Historical Background of the ADR

System in India
-Alternate Dispute Resolution system is not a new experience for the
people of this country. It has been prevalent in India since time
immemorial.
-Ancient system of dispute resolution made a considerable contribution,
in reaching resolution of disputes relating to family, social groups and
also minor disputes relating to trade and property.
- Village level institutions played the leading role, where disputes were
resolved by elders, comprising Council of Village (popularly called
Panchayats), which was an informal way of mediation.
-In earlier days disputes hardly reached courts. Decisions given by the
elderly council were respected by all. But subsequently boon
accompanied bane, the very system lost its impression due to
intervention of political and communal elements.
1
Contd……
Position of ADR in Ancient India
-In earlier times, disputes were peacefully settled by
intervention of kulas (family or clan assemblies), srenis (guilds
of men following the same occupation), parishads (assemblies
of learned men who knew law) before the king came to
adjudicate on disputes.
-In ancient India there were several grades of arbitration, for
example the Puga or a board of persons who belonged to
different sects and tribes but lived in the same locality; the
Sreni or assemblies of tradesmen and artisans belonging to
different tribes but connected in some way with each other,
the Kula or groups of persons bound by family ties. From early
times, the decisions of Panchayats were accepted as binding.

2
Contd…..
-According to Colebrooke (an English scholar and commentator
on ancient Hindu law), Panchayats were different systems of
arbitration subordinate to the regular courts of law.
-The decision of a Kula or kin group was subject to revision by
the Sreni which, in turn, could be revised by the Puga. From
the decision of the Puga, appeal was maintainable to
Pradvivaca and finally to the sovereign and the prince.
-Thus, in ancient times the Kula, sreni and Gana were the three
types of popular courts, each succeeding one being more
important than the preceding one. When and where these
three failed to administer proper justice, the king or his
officers were to interfere

3
Contd….
Alternative Dispute Resolution during British Period
-Judicial administration was changed during British period. The
current judicial system of India is very close to the judicial
administration as prevailed during British period.
-The traditional institutions worked as recognized system of
administration of justice and not merely alternatives to the
formal justice system established by the British.
-The two systems continued to operate parallel to each other.
The system of Alternate Dispute Redressal was found not only
as a convenient procedure but was also seen as a politically
safe and significant in the days of British Raj.
-Alternate Dispute Resolution in the present form picked up pace
in the country, with the coming of the East India Company.

4
Contd……
-Modern arbitration law in India was created by the Bengal
Regulations. The Bengal Regulations of 1772, 1780 and 1781
were designed to encourage arbitration.
-Bengal Resolution Act, 1772 and Bengal Regulation Act, 1781
provided parties to submit the dispute to the arbitrator,
appointed after mutual agreement and whose verdict shall be
binding on both the parties.
- Indian Arbitration Act,1899 was passed, based on the English
Arbitration Act of 1889. It was the first substantive law on the
subject of arbitration but its application was limited to the
Presidency – towns of Calcutta, Bombay and Madras.

5
Contd…
-The Act of 1899, however suffered from many defects and was
subjected to severe judicial criticisms. As a result, in1908 the
Code of Civil Procedure was re-enacted. The Code made no
substantial changes in the law of arbitration.
-Subsequently, The Arbitration Act of 1940 was enacted
replacing the Indian Arbitration Act of 1899 and S.89 and
clauses (a) to (f) of section 104(1) and the Second Schedule of
the Code of Civil procedure 1908.
-It amended and consolidated the law relating to arbitration in
British India and remained a comprehensive law on
Arbitration even in the Republican India until 1996.

6
Contd……
Alternative Dispute Resolution in post
Independence
-Bodies such as the panchayat, a group of elders and influential
persons in a village deciding the dispute between villagers are not
uncommon even today. The panchayat has, in the recent past, also
been involved in caste disputes.
-In 1982 settlement of disputes out of courts started through Lok
Adalats. The first Lok Adalat was held on March 14, 1982 at
Junagarh in Gujarat and now it has been extended through out the
country. Initially, Lok-Adalats functioned as a voluntary and
conciliatory agency without any statutory backing for its decisions.
-By the enactment of the Legal Services Authorities Act, 1987, which
came into force from November 9, 1995, the institution of Lok
Adalats received statutory status.

7
-To keep pace with the globalization of commerce ,the old Arbitration Act of
1940 is replaced by the new Arbitration and Conciliation Act, 1996, which is
the binding law on ADR today in India.
Other Legislations on ADR
-Settlement of matters concerning the family has been provided under Order
XXXIIA of the Code of Civil Procedure, 1908 by amendment in 1976.
-Provisions for making efforts for reconciliation under Sections 23 (2) and 23
(3) of the Hindu Marriage Act, 1955 as also under Section 34 (3) of the
Special Marriage Act, 1954 are made mandatory before going for decree of
divorce.
-Family Courts Act was enacted in 1984. Under Family Courts Act, 1984 it is the
duty of family court to make efforts for settlement between the parties.
-Further, introduction of Section 89 and Order X Rule 1A, 1B and 1C by way of
the 1999 Amendment in the Code of Civil Procedure, 1908 is a radical
advancement made by the Indian Legislature in embracing the system of
“Court Referred Alternative Disputes Resolution”.

8
 Advantages of ADR over litigation
1. ADR can be used to reduce the number of contentious issues between the
parties; and it can be terminated at any stage by any one of the disputing
parties.
2. ADR procedures are said to be helpful in reaching a decision in an
amicable manner.
3. ADR procedure permits parties to choose neutrals who are specialists in
the subject matter of the disputes.
4. ADR proceedings do not require a very high degree of evidence.
5. In ADR, the parties can choose their own rules or procedures for dispute
settlement.
6. ADR programmes are flexible and not afflicted with rigourous rules of
procedure.
7. A judicial settlement is a complicated procedure, ADR, on the other hand,
does not create any complications.
8. ADR establishes continued relationship between the parties even after the
settlement.
9 . ADR develops confidence and faith among the parties.
11. Speedy disposal of the cases
12 It reduces the burden of courts
13. Less expensive 9
 Disadvantages of ADR system

1. There is no guarantee that a final decision may be reached.

2. The decisions arrived at after a non-litigative procedure are not binding as
they are voluntary. This makes the entire exercise futile as parties do
not stick to their decision resulting in a waste of time and money.
3. There will be a diminished role for lawyers. They will continue to play a
central role in ADR processes; however, they will have to adapt their
role ADR requirements. Neutrals and trained ADR experts are very few
to cater to the vast population.
4 Most of the facts regarding the dispute which would have been proved
otherwise rather than evidence continue to be a bane in the
discussion which may lead to dissatisfaction.

5. Flexibility and unconfirmed procedures make it extremely difficult to quote

and use precedents as directives.

10
 Overview of ADR
-Alternative dispute resolution encompasses a range of means to resolve conflicts short
of formal litigation. The modern ADR movement originated in the United States in
the 1970s to avoid the cost, delay, and adversarial nature of litigation.
-It can be observed that the term “Alternative dispute resolution” can refer to
everything from facilitated settlement negotiations in which disputants 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 courtroom
process.
-Processes designed to manage community tension or facilitate community
development issues can also be included into the rubric of ADR.

