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INTRODUCTION TO ADR

[ALTERNATIVE DISPUTE RESOLUTION

DEFINITION OF ALTERNATIVE DISPUTE RESOLUTION: -

• One of the Definitions’ of ADR is “the procedure for settling disputes without
litigation, such as arbitration, mediation, or negotiation”

• It is also seen as “an umbrella” term that refers generally to alternatives to the court
adjudication [Litigation] of disputes. “Alternate Dispute Resolution” may also be
understood as “Amicable Dispute Resolution”.

DESCRIPTION OF ADR:

• ADR is a product of the legal institution to offer the best possible service to its clients. In
fact, lawyers are sometimes urged to use ADR.

• Even though ADR is a private way of resolving dispute, it must work within the broad
legal framework in which it operates. This means, the use of ADR to settle disputes must
be done within the confines of law.

• ADR aims at Resolving Conflicts or disputes which are everyday life experience both in
private and public life. Whenever there is a dispute, which is “an expressed struggle
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between at least two interdependent parties who perceive incompatible goals, scarce
resources, and interference from others in achieving their goal”, there is a need for
resolution. There are various ways in which disputants try to resolve their differences.

• The word “alternative” is used as an option to litigation. ADR is a recognised and a

time-tested alternative to litigation across the globe.

• ADR was recognised and in operation in India since 1940 and never has been an
unknown term/way of resolving the disputes.

• Disputants decide voluntarily to use ADR to resolve their differences. ADR thrives under
the principle of self-determination of the disputants to use legally accepted procedure to
resolve a conflict other than litigation. No one is coerced to enter into ADR. It is a
voluntary process unlike litigation.

• Arbitration as ADR process is mandatory if there is arbitration clause in a contract. The

arbitration clause stipulates that, in case of a dispute among the parties, ADR process will
be used to settle the dispute. Pre-dispute arbitration clause is an expression of the will of
the two parties to use ADR. This does not mean the parties are forced into it, but they
are simply called to respect a prior voluntary agreement to use arbitration as an alternative
dispute resolution. After Arbitration process, the outcome can be challenged in a
competent court of law.

• Often there is much public interest when a case is under litigation and with the media
sometimes giving details of court proceedings. However, ADR is private and confidential.
Its practitioners are bound by their code of ethics to preserve the privacy of their clients.

• ADR process is legally binding in two way: -

1. The disputants have the obligation to honour their pre-dispute agreement to use ADR to
settle their dispute.

2. They have to abide by the adjudication of the arbitrator, which is enforceable in a public
government court of competent jurisdiction.

• The basic aim of ADR mechanism was to provide a low-cost & time consuming litigation
alternative to the disputants. However in the current scenario, the first aim of providing
a low-cost alternative to litigation has lost its substance and is merely referred to as an ink
on the paper, but as far as the second aim is concerned, the ADR mechanisms have
shown considerably phenomenal outcome in-respect of the time-bound resolution of the
disputes as compared to the litigation.

ESSENTIAL ELEMENTS [PROCESS/MECHANISM] OF ADR: -

→ ADR CAN BE GENERALLY CLASSIFIED INTO FOUR TYPES OF METHODS

VIZ;

• NEGOTIATION

• MEDIATION
• ARBITRATION

• CONCILIATION

→ NEGOTIATION: -

• Bilateral or multilateral process in which parties who differ over a particular issue
attempt to reach agreement or compromise over that issue through
communication.

• Negotiation is about communication, which entails dialogue, deliberation and

round table conference with the aim of reaching an agreement or settlement over a
determined subject or object.

• Negotiation is a voluntary ADR process. There is no third party to facilitate the

resolution process or impose a sentence.

• Negotiation demands a lot of listening. It works when the parties are ready to
listen to each other and come to an agreement or compromise. Negotiation has
also a legal dimension. The settlement agreement has certain legal requirement to
fulfill for example; it cannot evade tax and in some cases a court approval of the
settlement34 is needed.

• Sometimes the Parties/Disputants may seek the assistance of ADR Professionals

which may help them to reach an understanding/settlement.

→ MEDIATION: -

• Mediation is «an extension of the negotiation process. Mediation takes place, when
parties cannot settle their dispute through negotiation and go to “an impartial
third party” to assist them in reaching a resolution.

• Mediation is therefore, a “facilitated negotiation”. While negotiation involves only

the parties and their agents such us lawyers, mediation adds only the mediator, who
is not agent of either party. The Mediator is and must be neutral to the Disputants.

• Mediator may by himself/herself facilitate the process by suggesting the probable

reasonable solutions/proposals, which the Parties/Disputants may opt as a
solution but the Mediator cannot impose the same upon the Parties under any
circumstances.

• The principle of mediation is to offer the parties opportunity to create or evolve

their own solutions instead of relying on a third party to pass a judgment as who is
right and who is wrong.

• Mediation as ADR process has gained tremendous popularity in dispute resolution

from local to national and from national to international dispute resolution.
Mediation is used from the private sector to the public sector and from domestic
issues to big business issues.

• Disputants go into mediation for many reasons but prominent among them are:

1. To resolve a dispute- that is to settle a case

2. To explore a balanced or win-win settlement.

3. To restore a broken relationship due to the dispute.

• The mediation process involves; the disputants and the mediator. In some cases,
their lawyers can represent them. At times, their family members can participate in
the process.

• In the actual mediation process, there are joint sessions whereby the mediator
brings the two together for communication. The mediator can also have separate

meetings with them, which is continuous or constant meeting of the parties to

understand their concerns individually.

• A mediator plays a big role in resolving a dispute but there are three principal roles,
namely: facilitator, evaluator, and transformator.

1. FACILITATOR: - As a facilitator, the mediator “creates an environment in

which parties work together collaboratively as problem-solvers”.

2. EVALUATOR: - The mediator “assists the participants in breaking impasses

by contributing his/her views of the merits of the legal case, the consequences
of failure to settle, and the benefits of particular settlement proposals.

3. TRANSFORMATOR: - the Mediator is to help participants “to determine

their own direction and supports the party’s own opportunities for perspective-
taking, deliberation and decision-making”.

• Three Principals make Mediation a foremost resort for a successful settlement,

which are: -

o Self-determination of the Parties.

o Mediator is Impartial and Even-handed.

o The Proceedings are kept Private & Confidential by the Mediator.

→ ARBITRATION: -

• Arbitration is a flexible and confidential adjudication process. It is the only ADR

process that has a resemblance of litigation.

• In arbitration process there can be one or more adjudicators or arbitrators. The

decision of the arbitrator is based on the hearing and evidence gathered/submitted
by the Disputants.

• After weighing the presentation and facts of the matter by disputants or their
lawyers and witnesses, the arbitrator decides in favour of one party who deserves
award or compensation.

• The resolution is most often rapid, as compared to litigation, which is a long

process which will be thoroughly explained in the further modules.

• There is a degree of autonomy through the selection of an arbitrator, who is more

likely to have subject matter expertise than a judge in litigation.

• It is very efficient, in fact, arbitration is generally considered a more efficient

process than litigation because it is quicker and less expensive. It also offers greater
flexibility of the process and procedure than litigation.

• Arbitration covers enormous & enough fields of human endeavoured such as: -

o Commercial Transactions [Domestic & International].

o Environmental Issues.

o Consumer Disputes.

o Disputes pertaining to the Intellectual Property Rights.

o Labour Disputes, Etc.

• Arbitration has a formal procedure and substantive rules to follow. The process
consists of a defined simple procedure whereby disputants argue their case before
an arbitrator or arbitrators. Sometimes there is a representation by attorney and
witnesses. The process ends with a settlement or an offer known as award. The
final decision of the arbitrator i.e. an award can be appealed against.

• Arbitration is either mandatory or voluntary depending on «whether the parties are

required to participate in arbitration or choose to do so.

• Arbitration can be Voluntary/Contractual: -

o CONTRACTUAL ARBITRATION: -

Prior agreement between parties “to resolve their dispute through a final
and binding arbitration”.

Contractual arbitration arises out of the initial voluntary act to use

arbitration to settle dispute.

o VOLUNTARY ARBITRATION: -

Voluntary arbitration is the goodwill of two or more parties to use

arbitration to resolve their dispute. In this case, there is no arbitration clause
that impels them to go into arbitration, but they voluntarily decide to use
arbitration instead of litigation.

However, this type of Arbitration is rare in sight pertaining to the

circumstances existing today in India.

→ CONCILIATION: -

• Conciliation is a less formal form of arbitration. This process does not require an
existence of any prior agreement.

• Any party can request the other party to appoint a conciliator. One conciliator is
preferred but two or three are also allowed. In case of multiple conciliators, all
must act jointly.

• If a party rejects an offer to conciliate, there can be no conciliation.

• Parties may submit statements to the conciliator describing the general nature of
the dispute and the points at issue. Each party sends a copy of the statement to the
other. The conciliator may request further details, may ask to meet the parties, or
communicate with the parties orally or in writing. Parties may even submit
suggestions for the settlement of the dispute to the conciliator.

• When it appears to the conciliator that elements of settlement exist, he may draw
up the terms of settlement and send it to the parties for their acceptance. If both
the parties sign the settlement document, it shall be final and binding on both.

❖ LOK – ADALATS:

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→ Apart from the above 4 major elements of the ADR mechanism, Lok-Adalats [Peoples’
Court] is specifically an Indian approach established under the National Legal Services
Authority Act, 1987, towards the settlement of disputes through ADR mechanism which
also has a legal binding.

• India has had a long history of resolving disputes through the mediation of village
elders. The system of Lok Adalats is an improvement on that and is based on
Gandhian principles. This is a non-adversarial system, whereby mock courts (called
Lok Adalats) are held by the State Authority, District Authority, Supreme Court
Legal Services Committee, High Court Legal Services Committee, or Taluk Legal
Services Committee, periodically for exercising such jurisdiction as they thinks fit.

• Lok-Adalats’ are usually presided by retired judge, social activists, or members of

legal profession. It does not have jurisdiction on matters related to non-
compoundable offences.

• Cases that are pending in regular courts can be transferred to a Lok Adalat if both
the parties agree. A case can also be transferred to a Lok Adalat if one party
applies to the court and the court sees some chance of settlement after giving an
opportunity of being heard to the other party.

• The First Lok Adalat was held in Chennai in 1986. Lok Adalat accepts the cases
which could be settled by conciliation and compromise and pending in the regular
courts within their jurisdiction.

• There is no court fee. If the case is already filed in the regular court, the fee paid
will be refunded if the dispute is settled at the Lok Adalat. The procedural laws

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and the Evidence Act are not strictly followed while assessing the merits of the
claim by the Lok Adalat.

• Main condition of the Lok Adalat is that both parties in dispute should agree for
settlement. The decision of the Lok Adalat is binding on the parties to the dispute
and its order is capable of execution through legal process.

