Ch 11alternative Dispute Resolution

Alternative Dispute Resolution Chapter XI

PUTTU GURU PRASAD INC GUNTUR

Concept of ADR 

The court proceedings is the regular process taken up for any dispute resolution.

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But there are certain alternative mechanisms available before a full-scale court proceedings and that is the Alternative Dispute Resolution.

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The spirit of ADR is that it emanates to find a better and more wholesome collaborative method of resolving disputes.

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ADR refers to the process, other than judicial determination, in which an impartial person assists the parties to a dispute to resolve the issues between the parties.

Efficacy of ADR 

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ADR is defined as a “collective description of methods of resolving disputes otherwise than through the normal trial process”. In general parlance it is usually understood as being “reference to some form of mediation by a third party”. The recent developments in the dispute resolution concept have been highlighted by establishment of the various tribunals under different statutes like labour tribunal, Income Tax Tribunals, Lok Adalats, Motor Accidents Tribunals, Consumer Redressal Forums etc… which form part of the description of ADR. Litigants are encouraged to choose any of the methods of the ADR like arbitration, mediation, negotiation and conciliation. Both national and international legal systems have adopted ADR movement.

Advantages of ADR 

It is faster and less expensive.

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It encourages direct participation of the parties and discourages the implementation of complete procedural law.

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It is believed to be a more satisfactory approach as in most of the cases both the parties will be satisfied with the outcome as well as their compliance with the agreements reached.

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It creates less ill will and improves the relationship of the parties, as it is based on an integrative approach than the adversarial court based method of litigation.

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It gives an opportunity to continue the interaction between the parties after they have reached a settlement.

Disadvantages of ADR 

It is criticized as rendering a “second-class justice”.

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It encourages compromise, but compromise is not a good remedy in all the matters, especially in cases of intolerable moral differences, which have grave or serious conflicts of justice.

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They are private in nature and not part of a public record, so it is not exposed to public scrutiny.

Definition of Arbitration 

The Law relating to Arbitration and Conciliation is governed under the Arbitration and Conciliation Act, 1996, which was enacted under the UNICITRAL Model law. Earlier law was Arbitration Act 1940. The other laws recognizing arbitration proceedings were Arbitration (Protocol and Convention ) Act, 1937 and the Foreign Awards (Recognition and Enforcement ) Act, 1961.

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The A & C Act, 1996 has consolidated and amended the law relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards and other related matters.

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Arbitration is defined as a means any arbitration, whether or not administered by the permanent arbitral institution.

International Commercial Arbitration It means an arbitration relating to disputes arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India and at least one of parties is: 

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an individual who is a national of or habitually resident in any country other than India; or a body corporate which is incorporated in any country other than India; or a company or association or a body of individuals whose central management and control is exercised in any country other than India; and The government of a foreign country.

Arbitration   

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Arbitrate or Arbitrator literally means “ to decide” “decision making process” or “decision maker or judge”. It is a less formal and a quicker dispute resolution mechanism than the court proceedings. The arbitrator makes decisions based on the facts, contractual obligations between the parties and the applicable law. It views the dispute as a legal analysis and seeks to solve the problems based on entitlement and rights. The arbitrator will be acting transparently as the arbitrator has to put across the reasons as to why he or she arrived at the decision. It may be or may not be final in nature and if the parties are not happy with the award of the arbitrator, they can approach the court for review based on some grounds. The benefits of arbitrations are its confidentiality, flexibility, speed and the expertise of many arbitrators.

What disputers can be decided through arbitration? Mostly all the disputes involving Civil Rights, which fall within the jurisdiction of Civil Court are referable to arbitration. But the law provides certain prohibitions, therefore disputes involving the question of morality, public policy, status and religious rights are not considered to be part of arbitration proceedings. The matters, which are of the following nature will not be solved under arbitration agreements:    

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Matrimonial matters and those connected with the conjugal rights. Industrial and Revenue Matters Testamentary matters under the Indian Succession Act Insolvency proceedings, Company matters those relating to winding up. Matters under Trust Act etc Determinations of rights and liabilities under the Guardianship and Wards Act.

Types of Arbitration and features of Arbitration Agreement 

Domestic Arbitration

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International Arbitration

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Ad hoc Arbitration

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Institutional Arbitration

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Statutory Arbitration

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Expedited Arbitration

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Hybrid arbitration

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Flip-Flop Arbitration

The arbitration agreementcan be in the form of:  an arbitration clause in a contract, or  in a separate agreement.  It need not be necessarily signed by the parties.  Stamp duty is chargeable.  The parties may set out the procedure for appointment of the arbitrators in their agreement.  By an agreement, the arbitration agreement can be terminated

Legal Attributes of the Arbitration Agreement   

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The arbitration agreement to be in writing. It can have a sole arbitrator or three or five etc arbitrators. The arbitrators can be named in the agreement or nominated in accordance with the provisions of law. It has to be in accordance with Section 10 of the Indian Contract Act, 1872 for being a valid contract. The parties should intend to evince interest to refer the matter to arbitration. Arbitration agreement to provide place of arbitration and the substantive law applicable to the contract especially in the International Commercial Agreement for arbitration, it is compulsory to do so.

Arbitration through Court 

Other than the parties agreeing to refer the matter to the arbitrator, even the court can impose a mandatory duty on a judicial authority to refer some matters to arbitration. It can use this power at its discretion.

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The discretion of the court to be properly and judicially decided. The parties can ask for a stay.

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There is provision for appeal to higher courts when the discretionary power of the court is used.

The various situations as to when the court can intervene 

When there is an agreement the court is empowered to refer the matter to arbitration

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It can grant interim measures

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On the termination of the mandate of an arbitrator

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Assist in taking evidence

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Setting aside arbitral award

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Enforcement of arbitral award

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Hearing appeal from the original decrees of the court orders.