ADR today falls into two broad categories:

 Court-annexed options and
 Community-based dispute resolution mechanisms
Court-annexed options
-Court-annexed ADR includes mediation/conciliation—the classic method where a
neutral third party assists disputants in reaching a mutually acceptable solution—as
well as variations of early neutral evaluation, a summary jury trial, a mini-trial, and
other techniques.
-Supporters argue that such methods decrease the cost and time of litigation, improving
access to justice and reducing court backlog, while at the same time preserving
important social relationships for disputants.
11
Contd……..
Community-based ADR
-Community-based ADR is often designed to be independent of a
formal court system that may be biased, expensive, distant, or
otherwise inaccessible to a population.
-New initiatives sometimes build on traditional models of popular
justice that relied on elders, religious leaders, or other community
figures to help resolve conflict.
-India embraced lok adalat village-level people’s courts in the 1980s,
where trained mediators sought to resolve common problems that in
an earlier period may have gone to the panchayat, a council of
village or caste elders.

12
Contd………..
Commercial arbitration & Private arbitration
-Some definitions of ADR also include commercial arbitration:
private adversarial proceedings in which a neutral third party
issues a binding decision.
-Private arbitration services and centers have an established role
in the United States for commercial dispute resolution, and
are spreading internationally as business, and the demand for
harmonization, expands.
-In the last decade, more countries have passed legislation based
on the 1985 UNCITRAL Model Law on International
Commercial Arbitration, which makes an arbitral award
legally binding and grants broad rights to commercial parties
choosing arbitration.

13
Contd……
Distinguish between binding and non-binding forms of ADR
-It is important to distinguish between binding and non-binding
forms of ADR.
 Negotiation, mediation and conciliation are non-binding
forms, and depend on the willingness of parties to reach a
voluntary agreement.
 Arbitration programs may be binding or non-binding. Binding
Arbitration produces a third party decision that the disputants
must follow even if they disagree with the result much like a
judicial decision. Non-binding Arbitration produces a third
party decision that the parties may reject

14
Contd……
Distinguish between mandatory processes and voluntary
processes
-It is also important to distinguish between mandatory processes
and voluntary processes.
 Some judicial systems require the parties to negotiate,
conciliate, mediate or arbitrate, prior to court action. ADR
processes may also be required as part of prior contractual
agreement between parties.
 In voluntary processes, submission of a dispute to an ADR
process depends entirely on the will of the parties

15
Contd……
To Sum up:
-India has a long history of settlement of disputes outside the formal justice
delivery system.
-The concept of parties settling their disputes by reference to a person or persons
of their choice or private tribunals was well known to ancient India.
-Long before the king came to adjudicate on disputes between persons such
disputes were quite peacefully decided by the intervention of the kulas, srenis,
pugas and such other autonomous bodies.

-Arbitration was recognized as out of court method of dispute resolution and

several provisions were enacted relating to that. The ADR system as is
understood in the present scenario is the result of the shortcomings of that
formal judicial system.

- In the recent past, no doubt, the alternative disputes resolution techniques are
being used to avoid the costs, delays and procedures of the formal courts.

16
Reasons behind introduction of ADR in India:
 Alternative Dispute Resolution in India is an attempt made by the
legislators and judiciary alike to achieve the “Constitutional goal”
of achieving Complete Justice in India.
 ADR first started as a quest to find solutions to the perplexing
problem of the ever increasing burden on the courts. A thought-
process that started off to rectify docket explosion, later developed
into a separate field solely catering to various kinds of mechanisms
which would resolve disputes without approaching the Formal Legal
System (FLS).
 The reasoning given to these ADR mechanisms is that the society,
state and the party to the dispute are equally under an obligation to
resolve the dispute as soon as possible before it disturbs the peace in
the family, business community, society or ultimately humanity as a
whole.

17
Contd……..
 It is an authoritative, legal doctrine, principle, or precept applied to
the facts of an appropriate case. These definitions give us the
indication that the Rule of Law is a authoritative concept which
might lead to a win-lose situation in cases of dispute.
 Therefore, ADR uses the principles of natural justice in consonance
with the Rule of Law, in order to create a favourable atmosphere of
a win-win situation. This is much needed in countries like India
where litigation causes a great deal of animosity between the parties
due to the agony caused by the long-standing litigation. ADR, thus,
gains its momentum in India today.
-Alternative Dispute Resolution in India was founded on the
Constitutional basis of Articles 14 and 21 which deal with Equality
before Law and Right to life and personal liberty respectively. These
Articles are enshrined under Part III of the Constitution of India
which lists the Fundamental Rights of the citizens of India

18
Contd……..
 ADR also tries to achieve the Directive Principle of State Policy
relating to Equal justice and Free Legal Aid as laid down under
Article 39-A of the Constitution.
 The Acts which deal with Alternative Dispute Resolution are
Arbitration and Conciliation Act, 1996 (discussed in detail later) and
the Legal Services Authorities Act, 1987. Section 89 of the Civil
Procedure Code, 1908 makes it possible for Arbitration proceedings
to take place in accordance with the Acts stated above.

19
The Arbitration and Conciliation Act, 1996
Introduction:
It had been recommended by General Assembly of the United Nations that all
countries should 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 the international commercial arbitration practices.

-It has also recommended the use of the said Rules in cases where a dispute
arises in the context of international commercial relations and the parties
seek on amicable settlement of that dispute by recourse to conciliation.

These rules are believed to make a significant contribution to the establishment

of a unified legal framework for the fair and efficient settlement of disputes
arising in international commercial relations.

-As a result of the above recommondations of General Assemly of The UNO

and in order to give effect to the law relating to domestic arbitration,
international commercial arbitration, enforcement of foreign awards and to
define the law relating to conciliation, the Arbitration and Conciliation Bill
1995 was introduced in the Rajya Sabha on 16th May 1995. 20
Contd……
-The Arbitration and Conciliation Act, 1996 received the Presidential
assent and was brought into force from 16 August 1996,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.

-The Arbitration and Conciliation Act, 1996 was passed on the basis of the
UNCITRAL Model Law on International Commercial Arbitration, 1985
and UNCITRAL Conciliation Rules, 1980

Object of The Act

-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 therewith or incidental thereto.