• An important aspect is that the award is final and cannot be appealed, not even
under Article 226 of the Constitution of India [which empowers the litigants to
file Writ Petition before High Courts] because it is a judgement by consent

• All proceedings of a Lok Adalat are deemed to be judicial proceedings and every
Lok Adalat is deemed to be a Civil Court.

CONCLUSION: -

• Alternative dispute resolution in India is not new and it was in existence even under the
previous Arbitration Act, 1940.

• The Arbitration and Conciliation Act, 1996 has been enacted to accommodate the
harmonisation mandates of UNCITRAL Model.

• To streamline the Indian legal system the traditional civil law known as Code of Civil
Procedure, (CPC) 1908 has also been amended and section 89 has been introduced.

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• Section 89 (1) of CPC provides an option for the settlement of disputes outside the
court. It provides that where it appears to the court that there exist elements, which may
be acceptable to the parties, the court may formulate the terms of a possible settlement
and refer the same for arbitration, conciliation, mediation or judicial settlement.

• While Arbitration and Conciliation Act, 1996 is a fairly standard western approach
towards ADR, the Lok Adalat system constituted under the National Legal Services
Authority Act, 1987 is a uniquely Indian approach.

• Dividing lines in ADR processes are often provider-driven rather than consumer-driven.
Educated consumers will often choose to use many different options depending on the
needs and circumstances that they face.

• Finally, it is important to realize that conflict resolution is one major goal of all the ADR
processes. If a process leads to resolution, it is a Dispute Resolution Process.

ARBITRATION – OVERVIE

ARBITRATION, A PART OF ADR.

Arbitration is an alternative to litigation in order to resolve a dispute. Arbitration panels are

composed of one or three arbitrators who are selected by the parties if a mutual consensus is
reached otherwise even a Court of Law of an Independent Arbitration Body/Forum/Authority
may appoint the Arbitrators neutral to the parties.
W

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ARBITRATORS & AWARD

The Panel/Arbitrator/s read the pleadings filed by the parties, listen to the arguments, study the
documentary and/or testimonial evidence, and render a decision. The said decision, called an
"award," is final and binding on all the parties. All parties must abide by the award, unless it is
successfully challenged in court within the statutory time period. Arbitration is generally
confidential, and documents submitted in arbitration are not publicly-available, unlike court-
related filings.

TIME

Arbitration is a less formal process than litigation, typically resulting in faster turnaround times
than court cases. The turnaround time for arbitration varies, and can be affected by many
factors, including the number of parties and witnesses involved, the complexity of the issues,
the volume of discovery and the schedules of the parties and arbitrators. However, in 2015 a
phenomenal step was taken in the filed of Arbitration in India by introducing Section 29A
[Arbitration And Conciliation (Amendment) Act 2015] , whereby “the award shall be made
within a period of twelve months from the date the arbitral tribunal enters upon the
reference”.

COST

The cost of an arbitration case varies. Cost is affected by the amount of the claim, the number
of hearing sessions, number of motions, and any adjournments.

SUBJECT MATTER OF ARBITRATION

Any commercial matter including an action in tort if it arises out of or relates to a contract can
be referred to arbitration.

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However, public policy would not permit matrimonial matters, criminal proceedings, insolvency
matters anti-competition matters or commercial court matters to be referred to arbitration

Similarly, Employment Contracts also cannot be referred to arbitration but director - company
disputes are arbitrable (as there is no master servant relationship here)5 . Generally, matters
covered by statutory reliefs through statutory tribunals would be non-arbitrable.

ROLE OF THE COURT

One of the fundamental features of the Act is that the role of the court has been minimised. Tt
is provided that any matter before a judicial authority containing an arbitration agreement shall
be referred to arbitration. Further, no judicial authority shall interfere, except as provided for
under the Act as applicable.

In relation to arbitration proceedings, parties can approach the Court only for two purposes:

1. For any interim measure of protection or injunction or for any appointment of receiver
etc.; or

2. For the appointment of an arbitrator in the event a party fails to appoint an arbitrator or
if two appointed arbitrators fail to agree upon the third arbitrator. In such cases, in the
case of domestic arbitration, the Chief Justice of a High Court may appoint an arbitrator,
and in the case of international commercial arbitration, the Chief Justice of the Supreme
Court of India may carry out the appointment of the Arbitrator.

3. A court of law can also be approached if there is any controversy as to whether an

arbitrator has been unable to perform his functions or has failed to act without undue

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delay or there is a dispute on the same. In such an event, the court may decide to
terminate the mandate of the arbitrator and appoint a substitute arbitrator.

JURISDICTION

The Act provides that the arbitral tribunal may rule on its own jurisdiction, including any
objections with respect to the existence or validity of the arbitration agreement.

The arbitration agreement shall be deemed to be independent of the contract containing the
arbitration clause, and invalidity of the contract shall not render the arbitration agreement void.
Thence, the arbitrators shall have jurisdiction even if the contract in which the arbitration
agreement is contained is vitiated by fraud and/or any other legal infirmity. [The Jurisdiction is
thoroughly explained in the further module]

CHALLENGE TO THE ARBITRATOR

An arbitrator may be challenged only in two situations: -

1. If circumstances exist, that give rise to justifiable grounds as to his independence or

impartiality.

2. If he does not possess the qualifications agreed to by the parties.

[The Jurisdiction is thoroughly explained in the further module]

CONDUCT OF ARBITRATION PROCEEDINGS: -

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The arbitrators are masters of their own procedure and subject to party’s agreement, may
conduct the proceedings “in the manner they consider appropriate. The said power includes; the
power to determine the admissibility, relevance, materiality and weight of any evidence.

The only restrain on them is that they shall treat the parties with equality and each party shall be
given a full opportunity to present his/her case, which includes sufficient advance notice of any
hearing or meeting.

Neither the Code of Civil Procedure nor the Indian Evidence Act applies to arbitrations.

Unless the parties agree otherwise, the tribunal shall decide whether to hold oral hearings for the
presentation of evidence or for arguments or whether the proceedings shall be conducted on
the basis of documents or other material alone. However, the arbitral tribunal shall hold oral
hearings if a party so requests (unless the parties have agreed that no oral hearing shall be held).

TAKING OF EVIDENCE IN ARBITRAL PROCEEDINGS

The Indian Oath’s Act 1969 extends to persons who may be authorized by consent of parties to
receive evidence. This Act thus, encompasses arbitral proceedings as well.

Thus, witnesses appearing before an arbitral tribunal can be duly sworn by the tribunal and be
required to state the truth on oath and upon failure to do so, commit offences punishable under
the Indian Penal Code

GOVERNING LAW

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In an international commercial arbitration, parties are free to designate the governing law for the
substance of the dispute. If the governing law is not specified, the arbitral tribunal shall apply
the rules of law it considers appropriate in view of the surrounding circumstances. For
domestic arbitration, however, (i.e., between Indian parties), the tribunal is required to decide
the dispute in accordance with the substantive laws of India. [the laws governing arbitration are
discussed in detail in the third module]

FORM AND CONTENT OF AWARDS

The arbitrators are required to set out the reasons on which their award is based, unless the
parties agree that no reasons are to be given or if it arises out of agreed terms of settlement.
The tribunal may make an interim award on matters on which it can also make a final award.

SETTING ASIDE OF AWARDS

The Arbitration Award may be set aside by the Hon’ High Court if appealed within time under
specific provisions of the Act.

[The topic is explained thoroughly in the further modules]

TYPES OF ARBITRATION PROCEEDINGS

The arbitral proceedings in India have been broadly classified into Ad-hoc arbitration and
Institutional arbitration: -

1. Ad-hoc Arbitration: -

Under Ad-hoc Arbitration parties determine the conduct of arbitration proceedings i.e.

arbitration proceedings are agreed to and arranged by the parties themselves without
recourse to an arbitral institution.

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In ad hoc arbitration, if the parties are not able to agree as to who will be the arbitrator
or one of the parties is reluctant to cooperate in appointing the arbitrator, the other party
will have to invoke Section 11 of the Act, whereunder the Chief Justice of a High Court
or the Supreme Court or their designate will appoint the arbitrator.

The fee of the arbitrator will have to be agreed to by the parties and the arbitrator.

2. Institutional Arbitration:

Arbitration is administered by an arbitral institution. The parties may stipulate in the

arbitration agreement to refer an arbitral dispute between them for resolution to a
particular institution.

The Indian institutions include the Indian Council of Arbitration and the International
Centre for Alternative Dispute Resolution. International institutions include the
International Court of Arbitration, the London Court of International Arbitration and
the American Arbitration Association.

All these institutions have rules expressly formulated for conducting arbitration. These
rules are formulated on the basis of experience and hence, they address all possible
situations that may arise in the course of arbitration.

ADVANTAGES

1. In contrast to litigation, where one cannot "choose the judge",  arbitration allows the
parties to choose their own tribunal.

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This is especially useful when the subject matter of the dispute is highly technical:
arbitrators with an appropriate degree of expertise (for example, expertise in commercial
property law, in the case of a real estate dispute) can be chosen.

2. Arbitration is often faster than litigation in court.

3. Arbitral proceedings and an arbitral award are generally non-public and can be made
confidential.

4. In arbitral proceedings the language of arbitration may be chosen, whereas in judicial

proceedings the official language of the country of the competent court will be
automatically applied.

5. Because of the provisions of the New-York Convention - 1958, arbitration awards are
generally easier to enforce in other nations than court verdicts.

6. In most legal systems there are very limited avenues for appeal of an arbitral award,
which is sometimes an advantage because it limits the duration of the dispute and any
associated liability.

DISADVANTAGES

1. Arbitration agreements are sometimes contained in ancillary agreements, or in small print

in other agreements, and consumers and employees often do not know in advance that

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they have agreed to mandatory binding pre-dispute arbitration by purchasing a product or

taking a job.

2. If the arbitration is mandatory and binding, the parties waive their rights to access the
courts and to have a judge decide the case.

3. If the arbitrator or the arbitration forum depends on the corporation for repeated/
continuous business, there may be an inherent incentive to rule against the consumer or
employee.

4. There are very limited avenues for appeal, which means that an erroneous decision
cannot be easily overturned.

5. Although usually thought to be speedier, when there are multiple arbitrators on the panel,
juggling their schedules and making them available for hearing dates in long cases can
lead to delays.

6. In some legal systems, arbitration awards have fewer enforcement options than
judgments; although in the India, arbitration awards are enforced in the same manner as
court judgments and have the same effect.

7. Discovery may be more limited in arbitration.

8. The potential to generate billings by attorneys may be less than pursuing the dispute
through trial

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9. Unlike court judgments, arbitration awards themselves are not directly enforceable. A
party seeking to enforce an arbitration award must resort to judicial remedies, called an
action to "Execute" an award.

