Module 1

Definition
• defined as encompassing all legally-permitted processes of dispute resolution other than litigation
• an umbrella term that refers generally to alternatives to the court adjudication of disputes such as
negotiation, mediation, arbitration, mini-trial and summary trial
• a colloquialism for allowing a dispute to drop or as an alternative to violence
Concepts of ADR
ADR as a Legal Institution
• ADR is a product of the legal institution to offer best possible service to its clients (Legal institutions can be
roughly characterised as distinct legal systems governing specific forms of social conduct within the overall
legal system.)
• Lawyers are sometimes urged to prefer ADR like in USA
• Although ADR is a private way of resolving dispute, it must work within the broad legal framework which it
operates—for example mediation cannot be used as a means to settle criminal cases
ADR as a process
• There are different kinds of ADR processes—negotiation, mediation, arbitration, settlements, etc.
• The choice of an ADR process depends on various factors like kind of conflicts and interests of the parties
involved. For eg, mediation resolves disputes, negotiation helps at arriving at a favourable outcome, etc
• ADR processes have 2 things in common—2 or more parties involved, there is a presumed goodwill of the
parties to find a solution through ADR processes
ADR aims at Resolving conflicts
• ADR is an alternative to resolving disputes through litigatory means
• The resolution of dispute entails the following: the claimant is satisfied with the result, or all parties are
satisfied with the result (which is a just result) through a fair process or something of the foregoing
ADR is an alternative of Litigation
• As the name suggests…
• It is a preferable alternative to litigation specially in modern times
• ADR process has been used to resolve conflicts among religious and ethnic groups since time in memorial.
However, in many countries, especially in United States, a legally instituted ADR movement started in 1976
as real alternative to litigation
• It was introduced in law schools so that lawyers can go beyond litigation, since the “failure to do this for so
long may be part of the reason for so much congestion in the civil justice system”
ADR is voluntary
• Disputants voluntarily decide to use ADR methods—No one is coerced into an ADR—unlike litigation where
respondents have to mandatorily respond to claims made by the plaintiffs or charges made against them
• ADR thrives under the principle of self-determination of the disputants to use legally accepted procedure to
resolve a conflict other than litigation
• For eg Mediation as typical ADR process «invites the parties to engage in a potentially creative and
collaborative method of problem solving, without forcing a decision
ADR can be mandatory
• ADR processes like arbitration can be mandatory in cases where there is an arbitration clause in a valid
contract entered into by the parties
• Arbitration clause stipulates that in case a dispute arises b/w the parties arbitration or another ADR process
will be used to settle the dispute instead of litigation
• 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.
ADR is confidential
• ADR is a private dispute redressal process and does not involve the participation of the public or the media
• The practitioners are bound by their code of ethics to preserve the privacy of their clients
• In many cases, the parties involved in the process have to sign agreement, to keep the proceedings
confidential and private unless permitted by law to do otherwise
ADR may be non-binding
• Some ADR processes do not have a legal binding force—like negotiation
• The outcome of an ADR is of the nature of an agreement which is subject to the goodwill of the parties
• Thus, an ADR decision cannot be enforced
ADR is efficient, saves time and costs less
• Lower cost and lower time requirement compared to conventional litigation
• We can measure ADR quality in two ways. One, quality in terms of satisfaction of the interests and the needs
of the parties involved in the process. Two, quality in terms of the capacity of ADR to provide disputants
reconciliation and mutual understanding, which litigation does not offer

History and Development in India

• Not a new concept—present since time immemorial. Legal history indicates that down the ages man has
been experimenting with procedure for making it easy, cheap, unfailing and convenient to obtain justice—In
India, people believed in resolving disputes within the four walls because this was somewhere considered as
an element to protect their dignity and personality in the society. Hence, the mechanism gained significance
in India since Ancient times
Ancient India
• In ancient India when there was Kulas, people used to live in joint families with their clans and when there
was caste system prevalent in the society. The disputes among the kulas were resolved by the head of the of
the family, clan or Kula. Likewise, when there was common trade, corporations or Shrenis among the people,
they used to appoint person to resolve the disputes within the Shrenis.

• Pre-British era ADR mechanisms revolved around village level institutions which comprised of elders, aka
Council of Village—an informal way of mediation—disputes hardly reached courts, decisions of the elders
were respected by all—there was downfall of this system due to involvement of political and communal
elements
During British era
• The traditional institutions worked as recognised system of administration of justice and not merely
alternatives to the formal justice system established by the British
• But the system of ADR was found to be convenient as well as politically safe and significant
• Bengal Regulations of 1772,1780 and 1781 designed to support arbitration—provided parties to submit the
dispute to the arbitrator, appointed after mutual agreement and whose verdict shall be binding on both the
parties
• Act VIII of 1857 codified procedure of Civil courts except those established under royal charter, which
contained sections 312 to 325 dealing with arbitration in suits. Sections 326 and 327 provided for arbitration
without the intervention of the court.
• Indian Arbitration Act,1899 was passed, based on the English Arbitration Act of 1889. It was the first
substantive law on the subject of arbitration but its application was limited to the Presidency - towns of
Calcutta, Bombay and Madras.
• in 1937 Geneva Convention was signed and adopted by India –The Arbitration Act of 1940 was enacted
replacing the Indian Arbitration Act of 1899 and section 89 and clauses (a) to (f) of section 104(1) and the
 Second Schedule of the Code of Civil Procedure, 1908. It amended and consolidated the law relating to
arbitration in British India and remained a comprehensive law on Arbitration even in the Republican India
until 1996.
Post-Independence
• in 1961, India became signatory to the New York Convention and The Foreign Award (Recognition and
Convention) Act, 1961 was enacted.
• In 1981, in M/S Guru Nanak Foundation vs. Rattan Singh & Sons, the Supreme Court described the
Arbitration Act, 1940 in off- quoted passage. It observed that “the way in which the proceedings under the
act are conducted and without an exception challenged in courts, has made lawyers laugh and legal
philosophers weep. Experience shows and law reports bear ample testimony that the proceedings under the
act have become highly technical and accompanied by unending prolixity, at every stage providing a legal
trap to the unwary.”
• Settlement of disputes out of courts started in Lok adalats in 1982—lok adalats are voluntary and
conciliatory agencies without any statutory backing for its decisions
• Lok adalats gained statutory status through Legal Services Authorities act 1987
• In 1985, the UNCITRAL (The United Nations Commission on International Trade Law) model law was
adopted and signed by India on International commercial arbitration
• To keep up with the globalization of commerce, Arbitration and Conciliation Act 1996 was passed which
superseded the older acts—Law Commission 246th report said:” The 1996 Act is based on the UNCITRAL
Model Law on International Commercial Arbitration, 1985 and the UNCITRAL Conciliation Rules, 1980”—
Preamble of the A&C act 1996 states that the provisions are in consonance to and in furtherance of the
UNCITRAL Model—definitions of both international and domestic comm arbitration is quite similar to def-
inition provided in UNCITRAL Model Law—act provides for existence of arb agreement b/w parties for the
commencement of arbi proceedings—chapt 3 & 4 deals with composition and jurisdiction of arb tribunals,
provisions in line with Model Law—other similarities as well—amendments of 2005 and 2019 has however
has deviated from some rules like judicial intervention
• Settlement of matters concerning the family has been provided under Order XXXIIA of the Code of Civil
Procedure, 1908 by amendment in 1976. Provisions for making efforts for reconciliation under Sections 23
(2) and 23 (3) of the Hindu Marriage Act, 1955 as also under Section 34 (3) of the Special Marriage Act, 1954
are made. Family Courts Act was enacted in 1984. Under Family Courts Act, 1984 it is the duty of family court
to make efforts for settlement between the parties.
• Introduction of section 89 and Order X Rule 1A, 1B and 1C by way of an Amendment in the Code of Civil
Procedure, 1908 is a radical advancement made by the Indian Legislature in embracing the system of "Court
Referred Alternative Disputes Resolution"
ADVANTAGES AND DISADVANTAGES OF ADR
Advantages:

i. Lower cost ADR tends to be lower in cost than litigation.

ii. Avoids a jury: alternative dispute resolution methods generally involves the use of one or more
knowledgeable professionals to resolve the dispute.

iii. Privacy: alternative dispute resolution is a private process; whereas, litigation and court records are open to
the public. The result can be kept confidential in ADR.

iv. ADR is speedy: trials are lengthy; whereas alternative dispute resolution techniques help to resolve the
dispute in a very minimum time.

v. Less stress: methods of alternative dispute resolution are often less stressful than expensive and lengthy
litigation. Many people have a high degree of satisfaction with ADR.
vi. Co-operation: ADR allowed the party to work together with the help of third party appointed who is
independent and neutral.

vii. The parties can often select their own arbitrator, mediator, conciliator to dissolve their disputes.

Disadvantages:

i. No guaranteed resolution with the exception of arbitration.

ii. Discovery limitations: like some of the procedure of safeguard to protect the party is available in court but
this facility is not provided in ADR.

iii. It can be used as a stalling tactic.

iv. Parties are not compelled to continue negotiations or mediation.

v. Does not produce legal precedents.

vi. Exclusion of pertinent parties weakens final agreement.

vii. Parties may have limited bargaining power. Parties do not have much of a say.

viii. Little or no check on power imbalances between parties.

ix. May not protect parties’ legal rights. The rights of the parties may not be protected by alternative dispute
resolution.

x. Your case might not be a good fit– Alternative dispute resolutions resolve only issues of money or civil
disputes. Alternative dispute resolution proceedings will not result in injunctive orders. They cannot result in an
order requiring one of the parties to do or cease doing a particular affirmative act.

xi. There are limits to the discovery process– You should also be aware that you are generally preceding
without the protections offered parties in litigation, such as those rules governing discovery. Courts generally allow a
great deal of latitude in the discovery process, which you will not have in an alternative dispute resolution.

xii. There is no guaranteed resolution. With the exception of arbitration, alternative dispute resolution
processes do not always lead to a resolution.

xiii. Arbitration decisions are final. With few exceptions, the decision of a neutral arbitrator cannot be appealed.
Decisions of a court, on the other hand, usually can be appealed to a higher court.

xiv. Participation could be perceived as weakness. While the option of making the proceeding confidential
addresses some of this concern, some parties still want to go to court “just on principle.”

xv. The case might not be a good fit-Alternative dispute resolutions generally resolve only issues of money or
civil disputes.

xvi. There are limits to the discovery process-One should also be aware that he is generally proceeding without
the protections offered parties in litigation, such as those rules governing discovery.

Reasons for growth

• The main reason lies with the cost-time effectiveness of ADR methods.
• Another aspect is the huge number of pending cases, the governance and administrative control over judicial
institutions through manual processes has become extremely difficult. The Supreme Court made it clear that
this state of affairs must be addressed: "An independent and efficient judicial system is one of the basic
structures of our Constitution It is our Constitutional obligation to ensure that the backlog of cases is
decreased and efforts are made to increase the disposal of cases."- Brij Mohan Lal vs UOI
 • The analysis of the Law Commission of India sheds light on the factors contributing towards delays and huge
backlog of cases—adjournment at the instance of the clients and lawyers, boycott of the courts by the
lawyers, shortage of presiding officers of the Tribunals and Courts, lack of adherence to basic procedures
and principles of case management and disposal—The government was also a huge contributor to this delay
in matters where it is a party at various stages from evading notices, replying to notices and replying without
application of mind, unnecessarily appealing even when the laws are clearly in favour of the other side—The
improper management of Court diary, absence of strict compliance with the provisions of Code of Civil
Procedure such as, provisions of the Order 10 Code of Civil Procedure relating to examination of parties
before framing issues, to ensure narrowing and focusing the area of controversy, the laxity in enforcing the
provisions of Order 8, R 1, Code of Civil Procedure by allowing repeated adjournments with Order 17, Rule 1,
Code of Civil Procedure to be read with the proviso to Order 17, Rule 2 where Clause (b) for giving
adjournments also are the prominent contributors to the problem of delays and the resultant judicial
arrears—ADR methods can tackle most of these problems and hence, appeared to be a suitable alternative

Judicial and legislative sanction on ADR

Alternative dispute resolution was at one point of time considered to be a voluntary act on the apart of the parties
which have obtained statutory recognition in terms of Code of Civil Procedure Amendment Act, 1999, Arbitration
and Conciliation Act, 1996, Legal Services Authorities Act, 1987 and Legal Services Authorities (Amendment) Act,
2002. The Parliament apart from litigants and the general public as also the statutory authorities Like Legal Services
Authority have now thrown the ball into the court of the judiciary. What, therefore, now is required would be the
implementation of the Parliamentary object.

Access to justice is a human right and a fair trial is also a human right. In some countries trial within a reasonable
time is a part of the human right legislation. But, in our country, it is a Constitutional obligation in terms of Article 14
and 21.

Civil Procedure (Amendment) Act 1999

• The Code of Civil Procedure (Amendment) Act 1999 has introduced a new provision in the Code in order to
provide for court-annexed ADR mechanisms.
• Under Section 89, the court is empowered to direct the parties to choose among different ADR modes
provided therein for the resolution of their dispute outside the court.
• This provision is based on the recommendations made by the Law Commission of India and the Malimath
Committee.
• The reason for the incorporation of Section 89 is to see that those cases, which do not require the court
intervention, may be settled by alternative means, thereby reducing the burden of the courts.
Further Section 89 has to be read with Rule 1-A of Order 10, which runs as follows: –

• Order 10 Rule 1-A direction of the Court to opt for any one mode of alternative dispute resolution.
• Order 10 Rule 1-B appearances before the conciliatory forum or authority.
• Order 10 Rule 1-C appearances before the Court consequent to the failure of efforts of conciliation.
The Arbitration Act of 1940:

The Arbitration Act, 1940, dealt with only domestic arbitration. Under the 1940 Act, the intervention of the court
was required in all the three stages of arbitration in the tribunal, i.e. prior to the reference of the dispute, in the
duration of the proceedings, and after the award was passed.

• This Act made provision for- a) arbitration without court intervention; b) Arbitration in suits i.e. arbitration
with court intervention in pending suits and c) Arbitration with court intervention, in cases where no suit
was pending before the court.
 • This Act did not fulfill the essential functions of ADR. The extent of Judicial Interference under the Act
defeated its very purpose. It did not provide a speedy, effective, and transparent mechanism to address
disputes arising out of foreign trade and investment transactions.
Arbitration and Conciliation Act, 1996:

• The government enacted the Arbitration and Conciliation Act, 1996 in an effort to modernize the 1940 Act.
And this Act repealed the previous statute.
• In 1978, the UNCITRAL Secretariat, the Asian African Legal Consultative Committee (AALCC), the
International Council for Commercial Arbitration (ICCA) and the International Chamber of Commerce (ICC)
met for a consultative meeting, where the participants were of the unanimous view that it would be in the
interest of International Commercial Arbitration if UNCITRAL would initiate steps leading to the
establishment of uniform standards of arbitral procedure.
• The preparation of a Model Law on arbitration was considered the most appropriate way to achieve the
desired uniformity and its primary purpose was to encourage arbitration as a cost-effective and quick
mechanism for the settlement of commercial disputes.
• It covers both domestic arbitration and international commercial arbitration.
Legal Services Authorities Act, 1987:

• The concept has been gathered from system of Panchayats which are maily adopted in villages.
• The Legal Services Authorities Act, 1987 was brought into force on 19 November 1995. The object of the Act
was to provide free and competent legal services to the weaker sections of the society to ensure that
opportunities for securing justice are not denied to any citizen.
• The concept of legal services which includes Lok Adalat is a revolutionary evolution of resolution of disputes
and Sections 19, 20, 21 and 22 of the Act deal with Lok Adalat. Section 20 provides for different situations
where cases can be referred for consideration of Lok Adalat.
• In the case of Abdul Hasan and National Legal Services Authority v. Delhi Vidyut Board and Others, the court
passed the order giving directions for setting up of Permanent Lok Adalats.

Abdul Hasan and National Legal Services Authority v.Delhi Vidyut Board and Others.

The petitioner filed a writ petition before Delhi High Court for restoration of electricity at his premises, which
was disconnected by the Delhi Vidyut Board (DVB) on account of non-payment of Bill. Interalia, the grievances of
the citizens were not only confined to the DVB but also directed against the State agencies like DDA, Municipal
Corporation, MTNL, GIC and other bodies, Court notices were directed to be issued to NALSA and Delhi State
Legal Service Authority.

Held- Hon’ble Mr. Justice Anil Dev Singh passed the order giving directions for setting up of Permanent Lok
Adalats. The scholarly observations of Mr. Justice Anil Dev Singh deserve special commendations and are worthy
of note. It will be profitable to reproduce the important text and abstract from this judgment, which should be
an eye-opener for all of us. It should also steer the conscience of all, as there is an increasing need to make the
Lok Adalat movement a permanent feature.

• U/S 19 of the Legal Services Authorities Act, 1987 Lok Adalats can be organized. Matters, such as
Matrimonial/Family Disputes, Criminal (Compoundable Offences) cases, Land Acquisition Cases, Labour
Disputes, Workmen’s Compensation cases, Bank Recovery cases, Pension cases, Housing Board and slum
clearance cases.
• These Lok Adalat courts decide the various matters right from petty cases to civil, criminal, and commercial
cases & Housing Finance cases. Consumer Grievance cases, Electricity matters, disputes relating to
Telephone Bills, Disputes with Cellular Companies. etc
Case laws on Scope of ADR
In ONGC v. Collector of Central Excise 1995 SCC 541, the dispute was between the government department and
PSU. The report was submitted by the cabinet secretary pursuant to the Supreme Court order indicating that an
instruction has been issued to all departments. It was held that public undertakings to resolve the disputes amicably
by mutual consultation in or through or good offices empowered agencies of govt. or arbitration avoiding litigation.

In Chief Conservator of Forests v. Collector(2003) 3 SCC 472, it was said that state/union govt. must evolve a
mechanism for resolving interdepartmental controversies- disputes between the department of Government cannot
be contested in court.

In the judgment of the Supreme Court of India in Salem Bar Association vs. Union of India( 2005) 6 SCC 344 the
Supreme Court has requested to prepare model rules for Alternative Dispute Resolution and also draft rules of
mediation under section 89(2)(d) of Code of Civil Procedure, 1908.