21
 SALIENT FEATURES OF THE ARBITRATION AND
CONCILIATION ACT, 1996
1. The parties 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.
2. It facilitates quick resolution of the commercial disputes and
speeds up arbitration procedure by minimizing intervention by the
Court.
3. A Court may provide certain interim measures of protection at a
party’s request.
4. The establishment of a unified legal framework for the fair and
efficient settlement of disputes arising in international commercial
relations.
5. The award of an arbitrator is itself enforceable as a decree of
Court.
6. The arbitrator has to give reasons for his award.
7. Judicial review is available for challenging the award in accordance
with the procedure laid down therein 22
 Highlights of Arbitration and
Conciliation (Amendment) Act,2015
-In an attempt to make arbitration a preferred mode of
settlement of commercial disputes and making India a hub of
international commercial arbitration, the President of India on
23rd October 2015 promulgated an Ordinance (“Arbitration
and Conciliation (Amendment) Ordinance, 2015) amending
the Arbitration and Conciliation Act, 1996.
-The Arbitration and Conciliation(Amendment) Act,2015 received
the assent of the President on 31st Dec, 2015.
• The Ordinance has introduced significant changes to the Act
and seeks to address some of the issues, such as delays and
high costs, which have been affecting arbitrations in India.
• The Ordinance is an attempt to make arbitration a preferred
mode for settlement of commercial disputes and to make
India a hub of international commercial arbitration. With the
amendments, arbitrations in India are sought to be made
more user-friendly and cost effective. 23
The major changes brought about by the Ordinance are:
Amendments (Total -18 Sections)
- The first and foremost welcome amendment introduced by the ordinance is
with respect to definition of expression ‘Court’.
The amended law makes a clear distinction between an international
commercial arbitration and domestic arbitration with regard to the
definition of ‘Court’. In so far as domestic arbitration is concerned, the
definition of “Court” is the same as was in the 1996 Act, however, for the
purpose of international commercial arbitration, ‘Court’ has been defined
to mean only High Court of competent jurisdiction.
- Amendment of Section 2(2): Now Section 2(2) envisages that Part-I shall
apply where the place of arbitration is in India and that provisions of
Sections 9, 27, 37(1) (a) and 37 (3) shall also apply to international
commercial arbitration even if the seat of arbitration is outside India
unless parties to the arbitration agreement have agreed to the contrary.
-Amendment to Section 8: (Reference of parties to the dispute to arbitration):
The sub-section(1) has been amended envisaging that notwithstanding
any judgment, decree or order of the Supreme Court or any court, the
judicial authority shall refer the parties to the arbitration unless it finds
that prima facie no valid arbitration agreement exists. 24
-Amendment to Section 9 (Interim Measures): The amended
section envisages that if the Court passes an interim measure of
protection under the section before commencement of arbitral
proceedings, then the arbitral proceedings shall have to
commence within a period of 90 days from the date of such
order or within such time as the Court may determine.
- Amendment to Section 11 (Appointment of Arbitrators): In so far as
section 11, “appointment of arbitrators” is concerned, the new law makes
it incumbent upon the Supreme Court or the High Court or person
designated by them to dispute of the application for appointment of
arbitrators within 60 days from the date of service of notice on the
opposite party.
-Amendment to Section 12: Amendment to Section 12, as per the new law
makes the declaration on the part of the arbitration about his
independence and impartiality more onerous. A Schedule has been
inserted (Fifth Schedule) which lists the grounds that would give rise to
justifiable doubt to independence and impartiality of arbitrator and the
circumstances given in Fifth Schedule are very exhaustive.
-Amendment to Section 14: Amendment of Section 14 aimed at filling a gap
in the earlier provision, which only provided for termination of mandate of
the arbitrator. If any of the eventualities mentioned in subsection (1)
arises. The new law also provides for termination of mandate of
arbitration and substitution and his/her substitution by another one.
25
Contd…….
Amendment to Section 17 (Interim Measures by Arbitral tribunal): The
old Act had lacunae where the interim orders of the tribunal were
not enforceable. The Amendment removes that lacunae and
stipulates that an arbitral tribunal under Section 17 of the Act shall
have the same powers that are available to a court under Section 9
and that the interim order passed by an arbitral tribunal would be
enforceable as if it is an order of a court.

-Amendment to Section 23: The new law empowers the Respondent in

the proceedings to submit counter claim or plead a set-off and
hence falling within the scope of arbitration agreement.

-Amendment to Section 24: It requires the arbitral tribunal to hold the

hearing for presentation of evidence or oral arguments on day to
day basis, and mandates the tribunal not to grant any adjournments
unless sufficient causes shown. It further empowers the tribunal to
impose exemplary cost where adjournment is sought without any
sufficient cost.

26
Contd….
- Amendment to Section 25: The new Act empowers the tribunal to
treat Respondent’s failure to communicate his statement of
defence as forfeiture of his right to file such statement of defence.

-Amendment to section 28: The new law requires the tribunal to take
into account the terms of contract and trade usages applicable to
the transaction. In the earlier law, the arbitral tribunal was
mandated to decide disputes in accordance with the terms of the
contract and to take into account the trade usages applicable to the
transaction. To that extent, the new law seeks to relieve the
arbitrators from strictly adhering to the terms of the contract while
deciding the case.

- Insertions of new Section 29A and 29B( Time limit for arbitral award
and Fast Track Procedure) : Under the amended act, an award shall
be made by the arbitral tribunal within 12 months from the date it
enters upon reference. This period can be extended to a further
period of maximum 6 months by the consent of the parties.

27
Contd….
-Amendment to Section 31: This provides for levy of future interest in the
absence of any decision of the arbitrator, on the awarded amount @2%
higher than current rate of interest prevalent on the date of award.
-In addition, the new Act lays down detailed parameters for deciding cost,
besides providing that an agreement between the parties, that the whole
or part of the cost of arbitration is to be paid by the party shall be
effective only if such an agreement is made after the dispute in question
had arisen.

-Amendment of Section 34 (Limiting the gamut of Public Policy of India): As

per the new amendment, an award passed in an international arbitration,
can only be set aside on the ground that it is against the public policy of
India if, and only if, –
(i) the award is vitiated by fraud or corruption;
(ii) it is in contravention with the fundamental policy of Indian law;
(iii) it is in conflict with basic notions of morality and justice. The present
amendment has clarified that the additional ground of “patently illegality”
to challenge an award can only be taken for domestic arbitrations and not
international arbitrations.

28
Contd….
-Amendment to Section 36 (Stay on enforcement of award): The Ordinance
provides that an award would not be stayed automatically by merely filing
an application for setting aside the award under Section 34. There has to
be a specific order from the Court staying the execution of award on an
application made for the said purpose by one of the parties.

-Amendment to Section 37: Under Section 37(1), the new law makes provision
for filing of an appeal against an order of judicial authority refusing to
refer the parties to arbitration under Section 8.

- As regards enforcement of certain foreign awards, the new law seeks to add
explanation of Sections 48 and 57 thereby clarifying as to when an award
shall be considered to be in conflict within public policy of India. The
parameters are the same as are provided under Section 34. Similarly, the
expression “Court” used in Sections 47 and 56 have been defined to mean
only the High Court of competent jurisdiction.

29
Arbitration-Meaning & Definition

-The Arbitration and Conciliation Act, 1996 governs the “arbitration

procedures” in India.
-Part-I of the Arbitration and Conciliation Act, 1996 comprises of 43
sections spread over ten chapters, making detailed provisions
relating to domestic arbitration and International commercial
arbitration held in India under this Act.
Meaning of Arbitration
-Arbitration’ means, a process of dispute resolution in which a neutral
third party called arbitrator, renders a decision after a hearing at
which both parties have an opportunity to be heard.
-Arbitration is a consensual process. It is not a matter of coercion.

30
Contd………
• The literal meaning of ‘arbitration’ is the "settlement" of differences
or disputes by mutual understanding or agreement by the parties
where the rights and liabilities of the parties are determined in
judicial point of view which are binding to them, such settlement
may be before the arbitral tribunal but not by the Court of law.
Definition of Arbitration
-Section 2(1) (a) of Arbitration and Conciliation Act, 1996 defines
arbitration as any arbitration whether it is administered by any
permanent arbitral institution or not. It also covers arbitration relied
on voluntary agreement by the private parties or by operation of
law.
-Arbitration, in law, is a form of Alternative Dispute Resolution -
specifically, a legal alternative to litigation, whereby the parties to a
dispute agree to submit their respective positions (through
agreement or hearing) to a neutral third party called the Arbitrator
for resolution of the dispute between them.
31
Contd……
• In Jivaji Raja Vs Khimiji Poonja & Company (AIR 1934 Bom 476)
Bombay High Court observed that, arbitration is the reference of
dispute or difference between two or more parties to a person
chosen by the parties or appointed under statutory authority, for
determination of the same. In a broad sense, it is substitution of
ordinary judicial machinery by a mutually chosen tribunal i.e., an
Arbitrator or an Arbitral Institution.

