DISSERTATION

ON
ALTERNATIVE DISPUTE RESOLUTION

SUBMITTED BY:-

RISHIKA JAIN

B.A.LL.B. (HONS)

IVTH YEAR, SEM-VII,

SEC-B, ROLL NO. 22

GUIDED BY:-

ADV. MADHU SAINI

FACULTY OF LAW

JAMIA MILLIA ISLAMIA

NEW DELHI- 110025

2018-2019
 ACKNOWLEDGEMENT
Exchange of ideas generates new objects to work in a better
way. Whenever a person is helped and co-operated by others,
his heart is bound to pay gratitude and obligation to them.

I would like to thank my ADR teacher, Adv. Madhu Saini and

my parents for providing me with invaluable support and
guidance which led to the completion and conception of this
project.

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 TABLE OF CONTENTS
S. NO. PARTICULARS PAGE NO.

1. LIST OF CASES 7

2. OBJECTIVE OF THE STUDY 9

3. RESEARCH QUESTION 9

4. HYPOTHESIS 9

5. METHODOLOGY 10

6. INTRODUCTION 11

7. IMPORTANCE OF ADR 14

8. SALIENT FEATURES OF ALTERNATE DISPUTE RESOLUTION 16

9. WHY TO RESORT TO ALTERNATIVE DISPUTE RESOLUTION? 18

10. LEGISLATIVE RECOGNITION OF ALTERNATE DISPUTE 20

RESOLUTION

11. TYPES OF ALTERNATE DISPUTE RESOLUTION 24

12. MEDIATION 24

13. NEGOTIATION 24

14. CONCILIATION 25

15. ARBITRATION 26

16. MEDIATION 27

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17. HISTORY OF MEDIATION 27

18. JUSTICE MALIMATH COMMITTEE REPORT 28

19. CONCEPT OF MEDIATION 29

20. MEDIATION PROCESS AND ROLE OF A MEDIATOR 30

21. CONFIDENTIALITY IN MEDIATION 32

22. WHO ATTENDS MEDIATION? 33

23. ADVANTAGES OF MEDIATION 33

24. DISADVANTAGES OF MEDIATION 35

25. ISSUES IN MEDIATION 36

26. RECOGNITION AND ENFORCEMENT OF MEDIATION 40

27. CURRENT METHODS OF ENFORCING MSA’S 47

28. WHY MEDIATION AND MSA’S WARRANT SPECIAL TREATMENT 47

29. MEDIATION AS A MEANS OF ACCESSING JUSTICE 47

30. CONCILIATION 49

31. HISTORY OF CONCILIATION 49

32. CONCEPT OF CONCILIATION 50

33. PROCESS OF CONCILIATION 51

34. ADVANTAGES OF CONCILIATION 55

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35. DISADVANTAGES OF CONCILIATION 58

36. CONCILIATION VIS-À-VIS MEDIATION 59

37. DIFFERENCE BETWEEN MEDIATION AND CONCILIATION 64

38. ARBITRATION 67

39. KEY HIGHLIGHTS OF ARBITRATION AND CONCILIATION ACT, 67

1996

40. INCENTIVES OF MEDIATION OVER ARBITRATION 77

41. ARBITRATION, MEDIATION, CONCILIATION-COMPARATIVE 82

ANALYSIS

42. JUDICIAL INTERPRETATION OF SECTION 48 83

43. PUBLIC POLICY UNDER SECTION 48(2)(B) 83

44. INTERNATIONAL COMMERCIAL ARBITRATION 90

45. INTERNATIONAL MEDIATION 91

46. CHARACTERISTICS OF INTERNATIONAL MEDIATION 95

47. OBSTACLES TO INTERNATIONAL COMMERCIAL ARBITRATION 97

48. INTERNATIONAL COMMERCIAL MEDIATION - A BETTER 100

ALTERNATIVE METHOD OF INTERNATIONAL COMMERCIAL
DISPUTE RESOLUTION

49. UNCITRAL MODEL LAW ON INTERNATIONAL COMMERCIAL 101

CONCILIATION (2002)

50. POSITION IN DIFFERENT COUNTRIES 104

51. 20TH LAW COMMISSION REPORT AND SUBSEQUENT ARBITRATION 105

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 AND CONCILIATION (AMENDMENT) ACT, 2015

52. AWARDS PASSED IN NON-CONVENTION & NON-RECIPROCATING 106

COUNTRIES

53. DOCTRINE OF DOUBLE EXEQUATUR 108

54. JURISDICTIONAL ISSUES 110

55. COMPETENCE-COMPETENCE DOCTRINE 111

56. SUGGESTIONS ON MED-ARB 113

57. PRACTICAL INSIGHT INTO ARBITRATION 116

58. NATIONAL SEMINAR ON EMERGING TRENDS OF ALTERNATIVE 117

DISPUTE RESOLUTION IN INDIA

59. CONCLUSION 120

60. BIBLIOGRAPHY 123

LIST OF CASES
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1. Corporation of India v. Joginder Pal [AIR 1989 SC 1263].
2. Jag Raj Singh v. Bripal Kaur [(2007) 2 SCC 564].
3. Brij Mohan Lal v. Union of India & Others [(2002)5 SCC 1].
4. Hussainara Khatoon v. State of Bihar [1979 CrLJ 1036].
5. Babu v. Raghunathji [AIR 1976 SC 1734].
6. Sitanna v. Viranna [AIR 1934 PC 105].
7. Salem Advocate Bar Association, Tamil Nadu v. U.O.I [(2003) 1 SCC 49].
8. Rajasthan State Road Corporation v. Krishna Kant [1995 (5) SCC 75].
9. Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd. [(2010) 8
SCC 24].
10. Bondu Ramaswamy & Ors v. Bangalore Development Authority [(2010) 7 SCC 129].
11. B.S. Krishnamurthy v. B.S. Nagaraj [S.L.P. Civil) No(s).2896 of 2010].
12. Moti Ram (D) Tr. LRs and Anr. v. Ashok Kumar and Anr [Civil Appeal No. 1095 of
2008].
13. Rama Aggarwal v. PIO, Delhi State Legal Service Authority [2015 SCC OnLine CIC
4872].
14. Visa International Ltd. v. Continental Resources [(USA) Ltd., AIR 2009 SC 1366].
15. Haresh Dayaram Thakur v. State of Maharashtra [AIR 2000 SC 2281].
16. United India Insurance Co. Ltd. v. Ajay Sinha [AIR 2008 SC 2398].
17. Mysore Cements Ltd. v. Svedala Barmac Ltd. [(2003) 10 SCC 375].
18. Alcove Industries Ltd. v. Oriental Structural Engineers Ltd. [(2008) Arb.L.R. 393].
19. Surinder Kaur v. Pritam Singh [154 (2008) DLT 598].
20. Richardson v. Mellish [(1824) 2 Bing 229,252].
21. Renusagar Power Electric Ltd. v. General Electric [(1994) Supp (1) SCC 644].
22. Oil and Natural Gas Corporation v. SAW Pipes ltd [(2003) 5 SCC 705].
23. Bhatia International v. Bulk Trading SA [(2002) 4 SCC 105].
24. Indian Technical Services Pvt. Ltd. v. Atkins PLC [(2008) 10 SCC 308].
25. Citation Infowares Ltd. v. Equinox Corp. [(2009) 7 SCC 220].
26. Venture Global Engineering v. Satyam Complex Services Ltd [(2008) 4 SCC 190].
27. Phulchand Exports Ltd. v. O.O.O Patriot [(2011) 10 SCC 300].
28. International Standard Electric Corp. v. Bridas Sociedad Anonima Petrolera [745 F.
Supp. 172].
29. Karaha Bodas Co. L.L.C. v. Perusahaan Pertambangan Minyakdan Gas Bumi Negara
[364 F.3d 274].

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 30. Inventa Fischer Gmbh & Co., K.G. v. Polygenta Technologies Ltd., [2005 (2) Bom
C.R. 364].
31. Bharat Aluminium Co. Ltd. v. Kaiser Aluminium Technical Services, [AIR 2005
Chhatisgarh 21].
32. Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. [(2012) 9 SCC
552].
33. Shri Lal Mahal Ltd. v. Progetto Grano SPA [Civil Appeal 5085/2013].
34. PT Asuransi Jasa Indonesia (Persero) v. Dexia Bank SA [(2007) 1 SLR 597].
35. AJU v. AJT, [(2011) SGCA 41].
36. ESCO Corporation v. Bradken Resources Pty Ltd [(2011) FCA 905].
37. Uganda Telecom Limited v. Hi-Tech Telecom Pty Ltd [(2011) FCA 131].
38. Parsons & Whittemore Overseas Co., Inc. v. Societe Generale De L'industrie Du
Papier [(Rakta 508 F.2d 969 (2nd Cir. 1974)].
39. Badat & Co. Bombay v. East India Trading Co. [(1964) AIR 538].
40. Universal Tractor Holdings v. Escorts Limited [2012 (3) ArbLR434 (Delhi)].
41. Escorts Ltd. v. Universal Tractor Holdings [(2013) 10 SCC 717].
42. Oil and Natural Gas commission v. Western Company of North America and Smita
Conductors Ltd. v. Euro Alloys Ltd. [(2001) 7 SCC 728].
43. Republic of Poland v. Saar Papier Vertriebs GmbH [(2001) 19 ASA Bulletin (No.3)].
44. Coimbatore District Podu Samgam v. Bala Subramania Foundary, [AIR (1987) SC
2045].
45. State of Orissa v. Klockner & Co., [AIR (1996) SC 2140].
46. Sasan Power Ltd. v. North American Coal Corporation India Pvt. Ltd. [AIR 2016 SC
3974].
47. Gao Hai Yan and another v. Keeneye Holdings Ltd and others [HCCT 41/2010].

OBJECTIVE OF THE STUDY

The present research study has been conducted to decipher the various kinds of alternate
dispute resolution mechanism and its relevancy in the present day era in India. The main
objectives of the study are:

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 1. To understand the different concepts related to the research problem.
2. To study, the major legislations that provides for different types of alternative dispute
redressal methods in India.
3. To study, the different alternative dispute redressal methods and their hybrids in
resolution of the disputes.
4. To explore the, uniqueness of the alternative dispute redressal methods that are
successfully functioning in other Countries and the major Institutions providing for
them in India and abroad.
5. To evaluate and find out to what extent the different types of alternative dispute
redressal methods can be effectively adopted as an applicable remedy in managing the
crisis of judicial delays and arrears in India.

RESEARCH QUESTION

As stated in the objectives of the research, efforts are made with the necessary points to study
the research problem and to find out procedural lacunas in the existing legislations providing
for ADR and in its implementation in India. The aforesaid objective of the study ought to be
addressed in light of the following question:

1. What are the different kinds of ADR methods?

2. What are the legal remedies of resorting to ADR under Indian legal system?
3. How does ADR affect the traditional litigation practices?
4. What in the International Standing of ADR?

HYPOTHESIS

Dispute resolution process in each and every case cannot be confined to the Courts of Law.
Due to the increased burden, procedural complications and inadequate knowledge about
alternative dispute redressal methods among the public the Courts of Laws are facing the
problem of judicial crises. The study is based on the assumption that, when the rate of filing
of the cases before the Courts is decreased the judicial delays and arrears before the Courts
can be properly managed. Different forms of alternative dispute redressal methods either
socially or legally can effectively be used as a mechanism in reducing the problem of judicial
delays and arrears. The lack of knowledge on the part of the disputed party has also made the
existing system not to function in an effective manner.

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In connection with the research questions and objectives stated, the hypothesis of the study is
formulated as:

“Alternate Dispute Resolution Mechanism is an emerging trend and resort of the present era”

METHODOLOGY

The present research study is doctrinal in nature. The doctrinal preposition of the study is
made by a systematic approach to examine the options developed in the selected research
method. The researcher used the doctrinal research method for gathering the opinions of the
textbook writers, the Law Commission reports on the structural and operational part of the
legislative machinery. The methodology helped in systematizing legal propositions and
judicial interpretations for a theoretical assessment of the research problem with the help of
the various law journals, and books of the eminent jurists forming the secondary sources of
the research. The researcher has tried to scrutinize and identify the institutional deficiency
present in the Indian legal system, which has resulted in the crises like situation. The
doctrinal research method was further used to study the different alternative dispute redressal
methods, the major institutions providing for the same at national and international levels and
a comparative study of the different dispute redressal methods functioning in different
Countries.

INTRODUCTION

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

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cost both in terms of money and time, so that more time and more resources are spared for
constructive pursuits.

‘Alternate Dispute Resolution’ 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 alternate court but something which is an alternative to court
procedures or something which can be operate as court annexed procedures.

Our judicial system is an adversarial system of law. Under this model, the parties to a dispute
are represented by their respective counsel and they present conflicting views as a necessary
adjunct to the pursuit of justice. This system is premised on the belief that by such adverse
opinions and contentions, the truth will eventually emerge. However, in reality, the
adversarial system acts as an impediment to efficiency and expedition. The socialist color of
the constitution seeks to establish welfare, order, and peace in the society. In lieu of
promoting welfare for all, ADR as a means of dispute resolution finds its genesis in the
Constitution of India in varied provisions implicitly.

Alternate Dispute Resolution (ADR), as the name suggests, is a means of solving all or any
form of civil dispute outside court. It is mostly a non-judicial means or procedure for the
settlement of disputes. There exist a number of mechanisms of resolving disputes outside the
court; however, the choice of alternative dispute resolution mechanism, to some extent,
depends upon the nature of the dispute and the relation of the parties inter se.

Alternative Dispute Resolution was conceived of as a dispute resolution mechanism outside

the courts of law established by the Sovereign or the State. In this sense, it included
arbitration, as also conciliation, mediation and all other forms of dispute resolution outside
the courts of law, which would all fall within the ambit of ADR.1

The Apex Court in the case of Corporation of India v. Joginder Pal2, also laid emphases on
ADR system of adjudication through arbitration, mediation and conciliation is modern
innovation into the arena of the legal system and it has brought revolutionary changes in the
administration of justice. It can provide a better solution to a dispute more expeditiously and
at a lesser cost than in regular litigation.

1
D. M. POPAT, ADR AND INDIA: AN OVERVIEW, THE CHARTERED ACCOUNTANT, December 2004, p. 749.
2
AIR 1989 SC 1263.

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The Supreme Court realized the scope of ADR Mechanism in procedural as well in family
law in Jag Raj Singh v. Bripal Kaur3, the Court affirmed and observed that the approach of a
court of law in matrimonial matters is much more constructive, affirmative and productive
rather than abstract, theoretical or doctrinaire. The Court also said that in matrimonial matters
must be considered by the courts with human angle and sensitivity and to make every
endeavour to bring about reconciliation between the parties.

The rationale behind the adoption of a system of ADR is undoubtedly the need to find a
method to elude and eventually to obliterate the tremendous problems which inundate the
litigation system. Further, aspect of equal justice4 for all in the Constitution entwines the
essence of the same, since through such dispute resolution mechanisms, people are given an
opportunity to get their conflicts resolved justly without having any fear of facing hot shot
lawyers limiting to their economic disparity, thereby ensuring sufficient opportunities of
securing justice. Since it is the onerous duty of the Govt. to ensure implementation of such
schemes and legislations, the Arbitration and Conciliation Act came into existence.

The dispute resolution mechanism as provided under Arbitration and Conciliation Act of

1996 marked an epoch in the struggle to find an alternative to the traditional adversarial
system of litigation in India. It heralded the dawn of a new regime of negotiated settlement
and consensual dispute resolution, as a means of combating the insurmountable impediments
posed by the archaic civil justice system. The progeny of the Act, section 89 of the Civil
Procedure Code,2 which infused the Court with the duty of referring certain disputes for
alternative remedies, was a stepping-stone towards achieving the ineffable ideal of judicial
efficiency.

ADR, in practice, is of two kinds, i.e., Mediation & Conciliation and Arbitration. Both of
these techniques are elite in their own respective domains. Whereas on one hand arbitration is
the chief ritual of dispute resolution of business entities and corporate bodies; mediation &
conciliations focuses on all forms of settlement which are of civil nature, thereby widening
the scope and horizon of instances sort after. This paper focuses on mediation as a crude form
of dispute resolution highlighting the existing Delhi Govt run mediation centers as a means of
dispute resolution mechanism.

3
(2007) 2 SCC 564.
4
INDIAN CONSTITUTION. Art 39A Equal Justice and free legal aid.

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The alternative dispute resolution methods are not new to India and have been in existence in
some form or the other in the olden days. It is interesting to discover that the practice of
settling the dispute through community elders existed in India even before British Raj. It is
only now that there is universal acceptance and statutory recognition for such procedures to
facilitate early settlement of disputes on agreed terms. It was only after the Court system that
was predominantly adopted for resolution of disputes, the methods such as Arbitration,
Mediation, and Conciliation came to be treated as alternative means of resolving the disputes.
A detailed study of various forms of alternative dispute resolution has been put forth in this
study.

Alternative dispute redressal methods are being increasingly acknowledged in the field of law
and commercial sectors both at National and International levels. Its diverse methods can
help the parties to resolve their disputes at their own terms cheaply and expeditiously. 5
Alternative dispute redressal techniques are in addition to the Courts in character. Alternative
dispute redressal techniques can be used in almost all contentious matters, which are capable
of being resolved, under law, by agreement between the parties. Alternative dispute redressal
techniques can be employed in several categories of disputes, especially civil, commercial,
industrial and family disputes6. Form the study of the different alternative dispute redressal
techniques in the proceeding chapters it is found that, alternative dispute redressal methods
offers the best solution in respect of commercial disputes where the economic growth of the
Country rests.

The goal of ADR is enshrined in the Indian Constitution’s preamble itself, which enjoins the
State: “to secure to all the citizens of India, justice-social, economic, and political—liberty,
equality, and fraternity.”7

The Law Commission of Indian has maintained that, the reason for judicial delay is not a lack
of clear procedural laws, but rather the imperfect execution, or even utter non-observance,
thereof.8 The Law Commission of Indian in its 14th Report categorically stated that, the delay
results not from the procedure laid down by the legislations but by reason of the non-
observance of many of its important provisions particularly those intended to expedite the
disposal of proceedings. Given the huge number of pending cases, the governance and
5
124th Report by the Law Commission (1988), The 188th Law Commission Report, 2003.
6
Hindu Marriage Act 1955, Industrial Disputes Act 1947, The Code Of Civil Procedure, The Family Courts Act
1984.
7
The Preamble of Indian Constitution.
8
Law Commission of India, 77th Report, pr.4.1.

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administrative control over judicial institutions through manual processes has become
extremely difficult. The Supreme Court made it clear that this state of affairs must be
addressed: “An independent and efficient judicial system is one of the basic structures of our
Constitution…It is our Constitutional obligation to ensure that the backlog of cases is
decreased and efforts are made to increase the disposal of cases.”9

IMPORTANCE OF ADR

Wide range of process are defined as alternative dispute redressal 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.10

The alternative dispute resolution mechanisms by the very methodology used in it can
preserve and enhance personal and business relationships that might otherwise be damaged
by the adversarial process.

The method has strength because it yields enforceable decisions, and is backed by a judicial
framework, which, in the last resort, can call upon the coercive powers of the State. It is also
flexible because it allows the contestants to choose procedures, which fit the nature of the
dispute and the business context in which it occurs. The process of alternative dispute
resolution mechanisms is facilitative, advisory and determinative in nature.

Distinct advantages of alternative dispute redressal methods over traditional Court

proceedings are its procedural flexibility. It can be conducted at any time, and in any manner
to which the parties agree. It may be as casual as a discussion around a conference table or as
structured as a private Court trial. Also unlike the Courts, the parties have the freedom to
choose the applicable law, a neutral party to act as Arbitrator or as the Conciliator in their
dispute, on such days and places convenient to them and fix the fees payable to the neutral
party.

9
Brij Mohan Lal v. Union of India & Others (2002)5 SCC 1.
10
Tania Sourdin , Alternative Dispute Resolution. p 4.

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Alternative dispute redressal methods being a private process between the disputed parties
and the arbitrator, mediator or the conciliator it offers confidentiality, which is generally not
available in Court proceedings.

While a Court procedure results in a win-lose situation for the disputants, in the alternative
dispute redressal methods such as Mediation or Conciliation, it is a win-win situation for the
disputants because the solution to the dispute emerges with the consent of the parties.

However, some of the disadvantages that are found on the methods of alternative methods of
dispute redressal are that, the arbitrators is not subject to overturn on appeal may be more
likely to rule according to their personal ideals. Large corporations may exert inappropriate
influence in consumer disputes, pressuring arbitrators to decide in their favour or lose future
business. The burden of paying remuneration for the arbitrators is upon the parties to the
dispute, which may sometime be felt as a burden by the disputants.

The parties can cure these difficulties by prudently entering into the contract and deciding the
terms of referring the dispute, before choosing the alternative dispute redressal forum. The
advantages of alternative dispute redressal methods are so prominent that there is global need
and trend to adopt alternative dispute redressal methods to resolve the dispute as it is quick as
well as cheaper than that of adjudication through Courts of Law.

As argued by the father of our Nation Mahatma Gandhi, the role of law, is to unite the parties
and not to riven them.11 As compared to Court procedures, considerable time and money can
be saved in solving the disputes through alternative dispute redressal procedures12, which can
help in reducing the workload of regular Courts and in long run can pave way in solving the
problem of judicial arrears before the Courts of law.

SALIENT FEATURES OF ALTERNATE DISPUTE RESOLUTION

 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
11
Mahatma Gandhi, The story of my experiments with Truth 258 (1962).
12
Hiram Chodosh, Global Justice Reform: A Comparative Methodology (2005).

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

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 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.
 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 77 th 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.
 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 mala fide. It is, therefore, very unfortunate that
increasingly misconduct by the arbitrator or the arbitrators as the case may be is
alleged. Sometimes obnoxious allegations are made. The image should be
untarnished. There may be black sheep like any other sphere of human life. But then
that fallacy can be remedied by making a wise choice at the threshold.

WHY TO RESORT TO ALTERNATIVE DISPUTE RESOLUTION?

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Delay, in the justice delivery system with respect to both the civil or criminal justice is a
disturbing feature in the Courts of law. Alternative and consensual means of dispute
resolution are needed to reduce the backlog and delay in civil justice system. In the criminal
justice system, the criminal offences are regarded as a breach of State’s command. The State,
as a prosecuting party, cannot resort to arbitration, mediation and conciliation modes to
reduce the backlog of criminal cases. Nevertheless, a device for compounding is allowed
under Section 320 of the Criminal Procedure Code. This section is limited with respect to the
minor and domestic offences, where by fulfilling the ends of criminal justice and stabilizing
orderliness in the society. For other crimes, the formal legal adjudication is the sole means
and last resort. In criminal trials the Supreme Court of India has laid down that, for fairness in
the criminal trial no procedure can be regarded as fair and just if it does not ensure a
reasonable quick trial. Expediency and fairness of trial are held by the Supreme Court 13 as
integral part of Fundamental right to life and personal liberty enunciated in Article 21 of the
constitution. The litigation in this 21st Century needs active intervention of the judges,
mediators, conciliators and arbitrators to achieve speedy disposal of pending cases and reduce
expenditure. In India, The Arbitration and Conciliation Act, 1996 provides for legislative
hold to the methods of Arbitration and Conciliation as, alternative forms of resolving the
disputes. The Indian Supreme Court has interpreted that “social justice includes ‘legal
justice,’ which means that the system of administration of justice must provide a cheap,
expeditious and effective instrument for realization of justice by all section of the people
irrespective of their social or economic position or their financial resources.”14 Form the
proceeding chapters of the study dealing with historical evolution of the dispute resolution
process it is evident that prior to the advent of the British the laws in India were not codified

An in depth study of the evolutionary history, the provisions, the study of actual functioning
of the Arbitration and Conciliation Act, 1996 and the allied facts are dealt with, in succeeding
chapter of this thesis. The time has come for the public at large to understand and adopt the
current fact that, there is a global trend of shifting towards alternative methods of dispute
redressal mechanisms like arbitration, conciliation, negotiation and mediation from that of the
predominately-adopted form of adjudication of disputes by the Courts of law. A settlement
agreement arrived at among the disputants has the same status and effect as if it is an arbitral
award on agreed terms and it is final and binding on them . This chapter dealt with the

Hussainara Khatoon v. State of Bihar ,1979 CrLJ 1036.

13

14
Babu v. Raghunathji AIR 1976 SC 1734 ; Madabhushi Sridhar, Miscarriage of Fast Track Justice, LEGAL
SERVICES OF INDIA, available at http://www.legalservicesindia.com/articles/misoj.htm.

18 | P a g e
conceptual analysis of the terms dispute, the problem of judicial arrears and backlog of cases,
different dispute resolution mechanisms and so forth. To tackle with problems of judicial
delays and arrears, all the Courts and members of the Bar as well as the litigants will have to
realize that, there exists a problem of judicial delays and arrears and the problem is to be dealt
with efficiency and fast track manner. One of the ways of finding the solution to the problem
is to conduct extensive research and publications in that field. The researcher has tried to
study the different types of dispute redressal methods in the subsequent chapters, the unique
characteristics of the different dispute redressal methods functioning in other countries in
order to find a solution as to, can the adoption of different process of dispute resolution,
function successfully as alternative dispute redressal methods? It the need of the time, hence
the study of the ADR methods that can be introduced and adopted with necessary
amendments according to the circumstances for reducing the problem of judicial arrears
before the Courts.

LEGISLATIVE RECOGNITION OF ALTERNATE DISPUTE RESOLUTION

Alternative Dispute Redressal or Alternative Dispute Resolution has been an integral part of
our historical past. Like the zero, the concept of Lok Adalat is an innovative Indian
contribution to the world of Jurisprudence. The institution of Lok Adalat in India, as the very
19 | P a g e
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 non-commercially.