In Sundaram Finance Ltd. v. NEPC India Ltd. (AIR 1999 SC 565; 1999 (1) Arb. LR 305 (SC)), the Supreme Court
explicitly made it clear that the 1996 Act is very much different from that of Act, 1940. The provisions made in Act of
1940 lead to some misconstruction and so the Act of 1996 was enacted or rather repealed. In order to get help in
construing these provisions made in Act of 1996, it is more relevant to refer to the UNCITRAL Model Law 1985
besides the Act of 1996 rather than following the provisions of the Act of 1940.

Important forms of ADR

Mediation

Conciliation ALL IN DETAIL IN NEXT MODULES

Arbitration

Lok Adalat

Negotiation

Module 2
Mediation
• It is an extension of the negotiation process—takes place, when parties cannot settle their dispute through
negotiation and go to an impartial third party to assist them in reaching a resolution—a facilitated
negotiation
• Principle of self-determination—heart of mediation—means that disputants decide the outcome of their
conflict
• The Mediator is a neutral party who facilitates the mediation process—he is not an agent of any party—he
may also suggest a resolution, known as mediator’s proposal—but does not impose a resolution on the
parties-- there are joint sessions whereby the mediator brings the two together for communication. The
mediator can also have separate meetings with them known as private causes or shuttle diplomacy, which is
continuous or constant meeting of the parties to understand their concerns
• 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—It is flexible and cost less. It
is confidential and this enables parties to communicate freely without fear of media coverage. In mediation,
real issues are brought to light and dealt with
 • Mediation as an ADR process has gained tremendous popularity in dispute resolution from local to national
and from national to international dispute resolution—some jurisdictions mandate mediation as a
prerequisite to trial
• Disputants go into mediation for many reasons but prominent among them are: one, to resolve a dispute-
that is to settle a case; two, to explore a balanced or win-win settlement-that is exploit positive-sum
opportunities; three, to restore a broken relationship due to the dispute-that is engender moral growth
• Two types of mediation:
o Dispute mediation- resolution of conflict under the principles of negotiation settlement—can be
mandatory or voluntary—mandatory when a court or govt agency requires it—voluntary when
parties decide freely to use mediation to settle their dispute
o Transaction mediation- when a mediator helps parties form a deal such as a collective bargaining
agreement between a labour union and an employer
• Mediation works on 3 principles:
o Self-determination- parties resolve disputes freely, without coercion—mediator facilitates them to
make an informed choice or decision
o Impartial and evenhanded mediator- mediator has no personal interest or benefit of the substantive
issue
o Privacy and confidentiality- the mediator keeps the proceedings private
History of Mediation
• The use of mediation as an ADR mechanism dates back to centuries before the British era. Informal
panchayats were used to resolve disputes between the parties where the respected elders of the villages or
the Mahajans were appointed as mediators—Disputes were (and still now are) resolved by Panchayats at the
community level—mediators were called Panch Parmeshwar
• However, with the onset of the British colonialism, mediation began to be recognized as a formal and
legalized ADR mechanism.
• Mediation gained popularity as an ADR mechanism with the re-introduction of Lok Adalats in the Indian
Judicial system. Enacted in1987, the Legal Services Authority Act gave statutory status to the Lok Adalats in
India for the first time. Under this act, the decision of the Lok Adalats has been awarded the same status as
that of a civil court.
• The legislature by the Code of Civil Procedure (Amendment) Act, 1999, amended section 89 of the CPC with
effect from 1.7.2002 whereby mediation was envisaged as one of the modes of settlement of disputes.
• the amendment was challenged by a group of lawyers following which the Malimath Committee and the
129th Law Commission were constituted.
• In the light of the reports submitted by the committees, the Hon'ble Supreme Court in the case of Salem
Advocates Bar Association vs. Union of India made it mandatory for the courts to refer cases to the
alternative forums, if they were so pleased.
• Under Hon'ble Mr. Justice R C Lahoti, a Mediation and Conciliation Committee was established and in a
Project on Mediation was also initiated in Delhi in the year 2005. In the same year, A Permanent Mediation
Centre was inaugurated at the Tis Hazari court complex and judicial mediation was started at the
Karkardooma court complex. Two mediation centres were also inaugurated, one at the Karkardooma court
complex in Delhi and another at the Patiala court in 2015.

Techniques of Mediation
• Communication to create learning- The mediator should deliver a welcome speech before the disputants
and thank them for being present in such a session and introduce the disputants to each other and ask them
about the names by which they prefer themselves to be called. He/she is to brief them about his role and
strategies through an inaugural speech. He has to explain his impartial stance as a mediator before the
disputants.
 After that he has to describe about logistics support and comfort such as, length of time available for
mediation, directions to restroom, tea, water etc. The most important thing is that he/she will provide a
brief preview of the process of mediation to the disputants. He needs to clarify to them that he/she is not a
judge and cannot determine the fact. He/she has no power to decide who is right or who is wrong, who is
guilty or who is innocent. Finally he/she has to explain the process of ground rules and obtain agreements to
use them—some examples of ground rules are – everyone will have an opportunity to speak, one person to
talk at a time, etc

• Helping the Parties to Tell Their Stories- The mediator can help the parties to disclose their history by being
empathetic and attentive. He/she will acknowledge what is shared, ask questions which demonstrate his/her
interest and attention, paraphrase or summarize what he/she hears. Objective of the second step is to
develop an atmosphere of trust and confidence between the parties. It helps the parties tell and listen to the
facts from each other's perspective. It also helps them explain and clarify their own perceptions,
communicate and work together and also identify the interests of the parties.
• Learning to Create New Understanding- When the party learns about how the other sees the situation, each
party begins to have a new understanding of the situation. This means that each party must let go of some
of his/her past thoughts and might require a part to begin to forgive (depend on the conflict).

• New Understanding to Create New Motivation-The new understanding is created to change the parties'
motivation as to what they are willing to do to about needs and interests of the parties. This step simply
helps the parties understand each other's perspective; not necessarily to agree. The parties should speak to
each other rather than to the mediator; and encourage the parties to ask clarifying question to each other,
particularly about intention, impact, and interest.
It is to simply encourage the parties to tell each other what they heard, and to check for understanding.
Reflective listening is a very useful technique in this phase. At this stage the mediator is to ask the parties
what they think their major problems or issues are, and whether they want those to be solved. If they are
not sure, then the mediator will suggest issues.

• New Motivation to Create the Ability of Parties to Negotiate at a New Level-The Parties begin to relate to
the needs and wants of the parties causing the parties to be able to do more and/or other things to meet the
needs and wants of the other parties. We now have parties who are willing to change some/all.

• Ability to Negotiate at a New Level to Create Agreements- Using these stages the disputant is to establish
an agreement for future conduct and use the interest based process to brainstorm, evaluate and choose
ideas about how to improve the relationship. Here the mediator's task is to create an environment in which
the disputants can invent and evaluate possible solutions. Before arriving at the solution, the mediator
should invite the parties to evaluate the options from the observer's perspective.
After the parties have brainstormed options, they can reduce the list to the most viable options. The process
is successful if they understand each option better and identifies which options are most beneficial. The goal
is to stimulate dialogue and creativity and to make sure that all options and interests have been thoroughly
explored and the agreement reflects what the parties desire, need and want.

Role of Mediator
• Three principal roles: facilitator, evaluator and transformator
o Facilitator- The mediator creates an environment in which the parties work together collaboratively
as problem-solvers—welcomes and introduces parties, informs them about success rates, and his
 role as the mediator, explains process, sets the tone and asks parties to maintain respect and
decorum
o Evaluator- evaluative measures exercised by the mediator when he assists the disputants in
breaking impasses by contributing his views of the merits of the legal cases, the consequences of
failure to settle and the benefits of particular statement proposals—asking open ended questions
and identify disputes and issues in order to assess and inform parties of their situation
o Transformator- The transformative task of the mediator is to help participants to determine their
own direction and supports the parties’ own opportunities for perspective-taking, deliberation and
decision-making—helps in recognizing underlying interests, values, needs and priorities—helps in
understanding the other’s views by clarifying, translating and reframing

Conciliation
• To “conciliate” means to win over someone, to overcome the hostility of someone—Chambers 21st Century
Dictionary
• Informal process in which the third party tries to convince the parties into an agreement. –He overcomes
the disputable issues by lowering the tension, improvement in communication, interpreting issues, providing
technical assistance, exploring potential solutions and bringing the negotiated settlement before the parties.
• Part III of Arbitration and Conciliation Act 1996 contains provisions of conciliation
• Conciliators are trained neutral professionals who help the conflicting parties to make them understand the
issues in dispute and their interest to reach mutually accepted agreements
• The conciliation process includes the discussion between the parties which is made with the participation of
the conciliator.
• Section 61 of the act- It is on the pattern of article of the UNCITRAL Conciliation Rules
1. Deals with the application and scope of conciliatory machinery—provisions shall apply to all disputes
whether contractual or non contractual—however, if the provisions of any other law is being applied
for conciliation of dispute, the provisions of this part shall not apply (space for special law for special
disputes)—the dispute must arise out of a legal relationship tho, such that one party has the right to
sue and other has the liability to be sued
2. “unless the parties have agreed” these provisions will not apply—stress on voluntary participation in
the conciliatory process
• S62- conditions to be fulfilled by party to initiate conciliation:
1. Written invitation to other party, subject should be mentioned
2. Inviting party should mention that the invitation is under Part III of A/C act
3. Must briefly identify the subject of the dispute
Conciliation process to begin after written acceptance of the invitation—a general time period of 30 days for
writing acceptance or rejection

• S63- there shall be one conciliator unless parties agree for 2 or 3 conciliators—they must act jointly—
purpose of preferring sole conciliator: a sole conciliator likely to win faith of the parties, no scope of
conflicting opinion between conciliators, less expensive, more efficient
• S67- Role of conciliator-
o Assist the parties in an independent manner in their attempt to reach an amicable settlement
o To consider the rights and obligations of the party along with the fundamental principles of natural
justice with an object of fairness and justice
o To ttake into account the present circumstances of the given dispute by assessing aspects like usage
of trade concerned, previous business practice before the dispute, etc-- Duty to not act arbitrarily
o “fairness” implies fairness in procedure, equal opportunity and treatment to be ensured
 o Conciliator may conduct proceedings in a manner deemed appropriate by him—discretionary power
o Conciliator can propose a settlement at any stage of the proceeding—such proposal need not be in
writing or accompanied by reasons

Principles to be followed

• Independence and impartiality (67(1))

• Fairness and Justice (67(2))
• Confidentiality (75,70, proviso)—parties an conciliator duly bound to keep all matters relating to the
conciliation as confidential—conciliator’s duty to not disclose information to other party when
trusted with the information from a party if such info given under the condition of confidentiality
• Disclosure of information (70)—when conciliator receives an information about any facts relating to
the dispute from a party, he should disclose the substance of that information to the other party—
purpose is to enable the other party to present an explanation which he might consider appropriate
• Cooperation (71)- parties to act in good faith and cooperate with the conciliator
• Rules of procedure (66)- The conciliator is not bound by the rules contained in the Code of Civil
Procedure, 1908 or the Indian Evidence Act, 1872. Though the conciliator is not bound by the
technical rules of procedure, he, it seems, should not ignore the principles of natural justice. Thread
of natural justice should run through the entire conciliation proceedings. The principles of natural
justice require that both parties must be heard each in the presence of the other.
• Communication between conciliator and parties (69(1))- The conciliator may invite the parties to
meet him or may communicate with them orally or in writing. He may do so with the parties
together or with each of them separately
Conciliation process
• General procedure
1. Commencement of conciliation proceedings (s 62)- Conciliation proceedings initiated by one party,
sending a written invitation to the other party-- subject should be mentioned, Inviting party should
mention that the invitation is under Part III of A/C act, Must briefly identify the subject of the dispute—
conciliatory proceedings begin when other party accepts—no proceedings if other party rejects-- If the
party inviting conciliation does not receive a reply within thirty days from the date he sends the
invitation or within such period of time as is specified in the invitation, he may elect to treat this as
rejection of the invitation to conciliate. If he so elects, he should inform the other party in.writing
accordingly.
2. Submission of statements to the conciliator (s65)- conciliator may request parties to submit to him a
brief written statement—statement to describe he general nature of the dispute and issues—copies to
be sent to other party as well—conciliator can require submission of further written statements as well
including documents, evidence, etc—conciliator may also ask for submission of any additional
information which he may deem appropriate
3. Conduct of conciliation proceedings (69(1) and 67(3))- conciliator may invite parties to meet him—may
communicate in oral or writing—may communicate with the parties together or individually—may
conduct the proceeding in such manner as he may deem appropriate, taking into account circumstances
of the case, express wishes of the parties, need of speedy settlement, etc
4. Administrative assistance (68)- conciliator and parties may request administrative assistance by suitable
institution with consent of both parties

• Settlement
• Settlement of dispute (s 67(4), 72,73)
 ▪ The conciliator may at any stage of the proceedings make proposals for the settlement—
need not be in writing or accompanied by reasons (67(4))
▪ Parties may, on their own initiative or at the invitation of the conciliator, may make
suggestions for the settlement of the dispute
▪ When it appears to the conciliator that there exist elements of a settlement likely to be
accepted by the parties, he shall formulate the terms of a possible settlement and submit
them to the parties for their observations. After receiving the observations of the parties,
the conciliator may reformulate the terms of a possible settlement in the light of such
observations. (73(1))
▪ If parties agree to a settlement, written statement agreement to be drawn up and signed by
the parties, in which the conciliator may assist. (73(2))
▪ After parties sign the agreement, it becomes final and binding on the parties(73(3))
▪ Conciliator to authenticate the agreement and furnish copies to parties (73(4))
Haresh Dayaram Thakur vs State of Maharashtra- Where the conciliator held some meetings with
the parties and drew up the settlement agreement by himself in secrecy and sent it to the court in
sealed cover, the supreme Court held that an order passed by the High court confirming such
settlement agreement received from the conciliator was wholly unsupportable. The section clearly
requires that in order to be binding and to have the status of an arbitral award, it must be signed by
the parties.

• Status and effect of settlement agreement (s74)

▪ Settlement agreement of a conciliation to have same status and effect as an arbitral award
on agreed terms under section 30—it shall be treated as a decree of the court and shall be
enforceable as such
▪ SC emphasised on complete compliance as a requirement of this status—substantial
compliance will not do
▪ Mysore Cements Ltd vs Svedala Barmac Ltd- It is only that agreement which has been arrived
at in conformity with the manner stipulated and form envisaged and got duly authenticated
in accordance with Section 73 ofthe Act, can be assigned the status of a settlement
agreement, within the meaning of and for effective purposes of the Act, and not otherwise.

• Restrictions on the role of the Conciliator (s80)

• 80(a)- prohibits the conciliator to act as an arbitrator or as a representative or counsel of a party in
any arbitral or judicial proceeding in respect of the conciliation subject
• 80(b)- prohibits the parties to produce the conciliator as a witness in any arbitral or judicial
proceedings
• Termination of conciliation proceedings (s76)
• With signing of the settlement agreement by the parties (same date)
• With the conciliator declaring in writing that further efforts at conciliation are no longer justified
(date of termination= date of declaration)
• With the written declaration of a parties to the conciliator to terminate proceedings
• With the written declaration of a party to other party and the conciliator that the conciliation
proceedings are terminated
• Resort to arbitral or judicial proceedings (s77)
Parties cannot initiate arbitral or judicial proceedings during the conciliation proceedings in respect of a
dispute which is the subject matter of the conciliation. But can be done in exceptional cases where party
believes such proceedings are necessary for preserving his rights

• Costs (s78)
 • Costs may mean : conciliator fee, witness fee, expert advice fee, fee for assistane provided under
s64(2)(b) and 68, any other expenses relating to proceedings and settlement agreement
• Conciliator fixes the costs of conciliation proceedings upon termination, costs are borne by the
parties in equal shares

Difference between Mediation and Conciliation

Negotiation
• Defined as a bilateral or multilateral process in which parties who differ over a particular issue attempt to
reach agreement or compromise over that issue through communication
• Heavily based on communication and back and forth statements between the parties to come to a
settlement
• It is a voluntary ADR process—no third party involved to facilitate the resolution process or impose a
sentence
• Negotiation is characterised by listening—it works when parties are ready to listen to each other and come
to an agreement thereof
• Legal requirements are also present like the settlement cannot evade tax and in some cases court approval is
also reqd
• Even though negotiation is everyday life experience, dispute negotiation is an art to learn. It is like a science
with prediction and experimentation. Most ADR professionals are very good in the art of negotiation. With
techniques and understanding they are able to help disputants negotiate well
• Two kinds of negotiation—transactional and dispute resolution
o Transactional Negotiation—cooperative, interest based, integrative, value creating and win-win
negotiation—based on the positive sum negotiation principle which means that it is not perceived
 as a war to win or lose but a communication to iron out differences and keep relationship going—
involves activities like buying and selling of goods and services, in marriages, family life, education,
business etc
o Dispute Negotiation- problem solving negotiation—involves 4 principles: planning and analysis,
exchanging information, exchange concessions and compromise, reaching agreement—can be
done by the parties themselves or through their lawyers/representatives—win-lose proposition—
based on the zero sum principle meaning either losing or winning big—heavy priority is based on the
interests of the client—Gerald Williams- “the aims of lawyers who use this kind of negotiation can be
summarized as maximizing settlement for their clients; obtaining profitable fees for themselves; and,
outmanoeuvring their opponents”—highly competitive, adversarial—three further types of dispute
negotiation:
▪ Distributive dispute negotiation- bargaining negotiation based on zero sum principle—one
party focusses on winning over the other
▪ Integrative dispute negotiation- operates on positive sum principle—focusses on satisfying
all parties involved—possible only when parties do not have sharp opposing interests
▪ Settlement dispute negotiation- has a tripartite principle. One, there is «an agent» involved
who is mostly a lawyer. Second, is about «the sale of a claim by Plaintiff to Defendant».
under «the shadow of the law». Third, there is «bilateral monopoly», which means there are
two parties involved in the negotiation unlike transactional negotiation which is opened to
more than two people.
Process of Negotiation
• Process is initiated at the first meeting—parties to have agreed on a date, time, place and agenda for the
meeting
• Negotiations begin usually with each party putting forth the facts from their perspective, using them as a
defence for their positions and their opening offers—however, negotiations cannot progress just by relying
on these submissions, there must be a middle ground for both sides
• Another tactic used is “bracketing”—involves reducing range to close the gap b/w parties—bracketing can
be of 2 types- conditional or exploratory—conditional bracketing when party says that if you do this for me, I
will pay you this—exploratory means that party asks questions as why or on what basis should I increase my
offer, what are you willing to offer if I increase my offer
• Although bracketing itself may lead to agreements, when they do not, the negotiator moves the discussions
from mere positions to a wider perspective, like looking for deeper interests and exploring other options for
settlements
• Brainstorming is a process by which ideas for resolution are brought out—ideas and options must be
evaluated and on arriving at a mutually acceptable solution, the settlement can be finalised

