Alternative Dispute Resolution Final
Alternative Dispute Resolution Final
Alternative Dispute Resolution Final
I take this opportunity to express my profound gratitude and deep regards to my teacher Mr.
Sukesh Mishra for his exemplary guidance, monitoring and constant encouragement
throughout the course of this dissertation. The blessing, help and guidance given by her time
to time shall carry me a long way in the journey of life on which I am about to embark.
I also take this opportunity to express a deep sense of gratitude to my friends for their
cordial support, valuable information and guidance, which helped me in completing this task
through exhaustive research.
AC : Appeal Cases
ADR : Alternative Dispute Resolution/Redressal Methods
AIR : All India Reporter
ALL ER : All England Law
Reporter ALR : Australian Law Reporter
Am.L.R : American Law Review :
C
CEDR : Center for Dispute Resolution
CILAS : Committee for Implementing Legal Aid Scheme
CPR : Center for Public Resources
D
DR : Dispute Resolution
H
Har.L.R : Harward Law Review
H.C : High Court
HKIAC : Hong Kong International Arbitration Centre
I
I.B.R : Indian Bar Review
ICADR : International Centre for Alternative Dispute Resolution
ICA : Indian Council of Arbitration
ICC : International Chamber of Commerce
ICCA : International Council for Commercial Arbitration
IIAM : Indian Institute of Arbitration and Mediation
TABLE OF CONTENTS
Pg 9-12
3. ALTERNATIVE DISPUTE Pg 13-15
MECHANISMS
4. ARBITRATION Pg16-27
4.1. HISTORICAL BACKGROUND Pg 28-30
9. BIBLIOGRAPHY/ WEBSITES Pg 92
Cases Referred
1. To study, the major legislations that provides for different types of alternative dispute
redressal methods in India.
2. To study, the different alternative dispute redressal methods and their hybrids in resolution of
the disputes.
"Discourage litigation. Persuade your neighbours to compromise wherever you can. Point
out to them how the nominal winner is often a real loser - in fees, expenses, and waste of time.
As a peacemaker, the lawyer has a superior opportunity of being a good man. There will still
be business enough."--------------------------Abraham Lincoln
India ,being a developing Country going through major economic reforms within the ambit
of rule of law demand expeditious resolution of disputes for the ease of business Disputes are
inevitable part of every society. It blocks development and disturbs peaceful conduct of
human life; hence, it becomes necessary to find a quick and easy method of resolution of the
disputes. Alternative Dispute Resolution or ADR refers to an assortment of dispute resolution
procedures that primarily serve as alternatives to litigation and are generally conducted with
the assistance of a neutral and independent third party.
Alternative mechanisms in form of Arbitration, Conciliation and Mediation have turned out
to be more effective than litigation process as access of justice is there without involvement
of courts . Though the Arbitration &Conciliation Act brings about various Amendment in
Act of 20151,to bring about some steep amendments in Arbitration regime
,still there are various evolving issues which needs to be redressed .This dissertation makes
critical analysis of issues connected with alternative mechanisms in the light of Arbitration
and Conciliation (Amendment ) Act ,2015 such as jurisdictional issues connected with cases
in which one party is foreign national, excessive costs, protracted proceedings leading to
extensive delays ,speedy disposal &Neutrality of arbitrators etc. The researcher made a
comparison of Indian Alternative Dispute mechanism in context of International Alternative
mechanisms which are successfully practised in various countries .The dissertation further
made extensive study for the process of referral to conciliation process and discussed issues
and suggestions assosciated with conciliation and mediation2.
Mahatma Gandhi, in his book, The story of my experiments with truth 3 while observing
the role of the lawyers in the society, observed that, after losing in arbitration, Mahatma
1
Arbitration and Conciliation Amendment Act 2015.
2
Section-89(1) of CPC(Amendment )Act,1999(wef-2002): Settlement of dispute out side Court: Section-89(1)
reads- where it appears to the Court that there exist elements of settlement which may be acceptable to the
parties, it shall formulate the terms of such settlement, give them to the parties for their observation and after
receiving the observations of parties, the Court may reformulate the terms of such settlement and refer the
same for(a)Arbitration,(b)Conciliation, (c) Judicial settlement including settlement through Lok Adalats; or
(d)Mediation.
3
(1962) Oxford Law Journal, available at https://academic.oup.com/ojls (visited October 27,2018)
Gandhi’s client secured an agreement to pay the award in installments over a long option and
use of alternative dispute redressal method. He said that, “I had learnt the true practice of law.
I had learnt to find out the better side of human nature and to enter men’s hearts. I realized
that the true function of a lawyer was to unite parties rivet asunder.
The lesson was so indelibly burnt into me that a large part of my time during the twenty
years of my practice as a lawyer was occupied in bringing about private compromises of
hundreds of cases. I lost nothing thereby – not even money; certainly not my soul.” It was
only after the introduction and predominant adoption of settlements of disputes through
adversarial system of litigations where Courts are the custodian of the rights of the citizen,
the dispute redressal methods such as ‘Arbitration’, ‘Conciliation’ and ‘Mediation’ came to
be treated as alternative means of resolving the disputes.4
The legal maxim “ubi jus ibi remedium” means, where there is a right there is a remedy,
lays down the foundation of legal system in every human society. With the spread of literacy
and growing importance of education in India, the people are becoming more sensitive,
literate and are having a better understanding and awareness of their rights and duties. So,
whenever there is an infringement of any right or any breach of duty, and a dispute arises, the
disputants immediately tend to approach the Courts of law for seeking justice. This has
led to the substantial increase in the numbers of new cases coming before the Courts, which is
adding to the already existing list of pending cases before the Courts. 5 There are large
numbers of Central and State Acts, which contains statutory provisions for arbitration.
Arbitration is recognized under Indian Contract Act, 1872 as the first exception to
Section 28, which envisages that any agreement restraining legal proceedings is void. The
legal service authority act 1987, brought new mode of alternative dispute resolution.
2.WHAT IS ALTERNATIVE DISPUTE RESOLUTION
ADR is composed o f different words: Alternative, dispute and resolution. Thus to clearly
understand or define the phrase it is paramount important to understand each words separately
thereof. And then what ‘Alternative‘ connotes to you? What about dispute? Is a dispute
synonymous with conflict? What about resolution?
The word ‘Alternative’, as to the definition given in 6th edition of Oxford Advanced Learners
Dictionary, refers a thing that you can choose to or have out of two or more possibilities.
Therefore the word in this context is used as an adjective and refers to all permitted dispute
resolution mechanisms other than litigation, be it in court or administrative tribunal . Whereas,
the phrase dispute resolution, in the absence of alternative as prefix, is simply a collection of
procedures intended to prevent, manage or resolve disputes and refers procedures ranges from
self-help in the form of negotiation through to state sanctioned mechanisms called litigation. It
is to mean that ‘Alternative‘connotes the existence of dispute settling mechanisms other than
formal litigation. Though the word ‘Alternative‘ in ADR seems to connote the normal or
standard nature of dispute resolution by litigation and aberrant or deviant nature of other means
of dispute resolution mechanisms, it is not really the case. ADR is not an alternative to the court
system but only meant to supplement the same aiming on less lawyering.
Now days there are arguments that ADR does not include arbitration and the proponent of this
position say that alternative Dispute resolution encompasses various amicable dispute
resolutions other than Litigation in court and arbitration. Indeed ADR Rules of The
international Chamber of Commerce follows this approach. The preamble of the same rule
reads as:
Amicable settlement is a desirable solution for business disputes and differences. It can occur
before or during the litigation or arbitration of a dispute and can often be facilitated through
the aid of third party (the neutral) acting in accordance with these rules.
Needless to say most literatures and laws consider alternative dispute resolution as methods of
dispute resolution which accommodates all the traditional dispute settling mechanisms other
than court litigation. As arbitration shares many characteristics with other dispute resolution
mechanisms than court litigation ADR in this material connotes all dispute resolutions out of
litigation.
The other important word to define ADR is Dispute/ Conflict. There is debate about whether a
conflict and a dispute are synonymous. Apart this debate psychologist, Lawyers, Diplomats,
and Public Servants all deal in their work with conflict/ dispute. Concerning the distinction
between Conflict and Dispute, different people suggested the difference in meaning between
these words. Some people, for instance, define ‘Conflict‘as a form of competitive behavior,
like competition for scarce resource. Some see it as mere reflection of differences and an
opportunity for personal growth. Still others only recognize conflict as armed conflict or war.
The nouns ‘Conflict‘ and ‘Dispute‘ are used interchangeably all time and indeed, are
synonymous for each other in English Language, however. Still scholars, including Chornenki,
draw slight distinction among the two words. According to the named scholar here, ‘Conflict‘is
the parent and disputes are the children and frequently, intervention is more important at
parental level. He further states that conflict is a phenomenon or condition with three aspects. It
manifests itself through attitudes, behavior and situations. This triangular image opens the
prospect that conflict can be internal state of mind, an external act or an environmental
situation. By contrast, Dispute is an issue – specific manifestation of conflict as to the same
person. It usually has identifiable parties and articulated or defined /delineated points of
difference between those parties. A dispute is the subset of conflict: conflict gives rise to and
sustains dispute. This distinction, as to the above proponent, is very important because if a
dispute is addressed in only superficial way without regard for the underlying conflict, it may
recur or replaced by other similar or related disputes.
Similarly, Folberg and Taylor also give the same definition for dispute as of Chornenki. To
them a ‘Dispute‘is an interpersonal conflict that is communicated or manifested. A conflict may
not become a dispute if it is not communicated to someone in the form of perceived
incompatibility or contested claim as to them.