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.

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

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
organize 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.

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

20 | P a g e
repealed and a new and effective arbitration system was introduced by the enactment of the
Arbitration and Conciliation Act,1996. This law is based on the United Nations Commission
on International Trade Law (UNCITRAL) model law on International Commercial
Arbitration.

In Sitanna v. Viranna15, the Privy Council affirmed the decision of the Panchayat and Sir
John Wallis observed that the reference to a village panchayat is the time-honored 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.

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).

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

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. While upholding the validity of the CPC

15
AIR 1934 PC 105.

21 | P a g e
amendments in Salem Advocate Bar Association, Tamil Nadu v. U.O.I16, 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 in to 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.

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

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.

Industrial Disputes Act, 1947 provides the provision both for conciliation and arbitration for
the purpose of settlement of disputes. In Rajasthan State Road Corporation v. Krishna
Kant17, 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.”

16
(2003) 1 SCC 49.
17
1995 (5) SCC 75.

22 | P a g e
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 endeavor to bring
about reconciliation between the parties, where it is 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 reconciliation18.

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.

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.

TYPES OF ALTERNATE DISPUTE RESOLUTION

A. Mediation

It is an informal process in which a neutral third party without the power to decide or usually
to impose a solution helps the parties resolve a dispute or plan a transaction. Mediation is
voluntary and non-binding, although the parties may enter into a binding agreement as a

18
Section 23(3) of the Act.

23 | P a g e
result of mediation. It is not an adjudicative process. The process of mediation aims to
facilitate their negotiations. The mediator has no independent decision-making
power, jurisdiction or legitimacy beyond what is voluntarily offered by the parties
themselves. Mediation is a process of structured negotiation conducted by a facilitator with
skill, training and experience necessary to assist the litigating parties in reaching a resolution
of their dispute. It is a process that is confidential, non-coercive and geared to aid them in
arriving at a mutually acceptable resolution to their dispute of any nature. One of the
advantages of the mediation process is its flexibility. It is not as if one party wins and the
other party loses. But the parties arrive at an equitable solution that is why mediation is said
to be a win-win situation. Mediation employs several strategies, sub-strategies and techniques
to encourage the parties to reach an agreement.
Mediation like many ADR strategies has distinct advantages over the traditional
courts/tribunals format of dispute resolution. The advantages of ADR including mediation are
the informality of the process, the speed in dispute resolution, relatively low cost, the ability
of the process to focus on the disputing parties interests and concern rather than exclusively
on their legal rights; encouragement to the parties to fashion their own solutions; much
greater involvement of the parties in the process; the essential confidentiality of the process
and the high success rate.

B. Negotiation

Negotiation in principle is any form of communication between two or more people for
the purpose of arriving at a mutually agreeable situation. Negotiation has been defined as
the process we use to satisfy our needs when someone else controls what we want. Most of
the disagreements or differences are dealt with in one way or the other by negotiation
between the principals themselves; relatively few involve legal intervention. In this form of
ADR, the disputants or their agents maintain control over the negotiation process. There are
several techniques of negotiation such as competitive bargaining, cooperation bargaining
and principled negotiation which are but different facets and styles of negotiations. In the
competitive bargaining method, the negotiators are essentially concerned with substantive
results and advocate extreme positions, create extravagant issues, mislead the other
negotiator or even bluff in order to gain an advantage and to ascertain the other negotiator’s
bottom line.

24 | P a g e
In cooperative bargaining both negotiations focus on building up a relationship of trust and
cooperation. In this strategy the negotiators are prepared to make concessions even on
substantives issues as the endeavour is to preserve the relationship. In principled negotiations
the negotiator focuses on the interests of each of the disputants, with the goal of creating
satisfactory and elegant options for resolutions, which may be assessed by objective criteria.

This is the business method that can be said to be used more than any other, and with good
cause-it is the most flexible, informal and party directed, closest to the parties’ circumstances
contrast and can be geared to each party own concerns.

Negotiation occurs in business, non-profitable organizations, and government branches,

legal proceedings, among nations and in personal situations such as marriage, divorce,
parenting, and everyday life. The study of the subject is called negotiation theory. Those who
work in negotiation professionally are called negotiators. Professional negotiators are often
specialized, such as union negotiators, leverage buyout negotiators, peace negotiators,
hostage negotiators, or may work under other titles, such as diplomats, legislators or brokers.

C. Conciliation

Conciliation is a private, informal process in which a neutral third person helps

disputing parties to reach an agreement. This is a process by which resolution of disputes is
achieved by compromise or voluntary agreement. Here the parties, together with the
assistance of the neutral third person or persons, systematically isolate the issues involved in
the dispute, develop options, consider alternatives and reach a consensual settlement that will
accommodate their needs. In contrast to arbitration, the conciliator does not render a binding
award. The parties are free to accept or reject the recommendations of the conciliator. The
conciliator is, in the Indian context, often a Government official whose report contains
recommendations. The conciliation process is sometimes considered synonymous to
mediation. Where a third party is informally involved without a provision under any law,
which is mediation. In other words, a non-statutory conciliation is what mediation is.
Essentially however in effect and structure, conciliation and mediation are substantially
identical strategies where assistance is provided to parties to a dispute by a stranger to the
dispute. Both the conciliator and mediator are required to bring to the process of dispute
resolution fairness, objectivity, neutrality, independence and considerable expertise, to
facilitate a resolution of the conflict.

25 | P a g e
 D. Arbitration

The essence of arbitration is that some disputes are referred by the parties for settlement to a
tribunal of their own choice instead of to a court. Arbitration is a procedure for the resolution
of disputes on a private basis through the appointment of an arbitrator, an independent,
neutral third person who person who hears and considers the merits of the dispute and renders
a final and binding decision called an award.
The parties to the arbitration have some control over the design of the arbitration process. In
the Indian context the scope of the rules for the arbitration process are set out broadly by the
provisions of the Arbitration and Conciliation Act, 1996 and in the areas uncovered by the
Statute the parties are free to design an arbitration process appropriate and relevant to their
disputes. There is more flexibility in the arbitration process than in the traditional courts
system as the parties can facilitate the creation of an arbitral process relevant to their disputes.
Once the process is decided upon and within the parameters of the Statute, the Arbitrator
assumes full control of the process. Among the advantages of the arbitration process are
considerable saving in time and money compared to a trial; the limited possibility for
challenging the award which again contribute the lower costs and finality of outcome; and
greater participation by the parties than is case in the courts/tribunal system. Arbitration may
be ad-hoc, contractual, institutional or statutory.  Arbitration is a reference to the decision of
one or more persons, either with or without an umpire, of a particular matter in difference
between the parties.

 MEDIATION

History of Mediation

26 | P a g e
The Concept of Mediation is ancient and deep rooted in our country. In olden days disputes
used to be resolved in a Panchayat at the community level. Panches used to be called Panch
Parmeshwar.

Now we have grown into a country of 125 crore people and with liberalization and
globalization, there is tremendous economic growth. All this has led to explosion of litigation
in our country. Though our judicial system is one of the best in the world and is highly
respected, but there is lot of criticism on account of long delays in the resolution of disputes
in a court of law. Now an honest litigant is wary of approaching the court for a decision of his
dispute. Hence, we have turned to Alternative Dispute Resolution mechanisms.

The Supreme Court of India has started the process of reforms in the Indian Judicial System.
Hon'ble Mr. Justice A.H. Ahmedi, the then Chief Justice of India in the year 1966 invited the
Institute for the Study and Development of Legal Systems (ISDLS), USA to participate in a
national assessment of the backlog in the civil courts. Studies were made in respect of the
causes of delay in the civil jurisdiction in our country.

The legislature by the Code of Civil Procedure (Amendment) Act, 1999, amended section 89
of the CPC with effect from 1.7.2002 whereby mediation was envisaged as one of the modes
of settlement of disputes. The amendment in Section 89 was made on the recommendation of
the Law Commission of India and the Justice Malimath Committee. It was recommended by
the Law Commission that the court may require attendance of parties to the suit or
proceeding to appear in person with a view to arrive at an amicable settlement of the dispute
between them and make an attempt to settle the dispute amicably. Justice 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 or Judicial
Settlement through Lok Adalat. It is only when the parties fail to get their disputes settled
through any of the Alternative Dispute Resolution methods that the Suit could proceed
further. Thus Section 89 has been introduced to promote alternative methods of dispute
resolution.

Hon'ble Mr. Justice R.C. Lahoti, the then Chief Justice, Supreme Court of India constituted a
Mediation and Conciliation Project Committee (then chaired by Hon'ble Mr. Justice N.
Santosh Hegde). A Pilot Project on Mediation was initiated in Delhi in the month of August,
2005. The first batch of Senior Additional District Judges were imparted Mediation Training

27 | P a g e
of 40 hours duration. The trained mediators started judicial mediation from their chambers in
the end of August, 2005. Thereafter, 24 more Additional District Judges have been trained as
mediators during the month of September and November, 2005.

A permanent Mediation Centre with all modern facilities was established at Tis Hazari court
complex in October 24, 2005.

Judicial mediation was started at Karkardooma Court Complex in the month of December,
2005 and a litigant friendly and modern Mediation Centre was established in May, 2006.
Eleven more Additional District Judges have been trained as mediators during the month of
June, 2006.

Subsequently four more Mediation Centers were established at Rohini, Dwarka, Saket and
Patiala House Courts Complex.

Justice Malimath Committee Report

If a law is enacted giving legal sanction to such machinery for resolution of disputes and
resort thereto is made compulsory, much of the inflow of commercial litigation in regular
civil courts gradually moving up hierarchically would be controlled and reduced. This
Committee agreeing with the Law Commission recommended that Conciliation Courts
should be established all over the country with power, authority and jurisdiction to initiate
conciliation proceedings in all types of cases at all levels and that the amendment suggested
by the Law Commission should be carried out to enable the Scheme to function effectively.
The conciliation procedure should also be made applicable to the Motor Accident Claims
Tribunal.

The practice of mediation can trace its relevance from pre-Vedic period. Further, the era of
Buddha and dharma shastra strengthened this practice wherein the Vedas taught various
methods of amicable dispute resolution to the parties. In the later modern epoch, the
formation of Panchayat saw tremendous rise of dispute resolution whereby the Sarpanch, or
the head of the village acted as a mediator for settling all sorts of disputes.

28 | P a g e
According to Black’s Law Dictionary, mediation is a method of nonbinding dispute
resolution involving a neutral third party who tries to help the disputing parties reach a
mutually agreeable solution.19

Concept of Mediation

Mediation is a voluntary process in which an impartial and neutral mediator tries to bring
together the disputant parties to arrive at a mutually agreeable solution. The parties to the
dispute have an opportunity to ventilate their grievances and feeling and thereafter work out
the solution to meet their interest. Herein, the mediator, being the third party conducts the
mediation hearings and allows individuals to lament their crisis. The mediator, on hearing the
predicament of both the parties helps them by creating a favorable environment to enable
them to reach an amicable solution without deciding or imposing any solution on the parties.
His opinions and suggestions act as a catalyst in solving dispute in hand rather than a
commandment which has to be adhered to whatsoever the situation might be.

Under Sec-89 of the Code of Civil Procedure, 1908 20, it provides for following ADR in as
many cases as possible. According to Supreme Court mediation as a part of ADR process,
assist the people in dispute to identify the disputed issues, develop options, consider
alternatives and try to reach an agreement.21 The long drawn nature of litigation which
ironically subverts the ends of justice due to delay makes it viable for parties to resort to
alternate dispute resolution would indeed curb delays and the limitations of the traditional
system, such as limited number of judges, voluminous number of cases etc.22

In the case of Bondu Ramaswamy & Ors v. Bangalore Development Authority23, the Hon’ble
Apex court held that “It is necessary to evolve tailor-made schemes so that they will be
smooth, speedy, litigation free and beneficial to all concerned. Proper planning, adequate
counseling, and timely mediation with different groups should be resorted.”

19
BLACK’S LAW DICTIONARY, 8TH ED., P. 1003.
20
Sec 89: Settlement of disputes outside the Court.
21
Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd. (2010) 8 SCC 24.
22
Salem Advocate Bar Association v. Union of India (2003) 1 SCC 49.
23
(2010) 7 SCC 129.

29 | P a g e
The right of self-determination is essential element of the mediation process. 24 The shade of
mediation can be obtained in almost all noncriminal civil cases. The arena of this form of
dispute resolution is a colossal one covering a plethora of disputes like:

 Neighborhood- parking, noise, nuisance, destruction/repair/maintenance of property,

fencing, pets, interpersonal, etc.
 Family- Parents/child, parenting (child custody/visitation/support), child welfare, etc.
adult guardianship, restitution, divorce, domestic violence, maintenance, etc.
 School- Special Education, peer (student-student), minor complaints, corrections.
 Commercial- Consumer/merchant, small claims, workplace, bad cheques, accident
compensation.
 Miscellaneous- Police/citizen, minor criminal, victim/offenders, disabilities, cross-
cultural, religious/charitable, multiparty, etc.

It is pertinent to note that personal appearance and active participation of the parties are
required. Unlike litigation, there is no form of ex parte order given by the mediator in case of
absence of any party from the hearing. Also, any party may withdraw from mediation
proceeding at any stage before its termination for reasons best known to them.

In B.S. Krishnamurthy v. B.S. Nagaraj25, the Supreme Court speaking through Justice
Markandey Katju emphasized the need for lawyers to advise their clients to try mediation
especially where family relationships are involved.

Mediation Process and Role of a Mediator

A mediation process works in a well-structured and systematic manner. The parties to the
dispute, on filing their complaint, are obliged to attend the mediation proceedings presided
over by a mediator. The mediator at the outset explains the manner of proceedings to the
parties. She/he establishes an air of neutrality and strives to build trust of parties in the
process and ultimately craft an atmosphere for open discussion.

Mediator thereafter listens and encourages both the parties to give information and facts and
helps them to identify their interests. He establishes communication between them. He also

24
Mediation and Conciliation Project Committee, Supreme Court of India, Concept and Process of Mediation,
MAIN MEDIATION CENTRE MAHARASHTRA AND GOA, (Nov 2, 2018, 10.10 PM),
http://mediationbhc.gov.in/PDF/concept_and_process.pdf.
25
S.L.P. Civil) No(s).2896 of 2010.

30 | P a g e
listens to both the parties separately to enable them to further explain their grievances,
demand, and expectations. He helps them to generate options for amicable settlement.

Generally, a party is asked to talk directly to the others involved in the dispute and may also
have separate sessions with the mediator. The choice as to engage a joint session or a private
session solely rests with the parties. An average session lasts for 30-60 minutes in one
hearing. Each person is made to reflect on the discussion and get advice or support from the
mediator on various possible solutions for the dispute.

Once the matter is settled, the mediator clarifies and confirms the terms and drafts an
agreement in consonance with those terms of settlement mutually agreed and binding upon
by both the parties. These sessions are usually a structured, face to face meeting with all the
people in dispute and no one or other mediators. 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 degree of flexibility in following these stages. The decree in term of the settlement is final
and is not appealable.

It is significant to note that a mediator is not an adjudicator but a mere facilitator of the entire
proceedings. Unlike the Judge in a traditional Courtroom setting or an arbitrator in the
arbitration proceedings, the mediator neither has to adjudicate the facts nor arbiter the
disputes. These mediators are usually lawyers who have undergone training as prescribed by
Mediation and Conciliation Project Committee (MCPC) of Supreme Court of India; or retired
officers, judges, bureaucrats, public-spirited persons, lawyers, social workers and respectable
citizens, etc. who aim at reducing the burden of court. The mediator, unlike a judge, does not
deliver judgment or dictate to the parties the terms of the agreement. As an impartial
facilitator, the function of the mediator is to enable the parties to arrive at a mutual and
voluntary agreement.

According to Order X Rules 1-A of the CPC 26, the court, after recording admission or denial
of documents, is under an obligation to direct the parties to opt for any of the four modes of
alternative dispute resolution including mediation. The request for reference of a dispute to
mediation can be made by both the parties.

26
1A. Direction of the court to opt for any one mode of alternative dispute resolution.

31 | P a g e
Justice can be accessed in its truest form when one party to the dispute understands the
grievances of another and voluntarily embraces all forms of changes in the status quo
required for the peace and tranquillity of another.

Confidentiality in mediation

One thing that is very central as indicated earlier is confidentiality. The parties should be able
to communicate openly for a mediation to succeed. Confidentiality questions that may arise
are complex and numerous and might not have been explored fully.

The question is how far confidentiality should extend. It is important to understand the
considerations of the question of confidentiality in mediation. The first one is that the
confidentiality encourages the parties involved to negotiate and come to an agreement. This
helps avoid litigation or arbitration. The other consideration is one that inclines
confidentiality based on the evidence produced to ensure that a fair decision is made.
Legislation has been enacted by many jurisdictions to make mediation a confidential process.

On 7 January 2011 the Supreme Court of India, in the case of Moti Ram (D) Tr. LRs and Anr.
v. Ashok Kumar and Anr27, held that mediation proceedings were confidential in nature, and
that only an executed settlement agreement or alternatively a statement that the mediation
proceedings were unsuccessful, should be provided to the court by the mediator.

In this case the Supreme Court had made a direction for the parties to take part in a mediation
in order to try and settle their dispute. After the mediator had provided a report of the
mediation proceedings to the court, the Supreme Court held that mediation proceedings were
confidential in nature, although such confidentiality could be lost in the event that the
mediation proceedings were disclosed. The court gave guidance to mediators in relation to
preserving confidentiality by holding that, if the mediation proceedings resulted in a
settlement, the mediator should only provide a copy of the executed settlement agreement to
the court, and not disclose anything about what transpired during the mediation proceedings.
Alternatively, if the mediation proceedings did not directly result in a settlement, the
mediator should only provide the court with a statement setting out that the mediation
proceedings were unsuccessful.

27
(Civil Appeal No. 1095 of 2008).

32 | P a g e
Prior to this judgment, whilst parties were free to make a contractual agreement to maintain
confidentiality of mediation proceedings, no statutory authority provided that mediation
proceedings were confidential. The judgment is expected to improve the popularity of
mediation as a method of resolving disputes in India, particularly amongst non-Indian parties.

In the case of Rama Aggarwal v. PIO, Delhi State Legal Service Authority 28 that came up
before the Central Information Commission, the CIC held that a party cannot seek
information pertaining to mediation proceedings under the Right to Information Act, 2005 as
the same attracts exceptions under provisions of the said Act. The Central Information
Commission observed that “Information regarding negotiation, mediation, conciliation and
counseling will fall under exempted clause of information of other spouse, being personal and
given in fiduciary capacity and, no public interest is established in disclosure, while there is
larger public interest in protecting that information as that would help mediation to flourish,
hence such information shall not be disclosed.

Who attends the mediation?

All the parties to the dispute, their lawyers, and the mediator. Sometimes, with the agreement
of all the parties and the consent of the mediator, it is helpful to have someone present who
are not a party but who can help resolve the dispute. Examples include experts such as
valuers and the professional advisers such as accountants. Whoever attends on behalf of the
parties must have full authority to settle the dispute.

Advantages of Mediation

Mediation as a process accrues high range of benefits for the parties to the suit. From control
over the mediation process in terms of its scope, i.e., the terms of reference or issues to its
outcome, i.e., the right to decide whether to settle or not settle the dispute; it allows parties to
personally express their views directly and formally.

 Confidentially: The process of mediation ensures utmost secrecy to the parties who
can communicate their anxieties and problems without any fear of adverse action.
This helps in building better and effective communication between disputed parties.
 Participative: Mediation partakes parties and bestows an equal opportunity to present
their case in their own words and to directly participate in the negotiation. This results

28
2015 SCC OnLine CIC 4872.

33 | P a g e
 in proper involvement of the disputed parties and helps in resolving the dispute in a
more effective manner. This helps to maintain, improve and restore the relationship
between the parties.
 Eliminates the baggage of long litigation: One of the chief features of this form of
ADR is that provides the parties and the judicial system a way out of the regular ever-
growing pendency of case logs. By opting for mediation, parties to the dispute get to
resolve their matter much faster and because of this fast dispute resolution, the burden
on judiciary with regard to disposal of case laws reduces.
 Mutual agreement: Mediation does not involve pronouncement of a sentence or
judgment at the finality of the settlement. It draws various terms and conditions which
are mutually agreed upon by both the parties through their own free will, without any
sense of coercion or influence. The mediator acts as a negotiator of these terms only.
 Rejuvenate relationships: The exclusivity of mediation is that it brings harmony by
creating a win-win situation for the disputing parties. The practice of mediation,
unlike litigation or any other form of dispute resolution where the result is the triumph
of one over the other; focuses on a sense of settlement for both the parties wherein the
disputed parties themselves agree to certain terms and conditions to be adhered to by
them. This results in ultimate satisfaction of both the parties.
 Speedy, simple, economical: The efficient and economical nature of mediation in
addition to its breakneck resolution makes it a favorable process for all. The DDRS
provides for free mediation opportunity to parties of all strata of the society. Further,
it is a fair process and the informal, cordial and conducive environment works like a
cherry on the icing.
 Authenticity of the settlement: Any settlement reached is required to be reduced to
writing, signed by the concerned parties and filed in Court for the passing of an
appropriate order
 Distinctive feature of cases are taken care of: In mediation, each case is decided as
per its own merits. The exceptionality of each case stands unconditionally valid.
Unlike litigation, where merits of the case are influenced by precedents, the mediation
proceedings ensure that each case is decided amicably as per the convenience of both
the parties.

34 | P a g e
  Lawyers not a compulsion: The set up under DDRS provides the disputed parties to
resolve their issues without seeking any aid from an advocate who might aim at
minting money rather than resolving the dispute quickly.

Disadvantages of Mediation

The process of mediation, despite a multitude of benefits, has some drawbacks too.

 Mediation does not always result in a settlement agreement: Parties might spend
their time in mediation only to find that they must have their case settled from them
by a court.
 Mediation lacks the procedural and constitutional protections: The lack of
formality in mediation could be a benefit, as noted above, or a detriment. Mediation
between parties of disparate levels of sophistication and power, and who have
disparate amounts of resources available, might result in an inequitable settlement as
the less-well positioned party is overwhelmed and unprotected.
 Legal precedent cannot be set in mediation: Mediation involves approaching every
case the way it is. Though an advantage in some cases, however, this nullifies the
practice of setting precedents in future cases. Thus, a case with similar facts may be
decided differently by different mediators according to their discretion and approach.
 Mediation has no formal discovery process: If one of the parties to a dispute cannot
fully address the cases without first receiving information from the party, there is no
way to compel disclosure of such information.
 Reliant on cooperation, emotionally intelligent participants: Mediation encourages
people to work together, express concerns and share understanding. This is one of its
great strengths, but during difficult workplace situations it is often difficult for people
to be positive and always do what is best for them. Co-operation with other also
become difficult when negative perception and emotional hook in.

35 | P a g e
ISSUES IN MEDIATION

The mounting global preoccupation with mediation, reflected in a growing array of

institutions, programs, laws and regulations; an international “evangelical” movement; and
mounting impetus for an international convention promoting the recognition and enforcement
of mediated settlement agreements; should be accompanied by collective reflection, dialogue
and discernment regarding present trends.

(1) Divergent perceptions and practice: Throughout the “modern mediation” era there has
been debate over the roles and practices of mediators. Mediation’s global growth has
heightened the debate, and data from studies like the Straus Institute’s recent survey of
members of the International Academy of Mediators indicate considerable variation in
mediators’ “default” practices. Some practices vary from region to region. California
mediators are more likely to begin mediation in caucus, meeting privately with the parties in
separate rooms, and also to caucus throughout mediation. Mediators practicing outside the
U.S. are much less likely to do so, and U.S. mediators practicing outside California tend to
fall somewhere in between the other groups. Furthermore, mediators practicing outside the
U.S. are more likely to tell parties that all information shared during caucus will be
confidential unless they instruct the mediator to share it; California-based mediators are more
likely to tell parties that they will share any information learned during caucus with the other
party as they see appropriate, unless instructed not to share it.29

Divergence is also evident in the realm of mediator evaluation and opinion-giving. Mediators
practicing in California are especially likely to “develop and propose potential agreements the
parties might all accept as part of a potential settlement”, to “tell parties [their] predictions of
how not settling might affect them, including what [they] think may result if the case
proceeds to court or arbitration”, or “assess, and share [their] opinion regarding, the legal
strength of arguments made by parties and/or counsel.” As a group, non-U.S. mediators are
much less likely to offer evaluations. Even within regions, of course, the preferred practices
of mediators vary greatly. Moreover, many mediators stress the importance of tailoring their
approaches to specific circumstances, to remain flexible in their approach. Experience also
indicates that mediators’ practices often change over time.30

29
The International Evolution of Mediation, available at: http://kluwerarbitrationblog.com/2016/06/02/the-
international-evolution-of-mediation-a-call-for-dialogue-and-deliberation/.
30
Ibid.

36 | P a g e
A failure to appreciate the diverse spectrum of approaches that prove beneficial in mediation
may cause law- or policy-makers to regulate mediation in a way that unduly restricts
flexibility and predictability. Although mediation is just emerging in Brazil, the Brazilian
Congress recently passed legislation that sets rigid limits on mediation practice. The law
establishes detailed requirements for contractual mediation provisions, including “minimum
and maximum period for the completion of the first mediation meeting”, the site of
mediation, and “criteria for choice of mediator.” It formally distinguishes mediation from
conciliation, thereby raising questions regarding the ability of mediators to engage in
evaluation. Furthermore, it requires that “information provided by a party in a private session
[caucus] will be confidential, and the mediator cannot reveal it to others, except as expressly
authorized.”

