A D R D: Lternative Ispute Esolution Issertation

ALTERNATIVE DISPUTE RESOLUTION
DISSERTATION
FACULTY OF LAW
JAMIA MILLIA ISLAMIA
SUBMITTED TO-
ADVOCATE MADHU SAINI
SUBMITTED BY-
Mohd Yasin
Sec- ‘A’
Roll No.- 20
7th Semester, B.A.LL.B. (Hons.)
CLINICAL COURSE – I
DECEMBER 2018
ACKNOWLEDGMENT
I, sincerely and gratefully acknowledge my primary obligation towards my supervisor

Advocate Madhu Saini, who through her wisdom, experience and sharp legal acumen has
constantly guided me in this research so as to enable me to bring it to its logical conclusion. I
also wholeheartedly utilize this opportunity for expressing my deep regards, gratitude and
admiration for him and I am extremely thankful for the patience, kindness and understanding
shown by him.
I also thank and express my gratitude to my friends, colleagues, relatives and all members of
the legal fraternity who have given their extremely valuable and scholarly inputs and have
extended their earnest support and assistance for the successful completion of this work.
MOHD YASIN
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TABLE OF CONTENTS
LIST OF CASES…………………………………………………………………. vii

LIST OF ABBREVIATIONS……………………………………………………….xiv
CHAPTER- I
INTRODUCTION
INTRODUCTION…………………………………………………………………..1
OBJECTIVES OF THE STUDY………………………………………………………2
RESEARCH METHODOLOGY………………………………………………………3
HYPOTHESIS……………………………………………………………………...4
RESEARCH QUESTIONS…………………………………………………………...5
GENESIS OF THE RESEARCH……………………………………………………...6
CHAPTER- II
WHAT IS ALTERNATIVE DISPUTE RESOLUTION?
2.1. INTRODUCTION………………………………………………………………8
2.2. WHY TO RESORT TO ALTERNATIVE DISPUTE RESOLUTION?.............................9
2.3. OBJECTIVE OF ENACTMENT OF SECTION 89 CPC …………………………..10
2.4. FORMULATING AND REFORMULATING THE TERMS OF SETTLEMENT UNDER
SECTION 89 CPC………………………………………………………………..11
2.5. SECTION 89 CPC - IT’S MANDATORY NATURE AND PROCEDURE FOR
REFERRAL………………………………………………………………………13
2.6. THE ROLE OF REFERRAL JUDGES…………………………………………...14

2.7. WHY TO RESORT TO ADR?...........................................................................15
2.8. AN ALTERNATIVE MECHANISM TO DEAL WITH CRIMINAL CASES………….22
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CHAPTER III
ADR MECHANISMS AVAILABLE UNDER SECTION 89 CPC
3.1 ARBITRATION……………………………………………………………….24
3.2 CONCILIATION………………………………………………………………25
3.3. LOK ADALATS……………………………………………………………...26
3.4 MEDIATION…………………………………………………………………27
3.5 JUDICIAL SETTLEMENT……………………………………………………...28
3.5.1 Judicial Settlement in India……………………………………………………..29
3.5.2 Judicial Settlement – Post Afcons Judgment…………………………………..31
3.5.3. Judicial Settlement – Need for Outlining Procedure…………………………..32
3.6. EFFICACY OF SECTION 89 CPC IN DELHI…………………………………...32
CHAPTER IV
IMPORTANCE OF ADR
IMPORTANCE OF ADR…………………………………………………………..35
4.1. PENDENCY OF CASES IN THE INDIAN COURT………………………….. ………..37
4.2 NEED FOR ALTERNATIVE DISPUTE METHODS……………………………….37
4.3 LEGISLATIONS RELATING TO ADR IN INDIA………………………………...38
4.4 DISADVANTAGE OF LITIGATION…………………………………………….39
4.5. DEVELOPMENT OF TECHNOLOGY AND ADVANCEMENT OF SOCIETY AT
PRESENT TIME…………………………………………………………………..40
4.6. METHODS OF ALTERNATIVE DISPUTE RESOLUTION AND ITS MERITS AND
DEMERITS………………………………………………………………………42
CHAPTER V
ARBITRATION LAW IN INDIA
5.1.
INTRODUCTION……………………………………………………………........44
5.2. HISTORICAL BACKGROUND OF ARBITRATION IN INDIA……………………..45
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5.3. TYPES OF ARBITRATION……………………………………………………46
5.3.1 Domestic, Foreign and International Arbitration: ………………………………46
5.3.2 Institutional Arbitration………………………………………………………...47
5.4. THE ARBITRATION PROCESS………………………………………………..47
5.5. APPOINTMENT OF ARBITRATOR(S)…………………………………………48
5.6. INTERIM MEASURES IN ARBITRATION………………………………………49
5.7. ARBITRAL PROCEEDINGS…………………………………………………...49
5.8. ARBITRAL AWARD…………………………………………………………50
5.9. SETTING ASIDE OF ARBITRAL AWARD……………………………………..50
5.10. ENFORCEMENT OF ARBITRAL AWARD…………………………………….51
5.11. ADVANTAGES AND MERITS OF ARBITRATION…………………………….51
5.12. ENFORCEMENT OF ARBITRAL AWARD…………………………………….51
5.13. ADVANTAGES AND MERITS OF ARBITRATION…………………………….51
5.13.1 Privacy and Confidentiality……………………………… …………………...51
5.13.2. Convenience of Parties and Flexibility of Procedure………………………….52
5.13.3. Liberty to choose Arbitrator…………………………………………………..52
5.13.4. Arbitration is Potentially Expeditious………………………………………...53
5.13.5. Finality of Awards……………………………………………………………53
5.13.6. Extensive Enforceability of Arbitral Awards…………………………. ……..54
5.14. JUDICIAL INTERVENTIONS IN THE ARBITRAL PROCESS……………………54
CHAPTER VI
PRACTICAL TRAINING
6.1. REPORT ON NATIONAL SEMINAR ON “EMERGING TRENDS IN ALTERNATIVE
DISPUTE RESOLUTION IN INDIA” ………………………………………………..59
6.2. WORK EXPERIENCE………………………………………………………...61
6.2.1. Delhi High Court Arbitration Centre (DAC)…………………………………..61
6.2.2. Arbitration Cases in Courts at Delhi……………………………………………62
6.2.3. Indian Council of Arbitration (ICA)……………………………………………63
6.2.4. The International Centre for Alternative Dispute Resolution (ICADR)………..64
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CHAPTER VII
COMMERCIAL ARBITRATION
7.1. INTRODUCTION……………………………………………………………..66
7.2. GROWTH OF INTERNATIONAL COMMERCIAL ARBITRATION…………………68
7.3. THE GIGANTIC GROWTH OF INTERNATIONAL COMMERCIAL ARBITRATION:
1950 TO THE PRESENT…………………………………………………………..72
7.4. THE NEW YORK CONFERENCE AND THE NEW YORK CONVENTION…………73
7.5. UNITED NATIONS COMMISSIONS ON INTERNATIONAL TRADE LAW
ARBITRATION RULES (UNCITRAL AR)………………………………………..75
7.6. INTERNATIONAL COMMERCIAL ARBITRATION IN INDIA…………………….79
7.7. COMPARATIVE ANALYSIS OF MODEL LAW WITH ARBITRATION AND
CONCILIATION ACT 1996……………………………………………………….83