Abebe Semagne in his unpublished senior thesis also quoted the meaning of dispute as;
“a conflict or controversy; conflict of claims or right; an assertion of right, claim or demand on
one side met by the contrary claims or allegations on the other; the subject of litigation; the
matter for which a suit is brought and which issue in joined; and in relation to which jurors are
called and witness examined”
Apart the above difference in meaning between two words the writers of this teaching material
use the two words interchangeably for convenience sake.
The other element of ADR is Resolution. The oxford Advanced Learner‘s Dictionary defines
‘Resolution‘as the act of resolving or settling a problem, dispute, etc.
Thus , even if the phrase ,i.e. ADR, defy precise definition ,as to the above illustrations and
different literatures, it is a generic term used to describe rang of procedure designed to provide
a way of resolving a dispute as an alternative to court or administrative Tribunal procedure. For
instance, Kerley, Hames and Sukys in their book entitled ‘Civil Litigation’ shortly define the
phrase as methods to resolve legal problems other than court judgment.
ADR is sometimes referred as Appropriate Dispute resolution as the preferred option should be
the process most appropriate to the case, the parties and the issue involved.
2.1 ANALYSIS OF Afcons infrastructure and Ors. v. Cherian Verkay Construction
and Ors [2010 (8) SCC 24]9
Introduction of Section 89 of Code emerged as “Trial Nightmare” for quite long period.This
nightmare gripped the mind of the Indian judicial system till the recent judgment of Afcons
infrastructure and Ors. v. Cherian Verkay Construction and Ors. 2010 (8) SC .The judgment
has finally end up the chapter of dynamism of the Alternate Dispute Resolution which is pro
bono for the Indian Judicial System.Section 89 of CPC, 1908, its need and the revolutionary
changes has brought in terms of ADR practices in India. The mixture in role of Legislature in
promoting ADR practices and approach of judiciary in this context is rightly pointed out in
this particular case.The 238th Report of Law Commission dated December , 2011 with regard
to amending section 89 of the code of civil procedure provides clear understanding of the
existing process of Alternate Dispute resolution and how the dynamism of Section 89 could be
stopped.
2. Cherian Verkay Construction filed a suit against the Afcons Infrastructure and Ors. for
recovery of Rs.210,70,881 which includes the amount due to the appellants from the
employer with interest at 18% per annum.10
3. In the same suit an order of attachment was made on 15.09.2004 in regard to the sum of
Rs. 2.25 crores. Thereafter, In March 2005 ,Cherian Verkay Construction filed an
application under section 89 of CPC before the trial court praying that the court may
formulate the terms of settlement and refer the matter to arbitration.
4. Afcons infrastructure and Ors. filed a counter dated 24.10.2005 to the application
submitting that they were not agreeable for referring the matter to arbitration or any of the
other ADR processes under section 89 of the Code.
9
Ajay Kumar gupta ,Case Commentary ,available at http://www.legalservicesindia.com/article/1248/Afcons-
infrastructure-and-Ors.-v.--Cherian-Verkay-Construction-and-Ors.html (visited 28 October ,2018).
10
Facts of case , available at www.indian kanoon.com
5. In the meanwhile, the High Court of Kerala by order dated 8.9.2005, allowed the appeal
filed by the appellants against the order of attachment and raised the attachment granted by
the trial court subject to certain conditions. While doing so, the High Court also directed the
trial court to consider and dispose of the application filed by the first respondent under section
89 of the Code.
6. The trial court after hearing the parties allowed the said application under section 89 of the
code. Then ,the Appellants filed the review petition against the order of the trial court.
7. The High Court by the impugned order dated 11.10.2006 dismissed the revision petition
holding that the apparent tenor of section 89 of the Code permitted the court, in appropriate
cases, to refer even unwilling parties to arbitration. This order was challenged in the Superme
Court as an Appeal.
3. ALTERNATIVE DISPUTE RESOLUTION MECHANISMS
Alternative dispute redressal methods are being increasingly acknowledged in the field of
law and commercial sectors both at National and International levels. Its diverse methods can
help parties to resolve their disputes at their own terms cheaply and expeditiously.
Alternative dispute redressal techniques are in addition to the Courts in character. The
goal of ADR is enshrined in the Indian Constitution’s preamble itself, which enjoins the
State: “to secure to all the citizens of India, justice-social, economic, and political—
liberty, equality, and fraternity.”17The present day Adr mechanisms include
1.Arbitration
2.Conciliation
3.Mediation
4.Negotiation
5.Other include lok adalats,lok nyalaya etc
law, is to unite the parties and not to riven them.As compared to Court procedures,
considerable time and money can be saved in solving the disputes through alternative
dispute redressal procedures, which can help in reducing the workload of regular Courts and
in long run can pave way in solving the problem of judicial arrears before the Courts .
4. ARBITRATION
Arbitration is a legal technique for resolution of all types disputes outside the national courts,
when in the parties to a dispute refer it to one or more neutral third party (the “arbiter” or
“arbitral tribunal”), by whose final decision (the arbitral award) they agree to be bound. The
parties to an arbitration agreement usually choose experts who are familiar with law and the
actual or potential disputes between them. The agreement to arbitrate is usually included in the
contract and is known as an arbitration clause. By this method, parties agree that in the event of
a dispute, such dispute will be submitted to arbiters for determination. Arbiters are preferred
because they are better placed than national Courts to deal with the several legal problems that
arise frame transnational relations. Arbiters employ procedures that are more flexible, and
readily apply international merchants, than national laws that may not cater for their needs.
Arbiter should, on the one hand, know the nature of the disputes, in order to be able to arbitrate.
On the other hand, they should know the applicable national and international law, in order to
conduct arbitration and make an arbitral award that satisfies legal principles, and is enforceable.
The Arbitration and Conciliation Act, 1996 governs the “arbitration procedures” in India.
Part-I of the Arbitration and Conciliation Act, 1996 comprises of 43 sections spread over ten
chapters, making detailed provisions relating to domestic arbitration and International
commercial dispute resolution in which a neutral third party called arbitrator, renders a
decision after a hearing at which both parties have an opportunity to be heard.Arbitration is
a consensual process. It is not a matter of coercion. No arbitration statute can require parties to
arbitrate when they have not agreed to do so. Nor can it prevent them from excluding certain
claims from the scope of arbitration agreement in any manner they choose. 18 It requires
Courts just to enforce privately negotiated agreements to arbitrate, like other contracts, in
accordance with terms of contract.
As defined under Section 2(1) (a) of Arbitration and Conciliation Act, 1996 it covers any
arbitration whether it is administered by any permanent arbitral institution or not. It also
covers arbitration relied on voluntary agreement by the private parties or by operation of law.
The Arbitration and Conciliation Act, 1996 does not provide definition of the word
"Arbitration". Arbitration, in law, is a form of Alternative Dispute Resolution - specifically,
a legal alternative to litigation, whereby the parties to a dispute agree to submit their
respective positions (through agreement or hearing) to a neutral third party called the
Arbitrator for resolution of the dispute between them. In Jivaji Raja Vs Khimiji Poonja
& Company., Bombay High Court observed that, arbitration is the reference of dispute or
difference between two or more parties to a person chosen by the parties or appointed under
statutory authority, for determination of the same. In a broad sense, it is substitution of
ordinary judicial machinery.
17
P.Sumitha,Commentary on Arbitration,available at http://www.lawyersclubindia.com/experts/About-
arbitaration-351186.asp ,last visited November 4,2018
18
Russell on Arbitration,twenty –second edn,2003,p29,para 2-010.
4.1 Historical Background
The 1st Legislative Council for India was formed in 1834, followed by the First Indian
Arbitration Act on 1st July, 1899. It came into force and said act was fundamentally based on
British Arbitration Act, 1889 but the application of the Indian Arbitration Act was confined only
to the presidency towns' i.e. Calcutta, Bombay and Madras. A unique feature in the Act was that
the names of the arbitrators were to be mentioned in the agreement; the arbitrator at that point
can also be a sitting judge, as was in Nusserwanjee Pestonjee andOrs.v. Meer Mynoodeen
Khan Wullud Meer Sudroodeen Khan Bahadoor 22 . In the case of Gajendra Singh vs. Durga
Kunwar 23 it was observed that the Award as passed in arbitration is nothing but a compromise
between the parties. In Dinkarrai Lakshmiprasad vs. Yeshwantrai Hariprasad 24, the Hon'ble
High Court observed that the said Indian Arbitration Act, 1889 was very complex, bulky and
needed reforms.
The basic difference in 1940 and 1996 Act was that in the former one a party could commence
proceedings in court by moving an application under Section 20 for appointment of an
arbitrator and simultaneously could also move an application for interim relief under the
Schedule read with Section 41(b) of the 1940 Act. The later one does not contain any provision
similar to Section 20 of the 1940 Act but the court can pass orders even before the
commencement of the arbitration proceedings. Another difference was that in the former act,
there was no requirement to give reasons for an award until and unless agreed by the parties to
arbitration. However, in the later Act, the award has to be given with reasons, which minimized
the Court's interpretation on its own. There were changes with respect to the award passed by
the arbitral tribunal in the 1940 and 1996 Act.
26AIR1963Cal14
27(1904)ILR 26NULL393
28AIR 1999 SC 565
The 1996 Act since its enactment faced many challenges and the Courts brought out what was
actually intended by the Legislation; the Courts clarified the said Act and the intention by
various landmark judgments. In particular, the landmark case of Bharat Aluminium Co. saw at
least three phases before the Hon'ble Supreme Court of India since the year 2001 till now i.e.
2016 carrying from two Hon'ble Judges to the Constitution Bench.