Tips for negotiator

• Separate people from the problem- avoid seeing the other party as your “opponent”—try to ignore
personality differences and focus on the issue on hand—three factors: perception, emotion and
communication—perception means “putting yourself in their shoes”—examine and acknowledge emotions
and ask oneself why they feel the way they do—remain calm, communicate clearly and precisely and
advocate active listening
• Focus on interests, not positions- People are seldom "difficult" just for the sake of it, and almost always
there are real and valid differences sitting behind conflicting positions. The way that each person sees the
issue may be influenced by many factors, such as their values, beliefs, status, responsibilities, and cultural
background—maintain courtesy, avoid blaming, try to find common interests
 • Invent option for mutual gain- if even after applying these techniques, not on the verge of reaching a
settlement, try to stay open to the idea that a completely new position may exist and use negotiation
process to explore other options
• Use objective criteria- set out only those facts which support your position—try to agree on a set of
objective criteria that provide a framework for your discussion
• Know your BATNA (Best alternative to negotiated agreement)-Your BATNA is your favored fallback option if
you can't get everything that you want. This is not the same as a "bottom line," which is a fixed position that
can limit your options and may prevent you from discovering a new course of action

Module 3
Provisions under CPC, 1908
• The Code of Civil Procedure, 1859 in its sections 312 to 325 dealt with arbitration in suits while sections 326
and 327 provided for arbitration without court intervention.
• The Code of Civil Procedure (Act 5 of 1908) repealed the Act of 1882. The Code of Civil Procedure, 1908 has
laid down that cases must be encouraged to go in for ADR under section 89(1).
• Under the First Schedule, Order XXXII A, Rule 3 a duty is cast upon the courts that it shall make an endeavor
to assist the parties in the first instance, in arriving at a settlement in respect of the subject matter of the
suit.
• The second schedule related to arbitration in suits while briefly providing arbitration without intervention of
a court. Order I, Rule 1 of the schedule says that where in any suit, all the parties agree that any matter in
difference between them shall be referred to arbitration, they may, at any time before judgment is
pronounced; apply to the court for an order of reference. This schedule, in a way supplemented the
provisions of the Arbitration Act of 1899.
Indian Arbitration Act 1899
• This Act was substantially based on the British Arbitration Act of 1889. It expanded the area of arbitration by
defining the expression ‘submission’ to mean “a written agreement to submit present and future differences
to arbitration whether an arbitrator is named therein or not”.
Arbitration (Protocol and Convention) Act 1937
• The Geneva Protocol on Arbitration Clauses 1923 and the Geneva Convention on the Execution of Foreign
Arbitral Awards 1927 were implemented in India by the Arbitration (Protocol and Convention) Act, 1937.
This Act was enacted with the object of giving effect to the Protocol and enabling the Convention to become
operative in India.
Arbitration Act 1940
• Dealt with only domestic arbitration—intervention of court reqd in all 3 stages of arbitration in the tribunal
i.e. prior to the reference of the dispute, in the duration of the proceedings, and after the award was passed.
• This Act made provision for- a) arbitration without court intervention; b) arbitration in suits i.e. arbitration
with court intervention in pending suits and c) arbitration with court intervention, in cases where no suit was
pending before the court.
• Before an arbitral tribunal took cognizance of a dispute, court intervention was required to set the
arbitration proceedings in motion. The existence of an agreement and of a dispute was required to be
proved. During the course of the proceedings, the intervention of the court was necessary for the extension
of time for making an award.
• Finally, before the award could be enforced, it was required to be made the rule of the court. This Act did
not fulfill the essential functions of ADR. The extent of Judicial Interference under the Act defeated its
 very purpose. It did not provide a speedy, effective and transparent mechanism to address disputes arising
out of foreign trade and investment transactions.
Arbitration and Conciliation Act 1996
• In 1978, the UNCITRAL Secretariat, the Asian African Legal Consultative Committee (AALCC), the
International Council for Commercial Arbitration (ICCA) and the International Chamber of Commerce (ICC)
met for a consultative meeting, where the participants were of the unanimous view that it would be in the
interest of International Commercial Arbitration if UNCITRAL would initiate steps leading to the
establishment of uniform standards of arbitral procedure.
• The preparation of a Model Law on arbitration was considered the most appropriate way to achieve the
desired uniformity. The full text of this Model Law was adopted on 21st June 1985 by UNCITRAL. This is a
remarkable legacy given by the United Nations to International Commercial Arbitration, which has
influenced Indian Law. In India, the Model Law has been adopted almost in its entirety in the 1996 Act.
• This Act repealed all the three previous statutes. Its primary purpose was to encourage arbitration as a cost-
effective and quick mechanism for the settlement of commercial disputes. It covers both domestic
arbitration and international commercial arbitration. It marked an epoch in the struggle to find an
alternative to the traditional adversarial system of litigation in India.
• Veerappa Moily said in the ADR congress held in the year 2010 that the 1996 Act, although modelled along
international standards, has so far proved to be insufficient in meeting the needs of the business community,
for the speedy and impartial resolution of disputes in India.
• The Law Commission of India prepared a report on the experience of the 1996 Act and suggested a number
of amendments. Based on the recommendations of the Commission, the Government of India introduced
the Arbitration and Conciliation (Amendment) Bill, 2003, in the Parliament. The standing committee of law
ministry felt that provisions of the Bill gave room for excessive intervention by the courts in arbitration
proceedings.
Industrial Disputes act 1947
• Dealt with ADR in labour disputes-- Conciliation has been statutorily recognized as an effective method of
dispute resolution in relation to disputes between workers and the management
• Section 4- conciliation officers- This section grants authority to “appropriate govt.” to appoint conciliation
officers, charged with the duty of mediating in and promoting the settlement of industrial disputes
• Section 5- Boards of Conciliation- grants authority to “appropriate govt.” to constitute a Board of
conciliation, for promoting the settlement of an industrial dispute.
• Section 12- Duties of Conciliation officers- to investigate the dispute and matters affecting the settlement of
such disputes. It also grants authority to the conciliation officer, to do all necessary things that are necessary
for the amicable settlement of the dispute—further lays down procedure in case of settlement or non
settlement of disputes
• The award arrived at in the course of conciliation proceedings under this Act, is a binding instrument and has
same value as the decree of court, by virtue of section 18 of the Act. The award binds all the parties to the
disputes as well as their successors.

Recent developments—Module VII

Module 4
Pre-neutral evaluation
• Early neutral evaluation is a preliminary assessment of facts, evidence, or legal merits—a neutral third party
conducts this assessment to identify the legal position/weaknesses of the parties and give an opinion on the
issue—duty of the neutral to facilitate negotiations and to provide an idea to the parties as to what they can
expect upon litigation.
• non-binding Dispute Resolution Method
• The main objective of ENE is to give a reality check to all parties concerned through an early and frank
assessment of their positions, helping them avoid a lot of hassle in the future.
• popular ADR mechanism in many nations like the UK, Australia, Singapore, etc. however, its origin can be
traced to California, USA, where Chief Justice Robert F. Peckham, in an effort to combat rising costs and time
inefficiencies suffered by litigants, created a task force in 1982 to look into ENE as a viable solution. Upon
receiving positive feedbacks from the task force and experimental programmes, ENE was enacted as a
permanent programme in the State. ENE is the most popular ADR mechanism in California today, above
arbitration, mediation and negotiation. Individuals across the world now include ENE clause along with the
arbitration clause in contractual agreements, so as to get their cases assessed pre-trial
• Section 89 of CPC 1908 includes provisions for referring he parties to ENE—first introduction in Bawa Masala
Company vs Bawa Masala Pvt Ltd-
“ENE is, thus, a different form of alternative dispute resolution and I see no reason why this process
cannot be resorted to towards the object of a negotiated settlement in pursuance to Section 89 of
the Code of Civil Procedure, 1908 especially when the parties volunteer for the same. The provisions
of the said section inter alia provide for Alternative Dispute Resolution Mechanism, which inter alia
includes mediation. ENE also broadly follows the same process as a mediation, though the concept is
not a negotiated settlement, but a neutral assessment.”

Process
• Intended to take place early in the pre-trial period, in order to help the parties reduce litigation time and
costs, and efficiently manage the case points, arguments and expectations. It helps the Court reach its
verdict faster by correcting the counsel’s mistakes before litigation proceedings begin. The participation of
parties is voluntary, even though they have been ordered to take part in ENE proceedings in many
jurisdictions
• Parties agree to appoint a neutral third party evaluator, an expert in the subject
• Evaluator analyses case facts, evidences and studies abbreviated arguments, oral and written, presented by
both parties and other submissions.
• Evaluator identifies the critical points to focus on and bases evidence procurement on the same
• Finally, the evaluator predicts the probable outcome for each party after litigation and gives written
opinions/recommendations on the strengths and weaknesses of both parties’ position and arguments. The
opinion is generally not binding on the parties or enforceable, as it is merely an opinion on the likely outcome
of the dispute.
• However, the parties may agree to be bound by the evaluation and for it to be enforceable. In order for it to
be enforceable, the (usually confidential) evaluation proceedings need to be recorded after receiving
consent of parties and approval by the Court.
• There is no mechanism in place presently for a party to appeal an evaluation nor is there any clarity as to
what a Court can do if a party disagrees with the evaluation
Judicial Settlement
• Judicial settlement as one of the modes of the alternative dispute resolution given under Section 89 of the
Code of Civil Procedure, 1908. As such, there are no specified rules framed so far. In judicial settlement, the
concerned judge tries to settle the dispute between the parties amicably.
• It was provided that the provisions of the Legal Services Authority Act, 1987, would apply when there is a
judicial settlement—such a settlement shall be deemed to be an agreement under LSA act
• Section 89 (2)(c)- where dispute has been referred:
for judicial settlement, the court shall refer the same to a suitable institution or person and such
institution or person shall be deemed to be a Lok Adalat and all the provisions of the Legal Services
Authority Act, 1987 shall apply as if the dispute were referred to a Lok Adalat under the provisions of
that Act
(basically a pseudo Lok Adalat)
• Apart from this, India has no written guidance on judicial settlement.

Lok Adalat
• “People’s court” established by government to settle disputes through conciliation and compromise—
judicial institution and dispute settlement agency developed by the people themselves for social justice
based on settlement or compromise reached through systematic negotiations.
• The first Lok Adalats was held in Una aim the Junagadh district of Gujarat State as far back as 1982.
• Lok Adalats accept even cases pending in the regular courts within their jurisdiction.
• Section 89 of the Civil Procedure Code provides as to referring the pending Civil disputes to the Lok Adalat.
When the matter is referred to the Lok Adalat then the provisions of the Legal Services Authorities Act, 1987
will apply.

Provisions of LSA Act pertaining to Lok Adalats

• Section 19-
o lays down the duty of State authorities or district authorities or supreme court legal services
committee, etc to organise Lok Adalats at such intervals and places and for exercising such
jurisdiction and for such areas as it thinks fit
o Composition of Lok Adalat- serving or retired judicial officers, other persons, of the area as may be
specified by the State Authority or the District Authority or the Supreme Court Legal Services
Committee, etc
o Qualifications of “other persons” to be prescribed by Central govt or State govt in consultation with
CJI or CJ of High Court
o Jurisdiction of LA: to determine and to arrive at a compromise or settlement between the parties to
a dispute in respect of –
(i) any case pending before it; or
(ii) any matter which is falling within the jurisdiction of, and is not brought before any court
for which the Lok Adalat is organised
Proviso- no jurisdiction in respect of case or matter relating to an offence not compoundable under
any law.

• Section 21- Award of the Lok Adalat

o Every award of the Lok Adalat to be deemed to be a decree of a civil court, or as the case may be, an
order of any other court
o Every award made by a Lok Adalat shall be final and binding on all the parties to the dispute, and no
appeal shall lie to any court against the award
 • In view of the aforesaid provisions of the Legal Services Authorities Act, 1987 if any matter is referred to the
Lok Adalat and the members of the Lok Adalat will try to settle the dispute between the parties amicably, if
the dispute is resolved then the same will be referred to the concerned Court, which will pass necessary
decree therein—decree shall be final and binding, no appeal against it shall lie.
• The main condition of the Lok Adalat is that both parties in dispute have to be agreeable to a settlement—
however, in certain situations, permanent Lok Adalat can pass an award on merits, even without the consent
of parties. Such an award is final and binding. From that, no appeal is possible.
• Lok Adalat are not necessarily alternatives to the existing courts but rather only supplementary to them.
They are essentially win-win systems, an alternative to ‘Judicial Justice’, where all the parties to the dispute
have something to gain.
• Types of Lok Adalat-
o National Level LA- it is held at regular intervals throughout the country at the Supreme Court to taluk
levels wherein cases are disposed of in huge numbers. It started in 2015 and is being held on a
specific subject matter every month.
o Permanent Lok Adalat: it is organised under section 22B of the Legal Services Authorities Act 1987. It
provides a compulsory pre-litigation mechanism to settle disputes related to public utility services
like transport, telegraph, postal etc.
o Mobile Lok Adalat: under this system, it travels from one place to other to settle disputes. As of 30th
September 2015, more than 15.14 lakhs Lok Adalat have been conducted in the country and over
8.25 crore cases have been settled so far.
o Mega Lok Adalat: this mechanism is held on a single day on the state level in all courts of the state.
o Daily Lok Adalat: it is held every single day.
o Continuous Lok Adalat: it is conducted for a particular number of days continuously.
• Advantages
o Provides a financially safer option to achieve justice
o Provides speedier resolutions in certain family disputes which saves time and expenses as compared
to mainstream litigation
o Decreases the burden in higher courts
o Can act as a decent supplement to the works of courts and could contribute to justice in a good way
o No requirement of legal counsel/lawyer, can simply talk to the judge about the matter
o Even if the case is filed in court, the expenses are refunded to the party when the case is solved by
Lok Adalat
• Disadvantages
o Faster justice comes with a price of settlement made at the cost of lesser compensation and the
petitioner had no time to claim higher amount which he justly should have got
o Not all cases are suitable for Lok adalat jurisdiction.

Legal Services Authorities Act 1987

• An act to constitute legal services authorities to provide free and competent legal services to the weaker
sections of society to ensure that opportunities for securing justice are not denied to any citizen by reason of
economic or other disabilities and to organize Lok Adalats to secure the operation of the legal system
promotes justice on the basis of equal opportunity.
National Legal Services Authority (s3-5)
• Central govt to constitute a Body called NALSA, consisting of:
o CJI as the patron in chief
o Serving or retired Judge of SC as executive chairman
o Such members possessing qualifications as prescribed by central govt (to be nominated by central
govt)
 o Member Secretary to be appointed by central govt
• Functions:
o to lay down policies and principles for making Legal Services available under the provisions of the
Act.
o to frame the most effective and economical schemes for the purpose of making the legal services
available under this act.
o To utilise the funds at its disposal and make appropriate allocations of funds to the State authorities
and District authorities
o To take necessary steps by way of social justice litigation with regard to consumer protection,
environmental protection or any other matter of special concern to the weaker sections of the
society and for this purpose give special training to legal workers
o To organise legal aid camps specially on rural areas ,slums or labour colonies with the dual purpose
of educating weaker sections of society as to their rights as well as encouraging of settling their
disputes through Lok Adalats
(Among others)
Supreme Court Legal Services Committee
• “central Authority” to constitute a committee to be called SCLSC to exercise such powers and perform such
functions as may be determined by regulations made by central authority (this means NALSA)
State Legal Services Authority (s 6-11)
• In every State a State Legal Services Authority is constituted to give effect to the policies and directions of
the Central Authority (NALSA) and to give legal services to the people and conduct Lok Adalats in the State.
• Consists of :
o CJ of HC as patron in chief
o Serving or retired HC judge nominated by governor, executive chairman
o Other qualifying members appointed by State govt
• Functions:
o Give to effect to the policy and directions of the central authority
o To give legal services to person who deserve it.
o To conduct Lok Adalats
o To undertake preventive and strategic legal aid programmes.
High Court Legal Services Committee
• Constituted by state authority to exercise such powers and perform such functions as may be determined by
regulations made by state authority
District Legal Services Authority
• District Legal Services Authority is constituted in every District to implement Legal Aid Programmes and
Schemes in the District. The District Judge of the District is its ex-officio Chairman.
Taluk Legal Service Committee
• constituted for each of the Taluk or Mandal or for group of Taluk or Mandals to coordinate the activities of
legal services in the Taluk and to organise Lok Adalats. Every Taluk Legal Services Committee is headed by a
senior Civil Judge operating within the jurisdiction of the Committee who is its ex-officio Chairman.

Criteria for giving legal services (s12-13)

• To a member of Scheduled Tribe or Scheduled Cast
• To a victim of trafficking in human beings or beggars
• To women and children
• To a person with disability
• To a person being victim of mass disaster, ethnic violence, caste atrocity, flood, drought , earthquake or
industrial disaster.
 • To a person in custody , including custody in protective homes like juvenile home etc.
• To a person whose annual income is less than 9 thousand rupees as prescribed by State Government and 12
thousand rupees as prescribed by Central Government.
[Lok adalats previously discussed]

Enforceability of settlement
• Pre-neutral evaluation—Not enforceable
• Lok Adalat—Enforceable as a decree of a civil court
• Judicial Settlement—Enforceable as a decree of civil court
Role of neutral
• Pre-neutral evaluation—Strictly evaluative role
• Lok Adalat—Statutory conciliators
• Judicial Settlement—Statutory conciliators

MODULE V: ARBITRATION AND CONCILIATION ACT, 1996 AND ITS

PROCEDURE
Section 2(1)(a) - “arbitration” means any arbitration whether or not administered by permanent arbitral
institution.