7.7.1. Object and Nature of Disputes…………………………………………………83
7.7.2. The Adversarial Procedure……………………………………………………..85
7.7.3. Suspension and Interruption of the Arbitration Proceedings…………………..86
7.8. CONCLUSION……………………………………………………………….86
CHAPTER VIII
EPILOGUE
EPILOGUE……………………………………………………………………….88
BIBLIOGRAPHY…………………………………………………………………90
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LIST OF CASES
• Ahmed Pasha v. Gulnaz Jabeen, AIR 2001 Karnataka 412.
• Abdul Hassan and National Legal Services Authority v. Delhi Vidyut Board, AIR 1999
Delhi 88.
• Adhunik Steels Ltd. v. Orissa Manganese and Minerals Pvt. Ltd., AIR 2007 SC 2563.
• Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd., JT 2010 (7) SC
616.
• Agarwal Engineering Co. v. Technoimpex Hungarian Machine Industries, Foreign
Trade Co., AIR 1977 SC 2122.
• Alcove Industries Ltd. v. Oriental Structural Engineers Ltd., (2008) Arb.LR 393.
• All India Judges Association v. Union of India, (2002) 4 SCC 247.
• Alok Mishra v. Garima Mishra, 2009 (2) R.C.R.(Civil) 263.
• Ambika Kumary v. State of Kerala, AIR 2012 Kerala 16.
• Arosan Enterprises Ltd. v. Union of India, AIR 1999 SC 3804.
• Ashok Traders v. Gurmukh Dass Saluja, AIR 2004 SC 1433.
• Aviral Bhatla v. Bhawna Bhatla, 2009 (3) S.C.C. 448.
• B.P. Moideen Sevamandir v. A.M. Kutty Hassan, 2009 (2) S.C.C. 198.
• B.S. Krishna Murthy v. B.S. Nagaraj, AIR 2011 SC 784
• Balwinder Kaur v. Hardeep Singh, AIR 1998 SC 764.
• Basheer v. Kerala State Housing Board, AIR 2005 Kerala 64.
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• Bawa Masala Co. v. Bawa Masala Co. Pvt. Ltd, AIR 2007 Delhi 284.
• Bihar State Mineral Development Corporation v. Encon Builders (India) Pvt. Ltd.,
(2003) 7 SCC 118.
• Branch Manager, Tata AIG General Insurance Co. Ltd. v. Bandana Devi, W.P.(S) No.
2557 of 2008 decided on 25.02.2010 by the High Court of Jharkhand.
• Byram Pestonji Gariwala v. Union Bank of India, AIR 1991 SC 2234.
• Centrotrade Minerals & Metal Inc. v. Hindustan Copper Ltd., 2006 (2) Arb. LR 547
(SC).
• Commissioner, Karnataka State Public Instruction (Education), Bangalore v. Nirupadi
Virbhadrappa Shiva Simpi, AIR 2001 Karnataka 504.
• D.D.A v. Happy Himalaya Construction Co., 2009 (1) A.D. (Delhi) 383 (DB).
• DDA v. R.S. Sharma and Co., (2008) 13 SCC 80.
• Delta Construction Systems Ltd. v. Narmada Cement Company Ltd, 2002 (2) Arb. LR
47.
• Dinesh Kumar v. Balbir Singh, AIR 2008 Himachal Pradesh 59.
• Dolphin Drilling Ltd. v. Oil & Natural Gas Corp.Ltd., (2010) 3 SCC 267.
• Eastern Central Railway v. Ashok Kumar Verma, 2009 (4) J.L.J.R.129.
• Food Corporation of India v. Jogindarlal Mohindarpal, 1989 (2) SCC 347.
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• Fuerst Day Lawson Ltd., M/s. v. Jindal Exports Ltd., AIR 2001 SC 2293.
• GE Countrywide Consumer Financial Services Ltd. v. Surjit Singh Bhatia, 129 (2006)
DLT 393.
• Gulati Construction Co. v. Betwa River Board, AIR 1984 Delhi 299.
• Haresh Dayaram Thakur v. State of Maharashtra, AIR 2000 SC 2281.
• Inter Globe Aviation Ltd. v. N. Satchidanand, (2011) 7 SCC 463.
• Jagdish Chander v. Ramesh Chander, 2007 (6) SCC 719.
• Jagraj Singh v. Birpal Kaur, A.I.R. 2007 SC 2083.
• Jagson Airlines Ltd. v. Bannari Amman Exports (P) Ltd., (2003) 104 DLT 957.
• Janson v. Driefontein Consolidated Gold Mines Ltd., (1902) AC 484.
• K.K. Modi v. K.N. Modi, 1998 (3) SCC 573.
• K.N. Govindan Kutty Menon v. C.D. Shaji, (2012) 2 SCC 51.
• Kanak v. U.P. Avas Evam Vikas Parishad, AIR 2003 SC 3894.
• Kinetic Capital Finance Ltd. v. Anil Kumar Misra, 2000 (56) DRJ 774.
• Konkan Railway Corpn. Ltd. v. Rani Construction Pvt. Ltd., (2002) 2 SCC 388.
• Konkan Railway Corpn. Ltd. v. Mehul Construction Co., (2000) 7 SCC 201.
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L
• Life Insurance Corporation of India v. Suresh Kumar, 2011 (4) SCALE 137.
• M. I. Ibrahim Kutty v. Indian Overseas Bank, AIR 2005 Madras 335.
• M.D. Army Welfare Housing Organization v. Sumangal Services Pvt. Ltd., AIR 2004
1344.
• M.M.T.C. Ltd. v. Sterlite Industries (I) Pvt. Ltd., AIR 1997 SC 605.
• Mahagun India Pvt. Ltd. v. Infiniti Retail Limited, ARB. P. 364/2010 decided on
20.05.2011 (Delhi High Court).
• Maharaj Singh v. Vulcan Insurance Company Ltd., AIR 1976 Delhi 182.
• Merlin Alias Sherly Augustin v. Yesudas, AIR 2007 Kerala 199.
• Modern Maintenance Services v. All India Fine Arts and Crafts Society,
MANU/DE/3127/2009.
• Moni Mathai v. The Federal Bank Limited, AIR 2003 Kerala 164. Moti Ram v. Ashok
Kumar, (2011) 1 SCC 466.
• Mysore Cements Ltd. v. Svedala Barmac Ltd., (2003) 10 SCC 375.
• N. Radhakrishnan v. Maestro Engineers, (2010) 1 SCC 72.
• Narayan Prasad Lohiya v. Nikunj Kumar Lohiya, AIR 2002 SC 1139.
• Naresh Chand Jain v. K.M. Tayal, MANU/DE/2014/2012.
• National Agricultural Coop. Marketing Federation India Ltd. v. Gains Trading Ltd.,
(2007) 5 SCC 692.
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• National Aluminum Co. Ltd. v. M/s. Pressteel & Fabrications Pvt. Ltd., 2004(1) S.C.C.
540.
• National Highways Authority of India v. Bumihiway DDB Ltd. (JV), 2006 (10) SCC
763
• National Insurance Co. Ltd. v. M/s. Boghara Polyfab Pvt. Ltd., AIR 2009 SC 170.
• New India Assurance Company Ltd. v. Ponnamma Thomas, AIR 2008 Kerala 4 (DB).
• New India Assurance Company Ltd. v. Sabharathanam, AIR 2009 Kerala 71.
• Oil & Natural Gas Corporation Ltd. v. SAW Pipes Ltd, 2003 (5) S.C.C. 705.
• ONGC Ltd. v. Garware Shipping Corporation Ltd., (2007) 13 SCC 434.
• P. Anand Gajapathi Raju v. P.V.G. Raju, (2000) 4 SCC 539.
• P. T. Thomas v. Thomas Job, AIR 2005 SC 3575.
• Paras Holidays Pvt. Ltd. v. State of Haryana, 2008(4) R.C.R. (Civil) 367.
• Parmod v. Jagbir Singh, 2003 (2) R.C.R. (Civil) 184.
• Pu Lalkanglova Sailo v. Pi Ngurthantluangi Sailo, AIR 2009 Gauhati 39.
• Punjab National Bank v. Lakshmichand Rah, AIR 2000 Madhya Pradesh 301.
• Rahisuddin v. Gambit Leasing & Finance, MANU/DE/033/2010.
• Raipur Development Authority v. Chokhamal Contractors, AIR 1990 SC 1426.
• Rajan Kakar v. Vijaya Bank, AIR 2008 Delhi 17.
• Ram Niwas v. D.D.A., AIR 2007 Delhi 115.
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• Rita Kumari Shahu @ Saha v. Shyam Sundar Shahu, 2007 (2) ICC 648.
• S.B.P. & Co. v. M/s Patel Engineering Ltd., 2005 (8) S.C.C. 618.
• S.N. Pandey v. Union of India, Writ Petition (C) No. 543/2002 decided on
28.10.2002(SC).
• Salem Advocate Bar Association v. Union of India (I), AIR 2003 SC 189.
• Salem Advocates Bar Association v. Union of India (II), AIR 2005 SC 3353.
• Sardar Singh v. Krishna Devi, 1994 (4) SCC 18.
• Sau. Pushpa Suresh Bhutada v. Subhash Bansilal Maheshwari, AIR 2002 Bombay 126.
• Security Printing and Minting Corporation of India Ltd. v. Gandhi Industrial
Corporation, (2007) 13 SCC 236.
• Shashi Prateek v. Charan Singh Verma, AIR 2009 Allahabad 109.
• Sir Syed Memorial Educational Society v. Mohmmad Usman Wani, AIR 2000 J&K 67.
• Sitanna v. Viranna, AIR 1934 PC 105.
• State Bank of Indore v. Balaji Traders, 2003(3) R.C.R.(Civil) 339.
• State of Arunachal Pradesh v. Subhash Projects & Marketing Ltd., (2007) 1 Arb.LR
564.
• State of Bombay v. K.P. Krishnan, A.I.R. 1960 SC 1223.
• State of Punjab v. Ganpat Raj, AIR 2006 SC 3089.
• Subhash Narasappa Mangrule v. Sidramappa Jagdevappa Unnad, 2009 (3) Mh. L.J.
857.
• Sundaram Finance Ltd. v. NEPC Ltd. (1999) 2 SCC 479.
• Surat Singh v. State of Himachal Pradesh, (2003) 3 Arb.L.R. 606 (DB).
• Surinder Kaur v. Pritam Singh, 154 (2008) DLT 598.
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T
• Tamil Nadu Electricity Board v. Bridge Tunnel Construction, AIR 1997 SC 1376.
• TVC India Pvt. Ltd. v. ABN Amro Bank N.V, 2008 (3) A.D.(Delhi) 550.
• Union of India v. Ananto, AIR 2007 SC 1561.
• Union of India v. M/s. Singh Builders Syndicate, 2009 (4) S.C.C. 523.
• Union of India v. Popular Construction Co., AIR 2001 SC 4010.
• United India Insurance Co. Ltd. v. Ajay Sinha, 2008 (7) S.C.C. 454.
• United India Insurance Co. Ltd. v. Master Imran Khan, AIR 2008 Delhi 26.
• Valarmathi Oil Industries v. Saradhi Ginning Factory, AIR 2009 Madras 180.
• Vallabh Das Gupta v. Geeta Bai, 2004(4) R.C.R. (Civil) 85.
• Visa International Ltd. v. Continental Resources (USA) Ltd., AIR 2009 SC 1366.
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LIST OF ABBREVIATIONS
AAA American Arbitration Association
AALCC Asian-African Legal Consultative Committee
ADJ Additional District Judge
ADR Alternative Dispute Resolution
CMEA Council for Mutual Economic Assistance Countries
CPC Code of Civil Procedure
DJ District Judge
ECAFE United Nations Economic Commission for Asia and the

Far East
ECE United Nations Economic Commission for Europe
ECOSOC United Nations’ Economic and Social Council
GAFTA Grain and Feed Trade Association
GC Geneva Convention
GP Geneva Protocol on Arbitration Clauses in Commercial

Matters
ICA International Commercial Arbitration
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ICC International Chamber of Commerce
ICJ International Court of Justice
ICSID International Centre for the Settlement of Investment

Disputes
IUSCT Iran-US Claims Tribunal
LCIA London Court of International Arbitration
ML Model Law
NYC New York Convention
PC Panama Convention
PCA Permanent Court of Arbitration
SC Supreme Court
SCC Supreme Court Cases
UNCITRAL United Nations Commission on International Trade Law
UNCITRAL AR United Nations Commission on International Trade

Law Arbitration Rules
UNIDROIT International Institute for the Unification of Private Law
WIPO World Intellectual Property Organization
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WTO World Trade Organisation
YBCA Yearbook Commercial Arbitration
YaleJIntlL Yale Journal of International Law YaleLJ Yale Law

Journal
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CHAPTER - I
INTRODUCTION
Alternative Dispute Resolution or ADR refers to an assortment of dispute resolution procedures

that primarily serve as alternatives to litigation1 and are generally conducted with the assistance
of a neutral and independent third party. The basic rationale of ADR as the expression itself
implies is to resolve disputes outside the conventional judicial system and therefore during the
entire process of appreciation of ADR, the baseline remains to be litigation. ADR procedures
have thus emerged as distinct alternatives to the courts established under the writ of the state
and hence the epithet ‘alternative’ has been coined.2 ADR techniques are extra judicial in
character and can be used in almost all contentious matters which are capable of being resolved,
under law by agreement between the parties.3
ADR processes are conducted with the assistance of an ADR neutral, who is an unbiased,
independent and impartial third party not connected with the dispute, and helps the disputant
parties to resolve their disputes by the use of the well-established dispute resolution processes.4
The non-adjudicatory ADR processes are those dispute resolution procedures falling within the
umbrella of ADR, which, do not involve any final and binding determination of factual or legal
issues of the dispute by the ADR neutral, but involve exploration of a mutually acceptable
solution with the cooperation of the parties who are assisted by the ADR neutral. The non-
adjudicatory ADR processes are the true exponents of the philosophy of ADR, that a dispute
is a problem to be solved together rather that a combat to be won.
One of the basic principles of ADR is cooperative problem solving.5 The ultimate objective is
to resolve the dispute by arriving at a compromise with the participation and collaborative
1
Bryan A. Garner (Ed.), Black’s Law Dictionary 112-113 (West Publishing Company, St. Paul, Minnesota, 8th
Edn., 2004)
2
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 Arunvir Vashista,
“Emerging Trends in ADR as Dispute Resolving Techniques”, XLIX ICA Arbitration Quarterly 31 (January –
March 2011).
3
P.C. Rao, “Alternatives to Litigation in India”, in P.C. Rao and William Sheffield (Eds.), Alternative Dispute
Resolution 24 (Universal Law Publishing Company Pvt. Ltd., Delhi, 1997).
4
Ashwanie Kumar Bansal, Arbitration and ADR 17 (Universal Law Publishing Co. Pvt. Ltd., Delhi, 2005).
5
S.B. Sinha, “Courts and Alternatives” available at: www.delhimediationcentre.nic.in (last visited on
05.09.2010). See also Ujwala Shinde, “Challenges Faced by ADR System in India”, 4 (2) The Indian Arbitrator
6 (February 2012).
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effort of the parties, facilitated by the ADR neutral. ADR methods aim at blunting the
adversarial attitude and encouraging more openness and better communication between the
parties leading to a mutually acceptable resolution.6 In that sense ADR methods are definitely
more cooperative and less competitive than adversarial litigation.7 The ADR methodology
focuses on purging the adversarial constituent from the dispute resolution process, steering the
parties to appreciate their mutual interests, dissuading them from adopting rigid positions and
persuading them towards a negotiated settlement. The parties control the dispute resolution
process as well as the outcome of the process and they themselves are responsible for finding
an effective, practical and acceptable solution to the dispute.8 The emphasis in ADR, which is
informal and flexible, is therefore on "helping the parties to help themselves".9
OBJECTIVES OF THE STUDY
The objectives of this study are generally to explore, examine, ascertain, and analyze the
concept, law and efficacy of ADR as a mechanism for expeditious and economical resolution
of disputes and more specifically of four individual ADR processes namely mediation,
conciliation, lok adalats & permanent lok adalats and arbitration with reference to Delhi. The
specific objectives of this study are as under:
(i) To explore, discuss and analyze the nature, scope and concept of ADR and the different
individual ADR procedures.
(ii) To explore, examine and analyze the reasons for the advent and growth of ADR in India.
(iii) To examine and analyze the law with respect to ADR and more specifically with respect
to mediation, conciliation, lok adalats & permanent lok adalats and arbitration in India.
6
Alexander Bevan, Alternative Dispute Resolution 2 (Sweet and Maxwell, London, 1992); ADR methods are in
fact participatory solution finding processes. See Law Commission of India, 222nd Report, Need for Justice-
dispensation through ADR, etc. (2009).
7
9 S.N.P. Sinha and P.N. Mishra, “A Dire Need of Alternative Dispute Resolution System in a Developing
Country like India”, XXXI (3 & 4) Indian Bar Review 297 (2004).
8
Michael Tsur, “ADR — Appropriate Disaster Recovery”, 9 Cardozo J. Conflict Resol. 371 (2008).
9
K.S. Chauhan, “Alternative Dispute Resolution in India”, available at: http://icadr.ap.nic. in/articles/articles.html
(last visited on 08.01.2009). In fact, party autonomy is the fundamental principle of ADR. See Dushyant Dave,
“Alternative Dispute Resolution Mechanism in India”, XLII (3 & 4) ICA Arbitration Quarterly 22 (October-
December 2007 & January – March 2008).
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(iv) To examine and analyze the practices and procedures with respect to individual ADR
procedures namely mediation, conciliation, lok adalats & permanent lok adalats and arbitration
in Delhi.
(v) To ascertain, examine and analyze the framework and avenues for implementation of
individual ADR procedures namely mediation, conciliation, lok adalats & permanent lok
adalats and arbitration in Delhi.
(vi) To examine, discuss and analyze the utility and merits of ADR and more specifically of
mediation, conciliation, lok adalats & permanent lok adalats and arbitration as ADR
mechanisms with reference to Delhi.
(vii) To examine, discuss and analyze the issues pertaining to individual ADR procedures
namely mediation, conciliation, lok adalats & permanent lok adalats and arbitration with
reference to Delhi.
(viii) To look for the causes for the limitations and shortcomings of individual ADR procedures
namely mediation, conciliation, lok adalats & permanent lok adalats and arbitration with
reference to Delhi.
(ix) To examine, analyze and demonstrate the utility, efficacy and success of ADR and
individual ADR procedures namely mediation, conciliation, lok adalats & permanent lok
adalats and arbitration with reference to Delhi.
(x) To formulate plausible remedial measures for overcoming the shortcomings, if any in this
framework and to offer suggestions for the better and more effective implementation as well
as progress and development of ADR and individual ADR procedures namely mediation,
conciliation, lok adalats & permanent lok adalats and arbitration with reference to Delhi.
RESEARCH METHODOLOGY
The nature of the topic was such that doctrinal research and empirical research were both
necessitated. Accordingly, this research work has been a combination of doctrinal as well as
empirical study. Extensive doctrinal research has been done on the subject and legal literature
from both India and foreign countries has been examined. References have been made to the
foreign legislations wherever required. The research involved the study and analysis of both
primary as well as secondary sources. The primary sources which were referred include the
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Constitution of India, various Indian and foreign legislations, case laws, etc. The secondary
sources which were referred include various books, journals, articles, research papers, reports,
newspapers, websites, etc.
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.
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.
Based on the data collected and the study made by several scholars, the researcher makes a
humble attempt to study topic, “Alternative Dispute Resolution in India”. With a view to
analyze the topic, the researcher has framed the main hypothesis that the Problem of Judicial
crises arising out of judicial delays and arrears must necessarily be reduced, if it is not possible
to be eradicated with the use of alternative dispute redressal methods. To study whether the use
of alternative dispute resolution mechanisms can play a constructive role in reducing the crisis
of judicial delays and arrears existing before the Courts of law in India.
As stated in the objectives of the research, efforts are made with the necessary sub hypotheses
to study the research problem and to find out procedural lacunas in the existing legislations
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providing for ADR and in its implementation in India. The sub hypotheses are framed wherever
necessary to study various causes for the judicial crises, the various kinds of alternative dispute
redressal methods, its institutionalization, the needed attitudinal changes and social changes
for its effective implementation and use.
The alternative dispute redressal methods cannot be said to be a replacement of the adversarial
system of Courts of law. Alternative dispute redressal methods can be quick and economical
methods, unless the parties are equally interested in settlement. If these methods are not put to
proper use, they can be very well be used as a strategy to delay the resolution, and further
prolong the possibility of litigation of the dispute without a sincerity of settling the issues for
their own reasons. Consequently, the right to speedy trial can successfully be given its due
respect only with the appropriate use of different alternative dispute redressal methods as a
supplement and not as supplant to the conventional method of resolution of disputes through
Courts of law.
RESEARCH QUESTIONS
In light of the topic “Alternative Dispute Resolution in India” as assigned by our

