Faculty of Law

B.A.LLB. (H.)
DISSERTATION ON ALTERNATE DISPUTE RESOLUTION

Submitted by: Submitted to:

Mohd Hamza Hussain Adv. Madhu Saini
Sec. – B Faculty of Law,
IV Year (7th Sem.) Jamia Millia Islamia.
Roll No. – 20

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ACKNOWLEDGEMENT
Firstly, I would like to express my profound sense of gratitude towards the almighty
“ALLAH” for providing me with the authentic circumstances which were mandatory for the
completion of my project.
Secondly, I am highly indebted to Adv. Madhu Saini at Faculty of Law, Jamia Millia
Islamia University, New Delhi for providing me with constant encouragement and guidance
throughout the preparation of this project.
Thirdly, I thank the Law library staff who liaised with us in searching material relating to the
project.
My cardinal thanks are also for my parents, friends and all teachers of law department in our
college who have always been the source of my inspiration and motivation without which I
would have never been able to unabridged my project.
Without the contribution of the above said people I could have never completed this project.

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LIST OF ABBREVIATIONS

 AALCC - Asian African Legal Consultative Committee

 ACAS - Advisory, Conciliation and Arbitration Service
 ADR - Alternate Dispute Resolution
 AIR - All India Reporter
 American Arbitration Association (AAA).
 AMLEAD - Arbitration Mediation Legal Education and Development
 Anor. - Another
 Arb - Arbitration
 Arb.L.R. – Arbitration Law Reporter
 Arbitration and Mediation Centre of World Intellectual Property Organization.
 BOM CR - Bombay Case Reporter
 BOM LR - Bombay Law Reporter
 Cal. – Calcutta
 Co. - Company
 CPC - Civil Procedure Code
 Del - Delhi
 Eg. - Example
 Etc. - Et cetra
 EURAM Bank - European American Investment Bank
 FGC - Family Group Conferences
 GDR - Global Depositories Receipt
 i.e. - That is
 ICC - International Chamber of Commerce
 ICCA - International Council for Commercial Arbitration
 IDLS - Institute for the Study and Development of
LegalSystems
 ILO - International LabourOrganisation
 ILR - Indian Law Reports
 International Centre for Dispute Resolution (ICDR).

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 International Court of Arbitration of the International Chamber of Commerce (ICC).
 Ltd. - Limited
 M.P. – Madhya Pradesh
 MoU - Memorandum of Understanding
 NADRAC - National Alternative Dispute Resolution Advisory Council
 NCLT - National Company Law Tribunal
 NCT of Delhi - National Capital Territory of Delhi
 OECD - Organisation for Economic Co-operation and Development
 Organization of American States (OAS), etc
 Ors. - Others
 PA - Public Announcement
 PAAL - PAN Asia Advisors Limited
 PAC – Public Accounts Company
 PFUTP - Prohibition of Fraudulent and Unfair Trade Practices
 S.C. - Supreme Court
 SAT - Securities Appellate Tribunal
 SCC - Supreme Court Cases
 SCR - Supreme Court Reports
 SEBI - Securities and Exchange Board of India
 Sec. - Section
 SLR - Service Law Reporter
 SPA - Share Purchase Agreement
 Ss. - Two sections of the same statute
 Tehran Regional Arbitration Centre (TRAC).
 UBL - Unocal Bharat Ltd.
 UIL - Unocal International Corporation

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TABLE OF CONTENTS

1. INTRODUCTION

2. ORIGIN OF ALTERNATIVE DISPUTE RESOLUTION SYSTEM IN INDIA

3. EVOLUTION OF DISPUTE RESOLUTION SYSTEM IN INDIA
4. VEDIC OR PRE-SUTRA PERIOD
5. DHARMA SUTRA PERIOD
6. POST SMRITI PERIOD
7. MUSLIM PERIOD
8. BRITISH PERIOD
9. AFTER INDEPENDENCE
10. REPORTS OF COMMITTEES AND COMMISSIONS
11. LEGISLATIVE ADOPTING THE ALTERNATIVE DISPUTE REDRESSAL METHODS IN

INDIA
12. ALTERNATIVE DISPUTE RESOLUTION MECHANISM
OBJECT AND SCOPE OF ALTERNATIVE DISPUTE RESOLUTION
SALIENT FEATURES OF ALTERNATIVE DISPUTE RESOLUTION

13. ADVANTAGES AND DISADVANTAGES OF ADR

14. CURRENT LAWS – ARBITRATION AND CONCILIATION ACT,1996
15. PREAMBLE
16. DIFFERENT TYPES OF ALTERNATE DISPUTE RESOLUTION
17. ARBITRATION
18. MEDIATION
19. CONCILIATION
20. NEGOTIATION
21. LOK ADALATS
22. COMPARATIVE ANALYSIS WITH OTHER COUNTRIES
23. UNITED STATES OF AMERICA
24. UNITED KINGDOM
25. AUSTRALIA
26. CHINA
27. JAPAN
28. INTERNATIONAL COMMERCIAL ARBITRATION UNDER INDIAN LAW

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29. INTERNATIONAL ARBITRATION UNDER INDIAN LAW
30. PRACTICAL KNOWLEDGE GAINED BY SEMINAR AND PROCEEDINGS
31. CONCLUSION
32. BIBLIOGRAPHY

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INTRODUCTION

THE INDIAN legal system is being criticized quite frequently because there is delay in
delivering justice. Some Studies into the reasons for this delay have indeed been done and the
need for developing ADR mechanisms was emphasized to cope up with this delay and
arrears in courts. This chapter attempts to identify the reasons for the delay in courts on the
basis of statistical data.

THE ALTERNATIVE Dispute Resolution mechanisms are complementary to court

proceedings and are gradually gaining recognition. The main advantage of ADR techniques
is that the litigants are not bound by the technicalities of ordinary court procedure. The
society, state and the parties to the dispute are equally under an obligation to resolve the
dispute before it disturbs the peace in the family, business community, society or ultimately
humanity as a whole, because in a civilized society the rule of law should prevail and
principles of natural justice should apply and complete justice should result. The chapter
attempts to study ADR mechanisms distinct from the judiciary but providing alternative
means to dispute resolution through ordinary courts, through its different disciplines.

Arbitration is a method of settlement of disputes as an alternative to the normal judicial

method. It is one of the methods of alternative dispute resolution (ADR). Of all the forms of
ADR like conciliation, mediation, negotiations, etc, arbitration has become the dominant
form of ADR. It is more firmly established in its utility. Alternative Dispute Resolution was
conceived of as a dispute resolution mechanism outside the court of law established by the
Sovereign or the State. ADR can be defined as a collective description of process or
mechanisms that parties can use to resolve disputes rather than bringing a claim through the
formal court structure. ADR is a part of civil justice system with the United Kingdom. It is a
key aspect of the civil justice system and has grown over the past forty years.

The law relating to arbitration is contained in the Arbitration and Conciliation Act, 1996. It
came into force on the 25th of January, 1996. It provides for domestic arbitration,
international commercial arbitration and also enforcement of foreign arbitral awards. It also
contains the new feature on conciliation. Like arbitration, conciliation is also getting
increasing worldwide recognition as an instrument for settlement of disputes. However, with

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the passage of time, the phrases “Arbitration and ADR” came in vogue, which implied that
arbitration was distinct from other ADR forms.

Before the enactment of Arbitration and Conciliation Act, 1996 the practice of amicable
resolution of disputes can be traced back to historic times, when the villages’ disputes were
resolved between members of particular relations or occupations or between members of a
particular locality. “Of all mankind’s adventures in search of peace and justice, arbitration
is amongst the earliest. Long before law was established or courts were organised, or
judges has formulated principles of law, man had resorted to arbitration for resolving
disputes.” With the advent of the British rule and the introduction of their legal system in
India starting from the Bengal Regulation of 1772, the traditional system of dispute resolution
methods in India gradually declined. The successive Civil Procedure Codes enacted in 1859,
1877 and 1882, which codified the procedure of civil courts, dealt with both arbitration
between parties to a suit and arbitration without the intervention of a court. The first Indian
Arbitration Act was enacted in 1899.

The year 1940 is an important year in the history of law of arbitration in British India, as in
that year the Arbitration Act, 1940 was enacted. It consolidated and amended the law relating
to arbitration as contained in the Indian Arbitration Act, 1899 and the Second Schedule to the
Code of Civil Procedure, 1908. It was largely based on the English Arbitration Act, 1934.
Later on this was repealed and thus The Act of 1996 was enacted due to some
misconstruction of the before Act of 1940.

The Arbitration Act, 1940 dealt with only domestic arbitration. In so far as international
arbitration was concerned, there was no substantive law on the subject. However,
enforcement of foreign awards in this country was governed by two enactments, the
Arbitration (Protocol and Convention) Act, 1937 and the Foreign Awards (Recognition and
Enforcement) Act, 1961. These two statutes, in their entity, except for Section 3 (in both of
them) did not deal with international arbitration as such but merely laid down the conditions
for ‘enforcement of foreign awards’ in India.

Though the Act of 1940 was a good piece of legislation but it was considered to be
ineffective. In M/S Guru Nanak Foundation v. M/S Ratan Singh & Sons,1 the Hon’ble
Supreme Court observed that the Act was ineffective and the way the proceedings under this
Act were conducted in the Courts made the lawyers laugh and legal philosophers weep.
1
(1981) 4 SCC 634

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In India, ADR has an important place, because of historical reasons. In regard to the global
perspective, the international business community realised that court cases was not only time
consuming but also very expensive. Various methods were adopted to solve the disputes.
They are arbitration, conciliation, mediation, negotiation and the Lok Adalats.

Alternative Dispute Resolution is today being increasingly acknowledged in the field of law
as well as in the commercial sector. The very reasons for origin of Alternative Dispute
Resolution are the tiresome processes of litigation, costs and inadequacy of the court system.
It broke through the resistance of the vested interests because of its ability to provide cheap
and quick relief. In the last quarter of the previous century, there was the phenomenal growth
in science and technology. It made a great impact on commercial life by increasing
competition throughout the world. It also generated a concern for consumers for protection of
their rights.

The purpose of ADR is to resolve the conflict in a more cost effective and expedited manner,
while fostering long term relationships. ADR is in fact a less adverse means, of settling
disputes that may not involve courts. ADR involves finding other ways (apart from regular
litigation) which act as a substitute for litigation and resolve civil disputes, ADR procedure
are widely recommended to reduce the number of cases and provide cheaper and less adverse
form of justice, which is a lesser formal and complicated system. Off late even Judges have
started recommending ADR to avoid court cases. In essence the system of ADR emphasizes
upon:

 Mediation rather than winner take all.

 Increasing Accessibility to justice.
 Improving efficiency and reducing court delays.

ADR aims to provide the parties with cheap, speedy and less formalistic remedy to the
aggrieved party. It aims at providing a remedy which is most appropriate in the
circumstances of the case. This makes ADR a viable substitution for arbitration or litigation.
ADR is an umbrella term for a variety of processes which differ in form and application.
Alternative Dispute Resolution, as the name suggests, is an alternative to the traditional
process of dispute resolution through courts. It refers to a set of practices and techniques to
resolve disputes outside the courts. It is mostly a non-judicial means or procedure for the
settlement of disputes. In its wider sense, the term refers to everything from facilitated
settlement negotiations in which parties are encouraged to negotiate directly with each other

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prior to some other legal process, to arbitration systems or mini trials that look and feel very
much like a court room process.

The search for a simple, quick, flexible and accessible dispute resolution system has resulted
in the adoption of ‘Alternative Dispute Resolution’ mechanisms. The primary object of ADR
system is avoidance of vexation, expense and delay and promotion of the ideal of “access to
justice”. ‘Alternative Dispute Resolution’ or ADR is an attempt to devise machinery which
should be capable of providing an alternative to the conventional methods of resolving
disputes. An alternative means the privilege of choosing one of two things or courses offered
at one’s choice. It does not mean the choice of an alternative court but something which is an
alternative to court procedures or something which can operate as court annexed procedure.
The ADR techniques mainly consist of negotiation, conciliation, mediation, arbitration and a
series of hybrid procedures.

ADR has many advantages and disadvantages. Few of the advantages are- it can be used at
anytime, reduces the number of contentious issues, it costs less than regular litigation, it is
flexible, ADR can be used with or without a lawyer, it helps in reduction of work load of
courts, etc. Besides advantages there are various drawbacks of ADR, some of them are
follows- ADR may not be appropriate, and may even carry a degree of risk for one of the
parties, imbalance of power between the parties which could make face-to-face mediation
unfair, legal rights and Human rights cannot be relied on in ADR processes, Ombudsmen
investigations can be very slow, etc.

“It is settled law that free legal aid to the indigent persons who cannot defend themselves in a
Court of law is a Constitutional mandate under Article 39-A and 21 of the Indian
Constitution. The right to life is guaranteed by Article 21.” The law has to help the poor who
do not have means i.e. economic means, to fight their causes.

The history of Alternative Dispute Resolution forum at international level can be traced back
from the period of Renaissance, when Catholic Popes acted as Popes as arbitrators in
conflicts between European countries. Many international initiatives are taken towards
alternative dispute resolution. The growth of international trade is bound to give rise to
international disputes which transcend national frontiers and geographical boundaries. ADR
has given fruitful results not only in international political arena but also in international
business world in settling commercial disputes among many co-operative houses. ADR is
now a growing and accepted tool of reform in dispute management in American and

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European commercial communities. ADR can be considered as a co-operative problem-
solving system. The biggest stepping stone in the field of international ADR is the adoption
of UNCITRAL (United Nations Commission on International Trade Law) model on
international commercial arbitration. An important feature of the said model is that it has
harmonised the concept of arbitration and conciliation in order to designate it for universal
application. General Assembly of UN also recommended its member countries to adopt this
model in view to have uniform laws for ADR mechanism. Many international treaties and
conventions have been enacted for establishing ADR worldwide. Some of the important
international conventions on arbitration are:

 The Geneva Protocol on Arbitration clauses of 1923.

 The Geneva Convention on the execution of foreign award, 1927.
 The New York Convention of 1958 on the recognition and enforcement of foreign
arbitral award.

In India, Part III of Arbitration and Conciliation Act, 1996 provides for International
Commercial Arbitration.

Another step in strengthening the international commercial arbitration is the established of

various institutions and organizations such as:

 International Court of Arbitration of the International Chamber of Commerce (ICC).

 Arbitration and Mediation Centre of World Intellectual Property Organization.
 American Arbitration Association (AAA).
 Tehran Regional Arbitration Centre (TRAC).
 International Centre for Dispute Resolution (ICDR).
 Organization of American States (OAS), etc.

The alternative modes of disputes resolution include- Arbitration, Mediation, Conciliation,

Lok Adalat, Negociations, National and State Legal Authority. ADR strategies which
facilitate the development of consensual solution by the disputing parties are therefore
considered a viable alternative. ADR methods such as mediation, negotiation and arbitration
along with many sub-strategies are increasingly being employed world over in a wide range
of conflict situations, ranging from family and marital disputes, business and commercial
conflicts, personal injury suits, employment matters, medical care disputes, construction

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disputes to more complex disputes of a public dimension such as environmental disputes,
criminal prosecutions, professional disciplinary proceedings, inter-state or international
boundary and water disputes.

The Arbitration and Conciliation Act, 1996 contains 85 Sections, besides the Preamble and
three Schedules. The Act is divided into four Parts. Part-I contains general provisions on
arbitration. Part-II deals with enforcement of certain foreign awards. Part-III deals with
conciliation. Part-IV contains certain supplementary provisions. The Preamble to the Act
explains the biases of the proposed legislation. The three Schedules reproduce the texts of the
Geneva Convention on the Execution of Foreign Awards, 1927; The Geneva Protocol on
Arbitration Clauses, 1923; and the New York Convention on the Recognition and
Enforcement of Foreign Arbitral Awards, 1958 respectively.

The establishment of the International Centre for Alternative Dispute Resolution (ICADR),
an independent non-profit making body, in New Delhi on May 1995 is a significant event in
the matter of promotion of ADR movement in India. Lastly, to make arbitration and
conciliation a success story in India, three things are needed:

1) A good law that is responsive to both domestic and international requirements.

2) Honest and competent arbitrators and conciliators without whom any law or
arbitration or conciliation can succeed.
3) Availability of modern facilities and services such as meeting rooms, communication
facilities, administrative and secretariat services.

Chapter VII reflects the role of judiciary in the field of dispute settlement. With the
increasing population, complications and disputes are increasing day by day between the
parties regarding various matters and as the courts are having a huge number of cases
pending in there, this method is put into practice for reducing the burden of cases and to solve
the matters quickly in parallel with the fast running of the life in the society. Dispute
resolution is one of the main functions of the stable society. States function through different
organs and the judiciary is one that is directly responsible for the administration of justice.
Resolving disputes is fundamental to the peaceful existence of society.  The only field where
the Courts in India have recognized ADR is in the field of arbitration.

Preamble to our Constitution reflects such aspiration as “justice-social, economic and

political”. Article 39A of the Constitution provides for ensuring equal access to justice.

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Administration of Justice involves protection of the innocent, punishment of the guilty and
the satisfactory resolution of disputes.

In order to overcome the much criticised delay in justice delivery, the adoption of Alternative
Dispute Resolution (ADR) mechanisms like Lok Adalats, arbitration, mediation and
conciliation was thought of and subsequently practised with commendable success. Although
the alternative mechanisms have delivered speedy justice to the people, yet the exercise has
raised some pertinent questions by some legal luminaries.

The Apex Court in the case of Food Corporation of India v. Joginder Pal,2 also laid
emphases on ADR system of adjudication through arbitration, mediation and conciliation is a
modern innovation into the arena of the legal system and it has brought revolutionary changes
in the administration of justice. It can provide a better solution to a dispute more
expeditiously and at a lesser cost than in regular litigation.

The Supreme Court realized the scope of ADRM in procedural as well in family law in Jag
Raj Singh v. Bripal Kaur, 3 the Court affirmed and observed that the approach of a court of
law in matrimonial matters is much more constructive, affirmative and productive rather than
abstract, theoretical or doctrinaire. The Court also said that in matrimonial matters must be
considered by the courts with human angle and sensitivity and to make every endeavour to
bring about reconciliation between the parties.

Since law is changing with the changing demand of time, to meet with the needs of the
peoples. ADR mechanisms would certainly supplement the existing adjudicatory machinery
so as to develop the confidence of common man in the justice delivery system.

Recently, in the past few years E- Commerce has become very important and is inevitable.
The advent of internet has created challenges and opportunities for dispute resolution
mechanisms and particularly ADR. However, the lack of dispute resolution mechanisms in
cyberspace will constitute a serious obstacle in the growth and development of e-commerce.
Alternative Dispute Resolution (ADR) and the internet are two very topical issues. Online
Alternative Dispute Resolution (OADR) or ADR online, refers to the use of internet
technology, wholly or partially, as a medium by which to conduct the proceedings of ADR in
order to resolve commercial disputes that arise from the use of the Internet. Neutral private
bodies operate those proceedings under published rules of procedure. Thus ADR emerged as

2
AIR 1989 SC 1263
3
(2007) 2 SCC 564

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a powerful weapon for resolution of disputes at domestic as well as international level. It is
developing as a separate and independent branch of legal discipline.

Chapter VIII reflects the new growing concept of Online Dispute Resolution (ODR). After a
good and keen study of the new advent of the concept of ODR, ODR is defined as a method
for resolving dispute that were arising online, and for which traditional means of dispute
resolution were inefficient or unavailable. Online Dispute Resolution is an automatised
platform or rather a trendy tool for the development of e-commerce and to solve dispute
easily. Due to increasing use of the Internet worldwide, the number of disputes arising from
Internet commerce is on arises. Numerous websites have been established to help resolve
these types of disputes. It is becoming an increasingly effective mechanism for resolving
disputes as technology advances.

Using computer-networking technology, ODR brings disputing parties together "online" to

participate in a dialogue about resolving their dispute. ODR also involves the modes of
arbitration, mediation and conciliation to solve such disputes online.

The growth of ODR is very recent. With the fast and quick lifestyle and with the increase of
various e-commerce problems, this method is adopted as it can solve the disputes very fast
and is easily accessible at a low cost. The whole procedure is carried over online, no matter
wherever the parties are. Distance does not cause any barrier in solving such disputes whether
it is business related or consumer related, whether related to marital separation or interstate
conflicts. The concept of Online Dispute Resolution (ODR) has been accepted in many
countries worldwide.

In India, to reduce the burdening of the already overburdened courts the Alternative Dispute
Resolution Mechanism has been put into practice and is gaining its popularity as days are
passing by. The importance of Information and Communication Technology (ICT) for
resolving contemporary electronic commerce (e-commerce) and other disputes. The best
example of the same is the use of Online Dispute Resolution (ODR) for resolving these
disputes and misunderstandings. The swift growth of e-commerce and website contracts has
increased the potential for conflicts over contracts which have been entered into online. The
use of Online Dispute Resolution Mechanism (ODRM) to resolve such e-commerce and web
site contracts disputes are crucial for building consumer confidence and permitting access to
justice in an online business environment. These ODRM are not part and parcel of the
traditional dispute resolution machinery popularly known as judiciary but is an alternative

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and efficacious institution known as ADRM. Thus, ADR techniques are extra-judicial in
character.

The term Online Dispute Resolution (ODR) has emerged as the most used term in the recent
years but it is also termed as internet dispute resolution, electronic dispute resolution,
electronic ADR, Online ADR. Various methods of Online Dispute Resolution adopted such
as- Automated Negotiation, Assisted Negotiation, Online Arbitration, Uniform Domain
Names Dispute Resolution Policy, Chargeback’s.

If we need to relate the practice of Online Dispute Resolution Mechanisms with the Legal
framework then we need to go through the provisions of the Information Technology Act,
2000 (IT Act, 2000) for establishing an ICT base that may be conducive for the development
of ODRM in India. The Government must appreciate the need of ODRM for resolving
disputes originating due to the liberalisation of its economy. It is also important to remember
that the foreign countries are very particular about getting their disputes resolved through
ADR/ODR methods and India may find itself in an embarrassing situation if its ICT
strategies are not modified accordingly.

As this is a growing up method of dispute settlement and is in process, so it can be considered

that there are a lot of advantages. And thus, it shall be glad to mention some of the
advantages, they are- hassle-free process, information is kept confidential, speedy outcome,
highly economical, etc.

Actually the main aim or rather the mission in using ODR is to increase integrity and
accountability in the Internet community, both locally and worldwide. ODR is firstly,
concerned with the civilized (i.e. peaceful) resolution of disputes between private parties,
and, secondly, with the prevention of such conflicts through the provision of legal certainty.

The judgment of the Supreme Court in State of Maharashtra v. Dr. Praful B. Desai is a
landmark judgment as it has the potential to seek help of those witnesses who are crucial for
rendering the complete justice but who cannot come due to “territorial distances” or even due
to fear, expenses, old age, etc. The Courts in India have the power to maintain anonymity of
the witnesses to protect them from threats and harm and the use of information technology is
the safest bet for the same. The testimony of a witness can be recorded electronically the
access to which can be legitimately and lawfully denied by the Courts to meet the ends of
justice.

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The judiciary in India is not only aware of the advantages of information technology but is
actively and positively using it in the administration of justice, particularly the criminal
justice. Thus, it can be safely concluded that the “E-justice system” has found its existence in
India. It is not at all absurd to suggest that ODRM will also find its place in the Indian legal
system very soon.

Recently many initiatives are taken by the governments around the world, industry groups,
consumer advocacy groups and dispute resolution professionals devoted great attention to the
development of ODR services and the standards and oversight over these ODR providers.
The Internet will work out for arbitration online what Google did for the retrieval of
information. By bringing the concept of ODR to our home, office or cell phone, time and
inconvenience are no longer an obstacle to justice worldwide.

In court system, time zones and physical locations are obstacles to justice. It is very
expensive as well as time consuming. Whereas, in Online Dispute Resolution Mechanisms
(ODRM) all the procedures is carried over through online and so the matter is solved or
rather settled within a few days or which may take a week or so, but shall not extend to
months or year after years. With the help of ODR a wide range of disputes are solved in a
very short time, where disputes includes inter-personal disputes i.e. consumer to consumer,
business to business, business to consumer; marital separation; court disputes and inter-state
disputes.

ORIGIN OF ALTERNATIVE DISPUTE RESOLUTION SYSTEM IN INDIA

The dispute resolution processes, which are “alternative” to the traditional Court
proceedings, are often referred to as alternative dispute resolution processes. A method of
resolving a dispute can be considered as alternative if it resolves the dispute and provide
justice, with a consensual process between the parties to the dispute. The dispute resolution
may be done with the help of a neutral third person who acts as a mediator or a middle
person between the parties to the dispute and tries to reduce the gap of differences between
the parties with the help of different process such as arbitration, conciliation, mediation or
negotiations. In the Year 1989 Supreme Court of India in the case of Food Corporation of
India V Joginder Pal, held that alternative dispute resolution process does not supplant but it
supplements the existing adjudicatory machinery through Courts of law4. Alternative dispute
4
AIR 1989 S.C.1263.

15
resolution processes are said to be flexible, cheap, speedy and less formalistic in nature thus
making it a viable alternative for adjudication through the Courts of law.

Following the perceptive study of the concepts of dispute, the need and the necessity of
resolving the disputes for peace, prosperity and the very existence of the society in earlier
chapter of this research paper, the researcher now proceeds towards the next step of, studying
the different stages in the evolutionary history of dispute resolution process in India.

EVOLUTION OF DISPUTE RESOLUTION SYSTEM IN INDIA

In India, there is no authentic account available for the judicial and political institution and
civilization period prior to Aryans. The available indigenous literature pertaining to that
period is contained in Vedas and sacred religious books. In ancient times, it is found that the
supreme duty of the King was considered to be, punishing the wicked and protecting the
righteous. In the Vedic period, the King in return for the taxes paid to him by the people,
performed the duty of a Judge5. In those early times, administration of justice did not form a
part of a State’s Duty6. The study of ancient Indian literature, illustrate the conditions where
the aggrieved party himself had to take steps as he could in order to get the wrong redressed.
The public devoured one another as the strong fish devour the weaker ones in the water 7.
This arrangement could not hold for long. As such, this method was not satisfactory and
there was a dire need to create the office of Kingship to avoid the situation of weaker being
exploited by the stronger one and there upon Lord Brahma is said to have introduced
Kingship upon Manu. The people agreed to pay certain taxes and prayed that in turn the
King should destroy their enemies to enable them to lead a peaceful life 8. The Vedic King as
the head of the Judiciary claimed himself as the upholder of Dharma. Thus, the origin of
judicial system in India can be traced from pre-historic Vedic times more than 3000 odd
years old, if not older still. With the passage of time, the King used to impart Justice with
the aid of his Ministers and Legal experts and the references to this is found in the Manu
smriti. The King became the holder of Law and was not a source of law. He was guided by
Dharma. He was expected to live up to the ideals of Kingship as laid down in the Dharma
sastra. The Dharma sastra and Nit sastra regarded the King as the fountain source of all
Justice. The King was the highest Court of appeal and was expected to decide cases
5
Birendra Nath, Judicial Administration in Ancient India (1979), p.27.
6
Dr.A.S. Altekar, State and Government in Ancient India (1977), p 245.
7
C.P. Ramaswamy Aiyar. Some Aspects of Social and Political evolution in India” (1969), p497.
8
S.K. De, The Cultural Heritage of the India. (1969, Vol.II), p 497.

16
according to Law9. The Ancient Hindu period of Indian legal system can be discussed
chronologically under the following heads of Vedic or per Sutra period Dharma Sutra period
and the Post Smriti period10.

VEDIC OR PRE-SUTRA PERIOD

The Vedic or Pre-Sutra period can be studied under the Aryan Civilization. In the Vedic
period law, religion and justice were closely interconnected and there was no clear-cut
demarcation. The Vedas are said to be four in number namely Rig-Veda, Yajur Veda, Sama
Veda and Athurva Veda. Of these Vedas, Rig-Veda explains the structure of the society and
the social and political institutions that existed in the Vedic period. There was absence of
central control of organized government in the modern sense. The entire territory was
divided into small Kingdoms ruled over by the King, as the head of the State and not of the
Society. The State and the Society had distinct sphere of activities. National life and
activities in the earliest times as on record were expressed through popular assembles and
institutions11. There were a gradation of Courts and the King was the highest Court of appeal.
Appeal lay from the lower Courts to higher Courts. The three most important and popular
bodies were Parishad, Samiti, and Sabha.

The ‘Parishad’ was an advisory body on religious matters but it also discharged some
judicial functions. ‘Samiti’ was the body for general deliberations where all kinds of policy
matters were discussed. This body also discharged legislative and judicial functions. It was
the assembly of whole of the People. The most important function of Samiti was the election
and re-election of the King. The King considered himself duty bound to participate in the
deliberations of the Samiti and thus emerged to be the sovereign body. The ‘Sabha’ was a
body of selected persons presided by the king himself. Sabha was the national judicature, due
to the reasons that the resolutions of the Sabha were considered to be binding on all the
persons12.

DHARMA SUTRA PERIOD

9
R.C. Majumdar, The History and Culture of the Indian People: The Vedic Age (1965), p475.
10
S. Varadachariar, The Hindu Judicial System, p 10
11
Dr. Radha Kumul Mookerjee, Local Government in Ancient India, p22.
12
K.P. Jaiswal Hindu Polity P 21,14.

17
Dharma sutra period is also called as the golden period of Indian Legal History. With the
advancement of time and society, the people progressed towards Civilization. The law
propounded by the Smriti writers was more systematic and comprehensive in nature and laid
down certain sets of principles to be followed by the people and the King alike. The principal
Sutras are the Dharma Sutra of Gautama and Baudhyana, Sutras of Apastamba, Harita,
Vashista, and Visnu. The areas that were mainly dealt by the Sutras were rules of civil and
criminal Law, marriage, inheritance, succession interest and partition 13. The important
Smritis, which contributed immensely towards the development, are Manu Smriti,
Yajnavalkya Smriti, Narada Smriti, Brihispati Smriti and the Katyana Smriti. The study of
Arthasastra of Kutilya reveals that there were two types of Courts viz., Dharmasthiya or the
Civil Courts and Kantakasodhana of Criminal Courts 14. The administration of Justice was
decentralised in order to avoid delay and other complications connected with the
investigation of cases. Kautilya and Manuhave given different system of gradation of Courts.
Kautilya has given much importance to Popular Courts and in his scheme, Courts were
instituted at Sangrahana, Dronamukha, Sthaniya and where the District met. According to
the scheme of Manu that was adopted by Yajnavalkya, Narada, Brihaspati and Katyayana,
the Sabha system formed the basis of forming and grading Courts. The Courts were known as
Popular Courts and were termed as Kula, Sreni, and Gana Courts and the idea behind these
Courts was to enable each and every person to receive justice without delay. In the Sutra and
the Smiriti period there were hierarchies of Courts at different levels. At the apex of the
Judicial hierarchy was the Royal Court called ‘Sabha’. It was staffed by experienced
Councilors who advised the King on the Points of Law in accordance with the law laid down
in the sacred textbooks and the local customs. The rulers of ancient India who administered
justice were subject to certain traditional obligations and customary limitations. They had to
take into consideration the laws of the guilds in administering justice. Secondly, all were not
equal in the eyes of law. The punishment for the offences depended on the social status of the
offender. The cast of the offender also influenced the judgments 15. The Yajnavalkya
mentions three types of Popular Courts namely the Kula, Shreni, and the Pugha. The ‘Kula’
was the assembly of persons of the same family or community tribe, cast or race and charged
with the function to decide the disputes amongst the persons who felt equality bound by its
decisions. The ‘Shreni’ was the assembly or association of persons following the same

13
Dr. S.K. Puri, Indian Legal and Constitution History (1980), P2,3.
14
Birendra Nath, Judicial Administration in Ancient India (1979), p.27.
15
H.V. Sreenivasa Murthy, V.S. Elizabeth, History of India, p8.

18
avocations or trade and the ‘Pugha’ is interpreted in three senses namely companies of
traders, association of persons differing in castes and the riders on the elephants and horses.
The existence of jury system is specifically mentioned in the Smritis. It was the duty of the
jury to consider the truth or the cause before the Court 16. The existence of People’s Court in
ancient India finds mention in Narada Smriti. The Jurors in ancient India were selected from
the higher classes and those who were the most respectable in the society. The main
qualification for the person to be juror was that, he was well versed with the question of law
and fact involved in the dispute referred by the parties.

POST SMRITI PERIOD

This period mainly pertains to Nibandhakars and Digest writers. The study of Kutilya’s
Arthashastra reveals that the Courts of Dharmasthas were located at the junction of two
territories or Janapadas and the Headquarters of 800, 400 and 10 Villages called Sthaniya,
Samgrahana and Dronamukha respectively. There was decentralization of Judiciary to a great
extent. Arthashastra of Kautilya deals with the rights, duties and responsibility of the King in
the administration of the State including judicial administration. The systematic and
exclusive treatment of law was a distinct feature of Arthashastra. The Nibandahas and Tikas
commentaries had significant part in the development of law and it even flourished in India
during the Muslim Period. It gave rules as to, in case of conflict the Suriti will prevail over
Smriti, and whenever there was conflict between the two texts in Suritis or Smritis then the
text that was supported by reason and usage would prevail 17. Thus, it can be said that the task
was to lay down the rules of interpretation with guidelines. The aim of every judicial
administration is to be just, honest and make available speedy remedy to the aggrieved
persons who as a last resort seek the assistance of the Courts. Form the above study it is
enlightened that the entire judicial administration in ancient India functioned under the
supervision of the King and the Courts derived their authority from King. The Hindu system
was not prepared to trust the judgments of a single individual, how so ever learned and
eminent he might have been18. The King discharged his judicial function with the aid and
assistance of his ministers, Purohit and Sabhyas. Later on, times, the King due to his inability
to attend personally to the judicial functions except in special circumstances used to depute

16
P.V. Kane, History of Dharma sastra (1973), p281
17
R.B. Pal, The History of Hindu Law.TLL. (1930), p158,159.
18
Dr.V.C. Sarkar, Epics of Hindu Legal History, Pg. 83(1958)

19
the learned Brahmins to take his place and do justice. In order to give speedy and proper
Justice, there existed well set principles which governed the proceedings in the Courts. The
Courts existing in the ancient India also enjoyed discretionary powers to deliver justice to the
aggrieved persons. The study of the ancient Indian dispute resolution system reveals that,
India was conversant with many of the modern judicial system. The success of any dispute
resolution system depends on the two basic elements, firstly a well– regulated system of
Courts following a simple and orderly procedure and secondly a definite, easily ascertainable
and uniform body of law. Thus, these two basic elements certainly formed the basis of
ancient Indian Judicial system19. The procedure that was followed for doing Justice to the
aggrieved persons was not very technical. The basic considerations were upholding dharma
and to avoid needless and vexatious litigations compounding. Withdrawing the complaint
was treated as cheating the King. The social interest cases were not sustainable in the Courts.
Thus, these are the indication to say that different forms of dispute resolution machineries
and People’s Court existed, continued to function down to the eighteenth century, and existed
in India thereafter. The Village Courts or the Panchayat played a significant role in settling
local disputes, both in ancient and medieval times in India. It is significant to note that the
Law Commission of India, in its 14th report (1958) has mentioned that the functioning of
such different alternative arrangements like People’s Courts as dispute resolution
mechanisms along with the Courts had successfully reduced the burden of the central judicial
administration20.