CONCLUSION

India has in place a modern, an efficient Arbitration Act. There are no mandatory laws
governing arbitration in India, except the Arbitration and Conciliation Act, which ensures party
autonomy in respect of most procedural matters. Arbitration is the near future which is very
much visible in sight to all the members of legal fraternity & with the daily increase in
commercial disputed, it will and is highly recommended that Arbitration is give a larger scope
and recognition.

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LAWS GOVERNING ARBITRATIO

There are various laws governing Arbitration all over the globe. However, the primary act which
governs the domestic arbitrations all over India is the ARBITRATION AND
CONCILIATION ACT 1996 (ACT), before which the Arbitration act 1940 was prevalent in
India.

Brief HISTORY: -

THE ARBITRATION ACT 1940:

• The act was enacted on 11th March 1940, which came into force on 1st July 1940. termed
as 'The Arbitration Act, 1940'. It was applied to the whole of India (including Pakistan,
Baluchistan)8. The same was modified vide an ordinance, post-Independence. This act
came into force during the British Regime.

• The scope of the Act of 1940 was wide enough but the same was also under many
criticisms. In some of the cases, it was observed that the Arbitration Act, 1940,
distinguishes between an application for setting aside an award and one for a decision that
the award is a nullity. This implies that it does not legally exist and contemplates that an
application for setting aside an award may be made under Section 30 and an application
of that award is a nullity under Section 33.

• Further, it was also observed that the said act fails in recognizing that the arbitration will
fail in-case of non-existence and invalidity of an arbitration agreement.

• The Act also did not speak anything about the shortcomings inherent in individual
private contracts.

• The rules providing for filing awards differed from one High Court to another.

• The lack of provisions prohibiting an arbitrator or umpire from resigning at any time in
the course of the arbitration proceedings, exposed the parties to heavy losses particularly
where the arbitrators or umpire acted mala fide.

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• It was also seen that if an arbitrator appointed by the Court dies during the arbitration
proceedings, there was no other provision in the said act for appointment of a new
arbitrator, which was also seen as a major flaw in the 1940 Act. Another concern in the
act was that the Marginal Notes were not regarded as part of an Act

THE ARBITRATION & CONCILIATION ACT 1996:

• A roar of criticism & lacking existent in the Arbitration Act 1940 led to the enactment &
enforcement of the Arbitration and Conciliation Act 1996, which came into force from
22nd August 1996.

• The basic intent of the legislation was to provide for a speedy solution to disputes
between the parties and also to limit the judicial intervention. The main intention of the
Legislation was primarily to cover the international and domestic commercial arbitration
and conciliation.

• The Parties disputing also agreed on various occasions to continue with the new law
instead of the old one.

• The Act of 1996 consolidated and amended laws relating to Arbitration, International
Commercial Arbitration and also for enforcement of the Foreign Arbitral Awards.
Initially, in the Act of 1996, it was held that the Court can pass interim orders under
Section 9 of the Act, where Section 9 contemplates two stages, firstly, court can pass
order during arbitral proceedings and secondly, that court can pass order before
commencement of arbitral proceedings [the said act underwent major amendments, on
23rd October,  2015 [Arbitration and Conciliation  (Amendment)  Act   2015] & on 9th
August 2019 [The Arbitration And Conciliation (Amendment) Act 2019]

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ON 6TH SEPTEMBER 2012

A 5- judge bench of the Supreme Court, in Bharat Aluminium Company v. Kaiser

Aluminium Technical Services (2012) 9 SCC 552 (BALCO) held that:

→ In cases of international commercial arbitrations, where the seat of arbitration is outside

India, Part I of the Act would not apply – heralding a new dawn for Indian arbitration.

→ It overruled the previous stand taken by the Supreme Court in Bhatia International v.
Bulk Trading SA (2002) 4 SCC 105 which said that the curial jurisdiction of the courts
under Part I of the Act would apply to all arbitrations, even those seated outside India. }

→ Therefore, consequently thereto the Indian Courts could not assert jurisdiction
concerned with foreign-seated arbitrations under Sections 9, 11 and 34, mainly.

→ Not necessary for parties to expressly exclude the application of Part I for foreign seated
arbitrations. Part I would apply only to arbitrations seated in India, both domestic and
foreign.

→ There was also a Negative consequence whereby there was no provision for seeking
urgent interim reliefs in cases of foreign seated arbitrations in India.

DEFICIENCIES IN THE ARBITRATION & CONCILIATION ACT 1996:

The Act of 1996 was heavily criticised in India due to the following reasons: The foremost
criticism was the interpretive loopholes in the Act, which allowed interference of the Courts in
arbitration proceedings, leaving the ‘expeditious’ mechanism for dispute resolution as time
consuming as litigation, if not more so.

RECOMMENDATIONS MADE BY THE 246TH REPORT OF THE LAW

COMMISSION:
1. Amendment to Preamble to reaffirm the objectives of the Act.

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2. Fairness / Speedy Disposal/ Economy in dispute resolution.

3. Insertion of Section 6A – determination of imposition of costs and the quantum

thereof.

4. Insertion of Sections 3A and 3B to bring it in conformity with UNCITRAL Model Law

on International Commercial Arbitration.

5. Reduction of role of Courts in granting interim relief under S. 9.

6. Reforms in provisions regarding ‘independence and impartiality’ of arbitrators.

7. If arbitrator fell under one of the categories in Schedule 5, he would be deemed not be
able to perform his duties.

8. Under Section 17, arbitral tribunal to be given the same powers as that of a Civil Court
under the CPC in relation to grant of interim injunctions.

9. Discouraging frequent and baseless adjournments and holding day to day hearings.

10. Recommendation for addition of Sections 34(5) and 48(4) for expeditious disposal of
disputes, within a period of 1 year.

THE ARBITRATION & CONCILIATION [AMENDMENT] ACT 2015

After the said recommendations/criticism & upon a calling pertaining to the need of the hour,
the Government promulgated the Arbitration and Conciliation (Amendment) Ordinance, 2015
which received assent from the President on 23rd October 2015.

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THE AMENDMENT MADE SOME MAJOR CHANGES IN THE PARENT ACT,

SOME OF WHICH ARE AS FOLLOWS:

1. S. 2(2) – makes Part I applicable to foreign seated arbitrations, unless expressly excluded
in the agreement.

2. S. 7 - arbitration agreement in electronic form will be deemed to be an “agreement in

writing”.

3. S. 8 - authority shall refer the parties to arbitration, unless it finds that no valid arbitration
agreement exists.

4. S.9 - Power to pass interim orders by Courts: -

a) If court passes order before commencement of arbitration;

b) Arbitration must commence within 90 days from date of such order;

c) Court to refrain from passing an order U/s 9 once arbitration starts;

d) Can do so only if efficacious remedy is not available under S. 17.

5. S.11 – appointment of arbitrators to be made by the Supreme Court/ High Courts within
60 days from the date of any such Application.

6. S.12 – Independence and Impartiality of arbitrators to be decided by examining:

a) grounds enlisted in Schedule 5;

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b) categories enumerated in Schedule 7

7. S.14 – if the mandate of an arbitrator is terminated, he is to be substituted by another.

8. S. 17 – Gave tribunals same powers qua interim measures as available to courts under the
CPC.

9. S. 23 – empowers respondent to make counterclaim or plead a for set-off.

10. S. 24 – mandates tribunal to hold hearings on a day to day basis and preclude from
granting many adjournments.

11. S. 25 – right to file statement of defence has to be forfeited, if time limits are not adhered
to.

12. S. 28 – while making an award, the Tribunal to take into account the terms of the
contract and trade usages whenever applicable.

13. Sections 29A and 29B – with intent to Fastrack proceedings & time bound arbitrations –

a) award to be rendered within 12 months from date of reference.

b) Extension for a maximum period of 6 months for completion.

c) Extension contingent on consent of parties and Court’s discretion.

d) Application for extension to be disposed of in 60 days.

 28

e) Parties to agree to Fastrack proceedings under S. 29B in advance, as also the fees
payable to the arbitrator.

14. S. 31 – Sum directed to be paid as part of the award would carry an interest at the rate of
2% higher than current rate of interest.

15. S. 31A – discretion to be exercised by Court or Tribunal to determine:

a) Whether costs are payable by a party.

b) Amount of such costs.

c) When they must be paid.

16. Explanation 1 to S. 34(2)(b) – The award to be treated in conflict with ‘public policy’ only
if it is:

a) Obtained by fraud, Violates confidentiality;

b) Admissibility of evidence of conciliation proceedings;

c) Controverts the fundamental policy of India law;

Explanation 2 to S.34(2)(b) – for determining contravention of fundamental policy of

India, no review of dispute on merits.

Sub-section (2A) – ‘Patent Illegality” added as an additional ground to challenge the

award

Sub-section (5) – application can be filed only after giving notice to opposite party.

 29

Sub-section (6) – Application to be disposed of in one year.

17. S. 36 – If application under S. 34 is not made within time limit specified, the award
becomes final. Mere filing of application under S. 34 would not render the award
unenforceable and automatically stay the award. A separate application needs to be filed
praying for grant of stay of the Award.

➢ CONFUSION TO THE APPLICABILITY OF THE

ACT TO THE PRIOR ARBITRATION
PROCEEDINGS:

o During the period between Ordinance and enactment, there

was confusion as to whether the amendments applied to
pending arbitration proceedings.
o Thus, Section 26 was introduced in the Amendment Act that
states:
“Nothing contained in this Act shall apply to the arbitral proceedings
commenced, in accordance with the provisions of section 21 of the
principal Act, before the commencement of this Act unless the parties
otherwise agree but this Act shall apply in relation to arbitral proceedings
commenced on or after the date of commencement of this Act."
o Despite the aforementioned provision, Courts in India have
differed on the applicability of the Amendment Act, 2015 to
arbitral and arbitration-related court proceedings in various
judgment.

18. S. 37 – Appeal can be filed to the court on the following grounds:

a) Refusal to refer parties to arbitration u/s 8.

b) Refusal to grant measure u/s 9.

 30

c) An order passed u/s 34.

Similar amendments as above were made to Part II of the Act in provisions relating to
challenging validity of the award and the appeal provisions, wherever applicable.

ARBITRATION AND CONCILIATION ACT 1996 (ACT): -

• The Indian law of arbitration is contained in the Arbitration and Conciliation Act 1996
(Act).

• The Act is based on the 1985 UNCITRAL Model Law on International Commercial
Arbitration and the UNCITRAL Arbitration Rules 1976

• The Statement of Objects and Reasons set forth the main objectives of the Act as
follows:

1. To comprehensively cover international and commercial arbitration and

conciliation as also domestic arbitration and conciliation;

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

3. To provide that the arbitral tribunal gives reasons for its arbitral award;

4. To ensure that the arbitral tribunal remains within the limits of its jurisdiction;

5. To minimise the supervisory role of courts in the arbitral process;

 31

6. To permit an arbitral tribunal to use mediation, conciliation or other procedures

during the arbitral proceedings to encourage settlement of disputes;

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

8. 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

9. 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.”