Clinical Teacher, Ms. Madhu Saini Mam, the researcher delves into the following
research questions:-
1. What is Alternative Dispute Resolution and what is the Scope of ADR?

2. What is the importance of ADR?
3. What are the mechanisms available under ADR Mechanism in India, especially
under Section 89 of the Code of Civil Procedure, 1908?
4. Why to resort to ADR?
5. What is the difference between different modes of ADR Mechanisms as
professed in India?
6. What is the extent of difference between International Arbitration and Domestic
Arbitration?
7. Whether the Courts should mandatorily formulate the terms of settlement before
referring the matter to any of ADR Mechanisms?
8. What is the extent of mutual consent required for both the parties while referring
the matter to any of the ADR Mechanisms by the Court?
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9. Has ADR been an effective tool to reduce the burden of the courts and has
incentivized cost-effective redressal in an expeditious manner?
10. To which extent a Judicial Intervention can be allowed in ADR processes?
GENESIS OF THE RESEARCH
The practice of settling the disputes through community elders existed in India even before the
advent of British. For all these years in India, the settlement of dispute between its subjects has
been the State monopoly and it had virtually elbowed out the pre-existing unofficial and non-
formal settlement procedures. It was only after the introduction and predominant adoption of
settlements of disputes through adversarial system of litigations where Courts are the custodian
of the rights of the citizen, the dispute redressal methods such as ‘Arbitration’, ‘Conciliation’
and ‘Mediation’ came to be treated as alternative means of resolving the disputes.
The independent judicial branch of the Government exercising the authoritative settlement of
disputes between individuals, between the State and its instrumentalities and individual is
regarded as a sovereign function of the State. However, the Courts of law are facing the crises
like situation, as they are not able to keep the pace of disposal of cases with the new and
increased filings. The procedural laws that the Courts are required to follow in order to maintain
the principles of natural justice and give equal opportunity of presenting their case before it are
time consuming. Arrears are mounting up at an alarming phase. It might take decades to clear
the backlog if the judiciary gives exclusive attention to the pending cases. However, by the
time it is cleared, arrears will pile up with the new filings during that period. Perhaps the
solution can be by doubling the size of the judiciary, but it is not simple and an immediate
solution to the problem of judicial delays and arrears. The doubling the size of the judiciary
involves the procedure to find new buildings, judicial officers and their supporting staffs, which
is highly expensive, and time-consuming work.
The legal maxim ubi jus ibi remedium means, where there is a right there is a remedy, lays
down the foundation of legal system in every human society. With the spread of literacy and
growing importance of education in India, the people are becoming more sensitive, literate and
are having a better understanding and awareness of their rights and duties. So, whenever there
is an infringement of any right or any breach of duty, and a dispute arises, the disputants
immediately tend to approach the Courts of law for seeking justice. This has led to the
substantial increase in the numbers of new cases coming before the Courts, which is adding to
Page | 6
the already existing list of pending cases before the Courts. Populace chose to approach the
Courts to restrain the injustice done to them, in one way this highlights their reliance to the
method of justice delivery system through the Court of Law. In other ways, this attitude of the
litigant public also apparently shows their ignorance about the availability of different methods
of resolution of disputes, like Arbitration, Conciliation, Mediation and such other methods that
are much cheaper, quick and less complicated than the Litigations before the Courts of law.
This pattern of preference in resolving dispute through the Courts has thus resulted in
abundance of new cases coming before it and there by the statistics show that there is increase
in the numerical data of the pending cases in Courts of law at every stage.
The practical experience of the researcher as lawyer and the reports of various committees and
commissions illustrate that, the Courts of law in India are facing the problem of judicial arrears
and delays due to various contributory factors. The other contributing factors to the problem of
judicial arrears and delays includes the complicated long procedural laws, the unending
appeals, revisions and reviews, the adjournment of the cases at the instant of the clients and the
lawyers, frequent boycott and strikes in the Courts of law, decreasing number of working days
and such other factors.
Page | 7
CHAPTER II
WHAT IS ALTERNATIVE DISPUTE RESOLUTION?
2.1. INTRODUCTION
The mechanism of ADR System and its techniques are extra-judicial remedy to resolve disputes
outside the legal fora. These techniques can be used in all those cases, which are capable of
being resolved, under law, by mutual agreement between the parties. The scope of ADR is
wider and can cover the cases of civil nature, commercial, industrial and family disputes or any
other cases of urgent nature. The ADR works across the full range of business disputes:
banking; contract performance and interpretations, construction contracts, intellectual property
rights, insurance coverage, conflicts in joint ventures, partnership differences, personal injury;
product liability; professional liability, real estate and securities. The mechanism of ADR
system may offer best solution in commercial disputes of an international character.
The scope of an ADR System is not intended to supplant existing means of dispute resolution.
It offers only alternative options to litigation. There are large number of important areas where
there is no substitute for Court decision. For example, the matter pertaining to the
Constitutional law and Criminal laws are beyond the purview of amicable settlement. But the
ADR system through conciliation or negotiations offers viable substitute to resolve the dispute,
if the matters are of such a nature which are compoundable in the eyes of law. The demand for
introduction of ADR system has been persistently gathering momentum from every walk of
life. The jurists, legal luminaries including judicial officer presiding over the Courts and
administrative heads considers that application of ADR shall reduce the mounting pressure of
cases in the
higher and subordinate judiciary. The conferences and meetings on judicial reforms always
start with preliminary speeches and addressed for search of viable substitute to existing legal
system. Every delegate stress for promotion of Mechanism of ADR system using its various
forms conciliation, negotiations, mediation instead of initiating trials in the Court. The fast-
emerging importance of ADR, its wider scope and commendable objectives emphasized for
creation of more Lok Adalat including establishment of Fast Track Courts.
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2.2. WHY TO RESORT TO ALTERNATIVE DISPUTE RESOLUTION?
Section 89 of the Code of Civil Procedure, 1908 embodies the legislative mandate to the court
to refer sub judice disputes to various ADR mechanisms enunciated therein where it finds it
appropriate to do so, in order to enable the parties to finally resolve their pending cases through
well-established dispute resolution methods other than litigation. Section 89 CPC has therefore
recognized the need and importance of ADR even at the post litigation stage.
In order to understand the niceties of section 89 CPC it is essential to refer to its text, which is
as under:
“89. Settlement of disputes outside the Court - (1) Where it appears to the Court that there
exist elements of a settlement which may be acceptable to the parties, the Court shall formulate
the terms of settlement and give them to the parties for their observations and after receiving
the observations of the parties, the Court may re-formulate the terms of a possible settlement
and refer the same for-
(a) arbitration;
(b) conciliation;
(c) judicial settlement including settlement through Lok Adalat; or
(d) mediation.
(2) Where a dispute has been referred-

(a) for arbitration or conciliation, the provisions of the Arbitration and Conciliation Act, 1996
(26 of 1996) shall apply as if the proceedings for arbitration or conciliation were referred for
settlement under the provisions of that Act;
(b) to Lok Adalat, the Court shall refer the same to the Lok Adalat in accordance with the
provisions of sub-section (1) of section 20 of the Legal Services Authority Act, 1987 (39 of
1987) and all other provisions of that Act shall apply in respect of the dispute so referred to
the Lok Adalat;
(c) for judicial settlement, the Court shall refer the same to a suitable institution or person and
such institution or person shall be deemed to be a Lok Adalat and all the provisions of the
Legal Services Authority Act, 1987 (39 of 1987) shall apply as if the dispute were referred to
a Lok Adalat under the provisions of that Act;
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(d) for mediation, the Court shall effect a compromise between the parties and shall follow
such procedure as may be prescribed.”
Thus, the court can refer the parties to arbitration, conciliation, mediation, Lok Adalat or
judicial settlement in terms of section 89 of the Code of Civil Procedure, 1908 for resolution
of their disputes at the post litigative stage. In fact, the Delhi High Court has gone one step
forward and held that there is no reason why Early Neutral Evaluation (ENE), which is a
different form of ADR though similar to mediation, cannot be resorted to towards the object of
a negotiated settlement in pursuance of Section 89 of the Code of Civil Procedure, 1908
specially when the parties volunteer for the same.10
2.3. OBJECTIVE OF ENACTMENT OF SECTION 89 CPC

