CERTIFICATE

This is to certify that SHARDENDU PANDEY, a bona fide student of

B.A.LL.B(H) 4th year, Faculty of Law, Jamia Millia Islamia, New Delhi has
satisfactorily prepared the Dissertation under the title “ALTERNATIVE
DISPUTE RESOLUTION SYSTEM IN INDIA” under my supervision. To the
best of my knowledge and belief this work is original. I am satisfied that
dissertation is worthy of consideration for the award of degree of Law.

Place:

Date:

SIGNED BY SUPERVISOR:

Adv. SUKESH MISHRA

Faculty of Law

Jamia Millia Islamia

1
 DECLARATION

I hereby declare that the entire work embodied in the present work titled
ALTERNATIVE DISPUTE RESOLUTION SYSTEM IN INDIA is written
by me and submitted to FACULTY OF LAW, JAMIA MILLIA ISLAMIA,
NEW DELHI. The present work is of original nature and the conclusions are
based on the data collected by me. To the best of my knowledge this work has not
been submitted previously, for the award of any degree or diploma, to this or any
other university.

Date:

Place:

(Signature of the candidate)

SHARDENDU PANDEY

IV YEAR

ROLLNO

16BLW048

2
 Acknowledgement

I feel delighted to thank all those whose help and encouragement made this work
possible. Firstly, I would like to thank my supervisor Adv. SUKESH MISHRA,
FACULTY OF LAW, JAMIA MILLIA ISLAMIA NEW DELHI
who is my supervisor, for her valuable guidance, constructive help and
wholehearted support given to me from time to time during my research work

Apart from the above, I would like to thank all my seniors, colleagues and Library
staff at FACULTY OF LAW, JAMIA MILLIA ISLAMIA who
helped me a lot and cooperated me in providing relevant books and material from
time to time during the research work. I am greatly indebted to the various writers,
jurists and all others from whose writings and work I have taken help to complete
this dissertation.

3
 ABBREVIATIONS

ADR: ALTERNATIVE DISPUTE RESOLTION

UNCITRAL: UNITED NATIONS COMMISSIONS ON INTERNATIONAL

TRADE LAW

UN: UNITED NATIONS

SCC: SUPREME COURT CASES

ONGC: OIL AND NATURAL GAS CORPORATION

ICDR: INTERNATIONAL COURT OF DISPUTE RESOLUTION

ICC: INTERNATIONAL CHAMBER OF COMMERCE

IP: INTELLECTUAL PROPERTY

ICA: INTERNATIONAL COMMERCIAL ARBITRATION ISDS:

INTERNATIONAL STATE DISPUTE SETTLEMENT

BALCO: BHARAT ALUMINIUM COMPANY LTD.

ODR: ONLINE-DISPUTE RESOLUTION

AIR: ALL INDIA REPORT

FTC: FEDERAL TRADE COMMISSION

NCAIR: NATIONAL CENTRE FOR AUTOMATED INFORMATION

RESEARCH
ICANN: INTERNET CORPORATION FOR ASSIGNED NAMES AND
NUMBERS

B2C: BUSINESS TO COMMERCE

ICT: INFORMATIONS AND COMMUNICATIONS TECHNOLOGY

4
 TABLE OF CASES

• Brij Mohan Lal vs. Union of India & Other , (2002)

• Nusserwanjee Pestonjee and Ors. v. Meer Mynoodeen Khan Wullud
Meer Sudroodeen Khan Bahadoor (1855) 6 MIA 134
• Gajendra Singh vs. Durga Kunwar (1925)ILR 47All637
• Dinkarrai Lakshmiprasad vs. Yeshwantrai Hariprasad AIR 1930 Bom 98
• Bharat Aluminium Co. (1999) SC 565
• Bhatia International vs. Bulk Trading SA1 ("Bhatia International") (2003)
5 SCC (Jour) 22
• Bharat Aluminum and Co. vs. Kaiser Aluminium and Co. (BALCO)
• Indowind Energy Ltd V. Wescare (India) Ltd AIR 2010 SC 1793,
• Haresh Dayaram Thakur v. State of Maharashtra and Ors. AIR (2000) SC
228
• In Mysore Cements Ltd. v. Svedala Barmac Ltd AIR (2003) SC 3493
• Salem Advocate Bar Association v. Union of India (2005) 6 SCC 344
• Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd JT
2010 (7) SC 616
• B.P. Moideen Sevamandir v. A.M. Kutty Hassan 2009 (2) S.C.C. 198
• Salem Bar Association(I) AIR 2003 SC 189
• State of Punjab v. Phulan Rani, AIR 2004 SC 4105; See also Union of India
v. Ananto 2007 SC 1561
• Sitanna v. Viranna AIR 1934 SC 105
• Salem Advocate Bar Association, Tamil Nadu v. U.O.I, (2005) SCC 6
(344)
• In Rajasthan State Road Transport Corporation v. Krishna Kant Ibid
• Delhi High Court in Bawa Masala Co. v. Bawa Masala Co. Ltd Pvt. AIR
2007 Delhi 284
• TDM Infrastructure Pvt . Ltd. v. UE Development India Pvt. Ltd 2008 (2)
UJ SC 0721

5
• Koch Navigation Inc v Hindustan Petroleum Corp Ltd (1989) 4 SCC 259
• Atiabari Tea Co. Ltd v State of Assam (1989) 4 SCC 259
• Bhatia International v Bulk Trading S.A (2002) 4 SCC 105
• Bharat Aluminium v Kaiser Aluminium (2012) 9 SCC 552
• Maruti Udyog Limited v. Maruti Software Pvt. Ltd (2009) SCC 146

6
 TABLE OF CONTENTS
S. PARTICULARS PAGE
No. NO.

1 OVERVIEW OF ADR 10
2 HISTORICAL BACKGROUND 11
3 OBJECTIVE OF THE STUDY 12
4 RESEACRH METHODLOGY 12
5 INTRODUCTION 13
6 SALIENT FEATURES OF ADR 15
7 MEANING & DEFINITION 18
8 ADVANTAGES & DISADVANTAGES 23
9 DIFFERENT TYPES OF ADR 28
10 ARBITRATION 31
• HISTORICAL BACKGROUND 32
• ARBITRATION ACT 1940 32
• ENFORCEMENT OF ARBITRATION ACT 1996 33
• ARBITRATION ACT 1940 V/S ACT OF 1996 34
• AMENDMENT OF 2005 35
• AMENDMENT IN 2015 36
• TYPES OF ARBITRATION 39
• ARBITRATION PROCEDURE 42
• ADVANTAGES
46
• DISADVANTAGES
47

11 CONCILIATION 49
• DEFINITION & MEANING 49
• HISTORY 50
• APPLICATION & SCOPE 51

7
 • ROLE OF CONCILIATOR 53
• CONCILIATION VIS-À-VIS ARBITRATION 53
• APPOINTMENT OF CONCILIATOR 55
• PROCEDURE 55
• ADVATNAGES 61

12 MEDIATION 62
• CONCEPT 62
• PROCESS 63
• TYPES 66
• QUALIFICATIONS OF MEDIATOR 67
• ROLE OF MEDIATOR 68
• ANALYSIS 69

13 JUDICIAL SETTLEMENT 70
JUDICIAL SETTLEMENT IN INDIA 71
14 LOK ADALAT 73
• CONCEPT 73
• LEVELS & COMPOSITION 75
• ADVANATGES 77

8
15 ONLINE DISPUTE RESOLUTION 79
• CONCEPT 79
• GROWTH & EVOLUTION 81
• MEANING 84
• ODR IN INDIA 86
• CONSTITUTIONAL MANDATE 89
• NEED FOR ODR 90
• OBJECTIVE 92
• ADVANTAGES 94

• DIADVANTAGES 95
• ANALYSIS 96

16 LEGISLATIVE RECOGNITION OF ADR 97

17 ADR U/S 89 OF THE CODE OF CIVIL PROCEDURE 103
18 WHY RESORT TO ADR ? 107
19 INTERNATIONAL COMMERCIAL ARBITRATION 113
20 COURT PROCEEDING 118
21 NATIONAL SEMINAR ON EMERGING TRENDS OF 120
ADR IN INDIA
22 CONCLUSION & SUGGEESTIONS 124

9
“THE LAW OF WIN-WIN SAYS, “LET’S NOT DO IT YOUR WAY OR
MY WAY; LET’S DO IT THE BEST WAY”. -GREG ANDERSON

AN OVERVIEW OF ALTERNATIVE DISPUTE RESOLUTION

With India opening up its markets in the early 1990’s the Indian legal and judicial
system has had to come to terms with the reality of globalization as well. As a
large country, both in terms of population and area, there is tremendous pressure
on India’s resources and its institutions. The legal system is no exception to this.

There has however, been a slow and steady pace of reform in the legal and judicial
system. India still has a long way to go, but will undoubtedly get there. In fact,
the pace has picked up in recent times as is evident from the enactment of the
Commercial Courts, Commercial Division and Commercial Appellate
Division of High Courts Act, 2015 (“Commercial Courts Act”) and the
Arbitration and Conciliation (Amendment) Act, 2015 (“Arbitration Amendment
Act”). The backlog of cases in courts across the country is reducing slowly and
the acceptance of alternate dispute resolution is increasing. The Commercial
Courts Act, along with the Arbitration Amendment Act, promises to improve the

10
traditional legal system and clean up the inefficiencies that had crept into the
system.1

Alternative Dispute Resolution was as an alternative to the traditional dispute

resolution mechanism, litigation, which had become costly, time consuming, did
not give the parties control over the outcome of their disputes and was generally
cumbersome. ADR refers to a variety of techniques for resolving disputes without
resort to litigation in the courts.2 The concept behind the introduction of ADR
methods was, inter alia, to reduce the delays and costs associated with litigation;
to introduce relatively less formal methods of dispute resolution; to introduce
consensual problem solving and empower individuals by enabling them to control
the outcome of their dispute and develop dispute resolution mechanisms that
would preserve personal and business relationships.

ADR processes were intended to produce better outcomes all round. 3

HISTORICAL BACKGROUND OF THE ADR SYSTEM IN INDIA

Dispute resolution outside of courts is not new; societies world-over have long
used non-judicial, indigenous methods to resolve conflicts. What is new is the
extensive promotion and proliferation of ADR models, wider use of
courtconnected ADR, and the increasing use of ADR as a tool to realize goals
broader than the settlement of specific disputes. 4

1
Saurab Kurukshetha ,Alternate dispute resolution mechanism: A case study of delhi (2012) (unpublished
dissertation, University of Delhi)
2
Paradigm of Alternative Dispute Resolution by Winne Sithole, available at:
https://core.ac.uk/download/pdf/43165628.pdf (visited on November, 20th 2018)
3
D. Umamaheswari “A study on the role of alternative dispute resolution methods in reducing the crisis of
judicial delays and arrears”
4
Alternative Dispute Resolution, Practitioners’ Guide, Centre for Democracy and Governance, Washington,
1998, available at:
http://www.usaid.gov/our_work/democracy_and_governance/publications/pdfs/pnacb895.pdf (visited on
November, 20th ,2018)

11
Alternate Dispute Resolution system is not a new experience for the people of
this country also. It has been prevalent in India since time immemorial. Legal
history indicates that down the ages man has been experimenting with procedure
for making it easy, cheap, unfailing and convenient to obtain justice. Procedure
for justice is indicative of the social consciousness of the people. Anywhere law
is a measuring rod of the progress of the community. 5 Ancient system of dispute
resolution made a considerable contribution, in reaching resolution of disputes
relating to family, social groups and 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.6

OBJECTIVES OF THE STUDY

The concise objectives of this research are to ascertain, examine and analyse the
concept and law relating to ADR, to further ascertain, examine and analyse the
framework, avenues, practices and procedures relating to ADR and more
specifically relating to four individual ADR processes namely Mediation,
Conciliation, Lok Adalats & Permanent Lok Adalats and Arbitration with
reference to Delhi and to further ascertain and analyse their necessity, advantages
and shortcomings and further to evaluate their efficacy and accomplishments
again with reference to Delhi and to further formulate plausible remedial

5
“Ancient Indian Government” available at: http://www.culturalindia.net/indian-history/ancientindia/ancient-
government.html ( visited on November,20th ,2018)
6
Anil Chawla “Republic in ancient India” available at: http://www.samarthbharat.com/files/republic.pdf
(visited on November, 20th 2018)

12
measures for overcoming the shortcomings and propose suggestions for their
better and more effective implementation and progress in Delhi.

RESEARCH METHODOLOGY

This study has been a combination of doctrinal as well as empirical research.

Extensive doctrinal research has been done on the subject and both primary and
secondary sources, from India as well as from foreign jurisdictions have been
analysed. The empirical research was conducted through observation as well
through interviews (both structured and unstructured) inter alia using the
questionnaire method. Individual cases were also examined and analysed so as to
further understand the practical aspects in a better manner. This research work is
also based on my personal observations and the experiences and opinions of the
other members of the legal fraternity. I also attended various conferences,
refresher courses and trainings on ADR which enabled me to ascertain the
viewpoints of other members of the legal fraternity and understand the nuances
and practicalities concerning the subject in a broader perspective.

INTRODUCTION

Dispute resolution is an indispensable process for making social life peaceful.

Dispute resolution process tries to resolve and check conflicts, which enables
persons and group to maintain co-operation. It can thus be alleged that it is the sin
qua none of social life and security of the social order, without which it may be
difficult for the individuals to carry on the life together. 7

Alternative Dispute Resolution (ADR) is a term used to describe several different

modes of resolving legal disputes. It is experienced by the business world as well
as common men that it is impracticable for many individuals to file law suits and
get timely justice. The Courts are backlogged with dockets resulting in delay of

7
Park and Burger, Introduction to the Science of Sociology (Project Gutenberg book) p. 735

13
year or more for the parties to have their cases heard and decided. To solve this
problem of delayed justice ADR Mechanism has been developed in response
thereof. Alternative dispute resolution methods are being increasingly
acknowledged in field of law and commercial sectors both at National and
International levels. Its diverse methods can helps the parties to resolve their
disputes at their own terms cheaply and expeditiously. Alternative dispute
resolution techniques are in addition to the Courts in character. Alternative
dispute resolution techniques can be used in almost all contentious matters, which
are capable of being resolved, under law, by agreement between the parties.
Alternative dispute resolution techniques can be employed in several categories
of disputes, especially civil, commercial, industrial and family disputes. 8 Form
the study of the different alternative dispute resolution techniques in the
proceedings chapters it is found that, alternative dispute resolution methods offers
the best solution in respect of commercial disputes where the economic growth
of the Country rests.

The goal of Alternative dispute resolution is enshrined in the Indian

Constitution’s preamble itself, which enjoins the state: “to secure to all the
citizens of India, justice-social, economic and political-liberty, equality and
fraternity”.9

The Law Commission of India has maintained that, the reason judicial delay is
not a lack of clear procedural laws, but rather the imperfect execution, or even
utter non-observance, thereof. 10 The Law Commission of India in its 14th Report
categorically stated that, the delay results not from the procedure lay down by the
legislations but by reason of the non-observance of many of its important
provisions particularly those intended to expedite the disposal of proceedings.

8
Hindu Marriage Act 1955, Industrial Dispute Act, 1947, The Code of Civil Procedure, The Family Court Act,
1984
9
The Preamble of Indian Constitution
10
Law Commission of India, 77th Report, pr. 4.1

14
Given the huge number of pending cases, the governance and administrative
control over judicial institutions through manual processes has become extremely
difficult. The Supreme Court made it clear that this stage of affair must be
addressed: ‘An independent and efficient judicial system in one of the basic
structures of our constitution… It is our Constitutional obligation to ensure that
the backlog of cases is declared and efforts are made to increase the disposal of
cases.” 11 Wide range of process are defined as alternative dispute resolution
process often, dispute resolution process that are alternative to the adjudication
through Court proceedings are referred to as alternative dispute resolution
methods. These methods usually involve a third party referred to as neutral, a
skilled helper who either assists the parties in a dispute or conflict to reach at a
decision by agreement or facilitates in arriving at a solution to the problem
between the party to the dispute. 12 The alternative disputes resolution mechanism
by the very methodology used, it can preserve and enhance personal and business
relationships that might otherwise be damages by the adversarial process. It is
also flexible because it allows the contestants to choose procedures, which fir the
nature of the dispute and the business context in which it occurs. The term
“Alternative Disputes Resolution” takes in its fold, various modes of settlement
including, Lok Adalats, arbitration, conciliation and Mediation. This technique of
Alternative Disputes Resolution has been used by many countries for effective
disputes resolution. The most common types of Alternative Disputes Resolution
is Mediation. In, fact mediation had been described by some as the most
Appropriate Dispute Resolution method.
Mediation as a tool for dispute resolution is not a new concept. To put it in simple
terms, mediation is an amicable settlement of disputes with the involvement of a
neutral third party who acts as a facilitator and is called a

11
Brij Mohan Lal vs. Union of India & Other , (2002)
12
Tania Sourdin, Alternative Dispute Resolution (Lawbook.co,2016)

15
‘Mediator”. ADR is usually less formal, less expensive and less time-consuming
then regular trial. ADR can also give people more opportunity to determine when
and how their dispute will be resolved.

SALIENT FEATURES OF ALTERNATIVE DISPUTE RESOLUTUON

Alternative dispute resolution, as the name suggests is an alternative to the

traditional process of dispute resolution through courts. It refers to a set of
practices and techniques to resolve disputes outside the courts. It is mostly a non-
judicial means or procedure for the settlement of disputes. In its wider sense, the
term refers to everything from facilitated settlement negotiations in which parties
are encouraged to negotiate directly with each other prior to some other legal
process, to arbitration systems or mini trials that look and feel very much like a
court room process. The need for public adjudication and normative judicial
pronouncements on the momentous issues of the day is fundamental to the
evolution of the land. ADR is necessary to complement and preserve this function
of the courts. It has some instrumental and intrinsic functions; it is instrumental
in so far as it enables amicable settlement of disputes through means which are
not available generally through courts. It is intrinsic because it enables the parties
themselves to settle their disputes.13 Our Constitutional goal is to achieve justice-
social, economic and political. Access to fast, inexpensive and expeditious justice
is a basic human right. Equal access to justice for all segments to society is
important to engender respect for law and judicial system. Access to justice would
be meaningful, if the judicial system yields result through a fair process and
within a prescribed time. Amicable settlement of disputes is very essential for
maintenance of social peace and harmony in the society. Our Constitution
mandates that the “state shall secure that the operation of the legal system
promotes justice, on a basis of equal opportunity and shall, in particular, provide

13
Prof. Aggarwal Nomita ―Alternative Dispute Resolution: Concept and Concerns, (NYAYA DEEP, Vol. VII)

16
free legal aid, by suitable legislation or schemes or in any other way, to ensure
that the opportunities for securing justice are not denied to any citizen by reason
of economic or other disabilities”14

ADR has been a spoke in the wheel of the larger formal legal system in India
since time immemorial. If we look back in to our history, we find that during
ancient and medieval period the disputes were being resolved in an informal
manner by a neutral third person, who would be either an elderly person or a chief
of a village or a clan or by a panchayat. The adversarial system of justice, which
we adapted later, has proved to be costly and time consuming. To a great extent
time is consumed over procedural wrangles, technicalities of law and the inability
of large number of litigants to engage lawyers. The problem of delay in deciding
the matters has resulted in long pendency. 15

The mounting arrears in the courts, inordinate delays in the administration of

justice and expenses of litigation have the potential to erode public trust and
confidence in the judicial system, which is the pillar of our democracy. Delay also
gives rise to corruption and other evils. Ideally speaking judicial system is blind
to power, wealth and social status. Courts are supposed to offer a forum, where
the poor, powerless and marginalized can stand with all others as equals before
the law. With the present state of affairs, many of our poor fellow citizens have
chosen to avoid courts rather than face intimidation cost and time in legal
proceedings. The legal problems faced by the poor and down trodden are
compounded by their lack of awareness of whom to approach to redress their
grievances.16

14
Sabharwal Y.K, J. “Alternative Dispute Resolution”; Article- 39A of the Constitution of India, (NYAYA DEEP,
Vol. VI)
15
Sinha S.N.P and Dr. Mishra P.N. “A Dire Need Of Alternative Dispute Resolution System In A Developing
Country Like India”, INDIAN BAR REVIEW, Vol. XXXI (3&4) 2004, p. 298
16
Alternative Dispute Resolution viewed at www.fresnosuperiorcourt.org (visited on November 20,2018)

17
The need to get away from the conception that court is the only place to settle
disputes has led to exploring the possibility of creating a dispute resolving
mechanism which would be flexible and saves valuable time and money. In its
14th Report, Law Commission of India recommended devising of ways and means
to ensure that justice should be simple, speedy, cheap effective and substantial.
In its 77th Report Law Commission of India observed that the Indian society is
primarily an agrarian society and is not sophisticated enough to understand the
technical and cumbersome procedures followed by the courts. 17

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

There are three important factors in every arbitration arrangement. The first
relates to nomination, second relates to legality of the award given by the
arbitrator and third the permissible area of challenge to the arbitrator’s award.
Accepting the award is the normal excepted code of conduct of the parties who
have chosen an arbitrator. It is but natural that they have initially reposed faith on
the arbitrator or the arbitrators, as the case may be. If the award is not to the choice
of the parties or any one of them, it would be unfair to the arbitrator or the
arbitrators, as the case may be, to term the award as the outcome of the malafide.
It is, therefore, very unfortunate that increasingly misconduct by the arbitrator or
the arbitrators as the case may be is alleged. Sometimes obnoxious allegations are

17
Sinha S.N.P and Dr. Mishra P.N. “A Dire Need Of Alternative Dispute Resolution System In A Developing
Country Like India”; Law Commission of India (14th Report on “Report on Reform of Judicial Administration,
1958 & 77th Report on Delay and Arrears in Trial Courts, 1979) INDIAN BAR REVIEW, Vol. XXXI (3&4)
2004, p. 299