In the first case, the Hon'ble Supreme Court was of the view that Part I is to apply also to
international commercial arbitrations which take place out of India, unless the parties by
agreement, express or implied exclude it or any of its provisions, it was also held that the
Arbitration Act of 1996 was not a well drafted act and had some lacunas
The second round 30 started around 2005, when there was a difference of opinion between the
two Hon'ble Judges of the Hon'ble Supreme Court of India and the said matter was thereafter,
placed before a three Judge Bench, which by its order directed the matters to be placed before
the Constitution Bench. The Constitution Bench was of the view that Section 2(2) makes it
clear that Part I is limited in its application to arbitrations which take place in India and that the
Parliament by limiting the applicability of Part I to arbitrations which take place in India has
expressed a legislative declaration. The Bench further went ahead with a distinction between
the arbitration in India and outside India. It held that Section 2(2) merely reinforces the limits of
operation of the Arbitration Act, 1996 to India and it was further held that if Part I of the Act
were applicable to arbitrations seated in foreign countries, certain words would have to be
added to Section 2(2). The section would have to provide that "this part shall apply where the
place of arbitration is in India and to arbitrations having its place out of India."
Another interesting question which was considered was whether Section 2(2) is in conflict with
Sections 2(4) and 2(5). It was held that the language as used by the legislature in Sections 2(4)
and 2(5) of the 1996 Act means the arbitration, that take place in India. It was further clarified
that the provision does not admit an interpretation that any of the provisions of Part I, would
have any application to arbitration which takes place outside India. The 1996 Act, was basically
designed to give different treatments to the awards made in India and those made outside India.
The distinction is necessarily to be made between the terms "domestic awards" and "foreign
awards". It was also clarified that Part I and Part II are exclusive of each other and the same is
also evident from the definitions. The issues relating to the interim reliefs in an Inter- Parte Suit
filed by the parties pending arbitration was held to be non-maintainable, as the pendency of the
arbitration proceedings outside India would not provide any cause of action for a suit where the
main prayer is for injunction.
30(2012)9SCC552
Third Round of Amendments in 2015
The question as to whether part I of the Arbitration and Conciliation Act, 1996 would apply to
foreign arbitrations was first examined by the Hon'ble Supreme Court of India in a celebrated
judgment by a three Judge bench in the year 2002 titled Bhatia International vs. Bulk Trading
SA1 ("Bhatia International"). The core issue before Hon'ble Supreme Court was the
interpretation of Section 2(2) of the un-amended Act which stated that, "This Part shall apply
where the place of arbitration is in India."The Hon'ble Apex Court had compared the said
provision with the UNCITRAL Model Law2, which clearly stated in its preamble that, "the
provisions of this Law... apply only if the place of arbitration is in the territory of this State."
The Hon'ble Supreme Court of India in the case of Bharat Aluminum and Co. vs. Kaiser
Aluminium and Co.3 (BALCO) had reconsidered the law laid down in Bhatia International
and overruled the same. In the landmark judgment pronounced by the Constitution Bench
of Hon'ble Supreme Court of India on September 06, 2012 it was concluded that "Part I of the
Arbitration & Conciliation Act, 1996 is applicable only to the arbitrations which take place
within the territory of India".
The Hon'ble Apex Court had observed as under:
"In our opinion, the provision contained in Section 2 (2) of the Arbitration & Conciliation Act,
1996 is not in conflict with any of the provisions either in Part I or in Part II of the Arbitration
Act, 1996. In a foreign seated international commercial arbitration, no application for interim
relief would be maintainable under Section 9 or any other provision, as applicability of Part I of
the Arbitration & Conciliation Act, 1996 is limited to all arbitrations which take place in India".
Only those cases in which agreements stipulate that the seat of the arbitration is in India or on
whose facts a judgment cannot be reached on the seat of the arbitration as being outside India
would continue to be governed by the said principle.
Even the world's two most prominent countries (India and Pakistan) also agreed to refer the
dispute to Arbitration and had referred the dispute relating to the Indus Water Treaty 1960 31 to
The Permanent Court of Arbitration. This move clarified and supported the importance of
arbitration globally.
With the economic growth of the nation, the foreign entities started business through their
100% subsidiaries. Eventually, an exciting question of law came for consideration before the
Hon'ble Apex
Court32 which was whether it is permissible under the Arbitration Act, 1996 for two Indian
Companies to agree to refer their commercial disputes to a place of arbitration outside India
with governing law being English law. It was observed that as one of the entities indirectly
involved in the matter is a foreign entity, therefore, there is some foreign element and secondly,
as Section 28(1) (b) of the 1996 Act expressly recognizes such autonomy to choose the
governing law, therefore the said clause is valid.
The 2015 Act can be looked as a boon for the party who succeeded before the arbitral tribunal,
as in the earlier act of 1996 if the award passed by the arbitral tribunal was challenged before
the court, even on issuance of notice by the court would tantamount as a stay but by virtue of
the amendment in the 2015 Act, a specific stay has to be granted.
It is to be noted that not all matters/disputes can be referred to arbitration even if the
agreement/contracts etc. contain an arbitration clause, its being noted that the disputes relating
to Trust, trustees and beneficiaries arising out of the Trust Deed and the Trust Act are not
capable of being decided by the arbitrator33
Ad-hoc Arbitration: The Ad-hoc Arbitration is agreed to and arranged by the parties
themselves without recourse to an arbitral institution. It is to get the justice, in the balance of
the un-settled part of their dispute only. It may be either International or Domestic
arbitration20
Domestic arbitration: The Domestic arbitration means, an arbitration which takes place in
India, wherein parties are Indians and the dispute is decided in accordance with substantive
law in India.
International Arbitration: An Arbitration, which may take place either within India or
outside India but, where there are ingredients of foreign origin in relation to the parties, or the
subject matter of the dispute. In this process, the dispute is decided in accordance with
substantive law in India or any other country, depending on the contract in this regard and the
rules of conflict of laws are termed as International Arbitration.
Institutional Arbitration: It means, an arbitration conducted by an arbitral institution in
accordance with the prescribed rules of the institution. In such kind of arbitration. The
arbitrator or arbitrators, as the case may be is appointed from the panel maintained by the
institution either by disputants or by the governing body of the institution.
19
AIR 1934 Bom 476.
20
Indu Malhotra & OP.Malhotra, The Law and Practice of Arbitration And Conciliation,2nd Edn2006.p115-129
31https://pca-cpa.org/en/search/?q=THE+INDUS+WATERS
The Arbitration and Conciliation Act, 1996 gives recognition and effect to the
agreement of the parties to arbitrate according to institutional rules and subject to
institutional supervision. Some of the leading Indian institutions providing for institutional
arbitration are, The Indian Council of Arbitration (ICA), New Delhi, The Federation of
Indian Chamber of Commerce and Industries (FICCI), New Delhi and The International
Center for Alternative Dispute Resolution (ICADA). Some of the leading international
institutions are The International Chamber of Commerce (ICC), Paris, The London Court
of International Arbitration (LCIA), London and The American Arbitration Association
(AAA). The World Intellectual Property Organisation (WIPO) is an agency of the United
Nations, which is offering its services exclusively for the intellectual property disputes.
WIPO is based in Geneva.
The first stage in arbitration is the formulation of the arbitration agreement whereby the
parties agree to submit their present or future differences to arbitration. Section 2 (1)(b)
does not give a definition of the term, but states that “Arbitration agreement” means an
agreement referred to in section 7.22 As per Section 7, the arbitration agreement is defined
as, 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. Thus, the provision of arbitration can be made at the time of entering the
contract itself, so that if any dispute arises in future, the dispute can be referred to arbitrator
as per the agreement. It is also possible to refer a dispute to arbitration after the dispute
has arisen. It was held by the Supreme Court in the Wellington Association Ltd V.
Kirti Mehta 23 case that, the word in the Section 7(1) “means an agreement by the parties
to submit to arbitration”, postulates an agreement which necessarily or rather mandatory
requires the appointment of an arbitrator or arbitrators24.
21
Indu Malhotra & OP.Malhotra, The Law and Practice of Arbitration And Conciliation,2nd Edn
22
AIR 2006 SC 341.p117.
23
AIR 2002 (3) RAJ 403.
24
2004 (3) SCC 155.
25
2000(4) SCC 543.
In Tamil Nadu Electricity Board V. Sumathi and others,26 case there was no arbitration
agreement within the meaning of Section 7 of the Arbitration and Conciliation Act, 1996. The
dispute relating payment of compensation for the death due to electrocution was under the
consideration of the High Court under Article 226. The High Court appointed an arbitrator in
exercise of its power under the 1996. The Supreme Court quashed the order of the High
Court, as the Suo-motu appointment of arbitrator in the absence of agreement to that effect
is not provided for under the provisions of the Arbitration and Conciliation Act, 1996.
The Section 4 of the Arbitration and Conciliation Act, 1996 is a deeming provision. It
lays down that, where a party precedes with the arbitration without stating his
objection to non-compliance of any provision of Part I from which the parties may
derogate or any requirement under arbitration agreement, it shall be deemed that he has
waived his right to so object
In Basheshar Nath V. Commissioner of Income Tax ,27 the Supreme Court held that, ‘There
must be an international relinquishment of a known right or the voluntary relinquishment or
abandonment of a known existing legal right , The Section 4 of the Arbitration and
Conciliation Act, 1996 is a deeming provision. It lays down that, where a party precedes
with the arbitration without stating his objection to non-compliance of any provision of Part
I28 from which the parties may derogate or any requirement under arbitration agreement,
it shall be deemed that he has international relinquishment of a known right or the
voluntary relinquishment or abandonment of a known existing legal right , or conduct such as
warrants an inference of relinquishment of a known right or privilege’.
