ALTERNATE DISPUTE RESOLUTION

India

Alternative dispute resolution in India is not new and it was in existence even under the previous Arbitration Act, 1940. The Arbitration and Conciliation Act, 1996 has been enacted to accommodate the harmonisation mandates of UNCITRAL Model. To streamline the Indian legal system the traditional civil law known as Code of Civil Procedure, (CPC) 1908 has also been amended and section 89 has been introduced. Section 89 (1) of CPC provides an option for the settlement of disputes outside the court. It provides that where it appears to the court that there exist elements, which may be acceptable to the parties, the court may formulate the terms of a possible settlement and refer the same for arbitration, conciliation, mediation or judicial settlement.

Due to extremely slow judicial process, there has been a big thrust on Alternate Dispute Resolution mechanisms in India. While Arbitration and Conciliation Act, 1996 is a fairly standard western approach towards ADR, the Lok Adalat system constituted under National Legal Services Authority Act, 1987 is a uniquely Indian approach.

Arbitration and Conciliation Act, 1996

Part I of this act formalizes the process of Arbitration and Part III formalizes the process of Conciliation. (Part II is about Enforcement of Foreign Awards under New York and Geneva Conventions.)

Arbitration

The process of arbitration can start only if there exists a valid Arbitration Agreement between the parties prior to the emergence of the dispute. As per Section 7, such an agreement must be in writing. The contract regarding which the dispute exists, must either contain an arbitration clause or must refer to a separate document signed by the parties containing the arbitration agreement. The existence of an arbitration agreement can also be inferred by written correspondence such as letters, telex, or telegrams which provide a record of the agreement. An exchange of statement of claim and defense in which existence of an arbitration agreement is alleged by one party and not denied by other is also considered as valid written arbitration agreement.

Any party to the dispute can start the process of appointing arbitrator and if the other party does not cooperate, the party can approach the office of Chief Justice for appointment of an arbitrator. There are only two grounds upon which a party can challenge the appointment of an arbitrator – reasonable doubt in the impartiality of the arbitrator and the lack of proper qualification of the arbitrator as required by the arbitration agreement. A sole arbitrator or a panel of arbitrators so appointed constitute the Arbitration Tribunal.

Except for some interim measures, there is very little scope for judicial intervention in the arbitration process. The arbitration tribunal has jurisdiction over its own jurisdiction. Thus, if a party wants to challenge the jurisdiction of the arbitration tribunal, it can do so only before the tribunal itself. If the tribunal rejects the request, there is little the party can do except to approach a court after the tribunal makes an award. Section 34 provides certain grounds upon which a party can appeal to the principal civil court of original jurisdiction for setting aside the award.

The period for filing an appeal for setting aside an award is over, or if such an appeal is rejected, the award is binding on the parties and is considered as a decree of the court.

Binding and Non-binding Arbitration 

Arbitration is much like a trial, in that the parties can call witnesses, present evidence, and argue the merits of their case to a neutral decision maker. In many jurisdictions, civil litigants whose claims do not exceed a certain dollar amount may be ordered to attend arbitration by the court, in an effort to keep the court’s docket clear for more substantial lawsuits. Local court rules may also allow litigants to elect for their case to be sent to arbitration regardless of the dollar amount at stake. In doing so, the parties can agree that the results of the arbitration will be binding or non-binding. In non-binding arbitration, the loser can afterwards request a new trial in the civil court. 

The court will appoint a well-established attorney in the local area to perform the duties of arbitrator. This person will act as a judge at the arbitration hearing, listening to the evidence and rendering a decision. Parties may be given some amount of say in the arbitrator selection process. At a minimum, they will be allowed to strike potential arbitrators with whom they have had prior dealings. 

Once a case is sent to arbitration, a conference will be held either by telephone, or in person at the arbitrator’s office. Much like a pre-trial conference in civil court, this is the opportunity for the parties to give the arbitrator an overview of what the case is about, and to discuss any evidentiary issues in advance of the arbitration hearing. On the day of the hearing, the parties will meet in a conference room at the arbitrator’s office or in an empty room at the courthouse. Each side will present its case over the course of several hours. Afterward, the arbitrator can render a decision immediately, or take the matter under advisement and issue a written decision in the following weeks. 

Conciliation

Conciliation is a less formal form of arbitration. This process does not require an existence of any prior agreement. Any party can request the other party to appoint a conciliator. One conciliator is preferred but two or three are also allowed. In case of multiple conciliators, all must act jointly. If a party rejects an offer to conciliate, there can be no conciliation.

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

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

Note that in the US, this process is similar to mediation. However, in India, mediation is different from conciliation and is a completely informal type of ADR mechanism.

Lok Adalat

Etymologically, Lok Adalat means “people’s court”. India has had a long history of resolving disputes through the mediation of village elders. The current system of Lok Adalats is an improvement on that and is based on Gandhian principles. This is a non-adversarial system, whereby mock courts (called Lok Adalats) are held by the State Authority, District Authority, Supreme Court Legal Services Committee, High Court Legal Services Committee, or Taluk Legal Services Committee, periodically for exercising such jurisdiction as they thinks fit. These are usually presided by retired judge, social activists, or members of legal profession. It does not have jurisdiction on matters related to non-compoundable offences.

While in regular suits, the plaintiff is required to pay the prescribed court fee, in Lok Adalat, there is no court fee and no rigid procedural requirement (i.e. no need to follow process given by [Indian] Civil Procedure Code or Indian Evidence Act), which makes the process very fast. Parties can directly interact with the judge, which is not possible in regular courts.