18
made. The image should be untarnished. There may be black sheep like any other
sphere of human life. But then that fallacy can be remedied by making a wise
choice at the threshold. 18

MEANING AND DEFINITION OF ALTERNATIVE DISPUTE

RESOLUTION

Human conflicts are inevitable. Disputes are equally inevitable. It is difficult to

imagine a human society without conflict of interests. Disputes must be resolved
at minimum possible cost both in terms of money and time, so that more time and
more resources are spared for constructive pursuits. 19

‘Alternative Dispute Resolution’ or ADR is an attempt to devise machinery which

should be capable of providing an alternative to the conventional methods of
resolving disputes. An alternative means the privilege of choosing one of two
things or courses offered at one’s choice. It does not mean the choice of an
alternative court but something which is an alternative to court procedures or
something which can operate as court annexed procedure. 20

ADR originated in the USA in a drive to find alternatives to the traditional legal
system, felt to be adversarial, costly, unpredictable, rigid, over-professionalized,
damaging to relationships and limited to narrow right-based remedies as opposed
to creative problem-solving. The American origin of the concept is not surprising,
given certain features of litigation in that system, such as: trial of civil actions by
a jury, lawyers’ contingency fees, and lack of application in full of the rule “the
loser pays the costs”. 21

18
Pasayat, Dr. Arijit, J.; “Arbitration And Courts Harmony Amidst Disharmony, NYAYA DEEP, Vol. VIII, Issue: 4,
Oct. 2007, p. 37
19
Singh, Dr. Avtar, Law of Arbitration and Conciliation (including ADR Systems), Eastern Book Company,
Lucknow, 7th Edition(2006), p. 391
20
Ibid
21
Medha Nishita “Alternative Dispute in India”, viewed at www.fdrindia.org (visited on November 20,2018)

19
Alternative Dispute Resolution is an alternative to the traditional process of
dispute resolution through courts. It refers to set of practices and techniques to
resolve disputes outside the courts. It is mostly a non-judicial means or procedures
for the settlement of disputes. ADR has been a spoke in the wheel of the larger
formal legal system in India since time immemorial. The search for a simple,
quick, flexible and accessible dispute resolution system has resulted in the
adoption of ‘Alternative Dispute Resolution’ mechanisms. The primary object of
ADR system is avoidance of vexation, expense, and delay and the promotion of
the ideal of “access to justice”. 22

The ADR techniques mainly consist of negotiation, conciliation, mediation,

arbitration and a series of hybrid procedures. Arbitration is adjudicatory and the
result is binding, whereas conciliation is consensual and very helpful in making
the parties in setting their disputes mutually with the help of a neutral third person.
The success of conciliation depends on the mental attitude of the parties, the skill
of the conciliator and creation of proper environment which is most essential in
matrimonial disputes. Negotiation is a non-binding procedure resorted to buy the
parties for arriving at a negotiated settlement. Willingness to resolve the dispute
and objectivity necessarily becomes essential to arrive at a negotiated settlement.
Mediation is a decision- making process in which the parties are assisted by a
third party, the mediator. The mediator attempts to improve the process of
decision making and to assist the parties’ reach an outcome to which each of them
can consent.23

ADR is based on more direct participation by the disputants rather than being run
by lawyers and judges. This type of involvement is believed to increase people’s
satisfaction with the outcome as well as their compliance with the settlement

Prof. Aggarwal Nomita “Alternative Dispute Resolution: Concept and Concerns”, NYAYA DEEP, Vol. VII,
22

Sinha, S.N.P and Mishra, Dr. P.N. “A Dire Need Of Alternative Dispute Resolution System In A Developing
23

Country Like India”, INDIAN BAR REVIEW, Vol. XXXI (3&4) 2004, p. 300

20
reached. Most ADR processes are based on an integrative approach. They are
more cooperative and less competitive than adversarial court based methods like
litigation. For this reason, ADR tends to generate less escalation and ill-will
between parties. This is a key advantage in situation where the parties most
continue to interact after settlement is reached, such as in matrimonial cases of
labour-management cases.24

Alternative Dispute Resolution System (ADR) has been a spark in the wheel of
larger formal legal system in India since time immemorial. If we look back in to
our history, we find that during ancient and medieval period the disputes were
being resolved in an informal manner by a neutral third person, who would be
either an elderly person or a chief of a village or a clan or by a panchayat. The
adversarial system of justice, which we adopted later, has proved costly and time
consuming. To a great extent time is consumed over procedural wrangles,
technicalities of Law and inabilities of large number of litigants to engage
lawyers. The problem of delay in deciding the matters has resulted in long
pendency.25

A time had come when litigants were afraid of approaching the courts with their
civil and other types of disputes, as they have no assurance that the claims would
be settled within the near foreseeable future. Equally, the time had come when
parties or clients to a contract, which had an alternative dispute settlement clause
or arbitration clause were wondering whether it would not be safer and quicker to
resort to the civil and other courts. Recently in this regard the Arbitration and
Conciliation (Amendment) Bill, 2003 when passed would be a true panacea to
cure these ills.26

24
Ibid
25
Sinha, S.N.P and Mishra, Dr. P.N. “A Dire Need Of Alternative Dispute Resolution System In A Developing
Country Like India”, INDIAN BAR REVIEW, Vol. XXXI (3&4) 2004, p. 298
26
Ibid, p. 298

21
The search for a simple, quick, flexible and accessible dispute resolution system
has resulted in the adoption of ‘Alternative Dispute Resolution’ mechanisms.
Most simply put, Alternative Dispute Resolution denotes all forms of dispute
resolution other than litigation and adjudication through courts. 27

However, Carrow defined “Alternative Dispute Resolution as including binding

arbitration in the minds of some since it qualifies as an alternative to court
litigation. The better view is that the distinguishing feature of ADR is that the
parties with few exceptions determine their own destiny rather than having the
decision of another imposed upon them”. 28

According to Akinsaya, “ADR is the abbreviation of Alternative Dispute

Resolution and is generally used to describe the methods and procedures used to
resolve disputes either as an alternative to the traditional disputes resolution
mechanism of the court or in some cases as supplementary to such mechanism”.

In other words, these processes are designed to aid parties in resolving their
disputes without the need for a formal judicial proceeding. 29

He went further to say that Alternative Dispute Resolution is also known as PDR-
Preferred Dispute Resolution. Many writers are of the view that ADR is strictly
not a new idea because from idea because from time immemorial people have
settled their disputes through third party intervention using alternative forum.

Mr Aina defines Alternative Dispute Resolution in these words30:

27
Ibid, p. 299
28
Jangkama D.N. “Alternative Dispute Resolution At A Glance”, p. 1041 viewed at www.duhaime.org (visited
on November 20,2018)
29
Ibid
30
Ibid

22
“The letters ADR stands for ‘Alternative Resolution Dispute’- a new approach to
dispute processing. It refers to a range of mechanisms designed to assist disputing
parties in resolving an ongoing dispute.

In other words, ADR thus involves not only the application of new or different
methods to resolve disputes, but also the selection or design of a process which is
best suited to the particular dispute and to the parties in dispute”.

The term “ADR” or “Alternative Dispute Resolution” has different meanings in

different contexts. The literature review did not reveal an accepted definition of
the term, but rather suggested that it is commonly used as an umbrella term for
practices that go beyond the resolution of specific disputes between parties. ADR
may not refer to a specific process, but rather to a shared set of methods, goals
assumptions or values. 31

As of the early 2000s, ADR techniques were being used more and more, as parties
and lawyers and courts realized that these techniques could often help them
resolve legal disputes quickly and cheaply and more privately than could
conventional litigation. Moreover, many people preferred ADR approaches
because they saw these methods as being more creative and more focused on
problem solving than litigation, which has always been based on an adversarial
model.32

The term alternative dispute resolution is to some degree a misnomer. In reality,

fewer than 5% of all lawsuits filed go to trial; the other 95% are settled or
otherwise concluded before trial. Thus, it is more accurate to think of litigation as
the alternative and ADR as the norm. Despite of this fact, the term alternative

31
Alternative Dispute Resolution, viewed at www.ebc-india.com (last accessed on 30.04.12)
32
Free Online Law Dictionary, viewed at www.freedictionary.com (last accessed on 30.04.12)

23
dispute resolution has become such well-accepted shorthand for the vast array of
non-litigation processes that its continued use seems assured. 33

ADVANTAGES AND DISADVANTAGES

Alternative Dispute Resolution is based on more direct participation by the

disputants rather than being run by lawyers and Judges. This type of involvement
is believed to increase people’s satisfaction with the outcome as well as their
compliance with the settlement reached. Most ADR processes are based on an
integrative approach. They are most co-operative and less competitive than
adversarial court based methods like litigation. For this reason, ADR tends to
generate less escalation and ill-will between parties. This is a key advantage in
situations where the parties must continue to interact after settlement is reached,
such as in matrimonial cases or labour-management cases.34 Following are the
advantages of ADR 35:

ADVANTAGES:

1. It can be used at any time, even when a case is pending before a

Court of Law.

2. It can be used to reduce the number of contentious issues between

the parties; and it can be terminated at any stage by any of the
disputing parties.

3. It can provide a better solution to dispute more expeditiously and at

less cost than regular litigation.

33
Ibid
34
Sinha, S.N.P and Mishra, Dr. P.N.; “A Dire Need Of Alternative Dispute Resolution System In A Developing
Country Like India”, INDIAN BAR REVIEW, Vol. XXXI (3&4) 2004, p. 300
35
Sathe, S.P.; “Judicial Activism in India- Transgressing Borders and Enforcing Limits, Oxford India
Paperbacks(2003), Motiwal O.P “Alternative Dispute Resolution”, p. 233

24
4. It helps in keeping the dispute a private matter and promotes
creative and realistic business solutions, since parties are in control
of ADR proceedings.

5. The ADR is flexible and not governed by the rigorous of rules or

procedures.

6. The freedom of parties to litigation is not affected by ADR

proceedings. Even a failed ADR proceeding is never a waste either
in terms of money or times spent on it, since it helps parties to
appreciate each other’s case better.

7. The ADR can be used with or without a lawyer. A lawyer however,

plays a very useful role in identification of contentious issues,
position of strong and weak points in a case, rendering advice during
negotiations and overall presentation of his client’s case.

8. ADR helps in reduction of work load of courts and thereby helps

them to focus attention on other cases.

9. The ADR procedure permits to choose neutrals who are specialists

in the subject-matter of the dispute.

10. The parties are free to discuss their difference of opinion without
any fear of disclosure of facts before a Court of Law.

11. The last but not the least is the fact that parties are having the
feeling that there is no losing or winning feeling among the parties
by at the same time they are having the feeling that their grievance
is redressed and the relationship between the parties is restored.

12. The ADR system is apt to make a better future. It paves the way to
further progress.

25
DISADVANTAGES:

There are some ADR does not have many potential advantages, but there are also
some possible drawbacks and criticisms of pursuing alternatives to courtbased
adjudication. Some critics have concerns about the legitimacy of ADR outcomes,
charging that ADR provides “second-class justice.” It is argued that people who
cannot afford to go to the court are those most likely to use ADR procedures. As
a result, these people are less likely to truly “win” a case because of the co-
operative nature of ADR.36 Following points may be dealt as some of the
disadvantages of ADR37:

1. Situations when ADR may not be appropriate, and may even

carry a degree of risk for one of the parties. It is important for
the advisers to use their professional judgement in each case,
but this section outlines key factors for consideration.

2. There may be an imbalance of power between the parties,

which could make face-to-face mediation unfair. This could
include family or neighbour mediation where there has been
violence or the threat of violence; or mediation between an
individual and a large

36
Spangler, Brad “Alternative Dispute Resolution”, viewed at www.beyondintractability.org (last accessed on
13.04.12)
37
Val Reid, A Practical Guide to ADR, The Advice Services Alliance, “Alternative Dispute Resolution”, pp. 9-
10, viewed at www.hg.org (last accessed on 20.04.12)
organisation such as a local authority, where the size and resources
of the organization would put the individual at a disadvantage.

3. There may be an urgent need (for example to prevent eviction) which

requires an immediate legal remedy.

26
4. Mediation and Ombudsmen do not provide a legally binding,
enforceable outcome, and decisions do not act as precedents in future
cases.

5. Legal rights and Human rights cannot be relied on in ADR processes,

which are private, confidential and not open to public scrutiny.

6. Ombudsmen investigations can be very slow.

7. Although Ombudsmen can make compensation awards, they are

often lower than is likely to be achieved in court.

8. There are no consistent quality standards or regulation for ADR

providers, so it can be hard for the advisers or their clients to know
how to choose a good service.

9. Where a dispute involves difficult legal points a mediator or an

arbitrator is unlikely to have the same legal expertise and knowledge
as a judge. Disputes can be of various situations such as- commercial
conflicts, social conflicts, legal conflicts and many others which
require specialized mediator. Most of the cases the mediator possess
a judge’s point of view.

10. The arbitrator’s decision can require a court action if one of the
parties refuse to accept the arbitrator’s decision. This would not only
create chaos but also a mandatory review by the court. Thus ADR
sometimes raises the question of biasness of arbitrator’s decision.
Also there is very limited opportunity for judicial review of an
arbitrator’s decision. A court might also overturn an arbitrator’s
decision if its decided issues were not within the scope of the
arbitration agreement.

27
 11. Alternative Dispute Resolution generally resolves only issues of
money or civil disputes. Alternative Dispute Resolution proceedings
will not result in injunctive orders. They cannot result in an order
requiring one of the parties to do or cease doing a particular
affirmative act.

12. ADR generally proceed without protections offered to the parties in

litigation, such as those rules governed through discovery. Courts
generally allow a great deal of latitude in the discovery process,
which is not active in alternative dispute resolution. 36

It is important to consider these advantages and disadvantages before agreeing to

arbitration, or any other kind of alternative dispute resolution. Chances are that
we have already agreed to arbitration in many situations, without even knowing
it. Many lease agreements and employment contracts have mandatory arbitration
provisions, and they are usually enforced, as long as certain standards are met
(generally, they must not deprive a person of a constitutional right, and they
should be reciprocal). 37

DIFFERENT TYPES OF ALTERNATIVE DISPUTE RESOLUTIONS

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

In India, the Parliament has amended the Civil Procedure Code by inserting

36
Discuss the characteristics, advantages and disadvantages of Alternative Dispute Resolution, viewed at
www.lawyersnjurists.com (visited on November 20,2018)
37
Lamance Ken “Advantages and Disadvantages of Alternative Dispute Resolution” viewed at
www.informlegal.com (visited on November 20,2018)

28
Section 89 as well as Order 10 Rule 1-A to 1-C. Section 89 of the Civil Procedure
Code provides for the settlement of disputes outside the Court. It is based on the
recommendations made by the Law Commission of India and Malimath
Committee. It was suggested by the Law Commission of India that the Court may
require attendance of any party to the suit or proceedings to appear in person with
a view to arriving at an amicable settlement of dispute between the parties and
make an attempts to settle the dispute between the parties amicably.

Malimath Committee recommended making it obligatory for the Court to refer

the dispute, after issues are framed, for settlement either by way of Arbitration,
Conciliation, Mediation, and Judicial Settlement through Lok Adalat. It is only
when the parties fail to get their disputes settled through any of the alternate
disputes resolution method that the suit could proceed further. In view of the
above, new Section 89 has been inserted in the Code in order to provide for
alternative dispute resolution.

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

follows: -

Sec.89. Settlement of disputes outside the court. –

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

(a) arbitration;

(b) conciliation;

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

(d) mediation.

29
(2) Where a dispute has been referred –

(a) for arbitration or conciliation, the provisions of the Arbitration and

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

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

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

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

On perusal of the aforesaid provisions of Section 89, it transpires that it refers to

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

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

30
Order X Rule 1-A. Direction of the Court to opt for any one mode of alternative
dispute resolution.- After recording the admissions and denials, the Court shall
direct the parties to the suit to opt either mode of the settlement outside the Court
as specified in sub- section (1) of section 89. On the option of the parties, the
Court shall fix the date of appearance before such forum or authority as may be
opted by the parties.

Order X Rule 1-B. Appearance before the conciliatory forum or authority.Where

a suit is referred under rule 1A, the parties shall appear before such forum or
authority for conciliation of the suit.

Order X Rule 1-C. Appearance before the Court consequent to the failure of
efforts of conciliation.- Where a suit is referred under rule 1A and the presiding
officer of conciliation forum or authority is satisfied that it would not be proper
in the interest of justice to proceed with the matter further, then, it shall refer the
matter again to the Court and direct the parties to appear before the Court on the
date fixed by it.

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

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

1. Arbitration

2. Conciliation

3. Mediation

4. Judicial Settlement &

5. Lok Adalat

31
 1. ARBITRATION

Concept of Arbitration

Arbitration is a legal technique for resolution of all types disputes outside the
national courts, when in the parties to a dispute refer it to one or more neutral
third party (the “arbiter” or “arbitral tribunal”), by whose final decision (the
arbitral award) they agree to be bound. The parties to an arbitration agreement
usually choose experts who are familiar with law and the actual or potential
disputes between them. The agreement to arbitrate is usually included in the
contract and is known as an arbitration clause. By this method, parties agree that
in the event of a dispute, such dispute will be submitted to arbiters for
determination. Arbiters are preferred because they are better placed than national
Courts to deal with the several legal problems that arise from transnational
relations. Arbiters employ procedures that are more flexible, and readily apply
international merchants, than national laws that may not cater for their needs.

Arbiter should, on the one hand, know the nature of the disputes, in order to be
able to arbitrate. On the other hand, they should know the applicable national and
international law, in order to conduct arbitration and make an arbitral award that
satisfies legal principles, and is enforceable

HISTORICAL BACKGROUND

Birth of India's 1st Legislative Council

The 1st Legislative Council for India was formed in 1834, followed by the First
Indian Arbitration Act on 1st July, 1899. It came into force and said act was
fundamentally based on British Arbitration Act, 1889 but the application of the
Indian Arbitration Act was confined only to the presidency towns' i.e. Calcutta,
Bombay and Madras. A unique feature in the Act was that the names of the

32
arbitrators were to be mentioned in the agreement; the arbitrator at that point can
also be a sitting judge, as was in

Nusserwanjee Pestonjee and Ors. v. Meer Mynoodeen Khan Wullud Meer

Sudroodeen Khan Bahadoor 38. In the case of Gajendra Singh vs. Durga Kunwar39
it was observed that the Award as passed in an arbitration is nothing but a
compromise between the parties. In Dinkarrai Lakshmiprasad vs. Yeshwantrai
Hariprasad40, the Hon'ble High Court observed that the said Indian Arbitration
Act, 1889 was very complex, bulky and needed reforms.

ARBITRATION ACT 1940 – UNVEILING CONTROVERSIES

Under the British Regime a more specific arbitration act was enacted on 11th
March 1940, which came into force on 1st July 1940, termed as ‘The Arbitration
Act, 1940'. It was applied to the whole of India (including Pakistan,
Baluchistan)41. The same was modified vide an ordinance, post-Independence.

The Act of 1940 was referred to many disputes but the same was also under many
criticisms. In some of the cases, it was observed that the Arbitration Act, 1940,
distinguishes between an application for setting aside an award and one for a
decision that the award is a nullity. This implies that it does not legally exist and
contemplates that an application for setting aside an award may be made under
Section 30 and an application of that award is a nullity under Section 33. Further,
it was also observed that the said act fails in recognizing that the arbitration will
fail in-case of non-existence and invalidity of an arbitration agreement42.

38
(1855) 6 MIA 134
39
(1925)ILR 47All637
40
AIR 1930 Bom 98
41
The Arbitration Act,1940, India, available at: http://www.wipo.int/edocs/lexdocs/laws/en/pk/pk066en.pdf
(visited on November, 21st ,2018)
42
(1956) Cal 32

33
The Act was silent about the shortcomings inherent in individual private
contracts. The rules providing for filing awards differed from one High Court to
another. The lack of provisions prohibiting an arbitrator or umpire from resigning
at any time in the course of the arbitration proceedings, exposed the parties to
heavy losses particularly where the arbitrators or umpire acted mala fide. It was
also seen that if an arbitrator appointed by the Court dies during the arbitration
proceedings, there was no other provision in the said act for appointment of a new
arbitrator, which was also seen as a major flaw in the 1940 Act 43. Another concern
in the act was that the Marginal Notes were not regarded as part of an Act 44.

ENFORCEMENT OF THE ARBITRATION ACT, 1996

The Arbitration Act of 1940 had been facing a lot of criticisms and lacked in quite
a lot of areas when it came to implementation in the real sense. Although it
brought uniformity in law across the nation, it needed to be replaced by The
Arbitration and Conciliation Act 1996, which came into force from 22nd August
1996. The basic intent of the legislation was to provide for a speedy solution to
disputes between the parties and also to limit the judicial intervention. The main
intention of the Legislation was primarily to cover the international and domestic
commercial arbitration and conciliation. It was also to make the arbitral tribunal
fail, provide them reasons to pass awards, minimize the role of courts, enforce the
arbitral award as the decree of the court.

In certain cases, there arose a dispute between the parties and applications were
filed before the enactment of the 1996 Act but the arbitrators were appointed after
the enactment. In such a given scenario, the arbitrators and the parties also agreed
that the proceedings for the said dispute will be governed by the New Law.

43
AIR (1963) Cal14
44
(1904)ILR 26NULL393

34
The Act of 1996 consolidated and amended laws relating to Arbitration,
International Commercial Arbitration and also for enforcement of the Foreign
Arbitral Awards. Initially, in the Act of 1996, it was held that the Court can pass
interim orders under Section 9 of the Act, where Section 9 contemplates two
stages, firstly, court can pass order during arbitral proceedings and secondly, that
court can pass order before commencement of arbitral proceedings 45.

