Arbitration and Mediation in reshaping the Indian legal system

With the fast-paced growth and demand of the litigation sector, the burden on the judiciary increases. As a consequence, there is a huge delay in dispute resolution. This creates a big hurdle in the pathway of resolving conflicts. This is when ADR comes into play. This article helps to understand the basics of Alternate Dispute Resolution Mechanism. It gives a brief account of the types of ADR with special emphasis on Arbitration and Mediation. The article also speaks about laws on the above-mentioned methods of ADR. It works its way to the conclusion pondering upon the contribution of ADR in reshaping the Indian legal system and also touches the problems in the way of ADR.

Introduction

What is ADR in India?

Alternate Dispute Resolution (ADR) system refers to the use of non-adversarial techniques of adjudication of legal disputes. The history of ADR in India finds its roots before the advent of the British colonial era. Colonization introduced India to the modern form of judiciary i.e. the now known adversarial model of the Indian judiciary. The model was established to bring in a uniform legal system in India under the English courts. However, even before such a formalistic set-up of the judiciary, the Indian legal system consisted of several native ADR techniques. In the Vedic era, India witnessed specialized tribunals such as Kula, Shreni and Puga, which dealt with disputes of family, internal disputes in business, disputes in associations respectively. In these institutions, interest-based negotiations with the help of a neutral third party seeking to identify the needs and concerns of the parties in dispute, whilst bringing them to an adjustment were done. “Panchayat” or “People’s court” continued to be the most important center of dispute resolution in villages.

Types of ADR in India

There are majorly four types of ADRs observed:

1. Arbitration

2. Mediation

3. Conciliation

4. Administrative tribunals [1]

The system of Lok Adalat and Ombudsman [2] pays a major contribution to the system of ADR as well.

Arbitration

Arbitration is a term derived from the nomenclature of Roman law. It is a private arrangement of solving disputes in a less adversarial, less formal and much more flexible forum and abiding by the judgment of a selected person i.e. the neutral third party, instead of carrying it to the established courts of justice.

Process:

Arbitration can be done in two ways i.e. by the way of agreement or through the reference of the court, formally known as arbitration agreement and court referral [3] of arbitration respectively. Under arbitration, parties have the freedom to select a qualified expert known as an arbitrator. The process is confidential, unlike court proceedings which are open. This is the key feature, which makes arbitration popular for commercial disputes. In this way, companies can come to an agreement whilst maintaining their commercial reputation and preventing public disclosure of their on-going legal disputes. The decision rendered by an arbitrator is known as an arbitral award. Similar to a judgment of court it is binding on the parties in dispute. Once the award is rendered, it is recognized and enforced. The arbitrator also holds power and authority to grant interim measures while the proceedings are undergoing. While an arbitral award is similar to a judgment it does not hold precedential value [4].

Types of Arbitration: [5]

1. Domestic Arbitration

2. Foreign Arbitration

3. Ad-hoc Arbitration

4. Institutional Arbitration

5. Statutory Arbitration

6. International commercial Arbitration

Laws on Arbitration:

The Arbitration and conciliation Act of 1996 is the earliest form of legislation that governs the process of arbitration in India. The said Act provides an elaborate recognition of the concept of arbitration, largely influenced by significant movements of judicial reforms and conflict management across the world. We may also refer to the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration 1985.

The Indian Arbitration and Conciliation Act of 1996 is similarly modeled on the UNCITRAL model law.

Mediation

Mediation is a method of alternate dispute resolution in which parties appoint a neutral third party to facilitate the mediation process in order to help the parties to achieve an acceptable and voluntary agreement. It is based on the voluntary will of the party. It’s a flexible and informal technique of dispute resolution in comparison of the adversarial method of dispute resolution or even in comparison to arbitration. It is more formal than a negotiation but less formal than arbitration or litigation.

It is inexpensive, fast, and confidential. The outcome of this process is not binding on the parties in dispute, which is in contrast to a judgment of a court or an arbitral award. Though it is not binding it can be turned into a legally binding contract if the parties agree to it. 

The process of mediation is no more, no less, similar to that of arbitration, the only difference being in the nature of the outcome.

Types of mediation: [6]

  1. Evaluative mediation
  2. Facilitative mediation
  3. Transformative mediation
  4. Mediation with arbitration
  5. Online mediation

Mediation with Arbitration

Mediation shows a good effect when it is coupled with arbitration particularly because arbitration has a binding force. This process is called mediation /arbitration. The process begins as a standard mediation. However, if the mediator is unable to bring parties to a conclusion the mediator becomes an arbiter.