CODE OF CIVIL PROCEDURE 1908

The Code of Civil Procedure, (CPC) 1908 has also been amended and section 89 has been
introduced.

Section 89 (1) of CPC provides an option for the settlement of disputes outside the court. It
provides that where it appears to the court that there exist elements, which may be acceptable to
the parties, the court may formulate the terms of a possible settlement and refer the same for
arbitration, conciliation, mediation or judicial settlement.

 32

While Arbitration and Conciliation Act, 1996 is a fairly standard western approach towards
ADR, the Lok Adalat system constituted under the National Legal Services Authority Act, 1987
is a uniquely Indian approach.

CHOICE OF LAW TO BE APPLIED: -

The validity of the arbitration agreement is primarily governed by the law chosen by the parties.
Typically, international business contracts do not contain specific choice of law clauses for the
arbitration agreement contained in such contracts. The general choice of law clause contained in
the contract and specifying the proper law of the contract does not necessarily extend to the
arbitration agreement which is a separate contract.

Absent a choice of law by the parties, the law of the seat of the arbitration plays a dominant
role in determining the law applicable to the arbitration agreement. It governs the following
issues, three of which relate to the validity of the arbitration agreement:

1. The substantive validity of the arbitration agreement absent a choice of law;

2. The formal validity of the arbitration agreement if it is to be determined by the tribunal;

3. The objective arbitrability of the subject matter of the dispute;

4. The arbitral procedure.

This significance of the law of the seat has an important harmonizing effect on the
determination of the law applicable to the validity of the arbitration agreement. It serves to
avoid frictions and contradictions that might arise if different laws apply to these issues.
Decisional harmony created by the seat is important because the arbitration agreement

 33

constitutes the very basis of the tribunal's jurisdiction. This requires hard, fast, workable and
generally accepted conflict rules in order to avoid further complications if the jurisdiction of
the tribunal is contested by one side. This is also in line with the notion of party autonomy as
one of the principal maxims of international commercial arbitration. The seat is typically
chosen by the parties or by the tribunal or by the arbitral institution on their behalf. The choice
of the seat thus becomes a direct or indirect choice of law by the parties with respect to the
issues listed above.

If the issue at stake relates to the personal status of a party or to the protection of the other
party, the significance of the seat is overridden by other connecting factors which are better able
to do justice to these policy considerations.

This applies to:

1. The parties" capacity to arbitrate ("subjective arbitrability"), which is governed by the law
of the country where the party has its residence, domicile or seat, and

2. The issue of whether a party was duly represented when concluding the arbitration
agreement, which is governed by the law of the state where the agent has concluded the
arbitration agreement

Thus, there are only three different connecting factors, the seat reigning most prominently
among them, with respect to the determination of the law governing all aspects of the validity
of international arbitration agreements for different legal issues.

FOREIGN AWARDS & THE NEW YORK CONVENTION

It is often easier to enforce arbitration awards in a foreign country than court judgments. Under
the New York Convention 1958, an award issued in a contracting state can generally be freely
enforced in any other contracting state, only subject to certain, limited defences.

 34

Only foreign arbitration awards are enforced pursuant to the New York Convention. An arbitral
decision is foreign where the award was made in a state other than the state of recognition or
where foreign procedural law was used.

In most cases, these disputes are settled with no public record of their existence as the loser
complies voluntarily, although in 2014 UNCITRAL promulgated a rule for public disclosure of
investor-state disputes.

Virtually every significant commercial country in the world is a party to the Convention while
relatively few countries have a comprehensive network for cross-border enforcement of
judgments their courts. Additionally, the awards not limited to damages. Whereas typically only
monetary judgments by national courts are enforceable in the cross-border context, it is
theoretically possible (although unusual in practice) to obtain an enforceable order for specific
performance in an arbitration proceeding under the New York Convention.

Article V of the New York Convention provides an exhaustive list of grounds on which
enforcement can be challenged. These are generally narrowly construed to uphold the pro-
enforcement bias of the Convention

CONCLUSION: -

Thus the Arbitration in India is primarily governed by the Arbitration and Conciliation Act
1996, however there are many institutions in India & Abroad which have their own set of rules
and regulations to be followed if the Parties to the dispute have agreed to refer to Arbitration
through that particular institution.

 35

ARBITRATION PROCEDURE IN INDIA

The Arbitration and Conciliation Act, 1996 (Arbitration Act) applies to arbitrations in India & Part I of the Arbitration
Act deals with arbitrations seated in India and Part II deals with arbitrations seated outside India.

Certain provisions of Part I of the Arbitration Act (such as court assistance in aid of arbitration) also apply to
arbitrations seated outside of India

There have been a series of judicial decisions and legislative amendments in recent years that apply partly
prospectively and partly retrospectively.

The version of the Act that will apply in any case will depend on the date on which

• The arbitration was commenced

• Court proceedings relating to the arbitration (if any) were commenced

• The arbitration agreement was executed

For all arbitrations commenced on or after 23 October 2015, the Arbitration Act, as amended in 2015, will/shall apply.

The Arbitration Act was also recently amended in 2019. The amendments are silent as to whether they would apply
retrospectively and/or prospectively upon coming into force on 30 August 2019; however, for all arbitrations initiated
after the commencement of the 2019 amendments, the Arbitration Act, as amended in 2019, will apply

Certain mandatory provisions of the Arbitration & Conciliation Act 1996 consist in – relation of

• Requirements for the form of the arbitration agreement

• Mandatory reference to arbitration by courts

• Grounds of presumed impartiality and lack of independence

• Time limits for completing arbitration proceedings

• Grounds for setting aside an arbitral award and challenging enforcement of an arbitral award

A violation of these conditions can either prevent reference to arbitration, render proceedings invalid or result in an
award being set aside by courts

Under Indian law, the types of disputes that cannot be resolved by arbitration include
.

 36
• Criminal offences

• Matrimonial disputes

• Guardianship matters

• Insolvency petitions

• Testamentary suits

• Trust disputes

• Labour and industrial disputes

• Tenancy and eviction matters, Etc

There is no particular provision and/or authoritative judicial decision to this effect, however basically and/or generally
disputes  in rem  (regarding a thing/property) cannot be resolved through arbitration, while disputes  in
personam (regarding a speci c person) can be. For example: if a special tribunal/s has already been set-up for the
resolution of certain category of disputes, then the same is prohibited for reference to Arbitration. Ex; Consumer
Forum

Conduct of Arbitration Proceedings: -

1. The arbitrators are masters of their own procedure and subject to party’s agreement, may conduct the
proceedings “in the manner they consider appropriate.”

2. This power includes- “the power to determine the admissibility, relevance, materiality and weight of
any evidence”.

3. The Arbitration Act does not prescribe detailed default rules regulating procedure. However, it does
provide some useful guidance to the parties and the arbitrators on the manner in which arbitrations
should be conducted. Parties can deviate from these default rules by speci c agreement, subject to
the limitation that any procedure devised by the parties or the tribunal must meet the basic tenets of
an adjudicatory process.
.

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4. The only restrain on them is that they shall treat the parties with equality and each party shall be
given a full opportunity to present his/her case, which includes suf cient advance notice of any
hearing or meeting

5. Neither the Code of Civil Procedure nor the Indian Evidence Act applies to arbitrations

6. The claimant must usually state the facts supporting his/her claim, the points at issue and the relief or
remedy sought, and the respondent must state his/her defence in respect of these particulars, and any
counterclaim or set-off he/she seeks to claim, while ling his/her statement of claim and defence,
respectively

7. Parties can submit with their statements all documents they consider to be relevant or add a reference
to the documents or other evidence they will submit

8. Either party can amend or supplement his/her claim or defence during the course of the arbitral
proceedings, unless the arbitral tribunal considers it inappropriate to allow the amendment or
supplement having regard to the delay in making it

9. The arbitral tribunal must, as far as possible, hold oral hearings for the presentation of evidence or
for oral argument on a day-to-day basis, and not grant any adjournments unless suf cient cause is
made out, and can impose costs including exemplary costs on the party seeking adjournment without
any suf cient cause

10. Unless the parties agree otherwise, the tribunal shall decide whether to hold oral hearings for the
presentation of evidence or for arguments or whether the proceedings shall be conducted on the basis
of documents or other material alone. However, the arbitral tribunal shall hold oral hearings if a party
so requests (unless the parties have agreed that no oral hearing shall be held)

11. The parties must be given suf cient notice in advance of any hearing and of any meeting of the
arbitral tribunal for the purposes of inspection of documents, goods or other property

12. All statements, documents or other information supplied to, or applications made to, the arbitral
tribunal by one party must be communicated to the other party, and any expert report or evidentiary
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document on which the arbitral tribunal relies on in making its decision must be communicated to
the parties
13. If, without showing suf cient cause, the claimant fails to communicate his/her statement of claim,
the arbitral tribunal must terminate the proceedings

14. If, without showing suf cient cause, the respondent fails to communicate his/her statement of
defence, the arbitral tribunal must continue the proceedings without treating that failure in itself as an
admission of the allegations by the claimant and must have the discretion to treat the right of the
respondent to le such statement of defence as having been forfeited

15. If, without showing suf cient cause, a party fails to appear at an oral hearing or to produce
documentary evidence, the arbitral tribunal can continue the proceedings and make the arbitral award
on the evidence before it

16. Arbitrators have power to proceed Ex-parte where the respondent, without suf cient cause, fails to
communicate his statement of defence or appear for an oral hearing or produce evidence. However,
in such situation the tribunal shall not treat the failure as an admission of the allegations by the
respondent and shall decide the matter on the evidence, if any, before it.

Taking of evidence in arbitral proceedings

1. Under section 19(3) of the Arbitration Act, in the absence of an express agreement by the parties, the
arbitral tribunal can, subject to Part I of the Arbitration Act, conduct the proceedings in the manner it
considers appropriate.

2. There is nothing in Part I of the Arbitration Act prohibiting or limiting the arbitral tribunal's power to
order disclosure of documents and attendance of witnesses. Further, the courts have recognised that
the arbitral tribunal has the same powers as the courts with respect to discovery, inspection,
production of documents and summoning of witnesses
.

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3. If a direction issued by the arbitral tribunal directing production of documents by a party is not
complied with, the tribunal can draw an adverse inference from the conduct of the parties, or it can
apply to the court under section 27 of the Arbitration Act for assistance in taking evidence.

4. The arbitrator can appoint one or more experts to report to it on speci c issues and require a party to
give the expert(s) any relevant information or to produce, or to provide access to, any relevant
documents, goods or other property for their inspection (section 26, Arbitration Act).