THE ARBITRATION ACT, 1940 VS.1996 –

CONTRASTING SCENARIOS

The basic difference in 1940 and 1996 Act was that in the former one a party
could commence proceedings in court by moving an application under Section 20
for appointment of an arbitrator and simultaneously could also move an
application for interim relief under the Schedule read with Section 41(b) of the
1940 Act. The later one does not contain any provision similar to Section 20 of
the 1940 Act but the court can pass orders even before the commencement of the
arbitration proceedings. Another difference was that in the former act, there was
no requirement to give reasons for an award until and unless agreed by the parties
to arbitration. However, in the later Act, the award has to be given with reasons,
which minimized the Court's interpretation on its own. There were changes with
respect to the award passed by the arbitral tribunal in the 1940 and 1996 Act.

The 1996 Act since its enactment faced many challenges and the Courts brought
out what was actually intended by the Legislation, the Courts clarified the said
Act and the intention by various landmark judgments. In particular, the landmark
case of Bharat Aluminium Co. saw at least three phases before the Hon'ble
Supreme Court of India since the year 2001 till now i.e. 2016 carrying from two
Hon'ble Judges to the Constitution Bench.

45
(1999) SC 565

35
In the first case, the Hon'ble Supreme Court was of the view that Part I is to apply
also to international commercial arbitrations which take place out of India, unless
the parties by agreement, express or implied exclude it or any of its provisions, it
was also held that the Arbitration Act of 1996 was not a well drafted act and had
some lacunas 46.

THE SECOND ROUND OF AMENDMENTS IN 2005

The second round started around 2005, when there was a difference of opinion
between the two Hon'ble Judges of the Hon'ble Supreme Court of India and the
said matter was thereafter, placed before a three Judge Bench, which by its order
directed the matters to be placed before the Constitution Bench. The Constitution
Bench was of the view that Section 2(2) makes it clear that Part I is limited in its
application to arbitrations which take place in India and that the Parliament by
limiting the applicability of Part I to arbitrations which take place in India has
expressed a legislative declaration. The Bench further went ahead with a
distinction between the arbitration in India and outside India. It held that Section
2(2) merely reinforces the limits of operation of the Arbitration Act, 1996 to India
and it was further held that if Part I of the Act were applicable to arbitrations
seated in foreign countries, certain words would have to be added to Section 2(2).
The section would have to provide that "this part shall apply where the place of
arbitration is in India and to arbitrations having its place out of India."

Another interesting question which was considered was whether Section 2(2) is
in conflict with Sections 2(4) and 2(5). It was held that the language as used by
the legislature in Sections 2(4) and 2(5) of the 1996 Act means the arbitration,
that take place in India. It was further clarified that the provision does not admit
an interpretation that any of the provisions of Part I, would have any application
to arbitration which takes place outside India. The 1996 Act, was basically

46
AIR (2002 )SC1432

36
designed to give different treatments to the awards made in India and those made
outside India. The distinction is necessarily to be made between the terms
"domestic awards" and "foreign awards". It was also clarified that Part I and Part
II are exclusive of each other and the same is also evident from the definitions.
The issues relating to the interim reliefs in an Inter-Parte Suit filed by the parties
pending arbitration was held to be non-maintainable, as the pendency of the
arbitration proceedings outside India would not provide any cause of action for a
suit where the main prayer is for injunction

THIRD ROUND OF AMENDMENTS IN 2015

The question as to whether part I of the Arbitration and Conciliation Act, 1996
would apply to foreign arbitrations was first examined by the Hon'ble Supreme
Court of India in a celebrated judgment by a three Judge bench in the year 2002
titled Bhatia International vs. Bulk Trading SA1 ("Bhatia International")47. The
core issue before Hon'ble Supreme Court was the interpretation of Section 2(2)
of the un-amended Act which stated that, "This Part shall apply where the place
of arbitration is in India." The Hon'ble Apex Court had compared the said
provision with the UNCITRAL Model Law, which clearly stated in its preamble
that, "the provisions of this Law... apply only if the place of arbitration is in the
territory of this State."

The Hon'ble Supreme Court of India in the case of Bharat Aluminum and Co. vs.
Kaiser Aluminium and Co. (BALCO) had reconsidered the law laid down in
Bhatia International and overruled the same. In the landmark judgment
pronounced by the Constitution Bench of Hon'ble Supreme Court of India on
September 06, 2012 it was concluded that "Part I of the Arbitration & Conciliation
Act, 1996 is applicable only to the arbitrations which take place within the
territory of India".

47
(2003) 5 SCC (Jour) 22

37
The Hon'ble Apex Court had observed as under:

"In our opinion, the provision contained in Section 2 (2) of the Arbitration &
Conciliation Act, 1996 is not in conflict with any of the provisions either in Part
I or in Part II of the Arbitration Act, 1996. In a foreign seated international
commercial arbitration, no application for interim relief would be maintainable
under Section 9 or any other provision, as applicability of Part I of the Arbitration
& Conciliation Act, 1996 is limited to all arbitrations which take place in India".

Only those cases in which agreements stipulate that the seat of the arbitration is
in India or on whose facts a judgment cannot be reached on the seat of the
arbitration as being outside India would continue to be governed by the said
principle.

Even the world's two most prominent countries (India and Pakistan) also agreed
to refer the dispute to Arbitration and had referred the dispute relating to the Indus
Water Treaty 1960 to The Permanent Court of Arbitration. This move clarified
and supported the importance of arbitration globally.

With the economic growth of the nation, the foreign entities started business
through their 100% subsidiaries. Eventually, an exciting question of law came for
consideration before the Hon'ble Apex Court50 which was whether it is
permissible under the Arbitration Act, 1996 for two Indian Companies to agree
to refer their commercial disputes to a place of arbitration outside India with
governing law being English law. It was observed that as one of the entities
indirectly involved in the matter is a foreign entity, therefore, there is some
foreign element and secondly, as Section 28(1)(b) of the 1996 Act expressly
recognizes such autonomy to choose the governing law, therefore the said clause
is valid.

The 2015 Act can be looked as a boon for the party who succeeded before the
arbitral tribunal, as in the earlier act of 1996 if the award passed by the arbitral

38
tribunal was challenged before the court, even on issuance of notice by the court
would tantamount as a stay but by virtue of the amendment in the 2015 Act, a
specific stay has to be granted.

It is to be noted that not all matters/disputes can be referred to arbitration even if

the agreement/contracts etc. contain an arbitration clause, its being noted that the
disputes relating to Trust, trustees and beneficiaries arising out of the Trust Deed
and the Trust Act are not capable of being decided by the arbitrator 51.

50
2016 (8) SCALE 225
51
2016(8)SCALE116

39
TYPES OF ARBITRATION

1.) Institutional or Ad-hoc Arbitration

This refers to a type of arbitration where the procedures or all aspects related to
the arbitration like seat of arbitration, number of arbitrators, governing law,
language of arbitration, etc. are determined by the parties themselves. Ad-hoc
arbitration unlike the institutional arbitration is not administered by institutions
like FICCI, ICC, etc, but are agreed to and arranged by parties to the dispute
themselves without resorting to any help from arbitral institutions. In this type of
arbitration, if the parties to the dispute are unable to choose arbitrator(s) by
‘consensus ad idem’ or mutual consent, then the appointment of the arbitrator can
be made by the Chief Justice of a High Court (if it involves domestic arbitration)
and by the Hon’ble Apex Court (if it is an international arbitration). And, the
charges/fees to be paid to the arbitrator are decided by the parties and the

40
arbitrator. Here, the parties don’t have to resign themselves to or abide by the
rules of the arbitral institutions, but they can stipulate their own arbitral clauses
and be bound by them. However, the parties to the dispute are not barred from
adopting the rules of any particular arbitral institution even without submitting or
referring their disputes to the said arbitral institution.48

2.) Statutory or Contractual Arbitration

In institutional arbitration, an arbitral institute is appointed to administer the

arbitration. Parties to the dispute refer their disputes to the arbitral institution and
the parties are governed by the rules and procedures of the arbitral institute. Not
all institutes provide arbitral services, they have a set of rules and procedures
which they offer to the parties who submit their disputes to them. The arbitral
institutes administer the arbitral process. Individual arbitral institutes have their
own set of procedures and they provide a framework to the parties for the
arbitration process.

Some common institutions are the ICC, FICCI, DIFC, etc. most often than not,
the arbitration clause contained in an arbitration agreement assign or designate a
particular arbitral institute to administer the process of arbitration.

Often the contract between two parties will contain an arbitration clause which
will designate a particular institution as the arbitration administrator.53

3.) AD-HOC

An ad hoc arbitration is one which is not administered by an institution such as

the ICC, LCIA, DIAC or DIFC. The parties will therefore have to determine all
aspects of the arbitration themselves - for example, the number of arbitrators,

48
Legal desk “Different types of Arbitration and their importance” available at:
https://legaldesk.com/general/different-types-of-arbitration-and-their-importance (visited on November,21st
,2108) 53 Id.

41
appointing those arbitrators, the applicable law and the procedure for conducting
the arbitration.

Provided the parties approach the arbitration with cooperation, ad hoc

proceedings have the potential to be more flexible, faster and cheaper than
institutional proceedings. The absence of administrative fees alone provides an
excellent incentive to use the ad hoc procedure.

The arbitration agreement, whether reached before or after a dispute has arisen,
may simply state that 'disputes between parties will be arbitrated'. It is infinitely
preferable at least to specify the place or 'seat' of the arbitration as well since this
will have a significant impact on several vital issues such as the procedural laws
governing the arbitration and the enforceability of the award. If the parties cannot
agree on the detail all unresolved problems and questions relating to the
implementation of the arbitration - for example, how the tribunal will be
appointed or how the proceedings will be conducted – will be determined by the
'seat' or location of the arbitration. However, this approach will only work if the
seat of the arbitration has an established arbitration law.

Ad hoc proceedings need not be kept entirely separate from institutional

arbitration. Often, appointing a qualified arbitrator can lead to the parties agreeing
to designate an institutional provider as the appointing authority. Additionally,
the parties may decide to engage an institutional provider to administer the
arbitration at any time.

42
THE ARBITRATION PROCEDURE

Arbitration proceedings are not in complex in nature unlike in regular courts, it’s
pretty simple and easy. A party commences an arbitration proceeding by issuing
a notice in written to the other party of its intention to refer the matter to
arbitration. The respondent replies to the arbitration by filing answer against the
arbitration claim within stipulated time period specifying relevant facts and
available defences against the claim. Unless otherwise agreed by the parties,
Arbitration proceedings are deemed to be commenced on the date on which the
respondent receives such notice from the claimant. After the selection of
Arbitrators, parties meet in persons for the conduct of the hearing in front of
arbitrators. Lastly, after the examination of witnesses and evidences, the
arbitrator, in concluding stage, gives ‘award’ which is binding in nature. Conduct
of Arbitral proceedings are provided in Chapter V of Arbitration and Conciliation
Act, 1996.

Limitation on commencement of arbitral proceedings

The Limitation Act, 1963 applies to all proceedings under Arbitration and
Conciliation Act, 1996 as it applies to proceedings in Indian courts, except to the
extent clearly keep out by the Arbitration and Conciliation Act. Any proceeding
under arbitration commenced after the limitation period (three years from the date
on which the cause of action arose) will be time barred.

Equal treatment of Parties

Both the parties should be treated equally and equal opportunities should be given
to them to be heard and to present their case.

Rules of procedure in arbitration

There are no such rules on the procedure for conducting the arbitration
proceedings. The parties are free to agree on the procedure to be followed by the

43
arbitral tribunals in conducting its proceedings. If no such procedure agreed by
the parties, the tribunal is authorised to conduct the proceedings in such a manner
it considers appropriate.

The arbitral tribunal is expressly not bound to apply any provisions of the Civil
Procedure Code 1908 and the Evidence Act, 1872. If under arbitration agreement
it is mentioned, the arbitration is to be administered by arbitral institute, the rules
of that institution become part of the arbitration clause by implication. The rules
of arbitral tribunal include, power to determine the admissibility, relevance,
materiality and weight of any evidence.

Place of arbitration

The parties are free to agree on the place of arbitration as per their convenience.
In case failed to agree upon place of arbitration, the arbitral tribunal shall
determine the place of arbitration considering the circumstances of case including
convenience of the parties.

Language of proceedings

Parties are free to agree upon the language to be used in the arbitral proceedings.
If the parties fail to agree on any language then arbitral tribunal decides which
language to be used in the arbitral proceedings.

Statement of claim and defence

The claimant have to state the facts supporting their claim, raise the points at
issues and relief or remedy sought to the respondent within the time period
stipulated by the parties or determined by the arbitral tribunal and the respondent
replies filing an answer against the arbitration claim of claimant that specifies the
relevant facts and available defences to the statement of claim.

44
A party can amend or supplement his claim and defence throughout arbitral
proceedings, unless the tribunal considers it unsuitable to allow the amendment
or supplement in respect of the delay in making it.

Hearings

The parties shall be given sufficient prior notice before any hearing and of any
meeting of arbitral tribunal for the inspection and verification of documents,
goods and property. The arbitral tribunal shall decide whether to hold oral
hearings for the presentation of evidence or for oral argument, or whether the
proceedings shall be conducted on the basis of documents and other materials:

Arbitration and Conciliation (Amendment) Act, 2015 requires the arbitral

tribunal at least, hold oral hearings for the presentation of evidences or for oral
arguments on a day-to-day basis, and not grant adjournments unless reasonable
cause is given.

All documents, statements and required information supplied, and application

made to the arbitral tribunal by the one party shall be communicated to the other
party and any evidentiary document or expert report on which an arbitral tribunal
can rely in making it decision shall also be communicated to the parties.

Default of a party

If claimant without providing sufficient cause fails to communicate his statement

of claim to the tribunal, the arbitral tribunal can terminate the proceedings with
immediate effects. But it is not the same in case of respondent if he fails to
communicate his statement of defence, the arbitral can continue the proceedings
without treating that failure in itself as an admission of alienations by the
claimant.

45
Evidences

The parties are free to agree on the rules of gathering and submitting evidences.
If they are not getting agreed on these matters, the tribunal has the discretionary
power to determine how evidence may be gathered and submitted to it. The
arbitral tribunal can take both documentary and oral evidence on record. While
considering evidence tribunal required to observe the fundamental principle of
natural justice.

Court Assistance

Local courts can assist tribunals in arbitration proceedings. This includes the
power of providing interim order and appointment of arbitrator if the parties are
unable to agree on the appointment of arbitrator.

If a party makes any default, refuses to give evidence or guilty of contempt of

arbitral proceedings shall be subject to penalties or punishment by the order of
the court on the representation of arbitral tribunal.

Third party

In India, the question is yet to be answered whether the non-signatory party bound
by arbitration agreement or not. Arbitral tribunals and courts take different
methods to bound non signatory parties to an arbitration agreement like “group
of companies” doctrine where a clear intent to bind such non signatory parties.
However, in Indowind Energy Ltd V. Wescare (India) Ltd 49the Supreme Court of
India held a “third party not a signatory to an arbitration agreement would not be
bound by such agreement, even if some sort of nexus exists between third party
and transactions of questions.”

49
AIR 2010 SC 1793,

46
ADVANTAGES

There are numerous advantages to arbitration as a way to resolve a case.50

1. The parties to the dispute usually agree on the arbitrator, so the arbitrator
will be someone that both sides have confidence will be impartial and fair.

2. The dispute will normally be resolved much sooner, as a date for the
arbitration can usually be obtained a lot faster than a court date. In Virginia, a
trial date is normally about twelve months from the date the lawsuit is filed.

3. Arbitration is usually a lot less expensive. Partly that is because the fee
paid the arbitrator is a lot less than the expense of paying expert witnesses to
come and testify at trial. (Most of the time the parties to arbitration split the
arbitrator’s fee equally). There are also lower costs in preparing for the arbitration
than there are in for preparing for a trial. Partly this is due to the fact that the rules
of evidence are often more relaxed than in a trial, so that documents can be
submitted in lieu of having a witness come to trial and testify. For instance, if a
claimant has several doctors who are out-of-state, the cost of bringing them to
trial or going out-of-state to take their depositions may be prohibitive for trial,
but in arbitration you can usually use just their records and reports.

4. Unlike a trial, arbitration is essentially a private procedure, so that if the

parties desire privacy then the dispute and the resolution can be kept confidential.

5. If arbitration is binding, there are very limited opportunities for either side
to appeal, so the arbitration will be the end of the dispute. That gives finality to
the arbitration award that is not often present with a trial decision.

50
R. Clayton Allen, “Arbitration: Advantages and disadvantages” available at:
https://www.allenandallen.com/arbitration-advantages-and-disadvantages/ (visited on November,21st ,2018)

47
DISADVANTAGE 51

• Arbitration agreements are sometimes contained in ancillary agreements, or in

small print in other agreements, and consumers and employees sometimes do
not know in advance that they have agreed to mandatory binding pre-dispute
arbitration by purchasing a product or taking a job.

• If the arbitration is mandatory and binding, the parties waive their rights to
access the courts and have a judge decide the case.

• In most arbitration agreements, the parties are required to pay for the arbitrators,
which adds an additional layer of legal cost that can be prohibitive, especially
in small consumer disputes.

• In some arbitration agreements and systems, the recovery of legal costs is

unavailable, making it difficult or impossible for consumers or employees to get
legal representation; however most arbitration codes and agreements provide
for the same relief that could be granted in court.

• If the arbitrator or the arbitration forum depends on the bigger party for repeat
business, there may be an inherent incentive to rule against the consumer or
employee.

• There are very limited avenues for appeal, which means that an erroneous
decision cannot be easily overturned.

• although usually thought to be speedier, when there are multiple arbitrators on

the panel, juggling their schedules for hearing dates in long cases can lead to
delays.

51
Ahmad Ghoneim, “Know your types of arbitration in a nutshell”, available at:
https://www.tamimi.com/lawupdate-articles/know-your-type-three-types-of-arbitration-agreements-in-a-
nutshell/ (visited on November,21st ,2018)

48
• In some legal systems, arbitral awards have fewer enforcement remedies than
judgments; although in the United States, arbitration awards are enforced in the
same manner as court judgments and have the same effect.

• Arbitrators are generally unable to enforce interlocutory measures against a

party, making it easier for a party to take steps to avoid enforcement of an award,
such as the relocation of assets offshore

• Rule of applicable law is not necessarily binding on the arbitrators, although

they cannot disregard the law.

• Disclosure of documents may be more limited in arbitration

• Unlike court judgments, arbitration awards themselves are not directly

enforceable; a party seeking to enforce an arbitration award must resort to
judicial remedies

• Although grounds for attacking an arbitration award in court are limited, efforts
to enforce the award can be fiercely fought, thus necessitating legal costs that
negate the perceived economic incentive to arbitrate the dispute in the first
place.

2. CONCILIATION

49
THE CONCEPT OF CONCILIATION

The Arbitration and Conciliation Act, 1996 (“the Act”) is based on the
UNCITRAL Model Law on international commercial arbitration and
conciliation. While the Act was not intended to displace the judicial system, the
new law ushered in an era of private arbitration and conciliation. It was also the
first time that a comprehensive legislation was made on the subject of conciliation
in India.49 Conciliation is one of the non-binding procedures where an impartial
third party, known as the conciliator, assist the parties to a dispute in reaching a
mutually agreed settlement of the dispute. As per the Halsbury Laws of England,
conciliation is a process of persuading parties to reach an agreement. Because of
its non-judicial character, conciliation is considered to be fundamentally different
from that of litigation. Generally Judges and Arbitrators decide the case in the
form of a judgment or an award which is binding on the parties whiles in the
procedure of the conciliation, the conciliator who is often a government official
52
gives its report in the form of recommendations which is made public.

DEFINITION AND MEANING OF CONCILIATION

The simplest meaning of conciliation is the settlement of the disputes outside the
court .It is a process by which the discussion between the parties are kept going
through the participation of a conciliator. Conciliation is one of the nonbinding
procedures where an impartial third party, known as the conciliator, assist the
parties to a dispute in reaching a mutually agreed settlement of the dispute. As
per the Halsbury Laws of England, conciliation is a process of persuading parties
to reach an agreement. Because of its non-judicial character, conciliation is
considered to be fundamentally different from that of litigation. Generally Judges
and Arbitrators decide the case in the form of a judgment or an award which is

52
Sujay “ A critical study of Principles and Procedure of Conciliation under Arbitration and conciliation act,
1996” available at: http://www.legalservicesindia.com/article/725/Principles-&-Procedure-of-
conciliationunder-Arbitration-&Conciliation-Act-1996.html (visited on November,23,2018)

50
binding on the parties while in the procedure of the conciliation ,the conciliator
who is often a government official gives its report in the form of
recommendations which is made public. The term conciliation is not defined in
the Act.

However, simply put conciliation is a confidential, voluntary and private dispute

resolution process in which a neutral person helps the parties to reach a negotiated
settlement. This method provides the disputing parties with an opportunity to
explore options aided by an objective third party to exhaustively determine if a
settlement is possible. Like arbitration, the Act covers both domestic and
international disputes in the context of conciliation. International conciliation is
confined only to disputes of “commercial” nature. As per the Act, the definition
of international commercial conciliation is exactly similar to that of international
commercial arbitration. 53 Accordingly, the Act defines international commercial
conciliation as conciliation proceedings relating to a dispute between two or more
parties where at least one of them is a foreign party. 54 The foreign party may be
(1) an individual who is foreign national, (2) a company incorporated outside
India, or (3) the government of a foreign country.