The Supreme Court of India in P.Anand Gajapathi Raju Vs PVG Raju, held that
Section 5 of the Arbitration and Conciliation Act, 1996 brings out clearly the object of
the Act, namely that of encouraging resolution of disputes expeditiously and less
expensively and when there is an arbitration agreement, the Court’s intervention should
be minimal. In BHEL Vs CN Garg & Ors30 case, it was held that, Section 5 was
inserted to discourage judicial intervention. It is seen that a party having grievances
against an arbitrator on account of bias or prejudice is not without remedy. It only has to
wait till the award is made and then it can challenge the award on various grounds under
Section 3431.
26
AIR 2009 SC.
27
(1958) SC 312.
28
In Basheshar Nath Vs Commissioner (1958)SC 312.
29
2002 SC 418.
30
AIR 2002 SC 4123.
31 Arbitration and Conciliation Act, 1996
4.4 THE COURT REFERRAL TO ARBITRATION
If a party to the dispute approaches the Court despite the presence of an arbitration
agreement, the other party can raise the objection. The Arbitration and Conciliation Act,
1996 further says that, the party must raise such an objection before submitting his first
statement on the substance of dispute. The original arbitration agreement or its certified
copy must accompany such objection. On such application, the judicial authority shall
refer the parties to arbitration. Since the word used is “shall”, it is mandatory for
judicial authority to refer the matter to arbitration.
The Supreme Court of India in P.Anand Gajapathi Raju V. P.V.G Raju32 case held that
arbitration agreement being brought into existence while action is pending before Court is
also a valid arbitration agreement.
The language of section 8 is peremptory. It is therefore, obligator for the Court to refer the
parties to the arbitration in terms of their arbitration agreement. The Supreme Court of
India in the case of Haryana Telecom Ltd V. Sterlite Industries (India) Ltd 33 held that,
notwithstanding any agreement between the parties, an arbitrator would have no
jurisdiction to order winding up of a company.
The Arbitration and Conciliation Act, 1996 under Section 9 empowers the Court to take
certain interim measures of protection including granting of interim injunctions, preservation,
interim custody, sale of goods, appointment of receivers, etc.
Supreme Court of India in the case of Bhatia International Vs Bulk Trading34 held that, the
provisions such as section 9 of the 1996 Act, relating to interim measures of protection by the
Court were the, 'general provisions which are applicable to international commercial
arbitrations held outside India, unless excluded either expressly by a statute or by an agreement
between parties, or by implication'. Thus, it is open for parties in an international arbitration with
the seat of arbitration outside India to apply for interim measures of protection within India
where the assets relating to the dispute are located in India35.
32
AIR 2000 SC 312.
33
1997 3 SCC 419.
34
AIR 2008 SC 415.
The Supreme Court of India in Firm Ashok Traders V. Gurumukh Das Saluja case held
that, the Court under Section 9 is only formulating interim measures to protect the right under
adjudication before the Arbitral Tribunal from being frustrated. The Court is conferred with the
same power for making the specified order as it has for the purpose of and in relation to any
proceeding before it through the venue of the proceedings in relation to which the power under
Section 9 is sought to exercised is the Arbitral Tribunal. The Supreme Court of India in
Sundaram Finance Ltd V NEPC India 36Ltd case held that, inorder to give full effect to
Section 9, it would not be necessary that a notice invoking the arbitration clause must be issued
to the opposite party
The parties to arbitration are free to determine the procedural rules subject, however, to
certain mandatory rules. If the parties do not agree to the procedure, the procedure will be
as determined by the arbitral tribunal. Arbitral Tribunal has powers to decide the procedure to
be followed, unless parties agree on the procedure to be followed and conduct the proceeding
in manner it considers appropriate . The Tribunal also has powers to determine the
admissibility, relevance, materiality and The concept of Conciliation has .
Thus, it is open for parties in an international arbitration with the seat of arbitration outside
India to apply for interim measures of protection within India where the assets relating to
the dispute are located in India now been given a statutory recognition .
4.6 THE ARBITRATION PROCEDURE
Arbitration proceedings are not in complex in nature unlike in regular courts, it’s pretty simple
and easy. A party commences an arbitration proceeding by issuing a notice in written to the
other party of its intention to refer the matter to arbitration. The respondent replies to the
arbitration by filing answer against the arbitration claim within stipulated time period specifying
relevant facts and available defenses against the claim. Unless otherwise agreed by the parties,
Arbitration proceedings are deemed to be commenced on the date on which the respondent
receives such notice from the claimant. After the selection of Arbitrators, parties meet in
persons for the conduct of the hearing in front of arbitrators. Lastly, after the examination of
witnesses and evidences, the arbitrator, in concluding stage, gives ‘award’ which is binding in
nature. Conduct of Arbitral proceedings are provided in Chapter V of Arbitration and
Conciliation Act, 1996.
Limitation on commencement of arbitral proceedings
The Limitation Act, 1963 applies to all proceedings under Arbitration and Conciliation Act,
1996 as it applies to proceedings in Indian courts, except to the extent clearly keep out by the
Arbitration and Conciliation Act. Any proceeding under arbitration commenced after the
limitation period (three years from the date on which the cause of action arose) will be time
barred.
Equal treatment of Parties
Both the parties should be treated equally and equal opportunities should be given to them to be
heard and to present their case.
Rules of procedure in arbitration
There are no such rules on the procedure for conducting the arbitration proceedings. The parties
are free to agree on the procedure to be followed by the arbitral tribunals in conducting its
proceedings. If no such procedure agreed by the parties, the tribunal is authorized to conduct
the proceedings in such a manner it considers appropriate.
The arbitral tribunal is expressly not bound to apply any provisions of the Civil Procedure Code
1908 and the Evidence Act, 1872. If under arbitration agreement it is mentioned, the arbitration
is to be administered by arbitral institute, the rules of that institution become part of the
arbitration clause by implication. The rules of arbitral tribunal include power to determine the
admissibility, relevance, materiality and weight of any evidence.
Place of arbitration
The parties are free to agree on the place of arbitration as per their convenience. In case failed
to agree upon place of arbitration, the arbitral tribunal shall determine the place of arbitration
considering the circumstances of case including convenience of the parties.
Language of proceedings
Parties are free to agree upon the language to be used in the arbitral proceedings. If the parties
fail to agree on any language then arbitral tribunal decides which language to be used in the
arbitral proceedings.
Statement of claim and defense
The claimant have to state the facts supporting their claim, raise the points at issues and relief or
remedy sought to the respondent within the time period stipulated by the parties or determined
by the arbitral tribunal and the respondent replies filing an answer against the arbitration claim of
claimant that specifies the relevant facts and available defences to the statement of claim.
A party can amend or supplement his claim and defence throughout arbitral proceedings, unless
the tribunal considers it unsuitable to allow the amendment or supplement in respect of the
delay in making it.
Hearings
The parties shall be given sufficient prior notice before any hearing and of any meeting of
arbitral tribunal for the inspection and verification of documents, goods and property. The
arbitral tribunal shall decide whether to hold oral hearings for the presentation of evidence or for
oral argument, or whether the proceedings shall be conducted on the basis of documents and
other materials: Arbitration and Conciliation (Amendment) Act, 2015 requires the arbitral
tribunal at least, hold oral hearings for the presentation of evidences or for oral arguments on a
day-to-day basis, and not grant adjournments unless reasonable cause is given.
All documents, statements and required information supplied, and application made to the
arbitral tribunal by the one party shall be communicated to the other party and any evidentiary
document or expert report on which an arbitral tribunal can rely in making it decision shall also
be communicated to the parties.
Default of a party
If claimant without providing sufficient cause fails to communicate his statement of claim to the
tribunal, the arbitral tribunal can terminate the proceedings with immediate effects. But it is not
the same in case of respondent if he fails to communicate his statement of defense, the arbitral
can continue the proceedings without treating that failure in itself as an admission of alienations
by the claimant.
Evidences
The parties are free to agree on the rules of gathering and submitting evidences. If they are not
agreeing on these matters, the tribunal has the discretionary power to determine how evidence
may be gathered and submitted to it. The arbitral tribunal can take both documentary and oral
evidence on record. While considering evidence tribunal required to observe the fundamental
principle of natural justice.
Court Assistance
Local courts can assist tribunals in arbitration proceedings. This includes the power of providing
interim order and appointment of arbitrator if the parties are unable to agree on the appointment
of arbitrator.
If a party makes any default, refuses to give evidence or guilty of contempt of arbitral
proceedings shall be subject to penalties or punishment by the order of the court on the
representation of arbitral tribunal.
Third party
In India, the question is yet to be answered whether the non- signatory party bound by
arbitration agreement or not. Arbitral tribunals and courts take different methods to bound non
signatory parties to an arbitration agreement like “group of companies” doctrine where a clear
intent to bind such non signatory parties. However, in Indowind Energy Ltd V. Wescare
(India) Ltd (2010) the Supreme Court of India held a “third party not a signatory to an
arbitration agreement would not be bound by such agreement, even if some sort of nexus exists
between third party and transactions of questions.”
4.7 ADVANTAGES
4.8 DISADVANTAGE
rights to access the courts and have a judge decide the case
• in most arbitration agreements, the parties are required to pay for the arbitrators, which adds
an additional layer of legal cost that can be prohibitive, especially in small consumer disputes
• in some arbitration agreements and systems, the recovery of legal costs is unavailable,
making it difficult or impossible for consumers or employees to get legal representation;
however most arbitration codes and agreements provide for the same relief that could be
granted in court
• If the arbitrator or the arbitration forum depends on the bigger party for repeat business, there
may be an inherent incentive to rule against the consumer or employee
•There are very limited avenues for appeal, which means that an
•although usually thought to be speedier, when there are multiple arbitrators on the panel,
juggling their schedules for hearing dates in long cases can lead to delays
• in some legal systems, arbitral awards have fewer enforcement remedies than judgments;
although in the United States, arbitration awards are enforced in the same manner as court
judgments and have the same effect
• Arbitrators are generally unable to enforce interlocutory measures against a party, making it
easier for a party to take steps to avoid enforcement of an award, such as the relocation of assets
offshore
• Rule of applicable law is not necessarily binding on the arbitrators, although they cannot
disregard the law.
