Conciliation a voluntary process, cannot be mandatory pre-condition before Arbitration: Delhi High Court

The Delhi High court passed a judgement on 7th  February, 2023. This was seen in the case of   Oasis Projects Ltd. v. Managing Director, National Highway and Infrastructure Development Corporation Limitedand 1364/DHC/2022 he case was presided over by Hon’ble  Justice Navin Chawla  


This petition has been filed  in delhi hc under Section 11(6) of the Arbitration and Conciliation Act, 1996  seeking appointment of an Arbitrator for adjudicating the disputes that have arisen between the parties in relation to the “Balance work for Four-Laning of NH-39 Dimapur-Kohima Road from Design 152.490 to Km. 166.700 (Existing Km 156.000 to Km. 172.900), in the State of Nagaland.

When a dispute arose, petitioner sought to invoke arbitration remedies, while respondent insisted that conciliation method should first be explored.The petitioner proceeded to approach the High Court for the appointment of an arbitrator under Section 11 (6) of the Arbitration and Conciliation Act, 1996. The respondent challenged the maintainability of the plea since the petitioner had not availed the conciliation option in terms of Article 26.2.


The primary issue to be decided in the  petition is, therefore, as to whether it was mandatory for the petitioner to resort to the Conciliation process by the Committee before invoking arbitration.

Court said that :- “Though Article 26.2 clearly states that before resorting to arbitration, the parties agree to explore Conciliation by the Committee, in my opinion, the same cannot be held to be mandatory in nature. It needs no emphasis that Conciliation as a Dispute Resolution Mechanism must be encouraged and should be one of the first endeavours of the parties when a dispute arises between them. However, having said that, Conciliation expresses a broad notion of a voluntary process, controlled by the parties and conducted with the assistance of a neutral third person or persons. It can be terminated by the parties at any time as per their free will. Therefore, while interpreting Article 26.2, the basic concept of Conciliation would have to be kept in mind.”

Justice Navin Chawla observed that even if a contract contains a clause for parties to first go for a conciliation process to settle disputes, such clauses can only be directory and not mandatory.

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Judgement reviewed by Drishti verma

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