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

The focus in Lok Adalats is on compromise. When no compromise is reached, the matter goes back to the court. However, if a compromise is reached, an award is made and is binding on the parties. It is enforced as a decree of a civil court. An important aspect is that the award is final and cannot be appealed, not even under Article 226 of the Constitution of India

[which empowers the litigants to file Writ Petition before High Courts]

because it is a judgement by consent.

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

Permanent Lok Adalat for public utility services.

In order to get over the major drawback in the existing scheme of organisation of Lok Adalats under Chapter VI of the Legal Services Authorities Act 1987, in which if the parties do not arrive at any compromise or settlement, the unsettled case is either returned to the back to the court or the parties are advised to seek remedy in a court of law, which causes unnecessary delay in dispensation of justice, Chapter VI A was introduced in the Legal Services Authorities Act, 1987, by Act No.37/2002 with effect from 11-06-2002 providing for a Permanent Lok Adalat to deal with pre-litigation, conciliation and settlement of disputes relating to Public Utility Services, as defined u/sec.22 A of the Legal Services Authorities Act, 1987, at pre-litigation stage itself, which would result in reducing the work load of the regular courts to a great extent. Permanent Lok Adalat for Public Utility Services, Hyderabad, India

The Lok Adalat is presided over by a sitting or retired judicial officer as the chairman, with two other members, usually a lawyer and a social worker. There is no court fee. If the case is already filed in the regular court, the fee paid will be refunded if the dispute is settled at the Lok Adalat. The procedural laws and the Evidence Act are not strictly followed while assessing the merits of the claim by the Lok Adalat.

Main condition of the Lok Adalat is that both parties in dispute should agree for settlement. The decision of the Lok Adalat is binding on the parties to the dispute and its order is capable of execution through legal process. No appeal lies against the order of the Lok Adalat.

Lok Adalat is very effective in settlement of money claims. Disputes like partition suits, damages and matrimonial cases can also be easily settled before Lok Adalat as the scope for compromise through an approach of give and take is high in these cases.

Lok Adalat is a boon to the litigant public, where they can get their disputes settled fast and free of cost.

Using Mediation to Reach a Settlement 

Mediation is a much different type of ADR proceeding. Unlike arbitration, it does not involve an adversarial hearing, and there is no decision-making official present. Instead, the parties involved in the dispute are brought together in one location, and a neutral facilitator acts as a go-between. The job of the mediator is to help the parties reach a voluntary settlement of the case. For litigants and attorneys who have become antagonistic toward each other over the course of the litigation, or who have unrealistic expectations concerning the outcome of the case, mediation may be their only chance to avoid having to go to trial. 

A typical mediation begins with everyone meeting in the same room, and each party giving a short presentation to the mediator. The purpose of the presentation is to give an overview of the facts and impress upon the mediator the relative strength of that party’s case. The parties then split up into two rooms. The mediator goes back and forth between the rooms, personally relaying the parties’ settlement offers and responses. Parties can share information with the mediator in confidence, and the mediator will give the parties his or her own thoughts about the case. In the end, the goal is for the parties to agree on how the case should be resolved. 

Mediation

Mediation is a flexible process that can be used to settle disputes in a whole range of situations such as:

  • consumer disputes
  • contract disputes
  • family disputes
  • neighborhood disputes

Mediation is another of the methods of alternative dispute resolution (ADR) available to parties. The role of the mediator is to help parties reach a solution to their problem and to arrive at an outcome that both parties are happy to accept. Mediators avoid taking sides, making judgments or giving guidance. They are simply responsible for developing effective communications and building consensus between the parties.Mediation is essentially a negotiation facilitated by a neutral third party. Unlike arbitration, which is a process of ADR somewhat similar to trial, mediation doesn’t involve decision making by the neutral third party. The focus of a mediation meeting is to reach a common sense settlement agreeable to both parties in a case.

Mediation is a voluntary process and will only take place if both parties agree. It is a confidential process where the terms of discussion are not disclosed to any party outside the mediation hearing.The disputing parties work with a neutral third party, the mediator, to resolve their disputes. The mediator facilitates the resolution of the parties’ disputes by supervising the exchange of information and the bargaining process.The mediator helps the parties find common ground and deal with unrealistic expectations. He or she may also offer creative solutions and assist in drafting a final settlement. The role of the mediator is to interpret concerns, relay information between the parties, frame issues, and define the problems.

If parties are unable to reach agreement, they can still go to court. Details about what went on at the mediation will not be disclosed or used at a court hearing.

Both parties share the cost of mediation, which will depend on the value and complexity of the claim.

When to mediate

Mediation is usually a voluntary process, although sometimes statutes, rules, or court orders may require participation in mediation.Mediation is common in small claims courts, housing courts, family courts, and some criminal court programs and neighborhood justice centers.

Unlike the litigation process, where a neutral third party (usually a judge) imposes a decision over the matter, the parties and their mediator ordinarily control the mediation process — deciding when and where the mediation takes place, who will be present, how the mediation will be paid for, and how the mediator will interact with the parties.

After Mediation

If a resolution is reached, mediation agreements may be oral or written, and content varies with the type of mediation. Whether a mediation agreement is binding depends on the law in the individual jurisdictions,but most mediation agreements are considered enforceable contracts. In some court-ordered mediation, the agreement becomes a court judgment. If an agreement is not reached, however, the parties may decide to pursue their claims in other forums.

The mediation process is generally considered more prompt, inexpensive, and procedurally simple than formal litigation. It allows the parties to focus on the underlying circumstances that contributed to the dispute, rather than on narrow legal issues.The mediation process does not focus on truth or fault. Questions of which party is right or wrong are generally less important than the issue of how the problem can be resolved. Disputing parties who are seeking vindication of their rights or a determination of fault will not likely be satisfied with the mediation process.

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