5. The tribunal can also order the expert(s) to participate in the oral hearings where the parties have
been given the opportunity to cross examine the expert(s) on their testimony

6. There is no mandatory requirement for disclosure of documents in an arbitration.

7. Under section 23 of the Arbitration Act it is open for the parties to agree upon the required elements
of the statements of claim and defence. There is no mandatory requirement to submit documents at
this stage, and it is open to the parties to either submit all documents that they consider to be
relevant along with their statements of claim and defence, or to add a reference to the documents or
other evidence that they will later submit.

8. Under section 19 of the Arbitration Act, parties can agree upon or the tribunal can decide a procedure
to be followed in conducting the arbitration proceedings. This includes the right to agree on a
procedure of discovery, inspection and production of documents. The tribunal or a party (with the
permission of the tribunal) can also seek the assistance of the court for the examination of witnesses
and the production of documents

9. The Indian Oath’s Act 1969 extends to persons who may be authorized by consent of parties to
receive evidence. This Act thus, encompasses arbitral proceedings as well
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10. Section 8 of the said Act states that every person giving evidence before any person authorized to
administer oath “shall be bound to state the truth on such subject.

11. Thus, witnesses appearing before an arbitral tribunal can be duly sworn by the tribunal and be
required to state the truth on oath and upon failure to do so, commit offences punishable under the
Indian Penal Code

12. However, Section 27 of the Indian Act goes beyond the Model Law as it states that any person
failing to attend in accordance with any order of the court or making any other default or refusing to
give evidence or guilty of any contempt of the arbitral tribunal, shall be subject to like penalties and
punishment as he may incur for like offences in suits tried before the court

13. Further, the court may either appoint a commissioner for taking evidence or order that the evidence
be provided directly to the arbitral tribunal. These provisions extend to any documents to be
produced or property to be inspected

THE LOCAL COURTS HAVE THE POWER TO INTERVENE TO ASSIST ARBITRATION

PROCEEDINGS SEATED IN ITS JURISDICTION. THE ASSISTANCE CAN BE IN ONE OF THE
FOLLOWING WAYS

• Reference of disputes to arbitration (section 8, Arbitration Act)

• Granting interim measures in aid of arbitration (section 9, Arbitration Act)

• Appointing arbitrators (section 11, Arbitration Act)

• Deciding any controversy regarding an arbitrator's mandate (section 14, Arbitration Act)

• Enforcing interim orders of the arbitral tribunal (section 17, Arbitration Act)

• Assistance in taking evidence including for summoning witnesses and producing documents (section
27 Arbitration Act)
.

 41
• Penalising and punishing parties for non-compliance with orders of the arbitral tribunal (section 27,
Arbitration Act)

• Extending an arbitral tribunal's mandate or penalising the tribunal or the parties for a delay in
pursuing arbitration proceedings (section 29(A), Arbitration Act)

• Hearing challenges to an arbitral award in a setting-aside application (section 34, Arbitration Act)

• Hearing appeals from certain decisions of the arbitral tribunal (section 37, Arbitration Act) such as
when a plea of lack of jurisdiction is accepted (section 16) or an interim measure sought of the
arbitral tribunal is denied (section 17, Arbitration Act)

• Payment of costs to the tribunal before the rendering of an award (section 39, Arbitration Act)

• Extension of time periods xed by the parties for the initiation of arbitration (section 43(3),
Arbitration Act)

Interim remedies;

The arbitral tribunal is empowered to grant interim reliefs during the arbitral proceedings until the making of
an award. A party can apply to the arbitral tribunal for the appointment of a guardian for a minor person or a
person of unsound mind for the purposes of arbitral proceedings or for an interim measure of protection in
respect of any of the following matters:
• The preservation, interim custody or sale of goods which are the subject matter of the proceedings
• Securing the amount in dispute in the arbitration
• The detention, preservation or inspection of any property which is the subject matter of the dispute in
arbitration
• Interim injunction
• The appointment of receivers

AWARDS: -

The arbitral tribunal can grant orders to provide security for any amount, goods or property in dispute in the
arbitration
.

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The arbitral tribunal has the power to grant

• Declarations
• Injunctions
• Payment of money
• Speci c performance
Damages can only be compensatory in nature and punitive damages are not permitted. Where an arbitral
award is for the payment of money, the arbitral tribunal can also include interest, at such rate as it deems
reasonable, on the whole or any part of the money, for 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. An arbitral tribunal can also
make a suitable award on costs

COSTS AWARDED IN ARBITRATION/S; -

In determining the costs, the tribunal is expected to have regard to

• The conduct of the parties
• The success of the claims of the parties
• Any reasonable offers of settlement and refusals of these made by the partie

The arbitral tribunal is empowered to determine the costs to be paid by one party to the other, the amount of
these costs and when they are to be paid

The Arbitration Act speci es what constitutes "costs", which includes

• Legal fees and expenses of arbitrators, the court and witnesses
• Administrative fees of the institution supervising the arbitration
• Other expenses incurred in relation to the arbitration
•

Parties are usually invited by the arbitral tribunal to make submissions on costs after the nal hearing, but
before the award is rendered

ENFORCEMENT OF AWARDS: -

DOMESTIC: -
→ An arbitral award is enforceable after the time for making an application to set aside such an award
has expired (three months). The party intending to enforce the award can le an execution petition
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before the civil court. The award is enforced in the same manner as a decree of the court under the
Indian Code of Civil Procedure, which provides the framework for the execution of arbitral awards

→ If a party wishes to seek a stay on the enforcement of the award, it must make a separate application
to the court for that purpose. Recent amendments to the Arbitration Act require the court to ensure
that the party applying for a stay on the enforcement of an award has provided suf cient security to
satisfy the award, as a precondition to granting a stay

→ An arbitral award rendered in India which is unstamped or is insuf ciently stamped is inadmissible.
This de ciency can be xed by payment of de cit stamp duty and penalty. An arbitral award must
also be registered if it concerns immovable property

FOREIGN: -

→ India is a party to both the New York Convention and the Geneva Convention on the Execution of
Foreign Arbitral Awards 1927 (Geneva Convention). However, an award is only enforceable if it was
made in the territory of another state that is identi ed by the Government of India in the  Of cial
Gazette as being bound by either convention

→ Most of the popular arbitration destinations such as the UK, US, Singapore, Hong Kong and
Switzerland, are gazetted convention countries, and so the awards made in these countries are
enforceable under the Arbitration Act. Certain countries such as the UAE are not convention
countries

→ Further, in India, the conventions only apply to disputes arising out of legal relationships which are
considered commercial under Indian law. In recent times, this has been interpreted as meaning that
the conventions (and the Arbitration Act) do not apply to Investment Treaty Arbitrations

→ An award rendered in a commercial arbitration in a gazetted convention country is enforceable in

India, only if; -

• The procedural requirements to enforce an award are satis ed (section 47, Arbitration Act)
• The award does not fall under any of the categories where enforcement can be refused
(section 48, Arbitration Act
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→ The grounds for refusing enforcement of a foreign arbitral award are moreover the same as the
grounds set out in the New York Convention

→ Indian courts have further held that the grounds for refusing enforcement of a foreign award are
narrower than the grounds available to challenge an award rendered in India

→ The public policy ground for refusing enforcement of a foreign award has been held to be
signi cantly narrower than the public policy ground that would vitiate an award rendered in India.
Further, unlike a domestic award, enforcement for a foreign arbitral award cannot be refused on
grounds that it is patently illegal

→ Once the court is satis ed that the foreign award is enforceable, it would be deemed to be a decree of
the court under section 49 of the Arbitration Act. The process for enforcement of a foreign award is
similar to that of a domestic award

LIMITATION FOR ENFORCEMENT OF FOREIGN AWARDS: -

→ Some courts have held that since a foreign award will need to be recognised in India before it is
deemed to be a decree of an Indian court, the rst step of the proceeding to enforce a foreign award
cannot be considered "execution". Therefore, the limitation period to le enforcement proceedings in
India is the same as that of ling a new suit (that is, three years from the date of the award)

→ Some courts in India have held that recognition and enforcement are part of the same process and so
the limitation period is the same as that which applies to execution proceedings (that is, 12 years
from the date of the award)

The Supreme Court has not yet provided any ruling upon the said topic and thus this currently remains
untested

APPEALS: -
• Awards rendered by arbitral tribunals are considered to be nal and binding in terms of the decision
on merits, and no appeal is allowed from an arbitral tribunal to the courts

• The Arbitration Act allows for challenges to the award (section 34, Arbitration Act). This right is
available to all parties to the arbitration where the arbitration is seated in India

Grounds available for challenging an arbitral award

• A party was under some form of incapacity

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• The arbitration agreement was not valid under the law to which the parties had subjected it

• The party was not given proper notice of the appointment of an arbitrator or the arbitral proceedings

• The award dealt with a dispute or contained a decision that was beyond the scope of the arbitration
agreement

• The composition of the arbitral tribunal or the arbitral procedure was not in accordance with the
arbitration agreement or, failing such agreement, was not in accordance with the provisions of the
Arbitration Act

• The subject matter of dispute was not capable of settlement by arbitration

• The arbitral award was in con ict with the public policy of India, which means that
o the making of the award was induced or affected by fraud or corruption in violation of
principles of con dentiality applicable to conciliation proceedings

o the award was in contravention of the fundamental policy of Indian law; o

o the award was in con ict with the most basic notions of justice

➢ An award can be challenged in a domestic arbitration (that is, between two Indian parties seated in
India) if the award is vitiated by patent illegality appearing on the face of the award

➢ The law expressly prohibits courts from looking into the merits of the dispute while examining a
challenge to an arbitral award and provides that an arbitral award cannot be set aside merely on the
ground of an erroneous application of law or evidence

➢ The recent amendments also clarify that a challenge on grounds of incapacity, insuf cient notice,
exceeding the mandate for arbitration, or improper constitution of the arbitral tribunal can only be
made on the basis of the material already available on the record of the arbitral tribunal, in an attempt
to curtail the scope of the challenge and time required to consider such challenge
.

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➢ LIMITATION; - A challenge to an arbitral award (whether relating to an international commercial

arbitration or a domestic arbitration) rendered in India can be made within three months from the date
of receipt of the award by the challenging party. If a party can show suf cient cause that prevented it
from making the challenge within the limitation period, a further 30 days can be granted, but no
longer

__________________________________________________________________________

MEDIATION / CONCILIATION & OTHER FORMS OF ADR

There are four main elements of ADR Mechanism in India, apart from Arbitration as is discussed in the First
Module

1. MEDIATIO
2. CONCILIATIO
3. NEGOTIATION
4. LOK ADALAT

MEDIATION: -
→ Rule 4 of the Civil Procedure - Alternate Dispute Resolution Rules, 2003 (ADR Rules) de nes
mediation by stating that: -

❖ Settlement by ‘Mediation’ means the process by which a mediator appointed by parties or by the
Court, as the case may be, mediates the dispute between the parties to the suit by the application of
the provisions of the Mediation Rules, 2003 in Part II, and in particular, by facilitating discussion
between parties directly or by communicating with each other through the mediator, by assisting
parties in identifying issues, reducing misunderstandings, clarifying priorities, exploring areas of
.

