Alternative Disputes

Resolution System
Civil Justice
•Civil Justice system is the substantive law machinery and
procedures for vindicating and defending civil claims
•Civil justice system machinery provides – Social Stability and
Economic Growth by-
1. Resolving Civil Disputes
2. Enforcement of legal rights
3. Protecting private and personal rights
Substantive Law and Adjective/Procedural
Law
•Substance Law determines the rights and liabilities of the
parties and
•Adjective Law provides machinery for enforcement of rights
and liabilities Prescribes – practice, procedure and
machinery
•Substantive Law – defines, creates or confer substantive
legal rights or legal status
•Adjective Law – Provides legal machinery for the
enforcement of legal rights and liabilities
Substantive Law and Adjective/Procedural
Law
•Procedural and Substantive Law are complimentary to each
other
•adjective law/procedural law is accessory to substantive law.
It puts life into substantive law by providing remedies
Tort
• Tort means a civil wrong which is not exclusively a breach of contract
or breach of trust (S2(m)-Limitation Act)
• It is a civil wrong for which the remedy is a common law action for
unliquidated damages and which is not exclusively the breach of a
contract or the breach of a trust or other merely equitable obligation
– Salmond
• Tortious liability arises from the breach of a duty primarily fixed by
the law; this duty is towards persons generally and its breach is
redressible by an action for unliquidated damages – Winfield
• It is an infringement of a right in rem of a private individual giving a
right of compensation at the suit of the injured part - Fraser
Role of Civil Court and Civil Law (Sec-9 CPC)
•Civil Law maps out the boundaries of social and economic
behavior
•Civil Courts resolve disputes when they arise – civil court
publicly reaffirm norms and behavioral standards for private
citizens, businesses and public bodies
•Civil Courts helps in bargain between strangers by a fixed
and standard legal framework
•Civil Courts quietly and significantly contribute to social and
economic welfare or wellbeing of the state
Section 9 CPC
•“The court shall have jurisdiction to try all suits of civil
nature excepting suits whose cognizance is either expressly
and implied barred”
•A suit of civil nature, if the principle question therein relates
to the determination of a civil right and enforcement
thereof.
•Private rights and liabilities of the parties are also included in
the definition of a suit of civil nature but political, social and
religious questions are not covered by that expression
Suit triable by Civil Courts
• A civil court has jurisdiction to try suit of two conditions are fulfilled –
1. The suit must of Civil Nature
2. The cognizance of such a suit should not have been barred
expressly or implied
Examples of Civil Nature
1. Suits relating to right to property
2. Suits relating to right to worship
3. Suits relating to taking out of religious procession
4. Suits relating to right to share in offerings
5. Suits for damages of civil wrong
6. Suits for specific performance of contract
7. Damages for breach of contract
 Examples of Civil Nature
8. Suits for specific reliefs
9. Suits for restitution of Conjugal Rights
10. Suits for dissolution of marriage
11. Suits for Rents
12. Suits for a right to franchise
13. Suits for a right to hereditary office
14. Suits against a wrongful dismissal from service and for
salary etc
Suits not of Civil Nature
1. Suits involving principally caste question
2. Suits involving purely religious rites or ceremonies
3. Suits for upholding mere dignity or honour
4. Suits for recovery of voluntary payments or offerings
5. Suits against expulsion from caste
Challenges of Civil courts
• Civil courts helps in maintaining orderly society where there are
rights and protections
• Civil courts delivers civil justice which is a public good
Fundamental Challenge of Civil courts is how to provide a
1. Modern Justice Delivery System
2. Efficient Justice Delivery System
3. Which delivers just outcomes by means of procedures which
are fair
4. Perceived by litigants and other courts as fair
5. Delivers Justice and enjoys public confidence
Threats to Civil Justice System
• Unstoppable burgeoning of criminal justice in an environment of
resource constraints
• Criminalization of Social and Economic activities
• Growing prison population leads to substantive increase in spending
of public money devoted to criminal justice system
• Rising cost of criminal justice system or criminal legal aid leads to a
squeeze on civil legal aid
• Civil Justice System is considered to be a private matter rather than
as public and socially important good
Ways to Improve Civil Legal System
• Self financing system of civil courts and which are not supported by
tax-payer money
• England introduced full-cost fee recovery civil justice system unlike
other common law system
• In self financing system the litigants pay for the building in which their
case is to be decided (judges and administrative staff are who support
the judiciary)
• Any surplus is send back to fill the gap of criminal justice and civil
courts
Origin of ADR
• A-51 clauses (c) & (d) of Indian Constitution –
• A 51 (c) foster respect for international law and treaty obligations in
the dealings of organized peoples with one another; and
• A 51 (d) encourage settlement of international disputes by
arbitration.