HISTORY

History and Evolution

The history and evolution of ADR is visible from 12th century in China , England
and America. And in the Indian perspective it has been seen that the practice of
amicable resolution of the disputes can be caught from the historic times , when
in the villages disputes were resolved between members of a particular relations
or occupations or between members of the same family was in practice in the

53
Explanation to section 1(2) of the Act states that “the expression “international commercial conciliation”
shall have the same meaning as the expression “international commercial arbitration” in clause (f) of
subsection (1) of section 2”.
54
Section 2(f) read with the explanation to section 1(2) of the Act

51
ancient times. In the villages still the panchayat decides approximately all the
disputes between the people as in earlier times the disputes were resolved by the
elders. The concept of Conciliation was introduced in the statute of Industrial
Disputes Act, 1947. The Conciliation is generally conducted by an officer
appointed by Government under Industrial Disputes Act, 1947. Industrial
Disputes Act, 1947 provides provisions for the parties to settle disputes through
Negotiation, Mediation and Conciliation, for example Section 12, Section 18, etc.
Alternate Dispute Resolution plays a major role in the family disputes settlement.
Section 5 of the Family Court Act, 1984 provides provisions for the association
of social welfare organizations to hold Family Courts under control of
government. Section 6 of the Act provide for appointment of permanent
counsellors to enforce settlement decisions in the family matters. Further Section
9 of the Act imposes an obligation on the court to make effort for the settlement
before taking evidence in the case. In addition to all provisions referred above,
Indian Contract Act, 1872 most importantly gives a mention about Arbitration
Agreement as an exception to Section 28 that renders an agreement void if it
restrains a legal proceeding. Alternate Dispute Resolution whether sorted for or
not can be easily inferred from presence or absence of the ‘Arbitration clause.

APPLICATION AND SCOPE

The UNCITRAL Rules on Conciliation, 1980 recognized “the value of

conciliation as a method of amicably settling disputes arising in the context of
international commercial relations” and that adoption of uniform conciliation
rules by “countries with different legal, social and economic systems would
significantly contribute to the development of harmonious international economic
relations.” 55 Accordingly, these rules were closely followed by the Indian
legislators to formulate conciliation rules under Part III of the Act. Section 61 of

55
Resolution 35/52 (Conciliation Rules of the UN Commission on International Trade Law) adopted by the
General Assembly on December 4, 1980

52
the Arbitration and Conciliation Act of 1996 provides for the Application and
Scope of Conciliation. Section 61 points out that the process of conciliation
extends, in the first place, to disputes, whether contractual or not. But the disputes
must arise out of the legal relationship. It means that the dispute must be such as
to give one party the right to sue and to the other party the liability to be sued.
The process of conciliation extends, in the second place, to all proceedings
relating to it. But Part III of the Act does not apply to such disputes as cannot be
submitted to conciliation by the virtue of any law for the time being in force.

Number and qualification of conciliators-Section 63 fixes the number of

conciliators. There shall be one conciliator. But the parties may by their
agreement provide for two or three conciliators. Where the number of conciliator
is more than one, they should as general rule act jointly.

Section 61 of the Arbitration and Conciliation Act of 1996 provides for the
Application and Scope of Conciliation. Section 61 points out that the process of
conciliation extends, in the first place, to disputes, whether contractual or not. But
the disputes must arise out of the legal relationship. It means that the dispute must
be such as to give one party the right to sue and to the other party the liability to
be sued. The process of conciliation extends, in the second place, to all
proceedings relating to it. But Part III of the Act does not apply to such disputes
as cannot be submitted to conciliation by the virtue of any law for the time being
in force.

Number and qualification of conciliators-Section 63 fixes the number of

conciliators. There shall be one conciliator. But the parties may by their
agreement provide for two or three conciliators. Where the number of conciliator
is more than one, they should as general rule act jointly.

53
ROLE OF CONCILIATOR

Per section 80 of the Act, the conciliator does not decide for the parties, but strives
to support them in generating options in order to find a solution that is compatible
for both of them, thereby fulfilling the mandate of section 67 of the Act under
which the main function of the conciliator is to assist the parties to reach an
amicable settlement.56 For achieving this, a conciliator is obliged to (1) act in an
independent and impartial manner, and (2) abide by the principles of objectivity,
fairness and justice.57 Section 67(4) specifically enables the conciliator to “make
proposals for settlement of the dispute … at any stage of the conciliation
proceedings.” The above provisions make it clear that the conciliator, apart from
assisting the parties to reach a settlement, is also permitted and empowered to
make proposals for a settlement and formulate/reformulate the terms of a possible
settlement.

CONCILIATION VIS-À-VIS ARBITRATION

While arbitration is considered private when compared with the court system,
conciliation is even more private than arbitration. As litigation and arbitration are
both means of adjudication, the judge and the arbitrator render their verdicts and
impose them on the parties. While the parties to an arbitration proceeding are
given considerable freedom in terms of deciding the venue, date, arbitrator, etc.,
they have no control over the decision making process except in the case of award
on agreed terms. 58 In contrast, parties to a conciliation proceeding have the
privilege to negotiate and arrive at an amicable settlement with the assistance of
a conciliator in a less formal setting. Secondly, while section 7(2) requires that an
arbitration agreement be in writing, there is no such express provision regarding

56
Under section 73 of the Act, a conciliator can formulate terms of a possible settlement and can also
reformulate the terms of settlement after receiving the observations of the parties.
57
Sub-sections 1 and 2 of section 67 of the Act
58
Section 30 of the Act

54
conciliation in the Act. However, this does not hold much relevance as the process
of conciliation commences with the written offer and acceptance to conciliate by
the parties. 59 Conversely, in arbitration, even in the absence of a prior written
agreement, if the parties appoint the arbitrator and proceed with arbitration, the
requirement of section 7(2) is taken as complied with.

Thirdly, section 30 of the Act permits the parties to engage in conciliation process
even during the course of arbitral proceedings. They may do so suo motu or under
the directions of the arbitrator. In case the conciliation concludes successfully, the
arbitrator is to record the settlement in the form of an arbitral award. Such an
award, which is prepared on agreed terms, is given similar status to that of any
other award. 60 However, section 77 of the Act bars any arbitral or court
proceedings in respect of a dispute which is the subject matter of conciliation
proceedings.61 This essentially means that during arbitral or court proceedings,
the parties are encouraged to initiate conciliation proceedings, but once
conciliation proceedings commence, they are barred from initiating arbitration or
approaching the court. Clearly, the purpose of sections 30 and 77 of the Act is to
encourage parties to resort to non-formal conciliation proceedings in preference
to the formal court and arbitral proceedings.

59
Section 62 of the Act stipulates that a conciliation proceeding shall commence only when a written invitation
issued by one party to commence conciliation is accepted by the other party
60
Section 30 of the Act
61
Section 77 of the Act states that,“the parties shall not initiate, during the conciliation proceedings, any
arbitral or judicial proceedings in respect of a dispute that is the subject-matter of the conciliation
proceedings.” The only exception to this if such proceedings are necessary to preserve the rights of the party,
such as restraining the opposite party through an injunction from doing an act

55
APPOINTMENT OF CONCILIATORS

Section 6462 deals with the appointment of the conciliators. When the invitation
to the conciliation is accepted by the other party, the parties have to agree on the
composition of the conciliation tribunal. In the absence of any agreement to the
contrary, there shall be only one conciliator. The conciliation proceeding may be
conducted by a sole conciliator to be appointed with the consent of both the
parties, failing to which the same may be conducted by two conciliators
(maximum limit is three), then each party appoints own conciliator ,and the third
conciliator is appointed unanimously by both the parties. The third conciliator so
appointed shall be the presiding conciliator. The parties to the arbitration
agreement instead of appointing the conciliator themselves may enlist the
assistance of an institution or person of their choice for appointment of
conciliators. But the institution or the person should keep in view during
appointment that, the conciliator is independent and impartial.63

62
Appointment of conciliators. (1) subject to sub- section (2),- (a) in conciliation proceedings with one
conciliator, the parties may agree on the name of a sole conciliator; (b) in conciliation proceedings with two
conciliators, each party may appoint one conciliator; (c) in conciliation proceedings with three conciliators,
each party may appoint one conciliator and the parties may agree on the name of the third conciliator who
shall act as the presiding conciliator. (2) Parties may enlist the assistance of a suitable institution or person in
connection with the appointment of conciliators, and in particular,- (a) a party may respect such an institution
or person to recommend the names of suitable individuals to act as conciliator, or (b) the parties may agree
that the appointment of one or mom conciliators be made directly by such an institution or person: Provided
that in recommending or appointing individuals to act as conciliator, the institution or person shall have regard
to such considerations as are likely to secure the appointment of an independent and impartial conciliator and,
with respect to a sole or third conciliator, shall take into account the advisability of appointing a conciliator of
a nationality other than the nationalities of the parties.
63
M. K. Sharma, “Conciliation and Mediation”, available at: www.delhimediation centre.gov.in (last visited on
05.10.2018).

56
PROCEDURE

It is the short study of the principles and procedures of conciliation under

Arbitration and conciliation act 1996.

A critical study of Principles and Procedure of conciliation under Arbitration and

Conciliation Act 1996.

Conciliation is one of the non-binding procedures where an impartial third party,

known as the conciliator, assist the parties to a dispute in reaching a mutually
agreed settlement of the dispute. As per the Halsbury Laws of England,
conciliation is a process of persuading parties to reach an agreement. Because of
its non-judicial character, conciliation is considered to be fundamentally different
from that of litigation. Generally Judges and Arbitrators decide the case in the
form of a judgment or an award which is binding on the parties whiles in the
procedure of the conciliation, the conciliator who is often a government official
gives its report in the form of recommendations which is made public.

PRINCIPLES OF PROCEDURE

1) Independence and impartiality [Section 67(1)]-

The conciliator should be independent and impartial. He should assist the parties
in an independent and impartial manner while he is attempting to reach an
amicable settlement of their dispute.

2) Fairness and justice[Section 67(2)]-

The conciliator should be guided by the principles of fairness and justice. He

should take into consideration, 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.

57
3) Confidentiality [Section 70]-

The conciliator and the parties are duly bound to keep confidential all matters
relating to conciliation proceedings. Similarly when a party gives information to
the conciliator on the condition that it be kept confidential, the conciliator should
not disclose that information to the other party.

4) Disclosure of the information [Section 70]-

When the conciliator receives information about any fact relating to the dispute
from a party, he should disclose the substance of that information to the other
party. The purpose of this provision is to enable the other party to present an
explanation which he might consider appropriate.

5) Co-operation of the parties with Conciliator [S. 71]-

The parties should in good faith cooperate with the conciliator. They should
submit the written materials, provide evidence and attend meetings when the
conciliator requests them for this purpose.

PROCEDURE OF CONCILIATION

1) Commencement of the conciliation proceedings [Section 62] 64

The conciliation proceeding are initiated by one party sending a written
invitation to the other party to conciliate. The invitation should identify the
subject of the dispute. Conciliation proceedings are commenced when the
other party accepts the invitation to conciliate in writing. If the other party
rejects the invitation, there will be no conciliation proceedings. If the party

64
Commencement of conciliation proceedings (1) the party initiating conciliation shall send to the other party
a written invitation to conciliate under this Part, briefly identifying the subject of the dispute. (2) Conciliation
proceedings shall commence when the other party accepts in writing the invitation to conciliate. (3) If the
other party rejects the invitation, there will be no conciliation proceedings. (4) If the party initiating
conciliation does not receive a reply within thirty days from the date on which he sends the invitation, or
within such other period of time as specified in the invitation, he may elect to treat this as a rejection of the
invitation to conciliate and if he so elects, he shall inform in writing the other party accordingly

58
 inviting conciliation does not receive a reply within thirty days of the date
he sends the invitation or within such period of time as is specified in the
invitation, he may elect to treat this as rejection of the invitation to
conciliate. If he so elects he should inform the other party in writing
accordingly.

2) Submission of Statement to Conciliator [Section 65] 65

The conciliator may request each party to submit to him a brief written
statement. The statement should describe the general nature of the dispute
and the points at issue. Each party should send a copy of such statement to
the other party. The conciliator may require each party to submit to him a
further written statement of his position and the facts and grounds in its
support. It may be supplemented by appropriate documents and evidence.
The party should send the copy of such statements, documents and
evidence to the other party. At any stage of the conciliation proceedings,
the conciliator may request a party to submit to him any additional
information which he may deem appropriate.

3) Conduct of Conciliation Proceedings[Section 69(1),67(3)]

The conciliator may invite the parties to meet him. He may communicate
with the parties orally or in writing. He may meet or communicate with the
parties together or separately. In the conduct of the conciliation
proceedings, the conciliator has some freedom. He may conduct them in

65
Submission of statements to conciliator. (1) The conciliator, upon his appointment, may request each party
to submit to him a brief written statement describing the general nature of the dispute and the points at issue.
Each party shall send a copy of such statement to the other party. (2) The conciliator may request each party
to submit to him a further written statement of his position mid the facts and grounds in support thereof,
supplemented by any documents and other evidence that such puny deems appropriate. The party shall send
a copy of such statement, documents and other evidence to the other party. (3) At any stage of the
conciliation proceedings, the conciliator may request a party to submit to him such additional information as
he deems appropriate. Explanation.- In this section and all the following sections of this Part, the term
conciliator" applies to a sole conciliator, two or, three conciliators, as the case may be.

59
 such manner as he may consider appropriate. But he should take in account
the circumstances of the case, the express wishes of the parties, a party’s
request to be heard orally and the need of speedy settlement of the dispute.

4) Administrative assistance [S. 68]-

Section 68 facilitates administrative assistance for the conduct of
conciliation proceedings. Accordingly, the parties and the conciliator may
seek administrative assistance by a suitable institution or the person with
the consent of the parties.

Case laws relating to Conciliation-

1. Haresh Dayaram Thakur v. State of Maharashtra and Ors. 66 while dealing

with the provisions of Sections 73 and 74 of the Arbitration and
Conciliation Act of 1996 in paragraph 19 of the judgment as expressed thus
the court held that- "19. From the statutory provisions noted above the
position is manifest that a conciliator is a person who is to assist the parties
to settle the disputes between them amicably. For this purpose the
conciliator is vested with wide powers to decide the procedure to be
followed by him untrammelled by the procedural law like the Code of Civil
Procedure or the Indian Evidence Act, 1872. When the parties are able to
resolve the dispute between them by mutual agreement and it appears to
the conciliator that their exists an element of settlement which may be
acceptable to the parties he is to proceed in accordance with the procedure
laid down in Section 73, formulate the terms of a settlement and make it
over to the parties for their observations; and the ultimate step to be taken
by a conciliator is to draw up a settlement in the light of

66
AIR (2000) SC 228

60
 the observations made by the parties to the terms formulated by him. The
settlement takes shape only when the parties draw up the settlement
agreement or request the conciliator to prepare the same and affix their
signatures to it. Under Sub-section (3) of Section 73 the settlement
agreement signed by the parties is final and binding on the parties and
persons claiming under them. It follows therefore that a successful
conciliation proceedings comes to 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”.

2. In Mysore Cements Ltd. v. Svedala Barmac Ltd 67it was said that Section 73
of the Act speaks of Settlement Agreement. Sub-section (1) says that when
it appears to the Conciliator that there exist elements of settlement which
may be acceptable to the parties, he shall formulate the terms of a possible
settlement and submit them to the parties for their observation. After
receiving the observations of the parties, the Conciliator may reformulate
the terms of a possible settlement in the light of such observations. In the
present case, we do not find there any such formulation and reformulation
by the Conciliator, under Sub- section (2), if the parties reach a settlement
agreement of the dispute on the possible terms of settlement formulated,
they may draw up and sign a written settlement agreement. As per Sub-
section (3) when the parties sign the Settlement Agreement, it shall be final
and binding on the parties and persons claiming under them respectively.
Under Sub-section (4), the Conciliator shall authenticate the Settlement
Agreement and furnish a copy thereof to each of the parties.

67
AIR (2003) SC 3493

61
ADVANTAGES OF CONCILIATION

There are a number of advantages to the conciliation process. These include: 68

• The presence of an experienced neutral (also an attorney) that will actively

suggest possible solutions to the problems at hand and evaluate the risks and
costs associated with continuing the dispute.

• The ability to select the conciliator, allowing parties to choose their conciliator
based on such criteria as expertise, availability, and knowledge of the subject
area.

• Time and cost-efficiency due to the flexible nature of proceedings.

• Total confidentiality agreed upon by both parties as well as the conciliator,

which means both parties can be assured of discretion no matter what the
outcome of the process.

68
Conciliation: advantages , available at: https://www.nextphaselegal.com/blog/conciliation-what-is-
theadvantage/ (visited on November 23,2018)

62
 3. MEDIATION

THE CONCEPT OF MEDIATION

The United Nations (UN) Guidance for Effective Mediation describes mediation
as a voluntary process “whereby a third party assists two or more parties, with
their consent, to prevent, manage or resolve a conflict by helping them to develop
mutually acceptable agreements”. 69 The term peace mediation comprises the
entire structured process of supporting negotiations, from initial contact between
mediators and conflict parties to ceasefire negotiations and the implementation of
peace agreements. Mediation is thus an instrument that can be used throughout
the whole conflict cycle.70

Mediation in its contemporary incarnation is an ADR process where a specially

trained mediator facilitates the parties in arriving at an amicable settlement
through a structured process involving different stages viz. introduction, joint
session, caucus and agreement.71

Mediation is in fact a successful management technique for resolving complex

disputes. The object of the process is to reduce acrimony and posturing, enable
the parties to realize and understand their priorities and interests and steer them
towards a self-determined and mutually acceptable resolution. The mediator
induces and facilitates the parties to enter into a positive dialogue, attempts to
break the impasse and enables them to visualize their own solutions in a pragmatic
manner. The idea is to assist people to communicate in a rational and problem
solving manner, clarify issues and to help negotiations by bringing realism and

69
Anil Xavier, “Mediation is here to Stay”, available at:
https://www.arbitrationindia.com/pdf/mediation_tostay.pdf (visited on November,23, 2018)
70
Mediation in India, available at: http://mediationinindia.blogspot.com/2012/09/delhi-mediation-centre.html
(visited on November,24,2018)
71
Paradigm of Alternative Dispute Resolution by Winne Sithole, available at:
https://core.ac.uk/download/pdf/43165628.pdf (visited on November, 20th 2018)

63
objectivity to a dispute. 72 Mediation is therefore in a sense empowering the parties
to think for themselves and choosing what is right for them so that they own the
responsibility of arriving at their own decisions. 73 In short it is a professionally
and scientifically managed negotiation process.74

THE MEDIATION PROCESS

The idea of specifying a pre-fabricated structured process is avoidance of hit and

trial methods and unnecessary experimentation so as to introduce consistency and
efficacy in the process and reap benefits of the best practices, experiences and
research of professionals and intellectuals. The fact of the matter is that the
structure of mediation process creates an efficient convention for mediators and
parties to follow in multiple iterations; however, adjustments may be desirable,
75
indeed even necessary in many cases and such adjustments are quite
permissible.

The functional stages of the mediation process are:

1) Introduction and Opening Statement

2) Joint Session

3) Separate Session(s)

4) Closing76

72
S.B. Sinha, “Mediation – Need of the Hour” available at: http://bombayhighcourt.nic.in/
mediation/index_articles.htm (visited on November,23,2018).
73
Rajiv Chelani, “Promoting Mediation as a Conflict Resolution Tool”, The Indian Arbitrator available at:
https://www.arbitrationindia.com/pdf/tia_1_4.pdf (visited on November 23,2018)
74
R.V. Raveendran, “Mediation – An Introduction”, available at: http://bombayhighcourt.nic.in (visited on
November 23,2018)
75
Hiram E. Chodosh, “Mediating Mediation in India”, available at: http://lawcommissionofindia.nic.in (visited
on November 24, 2018).
76
Mediation and conciliation in India, available at:
https://www.sci.gov.in/pdf/mediation/MT%20MANUAL%20OF%20INDIA.pdf (visited on November,24,2018)

64
Mediation is a voluntary, party-centred and structured negotiation process where
a neutral third party assists the parties in amicably resolving their dispute by using
specialized communication and negotiation techniques. In mediation, the parties
retain the right to decide for themselves whether to settle a dispute and the terms
of any settlement. Even though the mediator facilitates their communications and
negotiations, the parties always retain control over the outcome of the dispute.
Mediation is also voluntary. The parties retain the right to decide for themselves
whether to settle a dispute and the terms of settlement of the dispute. Even if the
court has referred the case for the mediation or if mediation is required under a
contract or a statute, the decision to settle and the terms of settlement always rest
with the parties. This right of self-determination is an essential element of the
mediation process. It results in a settlement created by the parties themselves and
is, therefore, acceptable to them. The parties have ultimate control over the
outcome of mediation. Any party may withdraw from the mediation proceedings
at any stage before its termination and without assigning any reason. 77

Mediation is a party-centred negotiation process. The parties and not the neutral
mediator are the key point of the mediation process. Mediation encourages the
active and direct participation of the parties in the resolution of their dispute.
Though the mediator, advocates, and other participants also have active roles in
mediation, the parties play the key role in the mediation process. They are actively
encouraged to explain the factual background of the dispute, identify issues and
underlying interests, generate options for agreement and make a final decision
regarding the settlement. Though the mediation process is informal, which means
that it is not governed by the rules of evidence and formal rules of procedure it is
not an extemporaneous or casual process. The mediation process itself is
structured and formalized, with clearly identifiable stages. However, there is a

77
R.V. Raveendran,“Mediation – An Introduction”, available at:
http://bombayhighcourt.nic.in/mediation/index_articles.htm (visited on November 24,2018) 83
Ashwanie Kumar Bansal, Arbitration and ADR 20 (Universal Law Publishing Co. Pvt. Ltd., Delhi, 2005)

65
degree of flexibility in following these stages. 83 Mediation, in essence, is an
assisted negotiation process. Mediation addresses both the factual/ legal issues
and the underlying causes of a dispute. Thus, mediation is broadly focused on the
facts, law, and underlying interests of the parties, such as personal,
business/commercial, family, social and community interests. The goal of
mediation is to find a mutually acceptable solution that adequately and
legitimately satisfies the needs, desires and interests of the parties. 78

Mediation provides an efficient, effective, speedy, convenient and less expensive

process to resolve a dispute with dignity, mutual respect and civility. Mediation
is conducted by a neutral third party- the mediator. The mediator remains
impartial, independent, detached and objective throughout the mediation process.
In mediation, the mediator assists the parties in resolving their dispute. The
mediator is a guide who helps the parties to find their own solution to the dispute.
The mediator’s personal preferences or perceptions do not have any bearing on
the dispute resolution process.