The Law Commission of India11 had recommended the introduction of the conciliation court
system and had underlined the importance of conciliation/ mediation as a mode of ADR. The
Malimath Committee12 had also advocated the need of an amendment in law for introduction
of ADR mechanisms.13
On the recommendations14 of the Law Commission of India and the Malimath Committee the
Code of Civil Procedure (Amendment) Bill was initiated in 1997. The Statement of Objects
and Reasons attached to the said bill15 read as under:
Statement of Objects and Reasons: With a view to implement the 129th Report of the Law
Commission of India and to make conciliation scheme effective, it is proposed to make it
obligatory for the court to refer the dispute after the issues are framed for settlement either by
way of arbitration, conciliation, mediation, judicial settlement or through Lok Adalat. It is only
after the parties fail to get their disputes settled through any one of the alternate dispute
resolution methods that the suit shall proceed further in the section in which it was filed.
10
Bawa Masala Co. v. Bawa Masala Co. Pvt. Ltd, AIR 2007 Delhi 284.
11
Law Commission of India, 129th Report, Urban Litigation: Mediation as Alternative to Litigation (1988).
12
The Malimath Committee submitted its report in August, 1990.
13
Sudipto Sarkar & V.R. Manohar (Eds.), Sarkar’s Code of Civil Procedure (Wadhwa and Company, Nagpur,
11th Edn., 2006).
14
A.R. Lakshmanan, “Settlement of Disputes Outside the Court under section 89(1) read with Order X Rules 1A,
1B and 1C of the Code of Civil Procedure, 1908”, Keynote address delivered at the Karnataka Judicial Academy,
Bangalore on 14.07.2007, 5 MLJ 22 (2007).
15
The notes attached to the bill further stated that clause 7 seeks to insert a new section 89 in the Code in order to
provide for alternative dispute resolution based on the recommendations made by the Law Commission of India
and the Malimath Committee.
Page | 10
Resultantly Section 89 CPC as it stands today was introduced into the statute book by the Code
of Civil Procedure (Amendment) Act, 1999 with effect from 01.07.2002. With the introduction
of this provision, a mandatory duty has been cast on the civil courts to make an endeavour for
settlement of disputes by relegating the parties to an ADR process.
It has now become imperative that resort should be had to ADR mechanisms with a view to
bring an end to litigation between the parties at an early date.16 Indeed this is the policy in the
west also where court efforts to facilitate settlement in civil cases, whether through judicial
settlement conferences or court-connected mediation and other ADR processes, have become
commonplace.17
The Supreme Court has also stated that the intention of the legislature behind enacting Section
89 CPC is that where it appears to the Court that there exists elements of 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 five ADR methods mentioned in section 89 CPC and if
the parties do not agree, the court shall refer them to one or other of the said modes.18
2.4. FORMULATING AND REFORMULATING THE TERMS OF SETTLEMENT

UNDER SECTION 89 CPC
Section 89 CPC provides that where it appears to the Court that there exist elements of a
settlement which may be acceptable to the parties, the court shall formulate the terms of
settlement and give them to the parties for their observations and after receiving the
observations of the parties, the court may re-formulate the terms of a possible settlement and
refer the same for any of ADR mechanisms as specified in the provision.
This shows that the sine qua non for referring the parties to an ADR mechanism within the
contemplation of section 89 CPC is the opinion recorded by the judge concerned regarding the
existence of elements of settlement which may be acceptable to the parties followed by the
16
Salem Advocate Bar Association v. Union of India, AIR 2003 SC 189.
17
Roselle L. Wissler, “Court-Connected Settlement Procedures: Mediation and Judicial Settlement Conferences”,
26 Ohio St. J. on Disp. Res. 271 (2011); Another advantage of court mandated ADR is that neither party fears
having to initiate the ADR process. See Ari Davis, “Moving from Mandatory: Making ADR Voluntary in New
York Commercial Division Cases”, 8 Cardozo J. Conflict Resol. 283 (2006).
18
Salem Advocate Bar Association v. Union of India (II), AIR 2005 SC 3353.
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formulation of the terms of the settlement followed by re-formulation of the possible terms of
the settlement after taking observations of the parties.19
However, the anomalous position is that section 89 CPC introduces the ultimate stage of
conciliation referred to in section 73(1)20 of the Arbitration and Conciliation Act, 1996 into the
pre-ADR reference stage under section 89 CPC. Section 89 CPC provides conciliation as one
of the ADR processes to which the matter can be referred to for settlement. But curiously
enough, the task of formulation and reformulation of the terms of settlement which a conciliator
has to perform at the concluding stage of conciliation has been entrusted to the trial judge at
the pre-ADR reference stage.
One of the reasons for introducing section 89 CPC was that the trial judge is not able to devote
much time and attention to effect conciliation between the parties and therefore the matter
should be referred to some other ADR fora for resolution. If sub-section (1) of Section 89 CPC
is to be literally followed, every trial judge before framing issues, is required to ascertain
whether there exist any elements of settlement which may be acceptable to the parties,
formulate the terms of settlement, give them to parties for observations and then reformulate
the terms of a possible settlement before referring it to arbitration, conciliation, judicial
settlement, Lok Adalat or mediation. There is nothing that is left to be done by the ADR forum
thereafter. If all these have to be done by the trial court before referring the parties to alternative
dispute resolution processes, the court itself may as well proceed to record the settlement as
nothing more is required to be done21 as a judge cannot do these unless he acts as a conciliator
or mediator and holds detailed discussions and negotiations running into hours.22 This will not
only eat away precious judicial time but would also render the subsequent ADR processes
redundant. Thus, formulation and reformulation of terms of settlement by the court is wholly
out of place in the pre-reference stage of ADR process.23
Moreover, if the reference is to be made to arbitration, the terms of settlement formulated by

the court will be of no use. If the reference is to conciliation/mediation/Lok Adalat, then
drawing up the terms of the settlement or reformulating them is the job of the conciliator or the
mediator or the Lok Adalat, after going through the entire process of conciliation/ mediation.
19
D.D.A v. Happy Himalaya Construction Co., 2009 (1) A.D. (Delhi) 383; Salem Advocate Bar Association v.
Union of India (II), AIR 2005 SC 3353.
20
S. 73(1), Arbitration and Conciliation Act, 1996
21
D.M. Popat, “ADR and India: An Overview”, The Chartered Accountant (December 2004).
22
Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd., JT 2010 (7) SC 616.
23
R.V. Raveendran,“Section 89 CPC: Need for an Urgent Relook” 4 SCC Journal 23 (2007).
Page | 12
Thus, the terms of settlement drawn up by the court will be totally useless in any subsequent
ADR process. Therefore, now the Supreme Court has unequivocally held that it is not necessary
for the court, before referring the parties to an ADR process to formulate or reformulate the
terms of a possible settlement.24
2.5. SECTION 89 CPC - IT’S MANDATORY NATURE AND PROCEDURE FOR

REFERRAL
Section 89 CPC makes it obligatory for the courts to explore the possibility of resolution of the
dispute by making reference to one of the several ADR mechanisms provided therein.25
However the pre-condition for referring the matter is satisfaction of the court that there exist
elements of settlement. The court has to form an opinion that a case is one that is capable of
being referred to and settled through any of the ADR processes. Simultaneously Order X Rule
1A CPC mandates that the court to direct the parties to the suit to opt either mode of the
settlement outside the court as specified in sub-section (1) of section 89 CPC and on the option
of the parties, the court has to fix the date of appearance before such forum or authority as may
be opted by the parties.
The provisions26 when harmoniously construed indicate that the need of the having a hearing
after completion of pleadings, to consider recourse to ADR process under section 89 CPC is
mandatory. But actual reference to an ADR process in all cases is not mandatory. Where the
case is unsuited27 for reference to any of the ADR process, the court will have to briefly record
the reasons for not resorting to any of the settlement procedures prescribed under section 89
CPC. In other cases, reference to ADR is mandatory. The court need not elaborate the terms of
the proposed settlement nor is there any requirement to give detailed reasons for arriving at the
conclusion regarding the existence of elements of settlement and the court may describe very
briefly the nature of the dispute and the existence of the elements of settlement in three or four
lines. However, a duty is cast upon the court to consider whether it is possible to refer the
parties for a settlement.28
24
25
A.M. Khanwilkar, “Need to Revitalise ADR Mechanism”, available at: http:// bombayhigh
court.nic.in/mediation/Mediation_ Concept_and_Articles/need to revitalis.pdf (last visited on 11.08.2018).
26
S. 89(1) and Order X Rules 1A, 1B and 1C, Code of Civil Procedure, 1908.
27
28
Basheer v. Kerala State Housing Board, AIR 2005 Kerala 64.
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During the course of legal proceedings after recording the admissions and denials, the court
has to direct the parties to suit to opt either mode of the settlement outside the court as specified
in sub-section (1) of section 89 CPC by mutual consent and on the option of the parties, the
court has to fix the date of appearance before such forum or authority as may be opted by the
parties.29 If the parties are not able to opt for a particular mode of ADR provided in section 89
CPC then the court has to refer the matter itself to a suitable ADR mechanism in terms of
section 89 CPC except for arbitration and conciliation which require express consent of the
parties.30 In this respect section 89 CPC has introduced the concept of mandatory ADR.31
Thereafter, the parties are supposed to appear before such forum or authority for settlement of
the case.32 However, if the matter is not settled the matter is again referred back to the court.33
If the matter is settled the settlement is recorded by the court and the matter is disposed of.34
Where the court refers the parties to the suit to anyone of the mode of settlement of dispute
referred to in section 89 CPC and the matter is settled and disposed of the plaintiff is entitled
for refund of court fees.35 Even if the matter is settled in appeal the appellant is entitled to
refund of court fees.36 This is an added incentive for taking recourse to the provisions of section
89 CPC.
2.6. THE ROLE OF REFERRAL JUDGES