• Salem Advocate Case
• Afcons case Infrastructure Ltd
ADR?
• What is ADR?
• It is an umbrella term which is generally applied to range of
techniques for resolving disputes other than by means of traditional
court adjudication
• Like Mediation – early neutral evaluation
• Like Arbitration – neutral expert fact-finding
• Like Med-Arb, which is combination of Mediation and Arbitration
• Like Mini Trails, sort of trail but outside court where experts are the
judges but it is different from mediation as there are no neutral
mediators
Alternative?
• Alternative why?
• Because there are ways of resolving disputes that theoretically do not
require the involvement of any aspect of the legal system
• Here the approach of resolving dispute is that the dispute is a problem
capable of a solution, where eventual settlement can be incorporated
• There is no relationship between the type and magnitude of the remedy
that would be available under the law
• Focus here is to shift away from a focus on legal entitlements to a problem
solving frame of reference
• A critical feature of all forms of ADR is that they are dispute resolution
processes conducted in private and generally confidential to the parties
Salem Advocate Bar Association Case
(Section 89 CPC)
• Settlement of disputes outside the Court.—Where it appears to the Court
that there exist elements of a settlement which may be acceptable to the
parties, the Court shall formulate the terms of settlement and give them to
the parties for their observations and after receiving the observations of
the parties, the Court may reformulate the terms of a possible settlement
and refer the same for:—
1. Arbitration;
2. Conciliation;
3. Judicial settlement including settlement through Lok Adalat;
4. Mediation.
Section 89 CPC and Order X, Rule 1A
• Section 89 of CPC and Order X Rule 1A
• Section 89 uses word ‘shall’ in 1st part stipulating that the court shall
formulate terms of settlement
• The use of ‘may’ in the later part of section 89 only relates to the aspect of
reformulating the terms of a possible settlement
• Order X Rule 1A uses the word ‘shall’ court directing the parties to the suit
to opt either mode of settlements outside the court as specified in sub
section 1 of the section 89
• So here section 89 uses both the word “shall” and “may” where as Order X
rule 1A uses word “shall” but on harmonious reading of these provisions it
becomes clear that the use of the word ‘may’ in section 89 only governs
the aspect of reformulation of the terms of a possible settlement
Salem Advocate Bar Association –(II)
• Court held, the intention of the legislature behind enacting section 89
is that where it appears to the court that there exists an element of a
settlement which may be acceptable to the parties, they, at the
instance of the court, shall be made to apply their mind so as to opt
for one or the other of the four ADR methods mentioned in the section
and if the parties do not agree, the court shall refer them to one or
the other of the said modes.