32
 KINDS OF ARBITRATION
Depending on the terms of arbitration agreement, the subject matter
-

of the dispute in arbitration, and the laws governing such

arbitrations,arbitrations can be classified into different types, such
as:
 Ad-hoc Arbitration: The Ad-hoc Arbitration is agreed to and
arranged by the parties themselves without recourse to an arbitral
institution. It is to get the justice, in the balance of the un-settled
part of their dispute only. It may be either International or Domestic
arbitration.
 Domestic arbitration: The Domestic arbitration means, an
arbitration which takes place in India, wherein parties are Indians
and the dispute is decided in accordance with substantive law in
India.
 International Arbitration: An Arbitration, which may take place
either within India or outside India but, where there are ingredients
of foreign origin in relation to the parties, or the subject matter of
the dispute. In this process, the dispute is decided in accordance
with substantive law in India or any other country, depending on
the contract in this regard. 33
Contd……..
 Institutional Arbitration: It means, an arbitration conducted by an arbitral
institution in accordance with the prescribed rules of the institution.
-In such kind of arbitration, there is prior agreement between the parties that in
case of future differences or disputes arising between the parties during their
commercial transactions, such differences or disputes will be settled by
arbitration as per clause provide in the agreement and in accordance with the
rules of that particular arbitral institution.
- Examples of Institutional arbitration:
 The Indian Council of Arbitration (ICA),New Delhi.
 The Federation of Indian Chamber of Commerce and Industries (FICCI), New Delhi.
 The International Center for Alternative Dispute Resolution (ICADA).
-Some of the leading international institutions are:
 The International Chamber of Commerce (ICC), Paris.
 The London Court of International Arbitration (LCIA), London.
 The American Arbitration Association (AAA).
 The World Intellectual Property Organization (WIPO) is an agency of the United Nations,
which is offering its services exclusively for the intellectual
property disputes.

34
 Statutory Arbitration: It is mandatory form of arbitration, which is
imposed on the parties by operation of law. It is apparent that
statutory arbitration differs from the other types of arbitration for
the reason that, the consent of parties is not necessary, it is
compulsory form Arbitration and it is binding on the Parties as the
law of land.
- Example : Sections 24, 31 and 32 of the Defence of India
Act, 1971 and Section 43(c) of The Indian Trusts Act, 1882 are the
statutory provision, which deals with statutory arbitration.
 Foreign Arbitration: When arbitration proceedings are conducted in
a place outside India and the Award is required to be enforced in
India, it is termed as Foreign Arbitration.
 Fast Track Arbitration or Documents Only Arbitration: The
Documents only arbitration is not oral and is based only on the
claim statement and statement of defence, and a written reply by
the claimant, if any. The tribunal may adopt the procedure to
resolve the dispute only on the basis of the documents submitted
to the tribunal and without any oral hearing or cross-examination of
35
the witnesses.
Contd……
 Look–Sniff Arbitration: Look –Sniff Arbitration is a hybrid
arbitration, and also known as quality arbitration. It is a
combination of the arbitral process and expert opinion.
-On the bases of the evidence and inspection of goods or
commodities that are subject matter of the dispute placed before
the arbitrator, who is selected based on his specialized knowledge,
expertise and experience in a particular area of trade or business,
the arbitrator decides the dispute and makes his award.
 Flip –Flop Arbitration: This type of arbitration has its origin in a
United States arbitration case, which dealt with a baseball player. In
such arbitration, the parties formulate their respective cases
beforehand. They then invite the arbitrator to choose one of the
two. On the evidences adduced by the parties, the arbitrator
decides which submission is the correct submission, and then
makes an award in favour of that party. This type of arbitration is
also known as ‘pendulum arbitration’.

36
Contd…..
 International Commercial Arbitration: Section 2(1)(f) of the
Arbitration and Conciliation Act,1996 defines an 'International
Commercial Arbitration' as the one in which at least one of the
parties is a resident of a country other than India, or a body
corporate incorporated in any country other than India, or a
company or association or a body of individuals whose central
management and control is exercised in any country other than
India.
- Arbitration with the government of a foreign country is also
considered to be an International commercial arbitration.

37
 ARBITRATION AGREEMENT (Sec.2 (1) (b))
-The first stage in arbitration process is the formulation of the arbitration
agreement whereby the parties agree to submit their present or future
differences to arbitration.
-Section 2 (1) (b) states that “Arbitration agreement” means an agreement
referred to in section 7.

--Acc. To Section 7, the arbitration agreement is defined as, an agreement by

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

-The Supreme Court in Wellington Association Ltd Vs Kirti Mehta (AIR 2000 SC
1379) held that, the word ‘agreement’ under Section 7(1) “means an
agreement by the parties to submit to arbitration”, which necessarily or
mandatorily requires the appointment of an arbitrator or arbitrators.
Essentials of Arbitration Agreement
-In Jayant N.Seth Vs Gyaneshwar Apartment Cooperative Housing Society Ltd,
(2000(1) RAJ 117), the Court laid down the following essential ingredients
38
of an arbitration agreement:
Contd……..

 There should be a valid and binding agreement between the

parties.
 Arbitration agreement may be in the form of an arbitration clause
in a contract or in the form of a separate agreement.
 That the arbitration agreement must be in writing.
 It should be signed by the parties or in an exchange of letters, telex,
telegrams or other means of telecommunication which provide a
record of the agreement or an exchange of statements of claim and
defense in which the existence of the agreement is alleged by one
party and not denied by the other.

39
 APPOINTMENT OF ARBITRATOR
-Under the provisions of the Arbitration and Conciliation Act, 1996 the
arbitral tribunal can consist of either a sole arbitrator or an odd
number of arbitrators.
-If the arbitral tribunal is to consist of more than one arbitrator, then
the 1996 Act provides that either party can appoint their nominee
arbitrator and the appointed nominee would further appoint a third
arbitrator who would be the presiding arbitrator.
-Section 10 of the 1996 Act provides that the number of arbitrators
cannot be an even number. (This is different from the 1940 Act,
wherein it was permissible to appoint an even number of arbitrators
and an umpire to whom the disputes were to be referred to in the
event of a deadlock).
-In Narayan Prasad Lohia Vs Nikunj Kumar Lohia(2002 (3) SCC 572)
the Supreme Court held If either of the parties fails to make an
appointment under the agreed appointment procedure then, the
other party may make a request to the Chief Justice or a person or
institution designated by him to take the necessary measure.
40
- The arbitration agreement entered into by the parties can provide for
other means of securing the appointment, for example by
delegating the appointing function to an institution.

-The parties can agree on a procedure for appointing the arbitrator or

arbitrators. If they are unable to agree on a single arbitrator then,
each party will appoint one arbitrator and the two appointed
arbitrators will appoint the third arbitrator who will act as a
presiding arbitrator(Section11(3) ).

-The Chief Justice can authorize any person or institution to appoint an

arbitrator.

-In case of international commercial dispute, the application for

appointment of arbitrator has to be made to Chief Justice of India.

-In case of other domestic disputes, application has to be made to Chief

Justice of High Court within whose jurisdiction the parties are
situated (Section 11(12) of Arbitration and Conciliation Act,1996).
-
41
Cond……
-The parties can also agree on a procedure for appointing the
arbitrator or arbitrators. If they are unable to agree on a single
arbitrator then, each party will appoint one arbitrator and the two
appointed arbitrators will appoint the third arbitrator who will act
as a presiding arbitrator(Section11(3) ).

-The Chief Justice can authorize any person or institution to appoint an

arbitrator.

-The Arbitration and Conciliation Act, 1996 only refers to the power of
the Chief Justice to take the 'necessary measures' for the
appointment of arbitrators in case of default by the parties.

-The UNCITRAL Model Law provided that the 'Court' would have the
power to make the appointment.

