What is ADR
The term is often used to describe a wide variety of dispute resolution mechanisms
that are short of, or alternative to, full-scale court processes.
Why ADR
With court congestion and excessive litigiousness drawing increasing criticism, it is
clear that lawyers in the future will have to be trained to find fresh approaches to
explore non-litigation routes to resolve disputes.
Advantages of ADR
Private process of dispute settlement
Expeditious
Informal
Inexpensive
Lack of technicality
Involve community participation
Decision making process is controlled by the parties
Leads to amicable results
Relationship is secured
Finality of result
Confidentiality
DISPUTE RESOLUTION
2 Issues to be addressed
Design the DR methods for cost and time effective dispute settlement
Bring peoples trust
Introducing teaching and research materials
Training future lawyers
Impediments to settlement
poor communication Effectively poor communication
Emotional stress Opportunity to express their views
Different views on fact Disagreement of parties on matters
Different views on law Disagreement on the legal implications
Important principle Fundamentally associated to a ideology
Constituent pressure Pressure formits group or constituency
Multiple parties - Different parties with diverse interest
Jackpot Syndrome - Discretionary awards
What is Arbitration
A private method of dispute resolution
A consensual dispute resolution process
To resolve their commercial or trade related disputes at venue selected by the parties.
Without recourse to court of law
By reference to a neutral third party for its determination chosen by the parties
themselves
With a binding end result which is internationally enforceable
Avail interim reliefs if required and Confidentiality in the process.
History of Arbitrations
Popular process of dispute resolution between commercial and trader groups from
ancient time.
Primary reason- Limiting the intervention of court and external sanctions
Initially no legal frame work
Peer-group pressure among the trader groups and communities as the main force
which resulted in obligating the parties to abide by the decision of the arbitrations
tribunals.
Types of Arbitration
Institutional Arbitration:
Clause- All disputes arising in connection with the present contract shall be finally settled
under the rules of ICC
Advantages
Degree of permanency
Modern rules of arbitration
High quality technical support facility
Better scrutiny of awards
Disadvantages
Cost is higher (Cost is determined on the ad-volerem of the amount involved in the
claim)
Time problems with the respondent (As there is a fixed period on the respondent to
submit his response to the issues raised by the party initiating arbitration).
Lack of greater flexibility
Process is extremely technical and involves higher time for its resolution.
Ad-Hoc Arbitration-
Clause- All dispute or differences arising out of or in connection with this agreement shall
be referred to and determined by arbitration.
Advantages
Parties agree there own rules
Greater flexibility offered
Usually less costly and less technical in comparison to institutional arbitration
The Adoption of UNCITRAL RULES OF ARBITRATION provides modern
rules.
Disadvantages
Depends on co-operation and effectiveness of parties.
Grater chance of existence of factual errors in the award.
Both the proceedings and, to a certain extent, the results, are determined by these
three fundamental decisions.
DAY 2
(ii) A body corporate which is in corporate in any on n try other than India; or
Commercial-
Matters arising from all relationship of a commercial nature whether contractual or of
non-contractual nature
UNCITRAL Model Law states that
The term commercial should be given a wide interpretation so as to cover matters
arising from all relationships of a commercial nature, whether contractual or not.
Relationships of a commercial nature include, but are not limited to, the following
transactions: any trade transaction for the supply or exchange of goods or services;
distribution agreement; commercial representation or agency; factoring; leasing; construction
of works; consulting; engineering; licensing; investment; financing; banking; insurance;
exploitation agreement or concession; joint venture and other forms of industrial or business
cooperation; carriage of goods or passengers by air, sea, rail or road.
ARBITRALITY
Not every type of disputes can be submitted to arbitration. The international conventions and
domestic statues require that certain matter of types of disputes cannot be subject matter of
arbitration. This subject matters or disputes are considered as no arbitrable subjects and the
principle is known as arbitrability. The decision relating to what is not arbitrable in
particular jurisdiction lies with the state and its domestic court. Arbitrability in essence, is a
matter of national public policy. As public policy can differ from one country to another, the
arbitrability of a particular dispute may vary considerably from jurisdiction to jurisdiction.
Arbitration primarily being a contractual process requires the free consent of the parties to
arbitrate. The arbitration agreement is the foundation stone on which the entire arbitration
process consolidates. Therefore requirement of a valid arbitration agreement is a mandatory
requirement in all national and international law governing arbitration.