Categories of Cases not suitable for ADR
• Representative Suits under order 1 rule 8 CPC which involves public
interest or interest of numerous persons who are parties before the
court
• Disputes relating to election to public offices
• Cases involving grant of authority by the court after enquiry as for
example suits for grant of probate or letters of administration
• Cases involving serious and specific allegation of fraud, fabrication of
documents, forgery, impersonation, coercion
• Cases requiring protection of courts, as for example, claims against
minors, deities and mentally challenged and suits for declaration of
title against government
• Case involving prosecution for criminal offences
Categories of Cases suitable for ADR
• All cases relating to trade, commerce and contracts
• All cases arising from strained or soured relationships
• All cases where there is a need for continuation of the pre-exisiting
relationship in spite of the disputes
• All cases relating to tortious liability
• All consumer disputes
Cases related to trade commerce and
contracts
• Disputes arising out of contracts
• Disputes relating to specific performance
• Disputes between suppliers and customers
• Disputes between bankers and customers
• Disputes between developers/builders and customers
• Disputes between landlords and tenants/licensor and licensees
• Disputes between insurers and insured
Cases arising from strained relationship
• Disputes related to matrimonial causes, maintenance, custody of
children
• Disputes relating to partition/division among family
members/co-parceners/co-owners
• Disputes related to partnership among partners
Cases where there is a need for continuation of
pre-existing relationship inspite of the disputes
• Disputes between neighbors (easement, encroachment, nuisance)
• Disputes between employer and employees
• Disputes among members of societies/association/apartment owners
Cases related to tortious liability and
consumer disputes
• Claims for compensation in motor accidents/other accidents
• Disputes where a trader/supplier/manufacturer/service provider is
keen to maintain his business/professional reputation and credibility
or product popularity
Afcon Infrastructure Ltd and Anr. V. Cherian
Varkey Construction Co. (P) Ltd. And Ors
2010
• The general scope of section 89 of CPC and the question whether the
said section empowers the court to refer the parties to a suit to
arbitration without the consent of both parties, arise for
consideration in this case
• The Supreme Court clarified the legal position more aptly by stating
that:
‘Section 89 starts with the words “where it appears to the court that
there exist elements of a settlement”. This clearly shows that cases
which are not suited for ADR process should not be referred under
Section 89 of the Code.
Afcon Case
• The court has to form an opinion that a case is one that is capable of being
referred to and settled through ADR process. Having regard to the tenor of the
provisions of Rule 1-A of Order 10 of the Code, the civil court should invariably
refer cases to ADR process. Only in certain recognized excluded categories of
cases it may choose not to refer to an ADR process. Where the case is unsuited
for reference to any of the ADR processes, the court will have to briefly record
the reasons for not resorting to any of the settlement procedures prescribed
under Section 89 of the Code. Therefore, having a hearing after completion of
pleadings, to consider recourse to ADR process under Section 89 of the Code, is
mandatory. But actual reference to an ADR process in all cases is not mandatory.
Where the case falls under an excluded category, there need not be reference to
ADR process. In all other cases reference to ADR process is a must’.
• Though, The Superme Court accepted that in most of the cases references to ADR
process is must but it also mentioned the excluded category which are not to be
referred for ADR Process. A court has no power, authority or jurisdiction to refer
unwilling parties to arbitration if there is no arbitration agreement
Afcon Case
• It should not be overlooked that even though section 89 mandates
courts to refer pending suits to any of the several alternative dispute
resolution processes mentioned therein, there cannot be a reference
to arbitration even under section 89 CPC, unless there is a mutual
consent of all parties for such reference.
• Therefore, where there is no pre-existing arbitration agreement
between the parties, the consent of all the parties to the suit will be
necessary for referring the subject matter of the suit to arbitration
under section 89 of the code
• A civil court exercising power under section 89 cannot refer the suit
to arbitration unless all the parties to the suit agree for such
reference
Mediation for Private Dispute
• Access to the courts is difficult for most people. There are no public
funds for ordinary citizens to seek to protect their rights or enforce
the obligations of others, or to make good their entitlement
• It is impossible to make the process much quicker or judicial
determination any less unpleasant
• In any case, the outcome is always unpredictable if not capricious
• Disputes are at bottom a clash of interests which do not justify the
imposition of judicial authority and can generally be settled
• Sensible people do not want to litigate
Arbitration as ADR
• Where there is no pre-existing arbitration agreement between the
parties, the consent of all the parties to the suit will be necessary for
referring the subject matter of the suit to arbitration under section 89
of the code
• It should not be overlooked that even though section 89 mandates
courts to refer pending suits to any of the several alternative dispute
resolution processes mentioned therein, there cannot be a reference
to arbitration even under section 89 CPC, unless there is a mutual
consent of all parties for such reference.