42
Contd……..

The Supreme Court of India in Ador Samia (P) Ltd Vs Peekay

Holding Ltd(AIR 1999 S.C. 3246, also in Konkan Railways Corp Ltd Vs Mehul
Construction Pvt Ltd. (2000 (7) SCC 201), held that the powers of the
Chief Justice under Sec 11 are administrative powers and
therefore, the Chief Justice while exercising powers under
Section 11 does not act as a “Court”.
-However, the Supreme Court in SBP & Co Vs.Patel
Engineering(2005 (3)Arb LR 285 (SC)) ultimately resolved this
controversy. A bench consisting of seven judges held that the
power conferred by section 11 of the 1996 Act was a ‘judicial
power’ and the Chief Justice had to act in his judicial capacity
and not in an ‘administrative capacity’.

43
CHALLENGE TO APPOINTMENT OF ARBITRATOR
-An arbitrator is expected to be independent and impartial
person, he must disclose the circumstances before his
appointmen (Section 12(1) ).
-Appointment of Arbitrator can be challenged only if :
(a) Circumstances exist that give rise to justifiable doubts as
to his independence or impartiality
(b) He does not possess the qualifications agreed to by the
parties (Section 12(3) )
(c) Appointment of arbitrator cannot be challenged on any
other ground except these grounds.

44
 ARBITRAL AWARD
Meaning:
-The decision of the Arbitral Tribunal is termed as 'Arbitral
Award’.
-In other words ‘Arbitral Award’ means an award given by the
Arbitrator in an arbitral proceeding and Section 2(1)(c)
mentions that “Arbitral Award” includes an interim award.
-Since the arbitrators are empowered to give an interim
award, all the provisions which are applicable to arbitral
award will be equally applicable to an interim award also.
-Thus,an award is nothing but a decision of the arbitrators in
writing duly signed by them.
-In the arbitral proceedings with more than one arbitrator, the
decision of Arbitral Tribunal will be by majority(Section 29).

45
 FORM AND CONTENTS OF ARBITRAL AWARD
 The award must be in writing and signed by the members of Arbitral
Tribunal (Section 31(1) ).
-The SC in Satwant Singh Sodhi Vs State of Punjab, (1999 (3) SCC 487) held
that an award is complete and final only when the arbitrators sign it. It
was also held that once an arbitrator has signed an award, he becomes
functus officio. It is not necessary that it should also be delivered,
pronounced, or filed in the Court.
 It must state the reasons for the award unless the parties have agreed that
no reason for the award is to be given.
-Reasons are the link between the material on which certain
conclusions are based and the actual conclusion. This was held by the
Supreme Court of India in the Union of India Vs Mohanlal Kapoor
case(1972 (2)SCC 836 ).
 The award should be dated and place where it is made should be
mentioned.

46
Contd…….
 Copy of award should be given to each party.
-In the Union of India Vs Tecco Trichy Engineers and Contractors
(2005(1) RAJ 506), it was held that, according to Section 31(5), 'after the
arbitral award is made, a signed copy shall be delivered to each party'.
 The delivery of an arbitral award, to be effective, has to be 'received' by
the party.
KINDS OF AWARDS
-The Arbitration and Conciliation Act, 1996 contemplates four types of
awards, namely:
 Interim Award: Section 31(6) authorizes an arbitral tribunal to make an
interim award on any matter with respect to which it may make final
arbitral award at any time during the arbitral proceeding. Interim award
deals only with some of the matters referred, so that the remaining
matters will be dealt with later.

47
Contd…….
 Additional Award : As in case of additional award , Section 33 (4) provides
that, in the absence of an agreement by the parties to the contrary, a
party with notice to the opposing party may, within 30 days from the
receipt of the award, request the arbitral tribunal to make an additional
award as to claims presented in the arbitral proceedings but omitted from
arbitral award.
 Final Award :Section 35 of Arbitration and Conciliation Act,1996 says that
once an arbitral award has been made, signed and delivered to the
parties, subject to the provisions of part 1 of the Act, it shall be final and
binding on the parties and persons claiming under them respectively.
 Domestic and Foreign Award: In Bhatia International Vs Bulk Trading S.A
(2002 AIR SC 1432), it was held that foreign awards are those where
arbitration takes place in a convention country; awards in arbitration
proceedings, which take place in a non-convention country, are considered
neither as foreign awards nor as domestic awards under the Act.
-The Court also stressed that 'Domestic Awards' include all awards
made under Part I of the Act. Awards made in an international commercial
arbitration held in a non-convention country will also be considered to be a
'domestic award'
48
SETTING ASIDE OF AN ARBITRAL AWARD
-The Arbitration and Conciliation Act, 1996 has very limited grounds of
challenge based on the UNCITRAL Model Law.
- Section 34 provides certain grounds upon which a party can appeal to the principal
civil court of original jurisdiction for setting aside the award.

-The arbitration award made by the arbitral tribunal is open to challenge on the
following grounds.
 Invalidity of the arbitration agreement
 Improper notice of appointment of the arbitrators
 Dispute not contemplated by or not falling within the terms of the arbitration
 composition of the arbitral tribunal not in accordance with the agreement of the
parties
 dispute incapable of settlement by arbitration under the law
 for the time being in force and the award being in conflict with the public policy of
India.

49
Contd……..
-Thus, apart from jurisdictional grounds, the arbitral award made by
the arbitral tribunal can be set aside if the award is in conflict with
the public policy of India.
-In ONGC Vs Saw Pipes Ltd (2003 (5)SCC 705), the Supreme Court
interpreted the meaning of 'public policy' in a wide sense in case of
a domestic arbitration. It held that an arbitral award could be
challenged on the ground that it is contrary to fundamental policy
of Indian law, the interest of India; or justice or morality, patently
illegal; or so unfair and unreasonable that it shocks the conscience
of the Court.

50
 FINALITY AND ENFORCEMENT OF ARBITRAL
AWARDS
-The finality of arbitral awards in an arbitral proceeding is subject to
Part VIII of The Arbitration and Conciliation Act 1996.
Thus, Section 35 provides that an arbitral award shall be final and
binding on the parties and persons, claiming under them
respectively.
-Under Arbitration Act 1940, an award could be executed in the same
manner, to the same extent and subject to the same limitation as a
decree of the Court.
- The Arbitration Act 1940, provided that an award could be enforced
by filing it in the Court and obtaining a judgment and decree on it
(Section17).

51
- The Arbitration and Conciliation Act ,1996 under Section 36, provides
that, where the time for making an application to set aside the
arbitral award under section 34 has expired, or such application
having been made, it has been refused, the award shall be enforced
under the Code of Civil Procedure, 1908 (5 of 1908) in the same
manner as if it were a decree of the Court.
- This section provides for the summary procedure for excluding
Court intervention at the enforcement stage, because most of the
object of arbitration would be defeated if a claimant who succeeds
in an arbitration has again stand in the queue of litigations seeking
to enforce their agreements.
- The fact that an arbitral award is enforceable as if it were a decree
does not render the arbitral proceeding as proceeding in a suit. Nor
does it render an arbitration a suit.
- All that this section provides is that for the purpose of enforcement,
an arbitral award can be enforced as if it were a decree.

52
Contd…….
-The Supreme Court in Fuerst Day Lawson Ltd Vs Jindal Exports
Ltd.(AIR 2001 SC 2293) held that, as the object of the Arbitration
and Conciliation Act, 1996 is to provide speedy and alternative
solution to the dispute.
-The Court further observed that, for the enforcement of a foreign
award there is no need to take separate proceedings, one for
deciding the enforceability of the award to make it a rule of the
Court or decree and other to take up execution thereafter. In one
proceeding, the Court enforcing a foreign award can deal with the
entire matter.