78
Dhananjaya Y. Chandrachud, “Mediation – Realizing the Potential and Designing Implementation Strategies”,
available at: http://lawcommissionofindia.nic.in (visited on November 24,2018)

66
TYPES OF MEDIATION

A.) Statutory.

There are some types of cases that are required by law to go through the mediation
process. Labor disputes and domestic (family law) disputes are two prime
examples. In India, however, this type of mandatory mediation is rare. B.) Court
ordered.

Most jurisdictions in India require some form of alternative dispute resolution

before a case may be resolved through the traditional judicial process. As soon as
a case is filed, the parties are provided a number of ADR options. They must,
unless exempted by the Court, select and pursue one of these options. Included,
as an option is mediation. The Court maintains a list of mediators—skilled and
experienced attorneys selected by the Court—who are available to the parties.

67
C.) Contractual.

The parties to a contract, as part of the terms of their agreement, may include a
mediation clause as a mechanism to resolve disputes. Although binding
arbitration is a much more common contractual term since it will always result in
a resolution, mediation can be an effective tool to resolve contractual disputes
before they blossom into a protracted battle. D.) Voluntary.

The parties to a dispute may decide to seek mediation without being compelled
by law, court order, or contract. They may choose to mediate their dispute at any
time: as the dispute is developing, before initiating legal action, or even while
legal action is pending. The conditions of the mediation—e.g., who will be the
mediator, when the mediation will occur, the rules of the mediation—are
controlled by the parties

QUALIFICATIONS OF MEDIATORS

The Supreme Court of India in Salem Advocate Bar Association v. Union of

India 79 approved the Model Civil Procedure Mediation Rules prepared by the
Committee headed by Hon'ble Mr. Justice M.J.Rao, the then Chairman, Law
Commission of India. These Rules have already been adopted by most of the High
Courts with modifications according to the requirements of the State concerned.
As per the Model Rules the following persons are qualified and eligible for being
enlisted in the panel of mediators: - (a)

(i) Retired Judges of the Supreme Court of India;

(ii) Retired Judges of the High Court;
(iii) Retired District and Sessions Judges or retired Judges of the City Civil
Court or Courts of equivalent status;

79
(2005) 6 SCC 344

68
(b) Legal practitioners with at least fifteen years standing at the Bar at the level
of the Supreme Court or the High Court or the District Courts of equivalent status;

(c) Experts or other professionals with at least fifteen years standing; or retired
senior bureaucrats or retired senior executives;

(d) Institutions which are themselves experts in mediation and have been
recognized as such by the High Court, provided the names of its members are
approved by the High Court initially or whenever there is change in membership.
80

ROLE OF THE MEDIATOR

Mediation is a process in which an impartial and neutral third person, the

mediator, facilitates the resolution of a dispute without suggesting what should
be the solution. It is an informal and no adversarial process intended to help
disputing parties to reach a mutually acceptable solution. The role of the mediator
is to remove obstacles in communication, assist in the identification of issues and
the exploration of options and facilitate mutually acceptable agreements to
resolve the dispute. However, the ultimate decision rests solely with the parties.
A mediator cannot force or compel a party to make a particular decision or in any
other way impair or interfere with the party's right of selfdetermination.

(A) FUNCTIONS OF A MEDIATOR

The functions of a mediator are to -:

(i) facilitate the process of mediation; and

(ii) assist the parties to evaluate the case to arrive at a settlement

80
Anubhav Panday , “all you need to know about ADR” available at: https://blog.ipleaders.in/adr-
alternativedispute-resolution/ (visited on November 25,2018)

69
ANALYSIS

Of late, mediation has proved to be a much-favoured method of alternate dispute

resolution, specifically amongst various foreign entities, inter alia, due to its
informal methods and reduced costs (compared to other forms of dispute
resolution). More often than not, a trusted third party is appointed as a mediator
between the disputing parties. Mediation is often used as the first step to resolve
any dispute and failing any resolution under mediation, parties agree that disputes
will be referred to arbitration. Thus, most commercial contracts now provide for
mediation as a mechanism for dispute resolution, prior to proceeding for
arbitration. Contractually, parties may agree to maintain confidentiality of the
said mediation proceedings. However, unlike in conciliation and arbitration
proceedings, there is no statutory provision in India that mandates maintaining
confidentiality of such proceedings in relation to mediation proceedings. A
significant concern that, therefore, typically arises in such circumstances is the
confidentiality that is accorded to the various discussions and proposals made in
such mediation proceedings.

The instant judgment should help assuage concerns on the confidentiality

surrounding the process of court-directed mediation. By the said judgment, the
Court has specifically acknowledged that any discussions and proposals made
during the course of mediation proceedings are confidential in nature. The said
judgment should provide a fillip to mediation proceedings.

70
 4. JUDICIAL SETTLEMENT

The expression Judicial Settlement suggests that it is some sort of a judge

mediated settlement of a dispute. Judicial Settlement is a term which is in vogue
in the west – particularly the United States of America. There we have what are
known as judicial settlement conferences. A judicial settlement conference is an
informal process in which a judge, trained in mediation and settlement conference
skills, actively facilitates a process whereby parties in conflict may reach a
mutually satisfactory resolution. In Afcons Infrastructure Ltd. v. Cherian Varkey
Construction Co. (P) Ltd. 81 The term judicial settlement therefore refers to a
settlement of a civil case with the help of a judge who has not been assigned the
duty to adjudicate upon the dispute.

Thus judicial settlement conference is presided over by a judge who uses fair
settlement techniques to enable the parties to arrive at an amicable settlement.
The archetypal role of the settlement conference judge is to roughly evaluate the
case on the merits and to assist the bargaining of settlement proposals. Some
settlement judges also use mediation techniques in the judicial settlement
conferences to improve communication among the parties, probe barriers to
settlement, and help formulate resolutions. 82 A settlement judge has however no
power to force the parties to arrive at a settlement. An important feature of judicial
settlement conference is that the judge who presides over the judicial settlement
conference does not conduct the trial of the case on merits.83 Either the case is
marked to a different judge for a settlement conference or the trial judge after
conducting a settlement conference does not proceed with the trial. The intent is

81
JT 2010 (7) SC 616
82
Elizabeth Plapinger & Donna Stienstra, ADR and Settlement in the Federal District Courts: A Sourcebook for
Judges and Lawyers, available at: http://www.fjc.gov (visited on November 25,2018)
83
Goldschmidt and Milford, Judicial Settlement Ethics (American Judicature Society, 1996), available at:
http://www.judiciary.state.nj.us (visited on November 25, 2018)

71
that a judge who conducts trial is not prejudiced by the conduct of a party during
judicial settlement proceedings.

In B.P. Moideen Sevamandir v. A.M. Kutty Hassan84, the Supreme Court held that
when deciding a matter on merits of a case, if a court carries any prejudice against
a party on account of his conduct before an ADR forum, it will violate the
inviolable guarantee against prejudice or bias in the decision making process.

JUDICIAL SETTLEMENT IN INDIA

As far as Indian Law is concerned the expression judicial settlement was

introduced in to the Code of Civil Procedure, 1908 through Section 89 CPC. 6.5.2
Judicial Settlement in India Section 89 CPC provides judicial settlement as a
mode of ADR. The court can refer a dispute to judicial settlement in terms of
section 89 CPC to a suitable institution or person and such institution or person
is to be deemed to be a Lok Adalat and all the provisions of the Legal Services
Authority Act, 1987 are applicable.

To implement the objectives of section 89 CPC under the directions of the

Supreme Court in the Salem Bar Association(I) Case85 a committee headed by
Justice M. Jagannadha Rao was formed and the committee placed before the
Supreme Court the Draft Civil Procedure - ADR and Mediation Rules, 2003
which were considered by the Supreme Court in the Salem Advocate Bar
Association v. Union of India (II) 86. The Supreme Court thereafter directed the
respective High Courts to examine and finalise the said rules.

Under the said draft Civil Procedure - ADR and Mediation Rules, 2003 Judicial
settlement was defined as : 'Judicial settlement' means a final settlement by way
of compromise entered into before a suitable institution or person to which the

84
2009 (2) S.C.C. 198
85
AIR 2003 SC 189
86
AIR 2005 SC 3353

72
Court has referred the dispute and which institution or person are deemed to be
the Lok Adalats under the provisions of the Legal Service Authority Act, 1987
(39 of 1987) and where after such reference, the provisions of the said Act apply
as if the dispute was referred to a Lok Adalat under the provisions of that Act. 87

Where all the parties to the suit decide to exercise their option and to agree for
judicial settlement the court has to refer the matter to a suitable institution or
person which shall be deemed to be a Lok Adalat. 88

Thus for judicial settlement as provided under section 89 CPC the court is
supposed to refer the dispute to a suitable institution or person. However there is
no indication in the statute, that to which institution or person the matter is to be
referred to. That person may be a judge or may not be a judge. He may be a person
of legal background or may not be a person of legal background. The dispute may
also be referred to some external private institution offering institutionalized
conciliation or mediation services. There is no indication as to what are the
guidelines/ practice directions for referring the matter. Thus section 89 CPC is
silent on these aspects.

This renders judicial settlement a sui generis settlement procedure. This is

because the term judicial settlement per se gives as indication that it is a judge
mediated settlement and this is also the plain meaning of judicial settlement as is
understood in the west. However in India by virtue of section 89 CPC any person
or institution may conduct judicial settlement and such institution or person is
deemed to be a Lok Adalat and all the provisions of the Legal Services Authority
Act, 1987 apply to such proceedings as if the dispute were referred to a Lok
Adalat under the provisions of that Act.

87
Rule 4, ADR and Mediation Rules, 2003 (Draft)
88
Rule 5, ADR and Mediation Rules, 2003 (Draft)

73
 5. LOK ADALAT

THE CONCEPT OF LOK ADALAT

NALSA along with other Legal Services Institutions conducts Lok Adalats. Lok
Adalat is one of the alternative dispute resolution mechanisms, it is a forum where
disputes/cases pending in the court of law or at pre-litigation stage are settled/
compromised amicably. Lok Adalats have been given statutory status under the
Legal Services Authorities Act, 1987. Under the said Act, the award (decision)
made by the Lok Adalats is deemed to be a decree of a civil court and is final and
binding on all parties and no appeal against such an award lies before any court
of law. In State of Punjab v. Phulan Rani, AIR 2004 SC 4105; See also Union of
India v. Ananto,95 it was held that, If the parties are not satisfied with the award
of the Lok Adalat though there is no provision for an appeal against such an
award, but they are free to initiate litigation by approaching the court of
appropriate jurisdiction by filing a case by following the required procedure, in
exercise of their right to litigate.

There is no court fee payable when a matter is filed in a Lok Adalat. If a matter
pending in the court of law is referred to the Lok Adalat and is settled
subsequently, the court fee originally paid in the court on the complaints/petition
is also refunded back to the parties. The persons deciding the cases in the Lok
Adalats are called the Members of the Lok Adalats, they have the role of statutory
conciliators only and do not have any judicial role; therefore they can only
persuade the parties to come to a conclusion for settling the dispute outside the
court in the Lok Adalat and shall not pressurize or coerce any of the parties to
compromise or settle cases or matters either directly or indirectly. The Lok Adalat

74
shall not decide the matter so referred at its own instance, instead the same would
be decided on the basis of the compromise or

95
2007 SC 1561
settlement between the parties. The members shall assist the parties in an
independent and impartial manner in their attempt to reach amicable settlement
of their dispute. 89

Nature of Cases to be referred to Lok Adalat

1. Any case pending before any court.

2. Any dispute which has not been brought before any court and is likely to be
filed before the court.

Provided that any matter relating to an offence not compoundable under the law
shall not be settled in Lok Adalat.

Which Lok Adalat to be approached

As per section 18(1)97 of the Act, a Lok Adalat shall have jurisdiction to determine
and to arrive at a compromise or settlement between the parties to a dispute in
respect of -

(1) Any case pending before; or

(2) Any matter which is falling within the jurisdiction of, and is not brought
before, any court for which the Lok Adalat is organised.

89
SRD Law notes “What are the benefits of Lok Adalat” available at:
https://www.srdlawnotes.com/2017/01/what-are-benefits-of-lok-adalat.html (visited on November 25,2018) 97
The Legal Services Authority Act, 1987

75
Provided that the Lok Adalat shall have no jurisdiction in respect of matters
relating to divorce or matters relating to an offence not compoundable under any
law.

How to Get the Case Referred to the Lok Adalat for Settlement

(A) Case pending before the court.

(B) Any dispute at pre-litigate stage.

The State Legal Services Authority or District Legal Services Authority as the
case may be on receipt of an application from any one of the parties at a
prelitigation stage may refer such matter to the Lok Adalat for amicable
settlement of the dispute for which notice would then be issued to the other party.

LEVELS AND COMPOSITION OF LOK ADALATS:

At the State Authority Level -

The Member Secretary of the State Legal Services Authority organizing the Lok
Adalat would constitute benches of the Lok Adalat, each bench comprising of a
sitting or retired judge of the High Court or a sitting or retired judicial officer and
any one or both of- a member from the legal profession; a social worker engaged
in the up-liftment of the weaker sections and interested in the implementation of
legal services schemes or programmes.

At High Court Level -

The Secretary of the High Court Legal Services Committee would constitute
benches of the Lok Adalat, each bench comprising of a sitting or retired judge of
the High Court and any one or both of- a member from the legal profession; a
social worker engaged in the upliftment of the weaker sections and interested in
the implementation of legal services schemes or programmes.

76
At District Level -

The Secretary of the District Legal Services Authority organizing the Lok Adalat
would constitute benches of the Lok Adalat, each bench comprising of a sitting
or retired judicial officer and any one or both of either a member from the legal
profession; and/or a social worker engaged in the upliftment of the weaker
sections and interested in the implementation of legal services schemes or
programmes or a person engaged in para-legal activities of the area, preferably a
woman.

At Taluk Level -

The Secretary of the Taluk Legal Services Committee organizing the Lok Adalat
would constitute benches of the Lok Adalat, each bench comprising of a sitting
or retired judicial officer and any one or both of either a member from the legal
profession; and/or a social worker engaged in the up-liftment of the weaker
sections and interested in the implementation of legal services schemes or
programmes or a person engaged in para-legal activities of the area, preferably a
woman.90

Permanent Lok Adalat

The other type of Lok Adalat is the Permanent Lok Adalat, organized under
Section 22-B of The Legal Services Authorities Act, 1987. Permanent Lok
Adalats have been set up as permanent bodies with a Chairman and two members
for providing compulsory pre-litigate mechanism for conciliation and settlement
of cases relating to Public Utility Services like transport, postal, telegraph etc.
Here, even if the parties fail to reach to a settlement, the Permanent Lok Adalat
gets jurisdiction to decide the dispute, provided, the dispute does not relate to any

90
Lok Adalats and permanent lok adalats, available at:
http://shodhganga.inflibnet.ac.in/bitstream/10603/26666/9/09_chapter%203.pdf (visited on November 25,
2018)

77
offence. Further, the Award of the Permanent Lok Adalat is final and binding on
all the parties. The jurisdiction of the Permanent Lok Adalats is up to Rs. Ten
Lakhs. Here if the parties fail to reach to a settlement, the Permanent Lok Adalat
has the jurisdiction to decide the case. The award of the Permanent Lok Adalat is
final and binding upon the parties. The Lok Adalat may conduct the proceedings
in such a manner as it considers appropriate, taking into account the
circumstances of the case, wishes of the parties like requests to hear oral
statements, speedy settlement of dispute etc. 91 ADVANTAGES

1. Lok Adalats are meant for conciliated settlement of disputes outside court
which is what most of our people like if the matter allows for this kind of
settlement. There is a fear among a large number of people about taking
disputes to court, not just about delay in getting justice but also for financial
reasons. In fact, one of the reasons for the formation of Lok Adalat or
people’s court is to provide fair and uncomplicated justice to the financially
deprived section of our society. Though government provides legal aids to
poor, there is a fear of monetary loss during the time period which is why
most people prefer Lok Adalats.

2. Family disputes like property acquisition and matrimonial issues are far
better and faster solved by these Lok Adalats in comparison to courts.
Though there are family courts for these matters, people would always
prefer settlement outside court and in a fair and just manner which is
delivered well by Lok Adalats. It saves time and expenses and also is easier
for parties to make their claims which is not the case when the matter is in
court and witnesses are afraid of getting involved into legal matters.

91
Lok adat, available at: https://nalsa.gov.in/lok-adalat (visited on November 25, 2018)

78
3. The numbers of cases that require jurisdiction is increasing at an alarming
rate and let’s face it – we have far inadequate number of courts and judges
in our country than we require which leads to unnecessary delay even in
smaller cases. If more and more people could understand the significance
of Lok Adalats and resort to them for easy litigations, there would be lesser
pending cases in the files gathering dust since years in courts.

4. Lok Adalats can be a decent supplement to the work of courts and could
contribute to justice in a good way only if awareness is increased and
people are encouraged to opt for them. For illiterates and poor there are
even more advantages of taking matters to lok adalats. Proceedings are
conducted faster and in simple arrangements and even in local languages.
They are not strict about procedural laws or Evidence Act and are based
more on merits which makes it “People’s Festival of Justice.”

5. There is no absolute need of advocates by the victim and the convict, who
can either prefer to have their cases pleaded by the lawyer or simply talk to
the judge about the matter directly. This is not a possibility in courts where
a third person pleads the case and the people involved only get a say when
their turn comes. To explain their stand directly is an advantage that makes
people’s court very accessible and easy for people.

6. Even if the case is filed in court, the expenses are refunded to the party
when the case is solved by Lok Adalat which is another reason why people
should be made more aware of this litigation system where there is no fee
involved. According to justice V V Rao, it will take another 320 years to
clear the pending backlogs in India but if more and more people take their

79
 cases to Lok Adalats, there is a fair chance that this could be achieved
earlier.92

ONLINE DISPUTE RESOLUTION

CONCEPT OF ONLINE DISPUTE RESOLUTION:

Online Dispute Resolution (ODR) was born from the synergy between
Alternative Dispute Resolution (ADR) and Information & Communication
Technology (ICT) as a method for resolving dispute that were arising online, and
for which traditional means of dispute resolution were inefficient or unavailable.
Online Dispute Resolution is an automatized platform or rather a trendy tool for
the development of e-commerce and to solve dispute easily. Due to increasing
use of the Internet worldwide, the number of disputes arising from Internet
commerce is on arises. Numerous websites have been established to help resolve
these Internet disputes, as well as to facilitate the resolution of disputes that occurs
offline. It is becoming an increasingly effective mechanism for resolving disputes
as technology advances.93

As of date, there have been several Internet service providers who have provided
platforms for Online Resolution of disputes by parties, which they can pursue
irrespective of their geographical locations. Quite a few of these have closed
down, may be due to theirs being a bad business model or probably due to their

92
Lok adalat: advantages and disadvantages, available at: https://www.careerride.com/view/lok-
adalatsadvantages-and-disadvantages-26001.aspx (visited on November 25, 2018)
93
Online Dispute Resolution viewed at www.wikipedia.org (visited on November 27,2018)

80
system/platform not living up to the expectations of the end user. But this
certainly does not reflect on the popularity or utility of the concept of ODR
(Online Dispute Resolution), in some places also referred to as “eADR”
(electronic Alternative Dispute Resolution). This is evident from the fact that the
number of service providers has increased in 2004 to over a hundred. 9495

Online Dispute Resolution (ODR) utilizes the Internet as a more efficient medium
for parties to resolve their disputes through a variety of ADR methods similar to
traditional ADR. Using computer-networking technology, ODR brings disputing
parties together "online" to participate in a dialogue about resolving their
dispute.96

ODR is still a fairly recent industry. Many new ODR providers have arisen while
others have stopped operating. ODR providers include private sector companies,
public sector agencies and academic institutions. Currently, the majority of ODR
providers are private sector companies.97

Generally, the complainant begins the ODR process by registering the complaint
online with an ODR provider. The ODR provider will then contact the other party
using the information provided, and invite that other party to participate in the
ODR process. If the other party accepts the invitation, he or she will file a
response to the complaint. The ODR providers employ one or more of the
following dispute resolution techniques or mechanisms (1) arbitration

(2) Mediation (3)

Negotiation,

94
D.M. Popat, “ADR And India: An Overview” viewed at www.legalindia.in (visited on November
95
,2018)
96
Online Dispute Resolution viewed at www.onlineresolution.com (visited on November 27,2018)
97
Ibid. 105
Ibid.

81
which may be assisted by software or rules, and includes blind bidding. Some
providers incorporate a technique that has been called "peer pressure" services.
"Peer pressure" services involve the use of publicity about the on-going dispute
to create an incentive for the online merchant to resolve the dispute. An example
of an ODR provider that utilizes this technique is iLevel. 105

Arbitration involves a decision by an arbitrator, which parties have agreed by

contract to be binding. Mediation involves facilitation of communication and
problem-solving by a mediator. A settlement is reached only if both parties
consent. The arbitration and mediation processes utilize email, chat or messaging
software, audio-conferencing or video-conferencing software for communication
between the arbitrator/mediator and the parties. 98

Online negotiation may involve use of email or messaging, or may utilize heavily
automated systems. Blind bidding refers to a system of settlement in which the
ODR provider's software accepts confidential offers and demands from the
parties, and records a settlement if the offer and demand are within a pre-specified
range from each other. If there is no settlement, the other party will not know
what the submitted bids were.99

THE GROWTH AND EVOLUTION OF ONLINE DISPUTE

RESOLUTION:100

The growth of Online Dispute Resolution is very recent. While the Internet began
in 1969, a need for ODR did not emerge until the early 1990s. For its first two
decades, the Internet was used by a limited number of people in a limited number
of ways. Those with Internet access were associated either with the military or

98
Ibid.
99
Ibid.
100
Ethan Katsh, “Online Dispute Resolution: Some Implications for the Emergence of Law in
Cyberspace” viewed at www.lex-electronica.org (visited on November 27,2018)

82
with academic institutions, and even in those environments; relatively few
computers had Internet access. While screens with images and email with
advertisements are commonplace today, they were unknown at that time. The
World Wide Web was not invented until 1989 and, perhaps even more
significantly, the National Science Foundation banned commercial activity from
the Internet until 1992.