However, there are some cases where the parties are uneasy to accept their mediator as their arbitrator. While in some cases parties’ awareness that their mediator can turn into an arbitrator makes them not open to him or her while the process of mediation. This concern can be addressed by using a different individual for mediation and arbitration. In this way, the parties won’t feel pressured and the process won’t be vulnerable to corruption. 

Process of mediation

The process is quite similar to that of arbitration. The neutral third party in the process of mediation is known as a mediator. Mediation does not follow any set of rules the mediation, typically mediators set forth rules that they find important in the process further. The rules to become a licensed mediator differ from state to state and place to place, regarding requirements for mediator certification.

Mediation is often triggered in three ways:

  1. A pre-litigation stage that is before initiating the formal judicial proceedings
  2. Court references: the parties may agree to mediate after the formal court proceedings are initiated.
  3. Post-trial appellate stage the mediation can take the course after the proceedings are started or even post-trial.

Contractual disputes, disputes from strain relationships, disputes for continuity of relationships (for example neighbours easement rights) and consumer disputes are mostly suited for mediation.

Conciliation

Conciliation is a similar process to mediation. However, the key difference between mediation and conciliation is in the take of the neutral third party. In mediation, the mediator helps parties to reach a mutually agreeable solution, but the role of a conciliator goes beyond that. A conciliator may be an interventionist. He or she may suggest potential solutions to the parties in order to resolve their claim and dispute.

Laws on Mediation

Both mediation and conciliation are governed by section 89 of the 2002 Amendment of Civil Procedure Code 1908. The code is primarily, as the name suggests, for governing the method, procedure and legal practice of civil dispute. Section 89 only refers to court-referred mediation. Pre-litigation or post-litigation mediation is not yet governed by any law in India.

Similarly, conciliation only finds a reference in section 89 of CPC 1908. The process and method of conciliation have been described in the Arbitration and Conciliation Act of 1996 and in the Industrial Disputes Act 1947, reference to conciliation as a viable means of resolving disputes in the labor sector is made.

Recently in the year 2011, the Supreme Court of India declared that mediation proceedings were confidential in nature, and only an executed settlement agreement or a statement that the mediation proceedings were unsuccessful, should be provided to the court by the mediator. 

The Law Commission of India in its 129th Report recommended that it should be made obligatory for the Court to refer disputes to mediation for settlement.

 

Advantages of ADR

The methods of ADR propose some vital benefits which counter the disadvantages seen in the existing conventional method of dispute resolution. 

It provides a speedier, informal and cheaper way. It is a more convenient forum as parties can choose the time, place and procedure of dispute resolution. They can even opt for a technical expert rather than just a legal expert in case of a technical dispute. 

ADR is also encouraged in the cases of long pendency and to reduce delays.

Role of Arbitration and Mediation in reshaping Indian legal system

ADR can prove to be a big deal in reshaping the legal system of India.

It fills in for the problems faced by the conventional methods of dispute resolution lack:

  1. The lack of courts and judges create an inadequacy within the justice delivery system.
  2. The increasing number of litigation in India due to increasing population complexities disputes and obsolete continuation of some pre-existing legal statutes makes it even harder to escape the delay.
  3. The increasing cost of litigation in prosecuting and defending a case, increasing court fees, lawyer’s fees and incidental expenses make conventional methods all the more expensive and unapproachable by a common man.
  4. Delay in cases leads to the pendency in all courts.

In light of the need and benefits provided by the ADR, it can be said that it is a much successful alternative to court trials.

The rise of the ADR movement in India indicates a huge contribution towards reviving the litigants’ faith in justice delivery mechanisms.

Recent observations have shown the Supreme Court to have a favorable attitude towards mediation. Also, mediation seems to have become the most approached means of dispute resolution with regard to the settlement of commercial disputes.

Problems lying ahead of ADR 

Lack of Awareness is perhaps one of the largest reasons for the failure in the implementation of ADR in India. The legislation exists on the constitutional and conventional level but not much effort has been made to build awareness of ADR as an alternative to litigation.

Legal Education in ADR methods is not as widely taught and practiced in law schools in India, in comparison to the United States. ADR clinics are few, arbitration and conciliation proceedings are not specialized, and there is only little encouragement by law schools to take on professions in ADR. 

Additionally, as a result of no legal education and no degree to pave the way for an individual to specialize in ADR, there is no specific profession. Many conciliators and mediators are retired judges or currently practicing attorneys so there is no or little specialization. 

Absence of Quality Training Programs the United States Federal Mediation and Conciliation Service is one such reputable organization that provides a well-trained body of mediators, with enough time to handle various disputes, thus rendering an effective service. In contrast, the Indian mediation, conciliation and arbitration officers lack sufficient quality training, infrastructural support systems such as information, legal and administrative support, and time to be effective. 