(2) Lawyers and mediation: The U.S. experience suggests that as attorneys garner
experience with mediation, they play more assertive roles in shaping the process for good or
ill. They may work strategically with the mediator to ensure that the negotiation “dance”
proceeds in a way that best protects their clients’ interests while exploring trade-offs and,
occasionally, options for value creation. But attorneys may also contribute to mediation
dysfunction by actively misleading the mediator regarding the prospects for settlement and
ensuring that the day of resolution is postponed. The vast majority of respondents to the
IAM/Straus Survey indicated that attorneys at least sometimes use mediation as a means of
dragging out litigation. Moreover, some mediators are expressing growing concern about
lawyers taking control of the mediation process, limiting joint sessions and insisting that all
communications go directly through them. As one California respondent to the Survey put it:

“Other sources suggest a disconnect between business users and counsel when it
comes to commercial mediation. Perspectives obtained at a 2014 London
convention on mediation indicated that while many users favor the use of
mediation early in the life of disputes, their external counsel are less enthusiastic.
Over three-quarters of business users registered support for early resort to
mediation, while less than half of legal advisors agreed. Two-thirds of users
supported using dispute resolution provisions that required mediation prior to
arbitration or litigation, but few advisors embraced that view. There were also
significant disparities in perceptions regarding the need to reduce costs and risks
in international dispute resolution – goals often tied to mediation. Many business

37 | P a g e
 users conceded that the ineffective use of ADR was attributable to the failure of
in-house counsel and senior management to effectively express their needs to
outside counsel.”

Mediation experience also entails consequences for law practice. While one might expect
mediation experience would give attorneys more confidence in their negotiation skills and
thereby lessen the need for mediation, it appears instead that over-reliance on mediators has
made some U.S. litigators more reluctant to negotiate outside mediation! There are also
concerns regarding the impact of diminished trial rates (attributable, it is said, to mediated
settlement) on the ability of young lawyers to assess their own chances in court.31

As mediation becomes an important element of a justice system and related law practice,
lawyers exert their own kind of “gravitational pull” on mediation; conversely, mediation
changes the practice of law. More reflective, deliberate practice should include meaningful
discussions between client and counsel regarding the use of mediation and their respective
roles in that process.

(3) The influence of culture and legal traditions: Culture is particularly relevant to
mediation practice because it shapes the way people view conflict and how they deal with
disputes within the justice system. Culture shapes the way one perceives the world. Culture in
conflict resolution forms one’s knowledge (what is a “dispute” and what is not), values
(what is worthy and meaningful), norms (what are the “acceptable” behaviours) and styles in
managing disputes or conflict. Conflict often involves the perceived or actual incompatibility
of norms and values, or processes in regards to the following goal issues: content, identity,
relationships, and conflict process or procedure. Culture can affect parties’ preferences and
agendas. Culture is a complex yet powerful construct in our society. It consists of unwritten
rules and “patterned ways of thinking, feeling and reacting, acquired and transmitted mainly
by languages or symbols”. Every social unit consists of multiple cultures; these cultural
groups are defined by a range of factors: different age groups, gender, language spoken,
ethnicity, spiritual beliefs, values and educational upbringing.32

The Western “modern mediation” model, founded on the primacy and autonomy of
individuals, differs markedly from older traditions where mediation is oriented toward social

31
Ibid.
Importance
32
of Culture in Mediation, available at: http://www.academia.edu/243509/
Culturally_sensitive_mediation_The_importance_of_Culture_in_mediation_accreditation.

38 | P a g e
hierarchy, societal harmony and obedience to authority. In China, mediation has a rich history
dating back more than two millennia. Submitting disputes to a village elder or authority
figure for the purpose of promoting or restoring harmony was consistent with Confucian
precepts, and the practice remains an important mechanism for maintaining the social order in
China today. These stark differences present challenges for those who promote structures for
international mediation. Community mediators in the People’s Republic of China (PRC) as a
part of local government, may resolve neighborhood disputes by investigating, conversing
separately with those involved, and proposing a solution—a highly directive but effective
approach to keeping the peace in a high-context and hierarchical society. Mediation is also
“housed” within institutions of public or private justice, where judges and arbitrators mediate
if the parties so agree. These approaches tend to be far different from the U.S. and other
countries where mediators are insulated from the judicial process due to concerns about
preserving party autonomy and the integrity of judicial decision making.33

33
Ibid.

39 | P a g e
RECOGNITION AND ENFORCEMENT OF MEDIATION

At this point in time, the international framework for conciliation includes two UNCITRAL
instruments: the Conciliation Rules (1980), and the Model Law on International Commercial
Conciliation (2002). It does not include a convention that would assure a uniform approach to
enforcement of the settlement agreements. In order to promote mediation and solidify the
enforceability of settlement agreements, efforts by the United Nations Commission on
International Trade Law (UNCITRAL) are currently taking place to find a solution.

In 2002 the UNCITRAL Model Law on International Commercial Conciliation (“the

Conciliation Model Law”) was adopted by resolution of the UN General Assembly with a
recommendation that:

“… all States give due consideration to the enactment of the Model Law, in view
of the desirability of uniformity of the law of dispute settlement procedures and
the specific needs of international commercial conciliation practice.”

By way of support to this “non-adjudicative dispute settlement method” the necessity to

provide for an enforceable settlement agreement is set out at Article 14 of the Conciliation
Model Law (‘Enforceability of settlement agreement’) which reads:

“If the parties conclude an agreement settling a dispute, that settlement

agreement is binding and enforceable … [the enacting State may insert a
description of the method of enforcing settlement agreements or refer to
provisions governing such enforcement].”

In the ‘Guide to Enactment’ of the Conciliation Model Law, the drafters recognised the wide
variation within different legal systems for possible enforcement mechanisms, stating:

“In the preparation of the Model Law, the Commission was generally in
agreement with the general policy that easy and fast enforcement of settlement
agreements should be promoted…

The ICSID Convention, Regulation and Rules include a conciliation procedure. The
procedure provides for the appointment of a Conciliation Commission of one, three or
more conciliators. The Commission may make oral or written recommendations to the parties

40 | P a g e
at any stage of the proceedings, in order to bring about agreement. Amongst other matters it
may recommend that the parties accept specific terms of settlement or that they refrain from
specific acts that might aggravate the dispute.34

The World Intellectual Property Organisation (WIPO) includes an Arbitration and Mediation
Center which promotes the resolution of international commercial disputes between private
parties through ADR mechanisms. Just over half of the cases administered by the Center are
mediations; and 68% of their cases involve parties based in different jurisdictions. Cross-
border enforcement of mediated settlement agreements is therefore a critical issue. WIPO
provides its own WIPO mediation rules, and offers an escalation clause providing for WIPO
mediation followed by WIPO expedited arbitration if required.35

Also of note is the Hague Conference on Private International Law (the Convention on the
Choice of Court Agreements (2005) and the Judgements Project, where a Working Group is
addressing the recognition and enforcement of judgments to facilitate cross-border trade. It is
expecting to be able to submit a finalised text during 2016 for a convention to apply to the
recognition and enforcement in one contracting state of a judgement given in another
contracting state, relating to civil or commercial matters.36

In the European Community, cross border enforcement is supported by EC Directive

2008/52/EC. In particular, the European Directive advises in its introductory guidance that:

“Mediation should not be regarded as a poorer alternative to judicial

proceedings in the sense that compliance with agreements resulting from
mediation would depend on the goodwill of the parties. Member States should
therefore ensure that the parties to a written agreement resulting from mediation
can have the content of their agreement made enforceable. It should only be
possible for a Member State to refuse to make an agreement enforceable if the
content is contrary to its law, including its private international law, or its law
does not provide for the enforceability of the content of the specific
agreement…”  

34
Enforcement of International Mediation Settlement Agreements, available at: http://www.probyn-
miers.com/perspective/2016/06/enforcement-of-international-commercial-mediation-settlement-agreements/.
35
Ibid.
36
Ibid.

41 | P a g e
 And

“The content of an agreement resulting from mediation which has been made
enforceable in a Member State should be recognised and declared enforceable in
the other Member States in accordance with applicable community or national
law….” 

Within the five broad areas covered by the EU Directive, member states were obliged to
ensure mediation settlement agreements were enforceable as if they were Court judgments.
EU Member States were required to bring into force the laws, regulations and administrative
provisions necessary to comply with the Directive before 21 May 2011.37

By way of general overview, the options for enforcement of a settlement agreement typically
will be:

 Enforcement as a contract, via a further court procedure.

 Enforcement via specific statutory provisions recognising the settlement agreement as

equivalent to an arbitration award, where such legislation exists; or

 Enforcement via an arbitration award.

 UNCITRAL Developments

 UNCITRAL is probably best known in dispute resolution circles for its Model Law
on International Commercial Arbitration and its Arbitration Rules. However it also
has a significant role in conciliation, since its publication in 1980 of its Conciliation
Rules and in 2002 of its UNCITRAL Model Law on International Commercial
Conciliation with Guide to Enactment and Use.

 UNCITRAL document ‘Modern Law for Global Commerce’ 2007 addressed, inter

alia, the issues of enforcement as a contract or as an arbitral award. It was in this
context that in 2014 the US Government proposed that the UNCITRAL Working
Group II should consider the issue of enforcement of international settlement
agreements resulting from conciliation proceedings. It was recognised that “the lack

37
Ibid.

42 | P a g e
 of a harmonised enforcement mechanism was a disincentive for businesses to proceed
with conciliation”.

 In July 2015, during a session of UNCITRAL that took place in Vienna, WGII
reported to UNCITRAL a summary of its findings, its concerns and
recommendations. UNCITRAL approved giving WGII a mandate to work on the
topic of enforcement of settlement agreements resulting from international
commercial conciliation.  The mandate given by UNCITRAL to the WGII was broad
enough to include different possible forms of work, namely, (i) a guidance text, (ii) a
model legislative provisions, and most importantly (iii) a convention. However most
importantly, WGII has a mandate to prepare a convention on the enforceability of
international commercial settlement agreements resulting from mediation/conciliation
(“Convention”). This is the core of the aforementioned Proposal and is supported by
the international community including the International Mediation Institute (‘IMI’). 
The idea of the Proposal is based on the successful role played by the 1958 United
Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards
(“NY Convention”) in the development, promotion and use of international arbitration
worldwide.  A total of 156 countries are signatories to the NY Convention of which
14 are countries in the Middle East, including Bahrain, Egypt, Jordan, Oman and the
United Arab Emirates.38

 The UNCITRAL Working Group II has met since at the 64 th session on arbitration
and conciliation 1-5 February 2016 in New York City. Pertinent points arising from
the meeting, inter alia are:

 Providing guidance to create a legal instrument for direct enforcement of an

“international commercial settlement agreement resulting from conciliation”.

 Considering the notions of “international” and of “commercial”.

 Consumer, family and employment law matters will be explicitly excluded.

38
Mediation- the other way, available at: http://www.lexology.com/library/detail.aspx?g=416b9435-39bb-4fa7-
a3b0-1039f0007e7f.

43 | P a g e
  Settlement agreements reached during judicial or arbitral proceedings but not
recorded in a judicial decision or an arbitral award will fall within the scope of the
instrument.

 Regarding defences to enforcement and applicable law, the Working Group has
considered: incapacity, coercion and fraud; subject matter of the settlement agreement
not capable of settlement; subject matter of the settlement agreement contrary to
public policy; contrary to the terms and conditions of the settlement agreement;
validity of the settlement agreement; the settlement agreement is not binding, is not
final, has been subsequently modified or the obligations therein have been performed;
enforcement of the settlement agreement would be contrary to a decision of another
court or competent authority.

 The Working Group also considered whether the conduct of a conciliator could have
an impact on the validity of the settlement agreement and its enforceability.39

There is no doubt that the WGII will have many challenges to cover when preparing the
Convention and the other aspects of its work.  These include, amongst others: 

 What a settlement agreement will need to contain to be recognized under the

Convention. 

 Whether the Convention will apply to settlement agreements reached through direct
negotiations between the parties.

 Whether the Convention will apply to any settlement agreement reached through a
process that includes a neutral third-party, regardless of being mediation, conciliation,
neutral-evaluation or another form of ADR.

 Whether the Convention will apply to all settlement agreements or only those that
involve international parties (i.e. parties from two different states).

 Whether it should cover disputes involving a governmental body or administrative

authority.

39
Ibid.

44 | P a g e
  The grounds for refusing enforcement of a settlement agreement.40

It is too early to predict what the WGII efforts will lead to given the complex set of concerns
that need to be addressed by the group. There should however be confidence that these
concerns will be resolved and that a solution will be produced in the near future.  The
creation of the NY Convention faced similar challenges, including initial opposition from the
delegation of the United States of America, but these challenges were overcome and the NY
Convention has become possibly one of the most successful instruments created by the
United Nations.41  

If the Convention is created and taken up with the same enthusiasm as the NY Convention, it
will (i) create a strong international legal framework for mediation, that will (ii) encourage
more parties to use this mechanism and (iii) result in many more disputes being settled
without the time and expenses of litigation and arbitration, leading to (iv) greater and more
effective access to justice.42

Despite all the benefits mediation has to offer, parties may be reluctant to commit to it
because the status of agreements reached in mediation (that is, mediated settlement
agreements or “MSAs”) is uncertain. Mediation is not supported by a framework of
multilateral conventions and treaties, model laws, and domestic rules akin to that which exists
for international commercial arbitration, and by virtue of which arbitral awards are
recognised and enforceable in most of the major trading nations in the world. In the absence
of such a system, it is difficult to enforce MSAs across national borders. National legislatures
and courts generally determine the status of MSAs, and there is considerable diversity in the
approach adopted. While high compliance rates are claimed for MSAs, and in fact, most
settlements are self-executory, there is a small but significant number of cases9 where a party
breaches the terms of an MSA (leaving the other side to consider enforcement options) or
alternatively seeks to have the MSA set aside. For the parties involved in this “small number”
of cases, the question of MSA enforceability is vitally important. It is also important to
anyone considering the use of mediation. 43

40
Ibid.
41
Ibid.
42
Ibid.
43
Ibid.

45 | P a g e
Several international institutions have taken baby steps towards the establishment of a system
which provides certainty and “a unified solution as to how [MSAs] might become
‘enforceable’”. The United Nations Commission on International Trade Law (hereinafter
“UNCITRAL”) and the European Union (hereinafter “EU”) have been at the forefront of
these initiatives. In 2002 UNCITRAL promulgated its Model Law on International
Commercial Conciliation (hereinafter “MLC”). In the lead up to its release, UNCITRAL
suggested as one possibility, the creation of a system where settlement agreements signed by
the parties would be “binding and enforceable as an arbitral award”. This option was
eventually rejected, in part because of lack of consensus by its constituents, and UNCITRAL
adopted instead what it called “the smallest common denominator” approach, leaving the
matter of enforcement to the law of each enacting state. Some years later the EU released a
Directive on Mediation (Directive 2008/52/EC), which arguably has been more successful
than the MLC in establishing uniformity of treatment of MSAs by member states. The
Directive envisages enforceability of MSAs through a number of avenues, such as courts and
other competent authorities, using a number of forms of settlement including contracts and
special deeds. However, like the MLC, the EU Directive ultimately leaves the exact mode of
enforcement to member states. The Directive also creates wide exceptions. The enforcement
provision “does not apply where the content of the mediated agreement is either contrary to
law of the member state in which the agreement is sought to be enforced or where that law
does not provide for its enforceability”.44

While UNCITRAL and the EU have been supportive regarding the idea of a system which
affords special protection and recognition to MSAs, the MLC and EU Directive, described by
one author as “the primary international legal instruments on mediation”, “both fall short of
establishing uniform standards in relation to the enforceability of mediated agreements”.
Alexander suggests that “the diversity in regulation of the enforceability of mediated
agreements is likely to continue within the frameworks of both the EU and UNCITRAL legal
instruments on the topic”. Currently there are no comprehensive systems providing for
crossborder enforcement of MSAs. The various methods by which MSAs might be enforced
are discussed next.45

44
Mediation and MSA, available at: https://poseidon01.ssrn.com/delivery.php?
ID=733004110116086125109066070014109090052064018031086020031096068088085008092117096096124
021020012098002061067027025123068126121051066001081068085106064116090079096007079045006012
003122093102127101066120095073092088003065099083026103113003116003096109&EXT=pdf.
45
Ibid.

46 | P a g e
CURRENT METHODS OF ENFORCING MSA’S

a. Enforcement as A Contract
b. Enforcement as A Court Consent Order
c. Enforcement as A Consent Arbitral Award

WHY MEDIATION AND MSA’S WARRANT SPECIAL TREATMENT

a. Promoting Uniformity, Predictability & Certainty in Dispute Resolution

b. Encouraging Settlement
c. Improving the Quality of the Dispute Resolution Process and Outcome
d. Providing Incentives for Compliance
e. Regulating and Reviewing Mediation

MEDIATION AS A MEANS OF ACCESSING JUSTICE

Our country is in desperate need of setting up more centers, like DDRS, in every state. It is
the duty of the Govt. of the state and the Law Ministry to take such initiatives to help the
overburdened courts in reducing pendency. In most of the disputes, the question as to who is
right and who is wrong seeds the entire plant for seeking redressal. Most of the times, despite
issue being a trivial one, its pendency in court makes it a matter of grave concern ultimately
resulting in a bitter and an astringent situation in lieu of seeking justice. Usually, these
disputes in civil cases can easily be solved amicably by reaching a common set up between
both the parties wherein both the parties to the dispute could settle down for a compromise,
resulting in triumph for all.

Thus, easy access to justice to all sections of people, maintenance of social order, provision
of legal aid for the poor & needy and dispensation of justice by an independent Judiciary
within a reasonable time are the cherished goals of our Constitutional Republic and for that
matter, of any progressive democracy.46

46
238TH LAW COMMISSION REPORT on AMENDMENT OF SECTION 89 OF THE CODE OF CIVIL PROCEDURE, 1908
AND ALLIED PROVISIONS, pg, 5.

47 | P a g e
Further, giving due legitimacy and stature to these alternate disputes resolving bodies and
empowering them with certain powers would increase the confidence of people in the
authorities thereby encouraging them to seek this mode of redressal than taking the course of
regular litigation.

India being a welfare seeking country, it aims at building its society on the pillars of peace,
harmony, and compassion. However, a majority of frivolous issues, on being set up in courts,
shake these pillars and create a sense of discord in the society.

The avenue of mediation helps in speedy dispute resolution without disembarking the towers
of strength. Ultimately, justice can be achieved when the entire society lives in a cordial and
harmonious manner by adjusting and compromising and without being at a major loss of
anything substantial.

Separate mediation centers, outside court, provide the people to bring out their grievances on
a platform away from complexities of court and getting their predicaments set right and
restore soured relations. The 21st century requires an effective dispute resolution mechanism
which provides user-friendly, speedy and cost-effective solution to all. A solution system
which provides for a multitude of options to cater to and which gives the litigants enough
flexibility to hear and be heard at the same time is something which is sought by all. In such a
horizon, mediation seems to be the penultimate solution for all.

48 | P a g e
  CONCILIATION

History of Conciliation

Conciliation is not a new concept as far as India is concerned. Kautilya’s Arthashastra also
refers to the process of conciliation. 47 Various legislations48 in India have also recognized
conciliation as a statutorily acceptable mode of dispute resolution and conciliation was in fact
being frequently resorted to as a mode of dispute resolution under these specific legislations.
However, apart from these statutory provisions dealing with specified categories of cases,
conciliation in general as a mode of ADR lacked proper legislative framework and statutory
backing.49

In 1984 faced with the problem of surmounting arrears the Himachal Pradesh High Court
evolved a unique project for disposal of cases pending in courts by conciliation. This was also
been recommended by the Law Commission of India in its 77 th and 131st reports and the
conference of the Chief Justices and Chief Ministers in December 1993. 50 The Malimath
Committee had also inter alia recommended the establishment of conciliation courts in
India.51

In the meantime the UNCITRAL had adopted the UNCITRAL Conciliation Rules, 198052
and the General Assembly of the United Nations had recommended the use of these rules,
therefore, the Parliament of India found it expedient to make a law respecting conciliation,
and the Arbitration and Conciliation Act, 1996 was enacted.53 Conciliation was afforded an
47
V.A. Mohta and Anoop V. Mohta, Arbitration, Conciliation and Mediation 535 (Manupatra, Noida, 2nd Edn.,
2008).
48
Section 12 of the Industrial Disputes Act, 1947 contemplates settlement of disputes through conciliation
effected through conciliation officers appointed under the Act; Section 23 of the Hindu Marriage Act, 1955 and
Order XXXII A, Code of Civil Procedure, 1908 enable the judge to effect settlement between the parties by
recourse to conciliation.
49
See Anirudh Wadhwa and Anirudh Krishnan (Eds.), R.S. Bachawat’s Law of Arbitration and Conciliation
(Lexis Nexis Butterworths Wadhwa, Nagpur, 5th Edn., 2010).
50
Sarvesh Chandra, “ADR: Is Conciliation the Best Choice” in P.C. Rao and William Sheffield (Eds.),
Alternative Dispute Resolution 82 (Universal Law Publishing Company Pvt. Ltd., Delhi, 1997); See also O.P.
Motiwal, “Development of Law of Conciliation in India”, XLIX ICA Arbitration Quarterly 2 (January - March
2011).
51
H.R. Bhardwaj, “Legal and Judicial Reforms in India”, available at:
<http://icadr.ap.nic.in/articles/articles.html>
52
Adopted on 23 July 1980 and recommended vide Resolution 35/52 of the UN General Assembly on 4 th
December 1980; The UNCITRAL has also published the Model Law on International Commercial Conciliation,
2002. The Model Law’s objectives include encouraging the use of conciliation and providing greater
predictability and certainty in conciliation’s use. See William K. Slate II, Seth H. Lieberman, Joseph R. Weiner,
Marko Micanovic, “UNCITRAL (United Nations Commission on International Trade Law): Its Workings in
International Arbitration and a new Model Conciliation Law”, 6 Cardozo J. Conflict Resol. 73 (2004).
53
See Preamble to the Arbitration and Conciliation Act, 1996.

49 | P a g e
elaborate codified statutory recognition in India with the enactment of the Arbitration and
Conciliation Act, 1996 and Part III of the Act comprehensively deals with conciliation
process in general. The chapter on conciliation under the Arbitration and Conciliation Act,
1996 is, however, essentially based on the UNCITRAL Conciliation Rules, 1980.54

Thereafter post litigation conciliation was recognized as a mode of dispute resolution when
section 89 was incorporated in the Code of Civil Procedure, 1908 55 which affords an option
for reference of sub judice matters to conciliation with the consent of parties for extra judicial
resolution.56

Concept of Conciliation

Conciliation is an Alternative Dispute Resolution Process involving the resolution of disputes

that involves negotiations between parties, assisted by a conciliator who is an independent
‘unbiased’ third party. Much like mediation, conciliation aims for mutual agreement rather
than a decision in favour of one side.

Unlike mediation, arbitration and negotiation, in conciliation the parties to a dispute are
rarely involved in face to face discussions. Once the parties agree to utilise a conciliator, the
parties generally meet with the conciliator separately in an attempt to resolve the differences
between the parties.  

The conciliator aims to lower tensions between the parties by improving communication,
interpreting issues in dispute and exploring solutions to reach a settlement which both parties
would be agreeable too. In this regard, the conciliator is not only a facilitator of the process,
like a mediator, it takes on the further role of being an advisor to the parties in the dispute.
This means that the conciliator can make advisory comments regarding the legal nature of the
dispute throughout the proceedings to the parties. The conciliator has no power to make a
binding decision on the parties. However, if the parties in a dispute come to an agreement,
they often have a contract drawn up by the parties solicitors or the conciliator in order to
make the agreement binding.

54
P.C. Rao, “Arbitration and Conciliation Act, 1996: The Context” in P.C. Rao and William Sheffield (Eds.),
Alternative Dispute Resolution 82 (Universal Law Publishing Company Pvt. Ltd., Delhi, 1997).
55
Inserted by the Code of Civil Procedure (Amendment) Act, 1999 with effect from 01.07.2002.
56
Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd., JT 2010 (7) SC 616.

50 | P a g e
Progressive Legal is experienced in conciliation and is dedicated to preparing our clients to
get the best out of their conciliation process. We particularly recommend this process to
clients who wish to maintain a positive relationship with the other party. To find out whether
Conciliation is right for you, please see the advantages and disadvantages of Conciliation.

Process of Conciliation

 Commencement of Conciliation and appointment of Conciliator

The conciliation process commences when the disputing parties agree to conciliate and a
neutral conciliator is appointed. The party initiating conciliation sends a written invitation to
conciliate to the other party briefly identifying the subject matter of the dispute. Conciliation
proceedings commence when the other party accepts in writing the invitation to conciliate.57

Thus, conciliation agreement should be an ad hoc agreement entered by the parties after the
dispute has actually arisen and not before.58 Even if the parties incorporate conciliation
clauses in their agreements, still conciliation would commence only if the other party accepts
the invitation of one party to conciliate in case of a de facto dispute. Thus, unlike in the case
of an arbitration agreement, Part III of the Arbitration and Conciliation Act, 1996 does not
envisage any agreement for conciliation of future disputes. It only provides for an agreement
to refer the disputes to conciliation after the disputes have arisen.59

In conciliation proceedings ordinarily, there is one conciliator unless the parties agree that
there shall be two or three conciliators. Even in case of plurality of conciliators they are
supposed to act jointly. An uneven number of conciliators is not necessary in conciliation
since the task of the conciliators is to make recommendations for a settlement and not to
render binding decisions.60

In conciliation proceedings with one conciliator, the parties may agree on the name of a sole
conciliator and in conciliation proceedings with two conciliators, each party may appoint one
conciliator. The parties may also request any institution or person to recommend suitable
names of conciliators or directly appoint them and such person or institution while

57
S. 62, Arbitration and Conciliation Act, 1996.
58
V. Nageswara Rao, “Conciliation Proceedings under the Indian Arbitration Conciliation Act of 1996 and CPC
— An Overview”, available at: <http://lawcommissionofindia.nic.in/adrconf/nageswararao.pdf>
59
Visa International Ltd. v. Continental Resources (USA) Ltd., AIR 2009 SC 1366.
60
See Commentary on Draft UNCITRAL Conciliation Rules.

