Mediation: How It Works and When to Use It
Mediation is a voluntary, confidential process in which a neutral helps the parties reach their own settlement. How it works in India and when it binds.
Conciliation lets a neutral conciliator propose settlement terms, unlike mediation. How it works in India, when it applies, how settlements are enforced.
Conciliation sits between mediation and arbitration in how active the neutral's role is. Like a mediator, a conciliator has no power to impose a binding decision. Unlike a mediator, a conciliator can — and often does — put forward specific settlement proposals for the parties to accept, modify, or reject, drawing on the conciliator's own assessment of the dispute's merits.
Conciliation is not always optional. Under the Micro, Small and Medium Enterprises Development Act, 2006, a buyer who delays payment to a qualifying micro or small supplier beyond the statutory period can be referred to conciliation before the Micro and Small Enterprises Facilitation Council — a mandatory first step before the dispute can proceed to arbitration under the same Act. This makes conciliation the default entry point for a significant share of India's commercial payment-recovery disputes.
A conciliation settlement agreement is not merely a private contract between the parties — Section 74 of the Arbitration and Conciliation Act, 1996 gives it the same legal status as an arbitral award made on agreed terms. In practice, that means it can be enforced through the courts in the same way a court decree can, without the winning party having to file a fresh civil suit to prove the underlying claim. See [Is a Settlement Binding & Enforceable?] for how this compares with mediation and arbitration outcomes.
Conciliation suits disputes where the parties want more active guidance toward a workable number or term than pure facilitative mediation offers, but still want to retain control over whether to accept the outcome — unlike arbitration, where an arbitrator's award binds the parties regardless of whether either side agrees with it.
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General information only — not legal advice.
Mediation is a voluntary, confidential process in which a neutral helps the parties reach their own settlement. How it works in India and when it binds.
Is a mediated settlement, conciliation agreement or arbitral award binding in India? It depends on the process. How enforceability actually works.
A conciliator is a neutral third party who assists disputing parties to settle, and who may actively propose terms of settlement for them to consider.
The Indian Council of Arbitration, founded in 1965, is India's oldest arbitral institution, handling commercial and trade disputes with links to FICCI.