Conciliation as ADR
• Conciliation is non Adjudicatory process governed by Arbitration and
Conciliation Act. (Objectivity, fairness and justice)
• There can be a valid reference to conciliation only if both the parties
to the dispute agree to have negotiations with the help of third party
or parties either by an agreement or by the process of invitation and
acceptance provided under section 62 of the Act followed by
appointment of conciliator as provided by section 64 of the Act.
• If both the parties do not agree for conciliation there can be no
conciliation. The court cannot refer the parties to conciliation under
section 89 in absence of consent of all the parties
Conciliation
• In Conciliation, when a matter is referred to conciliation, the matter
does not go out of the stream of court process permanently.
• If there is no settlement, the matter is returned to the court for
framing issues and proceeding with the trail.
Lok Adalat, Mediation and Judicial
Settlement
• If the parties are not agreeable for either arbitration or conciliation,
both of which require consent of all parties, the court has to consider
which of the other three ADR processes, which do not require the
consent of the parties for reference, is suitable and appropriate to
refer the parties to such ADR process.
• If mediation process is not available (for want of a mediation centre
or qualified mediators), necessarily the court will have to choose
between reference to Lok Adalat or judicial settlement.
Three ADR processes
• If the suit is complicated and lengthy, mediation will be the
recognized choice.
• If the suit is not complicated and the disputes are easily sortable or
could be settled by applying clear cut legal principles, Lok Adalat will
be the preferred choice
• If the court feels that a suggestion or guidance by a judge would be
appropriate, it can refer it to another judge for dispute resolution.
ADR – Meditation
• A basic definition of Mediation is that it is a process in which a neutral
third party assists disputing parties to reach a consensual solution to
their disputes
• In negotiation, it is carried out between lawyers on behalf of their
clients
• In Facilitative meditation, the mediator has no authority to impose a
solution on the parties and the aim of the mediation is to achieve a
settlement or atleast a clarification of the issue in dispute
• Mediation is often said to produce a win-win situation rather than a
win/lose situation as in court adjudication
Mediation – A Substitute for Judicial
Determination
• Mediation provides “SATISFACTION”, it is a powerful tool for satisfying
needs of the clients and reduce conflicts for parties to individual disputes
• “SOCIAL JUSTICE” mediation offers an effective means of organizing
individuals around common interests and thereby building stronger
community ties and structures- by reframing issues and focusing on
common interests
• “TRANSFORMATION” – Mediation provides capacity to transform the
quality of conflict interaction itself, mediation is non-judgmental it allows
people to explain and humanize themselves to one another
• “OPPRESSION” this presents a negative image about mediation as it
increases the power of the state over the individuals and the power of the
strong over the weak. It can extend the control of the state into previously
private areas of social conduct and magnify the power imbalance and open
the door to coercion and manipulation by the stronger party.
Questions related to Mediation
• For which kinds of cases were scarce judicial resources being saved?
• Saving judiciary for high value interesting commercial cases?
• Lord Woolf’s conviction that the public should try mediation and
make rules where ADR is not to provide direct incentives for parties
to settle disputes by mediation but to impose a future threat of
financial penalty on a party who might have unreasonably refused to
offer of mediation
• What has government policy been in relation to ADR in Civil Justice?