Arbitration is a reference to the decision of one or more persons, either with or without an umpire, of some
matter or matters in difference between the parties.

CHAPTER II – ARBITRATION AGREEMENT

SECTION 7 - ARBITRATION AGREEMENT.— (1) In this Part, “arbitration agreement” means

an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may
arise between them in respect of a defined legal relationship, whether contractual or not.

(2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a
separate agreement.

(3) An arbitration agreement shall be in writing.

(4) An arbitration agreement is in writing if it is contained in—

a) a document signed by the parties;

b) an exchange of letters, telex, telegrams or other means of telecommunication [including
communication through electronic means] which provide a record of the agreement; or
c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by
one party and not denied by the other.
(5) The reference in a contract to a document containing an arbitration clause constitutes an arbitration
agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the
contract.
 • ‘Arbitration agreement’ means “an agreement by the parties to submit to arbitration all or certain
disputes which have arisen or which may arise between them in respect of a defined legal
relationship, whether contractual or not.

1. DRAFTING OF ARBITRATION CLAUSE

a) Critical Attributes
i. The intention of the parties to settle their disputes by means of adjudication by a private tribunal
must be clearly stated;
ii. The clause must indicate that present or future differences or disputes that have arisen or may arise
between the parties in connection with their dealings shall be referred to arbitration; and
iii. It should be clearly indicated that the decision of the arbitral tribunal shall be final and binding on the
parties.
b) Optional but relevant additional elements
i. Procedure to be followed by the parties before invocation of the arbitration clause.
ii. Number of arbitrators that would constitute the arbitral tribunal.
iii. Qualifications required for becoming a member of the arbitral tribunal.
iv. The persons/institutions/officers empowered to make the appointment.
v. The period within which an appointment ought to be made and the authority or body which would
make the appointment in case any party or the two appointed arbitrators fail to make the appointment
within the stated time.
vi. Venue of arbitration.
vii. Language in which proceedings are to be conducted.
viii. Time limit for finalisation of award.
ix. The law which would govern the parties and the court which would have jurisdiction in the matter.

2. PARTY TO ARBITRATION AGREEMENT

• Definition of ‘Party’ - Section 2(1)(e) – “party to an arbitration agreement.” - Only parties to the
agreement can invoke the arbitration clause.
• Who can be ‘parties to an arbitration agreement’?
i. Companies: Only persons in whom the management of the company has been vested can enter
into such agreements (eg:- shareholders cannot seek appointment of an arbitrator).
ii. Firms: One partner of a firm cannot enter into an agreement to refer on behalf of firm unless all
partners join in the reference. 33 An arbitration agreement entered into by a partner on behalf of
the firm can be said to be impliedly ratified by the subsequent acts of the other partner. A partner
of an unregistered firm cannot apply to enforce a right arising from the contract between the
partners.
iii. Third parties: A court is authorised to determine whether a party, which although not formally a
party to the arbitration agreement, can be made a party to the arbitration proceeding. Persons
claiming under a party to an arbitration agreement, in addition to the party itself, would be
entitled to claim its benefits and be bound by the obligation imposed thereby. If the arbitration
agreement is capable of assignment, then the assignee would step into the shoes of his assignor.
iv. Karta: A Karta of a joint family can make a valid reference to arbitration and where he acts bona
fide the award binds other members.
v. Sub-Contracts: Where a term in a sub-contract provides for making of direct payment by the
owner to the sub-contractor, then in such circumstances, the owner is a necessary party to the
reference and an award passed without joining him would be bad in law.
vi. Transferee: A transferee of a motor vehicle from a person, who is a party to the contract of
motor insurance containing the arbitration clause, cannot be deemed to be a party to the
 arbitration agreement. However, it has been held that upon devolution of interest, transferee
upon whom interest is developed was entitled to be impleaded. However, in certain cases, a
beneficiary could apply if the party to the agreement was unwilling to do so.
vii. Minor: A minor cannot sue the partners for an account of the firm or for payment of his share of
the property, or profits of the firm, except when he severs his connection with the firm. Hence, a
minor is a necessary party to the arbitration. A reference made by one of the executors of a Will
without consulting his co-executors would be illegal.

3. ESSENTIALS OF ARBITRATION AGREEMENT

a) Arbitration agreement must be in writing
b) What qualifies as ‘written agreement’: (a) a document signed by the parties;
(b) an exchange of letters, telex, telegrams or other means of telecommunication [including
communication through electronic means] which provide a record of the agreement
c) Arbitration agreement must be clear and certain
d) Signatures of parties not necessary to constitute arbitration agreement if it is established by another
written contemporaneous document, which is binding between the parties.
e) Naming of arbitrator in Arbitration Agreement is not essential
f) However, when the arbitration clause does name an arbitrator, it should be ensured that the
identity of the arbitrator is not vague or uncertain.
g) When an arbitrator appointed by designation relinquishes his post due to transfer, retirement, etc.
his successor in office shall be deemed to be the arbitrator. In case of transfer, the arbitrator may
dispose of the reference even after being transferred elsewhere.

4. ARBITRATION AGREEMENT BY EXCHANGE OF LETTER

An arbitration agreement can come into existence by means of correspondence exchanged between the
parties, whether explicitly or implicitly, like an exchange of letters, telex, telegrams or other means of
telecommunication [including communication through electronic means since 2015 Amendment] which
provide a record of the agreement

5. ARBITRATION AGREEMENT – INCORPORATION BY ANOTHER AGREEMENT

• An arbitration clause contained in a standard form agreement can be incorporated into an agreement
entered into between the parties if the said standard form agreement is specifically referred to in the
said agreement and all its terms and conditions are made a part thereof.
• The parties need not set out the terms of the arbitration agreement in the contract itself. It is
sufficient for the clause to be incorporated by reference either to a standard form of contract or to a
set of trade terms which themselves include provisions requiring disputes to be submitted to
arbitration. Nor need the contract itself be contained in a single document.

6. ARBITRATION CLAUSE IN SUBSEQUENT AGREEMENT

An arbitration clause in one contract can be imported into a subsequent contract between the parties if it is
not inconsistent with the terms of the subsequent contract, such incorporation of arbitration clause to a
subsequent contract is statutorily recognized in the new Act. If the subsequent agreement creates new rights
and liabilities, then it will be considered to be a new agreement between the parties and the arbitration clause
under old agreement cannot be applied. However, if the subsequent modifications are only minor
modifications to the original agreement, then the previous arbitration clause can be applied.

7. ARBITRATION AGREEMENT SURVIVES EVEN WHEN CONTRACT FRUSTRATES

Even if performance of the contract comes to an end on account of repudiation, frustration or breach of
contract, the arbitration agreement would survive for the purpose of resolution of disputes arising under or in
connection with the contract. This position is now statutorily recognized under section 16(1) which inter alia
provides that an arbitration clause which forms part of the contract has to be treated as an agreement
independent of the other terms of the contract; and a decision that the contract is null and void shall not
entail ipso jure the invalidity of the arbitration clause. (National Agricultural Co-op. Marketing Fed. India
Ltd. v. Gains Trading Ltd)

8. ARBITRATION CLAUSE DELETED – EFFECT OF

State of Kerala v. C. Abraham – “Where an arbitration clause was deliberately and consciously struck off in
the original agreement signed by both the parties, it is explicit that they have done away with the arbitration
machinery. Such an agreement does not visualise any arbitration arrangement between the parties and
consequently the court has no jurisdiction to make any subsidiary exercise visualised in a situation when in
fact an arbitration arrangement exists but with some gaps or deficiencies in the working arrangement.”

Should be done explicitly with knowledge and consent of parties.

9. MATTERS BARRED FOR ADJUDICATION BY ARBITRATOR

If the parties have stipulated in the contract that certain types of disputes shall not be the subject-matter of
arbitration, then the arbitrators would be exceeding their jurisdiction if they make an award on excepted
matters. Arbitrators derive their powers from the agreement between the parties. Thus, if the parties have
agreed that certain categories of disputes have to be kept out of the purview of the arbitration clause, the
arbitral tribunal cannot exceed its jurisdiction and decide upon such matters. (I.T.C. Ltd. v. George Joseph
Fernandes)

10. ARBITRATION CLAUSE – WHEN EXTINGUISHES

An arbitration clause is distinct from other clauses in the contract [according to Section 16(1)]. Even if the
contract is void or there has been a breach of stipulations by a party, it will not abrogate the arbitration
clause because it is considered to be an independent agreement. However, if the entire contract is vitiated by
reason of fraud, then the arbitration clause will also be abrogated because if the main contract does not exist,
the arbitration clause cannot exist; since it is like rolling two contracts into one.

It cannot be generally said that the arbitration agreement perishes with the rights and duties of contracted
parties when the contracted work is completed. Each case has to be considered on its own fact.

SECTION 8 - POWER TO REFER PARTIES TO ARBITRATION WHERE THERE

IS AN ARBITRATION AGREEMENT
• When a matter which is the subject of an arbitration agreement is brought before a judicial authority
by a party or any person claiming through a party to the agreement, not after the date of submitting
his first statement on the substance of the dispute, the judicial authority shall, notwithstanding any
judgement/decree of the SC or any Court, refer the parties to arbitration unless it finds the arbitration
agreement to be invalid.
• The application made under this section is to be accompanied by the original arbitration agreement
of a duly certified copy of the same.

SECTION 9 – INTERIM MEASURES BY COURT - Same as Section 17 (Interim measure by

Arbitral Tribunal)
 CHAPTER III – COMPOSITION OF ARBITRAL TRIBUNAL

SECTION 10 – NUMBER OF ARBITRATORS

• The parties are free to determine the number of arbitrators and in the absence of such an agreement,
the arbitral tribunal shall consist of one sole arbitrator.
• The number of arbitrators shall NOT be an even number.

SECTION 11 – APPOINTMENT OF ARBITRATORS

• Unless otherwise agreed by the parties, the arbitrator may be of any nationality.
• The parties are free to agree on a procedure to appoint the arbitrator/arbitrators.
• In case of sole arbitrator, if the parties fail to reach an agreement on the arbitrator within 30 days
from receipt of requesting arbitration, the appointment shall be made by, upon request of party, by
the SC or HC or any person designated by such Court.
• In case of three arbitrators, each party shall appoint one each and the two arbitrators together shall
appoint a third arbitrator who shall act as the presiding arbitrator. If a party fails to appoint an
arbitrator within 30 days from request to do so or the two arbitrators fail to agree on the third
arbitrator within 30 days of their appointment, upon the request of a party, the SC, HC or any
persons designated by such Court shall appoint the arbitrator.
• When an agreement has been reach between the parties regarding appointment procedure, a party
may approach the SC, HC or any person or institution designated by such Court to take necessary
measure, when:

i. A party fails to act as required under the agreed procedure,

ii. The parties, or the two appointed arbitrators, failed to reach an agreement expected of them
iii. A person, including an institution, fails to perform any function entrusted to him or it under
that procedure.
• The SC, HC any person or institution designated by such Court to take necessary measure should
dispose the issue expeditiously, within a period of 60 days from date of serving the notice to the
opposite party. (2015 Amendment)
• The SC or, as the case may be, the HC or the person or institution designated by such Court, before
appointing an arbitrator, shall seek a disclosure in writing from the prospective arbitrator in terms of
sub-section (1) of section 12, and have due regard to—
(a) any qualifications required for the arbitrator by the agreement of the parties; and
(b) the contents of the disclosure and other considerations as are likely to secure the appointment of
an independent and impartial arbitrator.
• (9) In the case of appointment of sole or third arbitrator in an international commercial arbitration,
the Supreme Court or the person or institution designated by that Court may appoint an arbitrator of
a nationality other than the nationalities of the parties where the parties belong to different
nationalities.

SECTION 11A – POWER OF CENTRAL GOVERNMENT TO AMEND FOURTH

SCHEDULE (2015 Amendment)
• Fourth schedule –> Sums in dispute - Model fee Table
• Not too important. I hope. Lol.
SECTION 12 – GROUNDS FOR CHALLENGE
• When a person is approached to be appointed as an arbitrator, it is his duty to disclose it if he had any
prior direct or indirect relationship with any of the parties in the disputes which might give rise to
justifiable doubts regarding impartiality. He also has to disclose circumstances which might affect
his ability to dedicate sufficient time to the arbitration proceedings and complete it within 12 months.
(2015 Amendment)
• An arbitrator may be challenged only if there are justifiable doubts about his independence or
impartiality and if he does not possess the qualifications agreed upon by the parties.
• A party may also challenge arbitrators appointed by them if they become aware of certain facts after
the appointment.

SECTION 13 – CHALLENGE PROCEDURE

• The parties are free to agree on a procedure for challenging an arbitrator and in the absence of such
an agreement, parties may send a written statement of reasons challenging appointment of an
arbitrator to the arbitral tribunal within 15 days of being aware of the tribunal’s constitution or later
if there is justifiable cause for delay.
• The tribunal shall decide on the challenge, unless the other party agrees to the challenge or the
arbitrator in question withdraws from office. If the challenge is successful, the party challenging may
make an application for setting aside the arbitral award under section 34.

SECTION 14 – FAILURE OR IMPOSSIBILITY TO ACT

• The mandate of an arbitrator shall terminate and he shall be substituted by another arbitrator when he

i. becomes de jure or de facto unable to perform his functions or fails to act without undue
delay due to some other reasons.
ii. withdrew from office, or
iii. the parties agreed to terminate his mandate.
• If the parties are not in agreement and there is controversy regarding an arbitrator, a party may
approach the court for termination of mandate.
• Mere withdrawal of arbitrator from office or his termination due to agreement between parties does
not imply acceptance of validity of any grounds for dismissal under Section 12(3).

SECTION 15 – TERMINATION OF MANDATE AND SUBSTITUTION OF

ARBITRATOR
• In addition to the circumstances given in Section 13 and 14, the mandate of an arbitrator shall also
terminate when he withdraws from office for any reason and due to agreement of the parties.
• When the mandate of an arbitrator is terminated, a substitute arbitrator shall be appointed, following
the same rule applied to appointing the first arbitrator, and the tribunal has discretion to repeat
previously held tribunals.
 • Unless otherwise agreed by the parties, orders made by the tribunal prior to the replacement of the
arbitrator will not be invalid solely due to the change in composition of the tribunal.

CHAPTER IV – JURISDICTION OF ARBITRAL TRIBUNALS

COMPETENCE OF ARBITRAL TRIBUNAL TO RULE ON ITS JURISDICTION

SECTION 16 - COMPETENCE OF ARBITRAL TRIBUNAL TO RULE ON ITS

JURISDICTION.—(1) The arbitral tribunal may rule on its own jurisdiction, including ruling on any
objections with respect to the existence or validity of the arbitration agreement, and for that purpose,—

a) an arbitration clause which forms part of a contract shall be treated as an agreement independent of
the other terms of the contract; and
b) a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the
invalidity of the arbitration clause.
(2) A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of
the statement of defence; however, a party shall not be precluded from raising such a plea merely because
that he has appointed, or participated in the appointment of, an arbitrator.

(3) A plea that the arbitral tribunal is exceeding the scope of its authority shall be raised as soon as the
matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings.

(4) The arbitral tribunal may, in either of the cases referred to in sub-section (2) or sub-section (3), admit a
later plea if it considers the delay justified.

(5) The arbitral tribunal shall decide on a plea referred to in sub-section (2) or sub-section (3) and, where the
arbitral tribunal takes a decision rejecting the plea, continue with the arbitral proceedings and make an
arbitral award.