In the early 1990s, groups used “listservs” to communicate, and this form of
online discussion soon generated “flaming” and violations of “netiquette,”
personal attacks that violated generally accepted norms for online discussions.
Disputes also arose involving participants in role playing games that allowed one
to create an online identity and interact with others in a virtual “space.” Various
online mechanisms were employed to deal with these conflicts, but there were no
organized dispute resolution institutions devoted specifically to ODR. Indeed, the
acronym ODR had not yet been invented. The decision by the National Science
Foundation in 1992 to lift its ban on Internet-based commercial activity was
highly controversial and enormously significant. After the ban’s removal,
disputes related to online commerce began to surface. In 1994, for example, the
first commercial spam occurred when two lawyers tried to recruit clients to
participate in an immigration scam. A few months later, the U.S. Federal Trade
Commission filed its first case alleging online fraud. The case involved an
American Online subscriber who advertised the following:

“FOR JUST $99.00 WE WILL SHOW YOU HOW TO CREATE A BRAND NEW

CREDIT FILE AT ALL 3 OF THE MAJOR CREDIT BUREAUS...100% LEGAL

AND 200% GUARANTEED.”

The FTC did not consider the process to be legal or guaranteed. As a result of the
FTC action, the subscriber agreed to stop advertising credit repair programs and
to provide compensation to consumers. The need for a sustained ODR effort to

83
respond to growing number of disputes arising out of online activities prompted
the NCAIR to sponsor a conference on online dispute resolution in 1996. The
conference was the most significant development during the mid1990s, as it led
to the funding of three experimental ODR projects. The Virtual Magistrate project
aimed at resolving disputes between Internet Service
Providers and users. The University of Massachusetts Online Ombudsman Office
hoped to facilitate dispute resolution on the Internet generally. Finally, the
University of Maryland proposed to see if ODR could be employed in family
disputes where parents were located at a distance.

In 1997, the Hewlett Foundation provided funding for the establishment of a

Centre for Information Technology and Dispute Resolution at the University of
Massachusetts and in 1999, the online auction site eBay, asked the Centre to
conduct a pilot project to determine whether online mediation could assist in the
resolution of disputes between buyers and sellers. eBay currently has over one
hundred and sixty million registered users and over twenty five million
transactions take place each week. eBay itself is not a party to any transaction
and, in general, assumes no responsibility for problems that arise between buyers
and sellers. While the percentage of transactions that lead to disputes is low, the
number of such disputes is considerable. ODR has been assumed by many to be
negotiation via email. Email allows easy and quick communication but email
software provides limited information management resources and places most of
the responsibility for organizing the information in emails on the user.

In 1998, the United States government agreed to allow a new organization, the
Internet Corporation for Assigned Names and Numbers (ICANN) to manage the
domain name system. One of the first things ICANN did was enact the Uniform
Dispute Resolution Policy establishing both a process and a set of rules for
deciding domain name disputes.17 Both the approach ICANN chose, a modified
arbitration process, and the systems which have implemented this approach,

84
represent another choice in moving dispute resolution online. The process
employed to resolve domain name disputes. Both current providers, the World
Intellectual Property Organization (WIPO) and the National Arbitration Forum
(NAF) have online systems that could be employed and probably will be
employed in the future. Currently, online filings are occurring with increasing
frequency and email is employed sometimes.

Thus, it can be briefly observed that the increase in online transactions, especially
economic transactions, led to the rise of new type of disputes, either not resolvable
in physical world situation or demands a new, speedier and effective system to
address the issue. The demand for new system may be directly linked to the
several factors affected by the technology itself. Due to the increasing use of the
Internet worldwide, the number of disputes arising from e-commerce, domain
names registrations, and the like, is on the rise.
Traditional mechanisms of dispute resolution, including “offline arbitration”, are
often inappropriate to resolve them; they tend to be time-consuming, expensive
and raise the serious problems related to jurisdiction and enforcement. Hence the
point of departure for the development of online arbitration consists in saying:
“conflicts arising online should be resolved online.”

MEANING OF ONLINE DISPUTE RESOLUTION:

Online dispute resolution (ODR) is a branch of dispute resolution which uses

technology to facilitate the resolution of disputes between parties. It primarily
involves negotiation, mediation or arbitration, or a combination of all three. In
this respect it is often seen as being the online equivalent of alternative dispute
resolution (ADR). However, ODR can also augment these traditional means of

85
resolving disputes by applying innovative techniques and online technologies to
the process.101

ODR is still a fairly recent industry. Many new ODR providers have arisen
“Allsettle.com” or “Settlementonline.com”. The provider then uses the
information provided by the claimant to contact the defendant party and invite
them to participate in online dispute resolution. ODR providers include private
sector companies, public sector agencies and academic institutions. Currently, the
majority of ODR providers are private sector companies. ODR is a wide field,
which may be applied to a range of disputes; from interpersonal disputes
including consumer to consumer disputes (C2C) or marital separation; to court
disputes and interstate conflicts. It is believed that efficient mechanisms to resolve
online disputes will impact in the development of e-commerce. While the
application of ODR is not limited to disputes arising out of business to consumer
(B2C) online transactions, it seems to be particularly apt for these disputes, since
it is logical to use the same medium (the internet) for the resolution of e-
commerce disputes when parties are frequently located far from one another. 102

ODR can be defined as the deployment of applications and computer networks

for resolving disputes with ADR methods. Both e-disputes and brick and mortar
disputes can be resolved using ODR. At the moment there are four types of ODR
systems:103

• Online settlement, using an expert system to automatically settle financial

claims;

101
Online Dispute Resolution viewed at www.wikipedia.org (visited on November
27,2018)
102
Ibid.
103
ONLINE DISPUTE RESOLUTION AS A SOLUTION TO CROSS-BORDER E-DISPUTES : AN INTRODUCTION TO
ODR viewed at www.oecd.org (visited on November 27,2018)

86
 • Online arbitration, using a website to resolve disputes with the aid of
qualified arbitrators;

• Online resolution of consumer complaints, using e-mail to handle certain

types of consumer complaints;

• Online mediation, using a website to resolve disputes with the aid of

qualified mediators;

Not all of these types of ODR are fully developed yet. Online settlement and
online mediation are currently the most advanced.

ONLINE DISPUTE RESOLUTION IN INDIA:

The necessity of the same has arisen due to the growing use of Alternative Dispute
Resolution Mechanism (ADRM) in India to reduce the burdening of the already
overburdened courts in India. The popularity and use of ADRM is increasing but
it can achieve its best only if the same is integrated with the information
technology. The importance of Information and Communication Technology
(ICT) for resolving contemporary electronic commerce (ecommerce) and other
disputes. The best example of the same is the use of Online Dispute Resolution
(ODR) for resolving these disputes and misunderstandings. The Online Dispute
Resolution Mechanism (ODRM) is gaining popularity among all the countries of
the World, including India.104

Internet is a communication tool, which facilitates free information

dissemination. The growth of Internet has created various new problems as well.
New forms of business practices like e-commerce, franchising, service
agreements etc. are being used in international and national trade. With the

104
Online Dispute Resolution viewed at www.e-arbitration-t.com (visited on November
27,2018)

87
explosive globalization of trade and investment, there has been a corresponding
increase in commercial disputes between the parties across national boundaries.
It has become difficult to resolve these disputes by applying the traditional
judicial settlement mechanisms because of conflict in laws of various countries. 105
The swift growth of e-commerce and website contracts has increased the potential
for conflicts over contracts which have been entered into online. This has
necessitated a solution that is compatible with online matters and is netizens
centric. This challenging task can be achieved by the use of ODRM in India. The
use of Online Dispute Resolution Mechanism (ODRM) to resolve such e-
commerce and web site contracts disputes are crucial for building consumer
confidence and permitting access to justice in an online business environment.
These ODRM are not part and parcel of the traditional dispute resolution
machinery popularly known as judiciary but is an alternative and efficacious
institution known as ADRM. Thus, ADR techniques are extrajudicial in
character. They can be used in almost all contentious matters, which are capable
of being resolved, under law, by agreement between the parties. They have been
employed with very encouraging results in several categories of disputes,
especially civil, commercial, industrial and family disputes. These techniques
have been shown to work across the full range of business disputes like banking,
contract performance, construction contracts, intellectual property rights,
insurance, joint ventures, partnership differences etc. ADR offers the best
solution in respect of commercial disputes. However, ADR is not intended to
supplant altogether the traditional means of resolving disputes by means of
litigation. It only offers alternatives to litigation. There are a large number of areas
like constitutional law and criminal law where ADR cannot substitute courts. In
those situations one has to take recourse of the existing traditional modes of
dispute resolution. It is high time that we must build a base for not only offline

105
ICT Strategy in India viewed at www.cyberlawindia.blogspot.com (visited on November 27,2018)

88
ADRM but equally ODRM in India. It must be noted that every new project needs
time to mature and become successful. Thus, the success of ADRM and ODRM
depends upon a timely and early base building. 106

In the present globalised and decentralised world, India cannot afford to keep its
economy closed and secluded. Thus, an interaction between Indian economy and
world’s economy is inevitable. That is not a big problem. The real problem is to
make Indian economy an efficient and competitive economy. Though there are
many indicators for measuring the strengths and weaknesses of an economy, but
the ICT strategy of a nation is very crucial to put it on a global map. It is very
important that the ICT strategy and policies of a nation must not only be suitable
but should also believe in a holistic application and implementation. The ICT
strategy and policy of a nation cannot afford to keep the different components of
ICT separate. Their amalgamation and supplementation must be done at a priority
basis otherwise the ICT strategy and policy will not bring the desired results. The
present ICT strategy and policies of India are deficient and defective. It must be
appreciated that the ICT is directly related to International Trade, more
particularly e-commerce. Thus, when the Indian economy will be integrated with
the Global economy certain disputes are bound to be there. We cannot use the
traditional litigation methods to resolve those disputes. That will only put more
pressure on the already overburdened courts. The fact is that the increasing
backlog of cases is posing a big threat to our judicial system. The same was even
more in the early 90 but due to the computerisation process in the Supreme Court
and other courts that was reduced to a great extent. However, the backlog is still
alarming. This is because mere computerisation of Courts or other Constitutional
offices will not make much difference. What we need is a will and desires to use
the same for speedy disposal of various assignments. There is a lack of training
among Judges regarding use of Information Technology (IT). We need a sound

106
Online Dispute Resolution viewed at www.e-arbitration-t.com (last accessed on 11.06.12)

89
training of Judges first before we wish to capitalize the benefits of IT. A good
initiative has already been taken by the Supreme Court. However, the same
appears to be dormant for the time being. Thus, we need a public initiative as
well. Besides, the use of ICT for ODR purposes is also inevitable due to the
mandates of the right to speedy trial that is provided by the Constitution of
India.107

THE CONSTITUTIONAL MANDATES:108

Article 21 of the Constitution of India declares in a mandatory tone that no person

shall be deprived of his life or his personal liberty except according to procedure
established by law. The words “life and liberty” are not to be read narrowly in the
sense drearily dictated by dictionaries; they are organic terms to be construed
meaningfully. Further, the procedure mentioned in the Article is not some
semblance of a procedure but it should be “reasonable, fair and just.”109 Thus, the
right to speedy trial has been rightly held to be a part of right to life or personal
liberty by the Supreme Court of India. 110 The Supreme Court has allowed Article
21 to stretch its arms as wide as it legitimately can. 111 The reason is very simple.
This liberal interpretation of Article 21 is to redress that mental agony, expense
and strain which a person proceeded against in criminal law has to undergo and
which, coupled with delay, may result in impairing the capability or ability of the
accused to defend himself effectively. Thus, the Supreme Court has held the right
to speedy trial a manifestation of fair, just and reasonable procedure enshrined in

107
ICT Strategy in India viewed at www.cyberlawindia.blogspot.com (visited on November 27,2018)
108
Praveen Dalal, ICT Strategy of India: An ODR Perspective viewed at www.cyberlawindia.blogspot.com
(visited on November 27,2018)
109
Maneka Gandhi v. U.O.I, AIR 1978 SC 597.
110
Hussainara Khatoon (1) v. Home Secretary, State of Bihar, (1980) 1 SCC 81.
111
Article 21 is a Fundamental Right that can be directly enforced in the Supreme Court under Article 32 of The
Constitution of India.

90
Article 21. A speedy trial encompasses within its sweep all its stages including
investigation, inquiry, trial, appeal, revision and re-trial. In other words,
everything commencing with an accusation and expiring with the final verdict
falls within its ambit.

The constitutional philosophy propounded as right to speedy trial has though

grown in age by almost two and a half decades, the goal sought to be achieved is
yet a far-off peak. The failures of prosecuting agencies and executive to act and
to secure expeditious and speedy trial have persuaded the Supreme Court in
devising solutions which go to the extent of almost enacting by judicial verdict
bars of limitation beyond which the trial shall not proceed and the arm of law
shall lose its hold. 112 The validity or justness of those decisions is not the matter
to be decided but the seriousness of delay in the conclusion of criminal and civil
matters must be appreciated at the earliest. This seriousness was appreciated and
accepted by many, including the Constitutional Courts, long before. The same has
got recognition from the legislature as well in the form of introduction of
Alternative Dispute Resolution (ADR) Mechanism (ADRM) through various
statutes.113 There is a growing awareness among the masses as well regarding
ADR/ODR and people are increasingly using the same for getting their disputes
settled outside the court. Thus, to make that choice a ground reality the ICT
strategy of India must consider and accommodate these concerns as well.

NEED FOR ONLINE DISPUTE RESOLUTION

Not only has the development of society and technology magnified the
complexities of human life they also aid in eliminating the same by providing
effective means. Thus, by invention of World Wide Web in 1989 and the
appearance of first Internet Service Provider in 1992, online dispute resolution

112
P.Ramachandra. Rao v. State of Karnataka, (2002)4 SCC 578.
113
Justice Malimath Committee in 1990 stressed the importance of ADRM to supplement the legal forum with
a view to decrease the burden of traditional courts.

91
mechanism found its way into the world. Professor Ethan Katshis is the leading
researcher and developer of this concept. From 1997 to 1999, he had mediated a
variety of disputes online, involving domain name/trademark issues, intellectual
property conflicts, disputes with Internet Service Providers, and others. He also
supervised a project with the online auction site eBay, in which he mediated over
150 disputes in two week period. He went on to the co-founded Disputes.org,
which later worked with e-Resolution to become one of the four providers
accredited by ICANN to resolve domain name disputes. Along with Professor
Rifkin he wrote Online Dispute Resolution: Resolving Conflicts in Cyberspace
(2001), the first book about ODR and personified technology as a “Fourth Party”
in Online Disputes.114

Information and Communication Technology (ICT) after the development of

computer and internet technology has played an important role in every sphere
and therefore dispute resolution system has also been affected by this change.
Online dispute resolution has been emerged as a result of technological changes
and development of new online environment. It is a new concept and is capable
of solving the problems of traditional litigation, judicial system and ADRs. It has
been proved to help the courts to reduce the huge backlog of cases especially at
district and subordinate level in different countries. E-Court system has also been
considered as a part of ODR movement. Online Dispute Resolution has been
working at international level very successfully. Various countries has
experienced this system to solve number of disputes such as Consumer to
Consumer, Business to Business, Business to Consumer, small value of claim
disputes, family disputes, inter –state disputes and other civil disputes. It has
number of advantages over the traditional courts system and ADR systems. Such
as:-

114
Ethan Katsh, ODR.INFO The National Centre for Technology and Dispute Resolution,
http://odr.info/ethankatsh (visited on November 29,2018)

92
 1. This system is very efficient to solve the disputes which arises in cyber
space specially domain name disputes because such disputes are unique to
the electronic platform.
2. This system enhances trust and confidence in the e-commerce environment
which will ultimately promote the e-commerce.
3. ODR system is very important for small-value disputes due to low cost of
this mechanism. In small disputes parties do not prefer to go to the court or
to resort traditional ADR system.

4. ODR is also helpful to solve cross-border international commercial

disputes, due to jurisdictional and procedural obstacles in traditional ADR
system.
5. ODR system overcomes the geographical barriers. Parties need not to
travel anywhere for filling the case. Wherever internet is accessible ODR
is possible.115
6. Similar to the ADR system ODR mechanism will also help to reduce the
pendency in the higher courts as well as in lower courts. 116

OBJECTIVE OF ONLINE DISPUTE RESOLUTION

The primary purpose of ODR is to allow the parties to resolve their dispute with
the use of electronic technology. It may occur in “real time” or unroll in an
asynchronous manner, depending on the rules of the ODR Provider, as well as
the wishes of the parties. Often, this process is more convenient and cost efficient
than face to face meetings in order to negotiate, mediate, or otherwise resolve
existing disputes.

115
Chitranjali Negi, „Pendency in Indian Courts an Idea of Online Dispute Resolution,‟ April 17, 2015, available
at: https://ssrn.com/abstract=2597817 (Visited on November 26,2018)
116
Dispute Resolution Mechanism in Electronic Commerce” (2005) (Unpublished dissertation of LL.M,
University of Manchester)

93
The actual terms of the agreement that the parties come to can be as broad or as
specific as the parties desire, particularly if the matter is concluded at the
negotiation or mediation phase. The enforceability of the settlement agreement
may depend on the rules and jurisdiction of the ODR Provider, particularly if the
dispute is international.

The following questions could be important to consider in determining whether

ODR is an appropriate manner to settle the existing dispute:

1. Are there really only a few issues at stake?

o ODR is best-suited to deal with a small number of issues, and is often

best when the issue at stake is an amount of money rather than issues
pertaining to liability.

2. Are there only a few parties?

o ODR works best when there are only a few parties.

3. Can the factual and/or legal issues be concisely presented?

o Given that most of ODR involves electronic communication, often

in writing, it works best where the issues can be clearly stated.

4. Are the factual issues dependent on the parties' differing opinions or on

their credibility? o ODR is more effective where factual issues are not
dependant on credibility.

5. Are witnesses required to give testimony in order to resolve the dispute?

o Some ODR processes may not easily allow for witnesses to testify,
particularly if the ODR process focuses on the negotiation or
mediation phase of a dispute.

6. Are the parties being unrealistic regarding the outcome of the case?

94
 o Where the parties are unrealistic about outcomes, ODR may not be
successful, particularly if the process is focused on the negotiation
or mediation phase of the dispute.

7. Is the issue of law relatively settled or in flux?

o If there are issues of law that are unsettled, the matter may not be
appropriate for ORD

ADVANTAGES OF ONLINE DISPUTE RESOLUTION

• ODR is a generally informal, flexible and creative tool of dispute resolution

which is not governed by strict rules of procedure and evidence. This may
allow the parties to design or participate in a process which can be moulded
to suit their needs and encourages a consensual rather than an adversarial
approach.

• ODR may reduce litigation costs: this is of importance both to corporate

parties who wish to keep costs down and to parties who otherwise might
not be able to afford the cost of litigation. The costs of the process or
compensation given to the neutral evaluator are generally borne equally by
all parties, providing all parties with an equal stake in the outcome and an
equal sense of ownership.

• ODR may be the appropriate option particularly for low-cost, highvolume

transaction as it often allows for a timely, cost-efficient and efficient
resolution to problems where the amounts in dispute may not be
sufficiently high to justify the cost of a meeting-based mediation (e.g.
consumer disputes).

• ODR also allows for a more cost-efficient resolution of disputes where

there is significant geographic distance between the parties and the amount
in dispute may preclude the cost of travel.

95
 • ODR may be appropriate where there are sensitivities between the parties
that may be exacerbated by being in the same room (e.g. matrimonial
disputes).

• ODR may allow for the participation of parties who could not otherwise
attend an in-person meeting due to a severe disability.

• ODR is confidential (unless agreed otherwise by the parties), subject to the

application of the Access to Information Act and of the Privacy Act when
the federal government is a party. The process is appropriate when
confidentiality is considered important or necessary to the parties, which is
often the case: parties utilizing DR mechanisms usually do so on the basis
that they can discuss matters freely in the expectation that they will be
disclosed, neither publicly, nor to a court.[18]

DISADVANTAGES OF ONLINE DISPUTE RESOLUTION

• All parties would be required to have adequate technology to participate in

an ODR Process. Parties without adequate technology may be at a
disadvantage or unable to fully participate.

• ODR is a less personal form of dispute resolution as the parties are not in
the same room, and often all of the discussions are in writing.

• Parties with language and/or difficulties communicating in writing may be

at a disadvantage in an ODR process.

• Where ODR is a non-binding process (i.e. only part of the

negotiation/mediation phase), it cannot produce legal precedents.
However, if the last step of the ODR Process results in adjudication, a legal
precedent may be set

96
ANALYSIS

On November 8, 2016 Indian Government has taken decision of demonetisation

to curb problem of black money in India. Thereafter problem of shortage of cash
has arisen. Then need was felt to promote digital payments to deal with cash
shortage. Numbers of discount offers were announced by finance minister to
promote digital transactions. Governments and private entities have also waived
off charges over digital transactions to promote digital economy. Heavy discounts
were offered by big e-commerce giants. This event has promoted ecommerce,
which would not happen if demonetisation were not done. Therefore promotion
of e-commerce in India definitely helps to create roads to Online Dispute
Resolution.

Settlement of disputes by way of internet has gained immense popularity in

developed nations like Europe and USA and with International sanctions and
guidelines future of ODR is exceptional. The day is not far when ODR, as a way
of arbitration will soon become a necessity for the world. Information technology,
society, human relations, human interactions, commercial activities and laws a
step higher in all these fields is a step towards ODR. With respect to India the
trend of arbitration has seen considerable growth in past few years. Deeper
research in the field of arbitration and other ADR mechanisms are been
encouraged. Legal fraternity is working day and night to mitigate flaws in the
current system and to develop upgraded methods for harmonious working of the
society. In backdrop of such developments and followance of doctrine of

97
“justice delayed is justice denied” by the courts; ODR is indeed the new face of
arbitration in India.