PROBLEMS:
A bill of lading contains an arbitration clause that is not signed by the shipper or
the subsequent holder.
Q. Whether there is a binding arbitration agreement ?
Interim Measures
In arbitration, due to the lapse of time between commencement of arbitral proceedings
and issuance of the final award, interim measures often constitute a key tool to prevent
irreparable and non-compensatory harm to one party.
Nature of Interim Measures
An interim measure is any temporary measure, whether in the form of an award or in
another form, by which, at any time prior to the issuance of the award by which the dispute is
finally decided.
Difference with Section 9 application
Maintainable even before the commencement of proceedings
Sec 17 would operate only during the existence of the arbitral tribunal and it being
functional
Gujarat Bottling Co. Ltd. vs. Coca Cola Company and Others, 1995(5) SCC 545
The object of the interlocutory injunction is to protect the plaintiff against
a. injury by violation of his right for which he could not be adequately compensated in
damages recoverable in the action if the uncertainty were resolved in his favour at the
trial.(Irreparable injury)
b. The need for such protection has, however, to be weighed against the
corresponding need of the defendant to be protected against injury resulting from his having
been prevented from exercising his own legal rights for which he could not be adequately
compensated. The court must weigh one need against another and determine where the
balance of convenience lies."
Recourse
An appeal shall lie under Section 37 from an order
1. Court
Granting or refusing to grant any measure under section 9
2. Arbitral Tribunal
Granting or refusing to grant an interim measure under section 17
What Is Bias
A predisposition to decide for or against one party, without proper regard to the true
merits of the dispute is bias.
Reasonable apprehension of bias in the mind of a reasonable man can be a ground for
removal of the arbitrator.
There must be reasonable apprehension of that predisposition. The reasonable
apprehension must be based on cogent materials.
Disqualification
1. The relationship of the arbitrator to one of the parties was unknown to the other party
2. The arbitrator has performed as a lawyer, legal officer or legal consultant for any
party in the past.
3. The arbitrator has been an adjudicator in any matter before him in the capacity of a
judge
4. Fraudulent collusion
5. Arbitrator was indebted to one of the parties
6. Arbitrator has rendered some legal service to any of the parties free of charge in the
past
Domestic Arbitration
Section 31 & 33 of the Arbitration Act, 1940
No power of arbitrators to decide its jurisdiction.
Autonomy
The autonomy of the arbitration agreement is understood by arbitral tribunals and courts to
mean, above all, separability of the arbitral clause from the main agreement. To speak of
autonomy is to consider the arbitration clause as separate from the main contract.
Section 18 mandates that parties to the arbitral proceedings shall be treated with
equality and each party shall be given full opportunity to present his case. Section 19
specifically provides that arbitral tribunal is not bound by the Code of Civil Procedure 1908
or the Indian Evidence Act 1872 and parties are free to agree on the procedure to be followed
by the arbitral tribunal in conducting its proceedings. Failing any agreement between the
parties subject to other provisions of Part-I, the arbitral tribunal is to conduct the proceedings
in the manner it considers appropriate. This power includes the power to determine the
admissibility, relevance, the materiality and weight of any evidence. Sections 20, 21 and 22
deals with place of arbitration, commencement of arbitral proceedings and language
respectively. Thereafter, Section 23, 24 and 25 deal with statements of claim and defence,
hearings and written proceedings and procedure to be followed in case of default of a party.
ARBITRAL AWRAD
Meaning
An instrument embodying a decision of an arbitrator or arbitrators as regards matters
referred to him.
Settlement agreement under the conciliation process is not an award
Statutory Definition
Arbitral awards includes an interim award
VALID AWARD
To be valid an award must comprise a decision by the tribunal on the matters referred with
which it deals. An award must also be final, in the sense of being a complete decision without
leaving matters to be dealt with subsequently or by a third party, and it must be certain.
Kinds of award
Domestic award (Arbitral award made under Part-I)
[Bhatia International vs. Bulk Trading (AIR 2002 SC 1432)
Part-I extends to arbitration taking place outside the territory of India]
Foreign Award
Classification of awards
1. Final award
2. Interim award
3. Consent award
4. Additional Award
Exception
The parties have agreed that no reasons are to be given, or
The award is an arbitral award on a-reed terms under section 30.