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discharging this responsibility should have regard to aspects as are likely to secure the
appointment of an independent and impartial conciliator.61

 Procedure in Conciliation and role of Conciliator

The conciliator may request each of the parties to submit a brief written statement describing
the general nature of the dispute and the points at issue, with a copy to the opposite party. 62
At any stage of the conciliation proceedings the conciliator may request a party to submit to
him such additional information as he deems appropriate.63

The conciliator is supposed to assist the parties in an independent and impartial manner in
their attempt to reach an amicable settlement of their dispute.64 A conciliator assists parties by
helping them to initiate and develop positive dialogue, clarify misunderstandings, create faith
upon one another and generate a congenial atmosphere required for harmonious and
cooperative problem-solving. In order to justify his position, the conciliator must be an
impartial person. The parties should be able to repose trust and confidence in him so as to
enable them to share their secrets and their thinking process with the conciliator with the
belief that the same will not be divulged to other party without specific instructions in that
regard.65 The process of conciliation, inter alia, involves creating a constructive bonding
between the parties to a dispute to steer them towards resolution.

The conciliator may conduct conciliation proceedings in such a manner as he considers

appropriate, taking into account the circumstances of the case and the wishes of the parties.
The conciliator has wide procedural discretion in shaping the dynamic process towards a
settlement.66 The conciliator is not bound by the Code of Civil Procedure, 1908 or the Indian
Evidence Act, 1872.67 He is to be guided by principles of objectivity, fairness and justice
giving due consideration to 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.68

61
S. 64, Arbitration and Conciliation Act, 1996.
62
S. 65, Arbitration and Conciliation Act, 1996.
63
S. 65, Arbitration and Conciliation Act, 1996.
64
S. 67, Arbitration and Conciliation Act, 1996.
65
M. K. Sharma, “Conciliation and Mediation”, available at: <www.delhimediationcentre.gov.in>
66
P.M. Bakshi, “Conciliation for Resolving Commercial Disputes”, 1 Comp. L. J. (Journal) 19 (1990); See also
Haresh Dayaram Thakur v. State of Maharashtra, AIR 2000 SC 2281.
67
S. 66, Arbitration and Conciliation Act, 1996.
68
S. 67, Arbitration and Conciliation Act, 1996.

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The conciliator may invite the parties to meet him or may communicate with them orally or
in writing. He may meet or communicate with the parties together or with each of them
separately.69 The conciliator may hold several joint or private meetings with the parties so as
to enable the parties to clarify their cases and so as to persuade the parties to arrive at a
mutually acceptable solution.70 This shows that depending upon the requirement from case to
case basis the conciliator may or may not adopt a structured process in conciliation.

Unless the parties have agreed upon the venue of conciliation proceedings the conciliator is
supposed to decide the venue of conciliation proceedings in consultation with the parties.
Thus, the conciliator is vested with extensive power to choose and mould the procedure to be
followed by him untrammeled by the procedural laws, albeit in consultation with the parties.
In order to facilitate the conduct of the conciliation proceedings, the parties, or the conciliator
with the consent of the parties, may arrange for administrative assistance by a suitable
institution or person.71

The role of the conciliator is to assist the parties to arrive at an amicable settlement. The
conciliator may, at any stage of the conciliation proceedings, himself make proposals for a
settlement of the dispute.72 In the Indian context the conciliator therefore plays an evaluative 73
role while managing the process of conciliation as opposed to a mere facilitator. The
conciliator assesses the respective cases of the parties and apart from acting as a facilitator
suggests and advices the parties on various plausible solutions to the parties so as to enable
the parties to choose the best possible and apt solution. He attempts to get the parties to
accept the merits and demerits of their cases thereby leading them to a mutually acceptable
solution.74 The conciliator, in this manner plays a more proactive and interventionist role in
persuading the parties to arrive at a final settlement. 75 In actual practice conciliator needs to
be a person who is not only well-informed and diplomatic but can also influence the parties
69
S. 69, Arbitration and Conciliation Act, 1996.
70
Sarvesh Chandra, “ADR: Is Conciliation the Best Choice” in P.C. Rao and William Sheffield (Eds.),
Alternative Dispute Resolution 82 (Universal Law Publishing Company Pvt. Ltd., Delhi, 1997).
71
S. 68, Arbitration and Conciliation Act, 1996.
72
S. 67, Arbitration and Conciliation Act, 1996.
73
However, Conciliation may be facilitative also. See M. K. Sharma, “Conciliation and Mediation”, available
at: <www.delhimediationcentre.gov.in> The difference lies in the approach adopted by the conciliator and the
level of intervention. See Anirudh Wadhwa and Anirudh Krishnan (Eds.), R.S. Bachawat’s Law of Arbitration
and Conciliation (Lexis Nexis Butterworths Wadhwa, Nagpur, 5th Edn., 2010).
74
See O.P. Malhotra and Indu Malhotra, The Law and Practice of Arbitration and Conciliation (LexisNexis
Butterworths, Delhi, 2nd Edn., 2006).
75
Salem Advocate Bar Association v. Union of India, AIR 2005 SC 3353; See also Anirudh Wadhwa and
Anirudh Krishnan (Eds.), R.S. Bachawat’s Law of Arbitration and Conciliation (Lexis Nexis Butterworths
Wadhwa, Nagpur, 5th Edn., 2010.

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by his persona and persuasive skills. However, if the system of conciliation is to succeed as a
proficient ADR mechanism professional training of conciliators needs to be a mandatory
requirement.76

 The Settlement Agreement

When it appears to the conciliator that there exist elements of a settlement, which may be
acceptable to the parties, he is supposed to formulate the terms of a possible settlement and
submit them to the parties for their observations. After receiving the observations of the
parties, the conciliator may reformulate the terms of a possible settlement in the light of such
observations.77 The statutory provisions78 enjoin upon the conciliator to draw up and
authenticate a settlement agreement. He should ensure that the parties have full understanding
of the settlement terms.79 The agreement must embody the terms and conditions of the
settlement with clarity and precision. It is open to the parties to settle some of their disputes
by conciliation and leave the unresolved disputes between them for resolution by other modes
of adjudication.80

The settlement agreement must also bear the signatures of the parties. 81 Once the parties sign
the settlement agreement, it shall be final and binding on the parties and persons claiming
under them respectively.82

The settlement agreement drawn up in conciliation proceedings has the same status and effect
as if it is an arbitral award83 on agreed terms on the substance of the dispute rendered by an
arbitral tribunal under section 30 of the Arbitration and Conciliation Act, 1996. However it is
only that agreement which has been arrived at in conformity with the manner stipulated and
form envisaged and got duly authenticated in accordance with section 73 of the Arbitration
and Conciliation Act, 1996, which can be assigned the status of a true settlement agreement
and can be enforced as an arbitral award.84 Therefore a settlement agreement arrived in
76
A.C.C. Unni, “The New Law of Arbitration and Conciliation in India”, in P.C. Rao and William Sheffield
(Eds.), Alternative Dispute Resolution 68 (Universal Law Publishing Company Pvt. Ltd., Delhi, 1997)
77
S. 73(1), Arbitration and Conciliation Act, 1996; See also United India Insurance Co. Ltd. v. Ajay Sinha, AIR
2008 SC 2398.
78
S. 73(2), Arbitration and Conciliation Act, 1996.
79
P.M. Bakshi, “ADR in the Construction Industry”, in P.C. Rao and William Sheffield (Eds.), Alternative
Dispute Resolution 316 (Universal Law Publishing Company Pvt. Ltd., Delhi, 1997).
80
Mukul Mudgal, “Conciliation: An Indian Perspective”, II (2) Nyaya Kiran (April 2003).
81
Haresh Dayaram Thakur v. State of Maharashtra, AIR 2000 SC 2281.
82
S. 73(3), Arbitration and Conciliation Act, 1996.
83
S. 74, Arbitration and Conciliation Act, 1996.
84
Mysore Cements Ltd. v. Svedala Barmac Ltd., (2003) 10 SCC 375.

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private conciliation proceedings can be enforced by executing the same in a civil court as if it
were a decree of the court.85

 Termination of Conciliation Proceedings

A successful conciliation proceeding concludes with the drawing and signing of a

conciliation settlement agreement. The signing of the settlement agreement by the parties, on
the date of the settlement agreement terminates conciliation proceedings.

That apart, any party may terminate conciliation proceedings at any time even without giving
any reason since it is purely voluntary process. The parties can terminate conciliation
proceedings at any stage by a written declaration of either party. A written declaration of the
conciliator, after consultation with the parties, to the effect that further efforts at conciliation
are no longer justified, also terminates conciliation proceedings on the date of such
declaration.86

Advantages of Conciliation

 Cost Effective and Expeditious Process- Conciliation is an economical and

expeditious mechanism for resolution of disputes in comparison to litigation and
arbitration, which makes it an excellent ADR Mechanism. The cost management tools
and expertise of the conciliator generally prevent multiplication of actual costs to the
parties and seek to make it cost efficient. 87 The conciliator follows a simplified
procedure suited to the aspirations of the parties and keeping in mind the need for
speedy settlement of the dispute.88 Moreover the time management tools applied by
the conciliator prevent dragging on of conciliation proceedings for longer periods and
ensure its conclusion within a reasonable time frame. 89 The end result in conciliation
is a negotiated settlement which is treated to be an arbitral award on agreed terms,
thereby obviating the possibility of successive appeals and finally resolving the
dispute in an expeditious and cost effective manner.

85
As an arbitral award on agreed terms is also executable as decree of the court in terms of s. 36, Arbitration
and Conciliation Act, 1996.
86
S. 76, Arbitration and Conciliation Act, 1996.
87
Ashwanie Kumar Bansal, Arbitration and ADR 26 (Universal Law Publishing Co. Pvt. Ltd., Delhi, 2005).
88
S. 67(3), Arbitration and Conciliation Act, 1996.
89
Ashwanie Kumar Bansal, Arbitration and ADR 23 (Universal Law Publishing Co. Pvt. Ltd., Delhi, 2005).

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  Autonomy and Convenience of parties- Conciliation is flexible and convenient. The
parties are free to agree on the procedure to be followed by the conciliator, the time
and venue of the proceedings and thus eventually control the process. The conciliator
may conduct the conciliation proceedings in such a manner as he considers
appropriate, taking into account the circumstances of the case, convenience of the
parties and the wishes the parties may express.90 A very commendable feature of
conciliation is that the parties can withdraw from conciliation at any stage. 91 Unless a
party consents to the initiation and continuance of conciliation and accepts the
resultant settlement agreement he cannot be said to be bound by the process, and he
may walk out from conciliation proceedings at any time. This is unlike arbitration and
litigation where decisions can be made even if a party walks out. 92 The parties
therefore not only control the procedure in conciliation proceedings but also the final
outcome of the proceedings. Indeed, party autonomy is a very laudable feature of
conciliation.

 Creative Solution Remedies- In litigation or arbitration what solution or resolution

would be contained in the judgment or award is not within the control or prior
knowledge of the parties and moreover the ultimate decision is based on a
straightforward decision on merits keeping in view the rights and positions of the
parties. In conciliation however, the parties control the outcome and can incorporate
terms and conditions in the settlement agreement as per mutual agreement. They can
devise creative solutions for their disputes at one go which may not have been within
the contemplation of an arbitrator or a judge. They can also decide how their rights
and liabilities are going to be actually worked out on resolution of the dispute and
chalk out ingenious modalities for complying with the basic terms of settlement.

 Party Satisfaction and Harmony- Unlike litigation and arbitration where one party
wins and the other loses, in conciliation both parties are winners as the decision is
acceptable to both. Both parties are in favour of the decision, as until both parties
agree to a proposal, the settlement or agreement does not take place. Therefore, it is a
win-win situation for both the parties as both the parties are satisfied with the
agreement. Such win-win situation enables them to retain good relationship for times
90
S. 67(3), Arbitration and Conciliation Act, 1996.
91
Mukul Mudgal, “Conciliation: An Indian Perspective”, II (2) Nyaya Kiran (April 2003).
92
Ashwanie Kumar Bansal, Arbitration and ADR 24 (Universal Law Publishing Co. Pvt. Ltd., Delhi, 2005).

56 | P a g e
 to come unlike litigation and arbitration where the parties on account of the win-loss
equation are not able to continue or rebuild their relationship. Even where the
conciliation proceedings do not fructify into a settlement, they prove to be useful by
enabling the parties to understand each other’s versions, positions and aspirations in a
better perspective.

 Confidentiality- In contradistinction to judicial proceedings conciliation is a private

closed-door affair and therefore offers privacy and confidentiality. In fact,
confidentiality in conciliation proceedings is a statutory guarantee93 which makes
conciliation an excellent dispute resolution mechanism.

The conciliator and the parties are supposed to keep confidential, all matters relating
to the conciliation proceedings. The parties are also precluded from relying upon or
introducing as evidence in subsequent arbitral or judicial proceedings views expressed
or suggestions made by the other party in respect of a possible settlement of the
dispute, admissions made by the other party in the course of conciliation proceedings,
proposals made by the conciliator and the fact that the other party had indicated his
willingness to accept a proposal for settlement made by the conciliator.94

Even during the course of conciliation proceedings where a party gives any
information to the conciliator subject to a specific condition that it be kept
confidential, the conciliator is not supposed to disclose that information to the other
party.95 This ensures that even in the eventuality of failure of conciliation proceedings
neither party is able to derive undue benefit out of any proposal, view, statement,
admission, etc. made by the opposite party during conciliation proceedings. 96 The
process of conciliation provides an opportunity for settlement of disputes without
publicity.97 The conciliator is also precluded from acting as an arbitrator or as a
representative or counsel of a party in any arbitral or judicial proceeding in respect of
a dispute that is the subject of the conciliation proceedings nor can he be presented by
the parties as a witness in any arbitral or judicial proceedings.98
93
S. 75, Arbitration and Conciliation Act, 1996.
94
S. 81, Arbitration and Conciliation Act, 1996.
95
S. 70, Arbitration and Conciliation Act, 1996.
96
S. 70, Arbitration and Conciliation Act, 1996.
97
A.K. Bansal, “Conciliation: Quick Settlement of Disputes”, (1) Arb. L.R. (Journal) 22 (1999).
98
S. 80, Arbitration and Conciliation Act, 1996; See also Alcove Industries Ltd. v. Oriental Structural
Engineers Ltd., (2008) Arb.L.R. 393.

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  Enforceability of Conciliation Settlement agreement- The settlement agreement
drawn up in conciliation proceedings has the same status and effect as if it is an
arbitral award99 on agreed terms on the substance of the dispute rendered by an
arbitral tribunal under section 30 of the Arbitration and Conciliation Act, 1996. Thus,
the settlement agreement in conciliation is executable as a decree of the civil court. 100
It is open to any party to apply for execution of the settlement agreement by filing an
execution petition before the civil court. The expeditious enforcement of a
conciliation settlement agreement in a summary manner i.e. by way of execution
proceedings in a civil court is the principal advantage attached with conciliation.101

Disadvantages of Conciliation

 No Binding Decision: If no agreement can be made between the parties, each will be
left in the same position as they started. There is no binding decision handed down
which can be frustrating to parties who have invested time, money and effort into the
process.
 Conciliator Involvement: Although the conciliator is meant to be an impartial third
party, the ability for them to involve themselves in the proceedings through their
‘active’ involvement can question the unbiased nature of the conciliator.

CONCILIATION VIS-À-VIS MEDIATION

Mediation is nothing but negotiation facilitated by a third party who assists the parties in
moving to resolution.102 Conciliation is also a process of arriving at a settlement with the
assistance of a third party/conciliator.103

99
S. 74, Arbitration and Conciliation Act, 1996.
100
S. 36, of the Arbitration and Conciliation Act, 1996.
101
Ss. 74, 30 and 36, Arbitration and Conciliation Act, 1996; See also Avtar Singh, Law of Arbitration and
Conciliation (Eastern Book Company, Lucknow, 7th Edn, 2005).
102
V.R.R. Vara Prasad, “Alternative Dispute Resolution (ADR) System in United States of America”, Andhra
L. T. (Journal) 18 (2000); See also Stephen B. Goldberg, Frank E.A. Sander, Nancy H. Rogers & S.R. Cole,
Dispute Resolution: Negotiation, Mediation and other Processes (Aspen Law & Business, New York, 3rd Edn.).
103
Ashwanie Kumar Bansal, Arbitration and ADR 19 (Universal Law Publishing Co. Pvt. Ltd., Delhi, 2005).

58 | P a g e
The difference between conciliation and mediation has been an important issue in ADR
jurisprudence. One obvious reason is that there are striking similarities between mediation
and conciliation.104 The source of morality in both mediation and conciliation is the liberty
and spirit of the parties to evaluate their respective cases, understand their interests and arrive
at a negotiated settlement with the assistance of a neutral third party. Albeit, the two terms are
used distinctly yet the fundamental philosophy and the basic process in both mediation and
conciliation are similar. Both, conciliation and mediation can be described as negotiation
facilitated by a third party. They both focus on amicable resolution of disputes and aim at
maintenance of relationships between the parties. In fact, at times the two terms are used
synonymously or interchangeably.105

Article 1 of the UNCITRAL Model Law on International Commercial Conciliation, 2002 106
defines conciliation as a process, whether referred to by the expression conciliation,
mediation or an expression of similar import, whereby the parties request a third person, or a
panel of persons, to assist them in an independent and impartial manner in their attempt to
reach an amicable settlement of their dispute arising out of or relating to a contract or other
legal relationships.107

Byron A. Garner in his book A Dictionary of Modern Legal Usages states: The distinction
between mediation and conciliation is widely debated among those interested in ADR.

104
Ahmad Momeni Rad, “Good Offices, Conciliation and Mediation in WTO DSS”, (2) Kar.L.J. (Journal) 16
(2005); Mediation is a variation of conciliation. See G.K. Kwatra, Arbitration & Alternative Dispute Resolution
41 (Universal Law Publishing Co. Pvt. Ltd., Delhi, 2008).
105
Ghanshyam Singh, “Mediation: A Choice of Dispute Settlement in India”, X (1) MDU L. J. 41 (2005); See
also Karl Mackie and Edward Lightburn, “International Mediation – The UK Experience”, in P.C. Rao and
William Sheffield (Eds.), Alternative Dispute Resolution 137 (Universal Law Publishing Company Pvt. Ltd.,
Delhi, 1997); Alexander Bevan, Alternative Dispute Resolution 15 (Sweet and Maxwell, London, 1992); See
also Henry J. Brown & Arthur L. Mariot, ADR, Principles and Practice (Sweet & Maxwell, London 2nd Edn.,
1997).
106
Approved vide Resolution no. 57/18 of the United Nations General Assembly on 19 November 2002.
107
In respect of the UNCITRAL Model law on International Commercial Conciliation it has been stated that “in
practice, proceedings in which the parties are assisted by a third person to settle a dispute, are referred to by
expressions such as conciliation, mediation, neutral evaluation, mini-trial or similar terms. Various techniques
and adaptations of procedures are used for solving disputes by conciliatory methods that can be regarded as
alternatives to more traditional judicial dispute resolution. The Model Law uses the term “conciliation” to
encompass all such procedures. Practitioners draw distinctions between these expressions in terms of the
methods used by the third person or the degree to which the third person is involved in the process. However,
from the viewpoint of a legislator, no differentiation needs to be made between the various procedural methods
used by the third person. In some cases, the different expressions seem to be more a matter of linguistic usage
than the reflection of a singularity in each of the procedural method that may be used.” See UNCITRAL Model
Law on International Commercial Conciliation With Guide to Enactment and Use, 2002; See also Pieter
Sanders, The Work of UNCITRAL on Arbitration and Conciliation ( Kluwer Law International, The Hague, 2nd
Edn.)]

59 | P a g e
Though a distinction would be convenient, those who argue that usage indicates broad
synonymy are most accurate.108

While in many countries no distinction is made between conciliation and mediation, in India
the introduction of the term mediation and conciliation separately in section 89 CPC shows
that these terms are to be understood and treated differently. 109 To some extent there may be
overlapping between the two yet there is fine line of distinction between them as well.110

In this regard, it may be emphasized that the role of a conciliator is distinct from the role of a
mediator. A mediator’s task is to primarily facilitate the negotiations and discussions between
parties, and guide them to their own self-proposed solution. The mediator is usually regarded
as having a facilitative role and will not provide advice on the matters in dispute. 111 A
mediator is a therefore merely a facilitator. The conciliator however plays a more
interventionist role, therefore for clarity and consistency it would be better if the process
where the dispute resolution practitioner gives advice or plays a more interventionist role in
addition to facilitating negotiations is designated as ‘conciliation’.112

In the Indian perspective also, in conciliation, unlike in mediation, the conciliator plays a
more active role and may, at any stage of conciliation proceedings, make proposals for
settlement of the dispute.113 Therefore in India a conciliator can play a more pro-active,
interventionist and evaluative role, on account of his legal authority "to make proposals for
settlement of the dispute" and to formulate and reformulate the terms of the settlement
agreement.

Even the Indian Supreme Court has held that the mediator is a mere facilitator whereas the
conciliator by making proposals for a settlement of the dispute and by formulating or re-
formulating the terms of a possible settlement has a greater role than a mediator. 114 The
108
Quoted in R.V. Ravindran, “Section 89 CPC: Need for an Urgent Relook”, 4 SCC Journal 23 (2007).
109
Anil Xavier, “Mediation : Its Origin and Growth in India”, 27 Hamline J. Pub. L. & Pol'y 275 (2006).
110
P.M. Bakshi, “Conciliation in Indian Law”, 2 Comp. L.J. (Journal) 50 (1996).
111
NADRAC, Australia, “What is ADR: Mediation”, available at: <http://www.nadrac.gov.au/www/nadrac
/nadrac.nsf/Page/> ; N.V. Paranjape, Arbitration and Alternative Dispute Resolution 269 (Central Law Agency,
Allahabad, 3rd Edn. 2006).
112
See P. Chandrashekhara Rao, The Arbitration and Conciliation Act – A Commentary (Universal Law
Publishing Company Pvt. Ltd., Delhi, 1997); Mediation is facilitative whereas conciliation is advisory. See Law
Reform Commission, Ireland, Report on Alternative Dispute Resolution: Mediation and Conciliation, LRC 98-
2010, November 2010, available at: <http://www.lawreform.ie>
113
S. 67, Arbitration and Conciliation Act, 1996.
114
Salem Advocate Bar Association v. Union of India, AIR 2005 SC 3353, See also Anirudh Wadhwa and
Anirudh Krishnan (Eds.), R.S. Bachawat’s Law of Arbitration and Conciliation (Lexis Nexis Butterworths
Wadhwa, Nagpur, 5th Edn., 2010); See also See also S.S. Mishra, Law of Arbitration and Conciliation in India

60 | P a g e
concept of conciliation under Indian law is therefore consistent with Rules for Conciliation
promulgated by the UNCITRAL.115

In the United States of America, however, the term conciliation has fallen into disuse and the
expression mediation flourishes.116 There the expression mediation encompasses the proactive
form of facilitated negotiation also.117 But the meaning of these words i.e. conciliation and
mediation in India is the same as has been assigned under the UNCITRAL Conciliation
Rules, 1980118 and the UNCITRAL Model Law on International Commercial Conciliation,
2002. But, in the USA a different approach is adopted in this respect, although no specific
reasons can be attributed to this different approach and it appears that it is a matter of mere
linguistic usage.119 One may even say that there is no national or international consistency on
this aspect.120 However, in India this proactive, evaluative and interventionist technique of
dispute resolution through facilitated negotiation has been statutorily termed as
conciliation.121

As far as the procedural aspect is concerned in the Indian context mediation is a process of
structured negotiation involving different stages: introduction, joint session, caucus,
agreement, etc. In conciliation the conciliator may or may not follow a structured process.
The conciliator is free to follow his own procedure to suit the needs of the parties. Though the
stages in a structured conciliation process are not strictly designated, in a manner as is done
in case of mediation, there is no bar in doing so and even otherwise they are fundamentally
the same.

Thus, the position, which emerges is that although there are striking similarities between
mediation and conciliation yet there is a fine line of distinction between the two primarily
with respect to the role of the conciliator. However, in practice such distinctions tend to be

(With Alternative Dispute Resolution Mechanisms) (Central Law Agency, Allahabad, 1st Edn., 2007).
115
Anil Xavier, “Mediation: Its Origin and Growth in India”, 27 Hamline J. Pub. L. & Pol'y 275 (2006)
116
V.A. Mohta and Anoop V. Mohta, Arbitration, Conciliation and Mediation 534 (Manupatra, Noida, 2nd
Edn., 2008); See also Latha K., “The Need for the Proper Utilization of ADR Facilities in India”, XLIII ICA
Arbitration Quarterly 18 (October – December 2008).
117
Sarvesh Chandra, “ADR: Is Conciliation the Best Choice” in P.C. Rao and William Sheffield (Eds.),
Alternative Dispute Resolution 82 (Universal Law Publishing Company Pvt. Ltd., Delhi, 1997).
118
UNCITRAL Conciliation Rules adopted on 23 July 1980 and recommended vide Resolution 35/52 adopted
by the UN General Assembly on 4th December 1980.
119
M. Jagannadha Rao, “Concepts of Conciliation and Mediation and their Differences”, available at:
<www.lawcommissionofindia.nic.in>; See also R.V. Raveendran, “Section 89 CPC: Need for an Urgent
Relook” 4 SCC Journal 23 (2007).
120
See Henry J. Brown & Arthur L. Mariot, ADR, Principles and Practice (Sweet & Maxwell, London, 2nd
Edn., 1997).
121
Ghanshyam Singh, “Mediation: A choice of Dispute Settlement in India”, X (1) MDU L.J. 41 (2005).