(6) A party aggrieved by such an arbitral award may make an application for setting aside such an arbitral
award in accordance with section 34.

i. ARBITRAL TRIBUNAL TO RULE ON ITS OWN JURISDICTION

• A party may challenge the jurisdiction of the arbitrator by filing an application under Section 16 on
the following grounds:
a) if an arbitrator has failed to disclose in writing any circumstances likely to give rise to
justifiable doubts as to his independence or impartiality;
b) if an arbitrator, after the time of his appointment and throughout the arbitral proceedings,
failed to disclose to the parties in writing the circumstances which may give rise to justifiable
doubts as to his independence or impartiality;
c) if an arbitrator does not possess the qualifications agreed to by the parties, provided that
challenge on such objection is raised within fifteen days of becoming aware of any
circumstances, send a written statement of the reasons for the challenge;
d) if an arbitrator exceeds the scope of his authority which shall be raised immediately on its
happening; and (5) whether the scope of the award is wider than permitted by the agreement
and/or the reference.
• An arbitral tribunal has been conferred the power to ‘rule on its own jurisdiction’ and if it rules that it
has jurisdiction to entertain a dispute, then aggrieved party can challenge it only after the
proceedings are over and the award has been made.
 ii. TIME FOR RAISING OBJECTIONS TO JURISDICTION
• It is a requirement of law that the respondent must state his objection with regard to jurisdiction of
the arbitrator before filing the statement of defence. However, the respondent may be allowed to
raise objection to the jurisdiction of the arbitrator even subsequent to the filing of the defence
statement, provided he can show good reasons to the arbitral tribunal for raising such an objection at
a belated stage.

iii. JURISDICTION OF ARBITRAL TRIBUNAL – SCOPE OF

• A tribunal should consider the existence and scope of its jurisdiction. Usually, if there are concerns
about the tribunal's jurisdiction then one of the parties will raise them. Indeed, if the parties fail to
raise objections to jurisdiction in a timely fashion, they may lose their right to do so at a later stage.
Even if neither of the parties raises any objection to jurisdiction, the tribunal may still wish to
consider the position. It will want to be satisfied, for example, that it is a bona fide reference. If there
are specific concerns, for example about whether the particular dispute falls within the scope of the
arbitration clause, the tribunal may want to satisfy itself that it has jurisdiction to proceed.
• The test for determining if the point on which the parties are in a dispute or difference is whether
recourse to the contract by which the parties are bound is necessary. If such recourse to the contract
is necessary, then the matter must come within the scope of the arbitrator's jurisdiction. The
expression ‘in the matter of dispute’ is comprehensive enough to cover all disputes arising out of the
agreement. Thus, claims based on quantum meruit, frustration of contract, non-payment under a
promissory note, as also interest come within the arbitration clause. A claim for damages would be
included in an arbitration clause, but not a claim in tort like damages for libel. Where a contract is
not denied but the terms are in dispute, or where it is said that a contract originally existed but it
became void because of supervening circumstances, and this is denied by the other side, the dispute
is one under the contract.

iv. ARBITRAL TRIBUNAL CANNOT COMMENT WHEN APPOINTMENT MADE BY

CHIEF JUSTICE
• If the appointment of the arbitral tribunal or one of its members has been made by the Chief Justice
or his designate, then such a decision is final and binding on the parties. The Chief Justice or his
designate, must be deemed to have made the appointment after satisfying himself that an arbitration
agreement exists between the parties. A party cannot re-agitate the matter before the arbitral tribunal
since such a tribunal cannot sit over the verdict passed by the court. However, in a case where an
arbitral tribunal has been constituted by the parties themselves without recourse to section 11, the
arbitral tribunal will have the jurisdiction to decide all matters as contemplated by section 16.

v. ARBITRAL TRIBUNAL TO DECIDE WHETHER CLAIMS ARE FILED WITHIN

TIME
• The question whether the claims have been filed within time or not and whether there is accord and
satisfaction between the parties is to be decided by the arbitrator and not by court.
• Eg:- In an application for appointment of arbitrator, the opposite party opposed the application on the
ground that the claim was barred by limitation which was not decided by the court but instead an
arbitrator was appointed. The arbitrator took the view that the court while appointing him must have
turned down the plea of limitation and proceeded to make the award. Held, that the arbitrator had no
reason to assume that since the court had made the reference, the plea must have been overruled. The
plea should have been treated as one of the matters referred to arbitration and decided by him. 39

vi. ARBITRAL TRIBUNAL NOT TO EXCEED AUTHORITY

• A claimant may submit a large number of claims before the arbitrator. It is the duty of the arbitrator
to determine whether the disputes fall within its authority to adjudicate or whether it is barred by the
terms of the agreement entered into between the parties. If the parties have consciously kept certain
types of claims from being adjudicated in arbitration, then the arbitrator cannot assume to itself the
authority to adjudicate on such claims. An arbitrator derives his authority from the agreement and
since he is a creature of the agreement, he cannot ignore the provisions of the agreement. Otherwise
also, as per section 28 of the 1996 Act, an arbitrator has to decide the disputes in accordance with the
terms of the agreement.

vii. DISPUTE NOT COVERED BY ARBITRATION CLAUSE – NOT ARBITRABLE

• If an agreement entered into between the parties excludes certain categories of disputes from being
adjudicated upon in arbitration, then an arbitral tribunal should not assume jurisdiction to entertain
such excepted matters. The question whether a claim is within the purview of the arbitration clause
or not is to be decided by the arbitrators. Great care should be taken by the arbitrators in exercising
their verdict because any decision given by them cannot be challenged by either party till the
conclusion of the case. Thus, if the verdict given by the arbitrators is erroneous and the award is set
aside due to the said error, then the entire time, money and effort put in by the parties in the
proceedings is rendered futile.

viii. TEST FOR DETERMINING DISPUTES

• The test for determining whether a dispute is one ‘arising out of the contract’ or ‘in connection with
the contract’ is whether recourse to the contract by which both the parties are bound is necessary for
the purpose of determining whether the claim of the party is justified or not. If it is necessary, it must
be held that the matter is within the scope of the arbitration clause and the arbitrators have
jurisdiction to decide the disputes. What has to be determined is whether the disputes involve the
interpretation of the contract or arise thereunder.

ix. EXCEPTED MATTERS—NOT ARBITRABLE

• The arbitrators are bound to decide whether a particular dispute comes within the stipulations of the
contract. The arbitrators cannot enlarge their jurisdiction by stating that if they were to strictly follow
the stipulation, then there would be few disputes referable to arbitration. The parties choose their
terms for arbitration between themselves, and if certain disputes are placed beyond the realm of
arbitration, then the arbitrators must accept the wisdom of the parties which choose to contract in
such a manner.

x. PLEA OF ACCORD AND SATISFACTION

• A party cannot be compelled to give a ‘no-claim certificate’ upon the demand of the other party to
the contract. Practically, however, it is seen that on completion of works, the employer often insists
that the contractor or vendor should give such a certificate. In such a situation, the party is in a
dilemma – if it gives the certificate, it forfeits its right to make any further claims, however, if it does
not do so, then the final payment is withheld. Faced with such a situation, contractors and vendors
often give a ‘no-claim certificate’ as demanded by the employer. The law comes to the aid of such
parties and it has been held that such certificates must be deemed to have been given under duress or
coercion.

xi. CHALLENGING VALIDITY OF AGREEMENT

• A plea that there is no arbitration agreement between the parties has to be raised before the arbitral
tribunal. If one party to the alleged contract is contending that the contract is void ab initio, the
 arbitration clause cannot operate, for on this view, the clause itself also is void. When a contract is
invalid, every part of it, including the clause as to arbitration contained therein, must also be invalid.

xii. CHALLENGING EXISTENCE OF ARBITRATION AGREEMENT

• Whether or not an arbitration clause exists between the parties can be adjudicated upon by the
arbitral tribunal under section 16 of the 1996 Act.
• If such a dispute is agitated in an application seeking appointment of an arbitrator under section 11 of
the Act, it is the bounden duty of the Chief Justice or his designate to first decide this issue before
making a reference to arbitration.

xiii. AWARD ON INVALID REFERENCE

• Where the parties are not ad idem (in agreement) about the dispute to be decided by the arbitrator,
there is no valid arbitration agreement. If the agreement of reference is bad for indefiniteness and
uncertainty as to the exact dispute referred to arbitration, the award is bad.

xiv. PARTY CONTINUING UNDER PROTEST

• If a party voluntarily takes part in the arbitration proceedings, it cannot be heard to say at a later
point of time that the tribunal had no jurisdiction to proceed with the reference. If for some reason, a
party genuinely feels that either the entire arbitral process is invalid or that certain disputes referred
to the tribunal are beyond its jurisdiction, it should immediately protest in writing and request the
arbitral tribunal to desist from proceeding with the matter. If, however, the arbitral tribunal rejects
the request, the aggrieved party ought to record the fact that it is proceeding further with the
arbitration matter only under protest and without prejudice to its contention that the arbitral tribunal
lacks jurisdiction.

xv. WAIVER OF RIGHT TO OBJECT

• A party to an arbitration agreement must not remain silent in case it entertains some justifiable
doubts about the jurisdiction of the arbitral tribunal because failure to raise an objection at the proper
time would amount to waiver of its right to object. When an objection is not taken at an appropriate
stage of the proceedings under section 16, then it cannot later be taken before the court to assail the
award under section 34 of the 1996 Act.
• There is probably no limit to the types of irregularity which can be waived. The following may be
taken as illustrative of the types of irregularity which may be waived, as well as the ways in which
waiver may take place: (1) Partiality on the part of the arbitrator, (2) Arbitrator acting as advocate
before disagreement, (3) Failing to examine witnesses on oath, (4) Choosing an umpire (now third
arbitrator) by lot, (5) Proceeding without hearing evidence or argument. (6) Taking evidence in the
absence of the other party.
• However, a distinction must be drawn between mere irregularities of procedure and matters affecting
the jurisdiction of the arbitrator. Irregularities of procedure can be waived; but the jurisdiction of the
arbitrator must always depend on an agreement by the parties to abide by his award.

xvi. CLAIMS AND COUNTER CLAIMS

• Non consideration of counter claims of a party is judicial misconduct and the award has to remitted
back to the arbitrator for reconsideration. When the arbitrator is adjudicating the claims he must also
entertain the counter claims, if any. Counter claims need not be separately referred to the arbitrator to
give him jurisdiction to entertain them. If the arbitration clause provides for reference of all claims to
the arbitrator, then the arbitrator does not exceed his jurisdiction by entertaining the counter claims
of a party. An arbitrator is competent to pass a separate award if the counter claim is the subject-
 matter of a separate reference. Where the arbitrator did not at all consider the counter claim and kept
the same for consideration subsequently while making award in respect of the claims filed by a party,
such an award is not sustainable in law.

xvii. CLAIM FOR ADDITIONAL WORK

• The arbitrator has jurisdiction to decide matters regarding the additional work, as in deciding those
matters, disputes and questions arising out of the contract, may have to be considered and decided by
him. When the arbitrator on the interpretation of the agreement and the tender items, considered the
nature of the work and found there is extra work not covered in the tender items, it is not possible for
the court to interfere with the same. However, if the rate awarded was unreasonable, the case would
be different. Where an entire dispute has been referred to the arbitrator, it is open to him to allow
claims for additional works.
• Eg:- The appellant had awarded a contract to the respondent for the construction of a Power House.
Before undertaking the work, the appellant directed the respondent to shift the site of power house
site by 55 meters. The respondent claimed extra amount for excavation of the pit. The appellant
pleaded that the item of excavation was fully covered and provided for in the contract. Held that the
arbitrator was justified in rejecting the claim of the respondent.

xviii. APPEAL AGAINST INTERIM ORDER OF ARBITRAL TRIBUNAL

• An order of the arbitral tribunal that it has jurisdiction to decide upon the claims before them, cannot
be termed as an interim award. Before an order of the arbitrators may be held to be an interim award,
it must decide a part of the claim or an issue of liability. If the order of the arbitrators does not decide
the claim or even any part of the claim of any issue of liability, it cannot be held to be an interim
award, and thus, no appeal lies against such an order.

xix. WRIT NOT MAINTAINABLE AGAINST ORDER OF ARBITRAL TRIBUNAL

• In view of the provisions of sub-sections (5) and (6) of section 16 read with sections 13 and 37, it is
clear that the arbitral tribunal has power to decide about its own jurisdiction and such decision is not
amenable to writ jurisdiction. The aggrieved party has the right to challenge the order under section
34(6), but only after the arbitration proceedings are over and the arbitral award has been delivered.
• As per scheme of the Act, arbitration has to proceed without any hindrance or obstructions of the
courts. Sections 12, 13 and 16 are of the clear view that spokes should not be put in passing of
award. Under section 34, the aggrieved party has an avenue for ventilating its grievances against the
award, including any order that might have been passed by the tribunal under section 16. The object
of minimising judicial intervention while the matter is under adjudication will certainly be defeated if
the High Court could be approached by writ petitions against every order by the arbitral tribunal.

INTERIM MEASURES ORDERED BY ARBITRAL TRIBUNAL

SECTION 17 of the Act deals with INTERIM MEASURES ORDERED BY ARBITRAL

TRIBUNAL (added by 2015 Amendment Act, the same as Section 9 Interim measures by Court) Under
this Section, a party may, during the arbitral proceedings or at any time after the making of the arbitral
award but before it is enforced in accordance with section 36, apply to the arbitral tribunal to seek interim
measures for specified purposes:
 i. For the appointment of a guardian for a minor or person of unsound mind for the purposes of
arbitral proceedings
ii. For the preservation, interim custody or sale of any goods which are the subject matter of the
arbitration agreement.
iii. For securing amount in dispute in the arbitration.
iv. The detention, preservation or inspection of any property or thing which is the subject-matter of
the dispute in arbitration, or as to which any question may arise therein and authorising for any of
the aforesaid purposes any person to enter upon any land or building in the possession of any
party, or authorising any samples to be taken, or any observation to be made, or experiment to be
tried, which may be necessary or expedient for the purpose of obtaining full information or
evidence;
v. Interim injunction or the appointment of a receiver
vi. Any other interim measure that the tribunal may find to be necessary or convenient.
• Interim orders issued by the arbitral tribunal will be deemed to be/have the same force as an order of
a Court and shall be enforceable under CPC, 1908.

CHAPTER V - CONDUCT OF ARBITRAL PROCEEDINGS

SECTION 18 – EQUAL TREATMENT OF PARTIES – “The parties shall be treated with

equality and each party shall be given a full opportunity to present his case.”

i. “equal treatment of parties” –

Principles of natural justice and fair play must be followed while conducting arbitral proceedings. SC –
“Once the arbitrator enters an arbitration, he must not be guilty of any act which can be construed as
indicative of partiality or unfairness.”

ii. Arbitrators must render equal opportunity to the parties

Ex parte arbitral proceedings are not desirable and the arbitrator, playing the role of a judge, must uphold
principles of natural justice.

iii. A party should not be examined in the absence of another

Not permissible to examine one party in the absence of another in law of arbitration to ensure there is no ex
arte arbitration and that the fundamental principle of natural justice is followed i.e. no order should be
passed without hearing both parties in a fair manner.

iv. Section 18 reflects principle which are well established by Constitutional law
• No distinction between quasi-judicial function and administrative function for purpose of application
of rules of natural justice.
• Article 14 – Right to equality – basic law of the land, concept of equality is enshrined in the
preamble and rule of natural justice – protection against arbitrariness – Maneka Gandhi v. Union of
India: “...Equality is a dynamic concept with many aspects and dimensions and it cannot be
imprisoned within traditional and doctrinaire limits.” – Thus, to be applied in arbitration proceedings
as well.
• – D.K. Yadav v. J.M.A. Industries: SC held that termination of service of worker without giving
reasonable opportunity of hearing is unjust, arbitrary and illegal. Substantive or procedural laws and
actions taken under them will have to pass the test of Article 14.
• Equality before law and equal protection of law are essential ingredients of natural justice and the
arbitral tribunal is under statutory obligation to abide by these principles.
 v. Arbitral award must be based on evidence :-
Municipal Corporation v. Jagannath – SC ruled that arbitral tribunal has to rely on evidence/documents
submitted before them by the parties, and cannot proceed on the basis of personal knowledge. Doctrine of
Natural Justice pervades procedural law of arbitration.

SECTION 19 - DETERMINATION OF RULES OF PROCEDURE.—(1) The arbitral

tribunal shall not be bound by the Code of Civil Procedure, 1908 (5 of 1908) or the Indian Evidence Act,
1872 (1 of 1872).

(2) Subject to this Part, the parties are free to agree on the procedure to be followed by the arbitral tribunal
in conducting its proceedings.

(3) Failing any agreement referred to in sub-section (2), the arbitral tribunal may, subject to this Part,
conduct the proceedings in the manner it considers appropriate.

(4) The power of the arbitral tribunal under sub-section (3) includes the power to determine the
admissibility, relevance, materiality and weight of any evidence.

It is a well settled legal position that an arbitrator is not bound by the technical rules of procedure which the
courts are required to follow and thus, arbitral tribunal is not bound by procedural laws such as Code of
Civil Procedure, 1908 and Indian Evidence Cat, 1872.

i. Arbitral proceedings should be governed by the principle of natural justice

Modi Industries Ltd. v. UoI – Delhi HC observed that the arbitrator, being in a Judge’s position, need not
necessarily be a person who is familiar with procedural laws but has the faith of the parties entrusted in him
and has to follow such a procedure as a reasonable man would in deciding the disputes impartially. Unless
there is a special procedure agreed upon by the parties, the arbitrator’s procedure should be governed by
principles of natural justice.

ii. Recital “in whatever manner” does not constitute deviation from the principles of natural
justice
If the arbitration agreement includes the phrase “in whatever manner he thinks fit”, it does not mean that the
arbitrator has been absolved from following the principles of natural justice. An arbitrator constitutes a
quasi-judicial tribunal and thus it is implied that the appointed arbitrator will follow the law of the land. [SC
in Dewan Singh v. Champat Singh]

iii. Condition precedent must be performed by the arbitrator before making award
Chandmul Mulchand v. S.C. Nordlinger - the arbitration agreement provided for survey however, the
arbitrator proceeded without conducting the survey and he made the arbitral award, the Calcutta High Court
held that arbitral award is invalid; made without jurisdiction.

iv. Concrete principle of contractual justice must prevail over vague principle of natural justice
D.L. Miller & Co. Ltd. v. Daluran Goganmull – “..enthusiasm for natural justice must always be tempered
with due and proper regard for contractual justice to which the parties agree….Where the contract of
arbitration itself prescribes a private procedure of its own, then so long as such agreed private procedure is
not against the laws and the statutes of the land, then such agreed procedure must prevail over the notions
and principles of natural justice."
Ordinarily, the arbitrator is expected to follow the principle of natural justice while conducting the
arbitration proceedings, unless a special procedure is prescribed' by the parties in the contract itself, in such
situation the parties can even select a procedure contrary to the principles of natural justice.

v. Absence of a written notice to a party—Whether invalidates the arbitration proceedings

The mere absence of formal notice to the parties will not invalidate an award, if the arbitrator gave the
parties a reasonable opportunity of being heard. At the time of delivery of the arbitral award, the intentional
absence of the defendant does not vitiate the arbitral award.

Thademal v. Menghraj - it was held that the absence of a written notice to a party does not therefore
necessarily invalidate the proceedings. The court observed that a party who fails to appear in spite of having
actual knowledge of the proceedings or in spite of verbal notice of the proceedings, such party is not entitled
to challenge the validity of the arbitral award on the ground of non-service of formal notice.

vi. Power of the arbitrator regarding admissibility of evidence

Generally, the provisions of Indian Evidence ACT of 1872 do not apply to arbitration proceedings, but the
arbitrator has to follow the basic rules of evidence in order to comply with principles of natural justice and
fair play.

While determining the admissibility or inadmissibility of evidence tendered by the parties the arbitrator must
act honestly and impartially and if he determines erroneously, it may amount to legal misconduct on the part
of the arbitrator. The arbitrator is under obligation to hear all evidence tendered by the parties and he has to
decide whether the evidences tendered are relevant and admissible or irrelevant and inadmissible. However,
his decision should be judicially correct.

It is settled law of arbitration that the rules of procedure consented and agreed by the parties has to be
followed in the arbitral proceedings. Wherein both the parties have adduced their evidence and requested the
arbitrator to take them on record and in absence of protest by either party, the presumption would be drawn
that the evidence taken is with the due consent of the parties.