Section 89 CPC is an important step towards popularizing the employment of ADR methods
for settlement of cases pending before courts. The reference to ADR mechanisms is mandatory
in cases which are found to possess elements of settlement. The responsibility of deciding
whether a case possesses elements of settlement has been put on the shoulders of the trial judge
who is also referred to as the referral judge since it his on his orders that a case is referred to
any one of the ADR mechanisms enunciated in section 89 CPC. It is the referral judge who
determines that which case is suitable for being referred to ADR in terms of section 89 CPC.
The key to success depends on judges referring appropriate cases and conversely, failure is
dependent on referring inappropriate cases.
29
Order X Rule 1A of the Code of Civil Procedure, 1908.
30
31
Cardozo J. Conflict Resol. 479 (2010).
32
Order X Rule 1B, Code of Civil Procedure, 1908.
33
Order X Rule 1C, Code of Civil Procedure, 1908.
34
Except in case of arbitration where an arbitral award on merits is passed by the arbitral tribunal.
35
S. 16, Court Fees Act, 1870
36
Vallabh Das Gupta v. Geeta Bai, 2004(4) R.C.R.(Civil) 85.
Page | 14
The second responsibility upon a referral judge is to refer the dispute to the most appropriate
ADR process37 in terms of section 89 CPC where the parties are not able to arrive at a
consensus. If the case is simple which may be completed in a single sitting, or cases relating to
a matter where the legal principles are clearly settled and there is no personal animosity
between the parties (as in the case of motor accident claims), the court may refer the matter to
Lok Adalat. In case where the questions are complicated or cases which may require several
rounds of negotiations, the court may refer the matter to mediation. Where the facility of
mediation is not available or where the parties opt for the guidance of a judge to arrive at a
settlement, the court may refer the matter to another judge for attempting settlement.38
In order to discover as to which case is apposite for being referred to any one of the ADR
mechanisms enunciated under section 89 CPC, when the pleadings are complete the referral
judge should sift through pleadings of the parties and should hold a preliminary hearing with
the parties. The court should accustom itself with the facts of the case and the substance of the
dispute between the parties in order to discharge its duty in a fair and efficacious manner.
After all reference of a case is the first important stage in the entire dispute resolution process
on which the success of section 89 CPC depends. In that regard, necessarily intense training39
must be imparted to the referral judges so as to enable them to identify the cases which may be
considered fit for referral to any of the ADR mechanisms.40 The message and philosophy of
Section 89 CPC, if rightly appreciated and purposefully utilized, would shift the judge from
back seat to the driving seat holding the steering from day one.41
2.7. WHY TO RESORT TO ADR?
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
37
Frank E. A. Sander, Lukasz Rozdeiczer, “Matching Cases and Dispute Resolution Procedures: Detailed
Analysis Leading to a Mediation Centered Approach”, 11 Harv. Negot. L. Rev. 1 (Spring 2006).
38
39
Some training programs are conducted by the Delhi Mediation Centre at various court complexes for referral
judges on referral of cases for mediation and court management. See Delhi Mediation Centre, 4 (2) Mediation
Newsletter (February 2010).
40
M.M. Kumar, “Relevance of Mediation to Justice Delivery in India”, a paper presented in the National
Conference on Mediation, organised by the Mediation & Conciliation Project Committee, Supreme Court of India,
held on July 10, 2010 at New Delhi.
41
Justice R.C. Lahoti, Keynote address at the Valedictory Session of two days Conference on “ADR, Conciliation,
Mediation and Case Management” organised by the Law Commission of India, available at:
http://lawcommissionofindia.nic.in/adr_conf/Justice_ Lahoti_Address (last visited on 12.04.2012).
Page | 15
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 evolutionary history of Indian legal system establishing the
above fact is done in proceeding chapters of 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.
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 disputes. 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.” 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.42 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 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
42
Law Commission of India, 77th Report, pr.4.1.
Page | 16
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”.
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.
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. 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.
Some of the disadvantages that are found on the methods of alternative methods of
dispute redressal are that, the arbitrators are 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 favor 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
Page | 17
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. The characteristic features of individual
alternative dispute resolution methods are dealt in detail in the preceding chapters of this study.
As argued by the father of our Nation Mahatma Gandhi, the role of law, is to unite the parties
and not to riven them. As compared to Court procedures, considerable time and money can be
saved in solving the disputes through alternative dispute redressal procedures 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.
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
Section320 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 Court43 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
43
Hussainara Khatoon v. State of Bihar, 1979 CrLJ 1036.
Page | 18
economic position or their financial resources”.44 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 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.
There have been many assumptions on the average time taken by the courts in India to
resolve disputes but none is on the basis of any scientific study. In a study done in Mumbai,45
few interesting facts have been revealed. The study shows that during the period from 2006-
2008 the time taken from the inception of the suit in the court till the execution of the decree is
1420 days. This period can be further disaggregated in three stages. Firstly, from filing to
44
Babu v. Raghunathji AIR 1976 SC 1734.
45
International Finance Corporation, “ Doing Business Study” 2008, www.doingbusiness.org
Page | 19
service of summons it takes 20 days. Secondly, the trial proceedings and subsequent decree
takes 1095 days and thirdly the execution of decree takes 305 days.
Regarding the cost, the study reveals that during the same period the cost of the
commercial litigation in Mumbai was 39.6% of the total claim. In this the lawyer’s fee was the
highest at 30.6% of the total claim. The cost incurred in the court was 8.5% and for execution
of the decree, the cost involved was 0.47% of the total claim. On the whole, the analysis of data
included in this chapter shows that generally the pendency rate is much higher than the
institution and disposal rate. At the same time the disposal rate is fluctuating in nature and rests
on a lower side when compared to the institution rate. The reasons may include insufficient
infrastructure in the courts, deficient number of judicial officers, improper cadre management,
lack of skill, efficiency and techniques adopted by the judicial officers, nature of the particular
case, lacking in case management, non-cooperation among lawyers, lack of healthy
relationship between parties; lack of effective Alternative Dispute Resolution techniques etc.
Since the scope of this study is limited to analyzing the effectiveness of Alternative Dispute
Resolution mechanisms in India
The doctrinal analysis indicates that ADR methods have the potential to reduce the
arrears of courts. At the same time, the empirical data collected during the study show that
despite all efforts, there exists a huge disparity between the number of cases being disposed off
in a year and the number of cases pending in the courts. Reasons are manifold. They are being
analyzed. Remedial measures are also being explored since the potential of ADR in minimizing
caseload depends a lot on how imaginatively it is employed in a system. In the process of
administration of justice, the ADR methods could be better utilized with the help of a
supportive judiciary. It is desired that both the systems should work complementary to each
other. This invariably calls for attention of judicial officers towards systematic use of ADR
techniques. Resolution of disputes is an essential characteristic for societal peace, amity,
comity and harmony and access to justice to poor. Indian socio-economic conditions warrant
highly motivated and sensitized legal service programmes as large population of consumers of
justice are either poor or ignorant or illiterate or backward, and, as such, at a disadvantageous
position. The State, therefore, has a duty to see that the operation of legal system promotes
justice on the basis of equal opportunity. Alternative dispute resolution if properly
institutionalized, as an adjunct to judiciary would prove to be a vital tool for easy and early
settlement of disputes.
Page | 20
A summary of the recommendations made are given below:
i. Institutional arbitration shall be promoted in India to make India an important venue of

both domestic and international arbitration.
ii. A national institution shall be developed to promote ADR system in India. This
Institution shall impart training to arbitrators/mediators and to provide necessary
infrastructure facilities in the conduct of arbitration/mediation.
iii. Ad hoc arbitration in India may be regulated to ensure accountability of arbitrators
enabling progress in the present system of arbitration in India.
iv. The Arbitration and Conciliation Act, 1996, may be amended to include the following
provisions;
a) Time limit for conducting an arbitration matter.

b) The power may also be delegated to District Judges in the appointment of arbitrators
under section 11 of the Act.
c) Separate Bar of full-time arbitrators/mediators.
d) Compulsory registration of such arbitrators/mediators with the Government.
e) An internationally accepted code of conduct for arbitrators to ensure their
accountability.
f) Arbitrator’s fee shall be fixed.
g) Grounds for setting aside of arbitral awards under section 34 shall be further limited
by pecuniary limits. Cost to the affected party in case of a frivolous challenge
against the enforcement of an arbitral award.
h) Provision shall be made to regulate ad hoc arbitrations in India.
i) Provisions for a strong enforcement mechanism that may be self- regulatory.
v. The Code of Civil Procedure may be amended to include the following provisions in section
89;
a) Limited time frame shall be fixed for settlement of disputes outside the court.
b) The phrase ‘Suitable institution or person’ mentioned in section 89(2)(c) to effect
a judicial settlement may include Government accredited ADR institutions
including mediation centres in each state.
Page | 21
c) The phrase in section 89 (2) (d) ‘court shall effect a compromise’ shall be amended
to include suitable mediation institutions to take a leading role in the settlement of
disputes under section 89 CPC.
d) The stage at which a case may be referred to ADR shall be specifically mentioned
under the section. There shall be an amendment by stating, wherever it may be
acceptable to the parties or can be explored by the parties instead of stating where
it appears to the court.
e) Institutional arbitration and mediation shall be promoted in cases of settlement
outside the court.
f) Only accredited Institutions registered with the Government may be entrusted with
the task of appointment of arbitrators, mediators etc.
g) Keeping the objective of the Act in mind, the scope of judicial interference in
arbitration should be minimal. The consequential changes in the law and policy
including judicial approach are anticipated.
Thus, the doctrinal analysis of the law and policy with respect to resolution of
commercial as well as non- commercial disputes establishes the fact that there is an imminent
need to introduce changes into the existing legal framework. In the light these observations,
the following three chapters will be analyzing the data collected through the empirical study to
build up a strong case for effecting the aforesaid changes in the law and policy.
2.8. AN ALTERNATIVE MECHANISM TO DEAL WITH CRIMINAL CASES
There is an urgent need to find viable alternatives to criminal prosecution. The

burgeoning criminal system is becoming paralyzed under its own weight. Many criminal cases
are not being effectively addressed at all.46 Therefore without alternate relief now the criminal
system will only continue to disintegrate. The only immediate recourse is to adhere to
Alternative Dispute Resolution models. Not all broken laws require prosecution to rectify the
wrong. In today's complex society, prosecution often eludes justice. Often to obtain justice, we
must reach outside the traditional parameters of prosecution. Movement in this direction comes
from the growing realization that court-based adjudication is not the ideal form of justice in all
circumstances. For some cases legal prosecution is not successful in terms of rehabilitating the
46
Walton, Reggie, Associate Director, Office of Drug Control Policy: Speech 1991 Crime Summit, Washington
D.C., March 4, 1991.
Page | 22
offender, helping the victim, or protecting society.47 Prosecution is not always viable even for
legally sufficient cases. A legally sufficient case is that which is identified as having probable
cause and all the elements of the crime present.48 Nevertheless, a legally sufficient case is not
necessarily a trial sufficient case. To be trial sufficient a case must be strong enough to support
a conviction. When it is not, we can use ADR techniques to resolve the conflict without
‘dropping’ the case. wo characteristics of cases that are readily resolved by ADR are complaints
alleging acts without clear criminal intent by the defendant and those where an illegal act has
occurred, but the participants agree to non-criminal disposition. Often ‘victims are willing to
accept a disposition short of conviction, especially if it involves restitution.’49
Let us consider an illustration. A frustrated consumer who after unsuccessful attempts