• Disclosure of documents may be more limited in arbitration
• Unlike court judgments, arbitration awards themselves are not directly enforceable; a party
seeking to enforce an arbitration award must resort to judicial remedies
•although grounds for attacking an arbitration award in court are limited, efforts to enforce the
award can be fiercely fought, thus necessitating legal costs that negate the perceived economic
incentive to arbitrate the dispute in the first place.
36https://www.tamimi.com/law-update-articles/know-your-type-three-types-of-arbitration-agreements-in-a-nutshell/
4.9 E-ARBITRATION
The increasing popularity and dependence on the internet throughout the world has made the
number of disputes arising from e-commerce, domain names registrations, etc. even more
common. Thus, the internet can also be used in an effective manner to neutralize such issues by
way of online arbitration.
To differentiate Conventional Arbitration which requires the applicability of Arbitration and
Conciliation Act, 1996, the Online Arbitration, as the name suggests, besides the applicability
of Arbitration and Conciliation Act, 1996 also requires the aid of technologically related laws,
particularly the Information Technology Act, 2000. In other words, it can be said that Online
Arbitration is a blend of conventional Arbitration with the taste of technology in it.82
The Arbitration & Conciliation Act, 1996, if considered from the point of view of On-line
Arbitration, can be divided into three parts.
1. The arbitration agreement,
Viewing the provisions of Arbitration & Conciliation Act, 1996 (Act) in conjunction with
Information Technology Act, 2000 we need to analyze the each of the above three parts.
Online arbitration in India follows the Information Technology Act 2000 as well as the
Arbitration and Conciliation Act 1996. Under the Information Technology Act, Sections 4 &5
read with Section 65-B of Evidence Act clearly enumerates that electronic records and
signatures can be introduced as evidence and given legal recognition under the Indian legal
system.
Submitting a dispute to online arbitration can occur when there is an e-contract containing an
online arbitration clause, or when there is normally written agreement with a clause mentioning
reference to online arbitration or when the dispute arises the parties agree to resolve the matter
via online resolution.
Section 7(3) of the Arbitration and Conciliation Act, 1996 provides that an arbitration
agreement shall be in writing. However, if the parties agree online to refer the matter to cyber
arbitration through an ODR Service Provider, the question arises as to whether such a cyber-
agreement will be valid in law. Section 4 of Information Technology Act, 2000 lays down the
following provisions on this point: “Where any law provides that information, or any other
matter shall be in writing or the typewritten or printed form, then, notwithstanding anything
contained in such law, such requirement shall be deemed to have been satisfied if such
information or matter is-
(a)rendered or made available in an electronic form; and
The Hon’ble Supreme Court of India in the matter of Trimex83 Stated that “if the intention of
the parties to arbitrate any dispute has arisen in the offer and acceptance thereof, the dispute is
to be settled by arbitration. The only requirement of the arbitration agreement is that the parties
must clearly spell out the technology to be used in settlement of disputes, the place of
arbitration, laws governing the contract entered into between the two parties, the jurisdiction of
courts.”
II) Arbitral Proceeding:
The most important aspect post-judgment is the enforceability. At this stage, the role of the
national court comes into play. But due to limitless boundaries of the internet, the first and
foremost thing to consider will be affirming the location of the award
Section 31 of the Act relates to the form and contents of the arbitral award. It states that the
arbitral award must be in writing, duly signed by the arbitral tribunal. A signed copy of arbitral
award shall be delivered to each party after making the award under section 31(5).
The award can be issued through email by sending scanned signed copies in PDF format. The
actual signed copies can be sent through the post.
ODR is a generally informal, flexible and creative tool of dispute resolution which is not
governed by strict rules of procedure and evidence. This may allow the parties to design
or participate in a process which can be molded to suit their needs and encourages a
consensual rather than an adversarial approach.
ODR may reduce litigation costs: this is of importance both to corporate parties who wish
to keep costs down and to parties who otherwise might not be able to afford the cost of
litigation. The costs of the process or compensation given to the neutral evaluator are
generally borne equally by all parties, providing all parties with an equal stake in the
outcome and an equal sense of ownership.
ODR may be the appropriate option particularly for low-cost, high-volume transaction as
it often allows for a timely, cost- efficient and efficient resolution to problems where the
amounts in dispute may not be sufficiently high to justify the cost of a meeting-based
mediation (e.g. consumer disputes).
ODR also allows for a more cost-efficient resolution of disputes where there is significant
geographic distance between the parties and the amount in dispute may preclude the cost
of travel.
ODR may be appropriate where there are sensitivities between the parties that may be
exacerbated by being in the same room (e.g. matrimonial disputes).
ODR may allow for the participation of parties who could not otherwise attend an in-
person meeting due to a severe disability.
ODR is confidential (unless agreed otherwise by the parties), subject to the application of
the Access to Information Act and of the Privacy Act when the federal government is a
party. The process is appropriate when confidentiality is considered important or
necessary to the parties, which is often the case: parties utilizing DR mechanisms usually
do so on the basis that they can discuss matters freely in the expectation that they will be
disclosed, neither publicly, nor to a court.
Disadvantages of Online Dispute Resolution
ADR systems may be designed to meet a wide variety of different goals. Some of these goals
are directly related to improving the administration of justice and the settlement of particular
disputes. Some, however, are related to other development objectives, such as economic
restructuring, or the management of tensions and conflicts in communities. For instance,
developing an efficient, consensual way to resolve land disputes may be critical to an AID
mission not because of its commitment to strengthening the rule of law, but because land
disputes threaten the social and economic stability of the country. Likewise, efficient dispute
resolution procedures may be critical to economic development objectives where court delays
or corruption inhibit foreign investment and economic restructuring.
Within the context of rule of law initiatives, ADR programs can:
Increase civic engagement and create public processes to facilitate economic restructuring
and other social change
Help reduce the level of tension and conflict in a community
Manage disputes and conflicts that may directly impair development initiatives
Experience suggests that ADR programs can have a positive impact on each of these
development objectives, although the extent of the impact is very much dependent on other
conditions within the country and the fit of the design and implementation of the program with
the development objectives.
ADR programs can support a mission objective to reform the court system in several ways.
ADR can be used by the judiciary to test and demonstrate new procedures that might later be
extended to or integrated with existing court procedures. ADR systems can be created as an
option within the judicial system, either associated with the courts as a way of managing
existing caseloads, or separate from the courts to provide dispute resolution for conflicts or
constituencies not well served by the courts.
If the main problems with the courts are complex and inappropriate procedures, rather than
institutional corruption or bias, ADR programs can provide streamlined procedures to
accelerate case disposition. In some cases, these procedures may serve as models that can later
be incorporated into formal court procedures. If so, court-annexed ADR may turn out to be a
catalyst for more extensive court reform.
ADR programs can also be designed to deal with cases that could enter the court system but
may be resolved more efficiently (and perhaps with greater satisfaction) through ADR
procedures. In these cases, ADR programs can complement court reform by reducing caseloads.
They can also complement court reform by increasing access to dispute resolution services for
disadvantaged groups (e.g., urban neighborhood and rural centers), providing legal advice to
members of disadvantaged groups on whether and how to use the court system, and/or dealing
with specialized cases that the courts are not well-equipped to handle (e.g., complex
commercial disputes, labor-management disputes).
2) ADR can by-pass ineffective or discredited courts.
When the civil court system has so many institutional weaknesses and failures (inadequate
resources, corruption, systemic bias) that there is no near-term prospect of successful civil court
reform, ADR programs may be an appropriate way to provide an alternative forum.
In South Africa, India, and Bangladesh, ADR programs were developed to by-pass corrupt,
biased, or otherwise discredited court systems that could not provide reasonable justice for at
least certain parts of the population (blacks, the poor, or women). In Sri Lanka, the reputation of
the courts is relatively good, but they were ineffective in resolving many local and small
disputes because of high costs and long delays. The Mediation Boards there have evolved as a
substitute for the courts, but enjoy the support of the judicial system. Bolivia, Haiti, Ecuador,
and El Salvador are developing systems involving government support for independent, local,
informal dispute resolution panels to serve parts of the population for whom the courts are
ineffective.
Some ADR programs function as the primary institutions for resolving civil disputes, and have
effectively replaced or preempted courts. Taiwan and China have the best examples of broadly
and deeply institutionalized, community-based ADR. In both countries, local government
officials and well- respected citizens act as conciliators, mediators, and arbitrators for the vast
majority of local disputes. Taiwan's ADR system appears to be growing more popular over
time, despite social changes that have begun to erode Confucian norms of deference to local
notables.