MUSLIM PERIOD

The study of history of Indian legal system reveals that the recognized Hindu period changed
with the Muslims invasion. In Medieval period, the society in India was broadly divided in to
two parts Hindus and Muslims. The Muslim invasion was made by Mohammudbin-quasim in
712 AD. He came to India as invader and returned thereafter. Qutub-uddin Aibek made the
real penetration into India. He in reality established himself firmly in India after waging
series of wars. The Muslims thereafter continued to rule over India until 1857 when the
Britishers dethroned the last Mughal King Bahadhadur Shah Zafar. Their holy books, certain
rules of practices and traditions governed the Hindus and Muslims in their social relations

19
M.P. Jain. Outline of Indian Legal History, 5th ed, p.3.
20
Dr.A.S. Altekar, State and Government in Ancient India (1977), p 252; Law Commission of India, 14 th
report (1958) II, p874.

20
and political organization. The judicial structure, which existed in India during Muslim rule,
is studied under the ‘Sultanate Period’ from 1206 AD to 1526 AD and under the ‘Mughal
Period’ starting from 1526 AD that lasted up to 1680 AD21.

In this period, the civil and canon law cases pertaining to the Hindus were heard by learned
Brahmans appointed for the purpose, while the criminal cases were tried according to Islamic
Law. The revenue cases were tried according to the local tradition. The Muslim Rulers did
not interfere with the Law of Hindus and Hindus continued to be governed by their own laws
in personal matters. The judicial structure gave due place to the then existing institution in
India, such as Village Panchayat which served as extremely useful in the settlement of
dispute during ancient India. Panchayat were the lowest trail Courts and their findings were
final in petty cases. The characteristic of the Sultanate Period was that the Sultan was the
Supreme authority to administer Justice in his Kingdom. The Justice was administered in the
name of the Sultan in three capacities. Firstly, as the arbitrator in the disputes of his subjects,
he dispensed justice through the Diwan-e- Qaza. Secondly, as the head of the bureaucracy, he
dispensed justice through the Diwan-e- Mazalim. Finally, as the Commander-In-Chief of
Forces, through his military commanders who constituted Diwan-e- Siuasat, tried the rebels
and those charged with high treasons. As in case of ancient India, during the Muslim rule
also, all were not treated as equals in the eyes of law and the Hindus as well as poor were
discriminated against the Muslims and the rich respectively 22. The culture of the Muslim ruler
and the Hindu subjects differed materially but there was great affinity with regard to the law
as both the system had their origins in the religion. Therefore, both the systems of law were
given due recognition by the Courts in settling the disputes between the parties with regard to
civil matters but the entire Criminal administration of Justice was based on the Criminal Law
principles followed by the Mohammedan. The punishment was inflicted upon criminals in
accordance with the provisions of the criminal law governing Mohammedan 23.

The Muslim ruler while ruling over India regarded themselves as the servants of the God
(Allah). Mohammad, the Prophet of Islam, also preached this message. It is pertinent to note
that they considered the administration of justice as an essential act for the fulfilment of this
responsibility. As laid down in Fatwa- Alamgir, the Courts in India were to be guided by the
following authorities while deciding the disputes. Firstly, the sacred book of Muslims the
21
M.B. Ahmad, The Administration of Justice in Medieval India, Pg 98
22
H. Beveridge, History of India (1914), p102.
23
Dr.V.C. Sarkar, Epichs in Hindu Legal History, Pg.200-203, (ed.1958)

21
Quran; it collected the revelations of Mohammed in a definite written form. The
Mohammedans were and are still governed by this sacred book. Secondly, the Sunna, which
is the words, deeds, and silent approval of prophet during his lifetime, which were reduced to
writing, and came to be termed as Sunna or traditions. These traditions gradually laid the
foundations of Islam. Thirdly, the concurrent opinion of the Prophet’s companions called the
Ijma, literal meaning of it is “agreeing upon”. Those disputed point of law which was
resolved by the agreement of the persons who have right, in the nature of knowledge, to form
a Judgment of their own after the death of Prophet thus came to be regarded as a valid source
of law. Finally, judgments according to the individual discretion of the Judge based on the
doctrine of Justice, Equity and Good Conscience guided the function of resolution of
disputes24.

There was very systematic classification of the gradation of the Courts during the Muslim
Rule in India25. The Central Court were six in number namely, the King’s Court, Diwan-e-
Muzalim, Diwan-e- Risalat, Sadre Jahan’s Court, Chief Justice Court and Diwan-e- Siyasat.
The Provincial Courts were five in number namely, Adalat Nazim Sabha, Adalat Qazi-e-
Subah, Governor’s Bench (Nizam-e- Subha), Diwas-e- Subah and Sader Subah. At the
District level Qazi, Dadbaks or Mir Adils, Faujdaris, Sader Amirs and Kotwals were
functioning. At each Parghnah headquarter two Courts were established namely Qazi - e-
Parganah and Kotwal. According to Abu Hanifah, the Quazi could act on the Principle of
Istihsan (Public good) Istislah (Public policy) or Istishab (Concordance). A Parganah was
further divided into the village assembly or Panchayat, which were vested with enormous
powers to decide civil and criminal cases of purely local character 26. The lowest on the ladder
of hierarchy of Courts were the village council popularly known as Lok Adalat of today. The
Qazi were entrusted primarily with both civil and criminal administration and their counter
parts in the provinces and districts. Nevertheless, it cannot be denied that there existed qazis
who were well known for their character, integrity and sound knowledge of law. During this
period, the gift system was a recognized institution. The Emperor did not consider any
petition unless it was supported by gifts 27. Thus, there existed a well-organized judicial
institution with clearly defined procedure similar to institutions in modern times. The Mughal

24
Dr. S.K. Puri, Indian Legal and Constitution History (1980), p 18.
25
B.M. Gandhi, V.D. Kulshreshtha’s Landmark in Indian Legal and Constitutional History (19992), p 19,
p20
26
W. Briggs, Rise of the Mohammedan Power in India, (1829), III, p420. \
27
A.B. Pande, Society and Government in Medieval India, p166.

22
Dynasty continued up to 1850 and normally up to 1857, when there after the queen of
England took over the control of India.

BRITISH PERIOD

India had flourishing trade with the western world and the balance of trade was always in the
favour of India. Much of the trade was carried on through land routes. Portuguese were the
pioneers in finding the new sea routs. Vasco da Gama landed at Calicut and thus the cape
route to India was discovered. During the 16 th century the Portuguese maintained supremacy
in Indian Ocean. The spectacular success of the Portuguese attracted other European
countries and Dutch, the English and the French, in that order, began to compete with the
Portuguese. The British East India Company received its Charter from Queen Elizabeth in
1600, and the Emperor Jahangir issued a Firman to the Company in 1613 to establish a
permanent factory at Surat. This became the chief settlement of the company in India. In the
due course of time, specifically after the battle of Plassey in 1757 and until the annexation of
Oudh in 1856, the British were successful in establishing their paramount in India. Thus, by
this time the British East India Company was supreme from Himalayas to Kanyakumari and
from Sind to Burma. The Impact of West brought about momentous changes in India, which
was not anticipated by the Europeans. English replaced Sanskrit as the language of the
intelligentsia, and English language seemed to be Lingua Franca that is, the Common all
India language. It is thus very significant to point out that, it was through this medium the
first fifteen years of the Indian national movement was confined to those, who had learned
and mastered the English language and were brought up essentially in the western style28.

The dispute resolution function in the beginning of British Raj was delegated to the native
people for the reason the Britishers were unaware of the local language and the local Laws.
The Britishers also had the fear that the act of the punishment of the members of the native
population could lead to agitation at any time 29. With the induction of British judges trained
in Common Law into the Indian Judicial system, the Courts were reorganized and the entire
working of local Courts was reshaped. The judicial administration in three presidency towns
namely, the Calcutta Presidency, Madras Presidency and Bombay Presidency prior to 1726
were found wanting in uniformity and remained disoriented, informal and unsatisfactory. The

28
H.V. Sreenivasa Murthy, V.S. Elizabeth, History of India, p 9, to 14.
29
R.C..Majumdar, An Advanced History of India, (1977), p553.

23
Charter Act of 1726, introduced a uniform judicial system by the creation of Mayors Court in
each of the presidency towns, namely Madras, Bombay and Calcutta and later territories
surrounding the presidency towns were brought under its control 30. In the year 1772 Warren
Hasting took over Bengal, Bihar and Orissa and established a well-organized judicial system.
The Chief features of this Adalat System were Mofussil Diwani Adalat (Civil Court),
Mofussil Fauzadari Adalat (Criminal Court), Court of the Head Farmer of Parganas dealing
with petty civil cases, Sadar Diwani Adalat to hear appeals from the decisions given by
Mofussil Diwani Adalat and Sadar Nizamat Adalat to hear appeals from the decisions given
by Mofussil Nizamat Adalat31. Numbers of regulations were newly introduced and the old
ones were repealed to reform the judicial administration in India. The Government of India
Act, 1935 proposed a federal form of government for the whole of India and the provinces
were given some autonomous character and they began to be treated on a federal basis. Thus,
Federal Court was created which were the independent Courts, to decide the future disputes
between the units. First Federal Court was set up at Delhi in 1937. Federal Court possessed
exclusive original jurisdiction to determine disputes between the units inter se or between the
centre and the units on the objective interpretation of the provisions of the Act. As appellate
body, it heard appeals from the High Courts on the certificate that the case involved a
substantial question of law for decision. Through the advisory jurisdictions, the Federal Court
rendered advice to the Governor-General on any point of law referred by him in an open
Court in the presence of Lawyers of all the parties 32.Thus, it was the highest Court in India.
The appeals against the decision of the Federal Court lay to the Privy Council, which was the
highest Court of appeal for India in England.

Some of the regulations made during British Rule, played an important role in the survival of
alternative methods of resolving the disputes, along with the system of adjudication through
Courts. The Bengal Regulation Act, 1772 that provided that, in all cases of disputed accounts,
parties are to submit the same to arbitrators whose decision are deemed a decree and shall be
final. The Regulation of 1781 provided for the judges to recommend without any
compulsion, prevail upon the parties to submit to the arbitration before a person that is
mutually agreed upon by the parties to the dispute. The regulation of 1787 empowered the
Court to refer suits to arbitration with the consent of the parties. The procedure of conducting

30
M.P. Jain, Indian Legal History (1966),85.
31
Dr. S.K. Puri, Indian Legal and Constitution History (1980), p 45-46
32
M.V. Paylee, Constitutional History of India (1600-1950), p.86.

24
the arbitration was introduced by the regulation of 1793. The Madras Presidency Regulation
VII of 1816 authorized the District Munsif to convene district panchayat for civil suits
relating to real and personal property33. Bombay Presidency Regulation VII of 1827 provided
for arbitration of Civil Disputes. India was governed by combination of conflicting laws and
systems of administration of justice before the British rulers enacted The Charter Act, 1833.
The codification of laws was the beginning of legal and judicial reforms in India. When the
East India Company started taking over administrative control, the Presidency Governments
in Bengal, Madras and Bombay enacted ‘Regulations’34.

The Charter Act of 1833 provided for the establishment of the legislative council for India in
the year 1834. The Act VIII of 1857 codified the procedure of Civil Courts. Sections 312 to
325 of this Act dealt with arbitration in suits and Sections 326 and 327 provided for
arbitration without the intervention of Court. The Code of Civil Procedure was revised in the
year 1882 and the provisions relating to arbitration was reproduced under Section 506 to 526.
The provision for filing and enforcement of awards on such arbitrations was made in 1882
Act No. XIV. The first Indian Arbitration Act was introduced in the year 1899 based on the
English Arbitration Act of 1889.It was the first Substantive law on the subject of arbitration.
Due to several defects in this Act, in the 1908 the Code of Civil Procedure was re-enacted
and the provisions relating to arbitration were set out in the Second Schedule of the code,
though no substantial changes were made in the law of Arbitration. In 1925, the Civil Justice
Committee recommended several changes in the arbitration law. On the basis of the
recommendations by this Committee, the Indian legislature passed the Arbitration Act of
1940.

In the year 1940, the Arbitration Act was enacted 35. This Act replaced the Indian Arbitration
Act of 1899, Section 89, Clauses (a) to (f) of section 104(1) and Second Schedule of Code of
civil Procedure 1908. Thus, Arbitration Act of 1940 finally amended and consolidated the
Law relating to arbitration in the British India.

The ascendance of the People’s Court in British India was not deliberate but was gradually
weakened by several factors. The extension of civil and criminal Courts with adversary
system of adjudication, which was unknown and new to the village population, the progress
33
Epoch, Hindu Legal History, (1958), p335.
34
Thomson and Garratt, Raise and fulfilment of British Rule in India (1958), p300-301.
35
Salil K. RoyChowdhury, H. K. Saharay, Arbitration Law, (III Ed), p6,7.

25
of English education, the Police organisation, the migration of people from villages to towns,
the growing pursuits of individual interest and consequential lessening of community
influence over the people can be regarded as the main factors, which gradually contributed to
the decay of the People’s Court in India. There was a complete centralization of judiciary and
the local Courts were discouraged and replaced by the Royal Courts 36. Technicalities were
introduced into the Indian judicial system; the adjudicatory process became more and more
formal with the introduction of Anglo-Saxon system. The poor man found it difficult to enter
into the portals of the Courts, and found difficulty in to use of the legal process. The advent
of British rule finally led to the decline of People’s Court in India. The People’s Court thus
entered into the era of lessening importance, and finally vanished, as a result of British policy
of Feudalistic control of the countryside. The legislations introduced by the British Rule
brought about a perceptible change and uniformity in the administration of justice in India 37.
The influence of English, after the fall of Muslim rule in India, made a massive structure of
Indian law and jurisprudence resembling the height and symmetry and grandeur of the
Common law of England. The ‘Adversarial System’ of justice was introduced in India, where
two opposite parties are pitched against each other, both given levels playing field and
opportunity to present their case before the judge.

AFTER INDEPENDENCE

After the dawn of freedom in India, powerful voices were raised for providing speedy,
inexpensive and substantial justice, which suit the genius of Indian people. The drawbacks of
Anglo-Saxon Judicial system were recognized and founding fathers of the National Charter
made an effort to recognise the existing system on the lines of home-grown legal system that
existed in India since the dawn of its civilization. The drafters of the Constitution aimed that,
the judicial process must be reorganized and justice must be brought near to the people. The
sole of the good government is providing justice to the people; as such, the Preamble of the
Constitution highlighted the aspect of political, social and economic justice to the people 38.
36
K.N.C. Pillai, Criminal Jurisdiction of Nayaya Panchayats, JILI (1977), p438,439.
37
Dr. S.K. Puri, Indian Legal and Constitution History (1980), p 45.
38
V.N. Shukla, Constitution of India (2003), p 1.

26
The Article 39-A of the Constitution of India, secures the operation of the legal system,
promotes justice on the basis of equal opportunity, so that no citizen is denied access to
justice on account of financial or other disability 39. With the enforcement of the Constitution
in 1950, the Supreme Court of India is established as the apex Court in the country. On 26 th
January 1950 the Federal Court yielded the place to the Supreme Court, all the judges
became the judges of the Supreme Court. It was invested with the original, appellate and
advisory jurisdiction in the constitutional, civil, criminal and other matters 40. Next the High
Court’s where established in each State or a group of Union territory and the States. The
lower judicial setup in civil judicial setup consists of the District Courts, Sub-Courts, and the
Munsif Court. The Criminal cases are dealt as per the Section 6 of Code of Criminal
Procedure 197341. This section states that besides the High Court and the Courts constituted
under any law, other than this Code, there shall be Courts of Sessions, Judicial Magistrate of
First class and Second-class Courts and Executive Magistrates. Indian judiciary has
transverse a long way since the days of rule of East India Company. By the end of the Second
World War in 1945, particularly after independence in 1947, the trade and industry received a
great fillip. The commercial community became more inclined towards arbitration for
settlement of their disputes. It was the development as against litigation in Courts, which
involved long delays and heavy expenses. With increasing emphasis on arbitration, there was
the judicial grist exposing the infirmities, shortcomings and lacunae in the Act of 1940.

The Arbitration Act of 1940 could not give desired result. One of the main difficulties faced
in international arbitration was relating to the recognition and enforcement of an arbitral
award made in one country by the Courts of other countries. This difficulty was sought to be
removed through various international Conventions such as the Geneva Convention and the
New York Convention. India became a party to certain international conventions dealing
with the enforcement of foreign arbitral awards. The Geneva Protocol on Arbitration Clauses,
1923, came into force on 28th July 1924. The Geneva Convention on the execution of
Foreign Arbitral Awards, 1927, came into force on 25 July 1929. India became party to both
the Protocol and the Convention on 23 October 1937. The Arbitration (Protocol and
Convention) Act 1937 was enacted in India for giving effect to the obligations under the said
instruments. In the year, 1960 India became party to the New York Convention on the

39
Ins.by the Constitution (42nd Amendment) Act, 1976, S.8 (w.e.f. 3-1-1977)
40
V.N. Shukla, Constitution of India (2003), p304
41
Ratan Lal and Dhirajlal, The Code of Criminal Procedure ,17 th ed, p19-20.

27
Recognition and Enforcement of Foreign Arbitral Awards 1958. For giving effect to this
convention, India enacted the Foreign Awards (Recognition and Enforcement) Act, 1961.
The law of Arbitration was thus contained in these three enactments namely, The Arbitration
Act of 1940, The Arbitration (Protocol and Convention) Act of 1937 and the Foreign Awards
(Recognition and Enforcement) Act of 196142.

The liberalisation of Indian economy opened the gates for inflow of foreign investment. India
opened its economy and took several measures of economic reforms in the early 90’s. After
the development in the international trade and commerce, with the increasing role of GATT
and later WTO, there was a spurt in trading in goods, services, investments and intellectual
property. Disputes arose between the trading parties, which were diverse in nature and
complex, involving huge sums. Such disputes required quick and amicable settlement since
the parties could not tolerate the prolonged legal process in Courts, appeal, review and
revision. Indian judiciary played a very substantial role in the process of emphasizing the
need for the change in the then existing arbitration laws. Along the same lines, the apex Court
had also recognised the alternate forum in its various decisions. In Sitanna Vs. Viranna, AIR
1934 SC 105, the Privy Council affirmed the decision of the Panchayat and Sir John Wallis
observed that, the reference to a village panchayat is the timehonored method of deciding
disputes. It avoids protracted litigation and is based on the ground realities verified in person
by the adjudicators and the award is fair and honest settlement of doubtful claims based on
legal and moral grounds. In the year 1981, the Supreme Court of India in Guru Nanak
Foundation V/S Rattan & Sons43 observed, “Interminable, time consuming, complex and
expensive Court procedures impelled jurists to search for an alternative forum, less formal,
more effective and speedier for resolution of disputes avoiding procedure claptrap and this
led them to Arbitration Act, 1940. However, the way in which the proceedings under the
1940 Act are concluded and without an exception challenged in the Courts, had made
lawyers laugh and legal philosophers weep. Experience showed and law reports bore ample
testimony that the proceedings under the 1940 Act had become highly technical,
accompanied by unending prolixity, at every stage providing for a legal trap to the unwary.
Informal forum chosen by the parties for expeditious disposal of their disputes had by
decisions of the Court been clothed with ‘legalese’ of unforeseeable complexity.”

42
Chandrasekhara Rao, The Arbitration and Conciliation Act,1996, (1997), p4,5
43
AIR 1981 SC 2075 ;( 1981)4 SCC 634. 115 AIR
1981 SC 2085 ;( 1981) 1 SCC 80.

28
In the year 1981, Justice D.A. Desai of the Supreme Court in Ramji Dayawala and Sons (P)
Ltd Vs Invest Importcase accentuated that, the protracted, time consuming, exasperating and
atrociously expensive Court trails impelled an alternative mode of resolution of disputes
between the parties thus, arbitrate-don’t litigate. Arbitration being a mode of resolution of
dispute, by a Judge of the choice of the parties, can be considered to be preferable to that of
adjudication of disputes by Court. If expeditious, less expensive resolution of disputes by a
Judge of the choice of the parties was the consummation devoutly to be wished through
arbitration, experience shows and this case illustrates that the hope is wholly belied because
in the words of Edmond Davis.J in Price Vs Milner44, these may be disastrous proceedings.
In the year 1995 in the case of, Trustees for the Port of Madras Vs Engineering Construction
Corporation45, Supreme Court of India said that the Act of 1940, which contained the general
law of Arbitration, had become outdated and was not in harmony with the arbitral mechanism
available to resolve the disputes in most of the countries in the world. A number of foreign
investors started expressing restrain, as they would not like to invest in India unless disputes
arising out of their investments are settled abroad. Under the 1940 Act, the parties had to go
to the Court to make the awards final. Interference by the Courts at the instance of one party
or the other and a considerable delay in disposal of matters gave rise to demands to repeal the
1940 Act. These factors acting together made it essential for India to devise a new legal
regime relating to both domestic and international commercial arbitration. To attract the
confidence of the international mercantile community in the context of growing volume of
India's trade and our commercial relationship with the rest of the world after the new
liberalization policy of the Government, The Arbitration and Conciliation Act, 1996 Act was
passed. This Act was in harmony with the UNCITRAL Model Law on International
Commercial Arbitration, 198546. The Arbitration Act, 1940 (the 1940 Act) governed the law
relating to arbitration until it was replaced by the Arbitration and Conciliation Act, 1996 (the
1996 Act). The 1940 Act had a number of drawbacks, including provisions for Court
intervention at a number of stages in the proceedings, which resulted in delays. The 1996 Act
remedied these procedural defects. It was enacted to cover comprehensively international
commercial arbitration and conciliation as well as domestic arbitration and conciliation. It
aimed to make the arbitral process fair, efficient and capable of meeting the needs of
arbitrations. The 1996 Act introduced, among others, the changes such as the arbitral tribunal

44
(1966)1WLR 1235
45
AIR1995 SC 2423;1995(2) Arb LR 331.
46
N. K. Acharya, Law Relating to Arbitration and ADR. (2004), p2,3

29
must give reasons for passing an award and must remain within the limits of its jurisdiction.
An arbitral award must be enforced in the same manner as if it were a decree of a Court. The
arbitral tribunal is permitted to use Conciliation during arbitral proceedings to encourage
settlement of disputes (with a view to minimizing the supervisory role of the Courts in the
arbitral process). A settlement agreement reached by the parties as a result of Conciliation
proceedings, will have the same status and effect as an arbitral award on agreed terms on the
substance of the dispute rendered by the arbitral Tribunal. For the purposes of enforcement of
foreign awards, every arbitral award made in a country to which one of the two international
conventions relating to foreign arbitral awards to which India is a party applies is treated as a
foreign award. The Arbitration and Conciliation Act, 1996 repealed the Arbitration (Protocol
and Convention) Act of 1937, the Arbitration Act of 1940 and the Foreign Awards
(Recognition and Enforcement) Act of 1961.The Arbitration and Conciliation Act of 1996
received its assent on August 16, 1996. It contains 86 Sections and three schedules; Part I of
the Act contains general provisions on Arbitration. Part II of the Act consolidates the two
Acts for enforcement of ‘Foreign Awards’. Part III of the Act provides for Conciliation. Part
IV of the Act contains supplementary provisions. The basic features of the 1996 Act can be
summarised as, it provides for the party autonomy, minimum judicial intervention and
maximum judicial support. The main objectives of the 1996 Act as per the preamble of the
Act are to cover international and domestic arbitration comprehensively, to minimize the role
of Courts and treat arbitral award as a decree of Court, to introduce concept of conciliation
and Lastly, to provide speedy and alternative solution to the dispute47.

REPORTS OF COMMITTEES AND COMMISSIONS

To understand and establish the role of alternate dispute resolution methods, that can
substitute the formal method of settlement of disputes within the framework of formal
procedures conceived in the Code of Civil Procedure through the Courts and other
enactments, the Government has time and again appointed various Committees and
Commission. The reports of these Committees and Commission have always played a major
part in the various legislative amendments and recommendations proposed by the Law
Commission India in its study on various aspects of judicial reforms. In 1949, Justice Sudhi
Rajan das High Court Arrears Committee was constituted to look into the problem of delays.
The committee recommended the curtailment of appeals and revision to reduce the backlog
47
O.P Malhotra, Indu Malhotra, The Law and Practice of Arbitration and Conciliation, p1,32

30
of cases in the High Courts. In 1951, Justice Das Committee made recommendations to
unify and consolidate the legal profession. In 1972, Justice Shah Committee was constituted
to report on the arrears in the High Courts. The Seventy-seventh Report of the Law
Commission was assigned exclusively to the problem of "Delays and Arrears” in Trial
Courts. This was published in 1978. In this report, the Commission fairly admitted that, "The
problem of delay in the disposal of cases pending in law Courts is not a recent phenomenon.
It has been with us since a long time. A number of Commissions and Committees have dealt
with the problem, and given their reports. Although, the recommendations, when
implemented, havehad some effect, the problem has persisted. Of late, it has assumed
gigantic proportions. This has subjected out judicial system, as it must, to severe strain. It has
also shaken in some measure the confidence of the people in the capacity of the Courts to
redress their grievances and to grant adequate and timely relief”. In 1989, the Government of
India, on the advice of then Chief Justice of India, constituted Arrears Committee (189-1990)
under the Chairmanship of Justice Malimath, who was the Chief Justice of the Kerala High
Court. The terms of reference of the Committee were interalia, to suggest ways and means,
to reduce and control the arrears in the High Courts and the subordinate Courts. The
Committee submitted its comprehensive report in 7th August 1990. The other members of
this Committee were Dr. Justice A.S. Anand, the then Chief Justice of Madras High Court
and Mr. Justice P.D. Desai, the then Chief Justice of Calcutta High Court. The terms of
reference of the Committee were, inter alias, to suggest ways and means, “to reduce and
control arrears in the High Courts and Subordinate Courts.” It identified the causes of
accumulation of arrears like the litigation explosion; the increased legislative activity; the
accumulation of First Appeals; the continuation of ordinary civil jurisdiction in some High
Courts; the Inadequate number of Judges; the Appeals against orders of quasi-judicial forums
going to High Courts; the unnecessary numbers of revisions and appeals; the lack of modern
infrastructure in the High Courts; the unnecessary adjournments; the indiscriminate use of
writ jurisdiction in High Courts; the lack of facilities to monitor, track and bunch cases for
hearing in Courts; the changing pattern of litigation and lack of strategies to deal with new
48
litigation with new techniques; the social awareness in the masses . The Malimath
Committee made a large number of useful recommendations like the introduction of
Conciliation procedure in writ matters and setting up of Neighbourhood Justice Centres with
statutory status. The function of such centres should be confined to resolving disputes by

48
Arrears Committee Report (Malimath Committee Report) dt 7 August 1990.Vol-1section 8.21, 8.37, Vol-
II Section 8.71to 8.91, 112-17.

31
reconciliation. The Committee also favoured the machinery of Conciliation Courts for
resolving disputes arising under the Rent Control Act.

The Report of Malimath Committee became the basis of finding solutions of the problems of
arrears during the Law Ministers’ meetings which took place in 1992-93 at Bangalore,
Pondicherry, Pachachi and Calcutta. A joint Conference of the then Chief Ministers of the
States and Chief Justices of High Courts was held on 4th December, 1993 at New Delhi
under the Chairmanship of the then Prime Minister of India and presided over by the Chief
Justice of India. It adopted the following resolution: “The Chief Ministers and Chief Justices
were of the opinion that Courts were not in a position to bear the entire burden of justice
system and that a number of disputes lent themselves to resolution by alternative modes such
as arbitration, mediation and negotiation. They emphasized the desirability of disputants
taking advantage of alternative dispute resolution which provided procedural flexibility,
saved valuable time and money and avoided the stress of a conventional trial” 49. The
Malimath Committee while making a study on ‘Alternative Modes and Forums for Dispute
Resolution' endorsed the recommendations made in the 124th and 129th Report of the Law
Commission to the effect that the lacuna in the law as it stands today, arising out of the want
of power in the Courts to compel the parties to a private litigation to resort to arbitration or
mediation, requires to be filled up by necessary amendment being carried out. The
Committee stated that the conferment of such power on Courts would go a long way
resulting in reducing not only the burden of trial Courts but also of the Revisional and
Appellate Courts. Thus, there would be considerable divergence of work at the base level
and the inflow of work from Trial Courts to the Revisional and Appellate Courts would
thereby diminish50. The Law Commission headed by Shri M.C. Setalvad, after thorough
survey of the legal and judicial system, gave the Fourteenth Report dated 9th November 1978.
The Report said that the problem of delay in disposal of cases poses a challenge to the
system, presence of conflicting decisions on various points, areas where reforms were
needed and also pointed out that litigation has increased manifold and costs of litigation have
increased frustrating common man's efforts to have access to justice 51. The Law Commission
in its 129th Report examined at length the nature of litigation in urban areas and highlighted
the staggering pendency of cases in various Courts of urban areas. It was pointed out that as

49
Malimath Committee Report, Chapter VIII, p112 and Chapter IX p168,170,171.
50
Justice Dr. M. K. Sharma, High Court of Delhi, Conciliation and Mediation, p 4
51
The 14th Law Commission Report (1958) p ,252-263

32
on 31st December 1984, 2,48,845 cases were pending in Sessions Courts, 77,41,459 cases in
Magisterial Courts, 29,22,293 cases in Civil Courts of original jurisdiction and 10,91,760
cases on the appellate side. Special attention was given in the Report to house rent and
possession litigation in urban areas and as an alternative to the present method of disposal of
disputes under the Rent Acts, four distinct modes were considered. Firstly, on the
establishment of Nagar Nyayalaya with a professional Judge and laying them on lines similar
to Gram Nyayalaya and having comparable powers, authority, jurisdiction and procedure.
Secondly, on the hearing of cases in Rent Courts by a Bench Judges, with minimum two in
number, and no appeal but only a revision on questions of law to the district Court. Thirdly,
on the setting up a Neighbourhood Justice Centres involving people in the vicinity of the
premises in the resolution of dispute; and Finally, on the Conciliation Court system, which is
was then working with full efficiency in Himachal Pradesh. Thus, the above study reveals
that, the Law Commission of India has considered the question of delay and arrears in Courts
from time to time, and has thus given about 12 reports covering various aspects of the said
problem.

LEGISLATIVE ADOPTING THE ALTERNATIVE DISPUTE RESOLUTION

METHODS IN INDIA

The enactment of the Arbitration and Conciliation Act, 1996 has provided for an elaborate
codified recognition to the concept of Arbitration and Conciliation as discussed in the
succeeding chapter of this research thesis. The Code of Civil Procedure, under section 89 has
introduced four alternative methods to settle disputes outside the Court, namely through
Arbitration, Conciliation, Lok Adalat and Mediation. The Constitution of India, Article 51,
clauses (c) and (d) provide that the State shall endeavour to foster respect for international
law and treaty obligations and encourage settlement of international dispute by arbitration.
The Constitution of India puts arbitration under the Articles providing for the Directive
Principle of State Policy. The Article 39-A of the Constitution provides that, the State shall
secure that the operation of the legal system promote justice, on the basis of equal
opportunity, and shall, in particular provide free legal aid, by suitable legislations or schemes
or in any other way, to ensure that opportunities for securing justice are not denied to any
citizen by reason of economic or other disabilities 52. There are large numbers of Central and

52
The Constitution (42nd amendment) Act,1976, S.8(w, e, f.3-1-77)
AvtarSingh, Law of Contract and Specific relief (2002), p280.

33
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 Authorities Act, 1987
brought another mechanism under alternative dispute resolution method with the
establishment of Lok Adalat system53. The Industrial Dispute Act, 1947 statutorily
recognized conciliation as an effective method of dispute resolution. Sometimes the
submission instead of being ‘voluntary’ is ‘imposed’ by statute. Such arbitrations are called
statutory arbitrations. There are more than 25 Central Acts providing for statutory arbitration
in India. Like The Companies Act,1956; The Cantonments Act,1924; Cooperative Societies
Act ,1912; Indian Electricity Act, 1910 Land Acquisition Act,1894; Provincial Insolvency
54
Act,1890;Telegraph Act,1885 Assam Land Revenue Regulation,1886; Bombay Land
Revenue Code, 1897; Punjab Land Revenue Act,1887; Punjab Cooperative Societies
Act,1961; U.P Co-operative Societies Act, 1960; Maharashtra Co-operative Societies Act,
1961;Damodar Valley Corporation Act; A.P Co-operative Societies Act, 1964 Madras Town
Planning Act, 1920 ; Madras Co-operative Societies Act,1932; are few examples in this
regard. With regard to the absolute necessity to evolve an alternative mechanism of
resolution of disputes, Parliament in India has enacted three Acts namely: The Legal
Services Authorities Act, 1987 which has been amended by Legal Services Authorities
(Amendment) Act, 2002; The Arbitration and Conciliation Act, 1996; and The Code of Civil
Procedure (Amendment) Act, 1999, which came into effect from 1 July 2002. With this
amendment Sections 26, 27, 32, 60, 95, 96, 100-A, 115 and 148 were amended and Section
89 was inserted to Civil Procedure Code. Likewise, various orders in the first schedule to
Civil Procedure Code were also amended and Rules 1-A, 1-B and 1-C of order X were
inserted. The researcher has restricted the study only with the provisions relating to
alternative disputes resolution with respect to the research topic in this research paper. The
Section 89 of Code of Civil Procedure lays down that where it appears to the Court that there
exists an element of settlement, which may be acceptable to the parties; the Court shall
formulate the terms of settlement and give time to the parties for their comments. On
receiving the response from the parties, the Court may formulate the possible settlement and
refer to either (i) arbitration (ii) conciliation (iii) Judicial Settlement including the settlement
through Lok Adalat or (iv) mediation. As per sub-section (2) of Section 89 as amended
when a dispute is referred to arbitration and conciliation, the provisions of Arbitration and

53
Central/States Civil Acts, Professional Book Publishers. (2005).
54
Telecom District Manager Goa Vs. Dempo & Co. (1996) 8 SCC 753.