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Cost of the arbitration etc…

Conciliation 

The conciliation proceedings shall have to commence before any steps are taken for the appointment of arbitrators. It is utilized to reach early settlements.

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It means bringing the opposing parties or individuals into an undisputed territory of harmony. The conciliator may have advisory role on the content of the dispute or the outcome of its resolution.

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Conciliation is a process of persuading parties to reach an agreement and is plainly not arbitration.

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Conciliation can be resorted to in relation to disputes arising out of a legal relationship, whether contractual or not.

Role of Conciliator Conciliation is one of the mechanisms that has tobe adopted in reaching early settlements and therefore the conciliator has to play the role as following: 

The conciliator may advise or determine the process of conciliation whereby resolution is attempted.

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Conciliator to make suggestions for terms of settlement.

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Conciliator can give expert advice on likely settlement terms and

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Conciliator can actively encourage the participants to reach an agreement.

Chief elements in Conciliation Chief Elements of Conciliation Processes

Identification of the causes of disputes

Creation of options to resolve those disputes

Encouragement to visualize options that offer solutions

Conciliation provisions under the Act 

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The number of conciliator to be only one, unless the parties agree otherwise. If there are more than one conciliator, then as a rule they ought to act jointly. If there is only one conciliator, the parties may agree on his or her name. If there are two conciliators , each party can name one. In case of more than two conciliators, each party can name one and may agree on the name of the third, who shall act as a presiding conciliator. The parties may enlist the assistance of a suitable institution or person to act as a conciliator. Even for the cases pending in the court of law, conciliator may be appointed.

Institutional assistance in securing the Conciliator 

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There are certain institutions established to facilitate ADR mechanism with a panel of members, such as members in ICADR, AAA etc… So in case of need the institution may be requested to recommend the appointment of conciliator. It also has to ensure, to secure an independent and impartial conciliator. In case of sole conciliator, the appointing institution shall take into account the advisability of appointing a conciliator other than one having the nationality of the parties in the international agreements.

Procedure to be followed by conciliator 

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d) e) f)

The strict procedure of court under the CPC 1908 or adherence to Evidence Act, 1872 not necessary. The conciliator guided under the principles of natural justice, so he or she shall follow the objectivity, fairness and justice. While conducting the proceedings, the conciliator has to take into account the following aspects: The circumstances of the case; Wishes expressed by the parties; Need for speedy settlement.

In the proceedings , even the party may submit to the conciliator his own suggestions for the settlement of a dispute. This suggestion may be given on his own or on the request of the conciliator cont…..

Other procedures 

Ask the party to submit statement and send a copy to the other party. A written statement can be asked for.

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May invite parties for discussion or communicate with them jointly or individually.

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Parties to co-operate in good faith with the conciliator and provide necessary material required to give evidence.

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Conciliator to reformulate the terms of settlement if necessary.

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Parties may draw and sign a written settlement agreement.

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The conciliator can help the parties in drawing up the same.

Legal Affect of Settlement 

The settlement signed by the parties shall be final and binding on the parties.

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The agreement is to be authenticated by the conciliator.

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The settlement agreement has the same status and effect, as if it were an arbitral award rendered by the arbitral tribunal on the agreed terms.

Other requirements 

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Disclosure and Confidentiality- To maintain confidentiality is the duty of conciliator. Admissions- no admissions made by the parties are accepted as evidence. Parallel Proceedings- No other proceedings either in judicial proceedings or for an arbitration. Conciliator not to act as arbitrator or counsel. Cost and deposit- Conciliator has powers to direct the parties to deposit some amount or cost of conciliation proceedings and also account for it. Admissibility of evidence in other proceedings- The parties not to rely on the evidence expressed by other party etc..

Mediation 

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Mediation involves the mutual selection of a neutral third party who listens to both sides attentively and helps them communicate with another. The mediator is expected to be an unbiased and impartial person, working without any prejudice. Mediator can ease the tension and encourage discussion between the parties. It is based on the principle of win-win situation. The participation in the mediation can be voluntary or involuntary. Mediator facilitates the parties to reach an outcome that satisfies them rather than one aimed at proving someone right or wrong. In mediation , the parties are placed in a position to work together to reach a solution, which can be amicable to both of them. During the mediation process, the parties can identify the disputed issues, develop options, consider alternatives and endeavor to reach an agreement.

Distinctive features of Conciliation and Mediation Conciliation  It may comprise a mixture of different processes including facilitation and advice  It can be initiated by a written invitation to conciliation. It has to be accepted in writing  Two willing parties can at any stage resolve a dispute in the presence of a conciliator.  Need not be contractual or controlled by any prior agreements between the parties.

Mediation 

It is purely a facilitative process

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Only the parties or the persons who are designated can attend.

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It can be best used in matters of family disputes, business disagreements, contract disputes, insurance claims , employment and environmental issues ( if it is private in nature).

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It is done confidentially.

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Negotiation 

Negotiation is a sort of compromise, contemplating direct interaction between the parties.

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It is marked as an important legal method of resolving conflicts at any level.

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In the negotiation process, one party approaches the other party in dispute with an offer of a negotiated settlement, which is of the nature of a non-binding procedure.

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It is considered as an element of human behavior.

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It is a traditional as well as a modern concept to negotiate settlements.

Five Thumb Rules of Negotiation 

As per the Pepperdine University Institute for Dispute Resolution, the rules for negotiation process are:

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To send signals of cooperation without any jeopardy to the parties with politeness.

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To communicate that the other side is competitive.

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Live and Let Live, forget and forgive is the mantra of negotiation.

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There must be clarity and consistency in approach and predictability.

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It must be used for better assimilation.