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blurred and in a given case it may be difficult to draw the line between mediation and
conciliation122 and the term ‘mediation’ is many a time used interchangeably with
‘conciliation’.123

Of late a distinction is emerging that where the conciliator is a professional trained in the art
of mediation the process of conciliation is referred to as mediation. 124 It is said that a mediator
possesses professional training in the art of facilitation and negotiation whereas a conciliator
is a person who facilitates negotiation on an ad hoc basis without any specialized skills. This
however is not correct as even a conciliator may possess specialized training in the art of
facilitating dispute resolution. Conversely there is nothing in law which prevents a person
trained in the art of negotiating settlements from being referred to or acting as a conciliator

In the Indian context both the processes i.e., conciliation and mediation culminate into a
settlement agreement, but in conciliation the settlement agreement is considered to be an
arbitral award on agreed terms and is per se executable as a decree of the court, whereas there
is no such analogous statutory provision in case of mediation. 125 The settlement agreement
arrived between the parties in case of mediation is not per se enforceable in a summary
manner. In case there is no dispute pending before the court such an agreement can only form
the basis of a suit and is not executable as a decree of the court.

Earlier where a sub judice matter was referred to mediation in terms of section 89 of the Code
of Civil Procedure, 1908 the settlement agreement arrived at in mediation proceedings was
also not per se executable. It had to be crystallized into a decree of the court and that process
was also not immune from hassles and problems. However, the Supreme Court in Afcons
case126 has rephrased section of the Code of Civil Procedure, 1908 by judicial interpretation,
whereupon the settlement agreement arrived at in mediation pursuant to section 89 of the
Code of Civil Procedure, 1908 is to be deemed as an award of the Lok Adalat which is
executable as a decree of the court. This however is applicable only to court referred
mediation in terms of section 89 of the Code of Civil Procedure, 1908.
122
See J.G. Nerrils, International Dispute Settlement (Sweet and Maxwell, London, 1984).
123
The Delhi High Court has framed rules under clause (d) of sub-section (2) of S. 89, Code of Civil Procedure,
1908 which relates to mediation, yet it has classified the rules as the Mediation and Conciliation Rules, 2004
and although the legal principles pertaining to conciliation are already statutorily codified under the Arbitration
and Conciliation Act, 1996.
124
R.V. Raveendran, “Section 89 CPC : Need for an Urgent Relook” 4 SCC Journal 23 (2007).
125
In fact, there is no comprehensive legislation on mediation in India like part III of the Arbitration and
Conciliation Act, 1996 dealing with conciliation.
126
In Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd., JT 2010 (7) SC 616; See also
Surinder Kaur v. Pritam Singh,154 (2008) DLT 598.

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Thus the expeditious enforcement of a conciliation settlement agreement in a summary
manner i.e. by way of execution proceedings is the principal advantage attached with
conciliation.127 To begin with the term conciliation was used more widely in India, while of
late it is gradually falling into disuse and the term mediation has become more fashionable 128
However conciliation too is an extremely beneficial ADR mechanism in the Indian context
and needs to be resurrected as one of the important components of the ADR system.

DIFFERENCE BETWEEN MEDIATION AND CONCILIATION

Under our law and the UNCITRAL model, the role of the mediator is not pro-active and is
somewhat less than the role of a ‘conciliator’. We have seen that under Part III of the
Arbitration and Conciliation Act, the ’Conciliator’s powers are larger than those of a
‘mediator’ as he can suggest proposals for settlement. Hence the above meaning of the role of
‘mediator’ in India is quite clear and can be accepted, in relation to sec. 89 of the Code of
Civil Procedure also. The difference lies in the fact that the ‘conciliator’ can make proposals
for settlement, ‘formulate’ or ‘reformulate’ the terms of a possible settlement while a
‘mediator’ would not do so but would merely facilitate a settlement between the parties.

127
See ss. 74, 30 and 36, Arbitration and Conciliation Act, 1996; See also Avtar Singh, Law of Arbitration and
Conciliation (Eastern Book Company, Lucknow, 7th Edn., 2005); See also R.V. Raveendran, “Section 89 CPC:
Need for an Urgent Relook” 4 SCC Journal 23 (2007).
128
O.P. Malhotra and Indu Malhotra, The Law and Practice of Arbitration and Conciliation (Lexisnexis
Butterworths, Delhi, 2nd Edn., 2006); See also V.A. Mohta and Anoop V. Mohta, Arbitration, Conciliation and
Mediation 534 (Manupatra, Noida, 2nd Edn., 2008).

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Dispute resolution processes, facilitative, evaluative and adjudicative. It is there stated that
conciliation “is a process in which the Conciliator plays a proactive role to bring about a
settlement” and mediator is “a more passive process”.

This is the position in India, UK and under the UNCITRAL model. However, in the USA, the
person having the pro-active role is called a ‘mediator’ rather than a ‘conciliator’. The term
‘Conciliation’ which was more widely used in the 1970s has, in the 1970s, in many other
fields given way to the term ‘mediation’. These terms are elsewhere often used
interchangeably.

Where both terms survived, some organizations use ‘conciliation’ to refer to a more proactive
and evaluative form of process. However, reverse usage is sometimes employed; and even in
UK, ‘Advisory, Conciliation and Arbitration Service’ (ACAS) (UK) applies a different
meaning. In fact, the meanings are reversed. In relation to ‘employment’, the term
‘conciliation’ is used to refer to a mediatory process that is wholly facilitative and non-
evaluative. The definition of ‘conciliation’ formulated by the ILO (1983) is as follows:

“the practice by which the services of a neutral third party are used in a dispute
as a means of helping the disputing parties to reduce the extent of their
differences and to arrive at an amicable settlement or agreed solution. It is a
process of orderly or rational discussion under the guidance of the conciliator.”

However, according to the ACAS, ‘mediation’ in this context involves a process in which the
neutral “mediator takes a more pro-active role than a conciliator for the resolution of the
dispute, which the parties are free to accept or reject 129.. It will be seen that here, the
definitions, even in UK, run contrary to the meanings of these words in UK, India and the
UNCITRAL model.

The National Alternative Dispute Resolution Advisory Council, (NADRAC), Act 2600,
Australia130 in its recent publication states that the terms “conciliation” and “mediation” are
used in diverse ways131. It points out that the words ‘conciliation’ and ‘counselling’ have
disappeared in USA. In USA, the word ‘conciliation’ has disappeared and ‘mediation’ is used
for the neutral who takes a pro-active role. For example:

129
The ACAS role in Arbitration, Conciliation and Mediation, 1989.
130
National Alternative Dispute Resolution Advisory Council, available at: www.nadrac.gov.au.
131
The ‘New” Mediation: Flower of the East in Harvard Bouquet: Asia Pacific Law Review Vol. 9, No.1, p 63-
82 by Jagtenbury R and de Roo A, 2001

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 “Whereas the terms ‘conciliation’ and ‘counselling’ have long since
disappeared from the literature in reference to dispute resolution services in the
United States and elsewhere, these terms have remained enshrined in Australian
family laws, with ‘mediation’ grafted on as a separate dispute resolution service
in 1991.”

Conversely, policy papers in countries such as Japan still use the term ‘conciliation’ rather
than ‘mediation’ for this pro-active process132. NADRAC refers, on the other hand, to the
view of the OECD Working Party on Information, Security and Privacy and the Committee
on Consumer Policy where ‘conciliation’ is treated as being at the less formal end of the
spectrum while ‘mediation’ is at the more formal end. Mediation is described there as more
or less active guidance by the neutrals. This definition is just contrary to the UNCITRAL
Conciliation Rules which in Art 7(4) states

“Art 7(4). The conciliator may, at any stage of the conciliation proceedings,
make proposals for a settlement of the dispute....”

In an article from US entitled “Can you explain the difference between conciliation and
mediation”133, a number of conciliators Mr. Wally Warfield, Mr. Manuel Salivas and others
treat ‘conciliation’ as less formal and ‘mediation’ as pro-active where there is an agenda and
there are ground rules. In US from the informal conciliation process, if it fails, the neutral
person moves on to a greater role as a ‘conciliator’. The above article shows that in US the
word ‘mediator’ reflects a role which is attributed to a pro-active conciliator in the
UNCITRAL Model. In fact, in West Virginia, ‘Conciliation’ is an early stage of the process
where parties are just brought together and thereafter, if conciliation has not resulted in a
solution, the Mediation programme is applied which permits a more active role 134 The
position in USA, in terms of definitions, is therefore just the other way than what it is in the
UNCITRAL Conciliation Rules or our Arbitration and Conciliation Act, 1996 where, the
conciliator has a greater role on the same lines as the ‘mediator’ in US.

Under our law, in the context of sec. 30 and sec. 64(1) and sec. 73(1) of the 1996 Act, the
conciliator has a greater or a pro-active role in making proposals for a settlement or
formulating and reformulating the terms of a settlement. A mediator is a mere facilitator. The
132
Report of Justice System Reform Council, 2001, Recommendations for a Justice System to support Japan in
the 21st Century, available at: www.kantei.go.jp/foreign/judiciary/2001/0612.
133
Civil Rights, available at: http://www.colorodo.edu/conflict/civil-rights/topics/1950.html.
134
UNCITRAL Model, available at: http://www.state.wv.us/wvhic/Pre-Determination/20comc.htm.

65 | P a g e
meaning of these words in India is the same in the UNCITRAL and Conciliation Rules and in
UK and Japan. But, in USA and in regard to certain institutions abroad, the meaning is just
the reverse, a ‘conciliator’ is a mere ‘facilitator’ whereas a ‘mediator’ has a greater pro-active
role. While examining the rules made in US in regard to ‘mediation’, if we substitute the
word ‘conciliation’ wherever the word ‘mediation’ is used and use the word ‘conciliator’
wherever the word ‘mediator’ is used, we shall be understanding the said rules as we
understand them in connection with ‘conciliation’ in India.

It is therefore heartening to see the trend evinced by the various Supreme Court decisions
cited earlier which point towards a more conducive approach being adopted by the courts
with respect to mediation and conciliation. The two can be seen to be gaining momentum
thereby making the ADR system in the country an effective means of tackling the problem of
arrears as well as providing comfort to the business community.

 ARBITRATION

Key Highlights of Arbitration and Conciliation Act, 1996

In the interests of public policy, the A&C Act, 1996 contains a number of mandatory
provisions, including in relation to:

 Limitation periods

 The form of the arbitration agreement

 An arbitrator being ineligible for appointment

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  The court being required to refer parties to arbitration if the dispute is subject to an
arbitration agreement

 The court's power to terminate the arbitrator's mandate

 The grounds on which an arbitral award can be challenged or appealed

Prohibition: Only commercial disputes can be subject to arbitration. Issues relating to

criminal law, rent control or taxation, which have their own dispute resolution mechanisms,
cannot be the subject matter of an arbitration.

Limitation: The same limitation period that applies to a civil suit also applies to an
arbitration. Therefore, the limitation period under the Limitation Act for a civil suit is also
applied by arbitrators. The period of limitation varies from one to three years, depending on
the nature of the dispute. The limitation period is normally calculated from the date the cause
of action arose.

Arbitration Organisation: Arbitrations in India are either:

 Ad hoc arbitrations.

 Institutional arbitrations.

Large commercial disputes in India are normally settled by ad hoc arbitrations with the
Arbitration Act as the governing legislation.

Some parties also opt for dispute resolution under the rules of a particular arbitration
institution. Some of the popular arbitration institutions include the:

 International Chambers of Commerce (ICC).

 London Court of International Arbitration (LCIA).

 Singapore International Arbitration Centre (SIAC).

Indian arbitration organisations include the:

 Delhi International Arbitration Centre.

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  Indian Council of Arbitration.

 Construction Industry Arbitration Council (CIAC).

 Indian Council of Arbitation (ICA).

Jurisdiction: The Arbitration Act recognises the concept of kompetenz-kompetenz. Under

section 16 of the Act, the arbitral tribunal is competent to rule on its own jurisdiction,
including with respect to the validity and existence of the arbitration agreement.

If the arbitral tribunal rules that it has the jurisdiction under section 16(5), that decision is not
appealable and the arbitral proceeding must continue. The only remedy available to an
aggrieved party is to challenge the award under section 34. However, if the arbitral tribunal
rules that it does not have jurisdiction, then that decision can be appealed before a court under
section 37(2).

Arbitration Agreement: Substantive/formal requirements

Section 7 of the Arbitration Act stipulates the requirements for an arbitration agreement. The
parties may either have an arbitration agreement in the form of an arbitration clause in a
contract or in the form of a separate agreement. The arbitration agreement must be in writing,
and is considered to be in writing if it is:

 Contained in a document signed by the parties.

 In the form of exchange of letters, telex, telegram or other means of

telecommunication which provides a record of the agreement.

 In the form of an exchange of statement of claim and defence in which the existence if
the agreement is alleged by one party and not denied by the other.

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Separate arbitration agreement: Parties may either have a separate arbitration agreement or
a clause in the contract, and either of the two is sufficient under section 7(2) the Arbitration
Act. An arbitration clause in the contract is considered as an independent arbitration
agreement by the courts.

Under section 7(5) of the Act, a reference in a contract to a document containing an

arbitration clause constitutes an arbitration agreement if the contract is in writing and the
reference is such as to make that arbitration clause part of the contract.

Unilateral or optional clauses: Indian law does not contemplate an arbitration agreement
which is conditional or confers an option to arbitrate. For an arbitration agreement to be
valid, both parties must promise in writing to submit differences to arbitration. As there is a
similar promise on each side, the contract is bilateral. However, many contracts have
arbitration clauses which only permit certain kinds of disputes to be sent to arbitration.

The Arbitration Act does not grant powers to join a third party to pending arbitration
proceedings. Non-signatories to the arbitration agreement can only be bound to the arbitration
agreement under the "groups of companies" doctrine, where a clear intention to bind such
non-signatories can be established. There are a few judgments in which arbitrations among
such different parties have been combined, while there are also few judgments which hold
that if some parties or issues are not part of the arbitration, only a civil suit can be filed with
respect to such disputes.

A non-signatory third party cannot compel a party signing a contract to arbitrate disputes
relating to the contract.

Separability: Indian law recognises the separability of an arbitration agreement. Even if the
entire agreement containing an arbitration clause or referring to an arbitration clause or
agreement is held to be void (or superseded by subsequent agreements), the arbitration
clause/agreement survives. An arbitration clause contained in a contract is considered as an
independent agreement in itself. Under section 16 of the Arbitration Act, the arbitral tribunal
can rule on the existence or validity of the arbitration agreement, and for that purpose an
arbitration clause which forms part of a contract is treated as independent of the other terms
of the contract.

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Breach of an arbitration agreement: If one of the parties to an arbitration agreement initiates
court proceedings in contravention of the arbitration clause, the other party can and should
object to the proceedings on the ground that there is an arbitration agreement between the
parties. The court must refer the parties to arbitration under section 8 of the Arbitration Act.
However, any objection to such proceedings must be dealt with before filing the first
statement. If the opposite party does not raise any such objection, the proceedings in the civil
court proceed.

If arbitration is invoked where there is either no arbitration clause or where the dispute is not
arbitrable, the other side can make a preliminary objection to the validity of the arbitration.
There can be no arbitration in breach of a valid jurisdiction clause.

There have been cases where courts have granted injunctions restraining proceedings started
overseas in breach of an arbitration agreement and there is at least one Supreme Court
judgment which confirms such a right. However, courts in India do not have jurisdiction
under the Arbitration Act to restrain arbitration proceedings where the seat of arbitration is
outside India

Joinder of third parties: Third parties cannot be joined to an arbitration or be bound by an

arbitration award unless they specifically agree to become a party or be so bound.

Arbitrators: The parties are free to agree on the number of arbitrators, although there must be
an odd number. If the parties fail to determine the number of arbitrators, then a tribunal will
consist of a sole arbitrator.

There is no legal requirement relating to the qualification/characteristics of arbitrators. The

Arbitration Act does not contain any requirement for a licence to practice in India. Arbitrators
are appointed as agreed by the parties and the parties are free to determine their qualifications
and nationality. However, in an international arbitration, when appointing a sole or third
arbitrator, if the matter is referred to court, the court would appoint an arbitrator of a
nationality other than the nationality of parties.

Arbitrators must give a statement that they are independent and impartial on appointment. If
an arbitrator is not independent or impartial, an objection in this regard must to be raised
before the arbitral tribunal itself.

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Two schedules (Schedule V and VII) have recently been added to the Arbitration Act, which
provide the grounds by which an arbitrator can be considered ineligible or an arbitrators
independence can be reasonably questioned. This is a mandatory non obstante clause. It is not
entirely cleared how these amendments will be put into practice but at present it appears that
such a challenge will have to be made before the Arbitral Panel itself (under the existing
judgments). However, it is possible that the courts may also exercise power in this regard.

Appointment of arbitrators: Parties normally mention in their arbitration clause whether

disputes will be adjudicated by a sole arbitrator or by a panel consisting of an odd number of
arbitrators. The default provision is for a sole arbitrator. If the parties fail to agree on the
appointment of arbitrators, they have the option under section 11 of the Arbitration Act to
have the arbitrator(s) appointed by the court.

Removal of arbitrators: Parties can challenge the appointment of an arbitrator under sections
12 and 13 of the Arbitration Act, if a justifiable doubt arises as to the arbitrator's
independence or impartiality or the arbitrator(s) does not possess the necessary qualification
as agreed by the parties. Certain categories of Arbitrators have been made ineligible under the
amended provisions of the Arbitration Act. In addition, an arbitrator can be removed under
section 14 if the:

 Arbitrator(s) is unable to perform his functions or for other reasons.

 Arbitrator fails to act without undue delay.

 Arbitrator withdraws from his office.

 Parties agree to terminate the arbitrator's mandate.

If an arbitrator becomes legally or practically unable to perform his function or withdraws

from his office, the court can be approached to decide on the termination of the mandate of
the arbitrator and appointment of another arbitrator (unless otherwise agreed by the parties).
However, the arbitrator's impartiality and independence must be raised in the first instance
before the arbitrators. If the arbitrators do not accept the submission, this can be a ground for
challenging the award. However, the court can also remove arbitrators if they are found to be
ineligible

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Procedure: Section 21 of the Arbitration Act provides that the date of arbitral proceeding of a
dispute commences on the date on which a request for that dispute to be referred to
arbitration is made by one or the other party.

Applicable procedural rules: Parties can agree in the arbitration agreement/clause as to the
procedural rules applicable to the arbitral proceedings. Arbitrators must follow the procedural
rules as stated in the arbitration agreement/clause. The arbitration agreement/clause may
mention that the arbitration would be governed by either the rules of a particular institution,
such as the ICC, LCIA, SIAC or the UNCITRAL Model Law or the Arbitration Act itself.
The Arbitration Act also empowers the arbitral tribunal to make procedural rules to govern
the arbitration.

Default rules: While some provisions of the Arbitration Act cannot be derogated from, there
are no default rules regulating procedure.

The arbitral tribunal can compel a party to disclose documents and, if the party fails to
disclose the documents, an adverse inference may be drawn by the tribunal.

In addition, the Arbitration Act empowers the arbitral tribunal to compel a non-party to give
testimony or produce evidence for the arbitration, either itself or with the assistance of the
court.

Evidence: Scope of disclosure: There are no specific rules in arbitration with respect to the
disclosure of documents. The parties must state the facts supporting their claims while filing
their statement of claim and may submit with their statement of claim all documents they
consider to be relevant or add a reference to the documents or other evidence that they intend
to submit. The strict provisions of the Indian Code of Civil Procedure or the Evidence Act do
not apply to an arbitrator.

Parties' choice: The parties can agree disclosure rules.

Courts and arbitration: Parties can approach the court under section 9 of the Arbitration Act
for interim measures, before or during arbitral proceeding or any time after the making of the
arbitral award but before it is enforced. In addition, under section 11 of the Act, parties may
approach the court for the appointment of arbitrator(s) where the parties failed to appoint an
arbitrator under the arbitration agreement/clause. Either the arbitral tribunal, or a party with

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the approval of the arbitral tribunal, can apply to the court for assistance in taking evidence
with respect to compelling witness, under section 27.

The principal civil court of original jurisdiction in a district, which includes the High Court in
exercise of its ordinary civil jurisdiction, is the court with jurisdiction over arbitration-related
applications. However, in international arbitrations this would be the High Court.

Remedies:

 Interim measures

Under section 17 of the Arbitration Act, an arbitral tribunal can order a party to take any
interim measure of protection the arbitral tribunal considers necessary in relation the subject
matter of the dispute. Interim protection measures may relate to the preservation, interim
custody or sale of any good that is the subject matter of the arbitration agreement, or the
securing of the amount in dispute, and so on.

 Ex parte

The Arbitration Act does not specifically provide for whether an interim relief can be granted
ex parte. However, arbitrators do not generally grant ex-parte interim relief.

 Security

The tribunal has the power to order security. However, normally such security in India does
not relate to costs for prosecuting the arbitration.

 Appeals

Arbitration awards can be challenged in the local courts in India. Parties cannot waive the
right to challenge an award.

Grounds and procedure: The award can be challenged only if:

 A party was under some form of incapacity.

 The arbitration agreement was not valid under the law to which the parties had
subjected it.

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  The party making the application was not given proper notice of the appointment of
an arbitrator or of the arbitral proceedings, or was otherwise unable to present his case.

 The award dealt with a dispute not contemplated by, or not falling within, the terms of
the submission to arbitration.

 The award contained decisions on matters beyond the scope of the submission to
arbitration.

 The composition of the arbitral tribunal or the arbitral procedure was not in
accordance with the agreement of the parties or, failing such agreement, was not in
accordance with the provisions of the Arbitration Act.

 The subject matter of the dispute was not capable of settlement by arbitration.

 The award was in conflict with the public policy of India.

The public policy of India with respect to arbitration held in India has been interpreted more
widely than public policy with respect to enforcement of foreign awards. The recent
amendment to the Arbitration Act has further clarified the grounds for challenging domestic
and international awards with a seat of arbitration in India.

The procedure for challenging an award requires the challenging party to make an application
under section 34 of the Arbitration Act. An application under section 34 can only be made on
the limited grounds specified above. An application to challenge an award must be made
within three months from the date of the award. If an application to challenge the award is
made after the expiry of the three-month period, the court may grant another period of 30
days on a request by the party.

Excluding rights of appeal: Indian law does not authorise the parties to waive their rights of
challenge to an award by an agreement before the dispute arises. Section 34 of the Arbitration
Act, 1996 provides limited grounds to challenge an award. These provisions are mandatory
and the parties cannot exclude by an agreement a legal right which is provided under this
provision.

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Costs: In an institutional arbitration, the fee is prescribed by the institution. However, for
domestic arbitration with a seat in India, recent amendments have given the powers to the
states to prescribe fees.

Cost allocation

Arbitrators have discretion to award the costs of arbitration, including legal fees. However, in
many arbitrations, such costs are not awarded and this is not always the rule.

Cost calculation

Parties give calculations in their claim, supported by documents, under which they think that
they are entitled to costs. The tribunal usually calculates the costs to be awarded on the basis
of such documents. The Arbitration Act specifies what constitutes "costs", which includes:

 Legal fees and expenses of arbitrators, the court and witnesses.

 Administrative fees of the institution supervising the arbitration.

 Other expenses incurred in connection with arbitration or court proceedings and the
arbitral award.

Factors considered: Under the Arbitration Act, the arbitral tribunal can decide whether costs
should be paid, the amount of such costs and when such costs are to be paid. In determining
the costs, the courts or the tribunal have regard to all the circumstances, including the conduct
of the parties. Agreements between the parties as to the cost of arbitration are only be valid if
made after the dispute in question has arisen.

Enforcement of an award: An arbitral award is enforceable after the time for making an
application to set aside such an award has expired (90 days). However, the court may grant a
stay on the operation of the arbitral award on a separate application made for that purpose.
The party intending to enforce the award can file an execution petition before the Civil Court.
The award is enforced in the same manner as a decree of the court under the Indian Code of
Civil Procedure, which provides the framework for the execution of arbitral awards India is a
party to both the New York Convention and the Geneva Convention on the Execution of
Foreign Arbitral Awards 1927 (Geneva Convention). India made two reservations when it
ratified the conventions:

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  That India would apply both the Geneva Convention and the New York Convention
to the recognition and enforcement of an award only if it was made in the territory of
another state that is bound by either convention.

 That India would apply both the conventions only to differences arising out of legal
relationships which are considered as commercial under Indian law. Commercial
relationships are all relationships which arise out of, or are ancillary or incidental to,
business dealings

A foreign arbitration award is enforceable in India under Part II of the Arbitration Act, if it is
passed in a jurisdiction/country governed by either the New York Convention or the Geneva
Convention. The process for enforcement of a foreign award is similar to that of a domestic
award. Section 48 and 57 of the Act provides the conditions for enforcement of foreign
awards.

A person intending to enforce a foreign award should apply to the court along with the
following:

 The original award, or copy thereof, duly authenticated in the manner required by the
law of the country in which it was made.

 The original arbitration agreement, or a duly certified copy.

 Such evidence as may be necessary to prove that the award is a foreign award.

 If necessary, translated versions of these documents.

The Arbitration Act does not provide any limitation for the enforcement of a foreign award. It
is likely the normal period of limitation (12 years) would apply.