34
Conciliation Act, 1996 shall apply. When the Court refers the dispute to Lok Adalat for
settlement by an Institution or person, the Legal Services Authorities Act, 1987 alone shall
apply. It is only in the case of mediation that the Court itself shall affect compromise and
shall follow such procedure as may be prescribed by Rules made by the High Court under
Section 122 read with Section 130 of the Code of Civil Procedure 55. Rules 1-A, 1-B and 1-C
of Order X deal with different situations. These provisions are applicable where at the first
hearing of the suit the Court ascertains from each party or the counsel whether the parties
admit or deny the allegations of fact as are made in the plaint or the written statement. After
referring to the admissions and denials, the Court shall direct the parties to the suit to opt for
either mode of the alternative dispute resolution methods as specified in Section 89 (1) i.e.
Arbitration and Conciliation, Lok Adalat or Mediation. The Supreme Court of India has
clearly held that, Section 89 does not obligate the Courts to conduct arbitration. However, it
enables the Court wherever it is satisfied with reference to the dispute in a pending suit that
there is a possibility of settlement either by way of arbitration or conciliation etc., the Court
is required to refer the same to the arbitration or conciliation, judicial settlement including
settlement through Lok Adalat’s or mediation56. In Rajasthan State Road Transport Co. Vs
Nand Lal Sarawat57 case, the Rajasthan High Court held that, where parties agree for
settlement of dispute before the arbitrator, it is imperative for the Court to take steps for
settlement of dispute. Where a dispute has been referred for arbitration or conciliation, the
provisions of the Arbitration and Conciliation Act, 1996 shall apply as if the proceeding for
arbitration or conciliation were referred for settlement under the provision of that Act. Where
a dispute has to be referred to Lok Adalat, the Court shall refer the same to Lok Adalat in
accordance with Section 20 (1) of Legal services Authority Act 1987 and all the provision of
that Act shall apply in respect of the dispute so referred to the Lok Adalat. Where a matter
which is referred to Lok Adalat in terms of Section 89 (2), read with Section 20 of the Legal
services Authorities Act, is settled, the refund of the Court fees is governed by Section 16 of
Court Fees Act, read with Section 21 of the Legal Services Authorities Act, the plaintiff is
58
entitled to the refund of the whole of the Court fees paid . Legal Services Authority Act
institutionalized the concept of resolution of dispute through arbitration, mediation,
conciliation and negotiation. The said Act provides for holding Lok Adalat’s where disputes

55
Tandon, The Code of Civil Procedure,26th ed (2005) p,450-451.
56
K Venkulu Vs. State of Andhra Pradesh, A.I.R 2004 A.P.85.
57
A.I.R 2005 Raj 112 (113, 114)

58
Vasudevan Vs. A.V State of Kerala AIR 2004 Ker 43 (45)

35
are pending before the Courts. It also provides for settlement of disputes at pre-litigation
stage. The Legal Services Authority (Amendment) Act, 2002 provides for a radical change.
As regards disputes between the consumers and the statutory bodies or public corporations
providing public utilities, dispute at the pre-litigation stage may be referred to a permanent
Lok Adalat comprising of a judicial officer and experts in the field. The permanent Lok
Adalat would try to arrive at a conciliatory settlement but if does not succeed; they may
adopt an adjudicatory role. No appeal lies from such judgment, which became an executable
decree. Supreme Court of India held that, the award passed by the Lok Adalat’s are
executable like decree of Civil Courts and the same are non-appealable, thus putting an end
to litigation59.

Form the above study of evolutionary history of dispute resolution mechanisms in India, it is
evident that, different forms of dispute resolution methods which have now been categorized
as alternative dispute resolution methods, are in fact not new to India. These alternative
dispute resolution methods have been in existence in some form or the other in India. That is,
even before the introduction and the dominant adoption of the modern justice delivery
system through Courts, by the Colonial British rulers in India the said alternative dispute
resolution methods had been in existence. After the introduction of the modern justice
delivery system, the ancient form of dispute resolution took a back seat for many decades.
Prior to the British rule, the laws in India were not codified as in modern sense. The problem
of judicial delay and the urgency of reforms needed in the legal system has emphasized and
reintroduced the discussion about the need of some alternative dispute resolution methods as
discussed in the introductory chapters of this study. Proceeding further with the perception it
is found that the problem of judicial delay and accumulation of cases still exists. The need of
the day is to explore the possibility of creating some alternative dispute resolving machinery,
for resolution of the disputes among the disputants. In this manner the researcher, is trying to
find a solution to the crisis of judicial delay and judicial arrears with the introduction or re-
introduction of ADR at a pre-litigation, litigation or post-litigation stage, functioning along
with the existing process adjudication through Courts.

ALTERNATIVE DISPUTE RESOLUTION MECHANISM

The alternative dispute resolution methods are not new to India and have been in existence in
some form or the other in the olden days. It is interesting to discover that the practice of
59
P.T. Thomas Vs. Thomas Job 2005 (6) S.C.C 486.

36
settling the dispute through community elders existed in India even before British Raj. It is
only now that there is universal acceptance and statutory recognition for such procedures to
facilitate early settlement of disputes on agreed terms. It was only after the Court system that
was predominantly adopted for resolution of disputes, the methods such as Arbitration,
Mediation, and Conciliation came to be treated as alternative means of resolving the disputes.
A detailed study of evolutionary history of Indian legal system establishing the above fact is
done in proceeding chapters of this study.

Alternative dispute resolution methods are being increasingly acknowledged in the field of
law and commercial sectors both at National and International levels. Its diverse methods can
help the parties to resolve their disputes at their own terms cheaply and expeditiously.
Alternative dispute resolution techniques are in addition to the Courts in character.
Alternative dispute resolution techniques can be used in almost all contentious matters, which
are capable of being resolved, under law, by agreement between the parties. Alternative
dispute resolution techniques can be employed in several categories of disputes, especially
civil, commercial, industrial and family disputes60. Form the study of the different alternative
dispute resolution techniques in the proceeding chapters it is found that, alternative dispute
resolution methods offer the best solution in respect of commercial disputes where the
economic growth of the Country rests. 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.”61

The Law Commission of Indian has maintained that, the reason for judicial delay is not a lack
of clear procedural laws, but rather the imperfect execution, or even utter non-observance,
thereof.62 The Law Commission of Indian in its 14th Report categorically stated that, the
delay results not from the procedure laid down by the legislations but by reason of the non-
observance of many of its important provisions particularly those intended to expedite the
disposal of proceedings. Given the huge number of pending cases, the governance and
administrative control over judicial institutions through manual processes has become
extremely difficult. The Supreme Court made it clear that this state of affairs must be
addressed: “An independent and efficient judicial system is one of the basic structures of our

60
Hindu Marriage Act 1955, Industrial Disputes Act 1947, The Code of Civil Procedure, The Family
Courts Act 1984
61
The Preamble of Indian Constitution
62
Law Commission of India, 77th Report, pr.4.1.

37
Constitution…It is our Constitutional obligation to ensure that the backlog of cases is
decreased and efforts are made to increase the disposal of cases.”63

OBJECT AND SCOPE OF ALTERNATIVE DISPUTE RESOLUTION

It is the spirit and not the form of law that keeps the justice alive” – LJ Earl Warren64

The concept of Conflict Management through Alternative Dispute Resolution (ADR) has
introduced a new mechanism of dispute resolution that is non adversarial. A dispute is
basically ‘lis inter partes’ and the justice and the justice dispensation system in India has
found an alternative to Adversarial litigation in the form of ADR Mechanism.65

“Alternative Dispute Resolution” (ADR) is supposed to provide an alternative not only to

civil litigation by adjudicatory procedures but includes also arbitration itself. The institution
of arbitration came into being as a very useful alternative to litigation. But it is now being
viewed as closer to litigation because it has to be in accordance with statutory provisions and
becomes virtually an adjudicatory process with all the formalities of the functioning of a
court. A method of dispute resolution would be considered as a real alternative only if it can
dispense with the adjudicatory process, even if it is wholly a consensual process. It may be
worked by a neutral third person who may bridge the gap between the parties by bringing
them together through a process of conciliation, mediation or negotiations.66

Nevertheless, arbitration has also been considered as an alternative to litigation and is

generally included in the study of all other alternatives. This is so because arbitration has
been the mother source of other alternatives not only in substance but also in the procedural
working of the alternative methods. The principles and procedure of arbitration have

63
Brij Mohan Lal Vs. Union of India & Others (2002-4-Scale-433), May 6, 2002.
64
Dixit Sujoy, “Alternative Dispute Resolution Mechanism”, viewed at www.legalserviceindia.com (last
accessed on 15.04.12
65
Ibid.
66
Dr. Singh Avtar, Law of Arbitration and Conciliation (including ADR Systems), Eastern Book Company,
Lucknow, 7th Edition(2006), p. 394

38
influenced the growth of many of the ancillary and hybrid processes used in the alternative
methods of dispute resolution.67

ADR can be defined as a technique of dispute resolution through the intervention of a third
party whose decision is not legally binding on the parties. It can also be described as a
mediation though mediation is only one of the modes of ADR. ADR flourishes because it
avoids rigidity and inflexibility which is inevitable in litigation process apart from high
lawyer and court fee and long delays. 68

ADR aims to provide the parties with cheap, speedy and less formalistic remedy to the
aggrieved party. It aims at providing a remedy which is most appropriate in the circumstances
of the case. This makes ADR a viable substitution for arbitration or litigation. In ADR, in this
sense, it is not the ‘dispute’ or ‘difference’ between the parties that is parties, so that with
gradual change in the mindset eventually both sides come to a meeting point. The most
practiced forms of ADR, in this sense, are “conciliation” and “mediation”. In western
countries, neutral evaluation is also frequently resorted to but in India this or other forms of
ADR have not yet come in vogue. Conciliation and mediation are often used as
interchangeable terms although there is a subtle difference between the two.69

As previously noted, ADR is a broad spectrum of structured processes, including mediation

and conciliation, which does not include litigation though it may be linked to or integrated
with litigation, and which a involves the assistance of a neutral third party, and which
empowers parties to resolve their own disputes. ADR is an umbrella term for a variety of
processes which differ in form and application. Differences include: levels of formality, the
presence of lawyers and other parties, the role of the third party (for example, the mediator)
and the legal status of any agreement reached. Some common features relating to the
acronym ADR. For example:

i. There is a wide range of ADR processes;

ii. ADR excludes litigation;

iii. ADR is a structured process;

iv. ADR normally involves the presence of an impartial and independent third party;

67
Ibid.
68
Ibid.
69
Jangkama, D.N. “Alternative Dispute Resolution At A Glance” viewed at www.duhaime.org (last accessed on
30.04.2012

39
 v. Depending on the ADR process, the third party assists the other two parties to reach a
decision, or makes a decision on their behalf; and

vi. A decision reached in ADR may be binding or non-binding.70

Time has come to think to provide a forum for the poor and needy people who approach the
Law Courts to redress their grievance speedily. As we all know the delay in disposal of cases
in Law Courts, for whatever reason it may be, has really defeated the purpose for which the
people approach the Courts to their resolution. Justice delayed is justice denied and at the
same time justice hurried will make the justice buried. So we will have to find out a via
media between these two to render social justice to the poor and needy who wants to seek
their grievance redressed through Law Court. Considering the delay in resolving the dispute
Abraham Lincoln has once said:71
“Discourage litigation. Persuade your neighbours to compromise whenever you can point
out to them how the nominal winner is often a real loser, in fees, expenses, and waste of
time”.

A committee was formed under Indira Gandhi Government, to recommend measures at

national level to secure for the people a democracy of remedies and easy access to justice. In
one of such committee meetings a dialectical diagnosis of the Pathology of Indo Anglican
Judicial Process was presented by the committee as follows:

Where the bulk of social and economic justice, the rule of law, notwithstanding its mien of
majestic equality but fail its mission in the absence of a scheme to bring the system of justice
near to down-trodden. Therefore it becomes a democratic obligation to make the legal
process a surer means to Social Justice”. 72

All the above has made us to think and find out a way to resolve the dispute between the
parties otherwise than by going to law Court which is called the Alternate Dispute
Resolution.

SALIENT FEATURES OF ALTERNATIVE DISPUTE RESOLUTION

70
Agarwal K. Anurag, “Role Of Alternative Dispute Resolution Methods For The Development In The Society”,
Indian Institute Of Management, W.P. No. 2005-11-01, Research & Publications viewed at www.iimah.com
(last accessed on 13.04.2012)
71
Ramakrishnan K, J. “Scope of Alternative Dispute Resolution in India”, 2005(1) JV, pp. 1-2
72
Ibid

40
Alternative Dispute Resolution, as the name suggests, is an alternative to the traditional
process of dispute resolution through courts. It refers to a set of practices and techniques to
resolve disputes outside the courts. It is mostly a non-judicial means or procedure for the
settlement of disputes. In its wider sense, the term refers to everything from facilitated
settlement negotiations in which parties are encouraged to negotiate directly with each other
prior to some other legal process, to arbitration systems or mini trials that look and feel very
much like a court room process. The need for public adjudication and normative judicial
pronouncements on the momentous issues of the day is fundamental to the evolution of the
land. ADR is necessary to complement and preserve this function of the courts. It has some
instrumental and intrinsic functions; it is instrumental in so far as it enables amicable
settlement of disputes through means which are not available generally through courts. It is
intrinsic because it enables the parties themselves to settle their disputes.73

Our Constitutional goal is to achieve justice- social, economic and political. Access to fast,
inexpensive and expeditious justice is a basic human right. Equal access to justice for all
segments to society is important to engender respect for law and judicial system. Access to
justice would be meaningful, if the judicial system yields result through a fair process and
within a prescribed time. Amicable settlement of disputes is very essential for maintenance of
social peace and harmony in the society. Our Constitution mandates that the “state shall
secure that the operation of the legal system promotes justice, on a basis of equal opportunity
and shall, in particular, provide free legal aid, by suitable legislation or schemes or in any
other way, to ensure that the opportunities for securing justice are not denied to any citizen
by reason of economic or other disabilities.”74

ADR has been a spoke in the wheel of the larger formal legal system in India since time
immemorial. If we look back in to our history, we find that during ancient and medieval
period the disputes were being resolved in an informal manner by a neutral third person, who
would be either an elderly person or a chief of a village or a clan or by a panchayat. The
adversarial system of justice, which we adapted later, has proved to be costly and time
consuming. To a great extent time is consumed over procedural wrangles, technicalities of

73
Prof. Aggarwal Nomita “Alternative Dispute Resolution: Concept and Concerns”, NYAYA DEEP, Vol. VII, Issue:
01, Jan. 2006, p. 68
74
Sabharwal Y.K, J. “Alternative Dispute Resolution”; Article- 39A of the Constitution of India, NYAYA DEEP, Vol.
VI, Issue: 01, Jan. 2005, p. 48

41
law and the inability of large number of litigants to engage lawyers. The problem of delay in
deciding the matters has resulted in long pendency. 75

The mounting arrears in the courts, inordinate delays in the administration of justice and
expenses of litigation have the potential to erode public trust and confidence in the judicial
system, which is the pillar of our democracy. Delay also gives rise to corruption and other
evils. Ideally speaking judicial system is blind to power, wealth and social status. Courts are
supposed to offer a forum, where the poor, powerless and marginalized can stand with all
others as equals before the law. With the present state of affairs, many of our poor fellow
citizens have chosen to avoid courts rather than face intimidation cost and time in legal
proceedings. The legal problems faced by the poor and down trodden are compounded by
their lack of awareness of whom to approach to redress their grievances.76

The need to get away from the conception that court is the only place to settle disputes has
led to exploring the possibility of creating a dispute resolving mechanism which would be
flexible and saves valuable time and money. In its 14 th Report, Law Commission of India
recommended devising of ways and means to ensure that justice should be simple, speedy,
cheap effective and substantial. In its 77th Report Law Commission of India observed that the
Indian society is primarily an agrarian society and is not sophisticated enough to understand
the technical and cumbersome procedures followed by the courts.77

The search for a simple, quick, flexible and accessible dispute resolution system has resulted
in the adoption of ‘Alternative Dispute Resolution’ mechanisms. ADR represents only a
change in forum, not in the substantive rights of the parties. ADR is not intended to supplant
altogether the traditional means of resolving disputes by means of litigation. The primary
object of ADR system is avoidance of vexation, expense and delay and promotion of the ideal
of “access to justice”.78

75
Sinha S.N.P and Dr. Mishra P.N. “A Dire Need Of Alternative Dispute Resolution System In A Developing
Country Like India”, INDIAN BAR REVIEW, Vol. XXXI (3&4) 2004, p. 298
76
Alternative Dispute Resolution viewed at www.fresnosuperiorcourt.org (last accessed on 13.04.2012)
77
Sinha S.N.P and Dr. Mishra P.N. “A Dire Need Of Alternative Dispute Resolution System In A Developing
Country Like India”; Law Commission of India (14 th Report on “Report on Reform of Judicial Administration,
1958 & 77th Report on Delay and Arrears in Trial Courts, 1979) INDIAN BAR REVIEW, Vol. XXXI (3&4) 2004, p.
299
78
Sinha S.N.P and Dr. Mishra P.N. “A Dire Need Of Alternative Dispute Resolution System In A Developing
Country Like India”, INDIAN BAR REVIEW, Vol. XXXI (3&4) 2004, p. 299, Para. 3&4

42
There are three important factors in every arbitration arrangement. The first relates to
nomination, second relates to legality of the award given by the arbitrator and third the
permissible area of challenge to the arbitrator’s award. Accepting the award is the normal
excepted code of conduct of the parties who have chosen an arbitrator. It is but natural that
they have initially reposed faith on the arbitrator or the arbitrators, as the case may be. If the
award is not to the choice of the parties or any one of them, it would be unfair to the
arbitrator or the arbitrators, as the case may be, to term the award as the outcome of the
malafide. It is, therefore, very unfortunate that increasingly misconduct by the arbitrator or
the arbitrators as the case may be is alleged. Sometimes obnoxious allegations are made. The
image should be untarnished. There may be black sheep like any other sphere of human life.
But then that fallacy can be remedied by making a wise choice at the threshold.79

ADVANTAGES AND DISADVANTAGES OF ADR

Wide range of process are defined as alternative dispute resolution process often, dispute
resolution process that are alternative to the adjudication through Court proceedings are
referred to as alternative dispute resolution methods. These methods usually involve a third
party referred to as neutral, a skilled helper who either assists the parties in a dispute or
conflict to reach at a decision by agreement or facilitates in arriving at a solution to the
problem between the party to the dispute.80

The alternative dispute resolution mechanisms by the very methodology used in it can
preserve and enhance personal and business relationships that might otherwise be damaged
by the adversarial process. The method has strength because it yields enforceable decisions,
and is backed by a judicial framework, which, in the last resort, can call upon the coercive
powers of the State. It is also flexible because it allows the contestants to choose procedures,
which fit the nature of the dispute and the business context in which it occurs. The process of
alternative dispute resolution mechanisms is facilitative, advisory and determinative in
nature.
Distinct advantages of alternative dispute resolution methods over traditional Court
proceedings are its procedural flexibility. It can be conducted at any time, and in any manner

79
Pasayat, Dr. Arijit, J.; “Arbitration And Courts Harmony Amidst Disharmony, NYAYA DEEP, Vol. VIII, Issue: 4,
Oct. 2007, p. 37
80
Tania Sourdin, Alternative Dispute Resolution. p 4.

43
to which the parties agree. It may be as casual as a discussion around a conference table or
asstructured as a private Court trial. Also, unlike the Courts, the parties have the freedom to
choose the applicable law, a neutral party to act as Arbitrator or as the Conciliator in their
dispute, on such days and places convenient to them and fix the fees payable to the neutral
party. Alternative dispute resolution methods being a private process between the disputed
parties and the arbitrator, mediator or the conciliator it offers confidentiality, which is
generally not available in Court proceedings. While a Court procedure results in a win-lose
situation for the disputants, in the alternative dispute resolution methods such as Mediation or
Conciliation, it is a win-win situation for the disputants because the solution to the dispute
emerges with the consent of the parties.
Some of the disadvantages that are found on the methods of alternative methods of dispute
resolution are that, the arbitrators are not subject to overturn on appeal may be more likely to
rule according to their personal ideals. Large corporations may exert inappropriate influence
in consumer disputes, pressuring arbitrators to decide in their favour or lose future business.
The burden of paying remuneration for the arbitrators is upon the parties to the dispute, which
may sometime be felt as a burden by the disputants.
The parties can cure these difficulties by prudently entering into the contract and deciding the
terms of referring the dispute, before choosing the alternative dispute resolution forum. The
advantages of alternative dispute resolution methods are so prominent that there is global
need and trend to adopt alternative dispute resolution methods to resolve the dispute as it is
quick as well as cheaper than that of adjudication through Courts of Law. The characteristic
features of individual alternative dispute resolution methods are dealt in detail in the
preceding chapters of this study. As argued by the father of our Nation Mahatma Gandhi, the
role of law, is to unite the parties and not to riven them. 81 As compared to Court procedures,
considerable time and money can be saved in solving the disputes through alternative dispute
resolution procedures82, 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 of law.

CURRENT LAWS – ARBITRATION AND CONCILIATION ACT,1996

With a view to give effect the law relating to domestic arbitration, international commercial
arbitration, enforcement of foreign awards and to define the law relating to conciliation, the

81
Mahatma Gandhi, The story of my experiments with truth 258 (1962).
82
Hiram Chodosh, Global Justice Reform: A Comparative Methodology (2005)

44
Arbitration and Conciliation Bill 199583 was introduced in the Rajya Sabha on 16th May 1995.
The Arbitration and Conciliation Act, 199684 received the Presidential assent and was brought
into force from 16 August 199685, the Act being a continuation of the Ordinance is deemed to
have been effective from 25 January 1996 when the first Ordinance came into force.86 The
long title of this Act replicates that, the object of the Act is to consolidate and amend the law
relating to domestic arbitration, international commercial arbitration and enforcement of
foreign arbitral awards as also to define the law relating to conciliation and for matters
connected there with or incidental thereto.

The Arbitration and Conciliation Act, 1996 repealed the Arbitration Act of 1940, the
Arbitration (Protocol and Convention) Act of 1937 and the Foreign Awards (Recognition and
Enforcement) Act of 1961.
The Arbitration and Conciliation Act, 1996 is divided into following parts:

 Part I deals with the “Domestic arbitration”.

 Part II deals with the “Enforcement of foreign awards”.

 Part III deals with the “Conciliation procedures”.

 Part IV of the Act deals with the “Supplementary provisions”.

T h e Act has three Schedules namely,

 The First Schedule on the Convention on recognition and enforcement of foreign

arbitral award as per New York convention.
 The Second Schedule on the Protocol on Arbitration clauses.

 The Third Schedule on the convention on the execution of foreign arbitral awards as
per Geneva Convention.

3.3.1 SALIENT FEATURES OF THE ARBITRATION AND

CONCILIATION ACT, 1996

83
Bill No.30 of 1995.
84
The Arbitration and Conciliation Act, 1996. (No. 26 of 1996).
85
Notification No. GSR 375 (E) published in the Gazette of India, Extraordinary, Pt II
86
Fuerst Day Lawson Ltd. Vs. Jindal Exports Ltd. (2001)6 SCC 356.

45
The Arbitration and Conciliation Act, 199687 lay considerable stress on the party autonomy.
The party to the dispute can decide the number of arbitrators, the rules of procedure, and the
rules governing the substance of the dispute, the place of arbitration and the language of the
arbitrators. The major advantage of the new law is that, it facilitates quick resolution of the
commercial disputes and speeds up arbitration procedure by minimizing intervention by the
Court. Under the new law, a Court may provide certain interim measures of protection at a
party’s request and may offer assistance in taking evidence or recovering documents at the
request of the arbitral tribunal or a party to the reference. The award of an arbitrator is itself
enforceable as a decree of Court and is not required to be made a “Rule of Court”. The
arbitrator has to give reasons for his award. However, no reasons need to be given if the
disputant parties agree beforehand to such a thing.

PREAMBLE

Preamble to the 1996 Act is an introductory, prefatory and an explanatory note about the
sections namely that of the Arbitration and Conciliation Act, 1996. United Nations
Commission on International Trade Law (UNCITRAL) adopted the UNCITRAL Model Law
on International Commercial Arbitration in 1985. Thereby, the General Assembly of the
United Nations recommended that all countries give due consideration to the said Model Law,
in view of the desirability of uniformity of the law of arbitral procedures and the specific
needs of international commercial arbitration practice.

The United Nations Commission on International Trade Law has adopted the UNCITRAL
Conciliation Rules in 1980. Thereby, the General Assembly of the United Nations
recommended the use of the said Rules in cases where a dispute arises in the context of
international commercial relations and the parties seek an amicable settlement of that dispute
by recourse to conciliation.
The said Model Law and Rules has a significant contribution to the establishment of a unified
legal framework for the fair and efficient settlement of disputes arising in international
commercial relations.
Based on the above facts the Parliament of India considered that it was expedient to make law
with respect to arbitration and conciliation, taking into account the aforesaid Model Law and
Rules in the forty- seventh year of the Republic.
The process of ‘Conciliation’ and ‘Mediation’ is distinguishable from Arbitration as the

87
TheArbitrationandConciliationAct,1996 hereinafter referredtoas“1996Act”

46
disputed party’s willingness to submit to mediation or conciliation does not bind them to
accept the recommendation of the conciliation or mediator but an arbitrator’s award, by
contrast, is binding on the parties.88
The Hon’ble Supreme Court in Fuerst Day Lawson Ltd Vs. Jindal Exports Ltd89 held that the
provisions of the Arbitration and Conciliation Act, 1996 have to be interpreted and construed
independent to that the Arbitration and Conciliation Act, 1940. In order to get any further help
in construing the provisions, it is more relevant to refer to the United Nations Commission on
International Trade Law.
In Konkan Railways Corp. Ltd. Vs. Mehul Construction Company90, Supreme Court of India
stated that the Arbitration and Conciliation Act, 1996 was introduced in order to attract the
‘international mercantile community’ and at the time of interpretation, regard must be had to
the objectives behind the enactment of the Act.
In Babar Ali Vs. Union of India91, it was held by Supreme Court that, The Arbitration and
Conciliation Act,1996 is neither unconstitutional nor in any way offends the basic structure of
the Constitution of India, as Judicial review is available for challenging the award in
accordance with the procedure laid down therein. The time and manner of the judicial scrutiny
can be legitimately laid down by the Act passed by the parliament.
The MM Acqua Technologies Ltd Vs. Wig Brothers Builders Ltd92 case helps in explaining the
definition of a binding agreement between parties. In order to be a binding arbitration
agreement between the parties, the same must be in writing and the parties should have
specifically agreed to settle their disputes by arbitration. An arbitration agreement cannot be
inferred by implication.

88
Robert Merkin, Arbitration Law edn 2004, p 168, para 6.6.
89
A.I.R. 2001 S.C.2293; Sundaram Finance Ltd Vs. NEPC India Ltd., AIR 1999 S.C 565.
90
(2000) 7 SCC 201.
91
(2000) 2 SCC 178
92
2001(3) RAJ 531 (Del).

47
DIFFERENT TYPES OF ALTERNATE DISPUTE RESOLUTION

The most common types of ADR for civil cases are Arbitration, Conciliation, Mediation,
Judicial Settlement and Lok Adalat.

In India, the Parliament has amended the Civil Procedure Code by inserting Section 89 as
well as Order 10 Rule 1-A to 1-C. Section 89 of the Civil Procedure Code provides for the
settlement of disputes outside the Court. It is based on the recommendations made by the
Law Commission of India and Malimath Committee. It was suggested by the Law
Commission of India that the Court may require attendance of any party to the suit or
proceedings to appear in person with a view to arriving at an amicable settlement of dispute
between the parties and make an attempt to settle the dispute between the parties amicably.
Malimath Committee recommended to make it obligatory for the Court to refer the dispute,
after issues are framed, for settlement either by way of Arbitration, Conciliation, Mediation,
Judicial Settlement through Lok Adalat. It is only when the parties fail to get their disputes
settled through any of the alternate disputes resolution method that the suit could proceed
further. In view of the above, new Section 89 has been inserted in the Code in order to
provide for alternative dispute resolution.

It is worthwhile to refer Section 89 of the Civil Procedure Code, which runs as follows: -

SEC. 89. SETTLEMENT OF DISPUTES OUTSIDE THE COURT. –

(1) Where it appears to the Court that there exist elements of a settlement which may be
acceptable to the parties, the Court shall formulate the terms of settlement and give them to
the parties for their observations and after receiving the observations of the parties, the Court
may reformulate the terms of a possible settlement and refer the same for –

(a) arbitration;

(b) conciliation;

(c) judicial settlement including settlement through Lok Adalat; or

(d) mediation.

(2) where a dispute has been referred –

48
(a) for arbitration or conciliation, the provisions of the Arbitration and Conciliation Act, 1996
(26 of 1996) shall apply as if the proceedings for arbitration or conciliation were referred for
settlement under the provisions of that Act;

(b) to Lok Adalat, the Court shall refer the same to the Lok Adalat in accordance with the
provisions of sub-section (1) of section 20 of the Legal Services Authority Act, 1987 (39 of
1987) and all other provisions of that Act shall apply in respect of the dispute so referred to
the Lok Adalat;

(c) for judicial settlement, the Court shall refer the same to a suitable institution or person and
such institution or person shall be deemed to be a Lok Adalat and all the provisions of the
Legal Services Authority Act, 1987 (39 of 1987) shall apply as if the dispute were referred to
a Lok Adalat under the provisions of that Act;

(d) for mediation, the Court shall effect a compromise between the parties and shall follow
such procedure as may be prescribed."

On perusal of the aforesaid provisions of Section 89, it transpires that it refers to five types of
ADR procedures, made up of one adjudicatory process i.e. arbitration and four negotiatory
i.e. non-adjudicatory processes such as Conciliation, Mediation, Judicial Settlement and Lok
Adalat. The object behind Section 89 is laudable and sound. Resort to ADR process is
necessary to give speedy and effective relief to the litigants and to reduce the pendency in and
burden upon the Courts.

Of course, Section 89 has to be read with Rule 1-A of Order 10, which runs as follows: -

ORDER 10 RULE 1-A. Direction of the Court to opt for any one mode of alternative dispute
resolution. --After recording the admissions and denials, the Court shall direct the parties to
the suit to opt either mode of the settlement outside the Court as specified in sub- section (1)
of section 89. On the option of the parties, the Court shall fix the date of appearance before
such forum or authority as may be opted by the parties.

ORDER 10 RULE 1-B. Appearance before the conciliatory forum or authority. --Where a suit
is referred under rule 1A, the parties shall appear before such forum or authority for
conciliation of the suit.

ORDER 10 RULE 1-C. Appearance before the Court consequent to the failure of efforts of
conciliation.--Where a suit is referred under rule 1A and the presiding officer of conciliation

49
forum or authority is satisfied that it would not be proper in the interest of justice to proceed
with the matter further, then, it shall refer the matter again to the Court and direct the parties
to appear before the Court on the date fixed by it.

On joint reading of Section 89 read with Rule 1-A of Order 10 of Civil Procedure Code, it
transpires that the Court to direct the parties to opt for any of the five modes of the
Alternative Dispute Resolution and on their option refer the matter.

Thus, the five different methods of ADR can be summarized as follows: -

1. Arbitration

2. Conciliation

3. Mediation

4. Negotiation

5. Lok Adalat

ARBITRATION

The Indian law of arbitration is contained in the Arbitration and Conciliation Act 1996 (Act).
The Act is based on the 1985 UNCITRAL Model Law on International Commercial
Arbitration and the UNCITRAL Arbitration Rules 1976. The Statement of Objects and
Reasons of the Act recognises that India’s economic reforms will become effective only if the
nation’s dispute resolution provisions are in tune with international regime. The Statement of
Objects and Reasons set forth the main objectives of the Act as follows:
“i) to comprehensively cover international and commercial arbitration and conciliation as
also domestic arbitration and conciliation;
ii) to make provision for an arbitral procedure which is fair, efficient and capable of meeting
the needs of the specific arbitration;
iii) to provide that the arbitral tribunal gives reasons for its arbitral award;
iv) to ensure that the arbitral tribunal remains within the limits of its jurisdiction;
v) to minimise the supervisory role of courts in the arbitral process;
vi) to permit an arbitral tribunal to use mediation, conciliation or other procedures during the
arbitral proceedings to encourage settlement of disputes;

50
 vii) to provide that every final arbitral award is enforced in the same manner as if it were a
decree of the court;
viii) to provide that a settlement agreement reached by the parties as a result of conciliation
proceedings will have the same status and effect as an arbitral award on agreed terms on the
substance of the dispute rendered by an arbitral tribunal;
and ix) to provide that, for purposes of enforcement of foreign awards, every arbitral award
made in a country to which one of the two International Conventions relating to foreign
arbitral awards to which India is a party applies, will be treated as a foreign award.”

SCHEME OF THE ACT

The Act is a composite piece of legislation. It provides for domestic arbitration; international
commercial arbitration; enforcement of foreign award and conciliation (the latter being based
on the UNCITRAL Conciliation Rules of 1980).

The more significant provisions of the Act are to be found in Part I and Part II thereof. Part I
contains the provisions for domestic and international commercial arbitration in India. All
arbitration conducted in India would be governed by Part I, irrespective of the nationalities of
the parties. Part II provides for enforcement of foreign awards.
Part I is more comprehensive and contains extensive provisions based on the Model Law. It
provides inter alia for arbitrability of disputes; non-intervention by courts; composition of the
arbitral tribunal; jurisdiction of arbitral tribunal; conduct of the arbitration proceedings;
recourse against arbitral awards and enforcement. Part II on the other hand, is largely
restricted to enforcement of foreign awards governed by the New York Convention or the
Geneva Convention. Part II is thus, (by its very nature) not a complete code. This led to
judicial innovation by the Supreme Court in the case of Bhatia International Vs. Bulk
Trading93 . Here the Indian court’s jurisdiction was invoked by a party seeking interim
measures of protection in relation to an arbitration under the ICC Rules to be conducted in
Paris. The provision for interim measure (section 9) was to be found in Part I alone (which
applies only to domestic arbitration). Hence the Court was faced with a situation that there
was no proprio vigore legal provision under which it could grant interim measure of
protection. Creatively interpreting the Act, the Supreme Court held that the “general
provisions” of Part I would apply also to offshore arbitrations, unless the parties expressly or
impliedly exclude applicability of the same. Hence by judicial innovation, the Supreme Court
93
(2002) 4 SCC 105 (‘Bhatia’).