&

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compromise, generating options in an attempt to solve the dispute and emphasising that it is the
parties own responsibility for making decisions which affect them

COMMERCIAL MEDIATION in India was given life in 1996 when the Indian parliament amended the
Civil Procedure Code (CPC) and introduced section 89, which empowered courts to direct settlement of
disputes by mediation amongst other means. This provision governs mediation in the court system in India.
The year 1996 also saw the introduction of the Arbitration and Conciliation Act (ACA). The provisions of
the ACA govern private mediation (conciliation) in India

The primary mediation style is evaluative. The parties expect the mediator to give them his or her view of
the weakness of their case, and to actively participate in nding solutions; indeed, they would be
disappointed if they felt that the mediator was not fully engaged with them in resolving the dispute.
Interests, as well as rights, are focused on. Some mediators prefer to be facilitative. Transformative
mediation is rare

However, it needs also to be said that most mediators will start off being facilitative, encouraging movement
to come from the parties, and become evaluative later in the process

LAWS GOVERNING MEDIATION: -

❖ Section 89 of the CPC and the rules framed by various high courts under that section deal with court-
annexed mediation while Part III of the ACA deals with private mediation. Part II of the Civil
Procedure Alternate Dispute Resolution and Mediation Rules (the Mediation Rules) also provides for
various rules relating to mediation

❖ The Commercial Courts Act 2015, whereby it is mandatory for parties to exhaust the remedy of pre-
institution mediation under the Act before instituting a suit. The Commercial Courts (Pre-Institution
Mediation and Settlement) Rules 2018 (the PIMS Rules) have been framed by the government under
the Act

These laws are not based on the UNCITRAL Model Law on International Commercial Conciliation
.

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❖ A dispute resolution clause providing for mediation would be enforceable in India in the sense that if
a suit is led, then a court would most likely enforce the clause and send parties to mediation in
pursuance of its power under section 89 of the CP

LEGAL SANCTIONS: -

❖ There are no legal sanctions for ignoring or refusing a proposal for mediation. However, if a dispute
has reached the stage of litigation, the courts can suggest mediation in the course of proceedings and,
invariably, such suggestions are accepted by parties

MEDIATORS: -

❖ There is a professional association of mediators in India called Mediators India

❖ It is not necessary to be accredited to practise as a mediator in India. However, accreditation is

necessary for empanelment with court and tribunal mediation panels. With growing awareness of
mediation, there will be a preference for certi ed accredited mediators

❖ In India, court-annexed mediation centres conduct two training courses: a basic training course that
is 40 hours in duration and an advanced training course that is 20 hours in duration. Accreditation of
mediators takes place after completion of the basic training course, 20 hours of mediation (including
co-mediation) and completion of the advanced training course

❖ There is no requirement that mediators must undertake continuous professional education or

development courses. In the court mediation system, the mediation centres do arrange for refresher
courses and mediators are encouraged to attend the same

❖ The ACA and the CPC spell out the duties of mediators that pertain to disclosure, avoiding improper
conduct, maintaining con dentiality, not imposing settlements, etc. The PIMS Rules also impose
certain ethical duties on mediators

❖ However, no potential liability is spelt out in the statutes for mediators. In fact, Rule 22 of the Mediation
Rules and Rule 23 of the Companies (Mediation) Rules provide that mediators shall not be liable for
anything bona de done by them or omitted to be done by them during the mediation process and are
immune from civil or criminal action. In the court mediation system, mediators can be removed from the
panel for misconduct or poor performanc

AGREEMENTS: -
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❖ In the court mediation process, there is no obligation to have an agreement between the parties and
the mediator, since the rules under the CPC govern the mediation

❖ In other mediations, while there is no legal mandate, it is customary to have such written agreement.
This will include provisions regarding con dentiality and the process to be followed

APPOINTMENT: -

❖ In the court system, the Civil Procedure (Mediation) Rules regulate the accreditation, empanelment
of mediators and appointments in individual cases. Such appointments are usually based on the
roster; in exceptional cases mediators may be speci ed by name by the referring judge himself or
herself or acting on the suggestion of parties

❖  In the eld of private mediation, the practice of including mediation clauses in contracts is gaining
popularity. Such clauses may specify the name of a mediator to settle disputes or the name of an
institution whose assistance may be sought in appointing a mediato

PROCEDURE: -

❖ It is extremely common to see parties being represented by lawyers in commercial mediations in

India. However, fact and expert witnesses are rarely used

❖ The mediator will ensure that he or she has no con ict of interest in the matter, and will withdraw if
any exists

❖ The terms of engagement of the mediator (fees and expenses, etc) are made known and agreed to by
the parties; [do not apply in court-referred mediations] an

❖ The con dentiality agreement is signed between the parties and the mediator [do not apply in court-
referred mediations

❖ In court-appointed mediation proceedings, the mediator is free to decide on the mediation procedure
to be followed or to follow the Civil Procedure Mediation Rules. Some mediators request parties to
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le a brief statement of facts and issues prior to the rst session. At the rst session the process of
mediation is explained fully, facts and issues are ascertained and (if they have not done so already)
the mediators may request statements or summaries to be led

❖ In private mediation, it is quite common for the mediator to require parties to submit a statement of
facts and a summary of legal proceedings ahead of the mediation. Parties are requested to come to
mediation prepared with the facts and with authority to settle the dispute. The mediator may also ask
for further notes for additional information during the course of the mediation

❖ Mediation usually begins with a joint session. The mediator will usually hold separate sessions with
the parties during the course of mediation as and when he or she deems necessary

❖ At the rst joint session, the mediator will

→ ensure that all required are attending and have the requisite authority to do so, and make the
necessary introductions;
→ explain the concept of mediation and answer queries on the same;
→ request parties to each make their opening statement;
→ request the lawyers to make the supplementary statements on the law relevant to the matter;
→ see if any further facts are needed, and determine how to ascertain them; and
→ identify the issues that need to be resolved to arrive at a settlement

❖ At the separate sessions the mediator will

→ explore the long-term interests of the parties;

→ identify the weakness in their case, and the lack of good alternatives to settlement (in the
evaluative mode);
→ encourage and engage with the parties in identifying options for settlement; [may also take
place in joint sessions]
→ focus on possible settlement options and refine them; [may also take place in joint sessions]
and
→ draft, or help draft, the written settlement agreement [may also take place in joint sessions].

(PRE-INSTITUTION MEDIATION AND SETTLEMENT) RULES 2018

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❖ At the beginning, the mediator shall explain the process to the parties.

❖ The time and date of each mediation sitting shall be xed in consultation with the parties

❖ The mediator may hold sessions jointly or separately with the parties as he or she deems t

❖ The parties may share their settlement proposals with the mediator with instructions as to what can
be shared with the other party.

❖ The parties may also share settlement proposals with each other orally or in writing

❖ Once a settlement is reached, it shall be reduced to writing, and signed by the parties and the
mediator

❖ The settlement shall be provided to all parties and a signed copy will be sent to the authority under
the Commercial Courts Act

❖ When no settlement is arrived at within the time limit allowed under the Act, or if the mediator is of
the view that settlement is not possible, the mediator shall submit a report stating the same to the
authority under the Act

CONFLICT WITH LIMITATION ACT 1963: -

As per the Commercial Courts Act 2015, any period during which the parties ‘remain occupied’ with the
pre-institution mediation under the Act shall not be computed for the purposes of limitation

In other cases, also, the mediation proceeding does not suspend the limitation period for a court claim

SETTLEMENT AGREEMENTS: -

❖ Section 73 of the ACA provides for the drawing up and signing of a written settlement
agreement. The settlement agreement must also be witnessed. When the parties sign the
settlement agreement, it shall be nal and binding on the parties claiming under them
respectively. The mediator is required to authenticate the settlement agreement and furnish a
copy of the same to each of the parties

❖ In the case of a settlement arrived at in a court-annexed mediation or judicial settlement, the

same should be reduced to writing and presented to the court, which will pass an order or decree
on the terms thereof
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❖ As per the ACA and the Commercial Courts Act, the mediation settlement has the same status as
an arbitral award and hence can be challenged on the same grounds as an arbitral award

❖ In India, a mediator cannot be called to give evidence in relation to the mediation or the alleged
settlement in any judicial or arbitral proceeding. This provision exists to protect the
con dentiality of the mediation process

CONCLUSION: -

❖ Mediation is encouraged very strongly by the courts in India. Many high courts have set up
mediation centres housed within the premises of the courts. The courts provide staff and
facilities to the mediation centres and also bear the expenses. A huge number of lawyers and
others have been trained to become mediators, and the court also pays an honorarium to the
mediators. The process is generally free for the parties

❖ A large number of cases are referred to mediation by the courts. Although consent of parties
is invariably taken before referring a case for settlement by mediation, the court does have
the power to direct parties to attend the mediation, if at least to get to know more about the
process of mediation

❖ Judges, leading lawyers and policy makers speak very positively about mediation. However,
mediation is yet to catch on signi cantly in the private eld. With the success of court-
annexed mediation in India, attention is now being focused on private commercial mediation.
Leading business organisations and industrial leaders are getting involved for the sam

❖ Commercial mediation is fairly new in India and, hence, litigation remains the most popular
mode of settling disputes. Therefore, the percentage of commercial cases settled by mediation
would be small in comparison to cases litigated

❖ Overall, the stage is set for mediation to nally emerge as a major and widely accepted mode
of dispute resolution in the country.