LEGISLATIVE RECOGNITION OF ALTERNATIVE DISPUTE

REDRESSAL

Alternative Dispute Redressal or Alternative Dispute Resolution has been an

integral part of our historical past. Like the zero, the concept of Lok Adalat
(Peoples’ Court) is an innovative Indian contribution to the world of
Jurisprudence. The institution of Lok Adalat in India, as the very name suggests
means, Peoples’ Court. ‘Lok’ stands for ‘people’ and the vernacular meaning of
the term ‘Adalat’ is the Court. India has long tradition and history of such methods
being practiced in the society at grass root level. These are called panchayat, and
in legal terminology these are called arbitration. These are widely used in India
for resolution of disputes both commercially and noncommercially.

The ancient concept of settlement of disputes through mediation, negotiation or

through arbitral process is known as “Peoples’ Court Verdict” or “Nyaya-
Panch” which is conceptualized and institutionalized in the philosophy of Lok
Adalat. Some people equate Lok Adalat to conciliation or mediation, whereas
some treat it with negotiation or arbitration. Those who find it different from all
these, call it “Peoples’ Court”. It involves people who are directly and indirectly
involved by dispute resolution. 117

The concept of Lok Adalat was pushed back into oblivion in last few centuries
before independence and particularly during the British regime. Now this concept

117
V. Karthyaeni and Bhatt Vidhi, “Lok Adalat and Permanent Lok Adalats- A Scope for Judicial Review: A
Critical Study”, viewed at www.legalserviceindia.com (visited on November 28,2018) 126 Ibid

98
has once again been rejuvenated. It has once again become familiar and popular
amongst litigants.126

The movement towards Alternative Dispute Redressal (ADR) has received

Parliamentary recognition and support. The advent of Legal Services Authorities
Act, 1987 gave a statutory status to Lok Adalats, pursuant to the constitutional
mandate in Article- 39A of the Constitution of India, which contains various
provisions for settlement of disputes through Lok Adalat. It is an Act to constitute
legal service authorities to provide free and competent legal services to the
weaker sections of the society to ensure that opportunities for securing justice are
not denied to any citizen by reason of economic and other disabilities, and to
organise Lok Adalats to secure that the operation of the legal system promotes
justice on a basis of equal opportunity. Before the enforcement of the Act, the
settlements of disputes were in the hands of the Panchayat head or the tribal head.
But when statutory recognition had been given to Lok Adalat, it was specifically
provided that the award passed by the Lok Adalat formulating the terms of
compromise will have the force of decree of a court which can be executed as a
civil court decree.118

In India, laws relating to resolution of disputes have been amended from time to
time to facilitate speedy dispute resolution. The Judiciary has also encouraged out
of court settlements to alleviate the increasing backlog of cases pending in the
courts. To effectively implement the ADR mechanism, organizations like ICA,
ICADR were established, Consumer Redressal forums and Lok Adalats revived.
The Arbitration Act, 1940 was repealed and a new and effective arbitration
system was introduced by the enactment of the Arbitration and Conciliation Act,

118
Singh, Dr. Avtar; Law of Arbitration and Conciliation (including ADR Systems), Eastern Book Company,
Lucknow, 7th Edition(2006), p. 394;

99
1996.This law is based on the United Nations Commission on International Trade
Law (UNCITRAL) model law on International Commercial Arbitration. 119

In Sitanna v. Viranna120, the Privy Council affirmed the decision of the

Panchayat and Sir John Wallis observed that the reference to a village panchayat
is the time-honoured method of deciding disputes. It avoids protracted litigation
and is based on the ground realities verified in person by the adjudicators and the
award is fair and honest settlement of doubtful claims based on legal and moral
grounds.121

The legislative sensitivity towards providing a speedy and efficacious justice in

India is mainly reflected in two enactments. The first one is the Arbitration and
Conciliation Act, 1996 and the second one is the incorporation of section 89 in
the traditional Civil Procedure Code (CPC). 122

The adoption of the liberalized economic policy by India in 1991 has paved way
for integration of Indian economy with global economy. This resulted in the
enactment of the Arbitration and Conciliation Act, 1996 (new Act) by the
legislature as India had to comply with well-accepted International norms. It
superseded the obsolete and cumbersome Arbitration Act, 1940. The new Act has
made radical and uplifting changes in the law of arbitration and has introduced
new concepts like conciliation to curb delays and bring about speedier settlement
of commercial disputes. The new Act has been codified on the lines of the Model
Law on International Commercial Arbitration as adopted by the United Nations
Commission on International Trade Law (UNCITRAL). One of the most
commendable objects of the new Act is to minimize the role of the courts in the
arbitration process. The Arbitration and Conciliation Act, 1996 laid down the

119
Alternative Dispute Resolution, viewed at www.sethassociates.com (visited on November 29,2018)
120
AIR 1934 SC 105
121
Justice Dispensation through ADR Systems in India, viewed at www.legalindia.in (visited on November 29,2018)
122
Singh, Dr. Avtar; Law of Arbitration and Conciliation (including ADR Systems), Eastern Book Company,
Lucknow, 7th Edition (2006), pp. 394- 395

100
minimum standards, which are required for an effective Alternative Dispute
Resolution Mechanism. 123

Further, the recent amendments of the Civil Procedure Code will give a boost to
ADR. Section 89 (1) of CPC deals with the settlement of disputes outside the
court. It provides that where it appears to the court that there exist elements, which
may be acceptable to the parties, the court may formulate the terms of a possible
settlement and refer the same for arbitration, conciliation, mediation or judicial
settlement. 124 While upholding the validity of the CPC amendments in Salem
Advocate Bar Association, Tamil Nadu v. U.O.I, 125 the Supreme Court had
directed the constitution of an expert committee to formulate the manner in which
section 89 and other provisions introduced in CPC have to be brought into
operation. The Court also directed to devise a model case management formula
as well as rules and regulations, which should be followed while taking recourse
to alternative dispute redressal referred to in Section 89 of CPC. All these efforts
are aimed at securing the valuable right to speedy trial to the litigants. 126

ADR was at one point of time considered to be a voluntary act on the apart of the
parties which has obtained statutory recognition in terms of Civil Procedure Code
(Amendment) Act, 1999; Arbitration and Conciliation Act, 1996; Legal Services
Authorities Act, 1997 and Legal Services Authorities (Amendment) Act, 2002. The
access to justice is a human right and fair trial is also a human right. In India, it is
a Constitutional obligation in terms of Art.14 and 21. Recourse to ADR as a
means to have access to justice may, therefore, have to be considered as a human

123
Justice Dispensation through ADR Systems in India, viewed at www.legalindia.in (visited on November 29,2018)
124
Ibid
125
(2005) SCC 6 (344)
126
Singh Sunil, Alternative Dispute Resolution in India viewed at www.ijtr.nic.in (visited on November
29,2018)

101
right problem. Considered in that context the judiciary will have an important role
to play.127

The Supreme Court of India has also suggested making ADR as ‘a part of a
package system designed to meet the needs of the consumers of justice’. The
pressure on the judiciary due to large number of pending cases has always been a
matter of concern as that being an obvious cause of delay. The culture of
establishment of special courts and tribunals has been pointed out by the Hon’ble
Supreme Court of India in number of cases. The rationale for such an
establishment ostensibly was speedy and efficacious disposal of certain types of
offences.128

Industrial Disputes Act, 1947 provides the provision both for conciliation and
arbitration for the purpose of settlement of disputes. In Rajasthan State Road
Transport Corporation v. Krishna Kant, the Supreme Court observed: “The
policy of law emerging from Industrial Disputes Act and its sister enactments is
to provide an alternative dispute-resolution mechanism to the workmen, a
mechanism which is speedy, inexpensive, informal and unencumbered by the
plethora of procedural laws and appeals upon appeals and revisions applicable to
civil courts. Indeed, the powers of the courts and tribunals under the Industrial
Disputes Act are far more extensive in the sense that they can grant such relief as
they think appropriate in the circumstances for putting an end to an industrial
dispute.”138

Section 23(2) of the Hindu Marriage Act, 1955 mandates the duty on the court
that before granting relief under this Act, the Court shall in the first instance;
make an endeavour to bring about reconciliation between the parties, where it is

127
Justice Dispensation through ADR Systems in India, viewed at www.legalindia.in (visited on November 29,2018)
128
Ibid
138
Ibid

102
possible according to nature and circumstances of the case. For the purpose of
reconciliation the Court may adjourn the proceeding for a reasonable period and
refer the matter to person nominated by court or parties with the direction to report
to the court as to the result of the reconciliation [Section 23(3) of the Act]. 129

The Family Court Act, 1984 was enacted to provide for the establishment of
Family Courts with a view to promote conciliation in, and secure speedy
settlement of, disputes relating to marriage and family affairs and for matter
connected therewith by adopting an approach radically different from the
ordinary civil proceedings. Section 9 of the Family Courts Act, 1984 lays down
the duty of the family Court to assist and persuade the parties, at first instance, in
arriving at a settlement in respect of subject matter. The Family Court has also
been conferred with the power to adjourn the proceedings for any reasonable
period to enable attempts to be made to effect settlement if there is a reasonable
possibility.130

Shri M.C. Setalvad, former Attorney General of India has observed:

“….equality is the basis of all modern systems of jurisprudence and
administration of justice… in so far as a person is unable to obtain access to a
court of law for having his wrongs redressed or for defending himself against a
criminal charge, justice becomes unequal, …Unless some provision is made for
assisting the poor men for the payment of Court fees and lawyer’s fees and other
incidental costs of litigation, he is denied equality in the opportunity to seek
justice.”141

129
Ibid
130
Ibid
141
Ibid

103
ALTERNATIVE DISPUTE RESOLUTION UNDER SECTION 89 OF THE
CODE OF CIVIL PROCEDURE

SECTION 89 CPC

INTRODUCTION

Section 89 of the Code of Civil Procedure, 1908 embodies the legislative mandate
to the court to refer sub-judice disputes to various ADR mechanisms enunciated
therein where it finds it appropriate to do so, in order to enable the parties to
finally resolve their pending cases through well-established dispute resolution
methods other than litigation. Section 89 CPC has therefore recognized the need
and importance of ADR even at the post litigation stage. In order to understand
the niceties of section 89 CPC it is essential to refer to its text.142

Thus the court can refer the parties to arbitration, conciliation, mediation, lok
adalat or judicial settlement in terms of section 89 of the Code of Civil Procedure,
1908 for resolution of their disputes at the post litigative stage.

In fact the Delhi High Court in Bawa Masala Co. v. Bawa Masala Co. Ltd Pvt. 143
has gone one step forward and held that there is no reason why Early
Neutral Evaluation (ENE), which is a different form of ADR though similar to

142
89. Settlement of disputes outside the Court - (1) Where it appears to the Court that there exist elements of
a settlement which may be acceptable to the parties, the Court shall formulate the terms of settlement and
give them to the parties for their observations and after receiving the observations of the parties, the Court
may re-formulate the terms of a possible settlement and refer the same for- (a) arbitration; (b)
conciliation; (c) judicial settlement including settlement through Lok Adalat; or (d) mediation. (2) Where a
dispute has been referred- (a) for arbitration or conciliation, the provisions of the Arbitration and
Conciliation Act, 1996 (26 of 1996) shall apply as if the proceedings for arbitration or conciliation were
referred for settlement under the provisions of that Act;71 (b) to Lok Adalat, the Court shall refer the same
to the Lok Adalat in accordance with the provisions of sub-section (1) of section 20 of the Legal Services
Authority Act, 1987 (39 of 1987) and all other provisions of that Act shall apply in respect of the dispute so

104
 referred to the Lok Adalat; (c) for judicial settlement, the Court shall refer the same to a suitable institution
or person and such institution or person shall be deemed to be a Lok Adalat and all the provisions of the
Legal Services Authority Act, 1987 (39 of 1987) shall apply as if the dispute were referred to a Lok Adalat
under the provisions of that Act; (d) for mediation, the Court shall effect a compromise between the parties
and shall follow such procedure as may be prescribed

143
AIR 2007 Delhi 284
mediation, cannot be resorted to towards the object of a negotiated settlement in
pursuance of Section 89 of the Code of Civil Procedure, 1908 specially when the
parties volunteer for the same.

HISTORY AND BACKGROUND OF THE SECTION

Section 89 came into being in its current form on account of the enforcement of
the CPC (Amendment) Act, 1999 with effect from 1/7/2002. At the
commencement of the Code, a provision was provided for Alternate Dispute
Resolution. However, the same was repealed by the enactment of the Arbitration
Act (Act 10 of 1940) under Section 49 and Sch. 10. The old provision had
reference only to arbitration and it procedure under the Second Schedule of the
Code. It was believed after the enactment of the Arbitration Act, 1940, the law
had been consolidated and there was no need of Sec 89.

However, the Section was revived with new alternatives and not only restricted
to arbitration. A new Section 89 came to be incorporated in the Code by Section
7 of the CPC Amendment Act, 1999 to resolve disputes without going to trial and
pursuant to the recommendations of Law Commission of India and Malimath
Committee report. 131

Section 89 along-with rules 1A, 1B and 1C of Order X of First schedule have

been implemented by Section 7 and Section 20 of the CPC Amendment Act and
cover the ambit of law related to Alternate Dispute resolution. The clauses under
Order X are specified to ensure proper exercise of jurisdiction by the court. Sub-

131
Sarkar, S.C., and Prabhas C. Sarkar “The Law of Civil Procedure” (Delhi: Wadhwa and Company Nagpur,
2006. 49)

105
Section (1) refers to the different mediums for alternate resolution and sub-section
(2) refers to various Acts in relation to the mentioned alternate resolutions.

The changes brought in by the CPC Amendment Act, 1999 have no retrospective
effect and shall not affect any suit in which issues have been settled before
commencement of Section 7 of CPC Amendment Act, 1999 and shall be dealt as
if Section 7 and 20 of CPC Amendment Act never came into force.

The decision of the forums specified under Section 89 shall be as effective, having
same binding effect, as court orders/decrees and arrived at a relatively cheaper
cost and within a short span of time 132133 . The rules inserted under Order X
provide for when court may direct to take recourse to alternate means to resolve
disputes, the duty of parties to appear before such forums and the responsibility
of the presiding officer to act in interest of justice and return the suit if better
suited for the court.

MALIMATH COMMITTEE REPORT AND THE 129TH LAW

COMMISSION REPORT

The enormous arrears of cases, multiple appeals/revisions, procedural shackles

and the adversarial system, all result in creating a judicial lag of sorts and an
effective remedy against the same is settlement through alternate forums. The
same was brought to light in the Malimath Committee and the 129th Law
Commission report.

The Law Commission in its 129th Report146 advocated the need for amicable
134
settlement of disputes between parties and the Malimath Committee
recommended to make it mandatory for courts to refer disputes, after their issues

132
Justice Doabia, “MLJ‘s Code of Civil Procedure”(Delhi: Wadhwa Nagpur, 2008)
133
th Report of Law Commission of India
134
Malimath Committee Report, Chapter VIII, pg 112

106
having been framed by courts, for resolution through alternate means rather than
litigation/trials.

Malimath committee called for a “legal sanction to a machinery for resolution of

disputes and resort thereto is compulsory” 135 which the sole objective of
reducing he large influx of commercial litigation in courts of civil nature, number
of appeals to higher courts lessened and the efficiency of courts revitalized by
such implementation.

The Law Commission recommended the establishment of Conciliation Courts all

over the country to with the authority to initiate conciliation proceedings in all
cases at all levels. The aims of both these committees were to further the cause of
justice and ensure efficient working of the judicial system. The Commission
called for a replication of the Himachal Pradesh High Court’s Conciliatory
practices, before, during and post trial for litigants which majorly covered issues
related to partition, inheritance, wills etc. The positive results from the experiment
in Himachal Pradesh paved the way for revival of alternate forums. Furthermore,
it may be stated that it is the duty of the judges to assist parties in arriving at
settlements in certain suits, as has been elucidated under Rule 5-B of Order
XXVII and Rule XXIII-A of the Code of Civil Procedure. The conciliation
process casts a duty on judges to take appropriate steps, where there is scope of
settlement, to bring about reconciliation in certain suits and to come up with a
conclusive resolution on an expeditious basis.

The aim and objective of reviving Section 89, as stated in the Statement and
Objects of the Bill Code of Civil Procedure (Amendment) Bill initiated in 1997,
was to ensure effective implementation of Conciliation schemes, following
recommendations of the 129th Law Commission and make it obligatory for courts
to refer to disputes to alternate forums. Initiation of suits in courts shall be the last

135
BOC India Ltd v. Instant Sales Pvt Ltd, AIR 2007 Cal 275 at 276

107
resort of parties if all other alternatives fail. The resuscitated Section 89
incorporated Conciliation, Judicial Settlement including Lok Adalats and
Mediation in addition to Arbitration.

WHY RESORT TO ALTERNATIVE DISPUTE RESOLUTION

A judge is considered to be trained in the law in order to decide legal issues and
parties are not required to pay him. Then the question arises what is the need of
appointing an arbitrator? The answer to this question is that a judge may be expert
of law but he cannot be expert of all laws particularly the new emerging
technological fields. Such as – Cyber law, IT law, Building Construction work
Investment law etc. In fact, it is not possible for any human being to be the master
of all laws. In the 176th report of the Law Commission, Justice B.P.
Jeevan Reddy has suggested that “the principle of least court interference may be
fine principle for international arbitration awards but having regard to Indian
conditions and the fact that several awards are passed in India as between Indian
nationals sometimes by lay men who are not well acquainted with law, the
interference with such awards should not be as restricted as they are in the matter
of international arbitrations.” 136

Justice Malimath Committee Report

It was recommended by the committee that after the framing of the issue it should
be made obligatory for the court to refer the dispute for settlement either by way
of arbitration, conciliation, mediation, or through lok adalat.150

Following are the some advantages of ADR :-

136
Reddy,B.P.Jeevan, “Law Commission of India 176th Report on the Arbitration And Conciliation
(Amendment) Bill, 2001”, 12th September 2001, available at: htt.plawcommissionofindia.nic.inarb.pdf
(visited on November 29,2018) 150 Supra,p.51.

108
 1. Privacy and Choice in the Tribunal
One of the major significance of arbitration is privacy and
confidentiality of the proceedings. Some people prefer to settle their
dispute out of the public gaze. Particularly in matrimonial disputes it is
very effective. Because people don’t want that their private disputes to
come in the public. Arbitration also saves matrimonial home and
relations because the dispute is resolved peacefully with the consensus
of the parties. If matters come to the ordinary civil court in most of the
cases the relation become strained and family shatters. Further, some
disputes involve highly technical issues therefore it would be useful if
at least one member of the tribunal is expert in that field. Since in
arbitration it is the party who select the member of the tribunal, they
select at least one member expertise in that field. However, in the
ordinary court judge may not be expert in that field and therefore we
can’t expect proper justice in that case.137

2. Flexibility
Arbitration is very much flexible both in time and procedure. If dispute
needs urgent resolution, the parties can choose a tribunal who will act
promptly rather depending on the luck of the draw from a court list. The
parties are also free to choose the most suitable procedure. The parties
are also free to be represented by anyone of their choice and they are
not bound by rules limiting appearance to persons with particular legal
qualifications. 152

137
Russell on Arbitration, Sweet & Maxwell( twenty-first edition,London, 1997)
152
Id; p.10

109
 3. Neutrality and Equality
Where the parties belongs to the different countries they don’t wishes
to litigate in the ordinary court of law rather they prefer arbitration.
Because arbitration offers them neutrality in the choice of law ,
procedure and tribunal. They can choose the law and procedure of the
third or they can appoint an arbitrator which belong to the third country.
It gives them confident of equality and there is parity of power between
them138.

4. Principal of Natural Justice

Arbitrator is not bound by the strict procedure of the Civil Procedure
Code and law of evidence. However, he has to follow the principle of
natural justice. It is one of the advantages of the alternative dispute
resolution that it avoids technicality and complexity of law and focuses
on the problem of the disputant parties and tries to resolve it with simple
method or procedure.

5. Enforceability of award
Another advantage of the arbitration is the extensive enforceability of
the award. Today, there are various conventions which recognise
arbitral awards and enforce it in many countries than English court
judgment.139

6. Control over both the process and the outcome –

An important benefit of using ADR methods is that the disputant has
control over both the process and the outcome of the resolution.

138
Id;
139
Id;

110
 7. Amicable Settlement –
Alternative disputes method promote amicable settlement of dispute. It
enables the parties to resolve the dispute and bury the past. Which
results in the preservation of the present relation and at the same time it
paves better for future.140

8. Payment of Court fee

In Alternative Dispute Resolution there is no need of payment of Court
fees as it is paid in the ordinary court before the hearing of civil cases. If
court fee is not paid, the court does not entertain the suit. Sometimes, the
parties are not in a position to pay the court fee. ADR is the best resort for
those kind of people.

9. When a disputant goes to the court,

He knows that he would win or lose all. On the Contrary, if he gives his
consent for the informal settlement, he knows very well that he might
not get all that he wants, but he will also not lose everything. 141

10. Procedural flexibility

ADR provides procedural flexibility which is not found in the
traditional court. It may be as casual as a discussion around the
conference table. The disputant has freedom to choose the procedure
and applicable law. 142

140
Supra n.1.
141
Supra n.1
142
Supra n.1

111
 11. Win- Win Situation
The Court procedure results in win-lose situation. In other words, in the
ordinary court litigation a party shall either win the case or lose his claim.
On the contrary, in ADR a person may not get all that he wants, but he will
certainly not lose everything.
12. The most significant feature of ADR
Is that it does not only resolve the dispute but also the pathology of the
dispute. Which hit at the root of the dispute and it bring normalcy in the
relationship of the disputant.
13. ADR provides participatory solution
Being participatory solution in nature its implementation becomes easier.