The enforcement of a foreign award can be declined for the reasons given in the Arbitration
Act, the principal ground being the public policy of India.

Once the court is satisfied that the award does not fall under the category where enforcement
can be refused, the award is enforceable and would be deemed to be a decree of the court
under section 49 of the Arbitration Act.

Awards made in both the UK and US are enforceable under the Arbitration Act.

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INCENTIVES OF MEDIATION OVER ARBITRATION

One advantage of mediation in the international commercial context is that the parties have
an opportunity to develop a creative outcome. In addition, mediation is an informal
proceeding, and thus, may be quicker and less expensive if the parties settle. Furthermore, the
parties may schedule mediation on a regular basis. Moreover, the parties may discuss their
positions, and thus, generally feel that their concerns and positions are heard and dealt with
fairly, regardless of the outcome.135

Another advantage of mediation is that it may resolve virtually any type of conflict. Conflicts
are often based on individuals' perceptions that their counterparts are not upholding their
duties and responsibilities. By imposing a neutral third party, mediation may often dispel and
change these perceptions and lead to a quick resolution of the dispute. Once the parties
believe that their positions have been accurately heard and discussed, tensions often diminish
and a new receptivity develops, thus opening the parties' minds to a creative and consensual
solution.136

Mediation is also a more cathartic process than adjudicative type processes. One of the
greatest advantages of mediation is that the parties discuss the issues confidentially.
Furthermore, the parties have complete control of the mediation. Moreover, mediation creates
a "win-win" atmosphere and allows for the use of creative solutions generated during the
mediation. With all these advantages, mediation often results in settlement, thereby reducing
the large volume of arbitration and litigation.137

Mediation may also change an adversarial relationship into a cooperative one, potentially
improving the relationship between the parties. Even if mediation does not lead to a
resolution,

The parties are no worse off because they may still take advantage of arbitration or litigation.
Moreover, they have had the opportunity to narrow the disputed issues and structure the
framework for future negotiations. Consequently, parties who wish to maintain a harmonious
business relationship and to preserve their contractual and commercial ties often prefer
mediation.138
135
ADR- A way out, available at: http://digitalcommons.lmu.edu/cgi/viewcontent.cgi?article=1404&context=ilr.
136
Ibid.
137
Ibid.
138
Ibid.

77 | P a g e
Conciliation is being increasingly used in dispute settlement practice in various parts of the
world, including regions where until a decade or two ago it was not commonly used. In
addition, the use of conciliation is becoming a dispute resolution option preferred and
promoted by courts and government agencies, as well as in community and commercial
spheres. This trend is reflected, for example, in the establishment of a number of private and
public bodies offering services to interested parties designed to foster the amicable settlement
of disputes. Alongside this trend, various regions of the world have actively promoted
conciliation as a method of dispute settlement, and the development of national legislation on
conciliation in various countries has given rise to discussions calling for internationally
harmonized legal solutions designed to facilitate conciliation. The greater focus on these
methods of dispute settlement is justified particularly because the success rate of these
methods has been high; in fact, in some countries and industrial sectors, it has been
surprisingly high.139

Preamble (6) of the European Directive provides a useful description as to what mediation is
and its advantages. It reads as follows:

(6) Mediation can provide a cost-effective and quick extrajudicial resolution of

disputes in civil and commercial matters through processes tailored to the needs
of the parties. Agreements resulting from mediation are more likely to be
complied with voluntarily and are more likely to preserve an amicable and
sustainable relationship between the parties. These benefits become even more
pronounced in situations displaying cross-border elements.

Arbitration has long been the favorite of the ADR family. Mediation, however, has
established an increasingly relevant position for itself when it comes to resolving
(international) commercial disputes quickly, cost-efficiently, and successfully. Efforts to
render mediated settlement agreements enforceable persist and will likely further bolster
mediation as an independent and, possibly, even superior alternative to arbitration. Yet, as a
closer analysis suggests, mediation, just as arbitration, has its place and purpose. Commercial
mediation offers many advantages, such as, in particular, a broad scope of application,
flexibility of procedure, compatibility with other dispute resolution methods, time and cost-
efficiency, and confidentiality. For all these benefits, many commercial agreements even

139
Growth of International Mediation in Commercial Disputes, available at:
http://whoswholegal.com/news/features/article/29214/growth-international-mediation-commercial-disputes.

78 | P a g e
require efforts to mediate before arbitration may be commenced. The statistics are also
straightforward. According to the International Chamber of Commerce (‘ICC’), over three
quarters of its mediation cases are settled successfully – on average in only 4 months and for
about just 1 % of the amount in dispute. A simple analysis of costs, risks, and benefits easily
explains why mediation was chosen for amounts in dispute ranging from below US$ 20,000
to well above US$ 500 million.140

Mediation is a cost-effective and fast ADR mechanism when compared to litigation or

arbitration. It is a consensual process whereby the parties are not forced to settle. The process
is flexible, confidential and the parties are in ultimate control of the decision to settle.141

Mediation is a time-and-money-saving alternative for commercial dispute resolution and

arbitration proceedings, which allows parties to mutually resolve their problems. Mediation
can give you the chance to continue conducting your business, as opposed to court trials
where a hostile approach is more usual. Solutions reached in mediation must be satisfying for
both parties: it’s a case of looking for the classic “win-win” situation.142

Arbitration is a consensual process only when the parties initiate it. After that, it is
adjudicative. Mediation, by contrast, is consensual both in the procedure and in the
outcome.143

Mediation provides flexibility, since the role of the conciliator is only to facilitate a dialogue
between the parties and not to make a decision, there is no need for procedural guarantees of
the type that exist in arbitration, such as the prohibition of meetings by the conciliator with
one party only or an unconditional duty on the conciliator to disclose to a party all
information received from the other party. The flexibility of conciliation procedures and the
ability to adapt the process to the circumstances of each case and to the wishes of the parties
are thus considered to be of crucial importance.

Confidentiality is fundamental to mediation. Parties are less likely to have full and frank
discussions if the content might become public. Almost all mediators will insist on a
140
Mediation on the heels of Arbitration, available at: http://kluwerarbitrationblog.com/2016/10/06/mediation-
on-the-heels-of-arbitration-competition-or-peaceful-coexistence/.
141
Mediation and Conciliation as cost effective solution, available at:
http://www.lexology.com/library/detail.aspx?g=416b9435-39bb-4fa7-a3b0-1039f0007e7f.
142
International Mediation, available at: https://poland.taylorwessing.com/en/international-mediation.
143
The UNCITRAL Convention on dispute settlement, available at:
http://kluwermediationblog.com/2015/10/21/the-uncitral-convention-on-enforcement-of-conciliated-settlement-
agreements-an-idea-whose-time-has-come/.

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confidentiality agreement which will place the parties and the mediator under binding
obligations to keep all information exchanged during the process confidential. It is also usual
that the process is "without prejudice" so if the mediation does not result in a settlement,
neither party will be able to use the information in court proceedings.144

In a nutshell, mediation offers the following incentives:

1. Mediation is relatively inexpensive. Seeing a case through trial is an expensive

proposition.

2. Mediation is relatively swift. There is no dearth of mediators ready and willing to

assist parties whose goal is to try to settle a matter. A quick web search will result in
hundreds of mediators and mediation websites, some specializing in certain types of
cases and some more experienced and able than others. Mediation does not run by a
clogged court schedule and sessions can be easily scheduled any time at the mutual
convenience of the parties and the mediator, and can take place in a variety of
locations.

3. Mediation is relatively simple. There are no complex procedural or evidentiary rules

which must be followed. While most would agree that a general rule of fairness
applies, the maximum penalty a party can impose for foul play is to walk away from
the mediation and take his chances in court.

4. Mediation allows the parties to revise and adjust the scope of their conflict. In a trial,
initial pleadings and rules of procedure limit the issues which a party can raise. In
mediation, as circumstances change so can the topics up for discussion. This increased
flexibility makes it easier for negotiators to act as problem-solvers instead of
adversaries.

5. Mediation allows for flexible solutions and settlements. The relief available in court is
usually based on pecuniary damages, and equitable relief is hard to come by. In
mediation, however, the parties can agree to a settlement requiring, or restraining,
action by one party which was not originally envisioned as something beneficial to
the other party.

144
Mediation- European Directives, available at:
http://www.brownrudnick.com/uploads/117/doc/Brown_Rudnick_Litigation_European_Mediation_Directive_F
riel_Toms_1-20110.pdf.

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 Settlements reached in mediation are more agreeable to both parties than court
judgments. Because any settlement arrived at through negotiation is necessarily agreed to
voluntarily by both parties, obligations under the agreement are more likely to be fulfilled
than obligations imposed by a court.145

ARBITRATION, MEDIATION, CONCILIATION- COMPARATIVE ANALYSIS

Basis for          Arbitration Conciliation Mediation

Comparison

145
Advantages of Mediation, available at:
https://nationalparalegal.edu/public_documents/courseware_asp_files/ADR/MediateHow/AdvantageMediate.as
p.

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Meaning Arbitration is a dispute
  settlement process in which an
  impartial third party is
  appointed to study the dispute
and hear both the parties to
arrive at a decision binding on
both the parties.
Enforcement An arbitrator has the power to
enforce his decision.
Regulated by The Arbitration and
Conciliation Act, 1996
Prior Required
Agreement
Available for Existing and future disputes.
Example Damages in case of breach of
contract, matters of the right to
the office, time barred claims
etc.
JUDICIAL INTERPRETATION OF SECTION 48
Conciliation is a method
of resolving dispute
wherein an independent
person helps the parties
to arrive at the negotiated
settlement.
A conciliator does not
have the power to
enforce his decision.
Arbitration and
Conciliation Act, 1996
Not Required
Existing disputes.
Resolving disputes
between contractors and
subcontractors etc.
Mediation is a process of
resolving issues between
parties wherein a third
party assist them in
arriving at an agreement.
The decision made by the
mediator is not
enforceable like an
arbitral award.
Code of Civil Procedure,
1908
Not Required
Existing disputes.
Commercial transactions
in patents, trademark
licenses, Joint ventures
and R & D Contracts,
music and film contracts
etc.
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Both the Geneva Convention and New York Convention provides for limited grounds on
which the recognition & enforcement of an award can be refused. Some of the common
grounds inter-alia are: -

a. That the agreement/submission on which the arbitration proceedings were initiated

and award passed was valid under the law applicable to it.146
b. That the arbitral award passed is against the public policy of the country where the
said award is to be enforced.147
c. That the arbitral award is not capable of settlement under the law of the country where
the said award is intended to be enforced.148

Similarly, these grounds have been incorporated into the 1996 Act under the respective
headings.149

PUBLIC POLICY UNDER SECTION 48(2) (B)

The most controverted and notorious of all the grounds specified in the Conventions and
subsequently incorporated in the 1996 Act is the ground of refusal to enforce the arbitral
award if the same is against the public policy of the country where it is sought to be enforced.
This wide, unfettered and vague liberty given to the countries has left the enforcement of
arbitral award at the mercy of the judicial set-up of the country where the said award is
sought to be enforced. The concept of public policy is highly dynamic as it changes in
matters of months. What may be acceptable in a country today may be highly objectionable
to the same public after three months. Different countries have different culture, different
political outlook, different approach to economic activities and similarly different perceptions
of justice & morality. It is on the culmination of these perceptions that a public policy of a
country is skeletonised. Therefore, it is quite possible that a particular award may be enforced
in one country and at the same time may be refused in another on the ground of public policy.
The volksgeist or the common conscience of the people of a country creates and shapes its
public policy. This creates a problem in the process of getting a foreign award recognized and
enforced because it is not easy to comprehend whether an award in a country would be
according to its public policy. Moreover, these perceptions coupled with the judge’s own

146
Article (V) 1 (a) (New York Convention) and Article 1 (a) (Geneva Convention).
147
Article (V) 2 (b) (New York Convention) and Article 1 (e) Geneva Convention).
148
Article (V) 2 (a) (New York Convention) and Article 1 (b) (Geneva Convention).
149
Section 48 and 54, Arbitration and Conciliation Act, 1996.

83 | P a g e
notions of fairness and justice creates prejudice in the mind of Courts against a foreign decree
or judgment. Resultantly, judges end up adopting a parochial view. So, in the interest of the
parties, it is essential that uniformity in the interpretation of public policy is established.

Due to the vagueness of the term ‘Public Policy’ particularly in India, it is the interpretation
of the term by the judiciary which decides the fate of the award. In, as back as 1824, J.
Burrough in Richardson v. Mellish150 rightly described public policy as “a very unruly horse
and when once you get astride it you never know where it will carry you. It may lead you
from sound law. It is never argued at all, but when other points fail”

In order to attract foreign investment and foster bilateral trade it is pertinent that a country has
a pro-arbitration legal system. Therefore, to establish an arbitration friendly environment it is
imperative for the Courts and law of the country to be have a non-obtrusive and non-
interfering approach with respect to foreign arbitral awards. The Courts interpreting the
provision of these Conventions and Statute play a very pivotal role. They are required to de
horse the litigation mind-set imbibed in them and give impetus to the arbitration keeping in
view the economic implications and furthering the legislative intent of the statute. However,
the interpretation accorded by the Indian Courts in few of its landmarks judgment reveals a
contrary approach.

One of the very first and landmark judgment pronounced by the Hon’ble Supreme Court of
India was in Renusagar Power Electric Ltd. v. General Electric151(hereinafter referred to as’
Renusagar’) wherein a two-faceted objection was raised against the award passed by the
arbitral tribunal, firstly that the Renusagar was unable to present its case and secondly that the
enforcement of the award would be against the Public Policy. One of the bizarre contention
with respect to the second objection was that the term “Public policy” has to be interpreted in
a liberal sense so as to include not only the Public Policy of India but also the Public policy
of the country which governs the contract. Fortunately, this argument was rejected by the
Apex Court. It is quite apparent from the judgment in Renusagar that up till that point, the
judiciary was well acquainted with the oulook with which it was supposed to approach the
field of public policy. In this case, the Apex Court settled the controversy by enunciating that
a narrow interpretation is to be accorded to the term public policy so far as it related to
foreign award and thus specified a different standard for international public policy. The

150
(1824) 2 Bing 229,252.
151
(1994) Supp (1) SCC 644.

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Court in its ratio laid down the criteria for refusal of enforcement on the ground of public
policy, that if the same is against: (i) Fundamental policy of India law (ii) Interests of India
(iii) Justice or Morality.

The jurisprudence established by Renusagar saw its first modification in ‘Oil and Natural
Gas Corporation v. SAW Pipes ltd.152’(hereinafter referred to as ‘ONGC case’) wherein the
ambit and scope of Court’s jurisdiction in case where award passed by the Arbitral Tribunal
is challenged under Section 34 of the 1996 Act was under consideration. In adjudication of
the same, the Court brought a distinction between enforcement of an award which has
attained finality and challenging the validity of the award and thus in case of latter it enlarged
under the scope of ‘public policy’ under Section 34 of the 1996 Act, empowering Courts with
wide power of judicial review and thus advocated that narrow meaning should not be
assigned to the term ‘public policy’ instead a wide interpretation should be bestowed. This
led the Court to modify the ratio laid down in Renusagar whereby it introduced a new ground
to the list propounded in list enumerated in Renusagar, i.e. refusal to enforce is the same is
patently illegal. Ground of Patent illegality as propounded in this case included violation of
statutory provisions or violation of express provisions of contract. This judgment virtually
allowed the parties to challenge the entire award on merits and re-argue the case, thus
frustrating the entire purpose of arbitration.153 The Court erred in not realising that the ratio
laid down in Renusagar was with respect to foreign awards only keeping in view the standard
public policy in private international law.

The judgment in ONGC although rightly criticised for its adverse effect on domestic
arbitrations, it is however often mis-read and mis-understood for its implications on foreign
awards. The judgment, if read in isolation, has no bearing on the awards passed by Foreign
Arbitral Tribunal and therefore as such the ground of patent illegality is not only by the virtue
of the judgment in ONGC applicable to foreign awards. However, the issue arises when this
judgment is read with the ratio laid down by the Hon’ble Supreme Court in ‘Bhatia
International v. Bulk Trading SA’154(hereinafter referred to as ‘Bhatia’s case’), wherein it was
held that Part -I of the 1996 Act is applicable to all the arbitrations irrespective of the place of

152
(2003) 5 SCC 705.
153
Scope of Public Policy under Arbitral Award- A Scrutiny, available at:
https://www.kaplegal.com/upload/pdf/AIAJ_V4_N1_2008_Book_(Sumeet_Kachwaha).pdf;
http://www.nishithdesai.com/information/research-and-articles/nda-hotline/nda-hotline-single-
view/article/widened-scope-0f-public-policy-leaves-arbitral-awards-susceptible-to-further-scrutiny-by-
courts.html?no_cache=1&cHash=bd6a9abae83687808f2ccb78211ea511.
154
(2002) 4 SCC 105.

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arbitration unless the parties by agreement, express or implied, choose to exclude all or any
of the provisions of Part- I. In this scenario, if the party apparently fails to exclude the
provisions of Part I then the foreign arbitral award can be subjected to the wide test of Public
Policy under Section 34 including the ground of patent illegality. The ruling in Bhatia’s case
was followed by the Courts in many subsequent judgments 155 and subsequently led to
‘Venture Global Engineering v. Satyam Complex Services Ltd.’156 (hereinafter referred to as
‘Venture Global’). The catastrophic judgment in Venture Global, where the Hon’ble Court
after considering the judgment in Bhatia’s case, endorsed the same by further propounding
that foreign awards can be challenged in India under Section 34 and that the same is not
inconsistent with Section 48 of the Act. The thought process of the court behind the same is
abundantly clear from the judgment wherein the Court observed that the broader/extended
test of public policy under Section 34 which includes the ground of patent illegality has to be
made applicable to foreign awards. Similar trend continued till the judgment in ‘Phulchand
Exports Ltd. v. O.O.O Patriot’157 (hereinafter referred to as ‘Phulchand’) wherein the
Supreme Court completely diminished the already fading line between Section 34 and
Section 48 of the Act with respect to public policy and brought the two at the same pedestal.
The Court expressly held that the ratio laid down in ONGC is also applicable to foreign
awards. The ratio of Renusagar was overruled to the extent that narrow meaning is to be
given to ‘Public policy’ under Section 48. It was held that wide meaning has to be given and
that the award could be set aside. Phulchand was culmination of series of judgments which
deviated from Renusagar.

Before venturing into the later decision which have fortunately over-ruled the above-
mentioned case law, it is crucial to first dissect and divulge into the chaotic position of law
created by the co-joint reading of the judgments in ONGC, Bhatia, Venture Global and
Phulchand.

Firstly, the decision in Bhatia it correct to the extent of its concern towards the awards passed
in countries not party to the convention and to identify that there indeed is lacuna on behalf of
the legislature in not providing for the same. Although it’s a different debate whether the
legislature actually intended the enforcement of awards passed in a non-convention country.
However, the same couldn’t have been corrected by subjecting all the awards passed in
155
Indian Technical Services Pvt. Ltd. v. Atkins PLC (2008) 10 SCC 308; Citation Infowares Ltd. v. Equinox
Corp. (2009) 7 SCC 220.
156
(2008) 4 SCC 190.
157
(2011) 10 SCC 300.

86 | P a g e
International Commercial Arbitrations to the Part-I of the 1996 Act including those passed by
countries party to the Conventions. As the scheme of Part-I of the 1996 Act is wide and in
comparison, to Part- II more regulatory and controlling in nature.

Secondly, an important aspect which the Hon’ble Court in Bhatia and Venture Global missed
was that in Renusagar the ratio was laid down by the Court after identifying the distinction
between the application of ‘Public policy’ test in domestic matters and in cases involving
foreign element/ conflict of laws. Although the concept of public policy is the same in nature
in these two spheres of law i.e. municipal and in conflicts on law, its application differs in
degree and occasion, corresponding to the fact that transactions containing a foreign element
may constitute a less serious threat to municipal institutions than would purely local
transactions.158 The same is manifest in ONGC judgment as the Court recognized this
distinction and was careful so as to confine the extended test of public policy (Patent
illegality) to domestic awards only although the whole point of extending the same was
erroneous but still it was not read into Section 48 but only confined to Section 34.

Thirdly, the reason why only limited grounds were given in New York and Geneva
Convention for refusal to enforce an award, which were subsequently incorporated into the
1996 Act, was that these grounds were intended to provide minimum resistance against
foreign awards and as such the intent of the legislature was to facilitate the growth and
development of International trade and Commerce. “The essence of the theory of
transnational arbitration is that the institution of international commercial arbitration is an
autonomous juristic entity which is independent of all national courts and all national systems
of law”159. Therefore, in order to properly encapsulate the intent of the legislature an
interpretation which facilitates the enforcement of a foreign award ought to be accorded to
the provisions of Part-II. Thus, Part-II cannot be read together with Part-I instead it has to be
read in isolation. The purpose of consolidating all the three act and enacting 1996 Act was
limited to the extent of having a comprehensive legislation. Both the parts cater to different
class of arbitrations therefore both are amenable to their respective provisions only. While a
domestic award can be set aside in India a foreign award can only be set aside in the country
where it has been passed160. Thus, the role of the enforcement Court is very limited in this
158
R.H. GRAVESON, CONFLICT OF LAWS, p. 165(7th Edn).
159
SIR MICHAEL JOHN, TRANSNATIONAL ARBITRATION IN ENGLISH LAW, P133 (1984).
160
International Standard Electric Corp. vs. Bridas Sociedad Anonima Petrolera, Industrial Y Comercial, 745
F.supp.172, Karaha Bodas Co. L.L.C. vs. Perusahaan Pertambangan Minyakdan Gas Bumi Negara 364 F.3d
274, Inventa Fischer Gmbh & Co., K.G. vs. Polygenta Technologies Ltd., 2005 (2) Bom C.R. 364, Bharat
Aluminium Co. Ltd. vs. Kaiser Aluminium Technical Services, AIR 2005 Chhatisgarh 21.

87 | P a g e
regard. Therefore, the Court in Venture Global ignored the very essence behind the special
purpose of Part-II.

Subsequently, the landmark judgment of the Hon’ble Supreme Court in ‘Bharat Aluminium
Co. v. Kaiser Aluminium Technical Services Inc.’ 161 (hereinafter referred to as ‘Balco’)
straightened out the deviations and brought the position of law in sync with the legislative
intent. In this case although the interpretation of the term ‘public policy’ was not under
consideration before the Court. Instead the issue was whether the Part-I is applicable to
foreign seated International Commercial Arbitration. Answering the same in negative the
Hon’ble Supreme Court rightly propounded that both Part I and Part II or the Act are
mutually exclusive. It acknowledged the existence of territorial principle in the UNICTRL
Model Law which forms the basis of 1996 Act and thus seat of the arbitration determines the
supervisory jurisdictions of the Courts on them. The Court over-ruled the ratio laid down in
Bhatia and in Venture Global.

Finally, in Shri Lal Mahal Ltd. v. Progetto Grano SPA162(hereinafter referred to as ‘Lal
Mahal’) the three-judge bench of the Hon’ble Supreme Court laid the controversy with
regard to public policy to rest by confirming and reiterating Renusagar’s interpretation of
‘Public Policy’. It was held that the scope of public policy under Section 48 is limited and
thus although the expression ‘public policy’ is same in both Section 34 and 48, its application
is different and as such in case of former wider meaning as given in ONGC case and in case
of latter a narrow and strict meaning has to be given and therefore Court endorsed the test of
public policy as originally conceived in Renusagar. Commenting on Section 48 the Court
further limited its scope by expressly barring any “second look” or review of the award under
Section 48.

The implications of Balco judgment read with Lal Mahal with respect to public policy is that
a foreign award cannot be set aside under Section 34 and thus is excluded from being
challenged under its wide provisions more particularly from the wide ambit of public policy.
Moreover, when enforcement of a foreign award is challenged under Section 48(2)(b) the
Court only has to see whether the award is against (i) fundamental policy of Indian Law
(ii)interest of India (iii) justice and morality.

161
(2012) 9 SCC 552.
162
Civil Appeal 5085/2013.

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These judgments particularly Balco ushered a new era in Arbitration law in India and
significantly helped in casting aside Indian judiciary’s anti-arbitration reputation worldwide.

INTERNATIONAL COMMERCIAL ARBITRATION

89 | P a g e
In this century the market has globalized more and more and as a result of the growth of
international business, the number of international transactions has increased and gained a
significant importance in the last decades. Even if a transaction or a contract is planned well,
still it is possible to face some disputes. Parties should consider this possibility beforehand
and therefore there is a considerable need for including dispute resolution mechanisms in a
commercial contract.163

The main forms of commercial dispute resolution are; negotiation, arbitration, litigation and
alternative dispute resolution mechanisms such as conciliation, mediation and mini-trials.

International commercial arbitration is the process of resolving business disputes between or

among transnational parties through the use of one or more arbitrators. It requires the
agreement of the parties, which is usually given via an arbitration clause that is inserted into
the contract or business agreement. The parties can specify the forum, procedural rules, and
governing law at the time of the contract. The decision is usually binding. 

International commercial arbitration has long been the preferred means of resolving complex
business disputes in the cross-border context. However, the international corporate
community has become somewhat disenchanted with that particular mechanism because of
concerns about rising costs, delays, and procedural formality. As a result, parties are looking
for other means of resolving international commercial disputes. One of the more popular
alternatives is mediation.164

INTERNATIONAL MEDIATION
163
Adv and Disadv of Intl Commercial Arbitration, available at: https://www.lawteacher.net/free-law-
essays/commercial-law/advantages-and-disadvantages-of-international-commercial-arbitration-commercial-law-
essay.php.
164
ADR Policy and Analysis of varied dispute resolution alternatives, available at:
http://openscholarship.wustl.edu/law_journal_law_policy/vol45/iss1/7/.