3) ADR can increase satisfaction of disputants with outcomes. Although increasing the
satisfaction of disputants is one of the development objectives identified by earlier USAID
studies, user satisfaction is often an indirect proxy for more focused concerns such as cost,
access, and delay. The impact of ADR programs on these development objectives is addressed
in other sections. Beyond these aspects, disputant satisfaction is also affected by more subtle
factors, such as the creativity of outcomes, the impact of the ADR process on the ongoing
business or personal relationships, and disputant confidence that the system is responsive to
their needs. ADR programs can have a positive influence on all of these components of
disputant satisfaction. When evaluations of ADR systems have included an assessment of
overall user satisfaction, the ADR systems have generally compared favorably to formal legal
structures. In Sri Lanka, for example, satisfaction with the Mediation Board system is quite
high. In addition to the accessibility of the system, and the low cost, disputants indicate that the
way they are treated, the disputants' control of the process, and the community-based nature of
the system are all factors leading to high satisfaction. Satisfaction is also reflected in the
settlement and compliance rates. Nearly 65% of all mediated cases are settled, and compliance
rates, while not accurately measured, are reported to be quite high. The chairman of one
Mediation Board indicated that compliance with debtor dispute settlements, which constitute a
large proportion of the cases, is nearly 95%. The monthly caseload of the Boards more than
doubled between the first and third years of operation, indicating high satisfaction. Likewise, in
Bangladesh, almost all users indicate that they prefer mediation to the formal court system and
would use the mediation process again. In South Africa, users of commercial labor-
management mediation and arbitration cite the positive impact of ADR, relative to litigation, on
ongoing labor management relations. And throughout Southeast Asia, disputants cite a general
cultural preference for informal dispute resolution because of its ability to help reconcile and
preserve personal and commercial relationships.
4) ADR programs can increase access to justice for disadvantaged groups.
Many poor are denied access simply because they cannot afford to pay the registration and
representation fees necessary to enter the formal legal system. Since cost is probably the largest
barrier to formal dispute resolution for many people in developing countries.
Several studies indicate that the formality of court systems intimidates and discourages use. In
India and Bangladesh, for example, the court requirement of legal representation is both costly
and intimidating for people who may not be comfortable interacting with lawyers from a
different caste or class. In these and other countries, users of ADR programs have expressed a
preference for submitting cases to mediators who are local residents and understand the local
community. In Sri Lanka, users expressed their satisfaction at having their "stories" heard in an
informal process. All of these factors contribute to greater usage of and preference for informal
processes.
5) ADR programs can reduce delay in the resolution of disputes. Delays are endemic in most
court systems throughout the world and affect a number of development objectives. In some
cases, delays are so extreme that they effectively deny justice, particularly to disadvantaged
groups who may not be able to "grease the wheels" of the justice system. In other cases, delays
in the resolution of commercial disputes impair economic development and undermine the
efficiency of the economy. Informal dispute resolution (mediation and settlement programs), or
simplified procedures for dispute resolution (arbitration systems), can significantly reduce
dispute resolution delay, and indirectly reduce court backlog by redirecting cases that would
otherwise go to court.
Reduction of dispute resolution delays may serve a variety of USAID strategic objectives
outside the rule of law area. For example, in the Ukraine, support for mediation centers is
founded on the premise that mediation can serve economic development objectives by
accelerating the resolution of commercial and labor-management disputes, as well as other civil
disputes arising from the privatization process. (See Ukraine Case Study.) In South Africa,
quick resolution of labor-management disputes serves both economic and social equity
objectives.
6) ADR programs can reduce the cost of resolving disputes. Many ADR programs are designed
with a goal of reducing the cost of resolving disputes both to the disputants and to the dispute
resolution system. Whether ADR fulfills this goal is still under discussion even in the United
States, where there have been many studies of the issue. Nevertheless, the experience of at least
some of the ADR systems implemented in developing countries indicates that cost reduction is
a reasonable goal for ADR systems, and that well-designed systems can effectively meet this
goal. Relatively few comparative studies have been concluded, in part because of the lack of
data on the true costs of court dispute resolution. Several studies, however, indicate dramatic
differences in cost. For example, during the 1980s, when the lok adalat system was operating
successfully in India, a comparative study in Rajasthan indicated that the average cost of a case
handled in a lok adalat court was 38 rupees, compared with an average litigation cost of 955
rupees. The primary reason for the difference in cost was the simplicity of the system and the
lack of need for legal representation, compared with the extreme complexity of the formal court
system and the requirement of expensive representation.
Many other ADR programs seem to be successful in reducing the cost of dispute resolution and
providing access to justice for the poor. Most programs operate with only a modest fee, either
because they are managed by volunteers or because they are supported by government or donor
funds. In Sri Lanka, for example, the cost of filing for mediation is only 5 rupees, and the
number of cases filed with the Mediation Boards has increased from 13,280 in 1991 to 101,639
in 1996. Almost all the cases involve disadvantaged and poor members of the population
5. ADVANTAGES OF ADR
One of the major significance of arbitration is privacy and confidentiality of the proceedings.
Some people prefer to settle their dispute out of the public gaze. Particularly in matrimonial
disputes it is very effective. Because people don’t want that their private disputes to come in the
public. Arbitration also saves matrimonial home and relations because the dispute is resolved
peacefully with the consensus of the parties. If matters come to the ordinary civil court in most
of the cases the relation become strained and family shatters. Further, some disputes involve
highly technical issues therefore it would be useful if at least one member of the tribunal is
expert in that field. Since in arbitration it is the party who select the member of the tribunal,
they select at least one member expertise in that field. However, in the ordinary court judge
may not be expert in that field and therefore we can’t expect proper justice in that case.87
2. Flexibility
Arbitration is very much flexible both in time and procedure. If dispute needs urgent resolution,
the parties can choose a tribunal who will act promptly rather depending on the luck of the
draw from a court list. The parties are also free to choose the most suitable procedure. The
parties are also free to be represented by anyone of their choice and they are not bound by rules
limiting appearance to persons with particular legal qualifications. 88
3. Neutrality and Equality
Where the parties belongs to the different countries they don’t wishes to litigate in the ordinary
court of law rather they prefer arbitration. Because arbitration offers them neutrality in the
choice of law, procedure and tribunal. They can choose the law and procedure of the third or
they can appoint an arbitrator which belong to the third country. It gives them confident of
equality and there is parity of power between them89.
4. Principal of Natural Justice
Arbitrator is not bound by the strict procedure of the Civil Procedure Code and law of evidence.
However, he has to follow the principle of natural justice. It is one of the advantages of the
alternative dispute resolution that it avoids technicality and complexity of law and focuses on
the problem of the disputant parties and tries to resolve it with simple method or procedure.
88 Id; p.10
5. Enforceability of award
Another advantage of the arbitration is the extensive enforceability of the award. Today, there
are various conventions which recognise arbitral awards and enforce it in many countries than
English court judgment.
6. Control over both the process and the outcome –
An important benefit of using ADR methods is that the disputant has control over both the
process and the outcome of the resolution.
7. Amicable Settlement –
Alternative disputes method promote amicable settlement of dispute. It enables the parties to
resolve the dispute and bury the past. Which results in the preservation of the present relation
and at the same time it paves better for future.
8. Payment of Court fee
In Alternative Dispute Resolution there is no need of payment of Court fees as it is paid in the
ordinary court before the hearing of civil cases. If court fee is not paid, the court does not
entertain the suit. Sometimes, the parties are not in a position to pay the court fee. ADR is the
best resort for those kinds of people.
He knows that he would win or lose all. On the Contrary, if he gives his consent for the
informal settlement, he knows very well that he might not get all that he wants, but he will also
not lose everything.
10. When a disputant goes to the court,
He knows that he would win or lose all. On the Contrary, if he gives his consent for the
informal settlement, he knows very well that he might not get all that he wants, but he will also
not lose everything.
11. Procedural flexibility
ADR provides procedural flexibility which is not found in the traditional court. It may be as
casual as a discussion around the conference table. The disputant has freedom to choose the
procedure and applicable law.
12. Win- Win Situation
The Court procedure results in win-lose situation. In other words, in the ordinary court litigation
a party shall either win the case or lose his claim. On the contrary, in ADR a person may not get
all that he wants, but he will certainly not lose everything.
Is that it does not only resolve the dispute but also the pathology of the dispute. Which hit at the
root of the dispute and it bring normalcy in the relationship of the disputant.
14. ADR provides participatory solution
Alternative Dispute Redressal or Alternative Dispute Resolution has been an integral part of our
historical past. Like the zero, the concept of Lok Adalat (Peoples’ Court) is an innovative
Indian contribution to the world of Jurisprudence. The institution of LokAdalat in India, as the
very name suggests means, Peoples’ Court. ‘Lok’ stands for ‘people’ and the vernacular
meaning of the term ‘Adalat’ is the Court. India has long tradition and history of such methods
being practiced in the society at grass root level. These are called panchayat, and in legal
terminology these are called arbitration. These are widely used in India for resolution of
disputes both commercially and non-commercially.
