, or be presented as a witness, in any later proceedings on the Dispute. IN WITNESS WHEREOF the parties have signed this Agreement on the date first written above. Witnesses: 1. 2.
Clause-by-clause explanation
| Clause | What it does | Drafting tip |
|---|---|---|
| Invitation and acceptance | Starts the process | Section 62 needs a written invitation and written acceptance |
| Conciliator | Names the person or the method | The Act allows one, two or three conciliators |
| Statements | Lets the conciliator understand the dispute | Keep them brief and exchange copies |
| Conduct and place | Informal, impartial process | The conciliator decides the place after consulting the parties, unless agreed |
| Disclosure and confidence | Handles information | Parties should mark confidential material clearly |
| Confidentiality and non-use | Protects settlement talks | Matches sections 75 and 81 |
| Other proceedings | Stops parallel litigation | Keep the right to protect rights |
| Settlement | Records the outcome | Signed by the parties and authenticated by the conciliator |
| Termination | Ends the process | Section 76 lists four ways |
| Costs and deposits | Shares costs | Equal sharing is the statutory default |
The law behind it
Section 62. The party initiating conciliation sends a written invitation briefly identifying the subject of the dispute. The proceedings commence when the other party accepts in writing. If it rejects, there are no conciliation proceedings; if no reply is received within thirty days from the date the invitation is sent, or within such other period as the invitation specifies, the initiating party may treat it as a rejection and inform the other in writing.
Section 63 and 64. There is one conciliator unless the parties agree on two or three; the parties may agree on a sole conciliator, appoint one each in a two-conciliator case, and in a three-conciliator case appoint one each and agree on a presiding third. They may use an institution or person to recommend or appoint. See number and appointment of conciliators and application of Part III and commencement.
Sections 73 and 74. When the parties sign the settlement agreement it is final and binding on them and persons claiming under them; the conciliator authenticates it and furnishes a copy to each party. It has the same status and effect as an arbitral award on agreed terms under section 30. See settlement agreement in conciliation and its status.
Section 77. During conciliation the parties shall not initiate arbitral or judicial proceedings on the subject, except that a party may do so where, in its opinion, it is necessary to preserve its rights. For an overview see conciliation under sections 61 to 81.
The Mediation Act, 2023 deals with mediation as a separate process; read the mediation agreement under section 4 of the Mediation Act. Because the Mediation Act's Sixth Schedule amends the 1996 Act, check the current text of Part III before you finalise.
Stamp duty, registration and execution
A conciliation clause forms part of the main contract and carries that contract's stamp duty. A stand-alone agreement to conciliate is an agreement in writing, and any duty is fixed by the Stamp Act and Schedule of the State where it is executed; see our stamp duty on contracts guide. It is not ordinarily registered. Execution: the parties sign, the conciliator signs to accept, and each party keeps an original. The settlement agreement is signed by the parties and authenticated by the conciliator.
Common mistakes
- Using the phrase "mediation" and "conciliation" interchangeably in one clause.
- No method of appointing the conciliator if the parties cannot agree.
- No time limit after which the parties may go to arbitration or court.
- Forgetting that the process starts only on written acceptance.
- Silence on costs and deposits.
- Not saying that statements made in conciliation cannot be used as evidence.
- Appointing the conciliator and then naming the same person as arbitrator without agreement.
- Not recording the settlement in a signed, authenticated agreement.
Need help with a conciliation clause?
A good clause names the process, the conciliator and the next step if settlement fails. Our mediation services team drafts conciliation and mediation clauses and stand-alone agreements, and supports parties through the process.
Key takeaways
- Conciliation is governed by Part III of the Arbitration and Conciliation Act, 1996.
- It starts on written acceptance of a written invitation.
- A signed settlement agreement is final and binding and has the status of an agreed arbitral award.
- A clause should fix the appointment method, a time limit and the next step.
- Check the current text of Part III and the Mediation Act, 2023.
Read next
- Mediation agreement and mediation clause: format
- Mediated settlement agreement: format
- Sole arbitrator agreement: format
- Conciliation under sections 61 to 81
Disclaimer: This specimen is a general model for information. Every document must be adapted to its facts and to the law, rules and forms in force when it is signed or filed; stamp duty, registration and court fees depend on the State and the forum. This article is general information, not legal advice; check the official text before acting.