1. Delivery of award
2. Stamp duty
3. Awarding interest and period
4. Costs
Fees and expenses of arbitrators and witnesses
Legal fees
Administration fees
Expenses incurred in connection with arbitral proceedings
An application for setting aside an award be made before a competent court having
jurisdiction to hear such an application
Made before three months elapsed from the date on which the party making that
application had received the arbitral award
The phrase 'Public Policy of India' is not defined under the Act. Hence, the said term is
required to be given meaning in context and also considering the purpose of the section and
scheme of the Act. It has been repeatedly stated by various authorities that the expression
'public policy' does not admit of precise definition and may vary from generation to
generation and from time to time. Hence, the concept 'public policy' is considered to be
vague, susceptible to narrow or wider meaning depending upon the context in which it is
used.
PATENTLY ILLEGAL ORDER
The award which is, on the face of its, patently in violation of statutory provisions cannot be
said to be in public interest. Such award/judgment/decision is likely to adversely affect the
administration of justice. Hence, in our view in addition to narrower meaning given to the
term 'public policy' in Renusagar's case, it is required to be held that the award could be set
aside if it is patently illegal. Result would be - award could be set aside if it is contrary to:
fundamental policy of Indian law; or
the interest of India; or
justice or morality; or
in addition, if it is patently illegal.
The nature of illegality-
Illegality must go to the root of the matter and if the illegality is of trivial nature it cannot be
held that award is against the public policy. Award could also be set aside if it so unfair and
unreasonable that it shocks the conscience of the court. Such award is opposed to public
policy and is required to be adjudged void.
FINALITY
Arbitral award shall be final and binding on the parties and persons, claiming under them
respectively.
Enforcement
Where the time for making an application to set aside the arbitral award under section
34 has expired, or such application having been made, it has been refused the award shall be
enforced under the Code of Civil Procedure 1908 (5 of 1908) in the same manner as if it were
a decree of the court.
FOREIGN AWARD
1. It means an arbitral award on differences between persons arising out of legal
relationships, whether contractual or not.
2. Considered as commercial under the law in force in India.
3. Award must have been made in pursuance of an arbitration agreement in writing.
4. The award must be made in one of the reciprocating territories declared by the Central
govt. by notification in Official Gazette.
New York Convention Award
Geneva convention Award
NEGOTIATION
Negotiation is an interactive communicative process that potentially takes place
whenever you want something from some one else or they want something from you;
Negotiation is achieving what you want by convincing the person from whom you
want that.
Elements Of Negotiation
Interests : Your interests and other interests in Negotiation. Interest is different from
position. Interests may be classified into three categories:
(i) Absolutely essential Must be achieved.
(ii) Important It is important. May be obtained in different forms : there has to be
flexibility; Need not break the deal for not getting the way you want;
(iii) Desirable This is generally built as a buffer; May be given up to get important or
absolutely essential things.
(iv) Options There are many ways of satisfying interests. Options are possible solutions
to the problem. What options will satisfy your interests.
(v) Standards & People
(vi) Alternatives If no agreement is reached in Negotiation, what alternatives you have?
If the options coming out in the Negotiation are not acceptable, what is the alternative
to the problem?
(vii) Legitimacy When you put forth your option, what supports that? The proposals and
counter proposals are to be properly supported. You will be on a firm footing.
(viii) Communications Negotiation takes place through communications. Verbal or Non-
verbal body language, Skill of listening. Even if Negotiations fail,
communication lines could be kept alive.
(ix) Relationship Separate problems from the relationship. No emotions. Separate
people from problem. Easier to negotiate when relationship is good.
Communications lines should be kept alive. Positional Negotiation endangers
ongoing relationship.
(x) Commitment Ensure that the agreement is legally enforceable.
What is mediation?
It is negotiation carried out with the assistance of a third party. The mediator, in contrast to the arbitrator o
Main characteristics
Negotiation in presence of a third neutral Facilitative and not adjudicatory NOR BINDING
Mediation process was confidential, the procedure was simple and the atmosphere was
informal
Mediation restored my broken relationships and focused on improving the future, not
on dissecting the past
Mediation showed me the strength and weaknesses of my case which helped me find
realistic solution
MEDIATION
Mediation is an informal process where a party selected neutral assists disputing
parties in their negotiation.
Mediation is a process in which a third party facilitates and coordinates the
negotiation of disputing parties.