53
Disputes which are arbitrable
- Generally speaking, all disputes of a civil nature which
can be decided by a civil court, can be referred to
arbitration.
-Thus disputes relating to :
 Property
 Right to hold an office
 Compensation for non-fulfillment of a clause in a
contract
 Disputes in a company or partnership can be referred
to arbitration
 Thus, disputes arising in respect of defined
legalrelationship, whether contractual or not, can be
referred to Arbitration

54
 Disputes which are not arbitrable
- If a matter is governed by any other law which excludes reference to
Arbitration, this Act will not apply. Since in those cases, the law has given
precise jurisdiction to specified courts or tribunals only, those cases
cannot be decided through the mechanism of Arbitration.
- The following matters in general practice, are not arbitrable:
• Insolvency matters;
• Matrimonial causes (except matters pertaining to settlement of terms of
separation or divorce)
• Testamentary matters; e.g., validity of a Will
• Suit under section 92 of the Code of Civil Procedure, 1908
• Proceedings for appointment of guardian of a minor or lunatic person
• Industrial disputes
• Criminal proceedings [excepting matters relating to compoundable
offences]
• Relating to charities
• Pertaining to dissolution or winding up of a company incorporated and
registered under the provisions of the Companies Act, 1956 (Haryana
Telecom Ltd. vs. Sterlite Ind. Ltd.) 1999 (4) L.J. (S.C.) 389.
• Relating to claim for recovery of octroi duty.
• Pertaining to title to immovable property in a foreign country.
• Relating to possession of leased premises governed by the provisions of
55
the Bombay Rent, Hotel and Lodging House Rates Control Act, 1947.
ENFORCEMENT OF CERTAIN FOREIGN AWARD
New York Convention Award & Geneva Convention
Award
-In view of its simplicity, economy, speed and privacy, alternative
dispute redressal methods have particular attractions in the
international sphere.
-For instance, a party from one country would always have
reservations in suing the other party in another country where the
procedures are unfamiliar and the approach of the Courts may be
different because of different legal and cultural perspectives.
-Part II of The Arbitration and Conciliation Act, 1996 deals with
enforcement of New York Convention awards and Geneva
Convention awards and empowers Indian Courts to refer matters
coming before them to arbitration where the seat of arbitration is
outside India. 56
Contd…..
-The Arbitration and Conciliation Act,1996 deals with the enforcement
of foreign awards in Part II only in relation to States which were
parties to the New York Convention on the Recognition and
Enforcement of Foreign Awards of 1958 and the Geneva Protocol
on Arbitration Clauses of 1923 and the Geneva Convention on the
Execution of Foreign Awards of 1927.
-India made reservations to those instruments on the grounds of
reciprocity and for confining the disputes to matters of commercial
nature.
-Consequently, the Arbitration and Conciliation Act, 1996 did not deal
with international arbitration or with international conciliation in
general in relation to States that were not parties to the Geneva or
New York Conventions.

57
Contd……
-Arbitralawards given in the States that are not parties to those
conventions are treated as non-convention awards, but even the
awards made in States that are parties to the conventions but are
not covered by the reciprocity reservation might fall outside the
purview of Part II.
-Thus, the foreign awards, which can be enforced in India, are The
New York convention award made after 11 October 1960 and The
Geneva convention award made after 28 July 1924, but before the
concerned Government signed the New York convention.
-Since most of the countries have signed New York convention,
normally, New York convention awards are enforceable in India.
New York convention was drafted and kept in United Nations for
signature of member countries on 21st December, 1958. Each
country became party to the convention on the date on which it
signed the convention.

58
Contd………
Procedure to enforce foreign award
- The party which intends to enforce a foreign award has to produce the
arbitral award and agreement of arbitration in original or its certified copy
to the District Court having jurisdiction over the subject matter of the
award(Section 47).
Refuse to enforce foreign award by the court
-Court can refuse the enforcement of award only in cases specified in section
48.
-Section 48 of the 1996 Act enumerates the conditions for the refusal to
enforce a foreign award in an Indian Court.
-The Courts can refuse to implement the award only on limited grounds.
Grounds for refusal
- Thus, if the subject matter of the dispute or difference is not capable of
settlement by arbitration in India or if the enforcement of the award was
contrary to public policy of India, the Court may refuse to enforce the
award.
- Otherwise, the foreign award is enforceable through Court as if it is a
decree of the Court.
- If the Court declines to enforce the arbitral award, appeal can be made to
the Court where appeal normally lies from the District Court.
59
Contd…….
-However, no further appeal can be made except appeal to Supreme Court.
Probably, the aggrieved party may be able to approach International Court
of Justice, as the convention is an international convention, signed by
many of the member countries.
-The Supreme Court in Thyssen Stahlunion Gmbh Vs Steel Authority of
India Ltd (1999 (9)SCC 334), held that a foreign award given after the
commencement of the 1996Act could be enforced only under the
Arbitration and Conciliation Act, 1996. There is no vested right to have the
foreign award enforced under the Foreign Awards (Recognition and
Enforcement) Act, 1961.
-Thus, the Court further clarified that after the Arbitration and
Conciliation Act, 1996 has come into force, parties cannot agree to the
applicability of the Arbitration Act, 1940. The Arbitration and Conciliation
Act, 1996 would be applicable on or after the Act came into force. In cases
where arbitral proceedings have commenced before the coming into force
of the 1996 Act and are pending before the arbitrator, it is open to the
parties to agree that the 1996 Act be applicable to such arbitral
proceedings and they could so agree even before the coming into force of
the 1996 Act. There is nothing in the language of Section85 (2) (a) which
barred the parties from so agreeing.

60
 Conciliation
-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 Section-30 permits
the arbitral tribunal to “use mediation, conciliation or other procedures”,
for the purpose of reaching settlement.
Salient features of part-III of the Act, 1996.
-The Arbitration and Conciliation Act, 1996 Part III comprises of 21 sections
(Sections 61 to 81)dealing with various aspects of the process of
Conciliation.
-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.
-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 formal proceedings
and provides that the Code of Civil Procedure 1908 or the Indian Evidence
Act 1872 do not bind the conciliator.
-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 30. 61
Contd……
-There are three main exceptions to the application of this part III. –
 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 tortuous relationship may be resolved by
conciliation in accordance with the procedure prescribed under Part
III of the Arbitration and Conciliation Act, 1996.
Meaning & Definition of Conciliation
-The concept of Conciliation has now been given a statutory
recognition under the Arbitration and Conciliation Act, 1996.
However, the expression 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.
62
Contd…….
-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.
-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 of their dispute arising
out of or relating to a contractual or other legal relationship.
--However, the term ‘conciliation’ is gradually falling into disuse and
a process, which is pro-active, is also being regarded as a form of
mediation. 63
Contd….
Differences Between the Process of Conciliation & Mediation
-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.
-Conciliation means the adjustment and settlement of a dispute in a
friendly, un-antagonistic manner.
-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.”
-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 to achieve a settlement. 64
Contd……..
-Whereas “Mediation may be regarded as a half way house between
conciliation and arbitration.
The role of the conciliator is to assist the parties to reach their own
negotiated settlement and he may make suggestions as
appropriate.
-But, 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.
-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.
65
 Mediation & Conciliation-Interchangeable terms
-‘Mediation’ & ‘Conciliation’ are process whereby a third person
attempts to resolve a dispute by creating an environment of
empathy and openness in the hope of assisting the parties to
understand each others position and effect an agreement between
them.
-In mediation, there is third party, a mediator, who facilitates the
resolution process but does not impose a resolution on the parties.
-’Conciliation’ is a term used interchangeably with mediation and
sometimes used to differentiate b/n one of these processes(often
mediation) involving a more-pro-active mediator role, and the
other(conciliation) involving a more facilitative mediator ; but there
is no consistency in such usage.
-In both the procedures a successful completion of the proceedings
results in a mutually agreed settlement of dispute b/n the parties
though, in some jurisdictions, mediation is treated as distinct from
conciliation inasmuch as in mediation the emphasis is on more
positive role of the neutral third party than in conciliation. 66
 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.
-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 shall assist the parties in an independent and impartial
manner in their attempt to reach an amicable settlement of their dispute.
 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.
 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. 67
-A Conciliator is as an independent and impartial person and he must
enjoy confidence of both the parties.
-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.
-The number of Conciliator generally appointed for a conciliation
proceeding is one unless the parties agree and give mutual consent
to have more conciliators than one.
-The Conciliator will conduct the proceedings in a fair and judicious
manner, in order to do justice to each one of the parties.
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 while making a decision.
-Conciliator then proceeds to persuade the parties to come to a
settlement in the light of his opinion.
68
Contd…..
-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 solution.
-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 decisive, like the role of
an arbitrator or an adjudicator.
-The conciliator may, at any stage of the conciliation proceedings,
make proposals for a settlement of the dispute.