• What we have learned about mediation from the various court based
schemes? Compulsion
• What we have learned about motivation to mediate? Cost, delay and
discomfort
• What we have learned about time and cost? Avoid trails or limit the
time of settlement and trail
• What about customer satisfaction? Volunteer to enter and full
involvement
• What we have learned about outcome, is that the readiness – better
outcome when parties enter voluntarily
• What, then, can we conclude about the contribution of mediation to
access to justice? Increases access to justice, promotes harmony and
peace
• If mediation does not increase access to the courts and does not
increase access to substantive justice between the legal merits of
cases are not relevant to the process of mediation, then what does it
do? Mediation provides a responsive and individual solution to legal
disputes which does no worse harm to the parties than non
resolution of the dispute
Role of Judiciary in promoting ADR
• Crises in Civil Justice and shift away from trails and adjudication is the
active part of some judiciary in England and other parts of world
• Judith Resnik – “Judges may press for settlement because they
themselves doubt their own capacities to find information sufficient
to call “fact” and are painfully aware of the plasticity of law.”
• A central plank of government policy on civil justice system over the
past years has been to reduce the number of cases coming to civil
courts and to divert civil and commercial disputes into private
litigation
• Emergence of ADR is due to - Morally equivalent clashing interests
are too complex for courts to decide, that there are no facts that can
be found in court and therefore no substance to which the coercive
power of the state can be legitimately applied
Problems in a Legal Culture dominated by
Rights Discourse
• Most disputes or legal problems arise from the existence of a right or
an obligation
• Lift maintenance and Mother - Example
• Seller’s obligation under the contract to ensure that the lift is in
working condition and mother’s right as a consumer to have a
working lift
• Calls – threats – to no avail
• A credible threat could be invoking the power of the courts to direct
the company to comply with their obligations – can there be
mediation without threat ?
• “Justice is conceived of as the remedy that the substantive law
offers”
• The peace language of mediation has nothing to do with substantive
justice rather it is about closure and psychic healing
• Mediation is not about retribution or equity, it is about letting go of a
grievance or wrong in order to live in peace – it may relevant in case
of nations (disputes of nations) or inevitable in disputes following
relationship breakdown
• But it has no resonance in case of lift and mother problem
Where is ADR Policy going and where should
it be going?
• In England people are encouraged to go for mediate, in small claims
to mediate over telephone rather going to court and meeting judge in
the chamber
• There is a continued judicial pressure to mediate and a renewal
arguments for mandatory mediation – mandatory mediation along
the lines of the Canadian system
• Role of Judges and Policy Makers – facilitating mediation and
educating people about the range of dispute resolution options
Policy on Mediation
• Who needs mediation and for what?
• Is it to reduce expenditure on the courts?
• It it to provide more access to justice?
• Is it simply access to a quicker settlement?
• Or is it about access to harmony and moral growth?
Attorney General (US) – when minster in LCD said “the question that
court should be asking is not whether a case is suitable for diversion
to ADR but why a case is though suitable for adjudication”
• Unlike arbitration or conciliation, there is no specific statute that
deals with mediation in India. Therefore, unlike other
statutorily-recognized forms of non-binding alternative dispute
resolution (being conciliation), confidentiality in mediation
proceedings is not specifically provided for in any statute in India.
• SC in Moti Ram (D) Tr. LRs and Anr. Vs. Ashok Kumar and Anr,
held that mediation proceedings are confidential in nature. The said
judgment takes a forward step in relation to court-directed mediation
and asserts that such mediation proceedings are confidential in nature
Facts of the Case
• The Supreme Court of India had referred a matter for mediation to
the Mediation Centre at Chandigarh. The mediator laid the report of
mediation proceedings before the Supreme Court. After perusing the
report, the Supreme court observed that mediation proceedings are
totally confidential proceedings unlike proceedings in an open court.
The Court held that:
• in the event mediation is successful, the mediator should simply send
the executed agreement between the parties to the court.
• Significantly, the Court noted that in the event the proceedings that
transpired during mediation were disclosed, it would destroy the
confidentiality of the mediation process. The Court further directed
that a copy of the order be sent to the Supreme Court Mediation
Centre and the Mediation Centres in all the High Courts and District
Courts in the country.