Many times, professionals in the law field will suggest by default litigation to solve disputes because litigants and courts have an active interest in promoting litigation to use their services. As a result, this can mean legal professionals not referring to ADR when matters would be perfectly compatible in an ADR process.

Conclusion

From the article above one can gather basics on the major forms of ADR in India and their workings. 

It can also be seen that ADR in India is still relatively in its infancy stage. India’s first arbitration enactment was the Arbitration Act of 1940. However, arbitration under this law was never effective and ultimately led to litigation as a result of the challenges to the awards. In order to strengthen the process of arbitration, the government enacted the Arbitration & Conciliation Act of 1996 which said that the award can be challenged only on the limited ground and in the prescribed manner and ultimately, the Act provided a statutory framework for this medium of alternate dispute resolution. 

However, the act only deals with civil matters and there is no specific act that pertains to all the mediums of ADR in India, thus showcasing a need to improve the current system.

With a population of over 1.3 billion people, India is the most populated democracy. Despite various autonomous arbitral bodies and provisions for arbitration, mediation and conciliation for particular categories of cases, litigation still continues to remain popular amongst the Indian public.

In its simplest form, ADR seeks to get beyond the hurdles of the present difficulties and resolve matters in a way that does not just stop the discussions but allows the parties in dispute to build a better relationship for the future. It is important to note that ADR would not, in any way, replace the judicial system but instead it is there to make the judicial system more efficient and effective. It stands to fill the loopholes and bubbles in the existing conventional method of dispute resolution. It helps save from delays in hearings, excessive costs, the pendency of cases and so on. Rather it provides a speedier, more convenient and flexible method of dispute resolution, whilst keeping the confidentiality intact. It is due to this latter point that the necessity of ADR in India is ever more significant. 

In order to improve the current status and really ensure the growth of ADR, steps must be taken to ensure efficiency within the processes, such as reducing delays, dispel negative images by establishing a code of conduct, regulating ADR training, and increase awareness of ADR and its accessibility. By taking steps to improve its processes, ADR can truly flourish in India and can effectively serve as an alternative to litigation for dispute resolution.

FAQs

 What is ADR?

Alternate Dispute Resolution (ADR) system refers to the use of non-adversarial techniques of adjudication of legal disputes.

What is the difference between Arbitration and Conciliation?

It is inexpensive, fast and confidential. The outcome of this process is not binding on the parties in dispute, which is in contrast to a judgment of a court or an arbitral award. 

The process of mediation is no more, no less, similar to that of arbitration, the only difference being in the nature of the outcome.

What are the benefits of ADR?

The methods of ADR propose some vital benefits which counter the disadvantages seen in the existing conventional method of dispute resolution. 

It provides a speedier, informal and cheaper way. It is a more convenient forum as parties can choose the time, place and procedure of dispute resolution. They can even opt for a technical expert rather than just a legal expert in case of a technical dispute. 

ADR is also encouraged in the cases of long pendency and to reduce delays.

What are the drawbacks of the conventional method of dispute resolution?

  1. The lack of courts and judges create an inadequacy within the justice delivery system. 
  2. The increasing number of litigation in India due to increasing population complexities disputes and obsolete continuation of some pre-existing legal statutes makes it even harder to escape the delay. 
  3. The increasing cost of litigation in prosecuting and defending a case, increasing court fees, lawyer’s fees and incidental expenses make conventional methods all the more expensive and unapproachable by a common man.
  4.  Delay in cases leads to the pendency in all courts.

Can ADR replace the prevalent system of litigation?

ADR would not, in any way, replace the judicial system but instead it is there to make the judicial system more efficient and effective. It stands to fill the loopholes and bubbles in the existing conventional method of dispute resolution. It helps save from delays in hearings, excessive costs, the pendency of cases and so on. 

References

  1. https://dictionary.cambridge.org/dictionary/english/tribunal
  2. https://www.investopedia.com/terms/o/ombudsman.asp#:~:text=An%20ombudsman%20is%20an%20official,by%20mediation%20or%20by%20making
  3. https://www.madhyastham.com/mediation-services/court-referred-mediation
  4. https://www.yourdictionary.com/precedent
  5. http://lawtimesjournal.in/types-of-arbitration/
  6. https://www.pon.harvard.edu/daily/mediation/types-mediation-choose-type-best-suited-conflict/

Book referred: Legal Studies for Class XII (CBSE) Approved by Bar Council of India

http://cbseacademic.nic.in/web_material/doc/Legal_Studies/Legal%20Studies%20Text%20Book%20Class%20XII.pdf

Articles and works referred: 

https://www.mediate.com/articles/impact-of-mediation-in-india.cfm

https://svym.org/viis_publications/uploads/papercut/pdf_12.pdf

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