51
extended applicability of the general provisions of Part I to off-shore arbitrations as well. It
may be stated that this was premised on the assumption that the Indian Court would
otherwise have jurisdiction in relation to the matter (in the international sense). This became
clear in a subsequent decision of the Supreme Court in Shreejee Traco (I) Pvt. Ltd. Vs.
Paperline International Inc.94 Here the Court’s assistance was sought for appointing an
arbitrator in an offshore arbitration. The power of appointment by court exists under Section
11 of Part I of the Act. The Court declined to exercise jurisdiction. It found that the
arbitration was to be conducted in New York and that the law governing the arbitration
proceedings would be the law of seat of the arbitration. Hence, the extension of Part I
provisions to foreign arbitrations sanctified by Bhatia95 could not be resorted to in every case.
The Indian Courts would have to first determine if it has jurisdiction, in the international
sense.

SUBJECT MATTER OF ARBITRATION

Any commercial matter including an action in tort if it arises out of or relates to a contract
can be referred to arbitration. However, public policy would not permit matrimonial matters,
criminal proceedings, insolvency matters anti-competition matters or commercial court
matters to be referred to arbitration. Employment contracts also cannot be referred to
arbitration but director - company disputes are arbitrable (as there is no master servant
relationship here)96. Generally, matters covered by statutory reliefs through statutory tribunals
would be non-arbitrable.

ROLE OF THE COURT

One of the fundamental features of the Act is that the role of the court has been minimised.
Accordingly, it is provided that any matter before a judicial authority containing an
arbitration agreement shall be referred to arbitration (Section 8 provided the non - applicant
objects no later than submitting its statement of defence on merits). Further, no judicial
authority shall interfere, except as provided for under the Act (Section 5). In relation to
arbitration proceedings, parties can approach the Court only for two purposes: (a) for any
interim measure of protection or injunction or for any appointment of receiver etc.; or (b) for
the appointment of an arbitrator in the event a partyfails to appoint an arbitrator or if two
94
(2003) 9 SCC 79
95
supra
96
Comed Chemicals Ltd. Vs. C.N. Ramchand 2008 (13) SCALE 17

52
appointed arbitrators fail to agree upon the third arbitrator. In such an event, in the case of
domestic arbitration, the Chief Justice of a High Court may appoint an arbitrator, and in the
case of international commercial arbitration, the Chief Justice of the Supreme Court of India
may carry out the appointment. A court of law can also be approached if there is any
controversy as to whether an arbitrator has been unable to perform his functions or has failed
to act without undue delay or there is a dispute on the same. In such an event, the court may
decide to terminate the mandate of the arbitrator and appoint a substitute arbitrator.

JURISDICTION OF ARBITRATORS

The Act provides that the arbitral tribunal may rule on its own jurisdiction, including any
objections with respect to the existence or validity of the arbitration agreement. The
arbitration agreement shall be deemed to be independent of the contract containing the
arbitration clause, and invalidity of the contract shall not render the arbitration agreement
void. Hence, the arbitrators shall have jurisdiction even if the contract in which the arbitration
agreement is contained is vitiated by fraud and/or any other legal infirmity. Further, any
objection as to jurisdiction of the arbitrators should be raised by as party at the first instance,
i.e., either prior to or along with the filing of the statement of defence. If the plea of
jurisdiction is rejected, the arbitrators can proceed with the arbitration and make the arbitral
award. Any party aggrieved by such an award may apply for having it set aside under Section
34 of the Act. Hence, the scheme is that, in the first instance, the objections are to be taken up
by the arbitral tribunal and in the event of an adverse order, it is open to the aggrieved party
to challenge the award.

In SBP & Co. Vs. Patel Engg Ltd. 97 the Supreme Court of India (in a decision rendered by a
Bench of Seven Judges) held that the nature of power conferred on the Court under Section
11 of the Act is judicial (and not administrative) in nature. Accordingly, if parties approach
the Court for appointment of arbitral tribunal (under Section 11) and the Chief Justice
pronounces that he has jurisdiction to appoint an arbitrator or that there is an arbitration
agreement between the parties or that there is a live and subsisting dispute to be referred to
arbitration and the Court constitutes the Tribunal as envisaged, this would be binding and
cannot be re-agitated by the parties before the arbitral tribunal.
In S.B.P & Co. case the Supreme Court has defined what exactly the Chief Justice,
approached with an application under Section 11 of the Act, is to decide at that stage. The
97
(2005) 8 SCC 618

53
Chief Justice has the power to decide his own jurisdiction in the sense whether the party
making the motion has approached the right court. He has to decide whether there is an
arbitration agreement, as defined in the Act and whether the person who has made the request
before him, is a party to such an agreement. He can also decide the question whether the
claim was a dead one; or a long-barred claim that was sought to be resurrected and whether
the parties have concluded the transaction by recording satisfaction of their mutual rights and
obligations or by receiving the final payment without objection.
The Court in SBP & Co case, inter alia, concluded as follows:
(i) The power exercised by the Chief Justice of the High Court or the Chief Justice of
India under Section 11(6) of the Act is not an administrative power. It is a judicial
power.
(ii) ii) The power under Section 11(6) of the Act, in its entirety, could be delegated, by
the Chief Justice of the High Court only to another Judge of that Court and by the
Chief Justice of India to another Judge of the Supreme Court.
(iii) In case of designation of a Judge of the High Court or of the Supreme Court, the
power that is exercised by the designated Judge would be that of the Chief Justice as
conferred by the statute.
(iv) The Chief Justice or the designated Judge will have the right to decide the
preliminary aspects as indicated in the judgment. These will be, his own jurisdiction
to entertain the request, the existence of a valid arbitration agreement, the existence
or otherwise of a live claim, the existence of the condition for the exercise of his
power and on the qualifications of the arbitrator or arbitrators. The Chief Justice or
the designated Judge would be entitled to seek the opinion of an institution in the
matter of nominating an arbitrator qualified in terms of Section 11(8) of the Act if the
need arises but the order appointing the arbitrator could only be that of the Chief
Justice or the designated Judge.
(v) The District Judge does not have the authority under Section 11(6) of the Act to make
appointment of an arbitrator.
(vi) The High Court cannot interfere with the orders passed by the arbitrator or the
Arbitral Tribunal during the course of the arbitration proceedings and the parties
could approach the Court only in terms of Section 37 of the Act (appealable orders)
or in terms of Section 34 of the Act (setting aside or arbitral award).

54
(vii) Since it is a judicial order, an appeal will lie against the order passed by the Chief
Justice of the High Court or by the designated Judge of that Court only under Article
136 of the Constitution to the Supreme Court
(viii) No appeal shall lie against an order of the Chief Justice of India or a Judge of the
Supreme Court designated by him while entertaining an application under Section
11(6) of the Act.

CHALLENGE TO ARBITRATORS

An arbitrator may be challenged only in two situations. First, if circumstances exist that give
rise to justifiable grounds as to his independence or impartiality; second, if he does not
possess the qualifications agreed to by the parties. A challenge is required to be made within
15 days of the petitioner becoming aware of the constitution of the arbitral tribunal or of the
circumstances furnishing grounds for challenge. Further, subject to the party’s agreement, it
is the arbitral tribunal (and not the court - unlike under the old Act of 1940) which shall
decide on the challenge. If the challenge is not successful the tribunal shall continue with the
arbitral proceedings and render the award, which can be challenged by an aggrieved party at
that stage. This is another significant departure from the Model Law, which envisages
recourse to a court of law in the event the arbitral tribunal rejects the challenge.

The Indian courts have held that “the apprehension of bias must be judged from a healthy,
reasonable and average point of view and not on mere apprehension of any whimsical
person. Vague suspicions of whimsical, capricious and unreasonable people are not our
standard to regulate our vision.”98

CONDUCT OF PROCEEDINGS

The arbitrators are masters of their own procedure and subject to party’s agreement, may
conduct the proceedings “in the manner they consider appropriate.” This power includes-
98
International Airports Authority of India Vs. K.D. Bali & Anr; (1988) 2 SCC 360

55
“the power to determine the admissibility, relevance, materiality and weight of any
evidence”. The only restrain on them is that they shall treat the parties with equality and each
party shall be given a full opportunity to present his case, which includes sufficient advance
notice of any hearing ormeeting. Neither the Code of Civil Procedure nor the Indian
Evidence Act applies to arbitrations. Unless the parties agree otherwise, the tribunal shall
decide whether to hold oral hearings for the presentation of evidence or for arguments or
whether the proceedings shall be conducted on the basis of documents or other material
alone. However, the arbitral tribunal shall hold oral hearings if a party so requests (unless the
parties have agreed that no oral hearing shall be held).

Arbitrators have power to proceed exparte where the respondent, without sufficient cause,
fails to communicate his statement of defence or appear for an oral hearing or produce
evidence. However, in such situation the tribunal shall not treat the failure as an admission of
the allegations by the respondent and shall decide the matter on the evidence, if any, before
it. If the claimant fails to communicate his statement of the claim, the arbitral tribunal shall
be entitled to terminate the proceedings.

EVIDENCE IN PROCEEDINGS

The Indian Oath’s Act 1969 extends to persons who may be authorized by consent of parties
to receive evidence. This Act thus, encompasses arbitral proceedings as well. 99 Section 8 of
the said Act states that every person giving evidence before any person authorized to
administer oath “shall be bound to state the truth on such subject.” Thus, witnesses appearing
before an arbitral tribunal can be duly sworn by the tribunal and be required to state the truth
on oath and upon failure to do so, commit offences punishable under the Indian Penal
Code.100However, the arbitrators cannot force unwilling witnesses to appear before them and
for this court’s assistance is provided for vide Section 27 of the Act. Under this provision the
arbitral tribunal or a party with the approval of the tribunal may apply to the court seeking its
assistance in taking evidence (this is also provided for in the Model Law). However, Section
27 of the Indian Act goes beyond the Model Law as it states that any person failing to attend
in accordance with any order of the court or making any other default or refusing to give
evidence or guilty of any contempt of the arbitral tribunal, shall be subject to like penalties
and punishment as he may incur for like offences in suits tried before the court. Further, the

99
Raipur Development Authority Vs. Chokhamal Contractors, (1989) 2 SCC 721.
100
Section 191 and 193 of the Indian Penal Code, 1860

56
court may either appoint a commissioner for taking evidence or order that the evidence be
provided directly to the arbitral tribunal. These provisions extend to any documents to be
produced or property to be inspected. Section 26 provides for appointment of experts by the
arbitral tribunalfor any specific issue. In such situation a party may be required to give the
expert any relevant information or produce any relevant document, goods or property for
inspection as may be required. It will be open to a party (or to the arbitral tribunal) to require
the expert after delivery of his report, to participate in an oral hearing where the parties
would have an opportunity to put questions to him.

GOVERNING LAWS

In an international commercial arbitration, parties are free to designate the governing law for
the substance of the dispute. If the governing law is not specified, the arbitral tribunal shall
apply the rules of law it considers appropriate in view of the surrounding circumstances. For
domestic arbitration, however, (i.e., between Indian parties), the tribunal is required to decide
the dispute in accordance with the substantive laws of India.
The Supreme Court in TDM Infrastructure (P) Ltd. Vs. UE Development India (P) Ltd.101
held that irrespective of where the ‘central management and control is exercised’ by a
company, companies incorporated in India, cannot choose foreign law as the governing law
of their arbitration. The nationality of companies incorporated in India being Indian, the
intention of the legislature is that Indian nationals should not be permitted to derogate from
Indian law as it would be against public policy. The Court was of the view that "international
commercial arbitration" meant an arbitration between parties where at least one of it is a
body corporate incorporated in a country other than India. Where both companies are
incorporated in India (and thereby had Indian nationalities), then the arbitration between
them cannot be said to be an international commercial arbitration (even though the central
management and control of the company may be exercised from a country other than India).

FORMS AND CONTENTS OF AWARD

101
2008 (2) Arb LR 439 (SC)

57
The arbitrators are required to set out the reasons on which their award is based, unless the
parties agree that no reasons are to be given or if it arises out of agreed terms of settlement.
The tribunal may make an interim award on matters on which it can also make a final award.
Indian law provides for a very healthy 18% interest rate on sums due under an award. Thus,
unless the arbitral tribunal directs otherwise, the award will carry interest at 18% per annum
from the date of the award till the date of payment. The tribunal is free to award costs,
including the cost of any institution supervising the arbitration or any other expense incurred
in connection with the arbitration proceedings.

SETTING ASIDE OF AWARDS

The grounds for setting aside an award rendered in India (in a domestic or international
arbitration) are provided for under Section 34 of the Act. These are materially the same as in
Article 34 of the Model Law for challenging an enforcement application. An award can be
set aside if:

a) a party was under some incapacity; or

b) the arbitration agreement was not valid under the governing law; or
c) a party was not given proper notice of the appointment of the arbitrator or on the arbitral
proceedings; or
d) the award deals with a dispute not contemplated by or not falling within the terms of
submissions to arbitration or it contains decisions beyond the scope of the submissions; or
e) the composition of the arbitral tribunal or the arbitral procedure was not in accordance
with the agreement of the parties; or
f) the subject matter of the dispute is not capable of settlement by arbitration; or
g) the arbitral award is in conflict with the public policy of India.
A challenge to an award is to be made within three months from the date of receipt of the
same. The courts may, however, condone a delay of maximum 30 days on evidence of

58
sufficient cause. Subject to any challenge to an award, the same is final and binding on the
parties and enforceable as a decree of the Court.
Considerable controversy has been generated as to whether an award is liable to be
challenged under Section 34 on merits. The earlier view, as expounded by the Supreme
Court in Renu Sagar Power Co. Ltd. Vs. General Electric Co. 102 was that an award could be
set side if it is contrary to the public policy of India or the interests of India or to justice or
morality – but not on the grounds that it is based on an error of law or fact. The Supreme
Court in that case was faced with the issue to determine the scope of public policy in relation
to proceedings for enforcement of a foreign award under the Foreign Awards (Recognition
and Enforcement) Act, 1961. The Court also held that in proceedings for enforcement of a
foreign award the scope of enquiry before the court in which the award is sought to be
enforced would not entitle a party to the said proceedings to impeach the award on merits.
However, in a later Supreme Court of India decision in Oil and Natural Gas Corporation vs.
Saw Pipes103 the Court added an additional ground of “patentillegality”, thereby considerably
widening the scope of judicial review on the merits of the decision. In Saw Pipes case the
court accepted that the scheme of Section 34 which dealt with setting aside the domestic
arbitral award and Section 48 which dealt with enforcement of foreign award were not
identical. The court also accepted that in foreign arbitration, the award would be subject to
being set aside or suspended by the competent authority under the relevant law of that
country whereas in domestic arbitration the only recourse is to Section 34.
The Supreme Court observed:
“But in a case where the judgment and decree are challenged before the Appellate Court or
the Court exercising revisional jurisdiction, the jurisdiction of such Court would be wider.
Therefore, in a case where the validity of award is challenged there is no necessity of giving a
narrower meaning to the term 'public policy of India'. On the contrary, wider meaning is
required to be given so that the 'patently illegal award' passed by the arbitral tribunal could be
set aside. Similarly, if the award is patently against the statutory provisions of substantive law
which is in force in India or is passed without giving an opportunity of hearing to the parties
as provided under Section 24 or without giving any reason in a case where parties have not
agreed that no reasons are to be recorded, it would be against the statutory provisions. In all
such cases, the award is required to be set aside on the ground of 'patent illegality'.”

102
(1994) Supp (1) SCC 644
103
(2003) 5 SCC 705

59
The court in Saw Pipes case although adopted the wider meaning to the term ‘public policy’
but limited its application to domestic awards alone. The Saw Pipes case has generated some
controversy, and it remains to be seen if it will stand the test of time.
The position of a foreign award has also undergone some recent controversy. A foreign
award is enforceable under Part II of the Act if it is rendered in a country that is a signatory to
the New York Convention or Geneva Convention and that territory is notified by the Central
Government of India. Once an award is held to be enforceable it is deemed to be a decree of
the court and can be executed as such. Under the Act there is no procedure for setting aside a
foreign award. A foreign award can only be enforced or refused to be enforced but it cannot
be set aside.
This fundamental distinction between a foreign and a domestic award has been altered by the
Supreme Court in the recent case of Venture Global Engineering Vs. Satyam Computer
Services Ltd.104 (Venture Global). Here the Supreme Court was concerned with a situation
where a foreign award rendered in London under the Rules of the LCIA was sought to be
enforced by the successful party (an Indian company) in the District Court, Michigan, USA.
The dispute arose out of a joint venture agreement between the parties. The respondent
alleged that the appellant had committed an “event of default” under the shareholders
agreement and as per the said agreement exercised its option to purchase the appellant’s
shares in the joint venture company at book value. The sole arbitrator appointed by the LCIA
passed an award directing the appellant to transfer its shares to the respondent. The
respondent sought to enforce this award in the USA. The appellant filed a civil suit in an
Indian District Court seeking to set aside the award. The District Court, followed by the High
Court, in appeal, dismissed the suit holding that there was no such procedure envisaged under
Indian law. However, the Supreme Court in appeal, following its earlier decision in the case
of Bhatia International Vs. Bulk Trading105 held that even though there was no provision in
Part II of the Act providing for challenge to a foreign award, a petition to set aside the same
would lie under Section 34 Part I of the Act (i.e. it applied the domestic award provisions to
foreign awards). The Court held that the property in question (shares in an Indian company)
are situated in India and necessarily Indian law would need to be followed to execute the
award. In such a situation the award must be validated on the touchstone of public policy of
India and the Indian public policy cannot be given a go by through the device of the award
being enforced on foreign shores. Going further the Court held that a challenge to a foreign

104
(2008) 4 SCC 190
105
(2002) 4 SCC 105

60
award in India would have to meet the expanded scope of public policy as laid down in Saw
Pipes (supra) (i.e. meet a challenge on merits contending that the award is “patently illegal”).
The Venture Global case is far reaching for it creates a new procedure and a new ground for
challenge to a foreign award (not envisaged under the Act). The new procedure is that a
person seeking to enforce a foreign award has not only to file an application for enforcement
under Section 48 of the Act, it has to meet an application under Section 34 of the Act seeking
to set aside the award. The new ground is that not only must the award pass the New York
Convention grounds incorporated in Section 48, it must pass the expanded “public policy”
ground created under Section 34 of the Act. In practice, the statutorily enacted procedure for
enforcement of a foreign award would be rendered superfluous till the application for setting
aside the same (under Section 34) is decided. The statutorily envisaged grounds for challenge
to the award would also be rendered superfluous as notwithstanding the success of the
applicant on the New York Convention grounds, the award would still have to meet the
expanded “public policy” ground (and virtually have to meet a challenge to the award on
merits). The Venture Global case thus largely renders superfluous the statutorily envisaged
mechanism for enforcement of foreign awards and substitutes it with a judge made law. The
Judgement thus is erroneous. Moreover, in so far as the Judgment permits a challenge to a
foreign award on the expanded interpretation of public policy it is per incuriam as a larger,
three Bench decision in the case of Renu Sagar(supra) holds to the contrary. Further Saw
Pipes (on which Venture Global relies for this proposition) had clearly confined its expanded
interpretation of public policy to domestic awards alone (lest it fall foul of the Renu Sagar
case which had interpreted the expression narrowly). The Supreme Court in Venture Global
did not notice this self-created limitation in Saw Pipes nor did it notice the narrower
interpretation of public policy in Renu Sagar and therefore application of the expanded
interpretation of public policy to foreign awards is clearly per incuriam. The decision thus
needs to be reviewed.

MEDIATION

Mediation is a fundamental procedure for resolving controversies. It is a process in which a

neutral intervener called the mediator assists two or more negotiating parties, to identify
matters of concern, develop a better understanding of their situation, and, based upon that
improved understanding, develop mutually acceptable proposals to resolve those concerns.
Thus, Mediation can be said to embraces the philosophy of democratic decision-making.

61
The process of mediation can be ‘evaluative’ as well as ‘facilitative’. Henry J. Brown and
Arthur L. Mariot say that ‘mediation’ is a facilitative process in which “disputing parties
engage the assistance of an impartial third party, the mediator, who helps them to try to arrive
at an agreed resolution of their dispute. The mediator has no authority to make any decisions
that are binding on them, but uses certain procedures, techniques and skills to help them to
negotiate an agreed resolution of their dispute without adjudication.”
The process of mediation incurs minimal procedural and evidentiary requirements while
providing unlimited opportunity for the parties to exercise flexibility in communicating their
106
underlying concerns and priorities regarding the dispute.” Thus, mediation can be
practiced
in various ways. For example, in the United States of America, the purest of its form is still
considered to be facilitative. Undoubtedly, many practitioners and scholars differ on the
“role” of mediator in mediation. One view is that the process of resolving disputes shall be
called mediation only if the mediator limits his or her role to that of a facilitator. Whereas in
the evaluative method, the mediator assumes more control of the process and the parties may
be ordered to participate in a particular way that may influence the outcome of the process.
Moreover, from the standpoint of the Court's responsibilities, the use of mediation reduces
the heavy caseload so common with litigation. 107 The disputes referred to mediation can be
settled in accordance with reason, equity, and the actual circumstances of the case. 108 Both
equity and mediation offer a form of "individualised justice" unavailable in the official legal
system. However, through the mediation process a resolution or result to the dispute can be
achieved without a right-wrong determination and without a factual finding.109Thus,
mediation when adopted as alternative dispute resolution method helps in dissolving
bitterness and rivalry and creates the circumstance, which helps in the amicable development
of the concept peace and unity through the win situation among the disputants.

106
Brien Wassner, A Uniform National System of Mediation in the United States: Requiring National
Training Standards and Guidelines for Mediators and State Mediation Programs, 4 Cardozo Online
J. Conflict Resol. 3 (2002)

107
Kwang-Taeck Woo, A Comparison of Court-Connected Mediation in Florida and Korea, 22 Brook.
J. Int'l L. 605, 606 (1997).
108
Yong Kuk Chang, Minsa Chojeong Chedoeui Hyunhwangkwa Daichaik, Present and Future of Civil
Mediation 14 Minsa Panryae Yeonku (Study of Civil Cases) 521 (1992).
109
Kimberlee Kovach, teaching a New Paradigm: Must Knights Shed their Swords and Armor to
Enter Certain ADR Arenas? 1 Cardozo Online J. Confl. Resol. 3 (2000)

62
DIFFERENCE BETWEEN THE MEDIATION AND OTHER DISPUTE RESOLUTION
PROCESS

The alternative dispute resolution procedures can be broadly classified into two groups, first
those that are adjudicative and adversarial, and second those, which are consensual and non-
adversarial. The latter group includes mediation.110Sir Robert A. Baruch Bush and Joseph P.
Folger, in, “The promise of mediation” say that, in any conflict, the principal objective ought
to be to find a way of being neither victims nor victimisers, but partners in an ongoing human
interaction that is always going to involve instability and conflict.111
There are several types of different dispute resolution methods that have evolved owing to the
different needs and circumstances of the society. The study of the differences between them
will help the disputant in choosing the best and the apt method of resolving their disputes
according to their needs. The dominant form of dispute resolution method that is broadly
adopted for the resolution of a dispute is, by filing of case before the Court of law. With the
bird eye view, it can be said that, in the process of adjudication through Court of law,
someone has to lose among the disputing party. The litigation route has now become slow,
expensive, and uncertain in its outcome. The Courts and Tribunals do not 'resolve' a dispute,
but they only “decide” a dispute or “adjudicate” on them. Whereas, in the case of mediation,
the parties can try to agree with one another, were a mediator acts as a facilitator. Mediation
has the advantage as it can lead to finality because, it allows for an informed and un-
coerceddecision to be taken by everyone involved. Disputes are resolved in the process of
mediation through consensual interaction between the disputants112. The mediator in
promoting or in other words, facilitating resolution of the dispute by the parties themselves
does not purport to decide the issue between them. Mediation is more flexible, quick and less
expensive than the process of adjudication through Court of Law. Thus, the study reveals
that, litigation produces provides for fair and just results, but it is procedurally disadvantages
as compared to mediation. Mediation affords a far greater degree of flexibility, relative
informality, confidentiality and control over its resolution.
Comparative study of the process of ‘mediation’ and ‘arbitration’ shows that, mediation is a
form of expedited negotiation. The parties control the outcome. Mediator has no power to
decide. Settlement in the dispute is done only with party approval. Exchange of information
is voluntary and is often limited. Parties exchange information that will assist in reaching a
110
Manka, ADR: What Is It and Why Do You Need to Know? 47 J Mo Bar 623, 625
111
Robert A. Baruch Bush and Joseph P. Folger, The promise of mediation (1994) at 229-59
112
Tania Sourdin, Alternative Dispute Resolution, (2002) p 2,3

63
resolution. Mediator helps the parties define and understand the issues and each side's
interests. Parties vent feelings, tell story, and engage in creative problem solving. Mediation
process is informal and the parties are the active participants. Joint and private meetings
between individual parties and their counsel are held in this process. Outcome based on needs
of parties. Result is mutually satisfactory and finally a relationship may be maintained or
created. Mediation when compared with arbitration is of low cost. It is private and
confidential. Facilitated negotiation is an art. Mediator is not the decision maker. Mediator is
a catalyst. He avoids or breaks an impasse, diffuse controversy, encourages to generate viable
options. He has more control over the process. The process of mediation gives the parties
many settlement options. Relationship of parties is not strained in the process of mediation.
There is a high degree of commitment to settlement. Parties’ participation is there in the
decision-making process. Thus, there is no winner and no loser in this process, only the
problems are resolved. In this process the disputed parties maintain the confidentiality of
proceedings113.
The Arbitration and Conciliation Act, 1996 has provided for the legislative framework of the
processes of arbitration and conciliation in India. The process of ‘arbitration’ is adjudicative
in nature as the arbitrators control the outcome. Arbitrator is given power to decide.
Arbitration award is final and is a binding decision. Often extensive discovery is required in
this process. Arbitrator listens to facts and evidence and renders an award. The parties present
the case, and testify under oath. The process of arbitration is formal. The attorneys can
control the party participation. Evidentiary hearing is given in this process. No private
communication with the arbitrator is possible. Decision is in the form of award based on the
facts, evidence, and law. The process of arbitration is more expensive than mediation, but less
expensive than traditional litigation. It is a private process between the arbitrator and the
disputed parties but in some cases, decisions are publicly available. Thus, it is an informal
procedure, which involves decision-maker impasse when it is submitted to an Arbitrator. The
parties have less control in the proceedings and the final award, as the decision-making
process is with the arbitrator.114
The ‘Conciliator’ under the Arbitration and Conciliation Act, 1996, apart from assisting the
parties to reach a settlement, is also permitted to make “proposals for a settlement” and
“formulate the terms of a possible settlement” or “reformulate the terms”. ‘Conciliation’, is a
procedure like mediation but the third party called the conciliator, takes a more

113
L, Boulle, Mediation: Principles, process, practice (Butterworths, Sydney,1996) p10-14
114
P.C. Rao, Secretary General ICADR, Alternative Dispute Resolution (1997) at 19-25

64
interventionist role in bringing the two parties together and in suggesting possible solutions to
help the disputed parties to reach a settlement. The difference between the process of
mediation and conciliation lies in the fact that, the ‘conciliator’ can make proposals for
settlement, ‘formulate’ or ‘reformulate’ the terms of a possible settlement, while a
‘mediator’would not do so but would merely facilitate a settlement between the parties.
Under Section 30 and Section 64(1) and Section 73(1) of the Arbitration and Conciliation
Act, 1996, the conciliator has a greater or a pro-active role in making proposals for a
settlement or formulating and reformulating the terms of a settlement 115. A mediator is a mere
facilitator. The meaning of these words in India is the same in the UNCITRAL and
Conciliation Rules and in UK and Japan. Conciliation and Mediation process is
distinguishable from Arbitration as the parties’ willingness to submit to mediation or
conciliation does not bind them to accept the recommendation of the conciliation or mediator
but an arbitrator’s award, by contrast, is binding on the parties116.

MEDIATOR

“Mediator” is a neutral third party who facilitates the disputing parties in arriving at a win-
win settlement for both of them. The mediator assists and guides the parties toward their own
solution by helping them to define the important issues and understand each other's interests.
The mediator focuses each side on the crucial factors necessary for settlement and on the
consequences of not settling. The mediator does not decide the outcome of the case and
cannot compel the parties to settle117.

The mediator can defuse hostile attitudes and remedy miscommunications. The mediator is a
mirror of reality, which can help soften or eliminate extreme negotiating positions. Through
the mediator, parties assess the weaknesses in their own case and recognise potential
strengths of the other side. The parties can more clearly view matters previously distorted by
anger and emotion.
Mediator in general is a knowledgeable person with respect to the subject matter of the
controversies. Within the privacy of the caucus, mediators can help each party analyses the
strengths and weaknesses of their complete case. Most significantly, the mediator can explore
creative and innovative solutions that the parties who are caught up in adversarial
negotiations might never contemplate. The mediator does not impose a solution but rather
115
Sarvesh Chandra, ADR: Is conciliation the best choice? (1997) p1-6.
116
Robert Merkin, Arbitration Law edn 2004, p 168, para 6.6.
117
Tom Arnold, Mediation outline, A practical guide for the Mediator and attorneys. (1988) p-11-56

65
works with the parties to create their own solution, this characteristic of mediation
differentiates it from other forms of dispute resolution processes and principally, with that of
the process of arbitration and litigation.

THE TASKS OF THE MEDIATOR

The mediator has to play a very significant role in the process of Mediation. Mediator is not
responsible for the content of any resolution or agreement, but only for the way it is arrived
at. Mediator helps the parties to think through and state their own views of the problem and
their own preferred solutions. Mediator ensures that all the parties have an equal chance to
think through and state their own views of the problem. Mediator may challenge these initial
explorations as appropriate. Mediator explores and tests possible agreement with the parties
separately and together. Mediator can help if asked with the preliminary drafting of any
agreement. Mediator helps if asked with the drafting of any feedback to the institution
designed to assist it to avoid similar disputes in future. Mediations protect the 'safe place' by
means of a pre-mediation agreement. One of its features is an agreement that whatever takes
place or is said in the mediation will have to be confidential. It is subject to the recognition by
everyone involved in the process that, if it emerges that there has been criminal activity
confidentiality cannot be maintained. The pre-mediation agreement is separate from any
agreement arrived at as a result of the mediation, and it is for the parties to decide whether all
or part of what is agreed is to remain confidential118.

THE MEDIATION PROCESS

There is no definite procedure to be adopted by the mediator for conducting mediation.

Stephen B. Goldberg, Frank E.A. Sander and Nancy H. Rogers had highlighted this fact by
saying that, depending on the terms of agreement, the mediator may attempt to encourage
exchange of information, provide new information, and help the parties to understand each
other’s views. Mediator can let the parties know that their concerns are understood and
118
Tweeddal & Tweeddale, Arbitration of Commercial Disputes, International and English Law and Practice, 1st
edn,2005, p6.

66
thereby promote a productive level of emotional expression. He has to deal with the
differences in perceptions and interest between negotiations and constituents (including
lawyer and client). This will help the negotiators realistically assess the alternatives to
settlement and learn about those interests, which the parties are reluctant to disclose to each
other. This is often possible in separate sessions with each party to the dispute. Thereby the
mediator invents solutions that meet the fundamental interests of all parties to the dispute.

The parties may agree on the procedure to be followed by the mediator in the conducting the
meditation proceeding. If the parties do not agree on any particular procedure to be followed,
the mediator follows the procedure, which shall be guided by the principles of fairness and
justice, having regard to the rights and obligations of the parties, usages of trade, if any, and
the circumstances of the dispute.
The process of mediation generally starts with one of the disputing party suggesting for
mediation or if there is a mediation clause in the agreement then the disputed parties go for
mediation by selecting one mediator by consent or each party selecting a mediator and the
two select a third mediator. The parties can also choose an institute for mediation, which will
have a panel of mediators, and the parties can make the appointment or the institute itself
from among the names on the panel selects a mediator. Where a Court directs the mediation,
the Court will on its own, or the body handling Court referrals for mediation will appoint the
mediator.
The participation in the process of mediation is a voluntary process and requires the consent
of the parties to come to the mediation table and in participate in the process mediation. If, at
any time, a party feels that its interest is not served by the process or the party is in any way
uncomfortable with the mediator, the party may terminate its participation at the mediation
without any adverse consequences. The mediator and the parties select a mutually convenient
date and location for the mediation. Subject to the availability of the participants, meetings
can be conducted in person, by telephone, video conference, or any other method agreeable to
the parties and the mediator. The parties will be responsible for charges incurred in dispute
resolution process119.
The process of mediation can follow a general procedure that is, at first, the mediator receives
from each party a brief summary of the case. At the first session, each party can make an
opening statement giving its version. It can help in venting of their felling and enable each
party to understand the point of the other. The process can start with establishing the basic
119
Tweeddal & Tweeddale, Arbitration of Commercial Disputes, International and English Law and
Practice, 1st edn,2005, p6

67
facts of the dispute, identifying the issues for resolution, getting parties to be realistic about
their case. The issues needing resolution can thereby be clarified.
Thereafter the mediator can start communicating with the parties. This could be in joint
sessions with all the parties or in separate sessions with each party at a time. In these
sessions’ mediator can focus parties on their long-term interests, as distinct from the position
they have taken in the dispute. Long-term interests usually dictate that parties should adopt
harmonious method of resolving dispute. These steps can make the parties to get more
realistic about the strengths and the weaknesses of their case. This shows up the facts that are
not in a party’s favour, difficulties of proving matters asserted as facts, and those statutes and
case law, which may not support their stand. At this stage, disputants can become more
amenable to settlement after seeing the problem with their case 120.Thereby making the parties
examine their alternatives in reaching at a mediated settlement. The mediator can then
encourage the parties to come up with options for settlement, assuring them that they have
full freedom to put out whatever suggestions they like, that this is like a brainstorming
session. Putting an idea on the table will not mean a commitment has been given or the
disputing parties make a binding statement. This liberty enables many different ideas for
solution to emerge. The mediator then makes the parties focus on these lines of solutions,
which have opened up by then. The energies are focused on these ideas for possible
settlement. Now and again, it will be necessary for the mediator to remind the disputing
parties of the reasons why it is beneficial for them to reach agreement at the mediation table.
Giving the parties the freedom to create options for settlement, and refining their suggestion.
Once consensus is reached, the mediator can then ensure that it is properly reflected in the
written agreement, which loose ends are tied up, that a proper review mechanism is put in
place, if necessary. On reaching for an agreement of settlement between the disputed parties
and the mediator and the parties can sign it and the mediator can thereby declares the
mediation closed. Once the settlement agreement is signed, it is final and binding on the
parties. The process of mediation can also end if a party withdraws from the mediation or in
case where all the parties agree that, the mediation is unsuccessful and in cases where the
mediator terminates the mediation as unsuccessful.