to resolve a billing slammed a glass door behind him when he walked out of the store breaking
the door. The defendant clearly had no criminal intent. When the police report came before the
city's screening officer, the city attorney was not about to prosecute. Nevertheless, the
defendant had caused property damage and exhibited unacceptable violent behavior. The
defendant's actions needed to be addressed. After defendant’s and victim’s interviews in the
city dispute resolution office, the defendant paid for the broken door and satisfactorily resolved
his initial complaint against the store owner.
The main criterion used to track a case for ADR is whether a victim/defendant
relationship exists. Relationships that can be effectively dealt with by ADR are neighbours,
other non-intimate family members, commercial relationships such as suppliers / distributors,
co-workers, classmates and landlord / tenant. Certain types of victim-defendant relationships
are inappropriate for ADR intervention. If domestic violence is in issue, child abuse, or
extensive substance abuse is present, specialized departments should handle the case.50
However, there are certain types of parties or cases are not appropriate for ADR intervention.
An offender influenced by an addiction has a greater probability of repetition if the underlying
47
Marshall, Tony F., Alternative to Criminal Courts, The Potential for Non-Judicial Dispute Settlement, Vermont:
Gower Pub. Co. (1985), p. 1.
48
an Diego City Attorney Criminal Division, Issuing Handbook (1990), p. 5; California District Attorneys
Association, Ethics and Responsibility for the California Prosecutor, California: Calif. Dist. Attnys Assoc. (1985).
49
Nimmer, Raymond T., Diversion, The Search for Alternative Forms of Prosecution, Chicago: Am. Bar Found.
(1974).
50
San Diego City Attorney Criminal Division, Screening and Arraignment Unit Directions for ADR Office Cases,
in use as of April 5, 1991.
Page | 23
addiction is not confronted. This is true whether prosecution or ADR is used. A defendant with
a history of criminal activity in the same area is a poor choice for any ADR program.
Page | 24
CHAPTER III
ADR MECHANISMS AVAILABLE UNDER SECTION 89 CPC
3.1 ARBITRATION
Arbitration is one of the modes of ADR prescribed by section 89 CPC. Even prior to
incorporation of Section 89 in the Code of Civil Procedure, 1908 the parties to litigation, with
mutual consent, could take recourse to arbitration as a mode of resolution of their dispute which
was sub judice before a court of law in terms of the Arbitration and Conciliation Act, 1996
itself.51 The Arbitration and Conciliation Act, 1996 however, did not contemplate a situation
as in Section 89 CPC where the Court asks the parties to choose any ADR mechanism and the
parties choose arbitration as their option.
Section 89 CPC now provides for reference of a dispute in a sub judice matter to Arbitration.
The statute52 further provides that for arbitration the provisions of the Arbitration and
Conciliation Act, 1996 shall apply as if the proceedings for arbitration were referred for
settlement under the provisions of that Act. However, if reference is made to arbitration under
section 89 CPC, the Arbitration and Conciliation Act, 1996 would apply only from the stage
after reference and not before the stage of reference when options under section 89 CPC are
given by the court and chosen by the parties.53
Even though section 89 CPC mandates courts to refer pending suits to any of the several ADR
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.54 However, once the
matter is referred to arbitration the matter permanently moves out of the realm of court
proceedings and the suit stands disposed of at that very stage and afterwards the matter has to
be resolved in terms of the Arbitration and Conciliation Act, 1996.
3.2 CONCILIATION
Section 89 CPC also provides for reference of a dispute in a sub judice matter to conciliation.
The statute further provides that for conciliation the provisions of the Arbitration and
51
P. Anand Gajapathi Raju v. P.V.G. Raju, (2000) 4 SCC 539.
52
S. 89(2)(a), Code of Civil Procedure, 1908.
53
54
Jagdish Chander v. Ramesh Chander, 2007 (6) SCC 719.
Page | 25
Conciliation Act, 1996 shall apply as if the proceedings for conciliation were referred for
settlement under the provisions of that Arbitration and Conciliation Act, 1996.
As in case of arbitration, the Arbitration and Conciliation Act, 1996 in relation to conciliation
would apply only after the stage of reference to conciliation. Thus, for conciliation also rules
can be made under Part X of the Code of Civil Procedure, 1908 for the determining the
procedure for opting for 'conciliation' and up to the stage of reference to conciliation.55 Further
as in the case of arbitration, the court cannot refer the parties to conciliation under section 89
CPC, in the absence of express consent of all parties. However, when a matter is referred to
conciliation, the matter does not go out of the stream of court process permanently. If the parties
are not able to arrive at a final settlement during the conciliation the matter is returned back to
the court.
3.3. LOK ADALATS
Lok Adalat is generally known as ‘people’s court’. This is a non-adversarial system wherein
mock courts are held by State authority, District Legal Services authority, Taluk legal service
committee as well as Supreme Court and High Court legal services committees. It has no
jurisdiction over any non-compoundable offences. One of the merits of this system is that the
parties can directly contact with the judges which is not possible in regular courts. The focus
of adalat is on compromise and if not, the case will be returned to the courts and if
compromised, it will be a decree equal to the civil court and no appeal is applicable even under
Article 226 as the decree made is upon the consent of both the parties.
Adalats have assumed statutory recognition under the Legal Services Authorities Act, 1987.
These are being regularly organized primarily by the State Legal Aid and the Advice Boards
with the help of District Legal Aid and Advice Committees.56
The Legal Services Authorities Act, 1987
The Legal Services Authorities Act, 1987 was brought into force on 19 November 1995. The
object of the Act was 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. The
concept of legal services which includes Lok Adalat is a revolutionary evolution of resolution
55
56
P.C. Rao & William Sheffield, Universal Law Publishing Co. Pvt. Ltd., Alternative Dispute Resolution: What
is it and how it works, at 26(1997 ed., 2006).
Page | 26
of disputes. Though settlements were affected by conducting Lok Nyayalayas prior to this Act,
the same has not been given any statutory recognition. But under the new Act, a settlement
arrived at in the Lok Adalats has been given the force of a decree which can be executed
through Court as if it is passed by it. Sections 19, 20, 21 and 22 of the Act deal with Lok Adalat.
Section 20 provides for different situations where cases can be referred for consideration of
Lok Adalat.57
Honorable Delhi High court has given a landmark decision highlighting the significance of Lok
Adalat movement in the case of Abdul Hasan and National Legal Services Authority v. Delhi
Vidyut Board and Others58. The court passed the order giving directions for setting up of
permanent Lok Adalats.
3.4 MEDIATION
Mediation plays yet another role in the field of ADR wherein a negotiation is done between the
parties with the help of a mediator who is a third party to them. The main objective of
undergoing mediation proceeding is to protect the best interest of the parties. It does not cover
any legal provisions so that the parties will be not held inside certain limitations of such legal
matters. It provides a friendly talk between the parties and a means of counselling so that the
real issue faced by them will be found out and the dispute among them will be resolved easily.
Mediation involves a determination of interests of the parties. A concept frequently not found
in the litigator’s lexicon, interests are the needs, wants, and desires that are of importance to
the parties. Mediation provides a forum for principled negotiations. These negotiations may at
times become frustrating and troubling, but with the mediator’s help the parties keep moving
forward.
Principled negotiations stimulate exploration of settlement alternatives and an opportunity to

evaluate those alternatives, weighing them against the likely outcome of going to trial and
viewing proposals through the lenses of reality. Mediation, when compared to litigation, trial
and appeal is a veritable bullet train to certainty and finality. If the dispute settles at the
mediation, it settles on the acceptance of parties, the spectre of trial is removed; and the threat
of being tied up on appeal is eliminated.
57
O P Malhotra, Indu Malhotra, Lexis Nexis, The Law and Practice of Arbitration and Conciliation (2nd ed., 2006)
58
AIR 1999 Del 88.
Page | 27
There are certain types of mediation which are termed as court referred mediation and private
mediation. Same theory which is applicable to Lok Adalat is applied here also, i.e., if the parties
arrive at a settlement, no person can file an appeal to a higher court in any manner.
Mediation is accepted as the most viable process of resolving a conflict between two parties
before any legal or physical conflict is opted for settling the score for any kind of problem. The
major difficulty is getting the parties to agree to prefer the mediation as the process for
resolving their problems. As this is known as assisted negotiation or structured negotiation, it
is basically a necessary assistance to the negotiators who are the parties themselves.
From the voluntary submission to the drafting of settlement agreement, the parties have a major
role in mediation rather than the role of mediator himself. The mediator facilitates, renders
assistance, gives advise if necessary, presents options available, analyses the strategies,
suggests strategies to be adopted, hammers out the issues to be settled, drafts the agreement
sentences so that the parties do not find any difficulty in agreeing with them and finally
authorizes the settlement. The mediator does not settle. He will not give an award like an
arbitrator. He also does not prefer to adjudicate the issues. He will also not prescribe the
procedure. He does not examine the witnesses and insist on the production of evidence etc.
There is no rigid frame work of rules for mediation. It is a very flexible process. A person who
is acceptable to both the parties would serve as mediator. He is perceived as neutral capable of
understanding the issues of their dispute and knowledgeable enough about the mediation
processes along with sense of time and attitude to resolve the problems.
It is important to decide on the cost of the mediation at the beginning itself. The Mediator
should indicate the possible cost and obtain the consent of parties to share the cost equally. If
not the cost of mediation would become an issue of conflict to be mediated between the
mediator and the party. The parties have to recognize all the necessary parties, who are either
involved or interested or might be affected by the decision on the issues before them. If a
necessary party is not joined, the decision may not be binding on him and entire process may
go waste.
3.5 JUDICIAL SETTLEMENT
The expression Judicial Settlement suggests that it is some sort of a judge mediated settlement
of a dispute. Judicial Settlement is a term which is in vogue in the west - particularly the United
Page | 28
States of America. There we have what are known as judicial settlement conferences. A judicial
settlement conference is an informal process in which a judge59, trained in mediation and
settlement conference skills, actively facilitates a process whereby parties in conflict may reach
a mutually satisfactory resolution. The term judicial settlement therefore refers to a settlement
of a civil case with the help of a judge who, has not been not assigned the duty to adjudicate
upon the dispute.60
Thus, judicial settlement conference is presided over by a judge who uses fair settlement
techniques to enable the parties to arrive at an amicable settlement. The archetypal role of the
settlement conference judge is to roughly evaluate the case on the merits and to assist the
bargaining of settlement proposals. Some settlement judges also use mediation techniques in
the judicial settlement conferences to improve communication among the parties, probe
barriers to settlement, and help formulate resolutions. A settlement judge has however no
power to force the parties to arrive at a settlement. An important feature of judicial settlement
conference is that the judge who presides over the judicial settlement conference does not
conduct the trial of the case on merits. Either the case is marked to a different judge for a
settlement conference or the trial judge after conducting a settlement conference does not
proceed with the trial. The intent is that a judge who conducts trial is not prejudiced by the
conduct of a party during judicial settlement proceedings.61
3.5.1 Judicial Settlement in India
As far as Indian Law is concerned the expression judicial settlement was introduced in to the
Code of Civil Procedure, 1908 through Section 89 CPC.62 Section 89 CPC provides judicial
settlement as a mode of ADR. The court can refer a dispute to judicial settlement in terms of
section 89 CPC to a suitable institution or person and such institution or person is to be deemed
to be a Lok Adalat and all the provisions of the Legal Services Authority Act, 1987 are
applicable.63
59
In some jurisdictions we have sitting judges who are designated as judicial conference judges. In others like
Virginia (USA) we have retired judges who conduct judicial settlement conferences.
60
61
B.P. Moideen Sevamandir v. A.M. Kutty Hassan, 2009 (2) S.C.C. 198.
62
Inserted by the Code of Civil Procedure (Amendment) Act, 1999 with effect from 01.07.2002.
63
S. 89(2)(c), Code of Civil Procedure, 1908 .
Page | 29
To implement the objectives of section 89 CPC under the directions of the Supreme Court in
the 1st Salem Bar Association Case64 a committee headed by Justice M. Jagannadha Rao was
formed and the committee placed before the Supreme Court the Draft Civil Procedure - ADR
and Mediation Rules, 2003 which were considered by the Supreme Court in the 2nd Salem Bar
Association Case.65 The Supreme Court thereafter directed the respective High Courts to
examine and finalise the said rules.
Under the said draft Civil Procedure - ADR and Mediation Rules, 2003 Judicial settlement was
defined as:
'Judicial settlement' means a final settlement by way of compromise entered into before a
suitable institution or person to which the Court has referred the dispute and which institution
or person are deemed to be the Lok Adalats under the provisions of the Legal Service Authority
Act, 1987 (39 of 1987) and where after such reference, the provisions of the said Act apply as
if the dispute was referred to a Lok Adalat under the provisions of that Act.66
Where all the parties to the suit decide to exercise their option and to agree for judicial
settlement the court has to refer the matter to a suitable institution or person which shall be
deemed to be a Lok Adalat.67
Thus, for judicial settlement as provided under section 89 CPC the court is supposed to refer
the dispute to a suitable institution or person. However, there is no indication in the statute, that
to which institution or person the matter is to be referred to. That person may be a judge or may
not be a judge. He may be a person of legal background or may not be a person of legal
background. The dispute may also be referred to some external private institution offering
institutionalized conciliation or mediation services. There is no indication as to what are the
guidelines/practice directions for referring the matter. Thus section 89 CPC is silent on these
aspects.
This renders judicial settlement a sui generis settlement procedure. This is because the term
judicial settlement per se gives as indication that it is a judge mediated settlement and this is
also the plain meaning of judicial settlement as is understood in the west. However, in India by
virtue of section 89 CPC any person or institution may conduct judicial settlement and such
64
65
66
Rule 4, ADR and Mediation Rules, 2003 (Draft).
67
Rule 5, ADR and Mediation Rules, 2003 (Draft).
Page | 30
institution or person is deemed to be a Lok Adalat and all the provisions of the Legal Services
Authority Act, 1987 apply to such proceedings as if the dispute were referred to a Lok Adalat
under the provisions of that Act.
3.5.2 Judicial Settlement – Post Afcons Judgment
The legislative description ascribed to the term judicial settlement by section 89 CPC is
manifestly not in sync with the ordinary meaning of judicial settlement as a settlement device
as understood all over the world. This anomaly was noticed by Justice R.V. Ravindran and he
considered and reviewed clauses (c) and (d)68 of section 89 (2) CPC in his article59and opined
that there is a mixing up of the meanings of the terms judicial settlement and mediation due to
a clerical or typographical error in drafting, resulting in the two words being interchanged in
clauses (c) and (d) of sub section (2) of section 89 CPC.
This issue was thereafter considered by the Supreme Court of India in the famous Afcons
judgment in the year 2010.69 The Supreme Court also acknowledged the fact that there is an
error in the provision. It was held that a proper interpretation of section 89 of the Code requires
a change from a plain and literal reading of the section and the definitions of `judicial
settlement' and `mediation' in clauses (c) and (d) of section 89(2) shall have to be interchanged
to correct the draftsman's error. The Supreme Court also unequivocally directed that the above
changes made by interpretative process shall remain in force till the legislature corrects the
mistakes, so that section 89 CPC is not rendered meaningless and infructuous.
If the two clauses are interchanged judicial settlement acquires an altogether different meaning.
Section 89 (2) (d) CPC would read:
(d) for "judicial settlement", the court shall effect a compromise between the parties and shall
follow such procedure as may be prescribed.
The Supreme Court has thus stepped into the picture to correct the apparent error in the
legislative provision. After the rectification effected by the Supreme Court both the terms i.e.
mediation and judicial settlement, acquire their natural meanings. Judicial settlement postulates
a process where the court has to effect a compromise between the parties and follow such
68
Section 89(2)(d), Code of Civil Procedure, 1908 provides that for mediation, the court shall effect a compromise
between the parties and shall follow such procedure as may be prescribed.
69
Page | 31
procedure as may be prescribed. This is in consonance with the natural meaning of the
expression judicial settlement and as it is understood in the west.
3.5.3. Judicial Settlement – Need for Outlining Procedure