COMPARITIVE TABLE ON WHY TO RESORT TO ARBITRATION

Characteristics to Legal proceedings Arbitration

common
numerous disputes

112
International • multiple unique
dimension proceedings with proceedings in
different accordance with
legislations that the legislation
may come to determined by
differing results the parties
• possibility of a arbitration
real or presumed proceedings and
advantage for the the arbitrator’s
party in whose nationality may
country the differ from the
proceedings are legislation,
held language and
institutional
culture of
the parties.

Technical matter the adjudicator may the parties may

not have the choose one or
required several arbitrators
expertise(s) with

the required
expertise(s)

113
Matter of urgency proceedings are the arbitrator(s)
often very long may shorten the
protective proceedings
measures allowed arbitration may
in certain allow for
jurisdictions protective
measures; it will
not oppose a
protective
measure before a
judiciary power

Necessity of a final Possibility to Very few

decision lodge one/several possibilities to
appeal(s) lodge one/several
appeal(s)

Confidentiality, proceedings and proceedings and

business secrets and decisions are decisions are
reputation public knowledge
confidential

INTERNATIONAL COMMERCIAL ARBITRATION

With the growth of globalization, liberalization regimes and rapid advancement

in international business relationships, it is increasingly pertinent to have a

114
flexible and quick method of resolving disputes. Arbitration is a preferred process
of dispute resolution chosen by parties, wherein parties intentionally agree to
submit their case to a neutral third party and agree to be bound by his/her decision.
Section 2(1)(f) of The Arbitration and Conciliation Act, 1996, defines an
International Commercial Arbitration which means: an arbitration relating to
disputes arising out of legal relationships, whether contractual or not, considered
as commercial under the law in force in India and where at least one of the parties
is—

(i) An individual who is a national of, or habitually resident in, any country
other than India; or
(ii) A body corporate which is incorporated in any country other than
India;
(iii) A company or an association or a body of individuals whose central
management and control is exercised in any country other than India;
(iv) The Government of a foreign country

The scope of this section was determined by the Supreme Court in the case of
TDM Infrastructure Pvt . Ltd. v. UE Development India Pvt. Ltd 143 where in spite
of company having a foreign control, the Supreme Court concluded that,
“a company incorporated in India can only have Indian nationality for the purpose
of the Act.”

When Arbitration is deemed to be International

143
2008 (2) UJ SC 0721

115
In the United Nation Commission on International Trade Law (UNCITRAL)
Model Law, arbitration is deemed to be international if any one of four different
situations is present:

Article 1 (3)

(a) The parties to the arbitration agreement have, at the time of the conclusion
of the agreement, their places of business in different States.

(b) One of the following places is situated outside the State in which the parties
have their places of business:

(i) The place of arbitration, if determined in or pursuant to, the arbitration

agreement, is situated outside the State in which the parties have their places of
business

(ii) Any place where a substantial part of the obligations of the commercial
relationship is to be performed or the place with which the subject-matter of the
dispute is most closely connected

(iii)The parties have expressly agreed that the subject-matter of the arbitration
agreement relates to more than one country.

MEANING OF COMMERCIAL:

The word commercial includes the day to day international business activities that
have become part of the international trade nowadays. In Koch Navigation
Inc v Hindustan Petroleum Corp Ltd144it was held that “liberal construction is to
be given to any expression or phrase used in the Act”.

In Atiabari Tea Co. Ltd v State of Assam145, it was held that “trade and commerce
in India has a wide meaning.”

144
(1989) 4 SCC 259
145
(1989) 4 SCC 259

116
Applicability of Part 1 of the Act in International Commercial Arbitration:

In Bhatia International v Bulk Trading S.A146 , it was held that Part I of Arbitration
and Conciliation Act, 1996 would equally apply to International Commercial
Arbitrations having seat outside India, unless any or all the provisions have been
expressly excluded.

In Bharat Aluminium v Kaiser Aluminium 147 , the Court decided that a

constitutional bench of the Court would reconsider the Court's own ruling in
Bhatia International case. The Supreme Court gave following ruling in the above
mentioned case:

1. “Part I not applicable to International Commercial Arbitrations having seat

outside India: Section 2(2) makes a declaration that Part I of the Arbitration Act,
1996 shall apply to all arbitrations which take place within India. We are of the
considered opinion that Part I of the Arbitration Act, 1996 would have no
application to International Commercial Arbitration held outside India.

2. No Interim Injunction: No suit for interim injunction simplicitor would be

maintainable in India, on the basis of an international commercial arbitration with
a seat outside India.

3. Section 9 i.e. Interim Relief cannot be granted if seat is outside India: In

our opinion, the provision contained in Section 2(2) of the Arbitration Act, 1996
is not in conflict with any of the provisions either in Part I or in Part II of the
Arbitration Act, 1996. In a foreign seated international commercial arbitration,
no application for interim relief would be maintainable under Section 9 or any
other provision, as applicability of Part I of the Arbitration Act, 1996 is limited
to all arbitrations which take place in India.

146
(2002) 4 SCC 105
147
(2012) 9 SCC 552

117
4. Law to be applied prospectively: In order to do complete justice, we hereby
order, that the law now declared by this Court shall apply prospectively, to all the
arbitration agreements executed hereafter.”

Why Arbitration preferred in solving International Disputes

1. Speedy dispute solving mechanism:

Court process involves extensive procedures and rules, which a party needs
to follow. If parties refer their dispute to arbitration, they need not follow
strict procedures of law. Hence, the dispute solving becomes speedy.
2. Enforceability of Arbitral Awards:
It is more readily and swiftly enforced as compared to the court judgements.
3. Arbitrator is impartial:
Neutral third party is chosen to decide disputes. This third party is chosen
mutually by both the parties to dispute.
4. Arbitrator chosen may be an expert:
Based on the issue of dispute, parties may choose a specific arbitrator having
that particular technical experience and expertise in the area disputed.
5. Arbitration less expensive:
Since arbitration is a time effective remedy and does not involve too many
procedures, it is less expensive as compared to litigation procedures

ANALYSIS

In recent years there has been a significant increase in international businesses

operating out of India. This has led to an increase in international arbitrations
having its seat of arbitration in India. Both arbitration and litigation perform the
same function i.e. effective delivery of justice but the fact is that arbitration has
few characteristics which makes it a more viable option as compared to its
counterpart. Thus, the degree of protection that it guarantees is far reaching.

118
The judicial trend post Bhatia, as far as international arbitrations held out of India
are concerned showed a preference for interference on the part of Indian courts.
This is amply evident from the judgment of Indian courts. This clearly had an
adverse impact on the business environment prevailing in the country. It also
railed against the underlying principles of arbitration as a method of speedy
resolution of disputes. The Supreme Court instead of overruling the Bhatia case
used its ratio to devise an implied exclusion route. The Apex Court also widened
the ambit of this implied exclusion route sufficiently enough to cover all fact
scenarios where an ICA was held out of India. However, the position soon
changed with the Supreme Court judgment in the BALCO case, where the court
expressly overruled its Bhatia decision. The BALCO decision, however, had only
prospective applicability. "The Bhatia ratio continued to operate for cases where
the arbitration agreement had been executed before 6 September 2012. However,
the judicial trend of following the implied exclusion route continued. Even in the
post BALCO era, the Apex Court, while conceding that Bhatia ratio was
applicable, followed the judicial trend of taking the implied exclusion route to
exclude the applicability of Part I. The recent Amendment Act changes
everything, as it makes Sections 9, 27, 37(1)(a), and 37(3) applicable to
international commercial arbitrations held out of India. The Amendment Act,
however, allows the parties to exclude the applicability of Part I, in general, and
these provisions, in particular, by mutual agreement. There is still some
uncertainty over the applicability of the Amendment Act.

COURT PROCEEDING

119
 CASE DETAILS

DATE: - 02ND Novemeber 2018

PLACE: - M.C. SETALVAD LAWYERS’ CHAMBER

ARBITRATOR: - Shri S.M. Agarwal

CASE NO. 32 of 2017

PARTIES TO ARBITRATION: -

M/S Simplex Project Ltd ….……………Claimant

New Delhi Municipal Council ……. Respondent

FACTS OF THE CASE

In the case an arbitration agreement was entered into between the parties. Later
on disputes arose between the parties resulting in the commencement of arbitral
proceedings. Under the terms of the award, a direction was issued under which
the parties were required to return documents of title and share certificates
contemporaneously with paying an amount of Rs. 3,58,11,000 together with
interest at 12% p.a. on a sum of Rs. 2.55 crores. SPL challenged the award of the
arbitral tribunal under Section 34 of the Arbitration and Conciliation Act, 1996
on the ground that the arbitral award could not be executed against the appellant
who is admittedly not a signatory to the agreement.

STAGE OF THE MATTER

The proceeding is at the stage of arbitration and was given the next date of
arbitration.

PERSONAL OBSERVATION

120
During the proceeding, I observed that the parties to the matter were of the opinion
to not file a suit but to resolve the matter through mutual consent over arbitration.

The arbitrator was well aware of the facts of the case and the plea of the parties,
and keeping that in view he took into consideration all the necessary requirements
from both the parties. He was not biased to any of the parties, and was giving his
best to bring the matter to a settlement which will be agreed by both the parties.

He took into his consideration that both the parties were comfortable with his
observation and award contrary to the proceeding which take place in the trail
suit.

NATIONAL SEMINAR ON EMERGING TRENDS OF ALTERNATIVE DISPUTE

RESOLUTION IN INDIA

121
The National Seminar on Emerging Trends of Alternative Dispute Resolution in
India was organized by Faculty of Law, Jamia Millia Islamia on October 9-10,
2018.

Objective of this Seminar:

Alternative Dispute Resolution is being increasingly acknowledged in the field of

law and commercial sector. The very reasons for origin of Alternative Dispute
Resolution are tiresome processes of litigation, higher costs and inadequacy of
the court system. In the final quarter of the last century, there was phenomenal
growth of science and technology. It has made a great impact on commercial life
while increasing competition throughout the world. It also generated a concern
for protection of the rights of the parties. The legal system does not provide
adequate response to the new regime and problems relating to the commercial
world which requires speedy and effective resolution of disputes. In this context,
dispute resolution through ADR techniques are seen as more effective and viable.
Considering its significance, the Faculty of Law, JMI organised a Seminar on
Alternative Dispute Resolution with the following proposed objective:

• To enhance the knowledge, understanding and scope of ADR;

• To explore and expound the understanding of the emerging trends of ADR;

• To create awareness of importance of ADR as part of justice delivery system;

• To strengthen the implementation of ADR effectively;

• To equip the students and professionals with practical aspect of ADR
techniques to promote independent career in the field; &

• To look for futuristic assessment of best practice in the area of ADR.

Alternative Dispute Resolution (ADR) is a collection of techniques used for the

purpose of resolving conflicts informally while avoiding lengthy and costly legal

122
procedures. The present seminar has been conceptualized with the objective of
taking stock of the progress made by India in the sphere of law; while creating
space for discussion on matters pertaining to legal issues concerning Alternative
Dispute Resolution. In this background there is an incessant call to hold seminars,
conferences, workshops, symposia and discussions to elicit valuable inputs from
the ground so as to effectively shed light on the usage of the best practices of
dispute resolution techniques in India. The Seminar aims to enhance the
understanding of the legal issues related to dispute resolution techniques while
providing an updated account of law incorporating the recent amendments in the
Arbitration and Conciliation Act, 1996.

This National Seminar offered an opportunity to experts from various disciplines

comprising of Researchers, Academicians, Policymakers, Government
Organizations, Law Experts, International Lawyers, Judges, Negotiators,
Diplomats, Government Representatives, National Organizations, Media
Representatives, Non-Governmental Organizations and Students to come
together and share their valuable thoughts on the issues relating to following
majors themes:

(i) Alternative Dispute Resolution System

(ii) Emerging Issues in Arbitration, Conciliation, Mediation and Negotiation

(iii) Legislation and ADR Practices in India

(iv) Role of Judiciary in ADR

(v) ADR and Criminal Justice System in India

(vi) Scope of Institutional Arbitration in India

(vii) International Commercial Arbitration

(viii) Recognition and Enforcement of Foreign Arbitral Awards

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(ix) Mediation in Family and Matrimonial Disputes

(x) Online Dispute Resolution

(xi) Emergency Arbitration

The welcome speech was delivered by Prof. Kahkashan Y.Danyal, (Officiating

Dean, Faculty of Law, JMI) and Mr. P.K. Malhotra, Former Law Secretary,
Ministry of Law & Justice, Govt.of India, New Delhi was sharing the dias as the
chief guest for the event. The other dignitaries and experts in the field who dwelt
upon the subject of discussion included Mr. Ajay Thomas, Vice Chairman, ICC
India Arbitration Group, New Delhi, Mr. Nikhil Chopra, Coordinator, Delhi
International Arbitration Centre, New Delhi, Dr.Aman Hingorani, Advocate -on-
Record & Accredited Mediator, Supreme Court of India, New Delhi, Mr. Ratan
K.Singh, Fellow of Chartered Institute of Arbitrators, Advocate & Arbitrator,
South Delhi, Prof.(Dr.) Pradeep
Kulshrestha, Dean, School of Law, Sharda University, Prof. Saleem Akhter,
Former Dean & Chairman, Faculty of Law, Aligarh Muslim University, Aligarh

The event had five technical sessions and 88 papers scheduled for presentation.

Prof. Nuzhat Parveen Khan, Dean, Faculty of Law, JMI, Dr. Faizanur Rahman,
Assistant Professor, F/L, JMI and the team of enthusiastic volunteers toiled a lot
to make this Seminar a grand success.
Finally Dr. Faizanur Rahman, Convenor of the Seminar delivered formal vote of
thanks extending subtle gratitude to the dignitaries, academicians, participants
and the student volunteers at the Valedictory Session. The seminar got concluded
with lot of positive energy towards the subject and future prospects.

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CONCLUSION AND SUGGESTIONS

Alternative Dispute Resolution mechanisms are in addition to courts and

complement them. The traditional system of dispute resolution is afflicted with
inordinate delays. However the backlog and delay appear to be more accentuated
than in modern-day India. ADR mechanisms play an important role in doing away
with delays and congestion in courts. The Indian civil justice system serves the
interests of a diverse and exploding population, the largest democracy and the
seventh largest national market in the world. This formidable responsibility,

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combined with the recent drive toward greater political accountability in the
public administration and post-1991 market reforms, places ever-greater pressure
on the civil justice system. An estimated backlog of 25 million cases and reported
delays in some urban areas in excess of twenty years, currently undermine the
effective enforcement of the substantive civil and commercial rights. Backlog and
delay have broad political and economic implications for Indian society. If India
fails to face and meet these challenges, it will not be able to realise fully its legal
commitment to democratic and liberal economic policies. In cases such as motor
accident claims, the victims may require the compensation to be paid without
delay in order to meet medical and other expenses. In matters such as these,
Alternative Dispute Resolution mechanisms like Lok Adalat can help victims
obtain speedy relief.

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

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

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

With the advent of the alternate dispute resolution, there is new avenue for the
people to settle their disputes. The settlement of disputes in Lok Adalat quickly
has acquired good popularity among the public and this has really given rise to a
new force to alternate dispute resolution and this will no doubt reduce the
pendency in law Courts. The scope of alternate dispute resolution system (ADR)
has been highlighted by the Hon’ble Chief Justice of India in his speech in the
joint conference of the Chief Ministers of the State and Chief Justice of High
Courts, held at Vigyan Bhavan, New Delhi on September 18, 2004 and insisted
the Courts to try settlement of cases more effectively by using alternate dispute
resolution system so as to bring down the large pendency of cases in law Courts.

Alternate Dispute Resolution is rapidly developing at national and international

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

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

“Discourage litigation persuade your neighbours to compromise whenever you

can point out to them how the nominal winner is often a real loser, in fees,
expenses, waste of time…”

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

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

The on-going development of information and communication technologies,

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

Many of the initial ODR service providers focused on resolving disputes

stemming from e-commerce transactions, such as online retail or auction (e.g.
eBay) purchases. Consequently, the majority of the research and discussion on

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ODR is primarily focused upon the context of resolving such disputes. Recently,
ODR practitioners have begun to provide services intended to resolve more
complex types of dispute (e.g. child custody and divorce settlements as well as
complex, multi-party international employment disputes).

Online dispute resolution (ODR) has emerged as an alternative to ADR that is

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

SUGGESTIONS:

There may be some restrictions in the existing arbitration laws on the

development of online arbitration, but these restrictions are not substantial
obstacles. With the development of laws about the Internet, e-commerce and
arbitration, there is spacious room for the development of e-commerce and online
arbitration all over. By taking appropriate precautions, arbitration agreements
can be concluded by electronic means and arbitration proceedings can be
conducted by electronic means, within the framework of existing national laws
and international treaties. Though it is contended above that the online arbitration

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and its utility is a possibility without any law reform and people do not feel secure
unless it is placed in proper legal frame work. Hence law reform in this regard is
the urgent need. Jurisdictional issues in cyberspace have always been the matter
of great concern. There is a close connection of this issue with the success of
online arbitration. As online arbitration is more suitable and often resorted to in
resolution of cross border disputes, no amount of law reform at national level
would be the answer to the menace. At international level the suitable law reform
is recommended.

Online dispute resolution system presents a realistic and practical solution to the
growing needs of the Internet community. Furthermore, it provides speedy
resolution, is convenient, eliminates complex jurisdictional and choice of law
problems and has the potential to be economically viable. As the number of
people using the World Wide Web grows, so will the disputes. The existing
services are trying to come up with the demand but there are certain problems that
must be addressed first like jurisdiction, confidentiality, enforcement of
decisions, etc. there is an urgent need to address these issues to maximize the
benefits and to provide a better system of resolution for new breed of technology
led disputes. The world today acknowledges the accomplishment of WIPO online
dispute resolution system. It has extended to thousands of internet users easily
accessible and reliable means of dispute resolution and delivered substantial
justice in a very short span of time. There are a number of cases of domain name
disputes which have been successfully resolved online. A land mark case in the
Indian context is the TATA case wherein WIPO Arbitration and Mediation centre
in its administrative panel decision held that the domain name "tata.org "standing
in the name of the Advanced Information Technology Association, Mumbai
should be transferred to the complainant being Tata Sons Ltd. As it was a bad
faith registration. Another recent case decided by WIPO is the Maruti Udyog
Limited v. Maruti Software Pvt. Ltd.163wherein it was held that the respondents

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domain name "marutionline.com” is identical to trademark name MARUTI in
which complainant has rights, the respondent has no legitimate interest in domain
name and it is a bad faith registration. The panel decided that the domain name
"marutionline.com" should be transferred to the complainant. In this way many
e-disputes in the present times are being amicably settled without having to resort
to cumbersome process of litigation and the same is done expeditiously at more
convenience and at reduced costs.

The various possible steps that can be taken for the bringing in the concept and
practice of Online Dispute Resolution worldwide. Advances in technology can be
used in a variety of ways to help decrease the discrepancy that often exists
between parties to a commercially-based alternative dispute resolution. The first,
and arguably most important, use of technology would be the use of strict formats
for online dispute resolutions and the creation of in-depth tutorials to guide parties
to an online dispute resolution through the entire process.
Technology can also serve a purpose beyond making the format of an online

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dispute resolution site more understandable. Advances in technology can also be
used to simplify the negotiation process for different segments of the country—
or for that matter the world. In addition to the benefits of new technology, the
current system of online dispute resolution would benefit greatly from increased
governmental involvement. This involvement can come in a variety of ways
including the creation of model rules, the creation of a certification board for
online dispute resolution providers, and legislation that regulates contractual
clauses requiring consumers to enter into mandatory arbitration of commercial
disputes.

It is definite that this journey from ADR to ODR has been extremely fascinating.
While it invokes an ever challenging thought process in each one of us, it

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stimulates us to ponder over certain issues that are currently emerging and will
very soon aid in improvisation and extension of ODR system application to new
areas worldwide. Law which exists as of today in its binding force can be
categorized in three layers. The basic layer which can be said to constitute the
first layer is the domain of National/domestic law which is bound by
territorial/physical boundaries. The third layer can be said to comprise of
International legislative texts which serve as model laws and help nations
modernize adapt or adopt or amend or make more uniform their domestic laws
e.g UNCITRAL has framed laws on procurement of goods, construction and
services, law on International credit transfers and laws that are more procedural
laws by nature as that of International commercial arbitration. The second layer
is a new and emerging layer that has helped bring about uniformity of laws
worldwide and has a binding force and is enforceable everywhere such as the
Uniform dispute resolution Policy adopted by ICANN for resolution of domain
name disputes.

With the world becoming closer and free of physical boundaries through the
virtual world of cyberspace and internet, there is certainly a great scope of
bringing about uniformity in laws and their application and uniformity in
procedures adopted to resolve disputes between individuals across the globe.
Apart from success of ODR mechanisms, it would not be a farfetched idea to
conceive of an online International Court of justice to meet the demands of
edisputes though it would require political reconciliation between main trading
blocks and will take some time. Within European Union there have been already
developments to examine provision of mediation and arbitration services for
electronic commerce through National Chambers of Commerce. In some time, an
organization or system of law could find its way to regulate and determine the
bulk of e-disputes through uniform means. Considering the effectiveness and
desirability of ODR, online arbitration/mediation should be introduced in all

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model international legislative texts, national laws as an internationally accepted
uniform method of dispute resolution. Governments should consider their
regulatory role and seek to encourage the development of effective trust mark
programs standards and dispute resolution processes. Governments should also
consider an accreditation process to ensure that policy goals and consumer
protection are achieved. Governments should work towards international
cooperation and the development of international standards and codes of best
practice.

Lastly, it can be concluded by saying that as the importance and necessity of ADR
along with ODR is increasing in the society both in national and international,
initiatives should be taken in every way for the development in these fields so that
society can be benefited and the pendency of the cases in the courts may be
reduced to zero. If India wants to be a hub for international commercial dispute
resolution and online commercial arbitration, then it must start investing in ODR
and e-courts as soon as possible.

ODR system in essence not only offers a promising mechanism of dispute

resolution worldwide, but serves as a facilitator of global harmony and a
wholesome e-commerce interaction and growth.

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