THE TYPES OF DISPUTES NOT SUITABLE FOR MEDIATION

The attempt to arrive at an interests-based resolution through mediation may not be the best
approach in each and every kind of dispute arising between the parties. The process of
120
Brown and Marriott, ADR Principles and Practice, Second edn,1999, p127.

68
mediation is not a way for resolving a dispute if there is a matter of policy at stake, if there is
an issue on which it is desirable to establish a precedent, if there are legal restrictions as
statutes impose restrictions on its actions and on a point, which is 'non-negotiable' for the
complainant. Where order of the Court is necessary to enforce a right and where an
interpretation of a law is called for, in cases of serious criminal offences, mediation is not a
possible dispute resolution method. Where there is a statutory violation and, in the cases,
where not all the parties are willing to make the 'voluntary' attempt towards resolving the
issues mediation will be unsuccessful.
If a party is acting in bad faith, for example, trying to give the appearance of 'having tried' to
avoid the displeasure of a Court or to comply with a mandatory or contractual requirement to
attempt mediation, in such cases also the purpose will not be solved. If there are, going to be
consequences that are detrimental to those not involve or in other words, will be unfair to
them by comparison with that of other dispute resolution methods, in such cases the process
of mediation will not serve the purpose and thus cannot emerge as a successful alternative to
that of litigation in resolving disputes. Criminal matters (other than those under Section 498A
Indian Penal Code, Section 125 Code of Criminal Procedure and Section 138 Negotiable
Instruments Act) cannot be referred for mediation under any circumstances.

THE TYPES OF DISPUTES SUITABLE FOR MEDIATION

It is evident that, mediation belongs to the disputing parties called disputants. The disputing
parties control the process, scheduling, costs, and outcome of the dispute. Mediation is less
adversarial. The process of mediation is informal. It is less confrontational than arbitration or
litigation. The process of mediation preserves options in a way where parties can enter into
mediation without jeopardising their option to arbitrate or litigate. Mediation makes way for
swift settlement. Most of the mediations are successfully concluded in a single day. Since
mediation can be scheduled soon after a dispute arises, parties reach settlement much earlier
than in arbitration or litigation. In many cases, mediations conclude before a formalarbitration
claim is filed. It is of lower cost when compared to the other dispute resolution methods.
Mediation usually entails lower legal and preparatory costs, there is minimal interruption of
business or personal life, lost productivity is kept to a minimum, and the fees and expenses of
mediation are modest. Mediation paves way for preservation of business relationships.
As a result of reaching an early resolution with minimal financial or other strain on either
party, the chances for preserving business relationships are greatly enhanced. Sometimes
parts of a dispute are resolved in mediation, leaving fewer or less extreme differences to be

69
resolved in arbitration or litigation. Gaining agreement on collateral issues can translate into
significant savings of time and money for everyone involved. This method protects privacy of
the facts revealed during the mediation proceeding by the disputed parties. Mediation offers
greater confidentiality than arbitration. This means that any party may not use what is
revealed in the discussion in any future proceedings without the consent of those affected,
and that the discussion is confidential. The confidentiality of any resulting agreement is for
the parties to decide together. The view, suggestions, admissions, proposals made during the
mediation or conciliation proceedings cannot be used in any legal proceedings. It is to be
noted that a document that is otherwise admissible and can be summoned does not cease to be
so because it is introduced in mediation proceedings.
Thus, the above study shows that, mediators help the parties craft creative solutions.
Settlement potential is high in this process. The case proceeds promptly. The cost is modest
and there are benefits even if a settlement is not reached. The disposal of cases through
mediation has a direct advantage of not only reducing the number of pending cases in the
Courts but also a collateral advantage of reducing the number of appeals and revisions made
to the superior Courts. In other words, the advantage of a settlement through judicial
mediation benefits not only the Trial Court but also the Appellate Court, which has then to
deal with a lesser number of cases. The expected outcomes will not only directly benefit the
Trial Courts but also collaterally benefit the Appellate Courts. Another collateral advantage is
that one case being settled settles a large number of connected cases. Once parties reach an
agreement and sign it, it becomes enforceable under the provisions of the Arbitration and
Conciliation Act, 1996 and the Code of Civil Procedure. The Court will enforce the
agreement by legal process of execution. Advantages that are unique to the process of
mediation is that, in this process, creative solutions are possible, including options that are
not available to Courts or tribunals. Mediation can especially be helpful in the, resolution of
family disputes, which includes the matrimonial disputes, maintenance disputes, partition
cases, and such other matters that are possible to be resolve among the parties themselves
without publicity. The process of mediation can also be advantageous where financial
compensation may not be all that is sought. It is possible to rebuild trust and improve
damaged working relationships. Misunderstandings can be cleared up during the process of
mediation. 'Unfinished business' can be 'finished'. There is flexibility in the way the problem
solving is approached, without a requirement to go through fixed stages as in the case of
litigations in Court.

70
CONCILIATION

The Arbitration and Conciliation Act, 1996 Part III comprises of 21 sections dealing with
various aspects of the process of Conciliation. No such provision existed in the Arbitration
Act 1940. The Statement of Objects and Reasons of Arbitration and Conciliation Bill, 1995
was, “Like arbitration, conciliation is also getting increasing worldwide recognition as an
instrument for settlement of disputes. There is, however, no general law on the subject in
India…Though the said UNCITRAL Model Law and Rules are intended to deal with
international commercial arbitration and conciliation, they could, with appropriate
modifications, serve as a mode for legislation on domestic arbitration and conciliation”.

The Part III of the Arbitration and Conciliation Act, 1996 adopts, with minor contextual
variation, the UNCITRAL Conciliation Rules 1980. One of the important innovations is the
intent to avoid formalproceedings and provides that the Code of Civil Procedure 1908 or the
Indian Evidence Act 1872 do not bind the conciliator 121. The provisions under Part III of
Arbitration and Conciliation Act, 1996 confer same status and effect on the ‘settlement
agreement as if it is as award on agreed terms on the substance of the disputes rendered by an
arbitral tribunal under Section 30122. There are three main exceptions to the application of this
part123. Firstly, in the cases where any law for the time being in force provides otherwise.
Secondly in the cases where the parties agree not to be governed by the provisions of Part III
and agree to the effect that not to settle their disputes by conciliation. Thirdly, where any law
for the time being in force in India prohibits certain disputes to be submitted to conciliation.
Subject to these three statutory exceptions, disputes arising out of contractual or tortious
relationship may be resolved by conciliation in accordance with the procedure prescribed
under Part III of the Arbitration and Conciliation Act, 1996.

DIFFERENCE BETWEEN THE PROCESS OF CONCILIATION AND MEDIATION

Is there any difference between Conciliation and Mediation is a question that can trigger the
mind of a common man when the meaning of the term Conciliation is read. Conciliation
means the adjustment and settlement of a dispute in a friendly, un-antagonistic manner 124.

121
The Arbitration and Conciliation Act,1996. Section66
122
The Arbitration and Conciliation Act,1996. Section 74.
123
Black's Law Dictionary, 6th edn. (1990), West Publishing Co., p. 289.
124
Black's Law Dictionary, 6th edn. (1990), West Publishing Co., p. 289

71
This meaning of the term Conciliation does not make it clear as to whether the two concepts
of conciliation and mediation would have different connotation or they would refer to the
same mode. In order to understand this concept, the researcher has studies it in relation to the
legislations Arbitration and Conciliation Act, 1996 and The Civil Procedure Code
(Amendment) Act, 1999 where it is used.
The Arbitration and Conciliation Act, 1996 under Part I, Section 30, of the Act, provides that
an arbitral tribunal may try to have the dispute settled by use of ‘mediation’ or ‘conciliation’.
Sub-Section (1) of Section30 permits the arbitral tribunal to “use mediation, conciliation or
other procedures”, for the purpose of reaching settlement.
The Civil Procedure Code (Amendment) Act, 1999 that introduced Section 89, speaks of
‘Conciliation’ and ‘Mediation’ as different concepts. Order 10 Rules 1A, 1B, 1C of the Code
also go along with Section 89. Thus, the Parliament of India has made a clear distinction
between Conciliation and Mediation. In Part, III of the Arbitration and Conciliation Act, 1996
in Sections 61 to 81 deals with ‘Conciliation’ but there is no definition of the term
‘Conciliation’. Nor is there any definition of ‘Conciliation’ or ‘Mediation’ in Section 89 of
the Code of Civil Procedure, 1908 and as amended in 1999. As the two have been used in the
Acts as two different forms of dispute resolving techniques, it can thus be held that the
process of Conciliation is different from that of Mediation.
The concept of Conciliation has now been given a statutory recognition under the Arbitration
and Conciliation Act, 1996. However, the express ion conciliation is not defined in this Act.
It only states that conciliation could take place not only in contractual and commercial
disputes but also in all disputes arising out of legal relationship. The expression `conciliation’
is defined by the International Labour Organisation (ILO) in the year 1983, and the said
definition is also adopted by the Advisory, Conciliation and Arbitration Service. The process
of conciliation has been defined as, “The practice by which the services of a neutral third
party are used in a dispute as a means of helping the disputing parties to reduce the extent of
their difference and to arrive at an amicable settlement or agreed solution. It is a process of
orderly or rational discussion under the guidance of the conciliator.”125
Article 1(3) of UNCITRAL Model Law on International Commercial Conciliation 2002
defines conciliation to mean “a process, whether referred to by the expression conciliation,
mediation or an expression of similar import, whereby parties request a third person or
persons called the conciliator to assist them in their attempt to reach an amicable settlement

125
Brown and Marriott, Alternative Dispute Resolution methods Principles and Practice, 2nd
edn,1999, p272, para 11-017

72
of their dispute arising out of or relating to a contractual or other legal relationship. The
conciliator does not have the authority to impose upon the parties a solution to the dispute”.
Conciliation is also said, to be a procedure like mediation but the third party, the conciliator,
takes a more interventionist role in bringing the two parties together and in suggesting
possible solutions to help achieve a settlement. However, the term ‘conciliation’ is gradually
falling into disuse and a process, which is pro-active, is also being regarded as a form of
mediation126.
The Advisory, conciliation and arbitration service makes a distinction between conciliation
and mediation in the following words, “Mediation may be regarded as a half-way house
between conciliation and arbitration. The role of the conciliator is to assist the parties to
reachtheir own negotiated settlement and he may make suggestions as appropriate. The
mediator proceeds by way of conciliation but in addition is prepared and expected to make
his own formal proposals or recommendations which may be accepted”.
Under Part III of the Arbitration and Conciliation Act, 1996 the Conciliator’s powers are
larger than those of a ‘mediator’ as he can suggest proposals for settlement. Hence, the above
meaning of the role of ‘mediator’ in India is quite clear and can be accepted, in relation to
Section 89 of the Code of Civil Procedure also. The difference lies in the fact that the
‘conciliator’ can make proposals for settlement, ‘formulate’ or ‘reformulate’ the terms of a
possible settlement while a ‘mediator’ would not do so but would merely facilitate a
settlement between the parties.

CONCILIATOR

A Conciliator is basically different from that of a Judge or an Arbitrator. The role of the
Conciliator is to assist the parties to reach their own negotiated settlement and he may make
suggestions as appropriate. Conciliator does not impose a decision on the parties but, on the
contrary, his role is to assist the parties to resolve the dispute themselves. He may give
opinion on issues in dispute but his primary function is to assist in achieving a negotiated
solution127.

A conciliator can suggest terms upon which a settlement can be arrived at, but cannot impose
a settlement conceived by him on the parties. His role is merely advisory and not creative or

126
lord Chancellor’s Department on Alternative Dispute Resolution available at:
http://www.lcd.gov.uk/Consult/cir-just/adi/annexald/htm
127
Carrol and Dixon, ‘Alternative Dispute Resolution Developments in London’, ICLR Pt 4,1990, pp 436-37.

73
decisive, like the role of an arbitrator or an adjudicator 128. In practice, conciliation covers
different fields of activity, each with its own traditions, ethos and culture. The skill and
technique adopted by the conciliator in enabling the parties to come to a voluntary settlement
of dispute between them and thereby avoiding adjudication and in due course bringing about
a negotiated settlement vary. A conciliator, dealing with a commercial dispute, may have to
adopt altogether different procedure, technique and approaches, from that of a conciliator
dealing with family disputes or labour disputes. Nevertheless, all the fundamental principles
and procedure prescribed under the Arbitration and Conciliation Act, 1996 is the same.
A conciliator is as an independent and impartial person and he must enjoy confidence of both
the parties. The parties should be able to repose trust and confidence on him so as to enable
them to share their secrets and their thinking process with the conciliator with the belief that
the same should not be divulged to other party without specific instructions in that regard.
Therefore, a conciliator is bound by rules of confidentiality and not by the strict rules of the
Code of Civil Procedure, 1908 and the Indian Evidence Act, 1872 129. Though Section 66 is
not
governed by the provisions of Section 18, the provisions of Section 67, requires the
conciliation to be aided by the principles of objectivity, fairness and justice are applicable to
it. This ensures that the conciliator will conduct the proceedings in a fair and judicious
manner, in order to do justice to each one of the parties. The number of conciliators generally
appointed for a conciliation proceeding is one unless the parties agree and give mutual
consent to have more conciliators than one130.

ROLE OF CONCILIATOR

The role of the ‘Conciliator’ is pro-active and interventionist. The conciliator records the
evidence of the parties and hears their arguments on the question of fact and law, the
conciliator forms his opinion and stops just short of making a decision because that does not
fall in his territory. Conciliator then proceeds to persuade the parties to come to a settlement
in the light of his opinion. Conciliator can suggest certain terms for the acceptance of the
parties on which the dispute can be resolved. Conciliator has to use his best endeavour to
conclude the conciliation. Section 67, of the Arbitration and Conciliation Act, 1996 requires
the conciliator to play the following part in the process of conciliation: First, the conciliator

128
OP Malhotra, Arbitration of Labour Disputes: Labour Adjudication in India, 2001, JILI pp31-32.
129
The Arbitration and Conciliation Act, 1996. Section66.
130
The Arbitration and Conciliation Act, 1996. Section 63.

74
shall assist the parties in an independent and impartial manner in their attempt to reach an
amicable settlement of their dispute131. Secondly, the conciliator shall be guided by principles
of objectivity, fairness and justice, giving consideration to, among other things, the rights and
obligations of the parties, the usages of the trade concerned and the circumstances
surrounding the dispute, including any previous business practices between the parties 132.
Thirdly, Section67(3), provides that, the conciliator may conduct the conciliation proceedings
in such a manner as he considers appropriate, taking into account the circumstances of the
case, the wishes the parties may express, including any request by a party that the conciliator
hear oral statements, and the need for a speedy settlement of the dispute. The conciliator may,
at any stage of the conciliation proceedings can make proposals for a settlement of the
dispute. Such proposals need not be in writing and need not be accompanied by a statement
of the reasons therefore133.Thus, the primary role of a conciliator is to act as a facilitator
though he should not coerce the parties to accept his opinion. The above provisions in the
1996 Act make it clear that the ‘Conciliator’ under the said Act, apart from assisting the
parties to reach a settlement, is also permitted to make “proposals for a settlement” and
“formulate the terms of a possible settlement” or “reformulate the terms”.

CONDUCT OF CONCILIATION PROCEEDING

A conciliation proceeding could be initiated in India when, one of the parties to the dispute
arising out of legal relationship invites the other parties to get the dispute resolved through
conciliation. The conciliation can start only if other party accepts in writing the invitation to
conciliate. If, however, the other party rejects the invitation for settlement through
conciliation, no such proceeding would be initiated. Even if no response were sent within
thirty days to the invitation, it would be deemed that the said request is rejected134.

A statement of their respective cases is to be submitted by the parties to the conciliator in

order to enable the conciliator to understand the case of the parties and to form an opinion 135.
He can call for additional statement of facts and information in order to enable him to give
his suggestion to the parties136.

131
The Arbitration and Conciliation Act,1996. Section 67(1)
132
The Arbitration and Conciliation Act,1996. Section 67(2)
133
The Arbitration and Conciliation Act,1996. Section67(4)
134
The Arbitration and Conciliation Act,1996. Section62(1) to (4)
135
The Arbitration and Conciliation Act,1996. Section65(2)
136
The Arbitration and Conciliation Act,1996. Section65(3)

75
The Conciliation proceeding could be classified into two types namely, facilitative
conciliation and evaluative conciliation. In facilitative conciliation, the conciliator avoids
opinion and judgments and he merely assist the parties to clarify their communications,
interest and priorities. On the other hand, in evaluative conciliation, the conciliator expresses
his opinion on the merit of the issues so as to enable the parties to approach settlement. His
opinion is a third-party view on the merit but such opinion would not be conclusive and
binding137.
The section 69 of Arbitration and Conciliation Act, 1996 contains the provision regarding
communication between conciliator and parties whether orally or in writing and about place
of meeting. The conciliator may meet or communicate with the parties together or with each
of them separately. Unless the parties have agreed upon the place where meetings with the
conciliator are to be held, such place shall be determined by the conciliator, after consultation
with the parties, having regard to the circumstances of the conciliation proceedings. When the
conciliator receives factual information concerning the dispute from a party, he shall disclose
the substance of that information to the other party in order that the other party may have the
opportunity to present any explanation, which he considers appropriate. In the proviso to the
section 70, it is stated that when a party gives any information to the conciliator subject to a
specific condition that it be kept confidential, the conciliator shall not disclose that
information to the other party138. The Supreme Court of India in Haresh Dayaram Thakur Vs
State of Maharashtra 139case reinstated that under the provisions of section 72 each party may,
on his own initiative or at the invitation of the conciliator, submit to the conciliator
suggestions for the settlement of the dispute.
The success of a conciliation proceeding depends upon the genuine and honest desire of the
parties to settle the dispute amongst themselves with the assistance of the conciliator. The
parties shall in good faith cooperate with the conciliator and, in particular, shall endeavour to
comply with requests by the conciliator to submit written materials, provide evidence and
attend meetings140. Thus, good faith of the parties in cooperation with the conciliator in the
conciliation proceeding, is a sine qua non for arriving at an amicable settlement of the dispute
and in the absence of good faith and bona fide co-operation by the parties, no conciliator can
succeed in bringing about an amicable settlement.

137
Mackie, Miles, Marsh and Allen, ‘The Alternative Dispute Resolution methods Practice Guide;
Commercial Dispute Resolution’, 2nd edn, 2000, p 12, para1.3.3.
138
The Arbitration and Conciliation Act,1996. Section 70
139
2000(6) SCC 179.
140
The Arbitration and Conciliation Act,1996. Section 71.

76
The parties are entitled to suggest terms of settlement, which would be discussed by the
parties wherein suggestions could be given by the conciliator on such terms for their
observations but the conciliator, cannot impose a settlement as conceived by him on the
parties141. Under Section 73 of Arbitration and Conciliation Act, 1996 it is provided that, after
considering the reformulated terms of possible settlement, if the parties reach a settlement of
the dispute, they may draw up and sine a written agreement. Otherwise, the parties may
request the conciliator to draw up or to assist them in drawing up the settlement agreed upon
by them. The parties shall sign the settlement agreed upon by them. Such settlement shall be
final and binding on the parties and persons claiming under them respectively. The
conciliator is then required to authenticate the settlement agreement and furnish a copy of it
to each one of the parties.
The Supreme Court of India in Haresh Dayaram Thakur VS. State of Maharashtra142 case held
that, a successful proceeding comes to an end only when the settlement agreement signed by
the parties comes into existence. It is such an agreement, which has the status and effect of
legal sanctity of an arbitral award under Section 74 of Arbitration and Conciliation Act, 1996.
In Mysore Cements Ltd Vs Svedal Barmac Ltd 143 the Supreme Court noted that from the
Memorandum of Conciliation Proceedings and Letter of Comfort, it did appear that parties
had agreed to certain terms, but they could not straightaway be enforced by taking up the
execution proceedings. It falls short the essential legal pre-requisites to be satisfied for being
assigned the status of a legally enforceable agreement of settlement between the parties. In
case the parties arrive at a settlement during the discussion and the proceeding, a settlement
agreement is drawn up which would have the same effect and status as an arbitral award on
agreed terms as envisaged under section 30 of the Act 144. The same thereafter could be
enforced as a decree of the Court under the Code of Civil Procedure 1908.
A party desiring to avail the remedy could take resort to the said procedure during pre-
litigation and even during the pendency of litigation. If the effort does not succeed, the parties
can always come back to litigation.145However, during the pendency of conciliation preceding
a party is not entitled to pursue any arbitral or judicial proceedings in respect of a dispute that
is the subject matter of the conciliation proceedings. This is subject to one exception that, a

141
The Arbitration and Conciliation Act,1996. Section72
142
AIR 2000 SC 2281
143
2003 (10) SCC 375.
144
The Arbitration and Conciliation Act,1996. Section 74.
145
Conciliation and Mediation by Justice Dr.M.K. Sharma. Judge, High Court of Delhi, p1-4

77
party may initiate arbitral or judicial proceedings where, in his opinion, such proceedings are
necessary for the preserving his rights146.

TERMINATION OF CONCILIATION PROCEEDING

The provision of the Arbitration and Conciliation Act, 1996 set forth the situation and the
point of time at which the conciliation proceedings terminate. Accordingly, the conciliation
proceedings shall be terminated147 primarily by settlement. The conciliation proceeding is
terminated on the date the parties sign the ‘settlement agreement’. The proceeding shall be
terminated by a written declaration of the conciliator, after consultation with the parties, to
the effect that further efforts at conciliation are no longer justified, on the date of the
declaration. The conciliation proceeding can be terminated by the parties on the date when
they make a declaration in writing addressed to the conciliator to the effect that the
conciliation proceeding is terminated. The conciliation proceeding can be terminated by a
party on the date when it makes a declaration in writing to the other party and to the
conciliator, if appointed to the effect that the conciliation proceedings are terminated.
On the termination of the conciliation proceeding in any of the situation enlisted above under
Section76; the conciliator shall fix the costs of the conciliation and give written notice thereof
to the parties. Costs means reasonable costs incurred during the conciliation proceeding. The
costs shall include the fee and expenses of the conciliator and witnesses requested by the
conciliator with the consent of the parties, the expenses in relation to any expert advice
requested by the conciliator with the consent of the parties, expenses incurred for the
assistance of an institution or a person in connection with the appointment of a
conciliator148and the administrative assistance to facilitate the conduct of the conciliation
149
proceedings . In addition to this, it also includes any other incidental expenses incurred in
connection with the conciliation proceedings and the settlement agreement 150. The settlement
agreement may provide the mode and the manner of apportionment of the costs to be fixed by
the conciliator after the termination of the conciliation proceeding. In the absence of such

146
The Arbitration and Conciliation Act, 1996. Section 77
147
The Arbitration and Conciliation Act,1996. Section76
148
Section 64(2), The Arbitration and Conciliation Act,1996.
149
Section 68, The Arbitration and Conciliation Act,1996
150
Section 78(2), The Arbitration and Conciliation Act,1996

78
provisions in the settlement agreement, the cost shall be borne equally by the parties. All the
expenses incurred by a party shall be borne by that party151.
Section 38 if the Arbitration and Conciliation Act, 1996 empowers an arbitral tribunal to call
for deposits in an arbitral proceeding. The conciliator may direct each party to deposit an
apportioned amount as an advance for the costs referred to under section 78(2) which he
expects will be incurred during the conciliation proceeding152. By Section 79 (2), the
conciliator during the course of the conciliation proceedings, if he considers it expedient to
call for further deposits, he may ‘direct supplementary deposits in equal amount from each
party’. If both the party’s default in paying the amount called for by the conciliator within 30
days from the date of direction to deposit, the conciliator may suspend the proceedings.
Alternatively, he may make a declaration to the parties in writing that the conciliation
proceedings stand terminated153.Under Section79 (4) it is provided that, after termination of
the conciliation proceedings, the conciliator is required to render an accounting to the parties
of the deposits received by him and the conciliator shall refund any unexpended balance to
the parties. The Arbitration and Conciliation Act, 1996 under Section 80, prohibits the
conciliator from acting as an arbitrator or as a representative or council of any party, in any
arbitral or judicial proceedings in, respect of a dispute that is the subject matter of the
conciliation proceedings. The provision further prohibits the parties from presenting a
conciliator as a witness in any arbitral or judicial proceeding.154.
There is no conflict between litigation and a conciliation or mediation proceeding. Thus, they
can be said to be complimentary to each other, like a bye pass. Choice is of the parties to
choose one but one has a choice to come back to the main thoroughfare the litigation also,
when so intended. Moreover, when a reference is made by the Court under section 89 Code
of Civil Procedure, 1908 to a conciliator or a mediator, not only the Court retains the
supervisory jurisdiction over the matter but the lawyers and the litigants continue to be
participants therein. It is with the active support of all the three participants along with an
additional player, namely, the mediator or conciliator that a negotiated mutual settlement is
arrived at. Therefore, the system of alternative dispute resolution through mediation and
conciliation may not and should not be seen as competitive to litigation in Court.155

151
Section 78 (3), The Arbitration and Conciliation Act,1996
152
Section 79 (1), The Arbitration and Conciliation Act,1996
153
Section 79 (3), The Arbitration and Conciliation Act,1996
154
The Arbitration and Conciliation Act,1996. Section 80(a) and (b).
155
Peter Binder, International Commercial Arbitration and Conciliation in UNCITRAL Model Law
Jurisdictions, 2nd edn 2005, p 328

79
The mechanism of conciliation has also been introduced for settling industrial disputes under
Industrial Disputes Act, 1947 and by the Arbitration and Conciliation Act, 1996. The City
Disputes Panel, UK which offers a range of dispute resolution processes, facilitative,
evaluative and adjudicative stated that conciliation “is a process in which the Conciliator
plays a proactive role to bring about a settlement” and mediator is “a more passive
process”156.

NEGOTIATION

It is true that, nothing is more satisfying and more soothing than a cordially negotiated
amicable settlement because, it protects and preserves personal and business secrets,
relationships and reputations that might other wise be impaired by the adversarial process. The
process of negotiation does not fall either in the concept of ‘arbitration ’or‘ conciliation’.
Strictly, negotiation by itself, is not an alternative dispute resolution procedure because it is a
bipartite process and does not require a third party to facilitate and promote the settlement,
whereas alternative dispute resolution methods essentially involves a third person for
facilitating the resolution of the dispute by settlement. However, it is the most fundamental
way of dispute resolution and is generally treated as one of the main components of
alternative dispute resolution processes. It is only when the process of negotiation does not
succeed, that it transforms into alternative dispute resolution method by intercession of a
neutral and more structured process framework157.

Justice Krishna Iyer J accentuated the need for settling disputes between parties particularly in
commercial matters, by mutual negotiation in preference to Court litigation in the following
languages, ‘Commercial causes…, should, as far as possible be adjusted by non-litigative
mechanisms of dispute – resolution since forensic process, dilatory and contentious, hamper
the flow of trade and harm both sides, whoever wins or loses the lis.

A legal adjudication may be flawless but heartless but a negotiated settlement will be
satisfying, even if it departs from strict law’158.The parties should be encouraged, so far as
possible, to settle their disputes with out reference to litigation159.The Arbitration and
156
Brown, Handbook of the City Disputes Panel, UK.1997 (p 127)
157
Brown and Marriott, ADR Principles and Practice, 2nd edn, 1999, p12, para 2-003.
158
Agarwal Engineering Co Vs Techno impex Hungarian Machine Industries, Foreign Trade Co. 1977 (4) SCC 367
159
Cutts Vs .Head 1984 Ch 290.

80
Conciliation Act, 1996 gives legislative recognition to this concept under Section30.
Section30 provides that, ‘I t is not in compatible with an arbitration agreement for anarbitral
tribunal to encourage settlement of the dispute and, with the agreement of the parties; the
arbitral tribunal may use mediation, conciliation or other procedures at any time during
thearbitral proceedings to encourage settlement’ .

In India, the process of negotiation as a preferred dispute resolution method is yet to make an
impact. Nevertheless, in many countries it has made a remarkable impact.160

MEANING

Negotiation is the simple stand most purpose ful method of settling commercial disputes
between the parties. The disputants themselves are in the best position to know the strengths
and weaknesses of their respective cases. If there is any need of advice felt by the mon such
points of difficulty or controversy, the disputed parties can seek the needed advice from the
competent persons or from the experts of such field. The process of Negotiation thus enables
the parties to iron out their differences and dispute by direct face-to-face interaction. It avoids
unnecessary acrimony, anguish and expense. The process of negotiation can help in healing
the wounds and thus remedies pains caused by inter–party frictions. Thus, Negotiation can
take place in business, non-profit organizations, Government branches, legal proceedings,
among nations and in personal situations such as marriage, divorce and parenting.

PROCEDURE

Negotiation is a non-binding procedure in which discussions between the parties are initiated
without the intervention of any third party with the object of arriving at a negotiated
settlement of the dispute. It is not confined to the core points of the dispute alone. In order to
facilitating over all settlement of the dispute, parties can introduce other issues as trade-offs.
Negotiation is an interaction of influences. Such interactions, for example, include the process
of resolving disputes, agreeing upon courses of action, bargaining for individual or collective
advantage and of crafting outcomes to satisfy various interests.
The process of negotiation gives the parties an option to go over a wide rang e of issues. In
business disputes, the disputed parties try to reach a settlement by adopting a give and take
process, understanding each other’s point of view, as they best know the strength and

160 th
OP. Malhotra, The Law of Industrial Disputes Vol I, 6 edn,2004, p16.

81
weakness of their respective cases and the parties have their market reputation at stake. This
gives a greater chance of reaching a namicable settlement by negotiations.

Negotiation involves three basicelements: process, behavior and substance.

The ‘process’ refers to how the parties negotiate, the context of the negotiations, the parties to
the negotiations, the tactics used by the parties, and the sequence and stages in which all of
these plays out. ‘Behavior’ to the relationships among these parties, the communication
between the mand the styles they adopt. The ‘substance’ refers to what the parties negotiate
over: the agenda, the issues in their respective positions and more helpfully in interests of
the parties, the options, and the agreements reached at the end by them161.

Skilled negotiators may use a variety of tactics ranging from a straight forward presentation of
demands or setting of pre conditions to more deceptive approaches such as intimidation and
salami tactics may also play a part in arriving at the out come of negotiations. The key to
Negotiation is information.

Emotions have the potential to play either a positive or a negative role in negotiation. During
negotiations, the decision as to whether or not settler ests in part on emotional factors.
Negative emotions can cause intense and even irrational behavior, and can cause conflicts to
escalat eand negotiations to breakdown, while positive emotions facilitate reaching an
agreement and help to maximize joint gains.

Negative affect has detrimental effects on various stages in the negotiation process. Although
various negative emotions affect negotiation outcomes. Angry negotiators plant to use more
competitive strategies and to cooperate less, even before the negotiation starts. These
competitive strategies are related to reduced joint outcomes. During negotiations, anger
disrupts the process by reducing the level of trust, clouding parties 'judgment, narrowing
parties' focus of attention and changing their central goal from reaching agreement to
retaliating against the otherside. Angry negotiators can pay less attention to opponent’s
interests and can be less accurat e in judging the irinterests, thus achieve lower joint
gains.Moreover, because anger makes negotiators more self-centered in their preferences, it
increases the likelihood that they will reject profitable offers. Anger does not help in achieving
negotiation goals either: it reduces joint gains and does not help to boost personal gains, as
161
http//en.wikipedia.org/Negotiation

82
angry negotiators do not succeed in claiming more for themselves.Moreover, negative
emotions lead to acceptance of settlements that are not in the positive utility function but
rather have a negative utility.

However, expression of negative emotions during negotiation can sometimes be beneficial:

legitimately expresse danger can be an effective way to showone's commitment, sincerity,
andneeds.

LOK ADALATS

The emergence of ADR has become a “global necessity” as judicial backlog

proliferates.162Fast and equitable dispute resolution is the need of the nations around the
World and thus has led to the adoption of various manifestations of alternative dispute
resolution, including India. Lok Adalat as the name suggest means people’s Court. The
vernacular meaning of the word Lok means people and Adalat means Court. Though the term
Court is used it Lok Adalat has hardly anything in common with the Law Court except that
both are tools in the legal to deliver justice. Lok Adalat goes to the people to deliver justice at
their doorsteps. Thus, is a forum provided by the interested people such as social activists,
legal aiders and public-spirited people belonging to every walk of life. In order to ensure that
the settlement is fair according to law, the forum may consist of legally trained people 163.
Their function is to enable the disputed parties who voluntarily seek the Adalat’s intervention
to understand their respective rights and obligation with reference to the disputes brought
before it and to help them in keeping the dialogue going in fair manner. The role of the
presiding officers of the Lok Adalat is to clarify the law before the disputed parties and bring
about settlement of the disputes between the parties through conciliation and persuasive
efforts164.

THE EVOLUTION OF LOK ADALATS

162
Jitendra N. Bhatt, ‘A round table Justice through Lok-Adalat’, 1 SCC (JOUR) 11 (2002).
163
M.G. Chitkara, LokAdalat and the poor,1993, p35
164
N.R. Madhava Manon, ‘LokAdalat: people’s program for speedy justice’, IBR,1986
Vol 13(2) p129.