The expression judicial settlement, pursuant to the Afcons judgment is to be understood in the
modified form as enunciated by the Supreme Court that in case of judicial settlement the court
has to effect a compromise between the parties and follow such procedure as may be prescribed.
There is a severe lacuna in law as there is no procedure at all which has been prescribed for
judicial settlement. How the compromise is to be effected is not expressly mentioned, but it
gives an indication that the court is to play a positive role in steering the disputant parties to
arrive at a mutually acceptable solution. The need for a detailed procedure is accepted by all,
but who will prescribe the procedure is also a perplexed question. Either the procedure would
have to be prescribed by the Supreme Court or the High Courts on their judicial side. The
procedure can also be prescribed by the High Courts by framing rules under Part X of the Code
of Civil Procedure.70 The legislature may also step in to prescribe the procedure for judicial
settlement. Until and unless such a procedure is prescribed it would not be possible for the
judges and parties to take resort to judicial settlement as a mode of dispute resolution in terms
of section 89 CPC.
3.6. EFFICACY OF SECTION 89 CPC IN DELHI

Section 89 CPC makes it obligatory for the courts to explore the possibility of resolution of the
dispute by making reference to one of the several ADR mechanisms provided therein.71
However the pre-condition for referring the matter is satisfaction of the court that there exist
elements of settlement.
Despite the fact that various shortcomings have been pointed out by the Supreme Court in the
phraseology adopted by the Supreme Court yet there can be no doubt that section 89 CPC has
proved to be a system changer.72
70
In Delhi, in case of applications for plea bargaining the case is referred by the magistrate to the ACMM who
marks it to another magistrate for disposal of the plea bargaining application. A similar roster can be devised for
judicial settlement also where the case is marked to the Incharge, Judicial Settlement who further assigns it to
another judge for conducting judicial settlement proceedings. If the matter is settled a compromise decree can be
passed straight away. In case the matter is not settled the same is sent back to the referral court.
71
A.M. Khanwilkar, “Need to Revitalise ADR Mechanism”, available at: http:// bombayhigh
court.nic.in/mediation/Mediation_ Concept_and_Articles/need to revitalis.pdf (last visited on 11.09.2018).
72
Law Commission of India, 222nd Report, 2009.
Page | 32
The Supreme Court has given detailed practical guidelines so that section 89 CPC can be
utilized so as to achieve the best results.73 What is particularly laudable is that the Supreme
Court has recommended sufficient safeguards and checks to prevent ADR from being used by
an unscrupulous litigant as a tool for protracting the trial including, inter alia, recommending
the stage and the duration for which non-adjudicatory ADR processes ought to be resorted to
while retaining control over the same by insisting on periodic reports and further in laying
down the manner in which agreements reached in the ADR process are made binding upon
parties.74
However, an empirical study reveals that arbitration and conciliation are being rarely resorted
to in terms of section 89 CPC in Delhi. The prime reasons are that a state sponsored or state
funded arbitration or conciliation centre is lacking and the parties have to bear the cost of
arbitration/ conciliation which acts as a deterrent. Secondly the matter moves out of the court
system permanently in arbitration and temporarily in conciliation thus the public is not able to
repose so much confidence as it is able to do in other three processes where the case remains
in a court annexed system.
As far as judicial settlement is concerned there are no rules in place for reference of the matters
to judicial settlement after the Afcons judgment and hence judicial settlement is also not being
employed at all as an ADR mechanism in terms of section 89 CPC in Delhi. Resultantly
mediation and Lok Adalats are the most widely employed ADR mechanisms in terms of section
89 CPC in Delhi.
It was only to give effect to the mandate of section 89 CPC that mediation centers were
established under the aegis of the judiciary all over the country. The contribution of these
mediation centres in ameliorating the overburdened judicial system cannot be overlooked. In
Delhi more than 51,900 cases (excluding connected cases) in total have been settled on account
of mediation at courts. Apart from this a total number of cases 3120 (including connected cases)
73
74
Eastern Book Company, “Correcting the Printer’s Devil & Clearing the Air over Alternate Dispute Resolution:
Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd., (2010) 8 SCC 24”, Practical Lawyer,
available at: http://www.ebc-india.com (last visited on 08.09.2018).
Page | 33
were settled at the Delhi High Court Mediation and Conciliation Centre from 2006 to 2010.75
Thus mediation has emerged as the primary ADR process in Courts in Delhi.76
Further after the advent of section 89 of the Code of Civil Procedure there has been a spurt in
the cases being referred to the Lok Adalats also thereby increasing the number of settlements
also.77 ADR under section 89 CPC has therefore proved to be an efficient mechanism for
clearing docket congestion whilst at the same time ensuring quality justice.
75
High Court of Delhi, Biennial Report (2008-2010); See also Interview of Sadhana Ramachandran, Organising
Secretary of Samadhan, published in ‘Civil Society’ (June 2010) available at: http://www.civilsocietyonline.com
(last visited on 05.04.2012).
76
The US experience also shows that mediation had emerged as the primary ADR process in the federal district
courts in USA in the early stages. See Elizabeth Plapinger & Donna Stienstra, ADR and Settlement in the Federal
District Courts: A Sourcebook for Judges and Lawyers, available at: http://www.fjc.gov (last visited on
01.09.2018).
77
Lisa Blomgren Bingham, Tina Nabtchi, Jeffrey M.Senger, Michael Scott Jackman, “Dispute Resolution and the
Vanishing Trial: Comparing Federal Government Litigation and ADR Outcomes”, 24 (2) Ohio St. J. on Disp. Res.
225 (2009).
Page | 34
CHAPTER IV
IMPORTANCE OF ADR
As new issues emerge and conflicting situation flourish. In this way one dispute leads
to another and new complexities arises thereby leading to multiplicity of proceedings.
Therefore, it is always better to resolve it at the moment it rears its head. Therefore, it is
necessary that the procedure of resolving it must be agreeable by both the parties.78 The
preamble of the Constitution of India declares to secure all its citizen justice, liberty, equality
and fraternity. The justice granted to citizen is of social, economic and political. However, the
mode of delivering the justice to the citizen of India poses so many questions. It is in this regard
necessary to put the question that whether the present system of access to justice is satisfactorily
fulfilling the constitutional goal? The present mode of access to justice in India is based on the
adversarial legalism. This system is generally followed in the common law countries. In this
mode of justice, the State plays a neutral role and it is parties who are responsible for initiating
and conducting litigation. However, any crime is considered as an offence against the State in
which such proceeding is initiated. This mode of justice was adopted by the Britishers to exploit
the masses in their colonies. The whole set up was for the convenience of the administration in
which the position of the power addressee was very pathetic. If we analyse the adversarial legal
system, we could find that there is no parity of power between the parties to the dispute. It
discriminates on the social, economic and political ground and thus directly hit to the root of
the Constitution.
The adversarial system of justice is plagued by the high cost of litigation, delay,
technicalities of law, uncertainty and exploitation of parties by the advocates. Therefore, it is
necessary to think over the inquisitorial form of justice. Alternative Dispute Resolution has
emerged as a solution to the problems posed by the adversarial system of Justice at least in the
small cases. ADR is not new to India. Mediation was a method of dispute resolution in India
even centuries before British arrived. In ancient time there was Panchayat System in India.
This system was used by the village heads to resolve community dispute. It is prevalent in
Indian society till date. Mediation was used as a tool to resolve the dispute even in the
Role of Alternative Dispute Resolution methods in development of society: ‘Lok Adalat’ in India, available at:
78
www.napsipag.org/pdf/Lok_Adalat.pdf (last visited on April 28, 2018)
Page | 35
businessmen class in pre-British period. At that time impartial and respected businessman were
requested by business association members to resolve disputes through informal procedure.79
In pre-British period in tribal areas disputes were resolved by panchas, who were wise persons
of that locality. The disputant members of a tribe used to present their dispute to the panchas
who had to work out for settlement. In case of its failure it was referred to a public forum
attended by all interested members of the tribe for resolution. After considering the dispute,
available solution, interest of the tribe in great detail, panchas used to try once more to resolve
it. If settlement was possible yet, then the panch rendered a decision that was binding upon all
the parties. However, the decision of the panchas was not arbitrary rather it was based on the
tribal laws as well as such other consideration which was necessary to maintain harmony and
prosperity.80 The main significance of this system was that all proceedings were oral and there
was no record of the outcome. Instead of legal authority those kinds of dispute resolution
procedures were regularly used and commonly accepted in the Indian society.81 Thus, in India
ADR is not a new concept rather ADR relating resolution has been amended from time to time
to cater speedy dispute resolution.
The Indian judiciary has also encouraged ADR at various occasions which can be
clearly seen in Salem Advocate Bar Association v. Union of India82 where the Supreme Court
of India directed the constitution of an expert committee to formulate the manner in which the
provision relating to ADR incorporated in Section 89 of Civil Procedure Code – 1908 has to
be brought into operation.83 For the effective implementation of ADR mechanism, several
organisations and institutions like ICA, ICADR, Consumer Redressal Forum and Lok Adalat
were revived. The Old Arbitration Act, 1940 was repealed and new Arbitration and
Conciliation Act, 1996 was enacted. The new Act of 1996 is based on International Trade Law
(UNCITRAL) model law on International Commercial Arbitration.84
79
Mediation: Its origin and growth in India, available at: www.arbitrationindia.org/pdf/mediation_india.pdf. (last
visited on S
80
Anil Xavier, Mediation: Its origin and growth in India, available at
www.arbitrationindia.org/pdf/mediation_india.pdf.
81
Id.
82
Writ Petition No.496 of 2002 decided on 25.10.2002
83
Praveen Dalal, The culture of ADR in India, available at
www.odr.info/THE%20CULTURE%20OF%20ADR%20IN%20INDIA.doc accessed on 27-04-11.
84
Writ Petition No.496 of 2002 decided on 25.10.2002
Page | 36
4.1. PENDENCY OF CASES IN THE INDIAN COURT
Delay in justice not only affects the interest of the litigants but also undermines the
capability of the judicial system in imparting justice in efficient and effective manner. In Babu
Singh v. State of Uttar Pradesh85, Krishna Iyer J. while dealing with the bail petition remarked,
“Our justice system even in grave cases, suffers from slow motion syndrome which is lethal to
„fair trial‟ whatever the ultimate decision. Speedy justice is a component of social justice since
the community, as a whole, is concerned in the criminal being condignly and finally punished
within a reasonable time and the innocent being absolved from the inordinate ordeal of criminal
proceedings.” Similarly, in Sheela Barse v. UOI86 the Honourable Court reaffirmed that speedy
trial to be fundamental right. Thus, right to speedy trial is well recognized fundamental right at
present.87 There are many forum of appeals provided in the existing legal system. For eg :-
appeal from small causes court lies to the District Court on both facts and law and again right
of second appeal lies in the High Court which is known as Letters of Patent Appeal. These
various forums of appeal results cater delay in the justice delivery system.88
Till July 2009, there were 53,000 cases pending in the Supreme Court, 40 lakhs in the
different High Courts of India and 2.7 Crore in the different lower Court. Even if we assume
that no fresh cases would be filed and there will be no increase in the strength of the judge then
it would take 9 months to the Supreme Court to clear the backlog. Similarly, it would take 2
years and 7 months for the High Courts and 1 year and 9 months for the Lower Court to clear
the pending cases. However, the figure would vary if we look the individual High Courts and
Lower Courts. For example, Allahabad High Court needs nearly 6 years to clear the backlog
ADR has emerged as a new trend preventing court litigation and resolving disputes quickly
and amicably.
4.2 NEED FOR ALTERNATIVE DISPUTE METHODS
The main reason for the origin or needs of the ADR is the tiresome processes of
litigation, costs and inadequacy of the court system.89 It has ability to provide quick and cheap
85
AIR1978SC527
86
(1986) 3 SCC 235
87
Delayed Justice: An Inhuman Act, available at: http://www.mightylaws.in/439/delayed-justice-inhuman-act
(last accessed on Nov. 29, 2018)
88
Dr. Avtar Singh, Law of Arbitration 34 (Eastern Book Company, Lucknow, 2002)
89
Page | 37
relief. The present mode of adversarial system fails in providing the real justice between the
parties. The party, who approaches the Court of justice with pain and anguish in their heart,
faces various problems and suffers physically, economically and mentally. The present system
fails to deliver quick and inexpensive relief to the party. The procedure is also very complex.
This leads to a search for an alternative mechanism which should be inexpensive, quick and
with supplementary to the process of the traditional civil court. However, at the same time the
elements of judiciousness, fairness, equality and compassion cannot be discarded for
expeditious disposal. It is well said that “justice delayed is justice denied” and at same time, it
is also said that “justice hurried is justice buried”. In Fuerst Day Lawson Ltd v Jindal Exports
Ltd90 the Honourable Supreme Court held observed that the object of Alternative Dispute
Resolution Act 1996 is to provide speedy and alternative solution to the dispute and avoid
protraction of litigation. The provisions of the Act have to be interpreted accordingly.
Alternative Dispute Resolution promotes amicable settlement and help in the