❖ Of the cases settled by mediation, cases that have been referred to mediation by the courts
would be an overwhelming majority in comparison to cases where mediation has been
attempted voluntarily by the parties.
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CONCILIATION: -

❖ The term conciliation is not de ned in the Act. However, simply put conciliation is a con dential,
voluntary and private dispute resolution process in which a neutral person helps the parties to reach a
negotiated settlement

❖ As per the Act, the de nition of international commercial conciliation is; - exactly similar to that of
international commercial arbitration. Accordingly, the Act de nes international commercial
conciliation as conciliation proceedings relating to a dispute between two or more parties where at
least one of them is a foreign party. The foreign party may be (1) an individual who is foreign
national, (2) a company incorporated outside India, or (3) the government of a foreign country

❖ The Arbitration and Conciliation Act, 1996 (“the Act”) is based on the UNCITRAL Model Law on
international commercial arbitration and conciliation. While the Act was not intended to displace the
judicial system, the new law ushered in an era of private arbitration and conciliation. It was also the
rst time that a comprehensive legislation was made on the subject of conciliation in India

❖ The UNCITRAL Rules on Conciliation, 1980 recognized “the value of conciliation as a method of
amicably settling disputes arising in the context of international commercial relations” and that
adoption of uniform conciliation rules by “countries with different legal, social and economic
systems would signi cantly contribute to the development of harmonious international economic
relations.” Accordingly, these rules were closely followed by the Indian legislators to formulate
conciliation rules under Part III of the Act

PRINCIPLES: -

The procedure laid down in Part III of the Act re ects the following broad principles:

(1) non-adversary nature of conciliation proceedings – there is no claimant or plaintiff in conciliation

proceedings,
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(2) voluntary nature of proceedings – any party can commence and discontinue the proceedings,

(3) exible procedure – the conciliator has the discretion to adopt any procedural law to ensure speedy and
inexpensive conduct of proceedings, and

(4) decisions are recommendatory – disputes are settled by mutual agreement and not by imposed decisions

THE ROLE OF CONCILIATOR: -

As per Sec. 80 of the Act, the Conciliator does not decide for the Parties, but strives to support them in
generating options in order to nd a Solution that is compatible for both of them, thereby ful lling the
mandate of Sec. 67 of the Act under which the main function of the Conciliator is to assist the Parties to
reach an amicable settlement

For achieving this, a Conciliator is obliged to

1. Act in an Independent and Impartial Manne

2. Abide by the Principles of the Objectivity, Fairness 7 Justic

Sec. 67[4] of the Act speci cally enables the Conciliator to “Make Proposals for settlement of the Disputes
at any stage of the Conciliation Proceedings”

The above provisions make it clear that the Conciliator, apart from assisting the Parties to reach a settlement,
is also permitted and empowered to make proposals for a settlement and formulate/reformulate the terms of
a Possible Settlement

CONCILIATION VIS-À-VIS ARBITRATION: -

❖ While arbitration is considered private when compared with the court system, conciliation is even
more private than arbitration. As litigation and arbitration are both means of adjudication, the judge
and the arbitrator render their verdicts and impose them on the parties. While the parties to an
arbitration proceeding are given considerable freedom in terms of deciding the venue, date,
arbitrator, etc., they have no control over the decision making process except in the case of award on
agreed terms. In contrast, parties to a conciliation proceeding have the privilege to negotiate and
arrive at an amicable settlement with the assistance of a conciliator in a less formal setting
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❖ Secondly, while section 7(2) requires that an arbitration agreement be in writing, there is no such
express provision regarding conciliation in the Act. However, this does not hold much relevance as
the process of conciliation commences with the written offer and acceptance to conciliate by the
parties. Conversely, in arbitration, even in the absence of a prior written agreement, if the parties
appoint the arbitrator and proceed with arbitration, the requirement of section 7(2) is taken as
complied with

❖ Thirdly, section 30 of the Act permits the parties to engage in conciliation process even during the
course of arbitral proceedings. They may do so suo motu or under the directions of the arbitrator. In
case the conciliation concludes successfully, the arbitrator is to record the settlement in the form of
an arbitral award. Such an award, which is prepared on agreed terms, is given similar status to that
of any other award. However, section 77 of the Act bars any arbitral or court proceedings in respect
of a dispute which is the subject matter of conciliation proceedings. This essentially means that
during arbitral or court proceedings, the parties are encouraged to initiate conciliation proceedings,
but once conciliation proceedings commence, they are barred from initiating arbitration or
approaching the court. Clearly, the purpose of sections 30 and 77 of the Act is to encourage parties
to resort to nonformal conciliation proceedings in preference to the formal court and arbitral
proceedings

CPC & CONCILIATION: -

❖ A 1999 amendment to the CPC enabled the courts to refer pending cases to arbitration, conciliation
and mediation to facilitate early and amicable resolution of disputes

❖ Prior to the amendment of the CPC, the Act did not contain any provision for reference by courts to
arbitration or conciliation in the absence of the agreement between the parties to that effect.
However, pursuant to the insertion of section 89 in the CPC, a court can refer the case to arbitration,
conciliation, judicial settlement11 or mediation, “where it appears to the court that there exist
elements of settlement which may be acceptable to the parties.
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❖ Section 89 of the CPC empowers the court to formulate the terms of settlement and give them to the
parties for their observation and after receiving the observations, reformulate the terms of a possible
settlement and refer the same for arbitration, conciliation, judicial settlement or mediation. Once a
court refers a case to conciliation, the provisions shall not apply, and the parties shall be bound by
the provisions of the Act. This allows the parties to terminate the conciliation proceedings in
accordance with section 76 of the Act,12 even if the dispute has not been resolved, thereby rendering
the entire dispute resolution process futile

ADVANTAGES OF CONCILIATION: -

1. It is more exible, inexpensive and informal.

2. Parties are directly engaged in negotiating a settlement

3. Conciliation enhances the likelihood of the parties continuing their amicable business relationship
during and after the proceedings: -

REASON is that the parties are in a conciliatory mode, away from the hostile environment of a court
or an arbitral tribunal where exhaustive arguments take place and reach a mutually acceptable
settlement done volitionally, and in a congenial manner. Thus, the end result of a conciliation
proceeding is that both parties are relatively pleased with the nal outcome

4. The chances of an appeal after the conclusion of conciliation proceedings are considerably lower as a
mutual settlement is arrived at between the parties. However, there is no judicial precedent
establishing this

NEGOTIATION: -

WHAT IS NEGOTIATION: -
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→ The word "negotiation" is from the Latin expression, "negotiatus", past participle of negotiare which
means "to carry on business". "Negotium" means literally "not leisure

❖ Negotiation has been de ned as any form of direct or indirect communication whereby parties who
have opposing interests discuss the form of any joint action which they might take to manage and
ultimately resolve the dispute between them. Negotiations may be used to resolve an already-existing
problem or to lay the groundwork for a future relationship between two or more parties

❖ Negotiation has also been characterized as the “pre-eminent mode of dispute resolution”, which is
hardly surprising given its presence in virtually all aspects of everyday life, whether at the individual,
institutional, national or global levels. Each negotiation is unique, differing from one another in
terms of subject matter, the number of participants and the process used

❖ Given the presence of negotiation in daily life, it is not surprising to nd that negotiation can also be
applied within the context of other dispute resolution processes, such as mediation and conciliation

❖ In India, Negotiation doesn’t have any statutory recognition i.e. through way of legislation.
Negotiation is self-counselling between the parties to resolve their dispute

❖ Traditional negotiating is sometimes called win-lose because of the assumption of a xed "pie", that
one person's gain results in another person's loss. This is only true, however, if only a single issue
needs to be resolved, such as a price in a simple sales negotiation. This is nearly always the case,
although often how they go about getting what they want is so delicate it isn’t readily obvious

❖ The negotiators were in different attitudes as follows

1. one may be meticulously polite

2. one may be dull and to the point

3. one may seem to have been born negotiators

4. one may be have had to learn to be comfortable in the tug-and-pull of a con ict resolution

THE ESSENTIAL STEPS REQUIRED FOR A NEGOTIATION TO BE SUCCESSFUL ARE AS FOLLOWS: -

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1. The voluntary consent of both parties to negotiate on the dispute

2. The dispute concerns both parties in such a way that the parties are dependent on each other

3. The parties should have the willingness to settle the dispute

4. The dispute at hand should be negotiable

5. In certain cases, there is a sense of urgency and deadline in the dispute leading to negotiation

ADVANTAGES OF NEGOTIATION: -

1. PARTY BASED DISPUTE RESOLUTION

→ One of the reasons for the absolute success of a negotiation is that negotiation only involves the
stakeholders and does not include any other party as a result of which the negotiation process
remains an absolutely private affair

2. FREEDOM OF THE PARTIES

→ Negotiations ensure that there is absolute freedom of the parties. Freedom to set agendas of their
choice and to ensure the objective of the negotiation is achieved

3. CONSENT OF THE PARTIES

→ This process ensures that the consent of both parties is taken into consideration and that the
individual interests are well looked after. The freedom also ensures that there is no play of powers
and all the parties in the negotiation are given equal footing to speak and consider their options

4. SUCCESSFUL DISPUTE RESOLUTION

→ The negotiations have a possibility of greater successful outcomes because it is ultimately based on
the party’s interest and is entirely run by the party’s consent to dissolve the dispute also the process
of dispute resolution is suited with that of the parties

5. STRATEGY ORIENTED
→ By using the principled approach to the negotiations and considering the various other strategies one
can successfully conclude a negotiation process. The parties can easily come to a win-win situation
which is mostly the advantage of negotiations
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6. VOLUNTARY PROCESS
→ Negotiation is considered to be a voluntary process. However, agents representing the parties can
also take part in the negotiation process. There is no interference of a third party in the negotiation
process which leads to the proper safeguard of the con dential information

7. NO THIRD PARTY INTERVENTION

→ The need for a neutral third party which is the characteristics of most of the ADR systems is not the
case with negotiations. This type of ADR is mostly recommended in cases of highly classi ed
information such as the case of administration which if leaked through a third party would create
havoc

8. COMFORTABLE PROCESS
→ The process of negotiation is safe. It normally is a speedy process. The decision does not bind any
other party other than the stakeholders. The process does not require witnesses. It is comfortable.
There is not the third party imposing any order over the parties. It is a completely self-built process

9. IMPROVEMENT IN RELATIONS
→ After the successful completion of the negotiation rounds such as in the international negotiations,
there is an improvement in the relations of the parties. The successful completion of negotiations
further leads to the incentives of the negotiations with the other countries as well. Thus, facilitating
the process of negotiations on further occasions

DISADVANTAGES: -
1. POWER TACTIC
→ The parties to negotiation may not always be of equal stature and power. In the absence of a neutral
third party, the party which is in a position to dominate uses the scope to dominate over the consent
of the other party and thus come at an agreement. This play of powers thus is a disadvantage in the
negotiation process. The result may be an unfair agreement which later can be relegated to be
useless

2. UNEQUAL AGREEMENT
→ The agreement that the parties arrive at the time of negotiation can be unequal when there is one is a
powerful party than the other

3. IMPASSE
→ The dispute and disagreement between the parties sometimes lead to an impasse. An impasse is a
situation at the time of negotiation when the parties to an agreement reached a standstill in their
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discussion, where they cannot proceed with their discussion any longer. It is a stage of the frustration
of the discussion of the parties wherein the parties where no possible successful outcomes can
happen. This generally happens when one of the parties is so adamant over its goals that no middle
ground can be achieved

4. WALKOUT SITUATION
→ The walkout situation happens when an impasse frustrates the parties to the extent that no fruitful
discussion can happen any longer. The parties in such situations may storm out of the room and
terminate negotiations any further

5. STRAINED RELATIONS
→ The unsuccessful rounds of negotiations sometimes lead to bitterness in the relationship. The parties
are not ready to come for another round of negotiations and fail to reach an agreement at all

6. BACKING OFF
→ The unsuccessful negotiations sometimes lead to the creation of bad relations along with the
termination of any other business and contractual relations all together afterward. Some parties
sometimes lose con dence in the process of negotiation as a process of dispute resolution and
consider other options

7. NOT ALL ISSUES ARE NEGOTIABLE

→ There are cases that involve multiple stakeholders that are non-negotiable. These cases directly go to
court

LOK-ADALATS: -
FEATURES: -

❖ NALSA along with other Legal Services Institutions conducts Lok Adalats. Lok Adalat is one of the
alternative dispute redressal mechanisms, it is a forum where disputes/cases pending in the court of
law or at pre-litigation stage are settled/ compromised amicably

❖ Lok Adalats have been given statutory status under the Legal Services Authorities Act, 1987. Under
the said Act, the award (decision) made by the Lok Adalats is deemed to be a decree of a civil court

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and is nal and binding on all parties and no appeal against such an award lies before any court of
law

❖ If the parties are not satis ed with the award of the Lok Adalat though there is no provision for an
appeal against such an award, but they are free to initiate litigation by approaching the court of
appropriate jurisdiction by ling a case by following the required procedure, in exercise of their right
to litigate

❖ There is no court fee payable when a matter is led in a Lok Adalat.