83
The study of the evolutionary history of the Dispute resolution methods elucidate that Lok
Adalat originated from the discontent of the Indian legal system to provide fast, effective, and
affordable justice. The Courts have become a competitive field for proving one’s social status
as against the other. The counsel, judge, and litigants often cite deference of honour,
harassment, and speculation as reasons for filing the cases in Courts and that makes cases
drag out for, in some cases, decades. Inmany instances, petitioners seek endless series of
appeals, revisions, and reviews. However, excessive party control places those seeking legal
redress of their claims in an unequal position since respondents can abuse and delay
resolution procedures with impunity. Commonly made interlocutory appeals shatter cases
into many parts, each making its own path through the judiciary. The ignorance of the
presence of alternatives to litigation makes a full, discontinuous trial necessary, regardless of
how long a full trial may take. Once a judgment is reached, the truly hard work of
enforcement and execution begins. When these factors are mixed with inefficient Court
administration systems, judicial passivity, and severely limited substitutes to a protracted and
discontinuous litigation, widespread distress and distrust of the Indian justice system is the
inevitable result. The Supreme Court of India has repeatedly interpreted that a “speedy trial is
of essence to criminal justice and there can be no doubt that the delay in trial by itself
constitutes denial of justice.”165
It is a common phenomenon for the disputed parties to primarily approach a respected
individual and have him act as a mediator for resolving the dispute and the process for
arriving at a compromise in Lok Adalat’s is often through conciliation and mediation. Lok
Adalat’s are a blend of all three forms of traditional ADR: arbitration, mediation, and
conciliation.166 Lok Adalat’s use conciliation, with elements of arbitration given that
decisions are typically binding, and are an illustration of legal decentralization as conflicts are
returned to communities from whence, they originated for local settlement.167
The first modern Lok Adalat was held in Junagadh in 1981, though some argue that they
originated in Gujarat from the late Chief Justice of the Gujarat High Court, M P Thakkar.
Others contend that they began in Maharashtra well before 1982.168Justice Thakkar had a
significant influence in directing the contemporary evolution of Lok Adalat. The guiding
165
Hussainara Khatoon Vs State of Bihar AIR 1979 SC 1364
166
Anurag K. Agarwal, Role of Alternative Dispute Resolution in the
Development of Society: Lok Adalat in India, IIMA WORKING PAPERS 2005-11-01 (2002).
167
Robert Moog, Conflict and Compromise: The Politics of Lok Adalat’s in Varanasi District, 25(3)
LAW & SOCIETY REV. 545-570 (1991).
168
Report on National Juridicare (“the Bhagwati Report”) Minister of Law, Justice and Government
Affairs, 1977

84
principle of Justice Thakkar was, when he considered creating a system of Lok Adalat’s to
form a system that was “less expensive, less speculative, less glamorized, more participatory,
and more resolution oriented that would work to serve the purpose of justice with humanity
in mind.”169
The 1987 Legal Services Authorities Act provided free and competent legal service 170 to the
“weaker” sections of the society to ensure that opportunities for securing justice are not
denied to any citizen due to economic or other disabilities and to organize Lok Adalat to see
that operation of the legal system promotes justice based on equal opportunity. This statute
also gave statutory authority to Lok Adalat, based on the practice of panchayat. 171Under this
system, Lok Adalat is available at both the pre-litigation and litigation stages of dispute
resolution.
In traditional Lok Adalat, one or both parties give their consent for the matter to be heard by
conciliators in a Lok Adalat. The conciliators are comprised of a sitting or retired judicial
officer and other “persons of repute” who may be prescribed by the state government in
consultation with the chief justice of the High Court. Where no compromise is arrived at
through conciliation, the matter is returned to the concerned Court for disposal according to
the law. This system gave the choice of forum for the resolution of their disputes along with
the Courts so that they may better make well-informed, rational decisions.
Lok Adalat’s have been successful in the settlement of various types of claims, including:
motor accident claims, matrimonial and family disputes, labour disputes, disputes relating to
public services, bank recovery cases, and other cases. Up to 2004, more than 200,000 Lok
Adalat’s had been held throughout India leading to the settlement of more than 16 million
cases, half of them involving motor accident claims. Partition suits, damages, and
matrimonial cases can be easily settled before Lok Adalat as the scope for compromise
through an approach of give and take is high in these cases. The Media across India,
including the press for example, The Hindu, have applauded the widespread adoption of Lok
Adalat’s as a way to expedite justice.172While preferring Alternative Dispute Resolution
methods the effectiveness is seen as the main target, rather than as a way to better justice.

THE ADVANTAGES OF LOK ADALAT OVER THE COURTS

169
Girish Patel, Crippling Lok Adalat’s, INDIA TOGETHER,
170
Article 39A, Constitution of India.
171
Upendra Baxi, The Crisis of Indian Legal System (1982) 52, 94(1976).
172
Nod to 20 fast track Courts, 4 Lok Adalat’s, The Tribunal, March. 13, 2005

85
Lok Adalat’s has many advantages over the Courts. Fundamentally, Lok Adalat’s are less
formalized and less expensive than the Courts. The litigants have greater scope for
participation in the satisfactory resolution of their disputes. Lok Adalat’s can act
simultaneously as conciliators, mediators, arbitrators or adjudicators as the situation
demands. As such, Lok Adalat’s plays many different roles such as preventing conflicts from
festering, negotiating, bargaining, compromising and resolving disputes efficiently base on
the circumstances of the individual cases. Lok Adalat’s can be considered a recent expression
of this trend in judicial populism and the benefits of traditional dispute resolution that has
continued in India since Vedic period and re introduced after independence and traces its
roots back to the Britishers attempts to establish local panchayats that would handle petty
disputes.
Originally, Lok Adalat’s were held only several times per year on Sundays in towns
throughout the Districts of India, and the subject matter jurisdiction was potentially
unlimited.173 Lok Adalat’s handled dispute arising from the tahsil the subdivision of a district
in which the town was located. This tradition has continued. These days, Lok Adalat’s have
the jurisdiction to settle, by way of effecting compromise between the parties, matters that
may be pending before a Court, as well as matters at prelitigation stage, i.e. disputes which
have not yet been formally instituted in any Court of law. Nowadays Lok Adalat’s are held
frequently and almost daily. The disputes may be civil or criminal in nature, but the Lok
Adalat cannot decide any matter relating to an offence not compoundable under any law even
if the parties involved therein agree to settle the same.
The benefits of Lok Adalat’s include no Court fee and if a Court fee has been paid in the
Court, it is refunded when the dispute is settled in a Lok Adalat. There is direct consultation
with a judge without procedural hurdles, an extremely abbreviated hearing schedule and the
final decision by the Lok Adalat is binding. The disputants prefer Lok Adalat, as compromise
position is often reached and the problem of judicial stagnation right away calls for
simplifying procedures and increasing their flexibility.
There is a trend to have specialized Lok Adalat’s be convened, including consumer
commissions for deficiencies in service provided by contractors, doctors and insurance
companies, to dedicated motor vehicle accident and public utility service disputes.507 The
prisons have been hosting Lok Adalat’s, in some cases leading to the freeing of dozens of
prisoners or under-trials. It is entirely up to the conciliators at the lok Adalat’s whether to
accept a petition or reject it. Since 2002, Lok Adalat’s have been found to be a successful tool
173
Legal Services Authorities Act, 1987, Sec 19(3).

86
of alternate dispute resolution in India. It is most popular and effective because of its
innovative nature and inexpensive style. These panels have been described as a
“revolutionary evolution of the resolution of disputes”. As such, Lok Adalat’s have now been
widely accepted and recognized as an effective vehicle for conciliating and settling disputes.

THE ADVENT OF PERMANENT LOK ADALATS

The introduction of Lok Adalat’s as a dispute resolution mechanism added a new chapter to
the justice dispensation system of India and succeeded in providing a supplementary forum to
the litigants for conciliatory settlement of their disputes. The Legal Services Authorities Act
1987 was enacted to give a statutory base to legal aid programs throughout the country on a
uniform pattern. This Act was finally enforced on 9th of November, 1995 after certain
amendments were introduced therein by the Amendment Act of 1994.
Article 39A of the Constitution of India provides for equal justice and free legal aid. It is,
therefore clear that the State has been ordained to secure a legal system, which promotes
justice on the basis of equal opportunity. The language of Article-39A is understood in
mandatory terms. This is made more than clear by the use of the twice-occurring word "shall"
in Art-39 A. It is emphasized that the legal system should be able to deliver justice
expeditiously on the basis of equal opportunity and provide free legal aid to secure that
opportunities for securing justice are not denied to any citizens by reasons of economic or
other disabilities.
The Legal Services Authorities Act, 1987 was enacted to constitute legal services authorities
for providing free and competent legal services to the weaker sections of the society to ensure
that opportunities for securing justice were not denied to any citizen by reason of economic
or other disabilities, and to organize Lok Adalat’s to ensure that the operation of the legal
system promoted justice on a basis of equal opportunity. The system of Lok Adalat, which is
an innovative mechanism for alternate dispute resolution, has proved effective for resolving
disputes in a spirit of conciliation outside the Courts.
A traditional view was that the Lok-Adalat only deals with the petty legal matter like accident
claim cases or insurance claim cases etc., and in a way, it is good for poor litigants who wish
to have quick justice system in place for insignificant legal matters. Nevertheless, this
common sentiment is no longer the case with respect to permanent lok Adalat’s, which are
distinguishable from lok Adalat’s in all but, name.

87
Certain salient features of the Legal Services Authority Act are enumerated under the
following sections. Section 2 (d) gives the definition of the term 'Lok Adalat'. Lok Adalat
means a Lok Adalat organised under Chapter VI of the Act. Section 19 provides that, the
Central, State, District and Taluk Legal Services Authority are created who are responsible
for organizing Lok Adalat’s at such intervals and place. Conciliators for Lok Adalat comprise
of a sitting or retired judicial officer, other persons of repute as may be prescribed by the
State Government in consultation with the Chief Justice of High Court. Section 20 provides
for the reference of cases. The Cases can be referred for consideration of Lok Adalat by
consent of both the parties to the disputes. One of the parties makes an application for
reference. Where the Court is satisfied that the matter is an appropriate one to be taken
cognizance of by the Lok Adalat it shall make such reference. Compromise settlement shall
be guided by the principles of justice, equity, fair play and other legal principles. Where no
compromise has been arrived at through conciliation, the matter shall be returned to the
concerned Court for disposal in accordance with Law. Section 21 provides that once an
agreement is arrived by the consent of the parties, the conciliators pass award. The matter
need not be referred to the concerned Court for consent decree. Every award of Lok Adalat
shall be deemed as decree of Civil Court. Every award made by the Lok Adalat shall be final
and binding on all the parties to the dispute. Moreover, no appeal shall lie from the award of
the Lok Adalat. Section 22 provides that every proceedings of the Lok Adalat shall be
deemed to be judicial proceedings for the purpose of Summoning of Witnesses, discovery of
documents, reception of evidences and requisitioning of public record.
In 2002, the Indian Parliament amended the 1987 Legal Services Authorities Act (“LSSA”).
174
Chapter VI-A was introduced with the caption “Pre-litigation Conciliation and
Settlement,” which included Section 22-B envisaging the establishment of permanent lok
Adalat’s “at different places for considering the cases in respect of Public Utility Services
(“PUS”).” Under section 22C (1) any civil dispute with a public utility service, where the
value of the property in dispute does not exceed Rs1 million, or any criminal dispute that
does not involve an offense not compoundable under any law, can be taken up in the
permanent lok Adalat.175 The permanent lok Adalat’s is then expected to conciliate and bring
about a settlement between the parties as is its primary duty as per section 22-C(4).514 While
conducting such conciliation proceedings, it is incumbent on the members of permanent lok
Adalat to assist the parties to reach an amicable settlement. Once one party has made an

174
Legal Services Authorities (Amendment) Act, 2002. No.37 of 2002.
175
Section 22 C (1), Legal Services Authorities (Amendment) Act, 2002.

88
application to permanent lok Adalat, no party to that application shall invoke the jurisdiction
of any Court in the same dispute.
Permanent lok Adalat’s attempt to settle disputes involving public utility services through
conciliation and, if not on the basis of merit. Panels are guided by the principles of natural
justice, objectivity, fair play, and equity without being bound by the Code of Civil Procedure
and the Indian Evidence Act. What makes permanent lok Adalat’s unique from traditional lok
Adalat’s is that, if the conciliation fails, “the permanent lok Adalat still has the jurisdiction to
arbitrate and decide the dispute”.176 Explicitly, if the permanent lok Adalat is of the opinion
that, there exist elements of settlement in such proceedings, which may be acceptable to the
parties, it shall formulate the terms of possible settlement, communicate its observations to
the parties and if the parties agree, the settlement shall be signed and an award shall be
passed. Award shall be in terms of such settlement and copies of the award shall be furnished
to the parties.177 For all these purposes, permanent lok Adalat’s are vested with the same
powers as the Civil Courts under the 1908 Code of Civil Procedure, including: enforcing the
attendance and examination of witnesses, discovery or production of documents, reception of
evidence on affidavits, requisitioning of public records and documents, and such other matter
as the Government may prescribe.178 Permanent lok Adalat’s may even specify their own
procedure for deciding the dispute, which is still deemed to be a judicial proceeding.
The award of a permanent lok Adalat, whether made on merit or on settlement, is final and
binding on the parties and is be deemed to be a decree of a Civil Court. This fact was recently
litigated, and confirmed by the Indian Supreme Court in a series of cases. 179It shall be
executed as if it is a decree of a Civil Court having jurisdiction in respect of the dispute
involved. Yet the award cannot be called into question in any “original suit, application or
execution proceedings.” In other words, no appeal is provided from the award of the
permanent lok Adalat.180Then again, permanent lok Adalat’s require execution of its award by
District Civil Courts with local jurisdiction. Hence, the quantum of a permanent lok Adalat
award may be reviewable by a three-person panel in the District Court, of which the District
Judge is the Chairman. This distinction with traditional lok Adalat’s means that an appeal is
possible against an award of a permanent lok Adalat in terms of Section 96(1) of the Code of
Civil Procedure, when the 1987 Legal Services Authorities Act does not specifically bar it
176
Legal Services Authorities (Amendment) Act, 2002 Section 22 C (8).
177
Legal Services Authorities (Amendment) Act, 2002 Section 22-C (7)
178
Legal Services Authorities (Amendment) Act, 2002 Section 22 C (8).
179
Jagtar Singh and Another Vs. State of Punjab and Others, Criminal Appeal Nos. 1030–1031 of 2004; 2004
Indlaw SC 784. 2004.
180
Section 21 (2), Legal Services Authorities (Amendment) Act, 2002 Section 21 (2).

89
and as the award has all the attributes of a decree of a Civil Court. There is always a
constitutional remedy available under articles 226 and 227 of the Indian Constitution, which
provides for the aggrieved party to approach the concerned High Court by filing a writ
petition. It would be pertinent to note that the abovementioned amendment was challenged,
but the Supreme Court upheld its validity.181

CRITICISM OF PERMANENT LOK ADALATS

Significant opposition has existed against amending the Legal Services Authorities Act for
the establishment of the permanent Lok Adalat. Such a response might be expected, as
advocates stand to lose business if lok Adalat’s are successful in draining from the District
Courts many of the petty cases filed there. The main opposition has focused on the fact that
the permanent lok Adalat’s are being given the power to decide a dispute not through
conciliation, but through binding arbitration, unlike ordinary lok Adalat’s envisaged in
Section 19 of the Legal Services Authorities Act.182

The fact that permanent lok Adalat’s have the capacity to decide disputes without the parties’
agreement makes then unique, more like adjudication than conciliation, and without the
procedural safeguards inherent in Courts of law. Provisions of the Code of Civil Procedure
and the Indian Evidence Act do not apply. Determination or decisions can be in a summary
manner without redress. The only check on this authority is whether there exist elements of
the settlement that may also be subjected to judicial review under Article 226 of the
Constitution of India. Other standards of procedural fairness are at best, vague, enshrining
“principles of natural justice, objectivity, fair play, equity and other principles of justice, and
which is entirely at the subjective discretion of the arbitrator. It is exceedingly difficult to
review whether a judge has decided in accordance with such broad standards. The award of a
permanent lok Adalat has all the attributes of a Civil Court decree and it is deemed as a
decree of a Civil Court, but without any of the protections of a Civil Court.183
The Legal Services Authorities Act requires three people namely a judge, a lawyer, and a
social worker to sit on a Lok Adalat panel this is rarely done184. These situations have been
arising, due to the fact that the lawyers who are the members of the panel have to attend to
the cases of their personal clients and the social workers are bound by the different

181
S. N. Pandey Vs. Union of India (Civil writ No. 543/2002)
182
LSAA Section 19.
183
Section 96(1), Code of Civil Procedure, 1908 (Act 5 of 1908).
184
Field Study Report Chapter-VIII

90
organizational service activities to which they are attached to. Thus, often, one retired High
Court judge acting alone is deciding the cases. This is a tremendous amount of power to put
in the hands of one person, however well-meaning they may be. An illustration of the dangers
of inadequate procedural protections in fast track justice occurred in the “Best Bakery” case,
in which 14 Muslims were murdered in Vadodara on March 1, 2002. The Fast Track Court of
H.U. Mahida acquitted all the 21 accused. The National Human Rights Commission, in its
Special Leave Petition in the Indian Supreme Court, argued against the verdict. This episode
draws attention to the true cost of the lack of procedural protections in lok Adalat’s and other
Fast Track Courts. Such a system could propound miscarriages of justice, decreasing public
confidence in the judiciary. This could ultimately lead to the erosion of the judiciary even as
alternative dispute resolution methods was designed to save it. Because of the power of
permanent lok Adalat’s to decide which cases to hear, to set their own procedures, and issue
binding decrees, often ordinary men and women are at a distinct disadvantage relative to
utility companies, rather than the reverse. The only factor that has changed is the peoples’
option of dragging litigation out so much that it was no longer to the company’s advantage to
pursue it. Now, with the potential for the rapid, binding resolution of outstanding claims,
Insurance companies, Banks and other public utilities are able to circumvent proper judicial
review for the sake of the bottom line, sacrificing consumer confidence, and dis-intensifying
efficient power development and distribution along the way.
The spirit behind the Lok Adalat is to provide speedy andinexpensive justice to the masses in
their various Civil, Criminal and revenue disputes. Lok Adalat must aim at providing an
alternative dispute resolution mechanism to that of judiciary, which could settle the dispute
after a summary hearing, open discussion. Thus methods, that are more understandable to the
people and thereby saving their valuable time, energy and scanty monetary resources must be
adopted by the Lok Adalat. The beauty of Lok Adalat depends on the elimination of
bitterness, as compromise is the very spirit of the Lok Adalat Justice. The need of the hour is
frantically beckoning for setting up Lok-Adalat’s on permanent and continuous basis. The
institution Lok Adalat has taken birth between an over-burdened Court System crushing
under its own weight and alternative dispute resolution machinery for a just, inexpensive and
quick dispensation of justice. The researcher has confined the study of the system of Lok
Adalat as one of the alternative dispute resolution methods, aimed at reliving the
overburdened Court system out of the problem of judicial arrears and judicial delay.

COMPARATIVE ANALYSIS WITH OTHER COUNTRIES

91
Charles Dickens in his book Bleak House narrates that, “In the High Court of Chancery, the
solicitors are mistily engaged in one of the ten thousand stages of an endless cause, tripping
one another up on slippery precedents, groping knee-deep in technicalities and making a
pretense of equity with serious faces… This is the Court of Chancery… which exhausts
finance, patience, courage, hope, so overthrows the brain and breaks the heart: that there is not
an honorable man among the practitioners who does not give – who does not often give – the
warning, ‘Suffer any wrong that can be done to you rather than come here’185. These events are
identifiable to that of the Courts in India, which are facing the problem of judicial delays and
arrears which emphasis the need for alternative dispute resolution methods.
Abraham Lincoln, then President of the United States of America has once said that,
“Discourage litigation; persuade your neighbours to compromise whenever 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.”
The world is converging as a result of ‘globalization’. Its legal effect is seen from the
increasing multilateral treaties, conventions and agreements within WTO, the EU, as a result
of which there is changes being introduced to domestic law for performance of both the
international and regional obligations. Understanding the profile of individual legal system of
the different Countries around the world is essential, but a “Regional” and a wide “Global”
approach to the dispute resolution and law is probably a futile exercise. The researcher has
made a restricted study on the ADR methods of different Countries. The study is about the
uniqueness of the ADR methods successfully functioning in the countries like United States
of America (US), United Kingdom (UK) Australia and China, Japan, which can possibly be
made popular and be adopted as per the Indian dispute resolution systems.

UNITED STATES OF AMERICA

The development and use of alternative dispute resolution mechanisms in USA pre-dates both
the declaration of Independence and the Constitution. Arbitral tribunals were established as
early as 1768 in New York and shortly thereafter in other cities primarily to settle disputes in

185
Charles Dickens, Bleak House, (1853), PC Rao, ADR,1997 p,103(M. Jagannadha Rao “Need for
more ADR centers and training for lawyers and personals”)

92
the clothing, printing and merchant seaman industries186. The United States law has strongly
recognised and favoured recognition of agreement to arbitrate and enforcement of arbitral
awards, both in domestic and international commerce. In 1854, the United States Supreme
Court held that arbitration as a mode of settling dispute should get every encouragement from
the Courts and the Court upheld the right of an arbitrator to issue binding judgments 187.
Writing for the Court, Justice Grier said that the arbitrators are the judges chosen by the
parties to decide the matter submitted to them, finally and without appeal188.Arbitration law in
United States arises from both National laws i.e. the Federal Law and the law of various
States. The National Congress enacts federal statutory laws and they govern matters within
federal jurisdiction.

The federal statutory law of arbitration contained in the Federal Arbitration Act, which was
first enacted in 1925, has been amended several times since then. It is confined to disputes in
Federal Courts. The 1970 amendment was made to implement the accession by the United
States to the United Nation Convention on the Recognition and Enforcement of Foreign
Arbitral Awards189. In addition, almost all the States comprising the United States have their
own arbitration statutes, enacted by their State legislatures. The State statutes are patterned on
the model law of Uniform Arbitration Act that was first adopted in1955 and amended in1956.
Most State statute, while differing in some detail, follow the general principles as those
embodied in Federal Arbitration Act.
The arbitration law began in United States in early rule of the English Government. There are
numerous references in the Statute Books of Arbitration of particular cases such as disputes
against Stockholders of Corporations, but the New York Chamber of Commerce had
arbitration facilities from 1761 to 1920 and New York Stock Exchange provided for
arbitration of member’s disputes in its Constitution of 1817. The question of constitutionality
of arbitration was raised in Courts of law 190. Compulsory arbitration unless accompanied by
sufficient provisions for an appeal to the ordinary Courts has been deemed unconstitutional191.
Despite observation of the Courts and interference by the Legislature, use of arbitration has
been in trend in United States for commercial matters largely due to the influence of
Chamber of Commerce and other Trade Associations. The New York State Chamber of
186
Dana H. Freyer, The American Experience in the field of ADR. p,108, P.C. Rao and Eilliam Sheffild, The
Arbitration and Conciliation Act,1996 (1997).
187
Burchell Vs Marsh, 58 U.S. 344.
188
Burchell Vs Marsh, 58 U.S. at 349
189
U.S. Code, Title 9, Chapter 1 and 2.
190
Exall Vs Bombay Mountain Beam, Colorado 1928,232 Specific Report 680
191
St. Lewis, I.H and S. Rly.Co. Vs William (1887) 49 Arm 492.

93
Commerce has printed its earliest arbitration records consisting of Minutes of its Committee
from 1779 to 1792. Some States in the USA have passed Acts for compulsory arbitration so
as to avoid delay in the Court proceedings in respect of certain claims, such as motor
accidents and small claims. These statutes exclude the traditional jurisdiction of Courts based
on equity. The Year book on commercial arbitration in the United States for 1927
containedprovisions for arbitration including forms, rules and regulation and panel of
arbitrators in Trade Association for thirty principal branches of commerce, and a
comprehensive list of Chamber of Commerce Exchanges, Municipal Courts, Legal Aid
Society and Bar Associations Furnishing arbitration facilities in every part of the country.
The Federal Arbitration Act applies generally to arbitration that relates to maritime
transactions and to contracts evidencing transactions involving commerce among the several
States of United States or with Foreign Nations192. The arbitration law of the State where the
arbitration takes place is generally applicable to other cases. However, in any specific case,
the parties should consider whether the arbitration law of a particular State is applicable and
should consult that law. This is important even when the case is before a Federal Court
because of a doctrine, which requires that the Federal Court in many cases must determine
certain questions relating to arbitration in accordance with the laws of the State in which the
Federal Court is located.
In USA, mediation as a method of dispute resolution was used in an ad hoc way since long
time, though litigation was the primary method of dispute resolution. In 1976, Pound
Conference was held to commemorate the 70th Anniversary of Dean Rosco Pound’s
dissertation on the “Public dissatisfaction with American legal system”. The conference took
a close view as to the reasons as to why American Courts were criticized. One of the reasons
why justice administration in America was criticized was because of overcrowded and costly
Court system. The ADR movement of America started with Pounds Conference 1976.
Arbitration is used extensively in United States of America in commercial disputes, including
disputes over the performance of contracts, quality of goods and wide variety of other
controversies that are amenable to agreement between the disputed parties. Since the
enactment of the Civil Justice Reforms Act (CJRA) 1990, which calls for every federal
district Court to implement a civil justice expense and delay reduction plan, there has been
tremendous growth in the creation of ADR programs and the use of ADR by federal and State
Courts. A growing number of Courts have promulgated rules that mandate or authorize
judges to recommend, or require litigants to participate in, ADR procedures such as summary
192
Federal Arbitration Act Section 1 and Section 2.

94
jury trials, early mediator evaluation, mini-trials, mediation and arbitration. As of September
1995, 80 of 94 Federal District Courts had authorized or established some form of ADR
program193. Alternative dispute resolution methods have been so successful in America that
the District Court of Colombia introduced a voluntary mediation program in 1989 and in the
year 1997, it is said that more than, 1,000 cases have completed mediation. Moreover, the
program boasts a 50 % settlement rate194.
In the Native American culture, peace-making is the primary method of problem solving.
Disputes are handled in a way, which deals with the underlying cause of conflict, and mends
relationships195. The institutionalization of ADR in America can be said to be with the
establishment of American Arbitration Association. The principal arbitration institution is the
American Arbitration Association (AAA), which was found in 1926 in response to the need
for an arbitration institution able to administer all kinds of cases in all parts of United States
of America196. It is an independent, non-governmental, non-profit organisation. It is governed
by a Board of Directors chosen from a wide range of industries, professions and social groups
throughout the nation. A full-time professional staff of experts in arbitration procedure and
law administers it.
The Court of Appeals for the District Court of Columbia also has implemented a mediation
program in an effort to supplement the Court’s 1986 Case Management plan, which was
undertaken to accommodate a 60% increase in filing and pending cases over the prior two
years period. The key difference between these two programs is that the Court’s ChiefStaff
Counsel selects cases in the Appeals Court program for mediation, whereas the District Court
program is strictly voluntary. In 1994, the CPR Institute for Dispute Resolution conducted a
survey of 244 of the largest law firms in United States, all of which had demonstrated interest
in alternative dispute resolution methods through membership in the CPR Institute and found
that 65% of the 124 responding firms had formalized their delivery of ADR services with
68% having adopted two or more of the following organizational strategies. The strategies
like designation of an ADR specialist or partner (58%), the organization of an ADR
committee or department (47%), strategic profiling of one or more prominent partners a
neutral (27%) and creation of a distinct provider group within the form, or affiliated with but
distinct from the firm (14%)593. It has revealed that there are significant differences in
193
Dana H. Freyer, The American Experience in the field of ADR. P, 110, in P.C. Rao and Eilliam Sheffild, The
Arbitration and Conciliation Act,1996 (1997)
194
Cumulative Mediation Statistics for U.S District Court for the District of Columbia (February 1996).
195
Kimberlee K. Kovach, Mediation Principles and Practice p.19, West Publishing Co. 1994.
196
P.C. Rao and Eilliam Sheffild, the Arbitration and Conciliation Act, 1996 (1997) at, Dana H. Freyer, The
American Experience in the field of ADR. P, 108.

95
perceived gains from ADR between firms that had formalized their ADR organization and
those that had not done so. 59% of the organized firms verses 35% of unorganized firms
reported positive client comments from their alternative dispute resolution methods initiatives
and 49% of the organized firms verses 21% of the unorganized firms reported that ADR has
had an appreciable, positive impact on the firm’s lawyers, clients and practice. New business
or new clients resulting from the firm’s ADR expertise were reported by 37% of the
organized firm and only 2% of the unorganized firms.
In different States of United States of America such as Columbia, New Jersey, Houston,
Philadelphia, and a number of American cities and States now offer multi-door programs.
The program enables a member of the public to contact the Court in person or by telephone,
with a complaint or dispute. Where, a preliminary analysis of the case is done of the case in
order to be able to recommend which dispute resolution process is most suitable to resolve it.
Various criteria will be applied for this process, for example, the kind of issues involved,
what kind of compensation is likely to be awarded if successful, whether witnesses or other
evidence will be needed, whether rights need to be protected and what services are available.
The inquiring party is then advised about the processes that might be most appropriate to the
case and is given relevant referral details, which may be to departments within the Court, or
may perhaps be to outside agencies197.
Moreover, the judges of the Supreme Court increasingly encourage litigants to use both
public and private alternative dispute resolution methods to resolve their disputes. In addition
to the State programs discussed above, Special Courts offering relatively expeditious
processing of commercial disputes have been set up in three major cities namely New York,
Chicago and Wilmington. The Commercial Division of the New York State Supreme Court is
exclusively devoted to commercial disputes, committed to expedited process and
encouragement of settlement. Four judges hear cases in this Court from start to finish. This
offers several advantages, the most obvious of which is speed. Specialization also allows
these judges to develop subject-matter expertise. Prior to its implementation, each judge was
assigned approximately 1,000 pending cases. Because of the Court’s commitment in
expediting proceedings and encouraging settlement at every opportunity, within one year, the
average caseload reduced to 400 cases per judge. In U.S.A., judicial settlement conferences
and settlement weeks have resulted in a high success rate. In some of the Federal States of
U.S.A., legislation has been passed to provide for private judging (also known as 'rent a
Judge') such as Texas, California, New York, Ohio and Oregon. Multi-Door Courthouse
197
Filner, Dispute resolution Options in State Courts: NIDR News Vol.II No.2 at 1

96
system which has been developed in U.S.A., if followed, could offer the prospect of greater
access to justice and more economical and faster resolution of disputes.198
In USA, where ADR has been practiced in every Court at the State level since the 1970s,
more than 90% of all pending cases are settled through advocate and judicial mediation and
hardly a few percent of all cases actually proceed to trial. However, it took the American
justice delivery system over 20 years to achieve this success rate. Mediation was introduced
in USA first through judicial mediation and, once accepted, then advocate mediation. The
broad pool of qualified advocate-neutrals is essential to this success rate in USA. In the USA
high volume Court systems, advocate neutrals are relied upon to resolve the majority of cases
and judicial mediators are reserved for the most complex cases and cases that advocate
neutrals have been unable to resolve. The alternative dispute resolution methods in United
States of America is multifaceted and diverse. The growth in the use and the development of
different alternative dispute resolution methods has resulted from initiatives at all levels and
from all branches of the government- executive, legislatures, and judiciary and from many
corners of the private sectors, community organization, corporations and the bar. With these
increased inclusions of alternative dispute resolution methods in domestic as well as
international commercial agreements and the wide publication of ADR success, the
alternative dispute resolution methods are continuously expanding.

UNITED KINGDOM

Arbitration in England is as old as its legal history. At Common Law the parties could at any
time before award revoke the authority of the arbitrator even where the agreement expressly
made the submission irrevocable. The subject matter of disputes was mainly confined to
Chattel and Tort. With the expansion of the British Empire and the growth of trade, disputes
with merchants and traders increased and commercial matters were frequently referred to
arbitration. This resulted in substantial reduction of trial of commercial business in Courts.
English Courts felt greatly prejudice against arbitration. It was thought that arbitration was an
attempt to oust the jurisdiction of Court. The Statute of 1698 199 was the first legislation
towards encouragement of arbitration. The Statute of 1833 followed it 200. The Common Law
Procedure Act of 1854 and the England Arbitration Act of 1889 codified the general law
relating to arbitration. It sub-divided the subject-matter of arbitration into the one where
198
Freyer,” The integration of alternative dispute resolution methods into Corporate Law Firm Practice,”45
Arbitration and Conciliation Act, 1996.J, 3,7-8.
199
9 and 10 William III C 15.
200
3 and 4 William IV C 42.