90 | P a g e
International mediation is widely understood as a voluntary and a non-coercive form of
conflict management, which is highly practical within the intricate dynamics of international
relations, dominated by the principles of preservation of actors and independence.165

Article 3(a) of the EU Directive provides a useful definition of mediation as follows:

‘Mediation’ means a structured process, however named or referred to,

whereby two or more parties to a dispute attempt by themselves, on a
voluntary basis, to reach an agreement on the settlement of their dispute with
the assistance of a mediator. This process may be initiated by the parties or
suggested or ordered by a court or prescribed by the law of a Member State.

Mediation represents an extension and continuation of parties own conflict management

efforts. In other words an extension of the negotiation processes itself. When an outside party
enters the conflict in order to modify, alter, or influence the dynamics of previous relations
between conflicting sides. At the same time mediators play a crucial role in formulating
specific legally non-binding solutions or procedures for the purpose of ending hostilities or a
crisis, or even suggest options for resolving a dispute. International mediation refers to
activities conducted by various international actors with the aim of managing international
conflicts on interstate and intrastate levels. Just as disputants in these conflicts can be both
state and non-state actors, outside parties that could be motivated to mediate these conflicts
can be just as diverse and numerous. They include representatives of neighboring states, of
global powers states of medium and small relative size, representatives of global and
regional, international organizations, global NGO’s, such as religious organizations or
interest and advocacy groups.166

Adopted by UNCITRAL on 24 June 2002, the UNCITRAL Model Law on International

Commercial Conciliation (2002) provides uniform rules in respect of the conciliation process
to encourage the use of conciliation and ensure greater predictability and certainty in its use.
To avoid uncertainty resulting from an absence of statutory provisions, the Model Law
addresses procedural aspects of conciliation, including appointment of conciliators,
commencement and termination of conciliation, conduct of the conciliation, communication
between the conciliator and other parties, confidentiality and admissibility of evidence in

165
Mediation, available at: http://theheartofeurope.ideasoneurope.eu/2014/10/15/mediation/.
166
Ibid.

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other proceedings as well as post-conciliation issues, such as the conciliator acting as
arbitrator and enforceability of settlement agreements.167

UNCITRAL Model Law on International Commercial Conciliation (2002) provides ‘scope of

application and definitions’ under Article 1(3) as follows:

For the purposes of this Law, “conciliation” means a process, whether referred
to by the expression conciliation, mediation or an expression of similar import,
whereby parties request a third person or persons (“the conciliator”) to assist
them in their attempt to reach an amicable settlement of their dispute arising out
of or relating to a contractual or other legal relationship. The conciliator does
not have the authority to impose upon the parties a solution to the dispute.

Guide to Enactment and Use of the UNCITRAL Model Law on International Commercial
Conciliation (2002) provides that:

“In preparing and adopting model legislative provisions on international

commercial conciliation, the United Nations Commission on International Trade
Law (UNCITRAL or “the Commission”) was mindful that such provisions would
be a more effective tool for States modernizing their legislation if accompanied by
background and explanatory information. The Commission was also aware of the
likelihood that the model provisions would be used in a number of States with
limited familiarity with conciliation as a method of dispute settlement. Primarily
directed to executive branches of Governments and legislators preparing the
necessary legislative revisions, the information provided in this Guide should also
provide useful insight to other users of the text, including commercial parties,
practitioners, academics and judges.”

There are critical differences among the dispute resolution processes of negotiation,
conciliation and arbitration. Once a dispute arises, the parties typically seek to resolve their
dispute by negotiating without involving anyone outside the dispute. If the negotiations fail to
resolve the dispute, a range of dispute settlement mechanisms is available, including
arbitration and conciliation.

167
Model Conciliation Laws under UNCITRAL, available at:
http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/2002Model_conciliation.html.

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It also lays down that an essential feature of conciliation is that it is based on a request
addressed by the parties in dispute to a third party. In arbitration, the parties entrust the
dispute resolution process and the outcome of the dispute to the arbitral tribunal that imposes
a binding decision on the parties. Conciliation differs from party negotiations in that
conciliation involves third-person assistance in an independent and impartial manner to settle
the dispute. It differs from arbitration because in conciliation the parties retain full control
over the process and the outcome, and the process is non adjudicatory. In conciliation, the
conciliator assists the parties in negotiating a settlement that is designed to meet the needs
and interests of the parties in dispute. The conciliation process is an entirely consensual one
in which parties that are in dispute determine how to resolve the dispute, with the assistance
of a neutral third party. The neutral third party has no authority to impose on the parties a
solution to the dispute.

Further, it also lays down that in practice, proceedings in which the parties are assisted by a
third person to settle a dispute are referred to by expressions such as conciliation, mediation,
neutral evaluation, mini-trial or similar terms. Various techniques and adaptations of
procedures are used for solving disputes by conciliatory methods that can be regarded as
alternatives to more traditional judicial dispute resolution. The Model Law uses the term
“conciliation” to encompass all such procedures. Practitioners draw distinctions between
these expressions in terms of the methods used by the third person or the degree to which the
third person is involved in the process. However, from the viewpoint of the legislator, no
differentiation needs to be made between the various procedural methods used by the third
person. In some cases, the different expressions seem to be more a matter of linguistic usage
than the reflection of a singularity in each of the procedural method that may be used. In any
event, all these processes share the common characteristic that the role of the third person is
limited to assisting the parties to settle the dispute and does not include the power to impose a
binding decision on the parties. To the extent that “alternative dispute resolution” (ADR)
procedures are characterized by the features mentioned in this paragraph, they are covered by
the Model Law. However, the Model Law does not refer to the notion of ADR since that
notion is unclear and may be understood as a broad category that includes other types of
alternatives to judicial dispute resolution (for example, arbitration), which typically results in
a binding decision. To the extent that the scope of the Model Law is limited to non-binding
types of dispute resolution, the Model Law deals only with part of the procedures covered by
the notion of ADR

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Article 33 of the UN Charter provides a useful list of the range of mechanisms available for
the settlement of international disputes. These include: “negotiation, enquiry, mediation,
conciliation, arbitration, judicial settlement, resort to regional agencies or arrangements, or
other peaceful means”. These options differ from one another in three key ways: some result
in more binding outcomes, some are political processes whereas other are more legal, and
some offer the disputing parties greater control over structure and outcome. Addressing some
of these characteristics, the Energy Charter Conference (ECT) Guide describes mediation as:

“a process in which a neutral third party, a mediator, meets with the disputing
parties and actively assists them in reaching a settlement based on their business
interests and risk assessments or policy considerations and not only their legal
positions.”

Mediation is frequently likened to conciliation. In fact, both the ECT Guide and Permanent
Court of Arbitration (PCA) Conciliation Rules specifically use “mediation” and
“conciliation” interchangeably. While these two forms of dispute settlement are similar, they
are not entirely identical. One key difference is their level of institutionalisation, and the
extent to which the third party is empowered to suggest terms of settlement. Mediation is
easier to distinguish from arbitration and judicial settlement:

 Mediation is typically facilitative, rather than evaluative: the mediator does not issue a
binding decision, with the disputing parties instead retaining control over the process
and its outcome. Parties might, however, opt for “evaluative” rather than “facilitative”
mediation and so vest more power in the mediator to settle the dispute.

 Mediation is an “interests-based” rather than a “rights-based” This feature makes

mediation particularly appropriate for disputes involving long-term investments or
investors embedded within a host State. As the ECT Guide observes, a key advantage
of mediation is that it offers parties the possibility of retaining or even improving their
relationship (Section 12). Mediation is also not subject to standing or jurisdictional
requirements and so may be more inclusive of a broader range of participants.

 Mediation is likely to be less formal, placing emphasis upon communication between

the parties. The ECT Guide, for example, recommends that the teams of individuals
engaged in mediation proceedings be kept “as small as possible in order to maximise

94 | P a g e
 engagement” (Section 5.3). These features of mediation mean that it is likely to be
both quicker and cheaper than arbitration. This is recognised in Article 8.20(4) of
CETA, which provides that parties “shall endeavour” to resolve investor-State
disputes taken to mediation within 60 days from the appointment of the mediator.168

Characteristics of International Mediation

Mediation is a process of conflict management, related to but distinct from the parties' own
negotiations, where those in conflict seek the assistance of, or accept an offer of help from, an
outsider (whether an individual, an organization, a group, or a state) to change their
perceptions or behaviour, and to do so without resorting to physical force or invoking the
authority of law. The essential characteristics of mediation are highlighted below:

1. Mediation is an extension of the parties' own efforts to manage their conflict. Where
they fail, a third party (mediator) is called in.

2. Thus, mediation involves the intervention of an outsider; an individual, a group or an

organization into a conflict between two states or other actors.

3. This intervention is non-coercive, non-violent, and ultimately non-binding.

4. Mediators enter a conflict, whether internal or international, in order to affect it,

change it, resolve it, modify or influence it in some way. Their overriding interest is to
reduce violence and achieve a peaceful outcome.

5. Mediators bring with them, consciously or otherwise, ideas, knowledge, resources,

and prestige. These are used throughout the process to advance the cause of conflict
resolution.

6. Mediation is a voluntary form of conflict management. This means the adversaries in

an intractable conflict choose whether to begin or continue mediation or not, and they
retain their control over the outcome (if not always over the process) of their conflict,
as well as their freedom to accept or reject any aspects of the process or the ultimate
agreement.

168
The rising interest in the mediation of investment treaty dispute, available at:
http://kluwerarbitrationblog.com/2016/09/29/the-rising-interest-in-the-mediation-of-investment-treaty-disputes-
and-scope-for-increasing-interaction-between-mediation-and-arbitration/.

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 7. Mediation operates on an ad hoc basis only. Once completed, a mediator departs the
arena of the conflict.

All these features make mediation very attractive to parties in an intractable conflict.
Mediation is practiced widely in international relations. It has many advantages that may
appeal to parties in a bitter conflict. As described above, it is ad hoc in nature, non-coercive,
and voluntary, which makes it less threatening than other possible conflict management
options. It is non-evaluative and non-judgmental and it is particularly suited to the reality of
international relations, where states and other actors guard their autonomy and independence
quite jealously. It offers both parties the prospects of a better outcome without necessarily
having any direct meetings with a sworn enemy. It is also a process that leaves the ultimate
decision on any outcome to the parties themselves. These aspects of mediation make it a very
attractive method for dealing with intractable conflicts.169

169
Mediation and intractable conflict, available at: http://www.beyondintractability.org/essay/med-intractable-
conflict.

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OBSTACLES TO INTERNATIONAL COMMERCIAL ARBITRATION

International commercial arbitration is a legalistic, adversarial process whose purpose is to

decide on the respective rights and obligations of the parties to the dispute, not to help them
change their attitudes and behaviour to resolve their conflict.  Essentially it is private
litigation.  The failure of arbitrators to decide a dispute according to the applicable law is
ground for invalidating such award by the courts.

Arbitrating a dispute is not, however, a painless, inexpensive, quick solution.  Like litigation
in the courts, it is costly, may take years to conclude, and invariably results in a final rupture
of the parties' business relationship.  Even when an arbitral tribunal makes an award in favor
of one of the parties, the losing side may then proceed to challenge it in the courts, thus
delaying or even preventing a final resolution of the dispute.  For example, one arbitration
between Egypt and foreign investors took five years in its first phase and resulted in legal and
administrative costs of nearly $1.5 million dollars.  (International Chamber of Commerce
Court of Arbitration, 1983)  But thereafter, the arbitral award was appealed in the courts and
the case was re-arbitrated in another forum.  The parties finally settled the matter through
negotiation fourteen years after the dispute began.

The prospect of such a costly, lengthy and potentially destructive process does encourage the
two sides to negotiate a settlement of their dispute.  For example, approximately two-third of
all arbitration cases filed with the International Chamber of Commerce Court of Arbitration
are settled by negotiation before an arbitral award is made. Third persons, whether called
mediators or otherwise, could in theory help parties embroiled an international business
dispute settle their conflicts without the intervention of an arbitrator's decision. 

Generally speaking, an arbitrator's efforts, however minimal to facilitate settlement, tend to

have the effect of persuading the parties that if they allow the dispute to be arbitrated they
will not achieve all that they hope.  Such efforts by arbitrators have a predictive effect.  When
arbitrators strongly encourage settlement, they are actually saying to the claimant company
that it probably will not receive all that it claims, and they are also telling the respondent that
if the case goes to an award it will have to pay something.  The strategy of arbitrators who
seek to play a mediating role is to give the parties a realistic evaluation of what they will
receive or be required to pay in any final arbitration award.

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International commercial arbitration is an expensive process for the parties as they must pay
the fees and expenses of the arbitrators. Additionally, it may be necessary to pay the
administrative fees and expenses of an arbitral institution. These costs will be subject to an
increase if there is more than one member of the tribunal or if an arbitral institution is
involved. In addition to arbitration fees, there may be the expenses of hiring rooms for
meetings and hearings instead of using the public facilities of the courts of law. On the other
hand, the awards of arbitration are final decisions; it is unlikely to be followed by a series of
costly appeals to superior courts. 170

Due to busy arbitrators, counsel and clients from different counties, it may be difficult to
schedule hearing dates and the need to agree on most procedural steps makes the pace of this
procedure slower. However, again, as there is a limited scope for recourse against the award,
this situation may save time in the end by avoiding the possibility of appeals.171

With increasing recognition of the disadvantages of arbitration, some companies are

beginning to turn to more explicit forms of mediation to resolve business disputes. 
Increasingly, when a dispute can be quantified, for example the extent of damage to an asset
by a partner's action or the amount of a royalty fee owed to a licensor, the parties will engage
an independent third party such an international accounting or consulting firm to examine the
matter and give an opinion.  The opinion is not binding on the parties but it has the effect of
allowing them to make a more realistic prediction of what may happen in an arbitration
proceeding.

Generally, in institutional conciliation, a party to a dispute may address a request for

conciliation to the institution.  If the institution concerned secures the agreement of the other
disputant, it will appoint a conciliator.  While the conciliator has broad discretion to conduct
the process, in  practice he or she will invite both sides to state their views  of the dispute and
will then make a report proposing an appropriate settlement.  The parties may reject the
report and proceed to arbitration, or they may accept it.  In many cases, they will use it as a
basis for a negotiated settlement.  Conciliation is thus a kind of non-binding arbitration. Its
function is predictive.  It tends to be rights-based in its approach, affording the parties a third
person's evaluation of their respective rights and obligations.  Conciliators do not usually

170
Adv and Disadv of Intl Commercial Arbitration, available at: https://www.lawteacher.net/free-law-
essays/commercial-law/advantages-and-disadvantages-of-international-commercial-arbitration-commercial-law-
essay.php.
171
Ibid.

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adopt a problem-solving or relationship building approach to resolving the dispute between
the parties.  The process is confidential and completely voluntary.  Either party may withdraw
from conciliation at any time.

Despite the predictability of enforcing international arbitral awards, some aspects of

arbitration continue to cause difficulty. Arbitration is a quasi-adjudicative procedure,
whereby the disputing parties present both law and facts to a third-party decisionmaker, or
arbitrator, who makes an award based on those presentations. International disputes present
special problems for adjudicative-type processes because the disputes often involve more
than one national legal system. Accordingly, without cooperation between the parties
concerning a mutually acceptable forum and choice of law, there is often no predictable place
where parties may obtain compulsory jurisdiction, and there is no certainty about the law
applicable to the dispute. In addition to the problems regarding choice of forum and law,
many international businesses often perceive adjudicative type processes as too lengthy,
costly, and combative. Furthermore, adjudicative-type processes present practical problems
involving the voluntary settlement authority of the parties, as well as the preservation of other
rights and remedies.172

Other potential disadvantages of adjudicative-type processes include: lack of control over the
outcome, the general adversarial nature of the process, and'the inflexible and judgmental
character of the result. These processes lay blame upon one of the parties instead of creating a
face-saving way out of the dispute. These problems are particularly prevalent when
attempting to preserve amicable, long-term relationships.173

People are simultaneously frustrated and disenchanted with adjudicative-type processes such
as litigation and arbitration. The international community, and specifically international
commercial entities, are seeking dispute resolution mechanisms that minimize procedural and
ancillary issues, open dialogue between disputing parties, facilitate the development of
mutually acceptable resolutions, and maintain cordial business relations.174

INTERNATIONAL COMMERCIAL MEDIATION - A BETTER ALTERNATIVE METHOD OF

INTERNATIONAL COMMERCIAL DISPUTE RESOLUTION
172
Ibid.
173
Ibid.
174
Ibid.

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One dispute resolution method that achieves many of the goals stated above is mediation, or
third-party intervention. Linda C. Reif, Assistant Professor at the University of Alberta in
Edmonton, Canada, believes that "the international community should make greater use of
conciliation [mediation] as a pathway to the settlement of economic and business disputes,
rather than automatically taking the more complex arbitration route to dispute settlement.”175

Mediation is perhaps the dispute resolution method most readily transferable to the
international setting because parties may use it to resolve disputes that involve not only
questions of law and fact, but also "non-arbitrable" or "non-justiciable" issues that an
adjudicative-type process cannot settle. Such issues include intangible feelings, personal
interests, and emotional concerns. Whereas a court or arbitral panel is neither equipped to
handle nor interested in these issues, a mediator may explore these issues to perhaps bring
about a quicker and more creative resolution. Sometimes the difference between disputes and
settlements may be attributed to the parties' principles and interests, rather than their
bargaining positions. An apology, a recognition of hurt feelings, or a promise to avoid certain
problems in the future may often lead to a resolution. Adjudicative-type processes do not
explore parties' principles and interests because the processes are based strictly on
presentations of law and fact. Mediation, however, explores a wider and more practical range
of issues, and thus is a better alternative method of dispute resolution.176

UNCITRAL MODEL LAW ON INTERNATIONAL COMMERCIAL CONCILIATION (2002)

175
Ibid.
176
Ibid.

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Article 1(4) provides that conciliation is international if:

(a) The parties to an agreement to conciliate have, at the time of the conclusion of
that agreement, their places of business in different States; or

(b) The State in which the parties have their places of business is different from
either:

i. The State in which a substantial part of the obligations of the commercial

relationship is to be performed; or

ii. The State with which the subject matter of the dispute is most closely
connected.

Article 1(5) lays down that if a party has more than one place of business, the place of
business is that which has the closest relationship to the agreement to conciliate. However, if
a party does not have a place of business, reference is to be made to the party’s habitual
residence. Clause 8 and 9 of the said article deal with applicability and non-applicability
respectively. Clause 8 provides that subject to the provisions of clause 9 of this article, this
law applies irrespective of the basis upon which the conciliation is carried out, including
agreement between the parties whether reached before or after a dispute has arisen, an
obligation established by law, or a direction or suggestion of a court, arbitral tribunal or
competent governmental entity. On the other hand clause 9 lays down that this Law does not
apply to cases where a judge or an arbitrator, in the course of judicial or arbitral proceedings,
attempts to facilitate a settlement.

Article 2 lays down that regard is to be had to the international origin and to the need to
promote uniformity in the application and the observance of good faith of the Law. In
addition, it also mentions that questions concerning matters governed by this Law which are
not expressly settled in it are to be settled in conformity with the general principles on which
this Law is based.

Article 4 provides that conciliation proceedings in respect of a dispute that has arisen
commence on the day on which the parties to that dispute agree to engage in conciliation
proceedings. If a party that invited another party to conciliate does not receive an acceptance
of the invitation within thirty days from the day on which the invitation was sent, or within

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such other period of time as specified in the invitation, the party may elect to treat this as a
rejection of the invitation to conciliate.

Article 5 lays down that there shall be one conciliator, unless the parties agree that there shall
be two or more conciliators. Clause 2 points out that the parties shall endeavour to reach
agreement on a conciliator or conciliators, unless a different procedure for their appointment
has been agreed upon. Further, clause 3 provides that the parties may seek the assistance of
an institution or person in connection with the appointment of conciliators.

Article 6 lays down provisions regarding conduct of conciliation wherein clause 1 provides
that the parties are free to agree, by reference to a set of rules or otherwise, on the manner in
which the conciliation is to be conducted. Clause 2 held that failing agreement on the manner
in which the conciliation is to be conducted, the conciliator may conduct the conciliation
proceedings in such a manner as the conciliator considers appropriate, taking into account the
circumstances of the case, any wishes that the parties may express and the need for a speedy
settlement of the dispute.

Article 7 provides that the conciliator may meet or communicate with the parties together or
with each of them separately.

Article 8 mentions that when the conciliator receives information concerning the dispute from
a party, the conciliator may disclose the substance of that information to any other party to
the conciliation. However, when a party gives any information to the conciliator, subject to a
specific condition that it be kept confidential, that information shall not be disclosed to any
other party to the conciliation.

Article 9 provides that unless otherwise agreed by the parties, all information relating to the
conciliation proceedings shall be kept confidential, except where disclosure is required under
the law or for the purposes of implementation or enforcement of a settlement agreement.

Article 10 lays down provisions regarding admissibility of evidence in other proceedings. It

provides that:

“1. A party to the conciliation proceedings, the conciliator and any third person,
including those involved in the administration of the conciliation proceedings,

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 shall not in arbitral, judicial or similar proceedings rely on, introduce as
evidence or give testimony or evidence regarding any of the following:

(a) An invitation by a party to engage in conciliation proceedings or the fact that

a party was willing to participate in conciliation proceedings;

(b) Views expressed or suggestions made by a party in the conciliation in respect

of a possible settlement of the dispute;

(c) Statements or admissions made by a party in the course of the conciliation

proceedings; (d) Proposals made by the conciliator;

(e) The fact that a party had indicated its willingness to accept a proposal for
settlement made by the conciliator;

(f) A document prepared solely for purposes of the conciliation proceedings.”

Article 11 lays down that the conciliation proceedings are terminated:

(a) By the conclusion of a settlement agreement by the parties, on the date of the
agreement;

(b) By a declaration of the conciliator, after consultation with the parties, to the
effect that further efforts at conciliation are no longer justified, on the date of the
declaration;

(c) By a declaration of the parties addressed to the conciliator to the effect that
the conciliation proceedings are terminated, on the date of the declaration; or

(d) By a declaration of a party to the other party or parties and the conciliator, if
appointed, to the effect that the conciliation proceedings are terminated, on the
date of the declaration.

Lastly, Article 14 contains that if the parties conclude an agreement settling a dispute, that
settlement agreement is binding and enforceable . . . [the enacting State may insert a
description of the method of enforcing settlement agreements or refer to provisions governing
such enforcement].

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POSITION IN DIFFERENT COUNTRIES

The UNCITRAL Model Law as well as the respective conventions have been adopted by
most of the states in the world. The domestic statutes of these contracting states also have
similar provision of public policy. In most of the developing and developed economies there
is minimal court intervention in foreign awards as well as a very narrow and strict approach
towards the doctrine of public policy.

In Singapore, the courts have consistently accorded a very strict and narrow interpretation to
the term ‘public policy’ as is evident from the landmark judgments such as PT Asuransi Jasa
Indonesia (Persero) v Dexia Bank SA,177in the para 59 of the judgment the Hon’ble Court
correctly stated that public policy encompasses a very narrow scope. In the preceding
paragraph the Court also considered the decision of Indian Supreme Court in ONGC and
criticised the same as the Court considered the view taken by Indian Supreme Court in
ONGC inconsistent with the legislative intent of the Act. Similar view has been reiterated in
later judgments of the Court of Appeal.178

Similarly, Australian Courts have also emphasised for the requirement of a pro-arbitration
bias in landmark cases like ESCO Corporation v Bradken Resources Pty Ltd, 179 and Uganda
Telecom Limited v Hi-Tech Telecom Pty Ltd 180. In France, the public policy has been given
two levels of interpretation, one for domestic matter and another for international
consideration, a narrow interpretation is given to the latter. American Courts also necessitates
that a pro-arbitration bias has to be followed.181

177
[2007] 1 SLR 597; [2006] SGCA 41.
178
AJU v. AJT, [2011] SGCA 41.
179
[2011] FCA 905.
180
Uganda Telecom Limited v Hi-Tech Telecom Pty Ltd [2011] FCA 131.
181
Parsons & Whittemore Overseas Co., Inc. v. Societe Generale De L'industrie Du Papier (Rakta
508 F.2d 969 (2nd Cir. 1974).

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20TH LAW COMMISSION REPORT AND SUBSEQUENT ARBITRATION AND

CONCILIATION (AMENDMENT) ACT, 2015

The 20th Law Commission in its 246th report titled ‘Amendment to the and Conciliation Act
1996’182 proposed significant amendments to the 1996 Act. With respect to the term ‘Public
Policy’ the Commission after considering the reasoning laid down in Renusagar, ONGC and
Lal Mahal further opined to curtail the ambit of ‘Public policy’ under both Section 34 & 48
by proposing to amend the ratio of Renusagar to the extent of deleting the ground of
“Interest of India”. The commission proposed insertion of an explanation to both these
sections whereby the scope of public policy is limited to (i)fundamental policy of Indian law
(ii) basic notions of morality or justice. Instead of retaining the ground of patent illegality
under the tern ‘Public policy’ the Commission proposed insertion of Section 34(2A) whereby
the only the purely domestic awards are made subject to the test of patent illegality.

These proposals of the Law Commission were duly incorporated in the Arbitration and
Conciliation (Amendment) Act, 2015 and subsequently Sub-Section 2A was inserted in
Section 34 along with respective explanations to Public Policy in both Section 34 and Section
48.

Thus, the Arbitration and Conciliation Act as is currently drafted limits the scope of public
policy under Section 48.