It is a settled legal position that the documentary evidence is more reliable than oral evidence. Once the
terms of contract have been reduced into writing as required by law, [As provided in Section 7(3) of the
Arbitration and Conciliation Act], no oral evidence is admitted regarding the terms of contract.

vii. Whether "hearsay evidence" may be admitted in the arbitral proceedings

Though, the arbitrator has an absolute discretion under the arbitration agreement, and is not bound by rules
in the Indian Evidence Act of 1872, admissibility of hearsay evidence has not generally been recognised in
arbitration proceedings (except in certain contingencies).

viii. Arbitral Tribunal—Whether have the status of a Civil Court

Section 19(1) exempts arbitral tribunal from being bound by rules of procedure in CPC, 1908 and thus, the
tribunal is not a court. The Arbitration and Conciliation act of 1996 elevates an arbitral award to the level of
a decree for execution but it does not elevate the Arbitral tribunal to the status of a Civil Court.

SECTION 20 – PLACE OF ARBITRATION:

• The parties are free to agree on the place of arbitration and in the absence of such an agreement, the
arbitral tribunal shall make the decision, taking into consideration the circumstances of the case and
convenience of the parties.
SECTION 21 – COMMENCEMENT OF ARBITRAL PROCEEDINGS:
• Unless otherwise agreed by the parties, the arbitral proceedings will commence on the date the
respondent receives the request for that dispute to be referred to arbitration.

SECTION 22 – LANGUAGE
• The parties are free to agree upon the language/languages used in the proceedings and in the absence
of such an agreement, the arbitral tribunal shall determine the same.
• Unless otherwise specified, the agreed upon/selected language will apply to all written statements by
parties, hearings and arbitral awards or decisions or other communications by the tribunal. The
arbitral tribunal may also order documentary evidence to be accompanied by a translation into
selected language/languages.

SECTION 23 – STATEMENTS OF CLAIM AND DEFENCE

• Within the time period agreed upon by the parties or determined by the tribunal, the claimant should
submit the facts supporting his claim, points of issue and relief sought, while the respondent should
state his defence in respect of these points. The parties may submit documents or other evidence to
back up their points. The respondent may also submit a counter-claim or plead a set-off (added by
2015 Amendment) if such claims fall within the scope of the arbitration agreement.
• Unless otherwise agreed, the parties may also amend or supplement claims during the proceedings as
long as the tribunal does not consider it to be inappropriate.

SECTION 24 – HEARINGS AND WRITTEN PROCEEDINGS

• Unless otherwise agreed by the parties, the arbitral tribunal decides whether to conduct proceedings
on the basis of documents and other materials or to conduct oral hearings for arguments and
presentation of evidence.
• In case of oral hearings, the parties should be given sufficient advance notice of such
hearings/meetings of the arbitral tribunal. The tribunal should also, as far as possible, conduct the
presentations and arguments on a day to day basis without granting any adjournments without
sufficient cause and imposing fines on parties seeking adjournment without sufficient cause.
• All statement, documents or other information submitted to and all applications made to the tribunal
by ne party should be communicated to the other party. The tribunal shall also share with the parties
any expert report or evidentiary document they’ve relied on while making the decision.

SECTION 25 – DEFAULT OF A PARTY

• Unless otherwise agreed by the parties:
i. The arbitral tribunal shall terminate the proceedings if the claimant fails to communicate his
statement of claim in accordance with Section 23, without sufficient cause.
ii. If the respondent fails to communicate his statement of defence in accordance with Section 23,
without sufficient cause, the tribunal has the discretion to treat the right of the respondent to file his
statement of defence as having been forfeited but shall continue with proceedings without treating
the failure as an admission of guilt.
 iii. If a party fails to appear at an oral haring or to produce documentary evidence, without
sufficient cause, the tribunal may continue proceedings and make the arbitral award on the
basis of evidence available before it.

SECTION 26 – EXPERT APPOINTED BY ARBITRAL TRIBUNAL

• Unless otherwise agreed by the parties:
i. The arbitral tribunal may appoint one or more experts to report to it on specific issues and require
the parties to give the experts access to any relevant information, documents and property for his
inspection.
ii. Upon the request of a party or if the arbitral tribunal deems it necessary, the expert shall, after
submitting his written/oral report, participate in an oral hearing where the parties may question
him and present expert witnesses to testify on specific points.
iii. The expert shall give parties, upon their requesting, access to all documents, goods and other
property in his possession which he was provided with in the preparation of his report.

SECTION 27 – COURT ASSISTANCE IN TAKING EVIDENCE

• The arbitral tribunal, or a party with the approval of the tribunal, may apply to the Court for
assistance in taking evidence through an application specifying details (i) like names and addresses
of the parties and arbitrators, (ii) general nature of claim and relief sought, and (iii) details about
evidence to be obtained like the names and addresses of persons to be heard as witnesses, description
of document/property to be produce or inspected.
• The Court may order execution of the request by ordering the evidence to be provided directly to the
tribunal. The Court may apply the same process as in suits tried before it and persons failing to abide
by the process shall be subject to the like disadvantages, penalties and punishments by order of the
Court on the representation of the arbitral tribunal as they would incur for the like offences in suits
tried before the Court.

CHAPTER VI - MAKING OF ARBITRAL AWARD AND TERMINATION OF

PROCEEDINGS

SECTION 28 - RULES APPLICABLE TO SUBSTANCE OF DISPUTE

• When the arbitration is conducted in India and it is not a case of International Commercial
Arbitration (ICA), the tribunal shall apply the substantive law in force in India at the time to settle
the dispute.
• When the arbitration is conducted in India and it is a case of ICA, the arbitral tribunal shall settle the
dispute in accordance with the rule of law agreed upon by the parties. Unless otherwise expressed, it
will be assumed that the parties agreed upon the substantive laws of the given country and not its
conflict of laws rules (Private International Law, explicitly not part of International law). If the
parties fail to agree upon a legal system, the tribunal shall apply the rules of law it deems fit for the
specific dispute.
• The arbitral tribunal shall decide ex aequo et bono (“according to the right and good”) only if the
parties have expressly authorised it to do so.
,
SECTION 29 - DECISION MAKING BY PANEL OF ARBITRATORS
• Unless otherwise agreed by the parties, in all arbitral proceedings with more than one arbitrator, the
decision shall be made by a majority of the arbitral tribunal members.

SECTION 29A - TIME LIMIT FOR ARBITRAL AWARD (added by 2015 Amendment)
• The award shall be made within 12 months from the date of appointment of the
arbitrator/arbitrators.
• If the award is made within 6 months, the arbitral tribunal shall receive additional fee amount as
agreed upon by the parties.
• The parties may, by consent of all, extend the 12 month period for a further of maximum six
months.
• If the award is not made within 12 months or the extended period, the mandate of the arbitrator shall
terminate unless the Court had extended the period even further after finding reasons for delay
attributable to the tribunal.
• The Court may extend the period only upon application by a party based on sufficient cause. The
Court may also impose new terms and conditions while providing the extension. The Court may
substitute one or all of the arbitrators and in such a case the proceedings will resume as normal and
the new arbitrator shall be assumed to be up to speed of the proceedings so far.

SECTION 29B - FAST TRACK PROCEDURE (added by 2015 Amendment)

• The parties may, before or at the time of appointment of arbitral tribunal, agree in writing to have the
dispute resolved by fast track procedure (i.e. within 6 months). They may agree upon and choose a
sole arbitrator.

• The tribunal shall decide the matter on the basis of written pleadings, document and submission filed
by the parties without any oral hearing. Oral hearing shall be held only if all the parties request it or
the tribunal deems it necessary to clarify issues.

• The award is to be made within 6 months of appointing the arbitrator/arbitrators and failure to do so
will lead to application of provisions of Section 29A. The fees and mode of payment to the
arbitrators shall be agreed between the parties and he arbitrators.

SECTION 30 - SETTLEMENT
• With the agreement of parties, the arbitral tribunal may use mediation/conciliation/other procedures
during the proceedings to settle the dispute. If the parties settle the dispute during the proceedings,
the tribunal shall terminate the proceedings and record the settlement in the form of an arbitral award
on agreed terms.
• An arbitral award on agreed terms shall be made in accordance with Section 31 and shall state that it
is an arbitral award and it will have the same effect as any other arbitral award.

SECTION 31 - FORM AND CONTENTS OF ARBITRAL AWARD

 • The arbitral award shall be in writing and signed by the members of the arbitral tribunal. In case of
more than one arbitrator, signatures of a majority of the members is enough, given that the reason for
any omitted signature is given.
• The tribunal shall state reasons for its award unless it is an award under Section 30 or the parties
have agreed that no reasons are to be given.
• The arbitral award from shall state the date and place of arbitration and signed copy shall be
delivered to each party.
• The arbitral tribunal may also make interim arbitral awards during the proceedings on any matter
with respect to which it may make a final arbitral award.
• In arbitral awards ordering payment of money, unless otherwise agreed by the parties, an interest rate
2% higher than current rate of interest prevalent at the time shall be applied on the amount from the
date of award to date of payment.

SECTION 31A - REGIME FOR COSTS

• The Court or tribunal has discretion to determine whether any costs are payable by one party to
another and if yes, the amount and date of payment. These “costs” may include legal fees, fees of
arbitrators, witnesses, etc.
• In cases where costs are found to be payable, the general rule is that the unsuccessful party shall be
ordered to pay the costs of the successful party. The Court/Tribunal has to take into consideration
factors like conduct of the parties, who won, frivolous claims leading to delay in proceedings,
reasonable offers to settle, etc. while deciding the amount.

SECTION 32 - TERMINATION OF PROCEEDINGS

• Arbitral proceedings shall be terminated by the final arbitral award or by an order of the arbitral
tribunal for termination of the proceedings because:

i. The claimant withdraws his claim, unless the respondent objects and the tribunal finds a
legitimate interest on the part of the respondent to obtain a final settlement of the dispute.
ii. The parties agreed to terminate the proceedings.
iii. The tribunal fins continuation of proceedings to be unnecessary or impossible.

• The mandate of the arbitral tribunal shall also terminate with the termination of the arbitral
proceedings.

SECTION 33 - CORRECTION AND INTERPRETATION OF AWARD;

ADDITIONAL AWARD
• Within 30 days from receipt of arbitral award, unless another time period has been agreed upon by
the parties, a party may, with notice to the other party, request the tribunal to correct any clerical or
typographical errors or any other errors of a similar nature occurring in the award. They may also
request the tribunal to give an interpretation of a specific point of the award.
• If the tribunal considers the request to be valid, it shall make the necessary changes or give the
interpretations within 30 days from receipt of request.
 • If there is a justified cause, the tribunal will consider requests till within 60 days from receipt of the
award. The tribunal may also extend the time period within which it will make the correction, give
the interpretation, etc.
• Section 31 is applicable to awards under this section.

CHAPTER VII - RECOURSE AGAINST ARBITRAL AWARD

SECTION 34 - APPLICATION FOR SETTING ASIDE ARBITRAL AWARD

• Recourse to a Court against an arbitral award may be made only through an application for setting
aside the award in accordance with Sections 34(2) and 34(3).
• An arbitral award may be set aside by the Court only
a) if the party furnishes proof that:
i. They were under some incapacity
ii. Arbitration agreement is not valid
iii. They did not receive proper notice regarding appointment of arbitrator, and other arbitral
proceedings.
iv. Arbitral award went beyond scope of submission to arbitration.
v. The composition of arbitral tribunal was not in accordance with agreement of parties.
b) If the Court finds that:
i. The subject matter of the dispute is not capable of being settled by arbitration under the law
in force at the time.
ii. The award is in conflict with public policy of India. [i.e. in conflict with principles of
morality or justice, in contravention of fundamental policies of Indian law, making of award
was influenced by fraud or corruption]
• Application for setting aside of the award has to be made before 3 months from date on which the
party received the arbitral award or from the date on which request under Section 33 (Correction and
interpretation of award; additional award) was disposed of by the tribunal. If there is sufficient cause,
the Court may entertain applications for a further 30 days, not more.
• After receiving the application, the Court may, where it’s appropriate and requested by a party,
adjourn proceedings for a period of time to give the arbitral tribunal an opportunity to resume
proceedings or take other actions to eliminate the grounds on which the claim for setting aside the
arbitral award has been filed.
• Applications under this section should be filed only after issuing a prior notice to the other party and
such applications should be disposed of expeditiously within a period of one year from the date on
which the notice was issued to the other party.

CHAPTER VIII - FINALITY AND ENFORCEMENT OF ARBITRAL AWARDS

SECTION 35 - FINALITY OF ARBITRAL AWARDS.—Subject to this Part an arbitral award

shall be final and binding on the parties and persons claiming under them respectively.

SECTION 36 – ENFORCEMENT (added by 2015 Amendment Act)

• Arbitral awards shall be enforced in accordance with provisions of CPC, 1908 as if it were a decree
of the Court, after the time of making an application to set aside the award under Section 34 has
 expired. Just mere application under Section 34 won’t render the award unenforceable; the Court has
to grant a stay order on operation of the said award with reasons for the stay provided in writing.

CHAPTER IX - APPEALS

SECTION 37 - APPEALABLE ORDERS

• Appeals shall lie to a court from an order of the arbitral tribunal on the following grounds:
i. Accepting the plea referred to in sub-sections (2) and (3) of Section 16. [(2) – Arbitral Tribunal
doesn’t have jurisdiction, (3) – Arbitral tribunal exceeding scope of authority]
ii. Granting/refusing to grant interim measure under Section 17.
• Appeals shall lie to an Appellate court from original decree of the Court passing the following
orders:
i. Refusing to refer the parties to arbitration under section 8;
ii. Granting or refusing to grant any measure under section 9 (interim measures by Court);
iii. Setting aside or refusing to set aside an arbitral award under section 34.
• No second appeal shall lie from an order passed in appeal under this section, but nothing in this
section shall affect or take away any right to appeal to the Supreme Court.

CHAPTER X – MISCELLANEOUS (SECTIONS 38-43)

PART II - ENFORCEMENT OF CERTAIN FOREIGN AWARDS

CHAPTER I - NEW YORK CONVENTION AWARDS (SECTIONS 44-52)

CHAPTER II – GENEVA CONVENTION AWARDS (SECTIONS 53-60)

PART III –CONCILIATION (SECTIONS 61-81)

PART IV – SUPPLEMENTARY PROVISIONS (SECTION 82-86)

Module VI: ASSESMENT OF VARIOUS ADR METHODS IN A COMPARITIVE

PERSPECTIVE
NEGOTIATION STRATEGIES

1. CONCESSIONAL: It is a soft approach adopted by a negotiator who is not a rigid person in nature
and have the belief that by following concessional method the solution of problem would come and
via very next step.
 2. PROBLEM SOLVING: In this approach the negotiator focused on tools capable of solving the
problem at the threshold.
3. DISTRIBUTIVE: It is a method in which the negotiator makes sure that deadlock is distributed
according to the respective position of the parties. More or less it ensures involvement of the parties.
4. AVOIDANCE: It is regarded as a negative approach or the part of the negotiator and this approach
is adopted by the negotiator/parties who are not prepared to undertake risk. As a result in this
approach issues are not at all addressed.
5. POSITION: This approach is also called ‘positional bargaining’. In this process, the parties make
extreme claim rather coerce another so that he gets more benefits than his opponent at the outcome
of negotiation.

MODULE VII: RECENT JUDICIAL TRENDS

INSTITUTIONAL V. ADHOC ADR PROCESS

• INSTITUTIONAL ARBITRATION (should be the same for other ADR methods too)
- Institutional arbitration is one in which a specialised institution with a permanent character
intervenes and assumes the functions of aiding and administering the arbitral process, as provided by
the rules of the institution. It does not mean that the institution conducts the arbitration; that is done
by the arbitrators only, just that the rules of the institution will apply.
- In most cases, the contract between the parties will contain an arbitration clause designating an
institution as the arbitration administrator.
- Some of the prominent institutions which conduct institutional arbitration in India are: Delhi
International Arbitration Centre (DIAC) – New Delhi. Indian Council of Arbitration (ICA) – New
Delhi. Construction Industry Arbitration Council (CIAC)- New Delhi.
- Advantages:
i. Availability of pre-established rules and procedures which assure that arbitration will get off the
ground and proceed to conclusion with dispatch;
ii. One of the advantages of arbitration is that it provides for final & binding determination of the
dispute between the parties. In other words, no review or appeal lies against an arbitral award to
ensure finality. This involves an inherent risk that mistakes committed by the tribunal cannot be
corrected, whereby one party would inevitably suffer. However, some institutional rules provide for
scrutiny of the draft award before the final award is issued and some provide for a review procedure.
iii. Administrative assistance from institutions providing a secretariat or court of arbitration;
iv. Lists of qualified arbitrators, often broken out by fields of expertise;
v. Appointment of arbitrators by the institution should the parties request it;
vi. Physical facilities and support services for arbitrations;
vii. Assistance in encouraging reluctant parties to proceed with arbitration, and
viii. An established format with a proven record.
- Disadvantages:
i. Administrative fees for services and use of facilities may be high in disputes over large amounts,
especially where fees are related to the amount in dispute. For lesser amounts in dispute, institutional
fees may be greater than the amount in controversy;
ii. The institution's bureaucracy may lead to added costs and delays, and
iii. The disputants may be required to respond within unrealistic time frames.
• AD HOC ARBITRATION
- An ad hoc arbitration is one which is not administered by an institution and therefore, the parties are
required to determine all aspects of the arbitration like the number of arbitrators, manner of their
appointment, procedure for conducting the arbitration, etc.
- Parties wishing to include an ad hoc arbitration clause in the underlying contract between them, or
seeking to arrive at terms of arbitration after a dispute has arisen, have the option of negotiating a
complete set of rules, establishing procedures which fit precisely their particular needs. Experience
has shown that this approach can require considerable time, attention and expense without providing
assurance that the terms agreed will address all eventualities.
- Advantages:
i. Flexibility. There are various sets of rules suitable to ad hoc arbitration, of which the UNCITRAL
rules are considered most suitable.
ii. Properly structured ad hoc arbitrations should be cheaper than institutional arbitration and thus,
better suits smaller claims and less affluent parties.
- Disadvantages:
i. There is no opportunity for appeal or review and the parties have to be prepared to suffer for the
mistakes of the arbitrators
ii. May not necessarily be cheaper than institutional arbitration due to several reasons like
administrative costs, miscommunications, etc.
• CONCLUSION
- It is said that the parties are the masters of the arbitration but in institutional arbitration, the
institutions virtually acquire certain powers of the parties' such as appointment of arbitrators, etc. and
are in a position to impose their will upon the parties. This seems to be against the very spirit of
arbitration and one may say that this is not arbitration in the true sense. Though ad hoc arbitration
would then be preferred, it can be argued that in today's modern and complex commercial world, ad
hoc arbitration is suitable only to disputes involving smaller claims and less affluent parties and to
domestic arbitrations, excepting where state parties are involved, for the reasons stated hereinabove.
One may quote in support thereof that “Whatever its merits in a purely domestic situation, ad hoc
arbitration in an international setting frequently frustrates the party seeking to enforce the contract”
since international commercial arbitrations involve complicated legal issues, which parties coming
from different jurisdictions may be unable to deal with.
- In the context of international commercial disputes, one may argue that institutional arbitration is
more suitable, even though apparently it is more expensive, time consuming and rigid than ad hoc
arbitration, keeping in mind the fact that it provides established & updated arbitration rules, support,
supervision & monitoring of the arbitration, review of awards and most importantly, strengthens the
credibility of the awards. In conclusion, it is must be said that it is hard to claim that institutional
arbitration is superior to ad hoc proceedings or vice versa.
- It can therefore, be said of ad hoc arbitration that if the required co-operation is forthcoming and the
parties are conversant with arbitration procedures or the arbitration is conducted by experienced
arbitrators, “the difference between ad hoc and institutional arbitration is like the difference between
a tailor-made suit and one that is bought off-the-peg”. That is to say, ad hoc arbitration is tailored to
the needs of the parties and is more cost effective than institutional arbitration.