97
references are by consent of parties out of Court, and the other reference under the order of
the Court. With regard to the former, the Act required a submission to arbitration to be in
writing. The submission unless a contrary intention was expressed in it, was irrevocable
except by leave of the Court or a judge. An arbitrator was not liable for want of skill or for
neglect in conducting the arbitration. An arbitrator had power to administer oath. In the
absence of any express provision in the submission, an award was required to be made within
three months from the date of entering upon the reference. All the disputes referred to
arbitration had to be disposed of by the award. With regard to reference under order of Court,
a Court or a Judge could refer any question arising in any cause or matter to an official of
Special Referee whose report could be enforced like a judgment or order. The Act of 1889
was the foundation of subsequent legislations relating to arbitration in England.
The England Arbitration Act of 1889 and the subsequent legislations relating to arbitration,
however, cannot be said to contain the whole law of arbitration in England. Many of the
statutory provisions could be excluded. The parties were free to agree to the procedure to be
followed by the arbitrator and the powers to be vested in him. The parties by agreement could
determine the constitution of the arbitral tribunal that was to decide the dispute. All the legal
defences available to the party before the Court were also available in arbitration.
The Arbitration Clauses (Protocol) Act, 1924 was passed to ratify and give effect to the
Protocol signed at the assembly of the League of Nations and in regulating the procedure to
be adopted in commercial arbitration between parties to the jurisdiction of the signatory
States. In 1925 the Supreme Court of Judicature (Consolidation) Act repealed and replaced
certain section of Arbitration Act, 1889.TheArbitration (Foreign Awards) Act, 1930 gave
effect to a convention on the execution of the arbitral award and made amendments of the
Protocol Act, 1924. The Arbitration Act of 1934 made substantial changes by supplementing
the Act of 1889. These two statutes were consolidated in the Arbitration Act of 1950. The
Arbitration Act, 1950 came into force with effect from 1st September 1950. It provided for the
procedure regulating arbitration made as a result of a written agreement between the parties
as well as certain arbitrations conducted under statutory provisions. If the parties to a dispute
agree, many provisions of the 1950 Act need not be observed. The Departmental Advisory
Committee (DAC) reported that there were fundamental problems in the presentation of
Arbitration Law of England due to some uncertainty and confusion in English arbitration law.
DAC advices that there should be new improved legislation relating to arbitration. Thus, the
idea of the Arbitration Act 1996 was conceived. The Arbitration Act of 1950 has been
repealed by the Arbitration Act 1996 with the exception Pt II, which relates only to

98
enforcement of a limited number of Foreign Awards. The rest of the provisions with suitable
modifications have been re-enacted in the Act of 1996. This Act 1996 does not adopt the
UNICTRAL Model Law in its entirety, its structure and content are mainly based on it 201. The
Arbitration Act of 1996 received the Queen’s assent on 17 June 1996 and came into force
from 31 January 1997. This Act compounds the doctrine of arbitration law with realities of
institutional practices, and integrates the largest developments into regulatory provisions. The
amalgamation of doctrine and practice with comprehensiveness of the 1996 Act, qualifies it
to be a prototype statutory framework for governing an international arbitration
proceeding. The Act 1996 functions with the principle of speedy, inexpensive and fair trial by
an impartial tribunal, party autonomy and minimal Court intervention. In case of ambiguity
as to the meaning of any provision of the Arbitration Act 1996, regard is to be given to these
principles202. The English Common Law of Arbitration and the English Arbitration Act form
the main source of the law of the Arbitration in most of the Commonwealth Countries and the
United States of America.
With the Woolf Reforms, it seems likely that mediation will become a more prominent
fixture on the dispute resolution landscape in England and Wales. Civil Procedure Rule
1.4(2) (e) now requires the Court, as part of its responsibility to actively manage cases, to
encourage the parties to use an ADR procedure if the Court considers it appropriate and to
facilitate the use of such procedure.
Although City of London lawyers and others have embalmed mediation as a technique to
resolve large commercial cases, the cost savings that can be achieved through effective and
early use of ADR are such that very few types of dispute cannot be assisted by ADR.
With the opportunity for creative solutions, for a fast and inexpensive resolution that the
parties develop and buy into, and for a process that enhances rather than destroys on-going
business relationships, alternative dispute resolution method is likely to grow rapidly in
popularity over the next few years in the UK. As lawyers become more sophisticated
consumers of alternative dispute resolution services, they and their clients will select
mediators best suited for a given dispute and the number and range of competent, qualified
mediators will expand.

AUSTRALIA

201
Dice and Morris, ‘The Conflict of Laws’, Vol 1,13th edn, 2000, p 594, para 16-006
202
Tweeddale and Tweeddale, Arbitration of Commercial Disputes, International and English Law and practice,
p494-495, 2005.

99
Australia is a Federal State. Under the Constitution of Commonwealth of Australia, powers
are divided between the Central Government and the State Government. Arbitration is a
matter that is traditionally been covered by State and Territory, rather than Commonwealth,
legislation. The Commonwealth Parliament legislates with respect to external affairs, and to
trade and commerce with other countries, and in international commercial arbitration. It has
done so in the Arbitration (Foreign Awards and agreements) Act 1974, which gives effect to
the 1958 New York Convention. All other law affecting commercial arbitration is to be found
in the statutes and common law of the States and territories. Arbitration is commonly used to
settle building disputes arising out of insurance policies. In agreements between Australia and
other parties, which contain an international element, arbitration is increasingly accepted, as
it may lead to the avoidance of problems arising from the conflict of law, especially since the
adoption of the 1958 New York Convention, the recognition and enforcement of foreign
arbitral awards203. Thus, Australian law on arbitration is based on international conventions,
legislations both federal and State and common law which is the judge made law. Australia
being party to three international conventions on international arbitration has given effect to it
within Australia by federal International Arbitration Act 1974 (IAA). The Part II of the IAA
contains the provisions for implementation of the Convention on the Recognition and
Enforcement of Foreign Arbitral Award of 1958(New York Convention). Part III of IAA
gives the UNCITRAL Model Law on International Commercial Arbitration of 1885 a force
of law in Australia. Part IV gives effect to the Convention on the Settlement of Investment
Disputes between States and Nationals of other States of 1975 (Washington Convention). The
State and Territories of Australia all have their own uniform legislation on arbitration, which
is called the Commercial Arbitration Act (CAA).204

Australia had no national accreditation system for alternative dispute resolution mechanisms.
However, following the National Mediation Conference in May 2006, the National Mediation
Accreditation Standards system has apparently started to move to its implementation phase.
Mediation is now accepted procedure for resolution of domestic disputes in Australia. Its
popularity has grown remarkably over the past few years. In the area of neighbourhood
disputes and family law disputes, it has assumed particular importance. It is also used in
commercial disputes for a contractual and non-contractual nature. Specialist bodies have been
set up for promoting or foster mediation and numbers of instructional courses are offered on

203
Pryles Michale, Dispute Resolution in Asia, (2002), Kluwer Law International (Australia-p29)
204
Pryles Michale, Dispute Resolution in Asia, (2002), Kluwer Law International (Australia-p62)

100
mediation skills and techniques205. ADR practitioners recognize that mediators (as distinct
from arbitrators or conciliators) need to be recognized as having professional accreditations
the most. There are a range of organizations within Australia that do have extensive and
comprehensive accreditations for mediators but people that use mediation are unsure as to
what level of accreditation is required for the quality of service that they receive. Standards
will tend to vary according to the specific mediation and the level of specificity that is
desired. Due to the wide range of ADR processes that are conducted, it would be very
difficult to have a set of standards that could apply to all ADR processes, but standards
should be developed for particular ADR processes.
The clients need the assurance that mediators have some form of ongoing assessment and
training throughout their careers. Mediators must satisfy different criteria to be eligible for a
variety of mediator panels. In addition, different mediator organizations have different ideals
of what makes a good mediator that in turn reflects the training and accreditation of that
particular organization. Selection processes for ADR practitioners are based on the needs of
the service, but a problem is posed when organizations, such as the Court want to refer a
client to mediation and they usually have to rely on their in-house mediators or rely on word
of mouth. There are inconsistent standards. A National Accreditation System could very well
enhance the quality and ethics of mediation and lead mediation to become more accountable.
There is a need for a unified accreditation system for mediators across Australia to establish
clarity and consistency206. Suitable education and training for mediators becomes a complex
issue, largely due to the breadth of areas, which may call on mediation as a means of dispute-
resolution. The educational requirements for accreditation as a mediator differ between
accrediting groups and from Country to Country. In some cases, legislation mandates these
requirements; whilst in others, professional bodies impose standards and applicants must
comply prior to becoming accredited by them.
In Australia, professionals wanting to practice in the area of family law must have tertiary
qualifications in law or in social science, undertake 5 days training in mediation and engage
in at least 10 hours of supervised mediation. Furthermore, they must also undertake 12 hours
of mediation education or training every 12 months. Tertiary institutions globally offer units
in mediation across a number of disciplines such as law, social science, business and the
humanities. In Australia, not all fields of mediation-work require academic qualifications, as

205
Goldberg, S, Sander, F and Rogers, N, Dispute Resolution: Negotiation Mediation and Other Process, p265,
(1992).
206
Mortensen R (2006), Private International Law in Australia, p92-102, Lexis Butterworths, Australia

101
some deal more with the practical skills rather than with theoretical knowledge: to this end
membership-organization such as LEADR provide training-courses to further the adoption
and practice of mediation. Internationally the organisation CEDR takes a similar approach to
mediator training. No legislated national or international standards on the level of education,
which should apply to all mediation practitioners’ organizations, exist. However,
organisations such as the National Alternative Dispute Resolution Advisory Council
(NADRAC) in Australia continue to advocate for a wide scope on such issues. Other systems
apply in other jurisdictions such as Germany, which advocates a higher level of educational
qualification for practitioners of mediation.
A tendency exists for professional to develop their own codes of conduct, which apply to
their own members. Examples of this in Australia include the mediation codes of conduct
developed by the Law Societies of South Australia and Western Australia and those
developed by organisations such as Institute of Arbitrators & Mediators Australia (IAMA)
and LEADR for use by their members. Other organizations such as the American Centre for
Conflict Resolution Institute have developed both classroom and distance learning courses,
which subscribe to its mission of promoting peace through education. The CPR Georgetown
Ethics Commission, the Mediation Forum of the Union International des Avocats, and the
European Commission have also promulgated Codes of Conduct for mediators.
The most common aspects of a mediator Code of Conduct include a commitment to inform
participants as to the process of mediation, the need to adopt a neutral stance towards all
parties to the mediation, revealing any potential conflicts of interest. The requirement for a
mediator to conduct the mediation in an impartial manner within the bounds of the legal
framework under which the mediation is undertaken any information gained by the mediators
should be treated as confidential. The mediators should be mindful of the psychological and
physical wellbeing of all the mediations participants. The mediators should not offer legal
advice, rather they should direct participants to appropriate sources for the provision of any
advice they might need. The mediators should seek to maintain their skills by engaging in
ongoing training in the mediation process. The mediators should practice only in those fields
in which they have expertise gained by their own experience or training207.
Australia has incorporated mediation extensively into the dispute settlement process of family
law and into the latest round of reforms concerning industrial relations under the Work
Choices amendments to the Workplace Relations Act 1996. Where prospects exist of an

207
Sourdin Tania, Nadja Marie Alexander Global trends in mediation p,36, Mediation in Australia: Kluwer Law
International, 2006

102
ongoing disputation between parties brought on by irreconcilable differences stemming from
such things as a clash of religious or cultural beliefs, mediation can serve as a mechanism to
foster communication and interaction. Mediation can function not only as a tool for dispute
resolution but also as a means of dispute prevention. Mediation can be used to facilitate the
process of contract negotiation by the identification of mutual interests and the promotion of
effective communication between the two parties. Examples of this use of mediation can be
seen in recent enterprise bargaining negotiations within Australia.
The Governments can also use mediation to inform and to seek input from stakeholders in
formulation or fact-seeking aspects of policymaking. Mediation in wider aspect can also be
used in to prevent conflict or develop mechanisms to address conflicts as they arise208.
The Australian Government sought to alleviate the concerns of a wide section of the
population and industry on the decisions implications on land tenure and use by enacting the
Native Title Act 1993. A cornerstone of the Act is the use of mediation as a mechanism to
determine future native title rights within Australia. Although not barring litigation, the Act
seeks to promote mediation through a process incorporating the Federal Court and the
National Native Title Tribunal (NNTT). This has a better long tern success by providing
flexible and practical solutions to the needs of the various stakeholders. The extensive use of
mediation in the resolution of native title matters does not stop the referral of matters to the
Courts for resolution, nor is mediation precluded from occurring whilst legal challenges are
being pursued. In the cases where native title rights are found to exist over a large portion of
the City there is simultaneous use of mediation and formal legal appeals processes. A key
feature of Native Title mediation lies in the use of Indigenous Land Use Agreements
(ILUAs). These binding agreements are negotiated between native title claimant groups and
others such as pastoralists, miners and local governments and cover aspects of the use of the
land and any future act such as the granting of mining leases209.

CHINA

The basic framework of civil litigation in China is set forth in the Civil Procedure Law of the
People’s Republic of China, adopted by the National People’s Congress on 9 April 1991 210.
The general rule is that civil actions against citizens, legal person and organizations come

208
Boulle, L. Mediation: Principles Processes Practices, p 348, LexisNexis Butterworths, 2005
209
Tania Sourdin Avoiding the Credentialisng Wars - Mediator Accreditation in Australia, The Arbitrator and
Mediator, Volume 27, Number 2, September 2008
210
The Civil Procedure Law of the People’s Republic of China, 1991

103
under the jurisdiction of the Chinese Court in the place where the defendant is domiciled 211.
Certain actions, however, fall within the jurisdiction of the Chinese Court of the place where
the plaintiff is domiciled, including cases concerning personal relationships where the
defendants are not resident within PRC212.
The Chinese jurisprudence has two major philosophical traditions: Confucianism and Legalist
thought. Unlike Confucian thought (li) which seeks to make the enforcement of law flexible
and adaptable, the legalist tradition (fa) stresses that society can achieve harmony only where
transgressions are met with firm and swift punishment. Folsom and Minan, held that in China
mediation and conciliation remain the predominant forms of civil and commercial dispute
settlement in both domestic and international affairs 213.This preference derives from the
Confucian philosophy’s exaltation of harmonious relationships 214.The 1949 Revolution and
establishment of the PRC, while annulling many old systems and tradition, institutionalized
informal mediation systems. However, the Communist blessed and co-opted mediation not
only as a form of dispute, but also as a tool for the Communist Party to exert political,
economic and social pressure215. Mediation is so pervasive in China that it may be useful to
distinguish its context, namely whether it is prescribed by law, extra –judicial or judicially
required216.
Mediation is the first choice for dispute settlement in China. China’s principle use of
mediation is a direct result of the Confucian view of natural harmony and dispute resolution
by morals rather than coercion. Chinese mediation boards or committees made up of several
individuals from each local community resolve more than 80 per cent of all civil disputes 217.
Mediation is the corner stone of the Chinese system of dispute resolution. It has played a
prominent role in both traditional and contemporary China. It has also been employed to deal
with dispute arising from Chinese- Foreign business contracts. Mediation is used as an
Independent method for dispute settlement and in some places, it is employed in combination
with litigations of arbitration proceedings.

211
The Civil Procedure Law of the People’s Republic of China, Art.22.
212
The Civil Procedure Law of the People’s Republic of China, Art.23
213
Ralph H. Folsom and John H. Milan, Law in the People’s Republic of China. Commentary, Readings and
Materials 3-4 (1989)
214
Jun Ge, “Mediation, Arbitration and Litigation; Dispute resolution in the People’s Republic of China”,15
UCLA Pac Basin LJ 122 ,123 (1996)
215
Ralph H. Folsom and John H. Milan, Law in the People’s Republic of China. Commentary, Readings and
Materials at 86, 89-113 (1989)
216
Jun Ge, “Mediation, Arbitration and Litigation; Dispute resolution in the People’s Republic of China”,15
UCLA Pac Basin LJ 123-128 (1996)
217
L.L.N.2005 (5) Mar 465 (J 66)

104
China has extended the use of mediation to its arbitration and litigation proceedings. The
China International Economic and Trade Arbitration Commission (CIETAC) and the China
Maritime Arbitration Commission (CMAC) permit an arbitral tribunal to mediate a case
during arbitration if both parties desire or one party so desires and the other does not object
when consulted by the tribunal. Although arbitration is frequently designated as a means of
international dispute settlement contracts with Chinese agencies or corporations may simply
refer to consultation and mediation between the parties as the means to resolve disputes 218.
Under Chinese law, the settlement agreement is deemed to constitute a private contract. One
of the unique characteristics of arbitration in China is that proceedings before the
international arbitration bodies frequently involve conciliation. In general, at any time during
the course of the proceedings, with the consent of the parties, the arbitrators may resort to
conciliation in an effort to resolve the disputes. If their efforts are unsuccessful, the arbitrators
are then permitted to resume the arbitral proceedings and render an award.
The emphasis on mediation carries over not only to arbitration, but to litigation proceedings
as well. Under the Civil Procedural Law, Courts can attempt mediation during the
proceedings and may invite relevant parties and individuals to assist219. Any mediation
agreement must be reached voluntarily between the parties220.The general rule regarding the
legal effect of a mediated settlement is that Court mediated agreements are legally binding in
the same way as a Court judgment.
In any case, Chinese prefer negotiation, conciliation and joint conciliation with non-binding
recommendations for settlement221.The use of arbitration in China has increased and come
more in line with international standards222. Not surprisingly, arbitration tribunals frequently
convert the arbitration into mediation. Two different types of mediation services have
developed to deal specifically with Chinese- Foreign business disputes. The first is mediation
under the auspices of the Beijing Conciliation Centre (Established in 1987) and provincial –
level conciliation centres guided by the Beijing Conciliation Centre. The second type is ‘Joint
Conciliation’ carried out in accordance with arrangements between Chinese and foreign
dispute settlement bodies. The Beijing Conciliation Centre conducts institutional conciliation

218
Michale Pryles, Dispute Resolution in Asia, p,85, (2002), Kluwer Law International
219
The Civil Procedure Law of the People’s Republic of China, Art. 85 and 87.
220
The Civil Procedure Law of the People’s Republic of China, Art. 88
221
Ralph H. Folsom and John H. Milan, Law in the People’s Republic of China. Commentary, Readings and
Materials, 124. (1989)
222
Jun Ge, “Mediation, Arbitration and Litigation; Dispute resolution in the People’s Republic of China”,15
UCLA Pac Basin LJ 130 (1996)

105
services pursuant to its own rules; called the Conciliation Rules of the Beijing Conciliation
Centre (BCC) of China Council for the Promotion of International Trade. The centre
maintains its own panel of conciliators who carry out their functions in accordance with the
rules concerning handling of cases. Fees for the services performed by the Centre levied in
accordance with the fees schedule set forth in the BCC conciliation rules 223. In contrast to
conciliation under the Beijing Conciliation Centre, which is handled exclusively by Chinese
conciliators, joint conciliation involves both foreign and Chinese conciliators. The procedure
for joint conciliation in China was first developed in the 1970s pursuant to an agreement
between China’s international arbitration body and American Arbitration Association. China
has also entered into a conciliation agreement to handle disputes between Chinese and
Taiwanese parties. Like ad hoc conciliation, joint conciliation is non- binding. In cases where
the conciliation is successful, a settlement agreement or conciliation agreement will be drawn
up, signed by the parties and may be witnessed by the conciliators. Such agreements are not
enforceable except as private contracts between the parties.
The legislation governing arbitration in China is the Arbitration Law of the People’s Republic
of China (the Arbitration Law)224.The Arbitration Law is a unified law applicable to both
foreign and domestic arbitration. It calls for the creation of the China Arbitration Association
to serve as a non- governmental, self-regulating organization of arbitration
Commission225.The establishment of foreign related arbitration commissions and the
formulation of arbitration commission rules fall under the responsibility of the China Council
226
for the Promotion of International Trade (CCPIT) . After introduction of the Arbitration
Law there are almost 93 arbitral bodies established in China as per the report of the Chinese
International Economic and Trade Arbitration Commission (CIETAC). Under the amended
Rules of Chinese International Economic and Trade Arbitration Commission, CIETAC may
accept cases between foreign investment enterprises and other Chinese legal persons as well
as other cases that are not foreign- related.227
International arbitration in China is conducted predominantly before two institutions:
CIETAC and the China Maritime Arbitration Commission (CMAC). Both CIETAC and
CMAC operate under the umbrella of the China trade promotion body, the CCPIT, also

223
C. Deign, M. Moser and W. Shengachang, International Arbitration in the People’s Republic ofChina 623-625
(1995)
224
The Arbitration Law of the People’s Republic of China, 1995.
225
The Arbitration Law of the People’s Republic of China, Art.15.
226
The Arbitration Law of the People’s Republic of China, Art.66 and 73.
227
The Rules of Chinese International Economic and Trade Arbitration Commission came into effect
from 1october 2000.

106
known as the China International Chamber of commerce. The general, CIETAC’s jurisdiction
extends to all types of commercial disputes whereas CMAC’s jurisdiction is limited to
maritime disputes. The cases heard by the Arbitration tribunal of three arbitrators are decided
by majority vote. If a majority opinion cannot be reached, the award will be based on the
opinion of the presiding arbitrator 228. The Arbitration Law of the People’s Republic of China
Art 55 and 56 insists that arbitral award must be in written form, dated, identifying the place
of issuance and be signed by a majority of the arbitrators. The award must contain reasons
unless the parties agree otherwise or unless the ruling is made in accordance with a
conciliation agreement229. Under the CIETAC Rules, awards are final and binding on the
parties.230

JAPAN

Japanese business practice emphasizes autonomy in disputes, privacy for disputing parties,
and case specific solutions. In west, parties turn to alternative dispute resolution methods to
avoid crowded Courts dockets and high litigation costs. Confucian philosophy has long
influenced Japanese society. Confucianism’s moral philosophy emphasizes the ethical
meaning of human relationships. Harmonious relationships with others achieve the basic
Confucian value of Jen, which is often translated as compassion, human –heartedness or
man-tomanness. The Japanese express this spirit of harmony as the virtue of wa. If people
abide by wa, disputes would not arise. It is one’s duty to avoid discord. En is the principle of
social tie. Maintaining the relationship bound together by these forces is the paramount
concern231. Confucianism emphasized filial piety and the notion that individual interests are
subordinate to group welfare. Thus, under this model, when individual disputes arose,
compromise or the predisposition to yield was morally superior to the predisposition to
insist232. Reflecting these values, Japanese dispute resolution procedures are characterized by
conciliation, less litigation, and very few lawyers233.

With the arrival of Admiral Perry in Japan the development of commercial relations between
Japanese and Westerners started. The westerners did not conduct these relationships under

228
The Arbitration Law of the People’s Republic of China, Art.54.
229
The Arbitration Law of the People’s Republic of China, Art 55 and 56.
230
The Arbitration Law of the People’s Republic of China, Art.60.
231
David J. Prazeracki, Working It Out: A Japanese Alternative to Fight it Out, 37 Clev St Rev, p 157(1989)
232
Andrew M. Pardieck. “Virtuous Ways and Beautiful Customs: Role of Alternative Dispute Resolution in
Japan”.11Temp Int’l Comp L J at 35(1997)
233
David Prazeracki, Working It Out: A Japanese Alternative to Fight it Out, 37 Clev St Rev,156- 157(1989)

107
the principle of social harmony. In response, Japan developed a Civil Code based on the
German model. The imposition of an American –style Constitution on Japanese during the
post-World War II occupation, opened the door for more American – Style revisions to the
Japanese Civil Code234. However, the Confucian principle of social harmony continues to
define how groups interact with each other.
Dispute resolution in Japan encourages and protects social rights, which includes one
individual owes to another. Yet there is no concept of individual rights in Japanese society.
Rather the emphasis has been on the duty to maintain harmonious relationships. Thus, the
Japanese, in their approach to dispute resolution, prefer extra-judicial, informal means rather
than litigation. Litigation is seldom utilised by the Japanese as a dispute resolution
mechanism. It does not necessarily follow that, the Japanese are truly non-litigious; in fact,
litigation in Japan is increasing. However, it means the dispute resolution mechanism of last
resort.235
Dispute resolution through extra-judicial means is closely akin to negotiation. Most Japanese
start from the premise that agreement can be reached. This premise derives from the desire to
preserve harmonious relationships. Robert March suggests that the Japanese negotiation style
is to patiently pursue the goal by defending their position 236. Commentators note that the
Japanese consider a contract a document that sets forth a relationship and not a description of
the rights and obligation of each party237.Many arrangements are left vague and open-ended
so that discussions, in the context of an ongoing relationship, can be held to adjust to
changing conditions. There is a strong expectation that dispute should not arise, and if they
do, resolution should be through mutual agreement. The Japanese will generally make a
sincere effort to find an amicable solution. Settlement negotiations through mutual
concessions are called Jidan. Both make suggestions on how to improve communications.
The parties generally attempt to find out why the failure occurred and how to rectify it. It is
not considered a weakness in Japan to keep talking. Over 95 percent of all disputes in Japan
are resolved through negotiation and compromise.238
These informal methods may involve third party mediators. Conciliators (Chotei) are
generally more active in making suggestions as to how to resolve the dispute and may feel
morally bound to do so. Mediators (assen) may not insist on resolving the dispute. The

234
David Prazeracki, Working It Out: A Japanese Alternative to Fight it Out, 37 Clev St Rev,158 (1989)
235
David Prazeracki, Working It Out: A Japanese Alternative to Fight it Out, 37 Clev St Rev,163-166 (1989)
236
Joseph W.S Davis, Dispute Resolution in Japan, p439-45 (1996)
237
David Prazeracki, Working It Out: A Japanese Alternative to Fight it Out, 37 Clev St Rev,161-162 (1989)
238
Joseph W.S Davis, Dispute Resolution in Japan, p151-152 (1996)

108
disputants never need to accept the recommendations of the third party in either conciliation
or mediation. Mediators and conciliators range from common friends, to businessmen, with a
commercial relationship with both parties, to government officials. The body of informal
dispute resolution also includes consultation, a cross between negotiation and mediation239.
In Japan, conciliation was historically the primary means of dispute resolution with village
leaders serving as mediators. Most of the commercial disputes are not brought into Courts but
also not into arbitration, they are resolved by conciliation. There are two kinds of conciliation
is available in Japan. One is conciliation outside Court and the other is conciliation before the
Court, and conciliation outside the Court is further divided into ad-hoc conciliation and
institutional conciliation. In ad-hoc-conciliation a conciliator is appointed by the party’s
agreement and mediates between the parties with or without showing its own idea for
settlement. If the parties agree on an amicable settlement, it legally becomes a compromise
outside the Court. If the parties fail, they are free to refer their dispute to arbitration or to
Court litigation. In case of Institutional conciliation, the institutions like The Japan Shipping
Exchange, The Japan Commercial Arbitration Association (JCAA) and the Japanese Bar
Association (JBA) offer necessary services for managing conciliation of international or
domestic business disputes under their Conciliation Rules240. The Japanese negotiation style
places emphasis on the relationship and is often regarded as a purely conciliatory style 241.
Thus, the alternative dispute resolution methods place emphasis on peace and harmony over
conflict, litigation and victory. Japan has become a party to the protocol on Arbitration
Clause of 1923 and the Convention of Enforcement of Foreign Arbitral Awards in 1927.In
Japan a distinction has been made between reference to arbitration and existing difference
and reference to arbitration in future differences. The parties under the Arbitration Law of
Japan have a right to challenge, for instance, an arbitrator on a presumption of bias,
disqualifications in performing imparting and delay in his duties. Besides, law prescribed that
in case an arbitrator nominated otherwise than by an Arbitration Agreement dealt with the
proceedings, he could be removed. In absence of any agreement with regard to the procedure
to be followed in the arbitration, the arbitrator could proceed as he thought best.
In Japan, Judges intervene extensively during the in-Court settlement; every Japanese Judge
is expected, both by law and by litigants, to move a case towards settlement. This has the
force of statutory law. At least 40% of the cases are settled. The Judge, who decides to switch

239
Joseph W.S Davis, Dispute Resolution in Japan, p152 (1996)
240
Michale Pryles, Dispute Resolution in Asia, p.203, (2002), Kluwer Law International
241
L.L.N.2005 (5) Mar 465 (J 67)

109
the litigation to a settlement mode, takes off his robe and acts as mediator. The Japanese do
not favour arbitration as a method of dispute resolution. Because it is a third party’s
adjudication and it cannot fully restore the harmony disrupted by the dispute. However, in
disputes involving international business transactions, arbitration has gained widespread
acceptance. Arbitration allows Japanese concerns to negotiate equitable positions as opposed
to purely legal technicalities and to avoid extensive pre-trial discovery battles that serve only
to exacerbate the conflict.242
While Japanese have established arbitration institutions, including the Japanese Commercial
Arbitration Association (JCAA) and have adopted modern arbitration rules, Japanese
arbitration follows Japanese cultural aversion to an adversary process. For example, JCAA
recognizes the power of an arbitrator to make decisions regardless of law. The arbitrator is to
strive for a fair result. Arbitrators through mediation and conciliation frequently settle the
dispute submitted to arbitration. Many Western commentators describe Japanese arbitration
as an effort to persuade the parties to settle rather than to render an award243.
A brief look at the international scenario of alternative dispute resolution mechanism reveals
the popularity of alternative dispute resolution methods and its usage in these countries.
These unique experiences and techniques can help the disputed parties, the institutions and
Individuals in their adoption, use and choice of the relevant form of resolution of disputes
methods. This uniqueness can be adopted with due modification in India as per the existing
facts and circumstances of the Country. This will ultimately help the social, economic and
legal development of the Country and its people. The apt use of different alternative dispute
resolution method by the disputed parties, can give quick, economical and win-win result in
the dispute resolution process and thus, reinforcing the peace and harmony of the society and
reducing the problem of judicial delays and arrears before the Courts.

242
Andrew M. Pardieck, ‘Virtous Ways and Beautiful Customs: Role of Alternative Dispute Resolution
inJapan”.11Temp Int’l Comp L J at 45(1997)
243
Joseph W.S Davis, Dispute Resolution in Japan, p171-173 (1996)

110
INTERNATIONAL COMMERCIAL ARBITRATION UNDER INDIAN LAW

Current Indian arbitration law, the Arbitration and Conciliation Act, 1996 (hereafter the
Arbitration Act, 1996 or the Act, 1996), came into force in 25 th January 1996. This Act is a
unification statute in the sense that it was intended to give effect to multiple international
commitments undertaken by India, namely, the Model Law, 1985 (the ML, 1985), the
New York Convention, 1958 (the NYC,1958) and the like. The present Act, 1996 not only
consolidate, but also to unify Indian Law both on Domestic and International Commercial
Arbitration (ICA).244
The existing Indian Law of arbitration deserves a detailed examination, firstly because
the analysis of the ICA in India is not possible without an inclusive understanding of
Indian Law of arbitration in general. Secondly, the Arbitration Act, 1996 not applies
only to Domestic arbitration, but also to International arbitration taking place outside
India, provided that the Act is chosen as the applicable law by the disputant parties.
There are some other Acts of Indian Law, such as Indian Contract Act, The Foreign
Awards (Recognition and Enforcement) Act, 1961 and etc., which are relevant to
arbitration and particularly to international arbitration. The earlier Arbitration Act (the
Arbitration, Act 1940) is also discussed, when appropriate. The Act of 1996 governs

244
Jayagovind, A. “International Commercial Arbitration under the Arbitration and Conciliation Act, 1996”,
37, Indian J. Int’l Law, (1996); 658-59.

111
the enforcement of foreign court judgments and orders and arbitration awards as well
as the procedure of executing enforcement orders of domestic as well as foreign
sentences and arbitral awards. It is discussed in the Chapters on the enforcement of
arbitral awards in India.

This Chapter is an extensive analytical examination of the present Indian Law of

arbitration. It attempts to follow a comparative approach, emphasizing the similarities
and differences between the Indian Law of arbitration and the Model Law (the ML,
1985). This is not only because the ML can be regarded as a yardstick for assessing
various national laws of arbitration, but also because Indian Law itself is mainly
inspired by it. Since such inspiration has been made possible through the British legal
system, comparison has also been made with the English Law of Arbitration, whose
legal systems have developed in close contact with each other. Provisions of Indian
Law regarding various kinds of arbitration, arbitration agreements, and arbitration
tribunals as well as procedural and substantive laws of arbitration, and arbitral awards,
among other, are discussed in this Chapter. The powers of the Court concerning
arbitration in various stages, including vacation and enforcement, are mainly dealt with
in the next Chapter.

The Statement of Objects and Reasons

The main objectives of the Arbitration and Conciliation Bill, 1995 as stated in the
statement of objects and reasons are as follows:

 To comprehensively cover international and commercial arbitration and

conciliation as also domestic arbitration and conciliation;

 To make provision for an arbitral procedure this is fair, efficient and capable of
meeting the needs of the specific arbitration;

 To provide that the arbitral tribunal gives reasons for its arbitral award;

 To ensure that the arbitral tribunal remains within the limits of its jurisdiction;

 To minimize the supervisory role of courts in the arbitral process;

 To permit an arbitral tribunal to use mediation, conciliation or other procedures

during the arbitral proceedings to encourage settlement of disputes;

112
 To provide that every final arbitral award is enforced in the same manner as if it
were a decree of the court;

 To provide that a settlement agreement reached by the disputants as a result of

conciliation proceedings will have the same status and effect as an arbitral
award on agreed terms on the substance of the dispute rendered by an arbitral
tribunal; and,

 to provide that, for purposes of enforcement of foreign awards, every arbitral

award made in a country to which one of the two International Conventions
relating to foreign arbitral awards to which India is a party applies, will be
treated as a foreign award.”245

The provisions enacted in the Arbitration Act, 1996 aim to achieve the above
objectives but statement of objects and reasons which accompanies a Bill does not
form part of the Act as passed by the legislature and it is not permissible to refer to it in
interpreting the provisions of the present Act, 1996. In 1997, the Supreme Court (SC)
in case State ofHaryana Vs. Chanan Mal 246 emphasis that the objects and reasons give
an insight into the background as to why a particular provision was introduced. Though
objects and reasons cannot be the ultimate guide in interpretation of statues, it often
times aids in finding out what really persuaded the legislature to enact a particular
provision. And also, the SC observed in Narain Khamman Vs. Parduman Kumar : “It
is now well settled that though the statement of objects and reasons accompanying a
legislative Bill cannot be used to determine the true meaning and effect of the
substantive provisions of a statute, it is permissible to refer to the statement of objects
and reasons accompanying a Bill ,for the purpose of understanding the background
,the antecedent state of affairs ,the surrounding circumstances in relation to the
statute, and the evil which the statute sough to remedy.”247
Major thrust and legislative intent of the Act, 1996, as stated in the Objectives to the
Arbitration and Conciliation Bill, 1995, is to reduce excessive judicial intervention due
to which the earlier Arbitration Act, 1940 suffered serious infirmities. Section 8 (1) of
the Act, 1996, therefore it makes mandatory duty for the judicial authority i.e. Court to

245
Sumeet Kachwaha, Dharmendra Rautray, Kachwaha & Partners. “Arbitration in India: An
Overview”, (http://ipba.org/media/fck/files/Arbitration%20in%20India.pdf)
246
Haryana Vs. Chanan Mal (1977), 1 SCC 340,355 (Indian kanoon).
247
Narain Khamman Vs. Parduman Kumar (1985)1 SCC,8 (para 12), (Indian kanoon).

113
stay legal proceeding if started, where the subject matter has already been referred to an
arbitral tribunal. Similar provisions are made in connection with the New York
Convention, 1958 (the NYC, 1958) and Geneva Convention, 1927 (the GC, 1927)
under Sections 44 and 54 of the Act respectively.

The SC in its decision in Food Corporation of India Vs. Indian Council of

Arbitration248 has pointed out that the legislative intent of the Arbitration Act of 1996 is
to minimize the supervisory role of the court in arbitral process and expeditious
appointment of arbiter so that all contentious issues may be decided by the process of
arbitration without recourse to litigation.