69
Contd…….
--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 solution.
-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 decisive,
like the role of an arbitrator or an adjudicator.
-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.

70
 Conduct of Conciliation Proceedings
Commencement of the proceedings
-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 rejected.
-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
- He can call for additional statement of facts and information in order to
enable him to give his suggestion to the parties.
- 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.

71
Contd…….
Classification of Conciliation Proceedings
-The Conciliation proceeding could be classified into two types namely,
-1) Facilitative conciliation and
-2) Evaluative conciliation.
 In facilitative conciliation, the conciliator avoids opinion and
judgments and he merely assists 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 binding.
Procedure of Communication b/n Conciliator & Parties
- Section 69 of Arbitration and Conciliation Act, 1996 contains the
provisions regarding communication between conciliator and
parties whether orally or in writing and about place of meeting.
72
Contd….
-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 party.
-The Supreme Court of India in Haresh Dayaram Thakur Vs State
of Maharashtra (2000(6) SCC 179) it was stated 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.

73
 Success of Conciliation Proceedings
-The success of a conciliation proceedings 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 endeavor to comply with requests by the conciliator
to submit written materials, provide evidence and attend meetings.
-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.
-The Supreme Court of India in Haresh Dayaram Thakur VS.State of
Maharashtra(AIR 2000 SC 2281), 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.

74
Contd……
Enforcement of Conciliation Proceedings
- In Mysore Cements Ltd Vs Svedal Barmac Ltd.(2003 (10) SCC 375)’
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.

- Further the Court observed that 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.

- The same thereafter could be enforced as a decree of the Court

under the Code of Civil Procedure 1908.

75
Termination of Conciliation Proceedings
-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 terminated
primarily by settlement.
-The conciliation proceedings are 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 are
terminated.
76
Contd……………
-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.
-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 conciliator and the administrative assistance
to facilitate the conduct of the conciliation proceedings.
-In addition to this, it also includes any other incidental expenses
incurred in connection with the conciliation proceedings and the
settlement agreement.
-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 provisions in the settlement agreement, the
cost shall be borne equally by the parties.
77
 Mediation
Introduction
-The former President of India Dr. A.P.J. Abdul Kalam , advocated the
need to encourage mediation as an alternative dispute resolution
mechanism in the following words:
“Mediation and Conciliation are definitely a faster method
of dispute resolution compared to the conventional Court
processes. Only thing is that we have to have trained mediators and
conciliators, who can see the problem objectively without bias and
facilitate affected parties to come to an agreed solution. In my
opinion, this system of dispute resolution is definitely a cost
effective system for the needy... Mediators must possess the
qualities of being a role model in the society, impeccable integrity
and ability to persuade and create conviction among the parties”.

-In order to emphasize the need of mediation in the process of

resolving the disputes, it is significant to know the characteristic
features of this method.
-At the simplest, mediation is an informal, voluntary process in which
an impartial person, trained in facilitation and negotiation
techniques, helps the parties to reach at a mutually acceptable
resolution. 78
Contd……..
The main features of Mediaton
-Prof. Robert Baruch Bush and Prof. Joseph Folgen say that, “In a
transformative approach to mediation, mediating persons
consciously try to avoid shaping issues, proposals or terms of
settlement, or even pushing for the achievement of settlement at
all.
-Instead, they encourage parties to define problems and find solutions
for themselves and they endorse and support the parties’ own
efforts to do so.”
-In some situations, mediation is a form of negotiation carried out with
the assistance of a third party.
-The mediator, in contrast to the arbitrator or judge, has no power to
impose an outcome on disputing parties.
-Despite the lack of ‘teeth’ in the mediation process, the involvement
of a mediator alters the dynamics of negotiations.
79
 Definition and Scope of Mediation
-Mediation can be defined as a process of resolving dispute by which the
‘mediator’ a neutral person, works with the parties to a dispute to bring
them to an agreement that they can all accept.
-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.
-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.
-It is thus, impracticable to provide a final definition of the process of
80
mediation.
 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 settle.
- 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 recognize potential strengths of the other side.
- Mediator in general is a knowledgeable person with respect to the
subject matter of the controversies.
81
Contd……..
-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 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 MEDIATION PROCESS
-There is no definite procedure to be adopted by the mediator for
conducting mediation. The parties may agree on the procedure to
be followed by the mediator in the conducting the mediation
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.
82
Contd………
-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 chose 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.
-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 to participate in the process of mediation.
-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. 83
Contd……..
-The process can starts with establishing the basic 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.
-These steps can make the parties to get more realistic about the
strengths and the weaknesses of their case. 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.
84
Contd…….
Court Annexed Mediation
-Section 9 of the Family Courts Act, 1984, Section 89 and Order XXXII-A of the
Code of Civil Procedure, 1908 make it obligatory for the Court to give a fair
chance to a conciliated or negotiated settlement before adjudication is
embarked upon.
-The conceptualization of Court connected mediation was with the objective
of streamlining the extended procedures of litigation and conserving
judicial resources by shifting the burden of pending cases, evidences of
success of such programs can be gathered from the its popularity in the
United States and other developed countries.
-The first Court annexed mediation centre in India was established in Tamil
Nadu, a similar centre in the Delhi High Court and the Bombay High Court
was instituted on the lines of the Tamil Nadu model.
-These centers are technologically state-of-the-art facilities and located well
within the Court premises, sending psychological message to the
disputants and general public that they are under the umbrella of the
Court.
- The mediation movement in these States has picked up substantially with
establishment of these centers. Delhi District Courts are equipped with
the Court -annexed mediation facilities and have shown exceptional
results in such short time span.
85
Types of disputes resolved by mediation
• Aviation, Banking and finance
• Boundary Disputes, & Broker Liability
• Business Disputes & Charities
• Clinical & Medical Negligence
• Competition , Commercial agencies & Commercial contracts
• Construction & Development Corporate finance
• Distribution agreements & Employment
• Energy Engineering & Manufacturing Disputes
• Environmental issues & Financial Services
• Franchises Group/Class actions
• Information Technology , Insolvency and Bankruptcy
• Insurance , Reinsurance ,Intellectual Property, Trade Mark and Copyright
• Landlord & Tenant , Leasing & Supply Contracts
• Lender Liability, Libel & Defamation
• Maritime , Shipping & Multiparty actions
• Neighbour Disputes Nuisance
• Oil & Gas Contracts, and Partnership Disputes
• Passing-off & Actions Pensions
• Personal Injury & Pollution Claims
• Product Liability & Personal Indemnity
• Property & Real Estate ,Publishing, Television & Broadcasting Rights
• Railway Industry & Transport Regulatory Disputes
• Securities & Shares Shareholder’s Disputes 86
Contd…….
Finality & Enforcement of Mediation proceedings
-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.