The ancient concept of settlement of disputes through mediation, negotiation or through arbitral
process is known as “Peoples’ Court Verdict” or “Nyaya-Panch” which is conceptualized and
institutionalized in the philosophy of Lok Adalat. Some people equate Lok Adalat to
conciliation or mediation, whereas some treat it with negotiation or arbitration. Those who find
it different from all these, call it “Peoples’ Court”. It involves people who are directly and
indirectly involved by dispute resolution.93
The concept of Lok Adalat was pushed back into oblivion in last few centuries before
independence and particularly during the British regime. Now this concept has once again been
rejuvenated. It has once again become familiar and popular amongst litigants.94
The movement towards Alternative Dispute Redressal (ADR) has received Parliamentary
recognition and support. The advent of Legal Services Authorities Act, 1987 gave a statutory
status to Lok Adalats, pursuant to the constitutional mandate in Article- 39A of the Constitution
of India, which contains various provisions for settlement of disputes through Lok Adalat. It is
an Act to constitute legal service authorities 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 by reason of economic and other disabilities, and to organise Lok Adalats to secure
that the operation of the legal system promotes justice on a basis of equal opportunity. Before
the enforcement of the Act, the settlements of disputes were in the hands of the Panchayat head
or the tribal head. But when statutory recognition had been given to Lok Adalat, it was
specifically provided that the award passed by the Lok Adalat formulating the terms of
compromise will have the force of decree of a court which can be executed as a civil court
decree.95
93V. Karthyaeni and Bhatt Vidhi, “LokAdalat and Permanent LokAdalats- A Scope for Judicial Review: A Critical
Study”, viewed at www.legalserviceindia.com (visited on November 28,2018)
94Ibid
95Singh, Dr. Avtar; Law of Arbitration and Conciliation (including ADR Systems), Eastern Book Company,
29,2018) 99Singh, Dr. Avtar; Law of Arbitration and Conciliation (including ADR Systems), Eastern Book
Company, Lucknow, 7th Edition (2006), pp. 394- 395
Further, the recent amendments of the Civil Procedure Code will give a boost to ADR. Section
89 (1) of CPC deals with the settlement of disputes outside the court. It provides that where it
appears to the court that there exist elements, which may be acceptable to the parties, the court
may formulate the terms of a possible settlement and refer the same for arbitration, conciliation,
mediation or judicial settlement.101 While upholding the validity of the CPC amendments in
Salem Advocate Bar Association, Tamil Nadu v. U.O.I,102 the Supreme Court had directed
the constitution of an expert committee to formulate the manner in which section 89 and other
provisions introduced in CPC have to be brought into operation. The Court also directed to
devise a model case management formula as well as rules and regulations, which should be
followed while taking recourse to alternative dispute redressal referred to in Section 89 of CPC.
All these efforts are aimed at securing the valuable right to speedy trial to the litigants.103
ADR was at one point of time considered to be a voluntary act on the apart of the parties which
has obtained statutory recognition in terms of Civil Procedure Code (Amendment) Act, 1999;
Arbitration and Conciliation Act, 1996; Legal Services Authorities Act, 1997 and Legal
Services Authorities (Amendment) Act, 2002. The access to justice is a human right and fair
trial is also a human right. In India, it is a Constitutional obligation in terms of Art.14 and 21.
Recourse to ADR as a means to have access to justice may, therefore, have to be considered as
a human right problem. Considered in that context the judiciary will have an important role to
play.104
The Supreme Court of India has also suggested making ADR as ‘a part of a package system
designed to meet the needs of the consumers of justice’. The pressure on the judiciary due to
large number of pending cases has always been a matter of concern as that being an obvious
cause of delay. The culture of establishment of special courts and tribunals has been pointed out
by the Hon’ble Supreme Court of India in number of cases. The rationale for such an
establishment ostensibly was speedy and efficacious disposal of certain types of offences.105
100Justice Dispensation through ADR Systems in India, viewed at www.legalindia.in (visited on November
29,2018)
101Ibid
102(2005) SCC 6 (344)
103Singh Sunil, Alternative Dispute Resolution in India viewed at www.ijtr.nic.in (visited on November 29,2018)
104Justice Dispensation through ADR Systems in India, viewed at www.legalindia.in (visited on November
29,2018)
105Ibid
Industrial Disputes Act, 1947 provides the provision both for conciliation and arbitration for
the purpose of settlement of disputes. In Rajasthan State Road Transport Corporation v.
Krishna Kant, the Supreme Court observed: “The policy of law emerging from Industrial
Disputes Act and its sister enactments is to provide an alternative dispute-resolution mechanism
to the workmen, a mechanism which is speedy, inexpensive, informal and unencumbered by the
plethora of procedural laws and appeals upon appeals and revisions applicable to civil courts.
Indeed, the powers of the courts and tribunals under the Industrial Disputes Act are far more
extensive in the sense that they can grant such relief as they think appropriate in the
circumstances for putting an end to an industrial dispute.”106
Section 23(2) of the Hindu Marriage Act, 1955 mandates the duty on the court that before
granting relief under this Act, the Court shall in the first instance; make an endeavour to bring
about reconciliation between the parties, where it is possible according to nature and
circumstances of the case. For the purpose of reconciliation the Court may adjourn the
proceeding for a reasonable period and refer the matter to person nominated by court or parties
with the direction to report to the court as to the result of the reconciliation [Section 23(3) of the
Act].107
The Family Court Act, 1984 was enacted to provide for the establishment of Family Courts
with a view to promote conciliation in, and secure speedy settlement of, disputes relating to
marriage and family affairs and for matter connected therewith by adopting an approach
radically different from the ordinary civil proceedings. Section 9 of the Family Courts Act,
1984 lays down the duty of the family Court to assist and persuade the parties, at first instance,
in arriving at a settlement in respect of subject matter. The Family Court has also been
conferred with the power to adjourn the proceedings for any reasonable period to enable
attempts to be made to effect settlement if there is a reasonable possibility.108
Shri M.C. Setalvad, former Attorney General of India has observed: “….equality is the basis of
all modern systems of jurisprudence and administration of justice… in so far as a person is
unable to obtain access to a court of law for having his wrongs redressed or for defending
himself against a criminal charge, justice becomes unequal, …Unless some provision is made
for assisting the poor men for the payment of Court feesand lawyer’s fees and other incidental
costs of litigation, he is denied equality in the opportunity to seek justice.”109
106Ibid
107Ibid
108Ibid
109Ibid
7. INTERNATIONAL COMMERCIAL ARBITRATION
With the growth of globalization, liberalization regimes and rapid advancement in international
business relationships, it is increasingly pertinent to have a flexible and quick method of
resolving disputes. Arbitration is a preferred process of dispute resolution chosen by parties,
wherein parties intentionally agree to submit their case to a neutral third party and agree to be
bound by his/her decision. Section 2(1)(f) of The Arbitration and Conciliation Act, 1996,
defines an International Commercial Arbitration which means: an arbitration relating to
disputes arising out of legal relationships, whether contractual or not, considered as commercial
under the law in force in India and where at least one of the parties is—
1. An individual who is a national of, or habitually resident in, any country other than India; or
2. A body corporate which is incorporated in any country other than India;
3. A company or an association or a body of individuals whose central management and control
is exercised in any country other than India;
4. The Government of a foreign country
The scope of this section was determined by the Supreme Court in the case of TDM
Infrastructure Pvt. Ltd. v. UE Development India Pvt. Ltd 110where in spite of company
having a foreign control, the Supreme Court concluded that, “a company incorporated in India
can only have Indian nationality for the purpose of the Act.”
In the United Nation Commission on International Trade Law (UNCITRAL) Model Law,
arbitration is deemed to be international if any one of four different situations is present:
Article 1 (3)
(a)The parties to the arbitration agreement have, at the time of the conclusion of the agreement,
their places of business in different States.
(b)One of the following places is situated outside the State in which the parties have their
places of business:
(i) The place of arbitration, if determined in or pursuant to, the arbitration agreement, is situated
outside the State in which the parties have their places of business
(ii) Any place where a substantial part of the obligations of the commercial relationship is to be
performed or the place with which the subject-matter of the dispute is most closely connected
(iii) The parties have expressly agreed that the subject-matter of the arbitration agreement
relates to more than one country.
7.2 Meaning of Commercial:
The word commercial includes the day to day international business activities that have become
part of the international trade nowadays. In Koch Navigation Inc v Hindustan Petroleum Corp
Ltd111it was held that “liberal construction is to be given to any expression or phrase used in
the Act”.
In Atiabari Tea Co. Ltd v State of Assam112, it was held that “trade and commerce in
India has a wide meaning.”
Court process involves extensive procedures and rules, which a party needs to follow. If parties
refer their dispute to arbitration, they need not follow strict procedures of law. Hence, the
dispute solving becomes speedy.
2. Enforceability of Arbitral Awards:
Since arbitration is a time effective remedy and does not involve too many procedures, it is less
expensive as compared to litigation procedures.
7.4 ANALYSIS
In recent years there has been a significant increase in international businesses operating out of
India. This has led to an increase in international arbitrations having its seat of arbitration in
India. Both arbitration and litigation perform the same function
i.e. effective delivery of justice but the fact is that arbitration has few characteristics which
makes it a more viable option as compared to its counterpart. Thus, the degree of protection that
it guarantees is far reaching.
The judicial trend post Bhatia, as far as international arbitrations held out of India are
concerned, showed a preference for interference on the part of Indian courts. This is amply
evident from the judgment of Indian courts.This clearly had an adverse impact on the business
environment prevailing in the country. It also railed against the underlying principles of
arbitration as a method of speedy resolution of disputes. The Supreme Court instead of
overruling the Bhatia case used its ratio to devise an implied exclusion route. The Apex Court
also widened the ambit of this implied exclusion route sufficiently enough to cover all fact
scenarios where an ICA was held out of India. However, the position soon changed with the
Supreme Court judgment in the BALCO case, where the court expressly overruled its Bhatia
decision. The BALCO decision, however, had only prospective applicability. "The Bhatia ratio
continued to operate for cases where the arbitration agreement had been executed before 6
September 2012. However, the judicial trend of following the implied exclusion route
continued. Even in the post BALCO era, the Apex Court, while conceding that Bhatia ratio was
applicable, followed the judicial trend of taking the implied exclusion route to exclude the
applicability of Part I. The recent Amendment Act changes everything, as it makes Sections 9,
27, 37(1)(a), and 37(3) applicable to international commercial arbitrations held out of India.
The Amendment Act, however, allows the parties to exclude the applicability of Part I, in
general, and these provisions, in particular, by mutual agreement. There is still some
uncertainty over the applicability of the Amendment Act.
COURT PROCEEDING CASE DETAILS
In the case an arbitration agreement was entered into between the parties. Later on disputes
arose between the parties resulting in the commencement of arbitral proceedings. Under the
terms of the award, a direction was issued under which the parties were required to return
documents of title and share certificates contemporaneously with paying an amount of Rs.