❖ If a matter pending in the court of law is referred to the Lok Adalat and is settled subsequently, the
court fee originally paid in the court on the complaints/petition is also refunded back to the parties.

❖ The persons deciding the cases in the Lok Adalats are called the Members of the Lok Adalats, they
have the role of statutory conciliators only and do not have any judicial role; therefore they can only
persuade the parties to come to a conclusion for settling the dispute outside the court in the Lok
Adalat and shall not pressurize or coerce any of the parties to compromise or settle cases or matters
either directly or indirectly.

❖ The Lok Adalat shall not decide the matter so referred at its own instance, instead the same would be
decided on the basis of the compromise or settlement between the parties

❖ The members shall assist the parties in an independent and impartial manner in their attempt to reach
amicable settlement of their dispute

DISPUTES REFERRED TO LOK-ADALATS: -

Nature of Cases to be Referred to Lok Adalat: -
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1. Any case pending before any court

2. Any dispute which has not been brought before any court and is likely to be led before the court

Provided that any matter relating to an offence not compoundable under the law shall not be settled in Lok
Adalat

JURISDICTION: -

As per section 18(1) of the Act, a Lok Adalat shall have jurisdiction to determine and to arrive at a
compromise or settlement between the parties to a dispute in respect of

(1) Any case pending before; o

(2) Any matter which is falling within the jurisdiction of, and is not brought before, any court for which the
Lok Adalat is organised

Provided that the Lok Adalat shall have no jurisdiction in respect of matters relating to divorce or matters
relating to an offence not compoundable under any law

CONSENT OF THE PARTIES: -

❖ The most important factor to be considered while deciding the cases at the Lok Adalat is the consent
of both the parties.

❖ It cannot be forced on any party that the matter has to be decided by the Lok Adalat.

❖ However, once the parties agree that the matter has to be decided by the Lok Adalat, then any party
cannot walk away from the decision of the Lok Adalat.

❖ In several instances, the Supreme Court has held that if there was no consent the award of the Lok
Adalat is not executable and also if the parties fail to agree to get the dispute resolved through Lok
Adalat, the regular litigation process remains open for the contesting parties

❖ The Supreme Court has also held that compromise implies some element of accommodation on each
side. It is not apt to describe it as total surrender.
A compromise is always bilateral and means mutual adjustment. Settlement is termination of legal
proceedings by mutual consent. If no compromise or settlement is or could be arrived at, no order
can be passed by the Lok Adalat
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HOW & WHEN A DISPUTE CAN BE TRANSFERRED TO LOK-ADALATS: -

(A) Case pending before the court

(B) Any dispute at pre-litigative stage

The State Legal Services Authority or District Legal Services Authority as the case may be on receipt of an
application from any one of the parties at a pre-litigation stage may refer such matter to the Lok Adalat for
amicable settlement of the dispute for which notice would then be issued to the other party

TYPES & LEVELS OF LOK-ADALATS: -

At the State Authority Level -

→ The Member Secretary of the State Legal Services Authority organizing the Lok Adalat would
constitute benches of the Lok Adalat, each bench comprising of a sitting or retired judge of the High
Court or a sitting or retired judicial of cer and any one or both of- a member from the legal
profession; a social worker engaged in the upliftment of the weaker sections and interested in the
implementation of legal services schemes or programmes

At High Court Level

→ The Secretary of the High Court Legal Services Committee would constitute benches of the Lok
Adalat, each bench comprising of a sitting or retired judge of the High Court and any one or both of-
a member from the legal profession; a social worker engaged in the upliftment of the weaker sections
and interested in the implementation of legal services schemes or programmes

At District Level

→ The Secretary of the District Legal Services Authority organizing the Lok Adalat would constitute
benches of the Lok Adalat, each bench comprising of a sitting or retired judicial of cer and any one
or both of either a member from the legal profession; and/or a social worker engaged in the
upliftment of the weaker sections and interested in the implementation of legal services schemes or
programmes or a person engaged in para-legal activities of the area, preferably a woman

At Taluk Level
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→ The Secretary of the Taluk Legal Services Committee organizing the Lok Adalat would constitute
benches of the Lok Adalat, each bench comprising of a sitting or retired judicial of cer and any one
or both of either a member from the legal profession; and/or a social worker engaged in the
upliftment of the weaker sections and interested in the implementation of legal services schemes or
programmes or a person engaged in para-legal activities of the area, preferably a woman

National Lok Adalat: -

→ National Level Lok Adalats are held for at regular intervals where on a single day Lok Adalats are
held throughout the country, in all the courts right from the Supreme Court till the Taluk Levels
wherein cases are disposed off in huge numbers. From February 2015, National Lok Adalats are
being held on a speci c subject matter every month

Permanent Lok Adalat: -

→ The other type of Lok Adalat is the Permanent Lok Adalat, organized under Section 22-B of The
Legal Services Authorities Act, 1987. Permanent Lok Adalats have been set up as permanent bodies
with a Chairman and two members for providing compulsory pre-litigative mechanism for
conciliation and settlement of cases relating to Public Utility Services like transport, postal, telegraph
etc.

→ Here, even if the parties fail to reach to a settlement, the Permanent Lok Adalat gets jurisdiction to
decide the dispute, provided, the dispute does not relate to any offence. Further, the Award of the
Permanent Lok Adalat is nal and binding on all the parties. The jurisdiction of the Permanent Lok
Adalats is upto Rs. Ten Lakhs.

→ Here if the parties fail to reach to a settlement, the Permanent Lok Adalat has the jurisdiction to
decide the case. The award of the Permanent Lok Adalat is nal and binding upon the parties.

→ The Lok Adalat may conduct the proceedings in such a manner as it considers appropriate, taking
into account the circumstances of the case, wishes of the parties like requests to hear oral statements,
speedy settlement of dispute etc

Mobile Lok Adalats: -

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→ Are also organized in various parts of the country which travel from one location to another to
resolve disputes in order to facilitate the resolution of disputes through this mechanism

PROCEDURE OF LOK-ADALATS: -

The procedure followed at a Lok Adalat is very simple and shorn of almost all legal formalism and
rituals: -
→ The Lok Adalat is presided over by a sitting or retired judicial of cer as the chairman, with two other
members, usually a lawyer and a social worker

→ It is revealed by experience that in Lok Adalats it is easier to settle money claims since in most such
cases the quantum alone may be in dispute.

→ Thus, the motor accident compensation claim cases are brought before the Lok Adalat and a number
of cases were disposed of in each Lok Adalat.

→ One important condition is that both parties in dispute should agree for settlement through Lok
Adalat and abide by its decision.

→ A Lok Adalat has the jurisdiction to settle, by way of effecting compromise between the parties, any
matter which may be pending before any court, as well as matters at pre-litigative stage i.e. disputes
which have not yet been formally instituted in any Court of Law. Such matters may be civil or
criminal in nature, but any matter relating to an offence not compoundable under any law cannot be
decided by the Lok Adalat even if the parties involved therein agree to settle the same.

→ Lok Adalats can take cognizance of matters involving not only those persons who are entitled to
avail free legal services but of all other persons also, be they women, men, or children and even
institutions.

→ Anyone, or more of the parties to a dispute can move an application to the court where their matter
may be pending, or even at pre-litigative stage, for such matter being taken up in the Lok Adalat
whereupon the Lok Adalat Bench constituted for the purpose shall attempt to resolve the dispute by
helping the parties to arrive at an amicable solution and once it is successful in doing so, the award
passed by it shall be nal which has as much force as a decree of a Civil Court obtained after due
contest

FINALITY OF AWARDS: -
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❖ During the Lok Adalat, the parties agree to abide by the decision of the judge at the Lok Adalat.
However, it is often seen that later, the same order is challenged on several grounds. In one of the
recent decisions, the Supreme Court of India has once again laid to rest all such doubts. In
unequivocal terms, the Court has held that award of the Lok Adalat is as good as the decree of a
Court.

❖ The award of the Lok Adalat is ctionally deemed to be decrees of Court and therefore the courts
have all the powers in relation thereto as it has in relation to a decree passed by itself. This includes
the powers to extend time in appropriate cases.

❖ The award passed by the Lok Adalat is the decision of the court itself though arrived at by the
simpler method of conciliation instead of the process of arguments in court

ADVANTAGES OF LOK-ADALATS: -

1. There is no court fee and even if the case is already led in the regular court, the fee paid will be
refunded if the dispute is settled at the Lok Adalat

2. There is no strict application of the procedural laws and the Evidence Act while assessing the merits
of the claim by the Lok Adalat. The parties to the disputes though represented by their advocate can
interact with the Lok Adalat judge directly and explain their stand in the dispute and the reasons
therefore, which is not possible in a regular court of law

3. Disputes can be brought before the Lok Adalat directly instead of going to a regular court rst and
then to the Lok Adalat

4. The decision of the Lok Adalat is binding on the parties to the dispute and its order is capable of
execution through legal process. No appeal lies against the order of the Lok Adalat whereas in the
regular law courts there is always a scope to appeal to the higher forum on the decision of the trial
court, which causes delay in the settlement of the dispute nally. The reason being that in a regular
court, decision is that of the court but in Lok Adalat it is mutual settlement and hence no case for
appeal will arise. In every respect the scheme of Lok Adalat is a boon to the litigant public, where
they can get their disputes settled fast and free of cost

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