Emphasizing the need for interpreting the provisions of the Act in the light of it objects
249
and reasons, the Apex Court in Fuerst Day Lawson Ltd. Vs. Jindal Exports Ltd.,
observed that the Act is meant to provide speedy and alternative solution of disputes so
as to avoid protected litigation. The Court further held that though objects and reasons
of an enactment cannot be the ultimate guide in interpretation of statutes but they do
help in finding out the true legislative intent behind enacting a particular provision of
the Act.250

The SC has observedin P. Anand Gajapati Raju Vs. P.C.G. Raju 251, the legislative
intention of the Act has been provided in Sections 5&8 and such these Sections have
been interpreted. In Section 5, the effort is to curtail judicial intervention and to give
solution through less costly remedy, and in Section 8, arbitration has been made a
compulsory step. Likewise, in Everest Lasson Ltd. Vs. Jindal Exports Ltd., 252the SC
while underlining the object of the Act, 1996, has held that through alternative dispute
resolution system, the dispute should be resolved quickly and with lesser costs. The
legislative attitude of the people should also be curtailed.

Arbitration in India: General Features

248
AIR 2003 SC 3011, (Indian kanoon).
249
AIR 2001 SC 2291, (Indian kanoon).
250
Bharat Singh Vs. New Delhi Tuberculosis Center, AIR 1986 SC 842, (Indian kanoon).
251
AIR 2000 SC 539, (Indian kanoon).
252
AIR 2001 SC 356, (Indian kanoon).

114
It can be said that the thrust of the Act, 1996 is to encourage and facilitate arbitration. It
introduces arbitration as a reliable method of dispute resolution, with binding and enforceable
outcomes. It is presented as a regulated procedure that cannot be obstructed with dilatory
tactics. For example, a challenge to the appointment of an arbiter cannot stop the
proceedings, unless it is granted either by the arbitration tribunal or the Court. The Act also
intends to limit court intervention in arbitration procedures. For instance, an arbitration
tribunal decides about its own jurisdiction, without the possibility of court intervention, until
the end of the arbitration proceedings.
According to the Act of 1996, arbitration means any ‘Arbitration’ whether or not
administered by permanent arbitral institution. The definition covers all kinds of
arbitration conducted through any mode of arbitration but does not focus any light on
the term arbitration itself. Further, the definition covers only part I of the enactment,
though usually definitions cover whole of particular statute. In this Act, this is a novel
experiment which confines the scope of definitions, perhaps to mitigate the disputes of
interpretation, and them without enlarging the scope of confusion.253

The Act of 1996 has a comprehensive coverage, and applies to all kinds of arbitration
in India. Article 2 of the Arbitration Act, 1996 provides that this law is applicable to
any arbitration between persons of public or private law, irrespective of the nature of
their legal relationship, provided the arbitration takes place in the India. In case of ICA
taking place abroad, the law would be applicable, if the disputants have agreed to make
their arbitration subject to the jurisdiction of the law. While the ML, 1985 applies only
to International arbitration, the Act, 1996, following the English Arbitration Law of
1996, covers not only International arbitration, but also Domestic arbitration.

The main focus of the Act, 1996 is ICA. Hence, it is very important to see how
commercial arbitration is defined, under Indian Law. Practically, the Indian arbitration
law does not provide exhaustive definition of expression ‘Commercial’.

However, in ordinary parlance the expression “Commercial” means any activity

involving commerce and trade and wherein nature of relationship is commercial.

253
S.S. Misra. “Law of Arbitration & Conciliation in India with Alternative Dispute Resolution Mechanism.”,
2nd Ed. Allahabad: Central Law Agency, (2010), 26.

115
The Apex Court in Fetech Chand Vs. State of Maharashtra,254 laid down definition of
expression “commercial”- “Any service or activity which in modern business would be
considered to be lubricant for the wheels of commerce is Commercial.”255

In the view of the Foreign Awards (Recognition & Enforcement) Act, 1961 the term
“Commercial” should be interpreted broadly having regard to a number of activities
which are essential elements of modern international trade. The SC in R.M.
Investments& Trading Co. Vs. Boeing Co., 256has held that consultancy service is
commercial nature. The court observed that consultancy services including managerial
assistance and relevant information are being provided with the purpose to promote
sale of Boeing aircrafts and as such are commercial activities in nature.

Thus, it can be said that the term “Commercial” has wide scope to include various
activities pertaining to business and trade. The footnote annexed to Article 1(1) of the
ML (1985) to reads as follows:

“The term commercial should be given a wide interpretation so as to cover matter

arising from all relationships of a commercial nature, whether contractual or not.
Relationships of a commercial nature, include, but are not limited to the following
transactions: any trade transactions for the supply or exchange of goods and services;
distribution agreement; commercial representation or agency; factoring, leasing;
construction of works; constructions; engineering; licensing; investment; financing;
banking; exploitation agreement of concession; joint venture and other forms of
industrial or business cooperation; carriage of goods or passengers by air, sea, rail,
or road.”257

This footnote was intentionally excluded from the main body of the ML (1985) because
there was a serious concern that in adopting a precise definition for such an important
and sensitive term, States, especially socialist and developing States, would lose the
freedom to retain judicial control over essential State regulated objectives.258 The

254
AIR 1977 SC 1825, (Indian kanoon).
255
Ibid.
256
AIR 1994 SC 1136, (Indian kanoon).
257
UNCITRAL Model Law on International Commercial Arbitration and Conciliation. Footnote to Art. 1
(1985).
258
Vijay Reddy &Vs. Nagaraj. “Arbitrability: The Indian Perspective”, 19 J. Int’l 117, 118.No. 2, (2002), 135.

116
compromise was to include a footnote giving adopting States the freedom to retain
control over essential activities while still encouraging the widest interpretation
possible.259 Thus, the ML (1985) gives wide latitude to charter States to define those
“Commercial” matters that would give rise to arbitration.

The Act, 1996 in Article 2(1) (f) defines ‘Commercial’ as “Disputes arising out of a
legal relationship, whether contractual or not, considered as commercial under the
law in force in India.” This Article is inspired by the definition of “Commercial” given
by Article 1(1) of the ML (1985), while emphasizing issues particular to India. While
the ML (1985) provides for the definition of the term ‘Commercial’ in a footnote for
Article 2 of Indian Law, that is alien to the above drafting technique, defines the term
extensively in a separate Article.260
In the view of the SC of India the expression commercial as occurring in Section (2) (f)
of the Act, 1996 and in Section (2) of the Foreign Awards (Recognition and
Enforcement) Act, 1961 should be construed broadly having regard to manifold
activities which are integral parts of international trade today and the aid can also be
taken from footnote annexed to Article 1 of the ML (1985) for this purpose.261

INTERNATIONAL ARBITRATION UNDER INDIAN LAW

262
Another serious problem related to the concept of arbitrability in International
arbitration is defining what is meant by the term “International”. This warrants the
attention for two main reasons. First, whether a dispute is arbitrablemay be defined
differently under either domestic or international rules of arbitration. As a result, a
dispute which may be arbitrable under international arbitration rules may not be so
under domestic rules. Second, in context of the Act of 1996, it follows that if a dispute
259
Sood, Sandeep S. “Finding Harmony with UNCITRAL Model Law: Contemporary Issues in
International Commercial Arbitration in India After the Arbitration and Conciliation Act of 1996”, (2007),
47, http://works.bepress.com/sandeep_sood/2.
260
Most legal systems do not rely on the use of footnotes for reading statutes.
261
R.M. Investments & Trading Co. Vs. Boeing Co., AIR 1994 SC 1136.
262
Arbitrability determines the point at which the exercise of contractual freedom ends and the
public mission of adjudication begins. See more; Carbonneau, Thomas E. “The Law and Practice of
Arbitration.”, 2nd Ed., Juris Publishing, Inc., (2007), 194.

117
was not considered “International,” then enforcement of foreign awards found in Part II
under the Act of 1996 and select provisions of Part I would be inapplicable to an
arbitral proceeding. Thus, how arbitration law defines an international dispute become
important for disputants that seek to take advantage of ICA rules.

The ML considers an arbitration ‘International’ if:

a. The place of business of the disputants is in different States;

b. The place of arbitration is outside the State of which the disputants have
their places of business;
c. The place where a substantial part of the obligations of the commercial
relationship is to be performed is outside the State in which the
disputants have a business;
d. The place with which the subject matter of the dispute is most closely
connected is in a State other than the one in which the disputants have
their places of business; or
e. The subject matter of the arbitrationagreement is related to more than
one State.263

Thus, the ML focuses primarily on the place of the disputants, arbitration, or dispute.
The Act of 1996 definition of what constitutes “International” is at variance with the
ML, 1985. Section 2(1)(f) of the Arbitration Act, 1996 provides that;

“ An arbitration is international where at least one of the disputants 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 in India; or
(3) a company or an association or a body of individuals whose central management
and control is exercised in any country other than India; or (4) the government of a
foreign country.” 264

It is a main feature of the Act, 1996 that it makes a crystal-clear distinction between
International and Domestic arbitrations. Overlooking such as distinction has been a
shortcoming of most legal systems in the world, leading to a uniform treatment of both

263
Dore, Isaak Ismail. “The UNCITRAL Framework for Arbitration in Contemporary perspective”,1 st Ed.,
Graham & Trotman/M. Nijhoff, (1993), 102.
264
Section 2(1)(f) of the Arbitration Act, 1996.

118
types of arbitration.265 The disputants to an ICA are permitted, under Article of the Act
of 1996 to make the arbitration process subject to the Act. International arbitration is
defined by the law as cases of arbitration where the subject-matter of the dispute is
related to international trade, in one of the following ways: i) the principal business
centre of the disputants is located in two different countries. While the wording of the
ML revolves around the disputants “places of business”,266 Indian Law emphasizes
their “principal business centre”, in order to distinguish between marginal and central
business activities. If a party has several business centres, the centre that is close
relevant to the dispute is regarded as his business centre. If a party does not have a
business centre, his place of domicile is considered as his business centre. For instance,
under the Act of 1996 definition, any commercial contract between an Indian national
and a non-resident Indian habitually resident abroad or a foreign national automatically
is considered “International” and subject to international arbitration standards
regardless of whether the transaction was local in nature. 267 By the same token, a
foreign firm in India would not be subject-matter to International arbitration under the
Act of 1996 whose ‘management and control’ is exercised within India. 268 On the other
hand, under the ML, the disputants has to expressly agree that the subject-matter of the
dispute is connected to more than one State, if the arbitration is to be considered as
international. However, Indian Law does not provide for a criterion to determine that
the subject-matter of a dispute is linked to more than one State. By focusing on the
status of the disputants, the Indian approach seems to ignore the disputants’ actual
connections to international business and the forum related to that commerce. As a
result, there is a serious danger that International arbitrations will be categorized
arbitrarily potentially aggrieving a party wishing to arbitrate under international rules.

The ML’s approach should be adopted because of its focus on the substance of the
commercial interaction reflects more accurately the commercial reality of the
disputants and/or forum. The result would be a more predictable application of the
rules to disputants seeking to take benefit of international arbitration rules in India.

265
Saleh, Samir. “The Settlement of Disputes in the Arab World, Arbitration and Other Methods: Trends in
Legislation and Case Law”,Arab Quarterly Law, vol. 1, No. 2 (Feb 1986), 198.
266
Article 1(3), the UNCITRAL Model Law on International Commercial Arbitration.
267
Vijay Reddy &Vs. Nagaraj. “Arbitrability: The Indian Perspective”,19 J. Int’l 117, 118.No. 2, (2002), 135.
268
Ibid. (noting that another problem is that indicators used for determining what constitutes “management
and control” remain unclear).

119
Practically, if definitions of “International” and “Commercial” are combined, it can be
seen that Indian Law provides for a comprehensive definition of ICA which covers
arbitration in disputes concerning imports, foreign investment and contracts for
construction, development or technology transfer, as well as Indian investment abroad,
and the like. The comprehensive definition of ICA indicates the intention of the Indian
Parliament to encourage foreign investment and international business through
facilitating arbitration.

PRACTICAL KNOWLEDGE GAINED BY SEMINAR AND PROCEEDINGS

SEMINAR ON ‘EMERGING TRENDS IN ALTERNATE DISPUTE

RESOLUTION IN INDIA’

Report on Inaugural and Valedictory ceremony

INAUGRAL SESSION:
Mr. P K Malhotra – Chief Guest

120
Mr. Ajay Thomas- Keynote speaker

Mr. Nikhil Chopra – Panelist (chair)

Dr Aman Hingorani – Panelist

Mr. Ratan K Singh – Panelist

Dr Kahkashan Y Danyal – Dean

Dr Faizannur Rehman- Convenor

DR KAHKASHAN Y. DANYAL
Addressing the delegates, guests and students gathered for the seminar, Mam gave a warm
welcome to all. She further pointed out that Seeking justice has become an expensive affair.
Arbitration and legal aid, provides a helping hand which is not charity but a right.

Legal services provide free legal aid through clinics wherever applicable. Flexibility,
informality and creativity of ADR provides a bypass to handle more complex legal situations.
It fortifies the legal system. To enhance and explore the area of ADR, to strengthen the
implementation and look for futuristic perspectives, this seminar has been organized.

MR. P. K. MALHOTRA
It was Mr Malhotra’s first visit to the university of Jamia. Sir pointed out that such an
exposure was missing in the earlier times as the conventional method only involved study of
legal cases.

ADR is an alternative to the normal litigation which goes to the court. The disputes are
resolved not necessarily by the judicial officers but by experts based on the principle of
natural justice. Apart from Lok Adalat and ADR, Gram Nayalis existed which unfortunately
came to an end after the centre stopped providing funds to the state for the same.

Under section 89 of the CPC, before the adjudication, the court is required to ask the parties
whether they would like to settle through mediation. This is the only present law on
mediation. The mediators do not impose the decision but only provide it as an option. Despite
the betterment of the infrastructure of courts and various other steps, there is a pendency of 3
crore cases in India and arbitration provides a better alternative.

121
In arbitration, it is a win-win situation for both parties. However, the involvement of court at
every step is a hurdle in the path of arbitration. In Guru Nath Foundation case, the Supreme
Court observed that ADR leads to forming of legal philosophers. UNCITRAL has further
passed the law for international arbitration. Under the 2003 Act, there are certain
shortcomings which could have been reduced by the system.

In comparison to ADR in India, Singapore, London etc. have a better system. Justice Dhave
pointed out that two Indian parties having a dispute goes back to the system of London since
in India, the court interferes at every point.

The Act of 2015 provides a strict timeline that the dispute should be settled within 1 year and
if not that, an extension of 6 months may be granted at the consent of the parties. The
shortcomings of arbitration in India are that people prefer ad-hoc arbitration rather than
institutional arbitration and also that Arbitration is not taken as a full-time job.

ONGC, SAIL etc. have constituted a committee that acts on the conciliation process and 90%
of the disputes are resolved through this mechanism.

MR. AJAY THOMAS

Mr Thomas is the Vice Chairman of the ICC, India Arbitration Group. He presented a power-
point presentation on “Making India a Hub for International Arbitration”. He started by
addressing the university as an esteemed one, having played a major role in the freedom
struggle.

Arbitration is being increasingly used as a viable option in recent times. The speaker focuses
on the analysis of the Indian Legal System for promotion of arbitration.

There were several cases that compelled one to opt for arbitration. These were Bhatia
International case, 2002, ONGC V Saw Pipes, 2003, SVP V Patel Engineering, 2005 and
Venture Global Engineering V Satyam Computers. India has now moved on from the old
days and has developed arbitration hubs. Several countries including South Korea etc. have
expressed their desire to become an arbitration hub. The Chief Justice of Singapore has also
pointed out that this is the golden age for arbitration.

Before the goal setting, one has to take the following options in consideration:

 Global Commercial Hub; London, New York, Singapore, Hong-Kong, Tokyo.

 Global Dispute Resolution Hub; London and Singapore.

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  Global Arbitration Hub; London, New York, Paris, Geneva, Hong-Kong, Singapore.
 Regional Arbitration Hub; Kuala Lumpur, Malaysia, Dubai.

Next is the formulation of an Arbitration Policy. The following components constitute a hub:

 Proactive Government
 Supportive Judiciary
 Modern arbitration and supporting legislative framework
 Institutional support
 Professionalism of arbitration
 Training
 Accreditation
 Location and world class infrastructure
 Specialized and cosmopolitan legal fraternity
 Liberalization of legal services

ICADR was set up in India but with the 2005 cases, it suffered a backdrop. Lastly the speaker
concluded with the lines of PM Modi, ‘The creation of a vibrant ecosystem for arbitration is
one of the foremost priorities of my government’.

MR NIKHIL CHOPRA
The Panellist began by pointing out that there are 3 Crore pending cases in India. If the ones
that can be handled by arbitration are separated, only 2 lakhs will remain.

The question arises as to the need of alternate methods. The reasons are:

 Lengthy procedures
 One party may suffer a big loss while the other may only gain.
 Not all issues are fit for the national courts e.g. related to the engineering or medical
line.

A way of arbitration was also practiced during the Vedic times. Similarly, the Panchayat
system was also based on the Nyaaya system. The law on arbitration was made only in 1996
which was the copy of the already existing laws in other countries. In addition, government
made an amendment in 2015. Both of these proved to be game changers.

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The arbitration procedure has failed earlier due to its credibility. It is the subjectivity of the
process that plays an important role. The biggest challenge to legal procedure, arbitration or
mediation is the swiftness of the delivery of the judgment. A case which involves a
substantial question will require a much longer time. The Evidence Act and the CPC are not
applicable to arbitration. Under such circumstances, one has to make a decision, and should
be legally aware.

DR HINGORANI

Dr Hingorani started by stressing on the fact that law schools in the present times produce
law graduates and not legal professionals. There are requirements to involve the parties more
in order to promote arbitration. The object of ADR is to transform conflict into a win-win
situation. Arbitration is a form of legal proceeding taken by experts based on facts and laws.
The procedure is similar to that of litigation.

The speaker drew a close relevance of arbitration to moot courts rather than litigation which
is usually hurried and not entirely based on the procedure adopted in moot courts.

Mediation begins with Pre-Trial Mediation, where the parties opt for it before litigation.
Mediation is gaining more importance than arbitration as it is cheap, durable and not reduced
to Lok Adalat. It is very rarely practiced in the form that is ought to be practiced in. some of
the important factors are equal eye contact, body language, private session of parties and
listening to both parties.

Coming to the teaching process, the speaker pointed out that there should be individualized
feedback on every student in the teaching process rather than only giving lectures and holding
competitions. Internships should be more promising requiring the interns to do more than just
holding files. An in-house faculty should be present in every university consisting of lawyers
and professors imparting education and experience to the students in the field of ADR.

MR RATAN K. SINGH

Mr Ratan Singh specified that he would be speaking on arbitration solely. Arbitration is a

private dispute resolution mechanism by a private dispute resolution judge which is binding
on the parties. Confidentiality is one of the most important aspects of arbitration. The award
is final, and the court will grant the award as the final decree of court if referred to a court.

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An award is more powerful than a decree as judgement given by the court can be taken for
appeal.

Almost all international companies have arbitration as dispute resolution mechanism.

Arbitration can be taken as a career choice as one can sit as an arbitrator, as a counsel for
parties, or as a tribunal secretary. Arbitration is promising in terms of money as well. The
biggest award that has been granted was 50 billion USD in the U-cost cases. The claimant’s
lawyer’s fee alone was 90 million USD.

India is also facing treaty arbitration. International commercial arbitration involves different
countries. Treaty arbitration is that which involves state as one of the parties.

Arbitration is decided on legal principles. It was essentially industry specific but later its
nature changed and is now more like litigation. There are two main kinds of arbitration, ad-
hoc and institutional. In ad-hoc arbitration, the parties choose their private judges. In
Institutional arbitration it is overlooked by an institution and is conducted according to the
rules of such institution.

According to the speaker, ad-hoc arbitration is the purest form of arbitration as it gives liberty
to the parties. However, given the current situation of India, it is important to conduct the
same under an institution.

Process of typical arbitration involves the following steps,

 It is based on a contract between the parties which is the arbitration agreement. It

starts by sending a notice to the other party and a statement of claim.
 Rounds of pleadings start after this. Generally, 2 rounds in international arbitration.
 Documents submitted by both the parties.
 Discovery of the documents which is the most important step.
 Transcriptions are also present. The most important part of arbitration is time.

The laws on arbitration can be found in UNCITRAL model laws, Trevox- The Legislative
History, Clout- Digest of cases in different model law jurisdictions, IBA guidelines on taking
of evidence, Book by Hunter or Garreck E. Bon.

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DR FAIZANUR RAHMAN

Sir concluded the inaugural ceremony by thanking the Chief Guest, Keynote Speaker, Dean
and Panellists, students and participants and further stressed on the importance of ADR in the
present times.

VALEDICTORY SESSION

DR KAHKASHAN Y. DANYAL
Ma’am gave conclusive remarks on the seminar. This was followed by pointing out that the
judicial system has a heavy weight of pending cases. It is the collective responsibility of
every person causing the delay. There is a need to hold seminars and raise awareness about
ADR.

Litigation does not always lead to a satisfactory result. Moreover, it is expensive. Quoting
Abraham Lincoln, mam pointed out that it is important to persuade people to compromise
rather than go for litigation.

PROF SALEEM AKHTAR, CHIEF GUEST

Sir gave an example of how earlier in his life he saw a case being decided by his father
outside of his judicial capacity within half an hour. This reflects how arbitration can be
effective for saving both time and money.

The Supreme Court has also emphasized the importance of arbitration, particularly in
matrimonial cases. In the Dharma sastras, there was also a mechanism of arbitration for
settlement of disputes.

DR FAIZANUR RAHMAN
Sir gave the vote of thanks to all speakers and participants, the Chief Guest and Dean, and the
students and volunteers for making the event a success and hence concluded the session.

ARBITRATION PROCEEDINGS BEFORE SH. S.M. AGGARWAL, HON’BLE SOLE

ARBITRATOR
CASE NO. 32/2017

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ARBITRATION PROCEEDINGS BETWEEN:
M/S SIMPLEX PROJECTS LTD. …………………………………………… CLAIMANT
AND
NEW DELHI MUNICIPAL COUNCIL………………...……………………RESPONDENT

Due to Mrs. Madhu Saini’s efforts and contacts with the New Delhi Municipal Council,
students of 4th and 5th Year of Faculty of Law, Jamia Millia Islamia went on to attend live
arbitration proceedings between the party’s M/S SIMPLEX PROJECTS LTD. Vs. NEW
DELHI MUNICIPAL COUNCIL.

The facts of the case were related to delayed payments amounting to

By attending the proceedings, it gave practical knowledge to the students and answers the
following questions where been answered by the experience.

How to Register for Arbitration through Indian Council of Arbitration?

A written application to the registrar, asking for an arbitration, has to be initiated by the
parties. Registrar, as deem fit, may reject the request on reasonable grounds.

What are the Issues which Can be Taken Up for Arbitration and Who Can Be A Party to
Arbitration?

Disputes relating to commercial matter including shipping, sale, purchase, banking,

insurance, building construction, engineering, technical assistance, know-how, patents,
trademarks, management consultancy, commercial agency or labor are taken up by the Indian
Council of Arbitration.

As per Rule 4, ICA Rules: Parties to arbitration can be a resident of India or foreigner.
Even two or more foreign parties might enter into arbitration under the rules of Indian
Council of Arbitration. What is required is their mutual consent.

In the case where a party to a dispute referred for arbitration is a foreign national , it will be
assumed that he has submitted to the jurisdiction of India and all the substantive and
procedural law to be applied will be Indian according to Rule 6, ICA Rules.

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 Is the Decision of Indian Council of Arbitration Binding?

Yes. Under Rule 8 of Indian Council of Arbitration Rules, the decision of the arbitrators
over any dispute will be final and the parties to the arbitration are bound to follow it.

Who are Appointed as Arbitrators Under the Rule?

 A register is maintained by the registrar of ICA which includes the name and other
such important details of the arbitrators of Indian Council of Arbitration.

 The panel of arbitrators includes both Indian and foreign arbitrators. Arbitrators from
time to time are recommended by the members of the Council or any other person or
organization.

 Where a party to dispute ask for an arbitrator living in the foreign land, it will be the
duty of the party to dispute to accommodate the arbitrator he demanded. Subject to certain
exceptions, all the expenses will be incurred by the party demanding such foreigner
arbitrator.

 Age limit or retirement tenure of an arbitrator is 80. After the age of 80, any
person automatically ceases to be an arbitrator as per the rules of Indian Council of
Arbitration.

What are the Steps towards Filing for an Arbitration?

 Step 1: Party to a dispute can directly approach the registrar through an application as
mentioned in the first paragraph. After the application is duly accepted, a notice is sent to the
other party or parties, as the case may be.

 Step 2: On receiving the receipt of the application, the registrar will send a notice to
the other party to the dispute. The letter will include a copy of the claim statement and the
attached documents and a time period of 30 days or as the time period set up by the registrar
will be given to the other party to the dispute to show cause of their side of the case.

 Step 3: A counterclaim can be made by the respondent, provided the counterclaim

arises from the same transaction as the original claim. Counterclaim have to be supported

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 with all the relevant documents and to the counterclaim, the claimant may within twenty-one
days of the notification of the counterclaim or within such extended time, submit a statement
in reply to the counterclaim.

 Step 4: Three copies of all statements, replies and other documents and papers, as
well as appended documents, must be supplied to the registrar.

Step 5: Number of Arbitrators to Settle the Dispute

 Where the amount involved in the dispute is less than or equal to INR 1 crore, the
arbitration will be arbitrated by a single arbitrator. Provided, where the parties specifically
ask for arbitrators, it will be the duty of ICA to provide the parties in a dispute with such
three arbitrators.

 Where the amount involved in the dispute is more than INR 1 crore and less than or
equal to INR 15 Crore, the ICA will be duty bound to provide the parties with three
arbitrators. If the party insists the arbitration is to be instituted by a sole arbitrator in
such case, ICA will be duty bound to comply with the demands of the parties to a dispute.

 In the cases where parties cannot come to a unanimous selection of arbitrator– If

the parties fail to agree on the person to be appointed as sole arbitrator within the time
granted by the Registrar, the Registrar in consultation with the Chairman of the Committee
and in his absence in consultation with the member of the Governing Body designated by the
Chairman, shall appoint the sole arbitrator from among the Panel of Arbitrators.

 In the cases where one party to a dispute is a foreign national- In such cases, the
registrar will appoint an arbitrator who does not belong to any country as the proposing
parties do.

 Where parties are not satisfied with the selection of arbitrator by the registrar-
The Challenge of an arbitrator shall be made within 30 days after his appointment has been
communicated to the challenging party or within 30 days of his becoming aware of the
reasons for which the challenge is made. The judge will be members of ICA committee.

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What is the Amount of Money to be Deposited before Initiation of Arbitration?

Registrar orders the party to pay a particular amount before the initiation of arbitration
to incur the expenses in arbitration. This includes the procedural cost as well as expenditure
to support the arbitrators. Equal share is drawn from both the claimant and the respondent.

What if any Party to a Dispute Defaults in Paying the Advance Amount Before Arbitration?

When one of the party’s neglects or refuses to make the deposit, the Registrar or the arbitral
tribunal as the case may be may require such deposit whether in relation to a claim or a
counterclaim to be made by the other Party to the dispute (Claimant or Respondent as the
case may be).

In addition to all these, INR 500 is a concession charge of ICA for providing of basic
infrastructures for facilitating the arbitration.

Where any Party to a Dispute Fails to Cooperate with Indian Council of Arbitration

Where a claimant does not file all the requisite documents, papers, etc. or does not deposit the
appropriate fees, the arbitration procedure will come to a halt.

In such a case, the arbitration proceedings will proceed as it is assuming the presence and
awareness of the respondent.

What shall be the place of Arbitration?

The place or venue of arbitration shall be India. The Arbitration proceedings shall be held at
such place or places in India as the arbitral tribunal may determine to have regard to the
convenience of the arbitrators and the parties.

In a case in which one or both the parties are from overseas, the arbitration proceedings
may also be held at any place outside India at the discretion of the arbitral tribunal.

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Is there any provision of Fast Track Arbitration?

The party to a dispute can opt for fast track arbitration. The arbitration will be done within 3-
6 months.

What to Do if One is Not Satisfied with Arbitration Process

In such a case, parties are free to approach the court but only in special circumstances. First,
an application has to be forwarded to the registrar who in turn will forward it to arbitration
tribunal and if the arbitration tribunal is satisfied, an appeal may lie in the court.

CONCLUSION

Alternative Dispute Resolution mechanisms are in addition to courts and complement them.
The traditional system of dispute resolution is afflicted with inordinate delays. However the
backlog and delay appear to be more accentuated than in modern-day India. ADR
mechanisms play an important role in doing away with delays and congestion in courts. The
Indian civil justice system serves the interests of a diverse and exploding population, the
largest democracy and the seventh largest national market in the world. This formidable
responsibility, combined with the recent drive toward greater political accountability in the
public administration and post-1991 market reforms, places ever-greater pressure on the civil
justice system. An estimated backlog of 25 million cases and reported delays in some urban
areas in excess of twenty years, currently undermine the effective enforcement of the
substantive civil and commercial rights. Backlog and delay have broad political and
economic implications for Indian society. If India fails to face and meet these challenges, it
will not be able to realise fully its legal commitment to democratic and liberal economic

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policies. In cases such as motor accident claims, the victims may require the compensation to
be paid without delay in order to meet medical and other expenses. In matters such as these,
Alternative Dispute Resolution mechanisms like Lok Adalat can help victims obtain speedy
relief.

In the ultimate analysis it may be concluded that the widening gap between the common
people and the judiciary is indeed a serious cause of concern for all those who deal with the
judiciary is indeed a serious cause of concern for all those who deal with the administration
of justice. The effective utilization of ADR systems would go a long way in plugging the
loophole which is obstructing the path of justice. The concepts of alternative modes of
dispute resolution should be deeply ingrained in the minds of the litigants, lawyers and the
judges so as to ensure that ADR methods in dispensation of justice are frequently adopted.
Awareness needs to be created amongst the people about the utility of ADR and simultaneous
steps need to be taken for developing personnel who would be able to use ADR methods
effectively with integrity.

In the Preamble, the words ‘justice, liberty, equality and fraternity these four pillars form the
infrastructure, supporting the whole Indian system to be built. Breaking or damaging or
weakening any one of these pillars will damage the entire structure since everyone is a
fundamental pillar and each is tightly interlinked to each other and these four forms a single
interdependent reality.

The system of dispensing justice in India has come under great stress for several reasons
mainly because of the huge pendency of cases in courts. In India, the number of cases filed in
the courts has shown a tremendous increase in recent years resulting in pendency and delays
underlining the need for alternative dispute resolution methods.

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 alternate dispute
resolution and this will no doubt reduce the pendency in law Courts. The scope of alternate
dispute resolution system (ADR) has been highlighted by the Hon’ble Chief Justice of India
in his speech in the joint conference of the Chief Ministers of the State and Chief Justice of
High Courts, held at Vigyan Bhavan, New Delhi on September 18, 2004 and insisted the
Courts to try settlement of cases more effectively by using alternate dispute resolution system
so as to bring down the large pendency of cases in law Courts.

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Alternate Dispute Resolution is rapidly developing at national and international level,
offering simpler methods of resolving disputes. Increasing trend of ADR services can easily
be inferred from the growth of “Arbitration clause” in majority of contracts. There has been a
significant growth in number of law school courses, diplomas, seminars, etc. focusing on
alternate dispute resolution and rationalizing its effectualness in processing wide range of
dispute in society.

Lastly, the importance of ADR mechanism can be aptly put in the words of Abraham
Lincoln:

“Discourage litigation persuade your neighbours to compromise whenever you can point out
to them how the nominal winner is often a real loser, in fees, expenses, waste of time…”

After studying the topic it is observed that member country responses domestic frameworks
for consumer dispute resolution and redress provide for a combination of different
mechanisms. Although not available in all countries, three clear categories of mechanism
were identified in this report: mechanisms for consumers to resolve their individual
complaints; mechanisms for consumers to resolve collective complaints; and mechanisms for
government bodies to take legal action and obtain monetary redress on behalf of an individual
consumer or group of consumers. These different categories serve distinct yet complementary
functions, responding to the varying nature and characteristics of consumer complaints.

Increased mobility and the growth of the online marketplace have significantly increased the
possibility for consumers and businesses to engage in transactions over great distances and
without regard to geographic borders, local cultures and legal frameworks. Such benefits,
however, raise challenges as to how potential disputes can be resolved in an accessible,
effective, and fair way. Arbitration is considered to be an essential part of dispute resolution
among commercial parties these days. Even in non-commercial cases, arbitration and other
alternative dispute resolution mechanisms are used these days. However, gradually even
ADR mechanisms have become time consuming and expensive nowadays. Therefore,
commercial world is looking towards information and communication technology (ICT) for a
better opinion than ADR.

The ongoing development of information and communication technologies, especially

internet-based communications (e.g. message boards, email, chat rooms, and video
conferencing), have permitted ADR services to move into an online virtual arena known as
online dispute resolution.

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Many of the initial ODR service providers focused on resolving disputes stemming from e-
commerce transactions, such as online retail or auction (e.g. e-Bay) purchases. Consequently,
the majority of the research and discussion on ODR is primarily focused upon the context of
resolving such disputes. Recently, ODR practitioners have begun to provide services intended
to resolve more complex types of dispute (e.g. child custody and divorce settlements as well
as complex, multi-party international employment disputes).

Online dispute resolution (ODR) has emerged as an alternative to ADR that is primarily
technology driven. Perry4 Law and Perry4 Law Techno Legal Base (PTLB) have been
working in the direction of legal enablement of ICT systems in India and worldwide and legal
enablement of e-governance in India and abroad. To strengthen the initiatives and projects of
of Perry4 Law and PTLB, they have thought of taking some crucial and immediate steps for
the development of E-Courts, E-Judiciary, ODR India, and Online Arbitration and so on. It
has many advantages over traditional litigation methods and even over ADR methods.
However, online dispute resolution (ODR) in India is still evolving.
Perry4Law and PTLB suggest that India must speed up the process of adoption of ODR for
resolving e-commerce and international commercial disputes. E-commerce disputes
resolutions in India may be resolved using ODR in the near future. Electronic delivery of
justice in India has failed. There is no second opinion that e-delivery of justice in India is
needed. Further, e-courts and ODR in India are also required to be strengthened.

BIBLIOGRAPHY

BOOKS

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JOURNALS, MAGAZINES & NEWSPAPERS

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DEEP; Vol. VI, Issue: 01, Jan. 2006
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1. www.globaljurix.com
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