COURT ANNEXED MEDIATION/NEGOTIATION AND STATUTORY MEDIATION/

CONCILIATION
Mediation in India can be divided into two categories: court referred mediation and private mediation. Court
referred mediation is a process by which the court refers a dispute to mediation under Section 89 of the
Code of Civil Procedure, 1908 and it is most frequently used to resolve matrimonial disputes, divorce in
particular. Private mediation involves the parties coming together and agreeing to resolve their dispute
through mediation using the services of a qualified mediator. Anyone from individuals, business partners,
and appointees from the government sector can choose to resolve disputes using private mediation. Since
mediation is a method of alternate dispute resolution it means that the traditional process of litigation which
is usually a long-drawn and costly struggle, need not be endured by parties and this is the most appealing
quality of ADR.

Since courts in India are already burdened by a huge backlog of cases, there are many statutory provisions
that make mediation a compulsory prerequisite to filing of a suit in court. Some of these statutes are:

1. Industrial Disputes Act, 1947 – Section 4 of the Act assigns conciliators the responsibility to
mediate and settle industrial disputes and prescribes the procedure to be followed in great detail.
2. Code of Civil Procedure, 1908 – The Code was amended in 2002 which provided for the reference
of all pending court cases to mediation. The amendment also prescribes mediation for all family and
personal matters due to their sensitive nature. (Section 89)
3. Companies Act, 2013 – Section 442 provides for the referral of disputes to mediation by the
National Company Law Tribunal and the Appellate Tribunal.
4. Micro, Small and Medium Enterprises Development Act, 2006 – The Act mandates mediation
and conciliation when disputes arise.
5. Hindu Marriage Act, 1955 and Special Marriage Act, 1954 – As the courts have stated before,
disputes relating to marriage and divorce are more likely to be referred to and settled by mediation so
the provisions under these Acts are in consonance with the same.
6. Real Estate (Regulation and Development) Act, 2016 – Section 32(g) provides for the amicable
settlement of disputes through an established dispute resolution forum.
7. Commercial Courts Act, 2015 – The new amendment made to the Act in 2018 provide for
mandatory mediation between parties before filing of a suit. The amendment allows litigation only if
the arties meaningfully engage in mediation proceedings and still fail to resolve the matter.
8. Consumer Protection Act, 2019 – The new rendition of the Consumer Protection Act dedicates an
entire Chapter (Chapter 5) to the resolution of disputes through mediation first before approaching a
consumer redressal agency.
Even with these provisions for mediation, it is still an option not often preferred by parties due to the lack of
recognition and the absence of a uniform structure to execute the resolution agreement and make it
enforceable by the legislature and the judiciary.

COURT ANNEXED MEDIATION:

In COURT ANNEXED MEDIATION the mediation services are provided by the court as a part and
parcel of the same judicial system as against COURT REFERRED MEDIATION, wherein the court
merely refers the matter to a mediator. The advantage of court annexed mediation is that the judges, lawyers
and litigants become participants therein, thereby giving to them a feeling that negotiated settlement is
achieved by all the three actors in justice delivery system. When a judge refers a case to the court annexed
mediation service, keeping overall supervision on the process, no one would feel that the system parts with
the case. The Judge would feel that he refers the case to a mediator within the system. The same lawyers
who appear in a case retain their briefs and continue to represent their clients before the mediators within the
same set-up. The litigants feel that they are given an opportunity to 4 play their own participatory role in the
resolution of disputes. This will also give a larger public acceptance for the process as the same time tested
court system, which has acquired public confidence because of integrity and impartiality, retains its control
and provides an additional service. The court is the parental institution for resolution of disputes and if ADR
models are directed under court’s supervision, at least in those cases which are referred through courts, the
effort of dispensing justice can become more coordinated. ADR services under the control, guidance and
supervision of the court would have more authenticity and smooth acceptance. It would ensure the feeling
that mediation is complimentary and not competitive with the court system. The system will get a positive
and willing support from the judges who will accept mediators as an integral part of the system. If reference
to mediation is made by the judge to the court annexed mediation services, the mediation process will
become more expeditious and harmonized. It will also facilitate the movement of the case between the court
and the mediator faster and purposeful. Again, it will facilitate reference of some issues to mediation leaving
others for trial in appropriate cases. Court annexed mediation will give a feeling that court’s own interest in
reducing its caseload to manageable level is furthered by mediation and therefore reference to mediation will
be a willing reference. Court annexed mediation will thus provide additional tool by the same system
providing continuity to the process, and above all, court will remain a central institution for the system. This
will also establish a public-private partnership between the court and the community. A popular feeling that
court works hand-in-hand with mediation facility will produce satisfactory and faster settlements.

RECENT DEVELOPMENTS

1. THE ARBITRATION AND CONCILIATION (AMENDMENT) ACT, 2015

Salient features:

1. The term Court that was defined in section 2 of the Act was amended and it only refers to High Court
in case related to International Commercial Arbitration.

2. The provisions that related to grant of interim relief (Sec. 9), assistance by court in taking evidence
(Sec. 27) and provisions relating to Appeals (specifically, clause (a) of sub-section (1) and sub-
section (3) of Section 37) would now be applicable in matters relating to cases of international
commercial arbitrations also.

3. The provisions that related to setting aside of the arbitration awards on the ground that it was against
the public policy has been amended to include

(i) in contradiction with the policies related to fundamental to the Indian law.

(ii) in contravention with the general principle of justice and morality in addition to the other grounds
that are already mentioned in the statute.

4. The amendment of 2015 imposed a time limit in a strict sense for concluding the process of
arbitration. The time period was fixed at 12 months which could be extended for an extra time period
of 6 months for which the arbitration tribunal will take extra fees for the purpose. The deduction in
fees of the tribunal for the delay would be at a rate of five percent for each month of delay.

5. The parties who choose arbitration for dispute resolution also have the option of proceeding in a fast
track manner in which the matter is to be concluded within 6 months.

6. The amendment provided that the matters relating to challenges to the arbitral award to be dealt with
within a period of 1 year.
 7. New provision relating to cost regime was introduced by section 31A of the Act of 2015 ,according
to which the court or the arbitral tribunal could determine costs on principals of the party that lost
and may make different order while recording reasons for doing so in writing.

8. Section 36 in the 1996 Act has been amended and a new Section 36 has been inserted by which if
time to make an application for setting aside arbitrational award has passed, then such award would
be enforced taking in considerations the provisions of the Code of Civil Procedure, 1908, in a
manner as if it was a decree of the court.

2. THE ARBITRATION AND CONCILIATION (AMENDMENT) ACT, 2019

Major changes brought about:

i. Arbitral Institutions: The Act of 2019 has defined the Arbitral Institutions. Arbitral Institutions are
defined as, "an arbitral institution designated by the Supreme Court or a High Court.
ii. Fees for Arbitrators: The 2019 Act directs parties to follow Schedule IV of this Act. This is for
Adhoc arbitrations if in case the parties do not have a decided arbitration schedule for a fee. The Act
recognizes party autonomy regarding the fixing of fees of arbitrators together by both parties.
iii. ACI or Arbitration Council of India: The act of 2019 establishes a body that is independent and is
called the Arbitration Council of India (ACI) for the conciliation, promotion of arbitration,
mediation, and also other alternative dispute redressal mechanisms. The ACI will contain a
Chairperson who is either: a Judge of a High Court; or judge of a High Court; or an eminent person
with expert knowledge in the conduct of arbitration; or a Judge of a High Court; or a Judge of the
Supreme Court. Other members will include government appointees, an academician with
experience in arbitration, and an eminent arbitration practitioner. ACI can make different regulations
under the Act.
iv. Timelines for the conclusion of Arbitration Proceedings: This new Act, provided a period of
twelve months for the conclusion of the proceedings of arbitration from the date of formation of the
Arbitral Tribunal. The parties also have the power to jointly extend the period of arbitration
proceedings by a period of six months and if more time is required only Courts has the power to
increase the time in such cases. The 2019 Act of the arbitration and conciliation act gives an
exemption to the international arbitrations seated in India from the said timelines.
Disqualification of Foreign Arbitrators in India seated Arbitrations: The Arbitration and Conciliation
(Amendment) Act,2019 discusses qualification for Arbitrators, Moreover, the said Schedule VIII
excludes Foreign lawyers, Foreign Charted Accountants and Cost accounts of Foreign from the
categories which are eligible of persons who are eligible to be appointed as Arbitrators for India
seated as Arbitrations.
v. Appointment of arbitrators by Institutions for Adhoc Arbitrations: According to the un-
amended 1996 Act, parties were free to appoint arbitrators, and in case of disagreement on an
appointment, the parties had to approach High Court for Domestic arbitrations and Supreme Court in
case of International Arbitrations under Section11 of the Act. This procedure burdened the Courts
and courts took three to 6sixmonths to complete the appointments. But the 2019 amendment
empowers the Arbitral institutions to appoint the Arbitrators for Adhoc arbitrations on an application
from the parties concerned. While appointing such arbitrators, Institutions will fix the fee of the
Arbitrators as laid out in Schedule IV of the Act. The Institutions should complete appointment
within thirty days from the date of receipt of the request for appointment of Arbitrator.
 3. THE ARBITRATION AND CONCILIATION (AMENDMENT) ACT, 2021
Two major changes brought about:

i. The first is to allow automatic stay on awards in some cases where the court has prima facie evidence
that the contract on which the award is based was tainted by “fraud” and “corruption.”
ii. The other major change in the Act of 1996 is the omission of the 8th schedule from the main Act. It
specifies the qualifications, experience, regulations, and norms that should be followed for accurate
mediation of arbitrators. The move helps expand the scope of qualifications of arbitrators.

4. THE MEDIATION BILL, 2021

At present, mediation in India may be: (i) court referred (courts may refer cases to mediation under the Code
of Civil Procedure, 1908), (ii) private (for instance, under a contract having a mediation clause), or (iii) as
provided under a specific statute (such as the Commercial Courts Act, 2015, the Consumer Protection Act,
2019, or the Companies Act, 2013). Mediation services are provided by private ADR centres or mediation
centres, as well as centres set up by courts or tribunals (known as court annexed mediation centres).

Various countries including Australia, Singapore, and Italy have standalone laws on mediation. The
suggestion to enact a separate legislation governing mediation in India has been made on a number of
occasions, including by the Supreme Court (2019), and the High Level Committee to review the
institutionalisation of arbitration mechanism in India (2017). Further, a committee formed by the Supreme
Court in 2020 had recommended and prepared a draft umbrella legislation to give sanctity to dispute
settlement through mediation. The Mediation Bill, 2021 seeks to promote mediation, particularly
institutional mediation, and provide a mechanism for enforcing mediated settlement agreements. The Bill
has been referred to the Standing Committee on Personnel, Public Grievances, Law and Justice

Key Features:

• Mandatory pre-litigation mediation: Parties must attempt to settle civil or commercial disputes by
mediation before approaching any court or certain tribunals. Even if they fail to reach a settlement
through pre-litigation mediation, the court or tribunal may at any stage refer the parties to mediation
if they request for the same.
• Disputes not fit for mediation: The Bill contains a list of disputes which are not fit for mediation.
These include disputes: (i) relating to claims against minors or persons of unsound mind, (ii)
involving criminal prosecution, and (iii) affecting the rights of third parties. The central government
may amend this list.
• Applicability: The Bill will apply to mediations conducted in India: (i) involving only domestic
parties, (ii) involving at least one foreign party and relating to a commercial dispute (i.e.,
international mediation), and (iii) if the mediation agreement states that mediation will be as per this
Bill. If the central or state government is a party, the Bill will apply to: (a) commercial disputes, and
(b) other disputes as notified.
• Mediation process: Mediation proceedings will be confidential, and must be completed within 180
days (may be extended by 180 days by the parties). A party may withdraw from mediation after two
sessions. Court annexed mediation must be conducted as per the rules framed by the Supreme Court
or High Courts.
• Mediators: Mediators may be appointed by: (i) the parties by agreement, or (ii) a mediation service
provider (an institution administering mediation). They must disclose any conflict of interest that
may raise doubts on their independence. Parties may then choose to replace the mediator.
 • Mediation Council of India: The central government will establish the Mediation Council of India.
The Council will consist of a chairperson, two full-time members (with experience in mediation or
ADR), three ex-officio members (including the Law Secretary, and the Expenditure Secretary), and a
part-time member from an industry body. Functions of the Council include: (i) registration of
mediators, and (ii) recognising mediation service providers and mediation institutes (which train,
educate, and certify mediators).
• Mediated settlement agreement: Agreements resulting from mediation (other than community
mediation) will be final, binding, and enforceable in the same manner as court judgments. They may
be challenged on grounds of: (i) fraud, (ii) corruption, (iii) impersonation, or (iv) relating to disputes
not fit for mediation.
• Community mediation: Community mediation may be attempted to resolve disputes likely to affect
the peace and harmony amongst residents of a locality. It will be conducted by a panel of three
mediators (may include persons of standing in the community, and representatives of resident
welfare associations).

5. ONLINE DISPUTE RESOLUTION (ODR)

ODR is the process of resolution of disputes, particularly small- and medium-value cases, using digital
technology and techniques of ADR, such as arbitration, conciliation, and mediation1. The United Nations
Commission on International Trade Law (UNCITRAL) Technical Notes on Online Dispute Resolution 2016
define ODR at paragraph 24 as:

'A mechanism for resolving disputes through the use of electronic communications and other information
and communication technology [ICT]. The process may be implemented differently by different
administrators of the process and may evolve over time'.

In India, there have been various instances where the courts have indicated towards pro-ODR approach. It
becomes pertinent to analyse how prepared the country is to adapt this change in the system.

CURRENT FRAMEWORK IN INDIA

Owing to the changing circumstances, any debut institution in the societal framework demands a governance
framework for regulation purposes. The report of the high level committee on Deeping of Digital Payments
was the first formal step for the development of ODR in India. There are a range of contributing legislations
that deal with the ADR and technology angle of ODR. The Arbitration and Conciliation Act, 1996, governs
the domains of ADR. However, the parent legislation is the Code of Civil Procedure, 1908. Section 89 of the
Code provides for the power of the court to expose the parties to all forms of ADR and not just within the
limits of arbitration, i.e., the conciliation and judicial settlement, including the settlement through mediation
or Lok Adalat. These Lok Adalats are governed by the Legal Services Authorities Act, 1987.

Further, Section 12A of the Commercial Courts Act, 2015, introduced pre litigation mediation in India. The
parties should consider the option of initiating mediation before directly filing a suit unless the case requires
urgent interim relief. Section 442 of the Companies Act, 2013, states that a panel of experts called the
'Mediation and Conciliation Panel' must be maintained by the Central Government. The enactment allows
parties to proceedings before the National Company Law Tribunal (NCLT) or National Company Law
Appellate Tribunal (NCLAT), sometimes even the central government, to request for the dispute to be
referred to mediation. In section 74 of the Consumer Protection Act, 2019, consumers are facilitated with
broad base mediation through establishment of 'Consumer Mediation Cells' in every district. Further, the
Consumer Protection Act (E-Commerce) Rules, 2020, has set the foundation of ODR by mandating e-
commerce entities to develop internal grievance redressal mechanisms.

Further, the Information and Technology Act, 2000, comes into play for the technical aspect of ODR.
Electronic records and signatures are recognized by section 4 and 5 of the enactment. The digitisation of
justice delivery system is in crucial need of legal recognition, for which this Act can be used as a support
system. The Supreme Court in the case of Shakti Bhog Foods Ltd v. Kola Shipping Ltd., held that:

"Online arbitration agreements are lawful as fulfilling the essentials of a complaint under sections 4 and 5 of
the Information Technology Act."

Another notable legal framework is the Indian Evidence Act, 1872, where section 65-A and 65-B of the Act
recognises electronic evidence, sharing of virtual documents and conducting virtual hearings can be
regulated through such provisions.

For the purpose of appointing an arbitrator, the Supreme Court, in the case Grid Corporation of Orissa Ltd.
v. AES Corporation allowed remote conferencing for the purpose of appointing an arbitrator. Similarly, in
the case of State of Maharashtra v. Praful Desai5, the Supreme Court upheld video conferencing as a valid
mode for recording evidence and testimony of witnesses.