246th Report on Alternative Dispute Resolution

182
Mechanism in India, available at:
http://lawcommissionofindia.nic.in/reports/report246.pdf.

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AWARDS PASSED IN NON-CONVENTION & NON-RECIPROCATING COUNTRIES

From the above discussion it is conclusive enough that Part-I of the Act applies to purely
domestic awards and awards passed in India seated International Commercial Arbitrations
whereas Part-II of the Act is confined to New York Convention awards and Geneva
Convention awards. However, the 1996 Act is silent as to the treatment of an award where
the seat of the arbitration is not party to either of the above-mentioned Conventions.

Furthermore, another complexity that arises is that New-York Convention gives the liberty to
the contracting parties to opt for the inter-alia reciprocity reservation.183This reciprocity
reservation gives the party liberty to make the convention applicable only to the territory of
the State party to the Convention. While this reservation is optional in case of New York
Convention the same is obligatory in case of Geneva Convention. 184 India has incorporated
this reciprocity clause with respect to both the Conventions in the 1996 Act.185 Thus, even
though 142 countries are signatory to the New York Convention, its application in India will
be limited to the States which are notified by the Central Government in the official Gazette.
So far only 48 countries have been notified in the official gazette by the Central
Government.186

In case of awards passed in Non-Convention countries there have been varying judicial
decision. A landmark decision on this issue can be traced back to the Supreme Court
judgment in Bhatia wherein the Court observed that there were lacunae in the legislation as
the legislature failed to provide for the enforcement of these awards. Thus, the Court held that
since Part-II is strictly applicable to awards passed in Convention, for the purpose of
enforcement, the awards passed in Non-Convention countries will be considered domestic
awards and as such will be covered under Part-I of the Act.

183
Article 1(3) of Convention on Recognition and Enforcement of Foreign Arbitral Awards, 1958.
184
Article 1, Convention on the Execution of Foreign Arbitral Awards, 1927.
185
Section 44(b) and Section 53(c), Arbitration and Conciliation Act, 1996.
186
Australia; Austria; Belgium; Botswana; Bulgaria; Central African Republic; Chile; China (including Hong
Kong and Macau) Cuba; Czechoslovak Socialist Republic; Denmark; Ecuador; Federal Republic of Germany;
Finland; France; German; Democratic Republic; Ghana; Greece; Hungary; Italy; Japan; Kuwait; Malagasy
Republic; Malaysia; Mauritius, Mexico; Morocco; Nigeria; Norway; Philippines; Poland; Republic of Korea;
Romania; Russia; San Marino; Singapore; Spain; Sweden; Switzerland; Syrian Arab Republic; Thailand; The
Arab Republic of Egypt; The Netherlands; Trinidad and Tobago; Tunisia; United Kingdom; United Republic of
Tanzania and United States of America,

106 | P a g e
Whilst the judgment in Bhatia faced severe criticism particularly for exposing foreign awards
to the provisions of Part-I. This particular aspect of judgment though later over-ruled,
provided remedy to parties holding awards made in Non-Convention countries.

Later in Balco, a five-judge constitution bench over-ruled this law sub-planted in Bhatia by
along with its entire ratio. The Court observed that the very fact the legislature did not
provide for the enforcement of awards made in Non-Convention countries does not ipso facto
means that there is lacuna in the Act. Court held that the Act has not provided for the
treatment of these awards then it means that the parliament intended that these awards should
not be enforced.

Thus, after the judgment in Balco it is clear that the 1996 Act as it is drafted now, does not
provide for the enforcement of these awards. However, in another case law much prior to
Bhatia where the provision of Arbitration Protocol and Convention Act 1937 were under
consideration the Supreme Court held that the awards passed in Non-Convention country can
be enforced in India on the same grounds as in English Common Law i.e. on the ground of
equity, justice and good conscience.187 The correctness & applicability of this case law is still
uncertain.

Therefore as of now, until parliament comes to rescue, there is no remedy for the awards
passed in Non-Convention Countries.

187
Badat & Co. Bombay v. East India Trading Co. (1964) AIR 538.

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DOCTRINE OF DOUBLE EXEQUATUR

The Geneva Convention, 1923, had a very peculiar feature, opposed to the idea promulgated
in the New York Convention. It stated that the burden to make the enforcement of the foreign
award lay upon the shoulders of the party seeking such an enforcement. In other words, the
concept of exequatur had to be satisfied i.e. the party seeking such an enforcement had to
confirm the award from the competent authority of the country in which the award is made
final.

The proved to be extremely cumbersome and fraught with structural defects, as some
countries, pursuance of same, required a written order from the court of the country where the
award has been passed, along with the consent of the country in which the award is to be
made enforceable, subsequently resulting in the anomaly of ‘double exequatur’.

This confusion and multiplicity of proceedings that ensued were a menace in the interest of
justice, and as a preventive measure, the New York Convention, 1958, was enacted with a
view to achieve two goals, namely i) to eliminate the requirement of the double exequatur,
and ii) to shift the burden of proof upon the party that pleads to refuse the enforcement, as the
enforcement should be the norm, and the refusal, a dire exception.

The New York Convention, vide Article V(1)(e), vehemently moved to eradicate the
existence of ‘double exequatur’ by replacing the word ‘final’ with the word ‘binding’, as a
stoic effort to indicate that the enforcement of an award doesn’t necessitate the exequatur of
the country in which the award has been passed. As a consequent ramification, a foreign
award under the New York Convention becomes enforceable immediately, unless it is vilified
or overruled as per Article V(1)(e) of the Convention, or Article 48(2) of the 1996 Act.

The first time these changes were recognised in the Indian context was by the Delhi High
Court in Universal Tractor Holdings V. Escorts Limited188, where the question arose as to the
binding nature of a foreign award, where no prior consent was taken from the competent
authority of the country passing the award, in lieu of double exequatur.

The Delhi High Court, in this landmark judgment, put its weight behind the New York
Convention, and categorically stated that it is not necessary for the party seeking the

188
2012 (3) ArbLR434 (Delhi).

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aforesaid enforcement to show leave from the country passing such an award. The court
further recognised three aspects of the New York Convention, namely;

i) The concept of double exequatur was disregarded

ii) The term ‘final’ was replaced with ‘binding’ when it came to enforcement of
foreign awards

iii) The burden was shifted from the party seeking enforcement to the party pleading
for a refusal.

The judgement debtors, aggrieved by the order being in favour of the decree holder, filed an
appeal in the Supreme Court vide Escorts Ltd. V Universal Tractor Holdings 189. The apex
court reiterated the decision of the Delhi Court and stated specifically, as a ratio, that it is not
necessary to take leave from the country where the award was passed, thereby abrogating
double exequatur.

In Dicey and Morris190, it is stated as follows:

“…The Private International Law Committee in their Fifth Report suggest that an
Award is “binding” if no further recourse may be had to another arbitral
tribunal (e.g. an appeals tribunal); and that the fact that recourse may be had to
a Court of law does not prevent the Award from being ‘binding’. One thing seems
clear: the Conference which approved the New York Convention wished to avoid
a double exequatur of arbitration Awards, one in the country where the Award
was made and the other in the country where it is sought to be enforced.”

The question regarding double exequatur isn’t novel to the Indian jurisprudential and judicial
circles. Prior to the Universal Tractor case, it has come up in a catena of judgements such as
Oil and Natural Gas commission v. Western Company of North America and Smita
Conductors Ltd. v. Euro Alloys Ltd191.

189
(2013) 10 SCC 717.
190
DICEY AND MORRIS, THE CONFLICT OF LAWS, AT P. 586 (11TH ED).
191
(2001) 7 SCC 728.

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JURISDICTIONAL ISSUES

An arbitral award may be set aside if it is found that the tribunal by which it was passed did
not have adequate jurisdiction to pass the award. Jurisdictional grounds include matters
where the validity of the arbitration agreement itself comes into question. These grounds also
include matters in which the issues whether the tribunal was properly constituted and whether
the matters submitted to the tribunal under the agreement are arbitrable have been raised. An
award may be challenged if the constitution of the arbitral tribunal is of an irregular nature. If
it is found that a party lacked the capacity to enter into an arbitration agreement, the
agreement is to be considered as void.

Usually, challenges under the ground of incapacity are made at the beginning of the
arbitration proceedings. In Republic of Poland v. Saar Papier Vertriebs GmbH 192, it was held
that if a party does not raise an objection to the lack of capacity at the outset of the
arbitration, it risks losing its right to challenge at a subsequent date. An award may also be
challenged on the grounds of irregularity in the conduct of arbitral proceedings. For example,
a proceeding in which a proper notice of appointment of the arbitrators or of the
commencement of the arbitration proceedings is not given to a party, or a proceeding in
which a party was not given the opportunity to present its case is an irregular proceeding.
However, mere irregularity in proceedings is not enough to make the award subject to
challenge. The challenging party must prove that such procedural irregularity has violated its
rights and has caused an injustice. If the procedural errors committed by the arbitrators have
led to a mistake of facts but not a mistake of law, the award passed by such erroneous
proceedings cannot be challenged193.

COMPETENCE-COMPETENCE DOCTRINE
192
20 September, 2000, Bundesgericht, (2001) 19 ASA Bulletin (No.3) 487-97. Andrew Tweeddale, Arbitration
of Commercial Disputes: International and English Law and Practice, OXFORD UNIVERSITY PRESS, 2007.
193
Coimbatore District Podu Samgam v. Bala Subramania Foundary, AIR (1987) SC 2045: (1987) 3 SCC 723:
1987 (3) SCJ 157: 1987 (2) Supreme 215.

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The essence of an arbitration proceeding lies in the principle of party-autonomy and the
doctrine of competence-competence. Both these doctrines personify the entire purpose behind
the process of arbitration. Therefore, if these sacrosanct doctrines are not given their due
regard by the Courts then the whole idea behind the alternative dispute redressal gets
frustrated.

The competence-competence doctrine garnered recognition due to its empowering nature.

The text, quite literally, translates to the statement that ‘a court is competent to decide its own
competence’. This doctrine states, as a general principle of international commercial
arbitration, that every tribunal has the authority to demarcate its own jurisdiction. This
empowers them to determine the jurisdiction of the substantive disputes they deal with. This
principle has been incorporated under Section 16 as well as Section 45 of the 1996 Act.

However, in accordance with the much-celebrated belief, absolute discretion is constitutional

blasphemy, and thus it mustn’t be mistaken as the sole authority for the same. This doctrine,
most certainly, does not abrogate the right of an enforcing court which isn’t at the seat of
arbitration to review the decision of the tribunal. Fouchard Gaillard and Goldman, in their
book on International Commercial Arbitration, categorically state that;

“Arbitrators cannot be sole judges of their jurisdiction. That would be neither

logical nor acceptable. In fact, the real purpose of the competence-competence
rule is in no way to leave the question of the arbitrators' jurisdiction in the hands
of the arbitrators alone. Their jurisdiction must instead be reviewed by the courts
if an action is brought to set aside or to enforce the award.”194

The main issue lies in the judicial approach towards the doctrine. If the intent of the
legislature is to establish a pro-arbitration environment then the ideal judicial approach
should be aimed towards the minimum curtailment of the Arbitral Tribunal’s autonomy. Thus
the over-zealous Courts in order to foster International Trade and finance should ensure
minimal supervisory intervention under Section 45.

Section 45 mandates the judicial authority to compulsorily refer the matter for arbitration 195
unless if the agreement is null and void, inoperative of being performed. This conditional
Compulsion given under Section 45 is not to be understood so as to be conferring the judicial
194
FOUCHARD, GAILLARD, & GOLDMAN, INTERNATIONAL COMMERCIAL ARBITRATION, AT P. 586 (Kluwer Law
International).
195
State of Orissa v. Klockner & Co., AIR (1996) SC 2140.

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authority power to review the legality of the entire agreement altogether. An inquiry into the
legality of the substantive contract under the guise of Section 45 is not permissible. 196The
scope of inspection under Section 45 is minimum. The standard of review by a Court should
be limited to ascertaining if the agreement prima facie is not null and void or there is nothing
patently or fundamentally illegal on the fact of it.197

SUGGESTIONS ON MED-ARB

The practice of combining the mediation and arbitration processes is known as both “med-
arb” and “arb-med”, depending on which process was initiated first. This process involves the
same person acting both (i) as a mediator in seeking to facilitate a settlement between the
Sasan Power Ltd. v. North American Coal Corporation India Pvt. Ltd. AIR 2016 SC 3974.
196

Emmanuel Gaillard, The Urgency of not Revising the New York Convention, in 14 50 YEARS OF THE NEW
197

YORK CONVENTION: ICCA INTERNATIONAL ARBITRATION CONFERENCE 693 (Albert Jon Van Den
Berg ed., 2009).

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parties, and (ii) as an arbitrator to determine the issues in dispute and issue a final and binding
award. Med-arb is the melding of two well-established processes for conflict resolution into
one hybrid process. Mediation and Arbitration are used in conjunction with one another and,
in the truest form of med-arb, the same third-party neutral plays the role of both mediator and
arbitrator.198

Should arbitrators be permitted to serve as mediators of the disputes they might ultimately
determine? Instinctive reactions to this question are likely to be coloured by a party’s legal
background and cultural expectations. To those from common law traditions, the idea of
combining the roles of mediator and arbitrator is rather alien, whereas in civil law
jurisdictions, this is a relatively well-accepted practice.199

The key advantages of combining mediation and arbitration are usually said to be the
following:

 An arbitrator or judge will already be familiar with the case, the parties and their
counsel, and so should be well-placed to help settle the matters in dispute. An arbitrator
or judge is also often best-placed to identify the most appropriate time in the
proceedings to hold a mediation.

 It can be an efficient way of reaching an early settlement, avoiding substantive

hearings and the significant legal fees these incur – either by bringing the parties closer
together (under the facilitative approach) or by giving an early indication of the likely
outcome of the formal proceedings, and thereby encouraging the parties to settle.

 Any settlement reached during med-arb can subsequently be recorded in the form of a
final award by the tribunal, which would then benefit from the enforcement regime
under the New York Convention.

 A mediation under the facilitative approach can be particularly beneficial where there
is an on-going business relationship which the parties would like to preserve. Indeed, a
mediated settlement can cover issues outside the scope of the immediate dispute, and

198
Mediation and Arbitration, Available at: http://www.mediate.com/pdf/V2%20MED ARB%20The%20Best
%20of%20Both%20Worlds%20or%20Just%20a%20Limited%20ADR%20Option.pdf.
199
Mediator and Arbitrator- A Perfect Match, available at:
http://kluwerarbitrationblog.com/2011/02/15/mediator-arbitrators-the-perfect-match-or-no-love-lost-a-
valentines-day-blog/.

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 can therefore have a positive outcome on the relationship between the parties going
forward.

 There is evidence that med-arb is being used successfully in Asia. For example, in a
recent interview with the Global Arbitration Review, the secretary general of the China
International Economic and Trade Arbitration Commission, Yu Jianlong, said that 20
to 30 per cent of CIETAC’s caseload is resolved by this method each year. Similarly, a
study of JCAA arbitrations from 1999 to 2008 showed a successful outcome in 25
cases out of 48 in which arbitrators assisted the parties in reaching a settlement (See
JCAA newsletter No.22).200

Balanced against these are a number of potential drawbacks to med-arb / arb-med. There is a
(certainly perceived) risk that overseeing a mediation may threaten an arbitrator’s
impartiality. For example, it may be difficult for a mediator-arbitrator not to be influenced by
the private communications he hears where a “caucusing” technique is adopted.
Alternatively, if legislation dictates that a mediator-arbitrator must disclose all confidential
information gathered during the mediation to the other parties, one of the key advantages of
this form of ADR (i.e. that parties are free to discuss issues openly with the mediator) may be
lost. On the other side of the enforcement coin, arbitral awards that are rendered following
failed settlement efforts may be challenged on public policy grounds if the losing party
contends that there was a lack of due process during the mediation. A recent preliminary
decision of the Hong Kong courts illustrates this exact danger. In Gao Hai Yan and another v
Keeneye Holdings Ltd and others201 , enforcement of an arbitral award rendered in the PRC
was challenged on the basis that a member of the tribunal and the General Secretary of the
Xian Arbitration Commission had held an ex parte meeting with one of the parties to the
arbitration.202

It is clear that there is room in international arbitration for arbitrators to serve as effective
mediators of their disputes and vice-versa. However, guidelines addressing matters such as
acceptable procedures (e.g. to ensure that due process is delivered), and the extent of
disclosure following failed settlement proceedings, would be of assistance – particularly
where this practice is less widely accepted at present.

200
Alternative Dispute Resolution Practices, available at: http://hsfnotes.com/arbitration/2012/02/28/med-arb-
an-alternative-dispute-resolution-practice/.
201
HCCT 41/2010.
202
Ibid.

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International Commercial Arbitration has brought about revolutionary change and certainty in
International trade & finance, albeit the humungous growth world commerce has witnessed
because of it, the very nature of International Commercial Arbitration though intended to
provide simplicity to international commercial disputes, is riddled with complexities which
sometimes defeats the very purpose of the whole proceedings. Since the very nature of
International Commercial Arbitration involves multiple-jurisdictions, the issues with respect
to the enforcement of these awards are multifarious.

PRACTICAL TRAINING ON ARBITRATION

The Faculty of Law, Jamia Millia Islamia, in lieu of its Clinical Course on Alternative
Dispute Resolution organised varied field trips to arbitration proceedings held at Arbitration
Centre, M.C. Setalvad lawyers Chamber, New Delhi. The arbitration proceedings took place
before Shri S.M. Aggarwal, Hon’ble Arbitrator in case no.32 of 2018.

Parties to the case were:

Claimant: M/S Simplex Project Ltd.; and

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Respondent: New Delhi Municipal Council (NDMC).

The said case was filed under Sec 29A (4) of the 1996 Act. The argument between the parties
was regarding the filed document and affidavit and the amount mentioned in the document
which was to be paid by the claimant.

The plea of the claimant party to arbitration was not to extend the period of arbitration as the
reasons for delay were not attributable to the learned Arbitrator.

The facts of the cases were that there were some errors regarding the dates mentioned in the
agreement and the further delay of the said application were being objected by the claimants.

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

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 trial suit.

The said suit is pending arbitration and the same is yet to be adjudicated upon by the learned
arbitrator.

NATIONAL SEMINAR ON EMERGING TRENDS OF ALTERNATIVE DISPUTE

RESOLUTION IN INDIA
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

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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 practicein 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 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,
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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

(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.

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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.

CONCLUSION

To sum up, it is evident from the above discussion that the role played by the third party
differs the two form of alternate dispute resolution. While conciliator gives suggestions and
advice on the issue for resolving the dispute between the parties, as he/she is an expert in that
domain. Mediator on the other hand only facilitates communication and develop
understanding. No advisory role is played by the mediator.

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Mediation is a valuable dispute resolution tool because the means of reaching an agreement
can be as varied as the disputes that need to be resolved. Mediation procedures can be
tailored to a variety of factors: the personality of the mediator; the nature of the dispute; the
time or resources available; and the antagonism between the parties. The procedure can thus
minimize contentiousness, cost, and resources. If it is unsuccessful, the parties can always
resort to the courts or other means of dispute resolution. In short, mediation is a valuable
weapon against delay, cost, and injustice.

Conciliation is strikingly similar to mediation as both the processes can fundamentally be

described as facilitated negotiations and in fact at times the two terms are used synonymously
in various jurisdictions. In India however, the introduction of the two terms separately in
section 89 CPC has necessitated the development of a fine line of distinction between
mediation and conciliation.

The conciliator in the process of conciliation as is understood in India plays an evaluative and
interventionist role and is statutorily authorized to make suggestions and propose plausible
solutions to the parties while mediation is regarded as an ADR process which is primarily
facilitative. The principal advantage in conciliation is that a conciliation settlement agreement
is treated to be an arbitral award on agreed terms and is executable as a decree of the court
under the Arbitration and Conciliation Act, 1996.

It is primarily because of this advantage that conciliation overshadows mediation as an ADR

mechanism at the pre-litigation stage in Delhi. There are various institutions operating in
Delhi such as ICA, FACT, ICADR, etc. which provides state of the art infrastructure,
professional conciliators and excellent facilities for conciliation. There are various companies
and PSUs which incorporate conciliation clauses in their contracts and go in for conciliation
at the pre-litigation stage, conducted either by ad hoc conciliators appointed by the parties by
mutual accord or by institutions providing conciliation services.

However, the situation is diametrically opposite when it comes to post litigation conciliation.
Though conciliation is resorted to under the Hindu Marriage Act, 1955 and the Family Courts
Act, 1984 for resolution of matrimonial disputes by the courts themselves, however in
general, the process of mediation overshadows conciliation as a dispute resolution process
under section 89 CPC and in fact conciliation has been rendered redundant.

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One of the reasons is that the process as it has been interpreted today requires the consent of
both the parties for being referred to conciliation in a sub judice matter by the court.
Secondly, after such reference is made to an external conciliator, the matter moves out of the
realm of the court house requiring the parties to incur extra expenditure on such out of court
conciliation.

The prime reason is, however, the judiciary’s choice of mediation over conciliation.
‘Samadhan’ at the Delhi High Court is the Delhi High Court’s Mediation and Conciliation
Centre. The rules framed by the Delhi High Court are described as the Mediation and
Conciliation Rules, 2004. Despite this conciliation is rarely resorted to at ‘Samadhan’. At the
district courts the same Mediation and Conciliation Rules, 2004 are applicable yet there are
no facilities for conciliation and here in fact the centres have been designated as Mediation
Centres only with no reference to conciliation. The Mediation and Conciliation Rules, 2004
contemplate that conciliation should also be offered as a dispute resolution process to the
parties.

The process of mediation has therefore been given wide publicity and recognition in Delhi as
a court sponsored mode of dispute resolution and since both conciliation and mediation are
generically similar, the process of mediation is extensively used at the post litigation stage
and flourishes in Delhi whereas conciliation remains practically unexplored in this arena
although conciliation offers similar advantages and much more at the pre-litigation stage.

Conciliation however, is an excellent ADR mechanism and offers distinct advantages such as
a well-entrenched statutory framework, flexibility of procedure, a more interventionist role
for the conciliator, a settlement which is executable as a decree of the court and statutory
guarantee of confidentiality. In fact, the more interventionist role of the conciliator would
prove to be an added advantage in parties who belong to the poor strata or are not aware of
their rights and liabilities. There is absolutely no reason as to why the conciliation cannot be
utilized as an effective ADR mechanism simultaneously with mediation.

The state should endeavour to provide a state sponsored, state funded, court annexed
conciliation mechanism like mediation at the mediation and conciliation centres attached to
the courts in Delhi and give adequate publicity and importance to conciliation as an ADR
mechanism at the post litigation stage. At the pre-litigation stage also, conciliation can be
utilized at a mode of dispute resolution if the mediation and conciliation centres diversify and

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expand their role to offer pre-litigation services. In fact, it can be of great use specifically for
the ADR centres mooted by the Delhi Dispute Resolution Society.

Conciliation has therefore great potential in Delhi as an ADR mechanism, however, it is not
being utilized in Delhi to its full potential. Therefore, there is an urgent need to appreciate the
utility of this ADR process and take necessary measures for advocating, propagating,
popularizing and utilizing conciliation as an ADR process in Delhi.

There is a growing concern as regards the interventionist stance adopted by the Courts with
respect to arbitration. The business community as well as the legal fraternity has time and
again hinted at the need for the courts to re-look at the way arbitration is perceived to make it
an effective alternative remedy.

The Supreme Court has assumed a proactive role while dealing with ADR and went to the
extent of setting out the manner in which courts should approach/recommend the ADR
methods to litigants under Section 89.

BIBLIOGRAPHY
Books Referred:

 Arbitration and Conciliation Act (With ADR), 7th Edition, Central Law Publications
(2015)

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  P C Markanda, Naresh Markanda, and Rajesh Markanda, Law relating to Arbitration
and Conciliation, 8th Edition, LexisNexis Butterworths Wadhwa (2013)
 Saharay Madhusudan, Textbook on Arbitration & Conciliation with Alternative
Dispute Resolution, 2nd Edition, Universal Law Publications Co. Pvt. Ltd., Delhi
(2011)
 Henry J. Brown & Arthur L. Mariot, ADR- Principles and Practice, 2nd Edition,
Sweet & Maxwell, London (1997)

Articles Referred:

 Justice M. Jagannadha Rao, Concepts of Conciliation and Mediation and Their

Differences, also available at <http://lawcommissionofindia.nic.in/ adr_conf/ concepts
%20med%20rao%201.pdf>
 Dr. V. Nageswara Rao, Conciliation Proceedings under the Indian Arbitration
Conciliation Act of 1996 and CPC—An Overview, also available at
<http://lawcommissionofindia.nic.in/adr_conf/nageswara% 20rao10.pdf>
 Rohan Jhusiwala, Conciliation in India: An Overview, PSA, Issue VII, August 2010.
 Isha Modi, Conciliation-A Precursor to Arbitration, Indian Law Journal, also
available at <http://indialawjournal.com/volume1/issue_3/article _by_isha.html>
 Anil Malhotra and Ranjit Malhotra, Alternative Dispute Resolution in Indian Family
law – Realities, Practicalities and Necessities, also available at
<http://www.iaml.org>
 Mukul Mudgal, Conciliation: An Indian Perspective, II (2) Nyaya Kiran (April 2003).
 R.V. Raveendran, Section 89 CPC: Need for an Urgent Relook, 4 SCC Journal 23
(2007).

Websites Referred:

 <http://www.legalservicesindia.com/article/article/principles-&-procedure-of-
conciliation-under-arbitration-&-conciliation-act-1996-725-1.html>
 <http://www.icaindia.co.in/icanet/quterli/oct-dec2001/OCT4.htm>
 <http://indialawjournal.com/volume1/issue_3/article_by_isha.html>
 <http://lawcommissionofindia.nic.in/adr_conf/nageswara%20rao10.pdf>

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