3,58,11,000 together with interest at 12% p.a. on a sum of Rs. 2.55 crores. SPL challenged the
award of the arbitral tribunal under Section 34 of the Arbitration and Conciliation Act, 1996 on
the ground that the arbitral award could not be executed against the appellant who is admittedly
not a signatory to the agreement.
The proceeding is at the stage of arbitration and was given the next date of arbitration.
PERSONAL OBSERVATION
During the proceeding, I observed that the parties to the matter were of the opinion to not file a
suit but to resolve the matter through mutual consent over arbitration.
The arbitrator was well aware of the facts of the case and the plea of the parties, and keeping
that in view he took into consideration all the necessary requirements from both the parties. He
was not biased to any of the parties, and was giving his best to bring the matter to a settlement
which will be agreed by both the parties.
He took into his consideration that both the parties were comfortable with his observation and
award contrary to the proceeding which take place in the trail suit.
NATIONAL SEMINAR ON EMERGING TRENDS OF ALTERNATIVE DISPUTE
RESOLUTION IN INDIA
The National Seminar on Emerging Trends of Alternative Dispute Resolution in India was
organized by Faculty of Law, Jamia Millia Islamia on October 9-10, 2018.
Objective of this Seminar:
Alternative Dispute Resolution is being increasingly acknowledged in the field of law and
commercial sector. The very reasons for origin of Alternative Dispute Resolution are tiresome
processes of litigation, higher costs and inadequacy of the court system. In the final quarter of
the last century, there was phenomenal growth of science and technology. It has made a great
impact on commercial life while increasing competition throughout the world. It also generated
a concern for protection of the rights of the parties. The legal system does not provide adequate
response to the new regime and problems relating to the commercial world which requires
speedy and effective resolution of disputes. In this context, dispute resolution through ADR
techniques are seen as more effective and viable. Considering its significance, the Faculty of
Law, JMI organised a Seminar on Alternative Dispute Resolution with the following proposed
objective:
To enhance the knowledge, understanding and scope of ADR;
To explore and expound the understanding of the emerging trends of ADR;
To create awareness of importance of ADR as part of justice delivery system;
To strengthen the implementation of ADR effectively;
To equip the students and professionals with practical aspect of ADR techniques to
promote independent career in the field; &
To look for futuristic assessment of best practicein the area of ADR.
Alternative Dispute Resolution (ADR) is a collection of techniques used for the purpose of
resolving conflicts informally while avoiding lengthy and costly legal procedures. The present
seminar has been conceptualized with the objective of taking stock of the progress made by
India in the sphere of law; while creating space for discussion on matters pertaining to legal
issues concerning Alternative Dispute Resolution. In this background there is an incessant call
to hold seminars, conferences, workshops, symposia and discussions to elicit valuable inputs
from the ground so as to effectively shed light on the usage of the best practices of dispute
resolution techniques in India. The Seminar aims to enhance the understanding of the legal
issues related to dispute resolution techniques while providing an updated account of law
incorporating the recent amendments in the Arbitration and Conciliation Act, 1996.
This National Seminar offered an opportunity to experts from various disciplines comprising of
Researchers, Academicians, Policymakers, Government Organizations, Law Experts,
International Lawyers, Judges, Negotiators, Diplomats, Government Representatives, National
Organizations, Media Representatives, Non-Governmental Organizations and Students to come
together and share their valuable thoughts on the issues relating to following major themes:
The welcome speech was delivered by Prof. Kahkashan Y.Danyal, (Officiating Dean, Faculty
of Law, JMI) and Mr. P.K. Malhotra, Former Law Secretary, Ministry of Law & Justice, Govt.
of India, New Delhi was sharing the dais as the chief guest for the event. The other dignitaries
and experts in the field who dwelt upon the subject of discussion included Mr. Ajay Thomas,
Vice Chairman, ICC India Arbitration Group, New Delhi, Mr. Nikhil Chopra, Coordinator,
Delhi International Arbitration Centre, New Delhi, Dr. Aman Hingorani, Advocate -on-
Record & Accredited Mediator, Supreme Court of India, New Delhi, Mr. Ratan K. Singh,
Fellow of Chartered Institute of Arbitrators, Advocate & Arbitrator, South Delhi, Prof.(Dr.)
Pradeep Kulshrestha, Dean, School of Law, Sharda University, Prof. Saleem Akhter, Former
Dean & Chairman, Faculty of Law, Aligarh Muslim University, Aligarh. The event had five
technical sessions and 88 papers scheduled for presentation.
Prof. Nuzhat Parveen Khan, Dean, Faculty of Law, JMI, Dr. Faizanur Rahman, Assistant
Professor, F/L, JMI and the team of enthusiastic volunteers toiled a lot to make this Seminar a
grand success.
Finally Dr. Faizanur Rahman, Convener of the Seminar delivered formal vote of thanks
extending subtle gratitude to the dignitaries, academicians, participants and the student
volunteers at the Valedictory Session. The seminar got concluded with lot of positive energy
towards the subject and future prospects.
8. CONCLUSION
ADRs are an integral part of the policies aimed at improving access to justice. In effect, they
complement judicial procedures, insofar as the methods used in the context of ADRs are often
better suited to the nature of the disputes involved. ADR can help the parties to enter into
dialogue where this was not possible before, and to come to their own assessment of the value
of going to court.
While ADR processes, such as mediation and conciliation, must form an integral part of a
modern civil justice system in providing greater access to justice, these processes should only
be used in appropriate cases. Furthermore, the role of the legal profession should not be
overlooked in relation to assessing the appropriateness of ADR. Many disputants may not be
aware of the full spectrum of dispute resolution processes which are available to them and,
when assessing a client case, solicitors should also assess whether ADR is appropriate because:
An effective justice system must be accessible in all its parts. Without this, the system risks
losing its relevance to, and the respect of, the community it serves. Accessibility is about more
than ease of access to sandstone buildings or getting legal advice. It involves an appreciation
and understanding of the needs of those who require the assistance of the legal system.
Because justice is not executed speedily men persuade themselves that there is no such thing as
justice. Sharing the same sentiments, Chief Justice Bhagwati said in his speech on Law Day, “I
am pained to observe that the judicial system in the country is on the verge of collapse. These
are strong words I am using but it is with considerable anguish that I say so. Our judicial
system is creeking under the weight of errors.” Arrears cause delay and delay means negating
the accessibility of justice in true terms to the common man. Countless rounds to the Courts
and the lawyers’ chambers can turn any person insane. Even then loitering and wasting time in
the corridors of Courts has become a way of life for a majority of Indians who day by day are
becoming litigious. Some of the main reasons for delay in the disposal of cases are abnormal
increase in the number of cases going to Courts and Tribunals, mainly due to faulty legislation
enacted hurriedly, arbitrary administrative orders, increased consciousness of one’s rights and
gambler’s instinct in a litigant due to multiplicity of appeals and revisions provided in law.”
The disputants want a decision, and that too as quickly as possible. As the problem of
overburdened Courts has been faced all over the world, new solutions were searched. Various
Tribunals were the answer to the search. In India, we have a number of Tribunals. However, the
fact of the matter is that even after the formation of so many Tribunals, the administration of
justice has not become speedy. Thus, it can be safely said that the solution lies somewhere else.
All over the globe the recent trend is to shift from litigation towards Alternative Dispute
Resolution. It is a very practical suggestion, which if implemented, can reduce the workload of
Civil Courts by half. Thus, it becomes the bounden duty of the Bar to take this onerous task of
implementing ADR on itself so as to get matters settled without going into the labyrinth of
judicial procedures and technicalities. The Bar should be supported by the Bench in this
herculean task so that no one is denied justice because of delay. It is important here to mention
the statement made by John F. Kennedy in this respect: “Let us never negotiate out of fear but
let us never fear to negotiate.”
With the advent of the alternate dispute resolution, there is new avenue for the people to settle
their disputes. The settlement of disputes in Lok Adalat quickly has acquired good popularity
among the public and this has really given rise to a new force to ADR and this will no doubt
reduce the pendency in law Courts. There is an urgent need for justice dispensation through
ADR mechanisms. The ADR movement needs to be carried forward with greater speed. This
will considerably reduce the load on the courts apart from providing instant justice at the door-
step, without substantial cost being involved. If they are successfully given effect then it will
really achieve the goal of rendering social justice to the parties to the dispute.
It was red letter day in the history of the procedural law when section 89 was introduced in the
code of civil procedure, 1908. Section 89 emerged with the mechanism of settling dispute
outside the purview of the existing court. The idea behind introducing this mechanism is to
provide parties a chance to settle dispute on their own so as to reduce burden of the court in
trivial matters as well. This mechanism tries to reduce the long lasting litigation and go for
compromise decree in fewer expenses and in a short span of time.
Inference that can be drawn from this judgment is that consent is always given priority in
seeking remedies. The Court aptly stated that there must be free consent of both the parties
before exercising ADR Processes under section 89 of the code of Civil Procedure.
If section 89 is to be read and required to be implemented in its literal sense, it will be a ‘Trial
Judge's nightmare’. It puts the cart before the horse and lays down an impractical, if not
impossible, procedure in sub-section (1). It has mixed up the definitions in sub-section (2). In
spite of these defects, the object behind section 89 is laudable and sound. Resort to alternative
disputes resolution processes is necessary to give speedy and effective relief to the litigants and
to reduce the pendency in and burden upon the courts. As ADR processes were not being
resorted to with the desired frequency, Parliament thought it fit to introduce Section 89 and
Rules 1-A to 1-C in Order X in the Code, to ensure that ADR process was resorted to before the
commencement of trial in suits.
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