The apex court in the Meters and Instruments Private Limited &Anr. v. Kanchan Mehta observed that:

"Use of modern technology needs to be considered not only for paperless courts but also to reduce
overcrowding of courts. There appears to be a need to consider categories of cases which can be partly or
entirely concluded "online" without physical presence of the parties by simplifying procedures where
seriously disputed questions are not required to be adjudicated."

6. EMERGENCY ARBITRATION

The concept of emergency arbitration provides emergency arbitrators who can be utilized when urgent relief
is needed and during the period of the pandemic, people used this provision. There has been uncertainty in
India regarding the enforceability of the emergency awards and the orders for arbitrations that have taken
place in India. The LCI (Law Commission of India) in Its 246th report has mentioned a recommendation by
recognizing the concept of the emergency arbitrator by widening the definition of the arbitral tribunal under
Section 2(d) of Arbitration and Conciliation Act for including emergency arbitrators. However, this
recommendation was not incorporated in the 2015 amendment Act.

The said issue again came into the lead during the earlier widely disclosed dispute in Future Retails v.
Amazon, where the parties are Amazon, Future Group, and Reliance. In this Amazon managed to get the
interim order from the Emergency Arbitrator under the rules of SIAC. It restrained Future Group from
proceeding with a deal worth Rs. 24,700 crore for monetization of retail business. At that time the question
was raised about whether the passing of interim order is enforceable in India or not.

Hence, Reliance stated its intention publicly to go ahead with the sale. Currently, the position of emergency
arbitration in India is that such orders of emergency arbitration cannot be passed against non-parties and the
orders passed by emergency arbitrators especially in cases where the arbitration took place outside India
cannot be enforced directly. However, except for only this limitation, the orders by emergency arbitrators
have been quite famous and useful.
In this case, Future Retails argued that the order of Emergency Arbitrator is not valid in India. Because the
Arbitration and Conciliation Act doesn’t recognize Emergency Arbitrators. Hence the order given by EA
doesn’t comply with Section 17(1) of the Act, making it unenforceable under Section 17(2) of the said Act.
However, this point has been prosecuted before the High Court of Delhi, involving two different but
interlinked cases Future Retails v. Amazon and Amazon v. Future Coupons. The court after observing the
issues, the validity of the order/award given by EA, gave its decision in favour of recognizing emergency
arbitrators as legitimate arbitrators under Indian law.

JUDICIAL APPROACH /ROLE OF HIGHCOURTS & SUPREME COURT

In recent years, Indian courts have repeatedly embraced an arbitration-friendly attitude. There have been
numerous cases where courts have sustained arbitration agreements despite small flaws, thereby recognising
the parties’ decision to have their problems resolved through arbitration. Despite adopting a pro-arbitration
stance, the Supreme Court approved an arbitration agreement despite an error, concluding that because the
parties’ purpose to arbitrate was obvious, the Court can make the arbitration agreement viable even if it
contains certain faults.

Whenever litigants have attempted to circumvent the Arbitration Act’s requirements, the courts have
typically refused to interfere with the awards made under the Act. Anti-arbitration injunctions have also
been granted with caution by the courts. The High Court has ruled that if a party has recourse under the
Arbitration Act, it cannot obtain an anti-arbitration order from the court by ignoring the Act’s provisions. In
that particular ruling, one of the arbitrators was chosen in conjunction with another party and without
implementing the consented process, prompting the party to seek an injunction from the Court prohibiting
the arbitral tribunal from proceeding with the arbitration.

Section 82 – Power of High courts to make rules.

FINDINGS OF THE LAW COMMISSION OF INDIA

While the alternative methods have provided speedy justice to the people, some legal luminaries have raised
a few relevant questions through these exercises. The Law Commission of India maintained that the reason
for the judicial delay was not the lack of clear procedural rules, but rather the inadequate implementation or
even absolute non-observance thereof. In its 14th Report, the Law Commission of India categorically stated
that the delay did not result from the law-making process, but from the non-observance of many of its
important factors. Given the huge number of cases pending, governance and administrative oversight of the
judiciary by manual processes have become extremely difficult.

If we study the reports from the Law Commission of India it sheds light on the factors that contribute to
delays and a huge backlog of cases before the courts. The main contributing factors are regular
adjournments to clients and attorneys, trial boycotts by lawyers, a scarcity of presiding tribunals and
tribunals, lack of adherence to basic procedures and standards of case management and disposal.

The Supreme Court in Brij Mohan Lal v. Union of India & Others made it clear that this state of affairs
must be addressed: “An autonomous and effective judiciary is one of the basic structures of our Constitution
… It is our constitutional obligation to ensure that the backlog of cases decreases and that efforts are made
to increase the disposal of cases.”

In the case of Avitel Post Studioz Limited v. HSBC PI Holdings Limited, the Supreme Court recently
addressed the subject of whether or not claims of fraud can be handled in arbitration rather than in court. The
Apex Court decided that “serious charges of fraud,” leading to non-arbitrability, could emerge solely if any
of the following two requirements were met, but not otherwise:

- In cases in which the Court decides that the arbitration agreement itself is irrevocably tainted by
fraud;
- or when claims of arbitrary, fraudulent, or mala fide conduct are made against the State or its
instrumentalities, giving credence to due process concerns rather than commercial questions.

Thus, it implies that all other cases containing “serious allegations of fraud,” that is, situations that do not fit
the Supreme Court’s two criteria, would be arbitrable.

Alternative dispute settlement was once viewed as a voluntary act on the part of the parties seeking
legislative recognition under the Civil Procedure Reform Act, 1999, the Arbitration and Conciliation Act,
1996, the Legal Services Authorities Act, 1997, and the Legal Services Authorities (Amendment) Act, 2002.
What is required now is the implementation of the Parliamentary object.

Measures to be taken to make ADR more effective:

• The transition from ad hoc to institutional arbitration should be pursued.

• Courts should impose steep fines on frivolous petitions filed to challenge mediation awards.

• Expert arbitrators should be appointed based on the circumstances of the case.

• Laws pertaining to arbitration, mediation, and conciliation lack a clear distinction and should be
defined clearly.

• Each financial year, the state must specify a reasonable proportion of new issues that must be
resolved using one of the ADR methods. It would encourage organisations to begin training and
developing skills to advocates in the area of ADR, as well as building a profitable ADR practise.

• Since the govt is that the biggest litigator, necessary directives is also issued to all or any ministries,
bodies and public sector undertakings etc. to just accept and abide by the arbitration award, aside
from cogent reasons to be signed off by an official, not below the rank of Joint Secretary.
• Arbitrators ought to be appointed relying upon the character of the disputes.
• The number of judges and courts dealing solely with arbitration cases ought to be inflated in each
jurisdiction.

CONCLUSION

ADR and the judiciary should work in tandem as they both are reliant on one another; the Courts must urge
the parties to resolve their conflicts constructively using ADR processes. The Courts’ engagement in the
ADR process should be limited, and they should only act if needed; more freedom must be given to the
ADR procedure in business disputes. The arbitrator, who is attempting to be an unbiased judge, ought to be
rigorous and liable for any liability they may incur. Arbitrators should be given training and such advocacy
programmes should be organised by the judiciary to give them and train them the proper method to conduct
themselves in the ADR process.

It is strongly recommended that in a country like India, where the ADR process is rapidly expanding with
more cases being filed, the judiciary should commence arbitration advocacy under the Arbitration Act,
allowing it to resolve more litigation and conflict cases in India.
 MODULE VIII
ADVANTAGES & DISADVANTAGES OF DIFFERENT KINDS OF ADR METHODS:

1. ARBITRATION
Advantages of Arbitration:

i. Fairness: Both parties agree to the arbitrator, resulting in a fair outcome, especially when compared
to a traditional legal trial in which neither party has control over the jury or judge selection. Parties
can also agree to choose an arbitrator that has experience in their specific area of legal dispute.
ii. Timeliness: A legal resolution through arbitration is much quicker than waiting for a trial date.
Arbitration is less formal and more flexible in terms of scheduling. The discovery process is a simple
phone call, cutting down on much of the traditional trial process.
iii. Cost: Arbitration does not include expert witnesses or require as much legal preparation. Both
parties often split the cost of the arbitrator, meaning the process is much cheaper.
iv. Confidentiality: The arbitration legal process is more private than a trial.
v. Finality: There is a level of finality to the arbitration process. Because it cannot be appealed, both
parties can move on following the outcome.
vi. Agreeableness: Arbitration often results in an agreeable outcome, as parties are encouraged to come
up with a solution together.
vii. Simplified Procedures: Legal outcomes are more adaptable to the two parties present in the dispute.
Each party does not have to hire an attorney for representation.
Disadvantages of Arbitration:

i. No Appeals: The arbitration decision is final. There is no formal appeals process available. Even if
one party feels that the outcome was unfair, unjust, or biased, they cannot appeal it.
ii. Cost: While arbitration is generally a more cost-efficient legal settlement option, it might not make
sense in cases when minimal money is involved.
iii. Rules of Evidence: A judge in a traditional court setting has specific regulations to follow when it
comes to accepting evidence. Arbitrators, however, can utilize any information that is brought to
them.
iv. Lack of Cross-Examination: The arbitration process generally includes documents and not
witnesses, voiding the ability to cross-examine.
v. Limited Discovery: In the event that arbitration is not filed until litigation has already begun, both
parties lose the cost-saving advantage of limited discovery.
vi. Lack of Consistency: There are no set standards for arbitration, making it difficult to find
consistency. It is possible that an arbitrator can be biased, which is sometimes the case in mandatory
arbitration contracts.
vii. Lack of Evidence: Because arbitration is not evidence-based, you entrust the experience of the
arbitrator to make the right legal decision.
viii. Not Public: The level of confidentiality involved in arbitration cases could potentially be
disadvantageous to one party. There is also a lack of transparency, which is not the case in public
courtrooms.

2. MEDIATION
Advantages of mediation:
 i. Outside court system: In mediation process you are directly involve in negotiating your own
agreement. It is not binding like the decision of the court.
ii. Private - No public disclosure: as with the other types of alternative dispute resolution mediation
is the private process and in this process you are in control of your own position.
iii. Faster and cheaper the litigation: Generally the cost is greatly low in comparison when the
parties are going through the litigation. No settlement is imposed upon the parties. There is a
possibility that parties established their positive relation again when the dispute resolved between
the parties.
iv. Flexible and creative solutions
v. Restoration of relationship - In conventional court proceedings blame is put on one of the
parties which is often detrimental to the relationship of the parties. The final decision of the court
is imposed on both the parties and it can be undesirable because one party always loses. On the
contrary in mediation parties alone are responsible for their own decision and can choose to not
accept the final settlement brought about by this process. This helps parties to come to a solution
peacefully and amicably. Even if the relationship between the parties was compromised due to
existing issues it can be restored by the process of mediation as it upholds the interests of both
parties.
vi. Control and dominion - The parties can choose the time, location, and the duration of the
proceedings giving parties a lot of control. Courts have their own schedule that is to be adhered
to by everyone hence it is not as convenient. Contrary to the judicial system parties in mediation
are not opponents but are collaborators striving to find a resolution that is mutually acceptable.
One of the major advantages of mediation is that neither of the parties loses and the interests of
both the parties are conserved. The parties control the end result of the mediation and either party
has the advantage of terminating the mediation without giving any reason.
Disadvantages of Mediation:

i. In case when party reach in such a position where they totally refuse to negotiate, sometime it
takes several mediation for the parties to reach some type of agreement which make mediation
process and expensive method.
ii. Parties cannot be compelled to participate except when the court orders means enforcement of
the court is required in some cases. Sometimes, there is also a need to establish a legal precedent
which involve a complex process.
iii. It has a limited scope as it can be only opted in civil cases. Also because of its nature, it depends
heavily on the will of the parties, whether or not they themselves are ready to solve a dispute
peacefully through consensual negotiation or not which, in many cases, is not possible.
iv. Usually the parties to the dispute are not willing to choose mediation. This is because usually a
litigant feel’s that he or she has a strong chance of winning the case and thus choosing to settle a
dispute through mediation may lead to a lessor award than what can be granted by the court.
v. It is usually seen that in cases of Lok Adalats, as due to the time constraint, the parties in order to
delay the trial, falsely choose mediation and after some time deny the procedure of mediation
vi. The advocates appointed by the parties sometime play a huge role in deterring the parties to solve
a dispute through mediation. This is because they do not gain much if their clients go through
with mediation as it is quicker as it is formed after negotiations between the parties there is a very
small chance of future dispute or appeal.

3. NEGOTIATION
• Advantages of negotiation:
 i. Flexibility: since negotiation is an informal process, it is relatively flexible.
ii. Quick resolutions as compared to litigation.
iii. It facilitates in maintaining a healthy relationship between the disputing parties.
iv. Takes place in a private environment
• Disadvantages of negotiation:

i. The parties to the dispute may not come to a settlement.

ii. Lack of legal protection of the parties to the conflict.
iii. Imbalance of power between the parties is possible in negotiation

4. CONCILIATION
Advantages of Conciliation:

i. The conciliation procedure is of private nature. The documents, evidences or any other information
which are used during the process are Confidential.
ii. One of the most important advantages is that they are Informal process and contains Simple
procedures which can be easily followed by the general people.
iii. The process depends upon the circumstances of the case. In these processes the need of the parties
comes first like quick settlement of their cases so there is no chance for delay.
iv. The selection of the conciliators depends upon the parties. The parties can choose conciliator on the
basis of their availability, experience in particular field, previous track records of the cases,
knowledge in subject area.
v. The conciliation is cheap as compared to litigation. They are cost effective and most opted process
for resolving disputes. It purely depends upon the nature of the dispute but is widely acceptable.
Disadvantages of Conciliation:

i. Conciliator is not a legally qualified person for resolving disputes. His decision is not binding upon
the parties.
ii. As the procedure of conciliation is informal and simple there is high possibility of delivering
injustice.
iii. Miscommunication of information: The role of the conciliator to settle up the case by giving
information of one party to another and vice versa. The process of sending and receiving information
sometimes leads to mixed and incorrect information. So, by these processes one can easily interpret
the information given.

5. LOK ADALATS
Advantages of Lok Adalats:

i. It is a court that provides free justice. If the case is already filed in the regular court, the fee paid will
be refunded if the disputes are settled via Lok Adalat. This is in consideration to the economically
weaker section of the society.

ii. It allows for amicable settlement for parties as they can directly interact with the judge even if they
are represented by their lawyer. These parties can explain their stand in the dispute, which is
impossible in the normal courts.

iii. It reduces unwanted delays by doing away the longwinded legal procedures and formalities and aims
for mutual settlements to reduce the chances for the further need for appeals.
 iv. The procedure followed by Lok Adalat is simple, flexible, non-technical and informal. There is no
need for strict procedural laws like the Civil Procedure Code and Evidence Act while determining
the claims of the parties.

v. The lawyers are not essential during the conciliation process of Lok Adalat. However, they can assist
the proceedings by helping parties understand contentious issues and available alternatives and
persuade them to arrive at a dispute settlement.

vi. It disposes of cases via collaborative and participatory efforts of lawyers, social workers,
administrative authorities etc., who are actively involved in the dispute resolutions.

vii. It significantly reduces the burden of the formal judiciary so that the latter can deal with more serious
cases.

viii. This mechanism helps spread awareness at the grass-root level about the fundamental rights and
duties mentioned in the numerous social and welfare legislation.

ix. It brings justice to the doorsteps of people by organising at various places like villages, slums,
industrial areas, labour colonies etc.

x. There is neither a victor nor a vanquished and both the contestants are gainers and winners.

xi. This mechanism promotes local unity and secures substantial equity and social justice.

Disadvantages of Lok Adalats:

i. Though it is true that “Justice delayed is justice denied”, it is also true that a hurried justice is justice
buried. Thus, speedy resolutions must not impair the rights of parties. In reality, Judges are pressured
to quickly dispose of the cases for political gains, leading to limited consideration to the parties’
rights and needs.
ii. Lawyers are sometimes reluctant to refer the matter for settlement in Lok Adalat.
iii. There are also instances of parties pressurising their lawyers to stick up to strict procedures of the
court.
iv. Sometimes there are even the cases where a party’s attorney is unprepared or not present, which
subsequently prevents parties from reaching a settlement.
v. There are even instances of antagonism among the lawyers and judges.
vi. Another major drawback of this mechanism is that the organisation of the Lok Adalat is mainly
based on compromise or settlement between parties. If the parties do not arrive at a consensus, the
case is either returned to the court of law or the parties are advised to seek a remedy in the court of
law. It leads to unnecessary delays in the dispensation of justice.
This issue is addressed by the Permanent Lok Adalat.
However, Permanent Lok Adalat also is faced with few drawbacks.
vii. There are concerns that the persons appointed for Permanent Lok Adalat will not have the necessary
legal background.
viii. Currently, specialised tribunals are appointed with the representatives of social organisations or
experts.
ix. In the case of mechanisms set up to resolve disputes raised by consumers, members other than
Chairman are persons without a legal background.
x. There were also instances of members without a legal background in administrative tribunals. These
members only have administrative experience.
 xi. While deciding the dispute, the provisions of the Code of Civil Procedure and the Indian Evidence
Act will not be applicable. This means that the determination or decisions will be in a summary
manner.
xii. A decision is possible only in those cases where there exists an element of the settlement. In such
cases, the Permanent Lok Adalat formulates terms of a possible settlement and gives such terms to
the concerned parties for their observations.
xiii. These observations will be considered based on the evidence produced by the parties.
xiv. If they do not consent to the settlement, Permanent Lok Adalat shall decide the dispute.
xv. However, the decision or the opinion of the Permanent Lok Adalats as to whether there exist
elements of settlement is also a matter that can be subjected to judicial review under Article 226 of
the Indian Constitution.

DIFFERENCE BETWEEN DIFFERENT TYPES OF ALTERNATIVE DISPUTE RESOLUTION

(ADR) SYSTEMS:

ADR Methods- Arbitration Mediation Conciliation Negotiation

Neutral Third Party- Adjudicator Facilitator Facilitator, Evaluator Facilitator

Nature of the Proceeding- Legally Binding Not legally binding Not legally binding Not legally binding

Level of Formality- Formal Informal Informal Informal

Confidentiality as Confidentiality Confidentiality as Confidentiality

Level of Confidentiality-
determined by law based on trust determined by law based on trust