87
 NEGOTIATION
-It is true that, nothing is more satisfying and more smoothing than a
cordially negotiated amicable settlement because, it protects and
preserves personal and business secrets, relationships and reputations
that might otherwise 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, where as 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 framework.
88
Contd……
-The Arbitration and Conciliation Act ,1996 gives legislative recognition
to this concept under Section 30.
-Section 30 provides that, ‘ It is not incompatible with an arbitration
agreement for an arbitral 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 the arbitral 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. In
Sweden the disputed parties meet in a spirit of determination to
agree, and they are said to consider the non arrival at an amicable
settlement almost a disgrace to themselves.

89
 Meaning of Negotiation
-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.
-Negotiation is the simplest and most purposeful 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.
-The process of Negotiation thus enables the parties to iron out their
differences and dispute by direct face-to-face interaction.
-If there is any need of advice felt by them on 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.
-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.
90
Process of Negotiation
-The process of negotiation gives the parties an option to go over a wide
range 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 weakness of their respective
cases and the parties have their market reputation at stake.
-This gives a greater chance of reaching an amicable settlement by
negotiations.
Negotiation involves three basic elements:
 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 play out.
-‘Behavior’ to the relationships among these parties, the
communication between them and 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 them.
91
 Lok- Adalats as a unique ADR mechanism in
India
Abraham Lincoln observed:
"Discourage litigation. Persuade your neighbours to compromise wherever you
can. Point out to them how the nominal winner is often a real loser - in fees,
expenses, and waste of time. As a peacemaker, the lawyer has a superior
opportunity of being a good man. There will still be business enough."
Introduction:
- The concept of Lok Adalat was pushed back into oblivion in last few centuries
before independence and particularly during the British regime. This concept
is, now, again very popular and is gaining historical momentum.
-Undoubtedly, Lok Adalat (Peoples' Court) concept and philosophy is an
innovative Indian contribution to the world jurisprudence. It has very deep
and long roots not only in the recorded history but even in pre-historical
era.
-It has been proved to be a very effective alternative to litigation. Lok -Adalat
is one of the fine and familiar fora which has been playing an important
role in settlement of disputes.
-The system has received laurels from the parties involved in particular and
the public and the legal functionaries, in general. It also helps in
emergence of jurisprudence of peace in the larger interest of justice and
wider sections of society. 92
Contd……..
Why Lok-Adalats ?
-Equal justice and free legal aid are hand in glove (Art-39-A). -The statutory
mechanism of legal services includes concept of Lok-Adalat in the Legal
Services Authorities Act. The legal aid, in fact, is a fundamental human right
(M.H Hoskote v. State of Mharastra)
- Indian socio-economic conditions warrant highly motivated and sensitized
legal service programmes as large population of consumers of justice
(heart of the judicial anatomy) are either poor or ignorant or illiterate or
backward, and, as such, at a disadvantageous position.
-The State, therefore, has a duty to secure that the operation of legal system
promotes justice on the basis of equal opportunity.
-Alternative dispute resolution is, neatly, worked out in the concept of Lo
Adalat. It has provided an important juristic technology and vital tool for
easy and early settlement of disputes.
-It has again been proved to be a successful and viable national imperative
and incumbency, best suited for the larger and higher sections of the
present society and Indian system.
-The concept of legal services which includes Lok Adalat is a "revolutionary
evolution of resolution of disputes".

93
Contd……
Meaning & Definition of Lok-Adalat
-The word Lok-Adalat means a ‘People’s Court’. However, it is not a
court of law in it truest and accepted norm and connotation.
-”Lok-Adalat” is defined “as a forum where efforts, aimed at bringing
about settlement of disputes b/n the parties, are made through
conciliatory and pervasive efforts”.
-Undoubtly, Lok-Adalat (People’s Court) concept and philosophy is an
innovative Indian contribution to the world jurisprudence.
- Lok Adalat (people’s courts), established by the government settles
dispute through conciliation and compromise.
• The First Lok Adalat was held in Gujarat in 1982. Lok-Adalat accepts
the cases which could be settled by conciliation and compromise,
and pending in the regular courts within their jurisdiction.
-

94
 Working procedures of the Lok-Adalas
- The Lok Adalat is presided over by a sitting or retired judicial officer as the
chairman, with two other members, usually a lawyer and a social worker.
- There is no court fee. If the case is already filed in the regular court, the
fee paid will be refunded if the dispute is settled at the Lok Adalat.
- The procedural laws, and the Evidence Act are not strictly followed while
assessing the merits of the claim by the Lok Adalat.
- Main condition of the Lok Adalat is that both parties in dispute should
agree for settlement. The decision of the Lok Adalat is binding on the
parties to the dispute and its order is capable of execution through legal
process.
- No appeal lies against the order of the Lok Adalat. Lok Adalat is very
effective in settlement of money claims. Disputes like partition suits,
damages and matrimonial cases can also be easily settled before Lok
Adalat, as the scope for compromise through an approach of give and take
is high in these cases.
- Lok Adalat is a boon to the litigant public,
95
 Legal Services Authorities Act 1987
-Parliament enacted the Legal Services Authorities Act 1987, and one of the
aims for the enactment of this Act was to organize Lok Adalat to secure
that the operation of legal system promotes justice on the basis of an
equal opportunity.
-The Act gives statutory recognition to the resolution of disputes by
compromise and settlement by the Lok-Adalats.
-According to Legal Services Authorities (Amendment) Act 1994 effective
from 09-11-1995 has since been passed, Lok-Adalat settlement is no
longer a voluntary concept.
By this Act Lok-Adalat has got statutory character and has been legally
recognized.
Salient features of the Act are: (Section 19)
1. Central, State, District and Taluk Legal Services Authority has been
created who are responsible for organizing Lok Adalats at such
intervals and place.
2. Presiding officers for Lok Adalat comprise the following: -
A. A sitting or retired judicial officer.
B. other persons of repute as may be prescribed by the State
Government in consultation with the Chief Justice of High
Court. 96
Contd……
Section 20: Reference of Cases
Cases can be referred for consideration of Lok Adalat as under:-
 1. By consent of both the parties to the disputes.
 2. One of the parties makes an application for reference.
 3. Where the Court is satisfied that the matter is an appropriate one to be taken
cognizance of by the Lok -Adalat.
 4. Compromise settlement shall be guided by the principles of justice, equity,
fair play and other legal principles.
 5. 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 : After the agreement is arrived by the consent of the parties, award is
passed by the conciliators. The matter need not be referred to the concerned
Court for consent decree. The provisions envisages as under:
 1. Every award of Lok Adalat shall be deemed as decree of Civil Court.
 2. Every award made by the Lok Adalat shall be final and binding on all the parties
to the dispute.
 3. No appeal shall lie from the award of the Lok Adalat.
97
Contd…..
• Section 22
• Every proceedings of the Lok Adalat shall be deemed to be
judicial proceedings for the purpose of :-
-1. Summoning of Witnesses.
-2. Discovery of documents.
-3. Reception of evidences.
-4. Requisitioning of Public record

98