Mediation is trying to get two people to do that which they least want to do talk to
each other.
Mediation process is a flexible one. There is a structure to the mediation process, it is
not rigid but rather fluid in nature.
Mediation has been used since thousands of years as a primary means of conflict
resolution.
The Indian history reflects this.
In China and Japan Mediation and Conciliation is used as primary means of dispute
resolution.
CONCILIATION
It means the process by which a conciliator who is appointed by parties or by the Court, as the case
may be, conciliates the disputes between the parties to the suit by the application of the provisions of
the Arbitration and Conciliation Act, 1996 (26 of 1996) in so far as they relate to conciliation, and in
particular, in exercise of his powers under sections 67 and 73 of that Act, by making proposals for a
settlement of the dispute and by formulating or reformulating the terms of a possible settlement; and
has a greater role than a mediator.
Distinction
Conciliation Mediation
STAGES IN MEDIATION
Convening Process preliminary arrangements.
Mediators introduction and laying down of ground rules to be followed in the Mediation
process.
Statements by Negotiators problem venting of emotions.
Re-statement of the problem by the Mediator briefly
Collection of additional information, if necessary
Setting the Agenda for Mediation similar to issues how to arrange?
Facilitation of Negotiation - process
Mediator generating alternatives process
Private meetings, if necessary process
Persuasion meetings, if necessary process
Persuasion to reach a settlement process
Agreement Realistic Implementable
Summing up the settlement for clarity also process of implementation
Reduce the settlement to writing
Who is a conciliator
Conciliator is the neutral third party who assists the disputing parties in mutually reaching an agreed settlement
Appointment of conciliator
In conciliation proceedings with one conciliator, the parties may agree on the name of a sole
conciliator;
In conciliation proceedings with two conciliators, each party may appoint one conciliator;
In conciliation proceedings with three conciliators, each party may appoint one conciliator
and the parties may agree on the name of the third conciliator who shall act as the presiding
conciliator.
Parties may enlist the assistance of a suitable institution or person in connection with the
appointment of conciliators
CONCILIATION PROCEEDINGS
Commencement of conciliation
Written invitation by one party
Written acceptance by other party
Appointment of conciliator
Submission of statements by parties
Exchange of statements and communication between conciliator and the parties
Suggestion for settlement
Role of mediator
The mediator shall attempt to facilitate voluntary resolution of the dispute by the parties, and
communicate the view of each party to the other, assist them in identifying issues, reducing
misunderstandings, clarifying priorities, exploring areas of compromise and generating
options in an attempt to solve the dispute, emphasizing that it is the responsibility of the
parties to take decision which effect them; he shall not impose any terms of settlement on the
parties.
Confidentiality of mediation
When a mediator receives factual information concerning the dispute from any party, it shall be
confidential and the mediator shall not be compelled to divulge
information regarding those documents.
Who can be appointed as conciliators
Any persons other than
a person who has been adjudged as insolvent or persons
against whom criminal charges involving moral turpitude are framed by a criminal
court
persons who have been convicted by a criminal court for any offence involving moral
turpitude
person against whom disciplinary proceedings have been initiated by the appropriate
disciplinary authority
any person who is interested or connected with the subject-matter of dispute
any legal practitioner who has or is appearing for any of the parties in the dispute
ROLE OF CONCILIATOR
Independence and impartiality
Maintaining confidentiality of all communications between the parties and the conciliator
Give consideration to the rights and obligations of the parties, usages of the trade concerned
and the circumstances surrounding the dispute
Conduct of proceedings in an objective and fair manner
Proposal of settlement
Formulation of the settlement agreement as agreed by the parties to conciliation
Authentication of the settlement agreement
SETTLEMENT AGREEMENT
1. When it appears to the conciliator that there exist elements of a settlement, which may be
acceptable to the parties, he shall formulate the terms of a possible settlement and submit
them to the parties for their observations.
2. After receiving the observations of the parties, the conciliator may reformulate the terms of a
possible settlement in the light of such observations.
3. If the parties reach agreement on a settlement of the dispute, they may draw up and sign a
written settlement agreement.
4. When the parties sign the settlement agreement, it shall be final and binding on the parties and
persons claiming under them respectively.
FINALITY
The settlement agreement shall have the same status and effect as if it is an arbitral award on agreed
terms on the substance of the dispute rendered by an arbitral tribunal under section 30.