preservation of the relations. Since there is direct involvement of parties in the settlement
process there is no need of the involvement of technical and formal procedures. However,
amicable settlement does not mean compromise at any cost rather it is reasonable compromise
factor.91
4.3 LEGISLATIONS RELATING TO ADR IN INDIA
Legislators in India has incorporated various provisions in different statutes pertaining to ADR.
The list of such legislations are as follows:-
1. Section 89 of Civil Procedure Code.

2. Order 23 Rule 3 of the Civil Procedure Code.
3. Order 32-A of the Civil Procedure Code.
4. Section 80 of the Civil Procedure Code.
5. Arbitration and Conciliation Act – 1996.
6. Legal Services Authorities Act – 1987.
7. Industrial Dispute Act
90
(2001) 6 SCC 356: AIR 2001 SC 2293
91
P.C Rao & William Sheffield, ADR IN THE CONSTRUCTION INDUSTRY 316 (Universal Law Publishing Co.
Pvt. Ltd., 1997)
Page | 38
8. Section 320 of Criminal Procedure Code
9. Section 9 of Family Court Act
10. Interstate water Dispute Act
4.4 DISADVANTAGE OF LITIGATION
Article 21 encompasses all conceivable human rights within its ambit. It is a directive to the
State to refrain from infringing the right of life or personal liberty of a person.92 In Hussainara
Khatoon v. Home Secretary93 State of Bihar, the Honourable Supreme Court held right to
speedy trial as a part of right to life or personal liberty. In Abdul Rehman Antulay v. R. S Nayak94
the court asserted that the “Right to speedy trial” flows from Art. 21 and encompasses the
stages right from the date of registration of the FIR and onwards, remains unaltered.
Following are the disadvantages of litigation :-
i) Cost – The present adversarial system of litigation is too expensive and at times the
cost exceeds the value of the claim. It is expensive, financially and emotionally
both. The cost of litigation includes the payment of court fees, fees paid for
summons and other processes, advocates fees etc. Though the government pays to
the judges and provide building and other infrastructure necessary to try cases. Yet
the fact is that the litigant has to bear the high cost in the litigation and the most
important expense is to bear the lawyer’s fees.
ii) ii) Delay – The delay is the most disadvantageous part of the litigation. If we look
at general proceeding in Civil cases it takes at least 15-20 years to be decided. In
some of the cases it is the next generation which litigate the dispute. In grave
criminal cases also, it takes at least decade. The delay result into the physical,
mental and financial harassment.
iii) No Parity of Power – There is no parity of power between the wealthier litigant and
under resource litigant. Parity of power refers to the balance between the parties. If
one party is rich and other is poor than there are all chances of the exploitation of
the later. The reason is that the rich person can afford the best lawyer of the country
92
Ashok K. Jain, Constitutional Law of India 137 (Ascent Publication, Delhi, 2009)
93
1980) 1 SCC 81.
94
(1992) 1 SCC 225.
Page | 39
whereas the poor person will not be in a position to afford such lawyer. Secondly,
the delay overburdens the expenses of the litigation. Therefore, the time will come
when the poor person would abandon his claim or go for out of court settlement.
iv) Uncertainty – There is no certainty about the result of the litigation and how long it
will last which induces the fear of incomprehensible to litigants.
v) There is no chance of reconciliation in family disputes. Parties never forget the bad
things said by their spouses at the trial.
vi) Lack of expertise – There is lack of expertise of judges in the present legal system
in commercial and technology disputes matter. This has resulted in wrong decisions
and consequential appeals to higher forums. For example – In matter relating to
building the person chosen to decide the matter should be normally an expert in the
subject matter of dispute, whereas the judges in the court will seldom have any
practical experience of the technicalities of the trade in question. Therefore, they
can’t appreciate the matter satisfactorily. Even if experts are called to assist them,
their opinion is not binding upon the judges.95 In Mitsubishi Motors Corporation v.
Soler Chrysler Plymouth Inc96 The Supreme Court of Australia highlighted one
advantage of arbitration as the adaptability and access to expertise as hallmarks of
arbitration. It made a point that the arbitrator is an expert in the subject-matter
appointed by the party to the dispute or the tribunal itself.
vii) Win – lose Scenario – In present legal system Court act as Courts of law and not as
court of equity. It leads to win- lose scenario, there is no mutual acceptable decision.
viii) No privacy - Another disadvantage of litigation is that pleading and document filed
in the court becomes public document and any person can have access of it.
4.5. DEVELOPMENT OF TECHNOLOGY AND ADVANCEMENT OF SOCIETY AT

PRESENT TIME
Present era is the age of technology, since last century technological advent has been
an ongoing process. This has made a great impact on the commercial life by increasing the
competition throughout the world. At the same time, it produces concern for the protection of
the consumer’s right. Various new issues emerging in the society and the present legal system
95
96
87 LED 2d 444 (1985)
Page | 40
is not sufficient to give any response to the new atmosphere and problem of the commercial
world. In such a situation, ADR has emerged as a powerful weapon for resolution of disputes
at domestic as well as international level. And now it is developing as an independent and
separate legal branch. Till 2009, Indian Information Technology (IT) industry accounted for a
total of 5.19% of the country’s GDP while providing employment to its various tertiary sectors.
The annual revenues from IT-BPO sectors have increased over US $ 76 billion in 2010-11.
India is producing around 5,00,0000 engineers each year. India is leading country in providing
outsourcing for customer support via Internet or Telephone connections. By 2009 India has
total of 37,160,000 telephone lines in use and total of 5.06,04,0000 mobile phone connections.
Around 7,570,000 people in the country have a access to broadband internet which makes it
12th largest countries in the world in terms of Broadband users. With the drastic growth in this
communication sectors, the crime has also emerged as a challenge to the government. Cyber
Crime is more burning issues at this time. Hacking of internet, online banking services etc.
poses a great threat.
In this backdrop it must be mentioned that the Police, lawyers, judges etc. are not
sufficiently equipped to handle such technical cases and therefore require proper training about
these technologies. Their lack of technological knowledge put them in great trouble and which
paves the way of delay in resolving a dispute.97 Cybercrime, is one such example where most
of the police, judges of lower courts do not have even primary knowledge of computer, in such
situation how one can expect the resolution of dispute with them.98 Globalisation has thrown
open the world market to every nation of the world. It has turned the world as small playground
for gigantic companies. Even countries like India has opened its market and marched on the
path of economic liberalisation, industrial deregulation, privatisation of state-owned
enterprises and reduced controls on foreign trade and investment.99 Since trades are no longer
restricted within the boundaries of a nation, the nomenclature of the contracts entered into has
also changed. International Contract is often difficult for the parties to agree on the choice of
the national Court. It is also true that choice of a state Court in a third country is seldom
appropriate.
97
Perry4Law Launched Online Dispute Resolution Centre in India, available at:
http://cyberlawsinindia.blogspot.com/2010/03/perry4law-launched-online-dispute.html (last visited on Aug 28,
2018)
98
Id
99
The World Factbook, available at: https://www.cia.gov/library/publications/the-world-factbook/geos/in.html
(last visited on Aug 28, 2018)
Page | 41
Further, judicial proceedings are time consuming and set impediments in business
transactions. Under such situation ADR emerges as the most suitable option to the parties to
such disputes.100 Moreover, ADR gives more autonomy to the parties in matters relating to
selection of the neutral third party who shall preside the proceedings, the rule they are to be
bound by and the time limits within which the dispute is to be settled. These discretions vested
in the parties ensure expedient disposal of the matter.
4.6. METHODS OF ALTERNATIVE DISPUTE RESOLUTION AND ITS MERITS AND

DEMERITS
The administration of justice is one of the essential functions of the State. The
disadvantage of adjudication has already been discussed in Chapter –II of this paper.
Considering those disadvantages, it can be said that the time demands, some alternative
methods for resolving the disputes, much quickly and efficiently. Therefore, the method like
arbitration, mediation, conciliation, specialised tribunal, consumer forum etc. was evolved.101
Lok Adalat is the fine blend of all. Following are the methods of Alternative Dispute
Resolution:-
i) Lok adalat – In 1987, the Legal Services Authorities Act was enacted by the Parliament
which came into force on 9th November, 1995 with an object to establish a nationwide
uniform network for providing free and competent legal services to the weaker sections
of the society on the basis of equal opportunity. Lok adalat means “People’s Court”. It
is to provide quick, accessible, non-technical, sympathetic and homely forum for
resolution the disputes and to resolve the disputes in a conciliatory spirit. This method
facilitates the parties to come to some form of agreement irrespective of whether they
answer the requirement of law or not. It is a form of administrative methods of dispute
resolution.
ii) Arbitration and Conciliation – The Arbitration and Conciliation Act -1996 provides an
alternative mode of dispute of resolution through arbitrator and conciliator.
iii) Mini Lok Adalats – With the object of providing justice to rural and tribal people mini
lok adalat was constituted at sub-district level and in villages. It caters justice to them
100
G K Kwatra, Arbitration and alternative dispute resolution : How to settle business disputes ( Lexis Nexis,
New Delhi, 2004)
101
Arnab Kumar Hazra, The law and Economics of Dispute Resolution in India 180 (Bookwell, New Delhi, 2003)
Page | 42
at their door-step. Local advocates and officials and social workers take part in the mini
lok Adalat.102
iv) Village Courts – These are units of self-government. They are like village panchayat.
Village panchayat is under the subject of state list. There are five members in the village
court. In some state these members are elected whereas in some they are nomitate.
There is no need of legal qualification to become the member.
v) Mediation Centres – Mediation centre originated in year 1983, in Tamil Nadu, in rural
areas under the Tamil Nadu Legal Aid and advice boards. The main object of the
mediation centre is to promote settlement of disputes which came before it. There is
participation of local social worker and mediator –lawyers.
vi) Family Courts Act of 1984- It was enacted to establish family courts with the object to
promote conciliation and speedy settlement in marriage and family cases. It deals with
conjugal right restitution, decree of nullity, judicial separation and dissolution
marriages.
102
Page | 43
CHAPTER V
ARBITRATION LAW IN INDIA
5.1. INTRODUCTION
Halsbury’s Laws of England103 define Arbitration as reference of a dispute or difference

between not less than two parties for determination after hearing both parties in a judicial
manner by a person or persons other than court of competent jurisdiction.
Arbitration is a recognized private legal procedure used to resolve disputes between two or
more parties104 where the parties entrust the dispute resolution process as well as the outcome
of the dispute to a neutral third party i.e. the arbitrator (or the arbitral tribunal).105 The arbitrator/
arbitral tribunal considers the case of the parties on merits, follows as simplified procedure to
adjudicate the dispute and the arbitral proceedings then culminate into a binding decision i.e.
the arbitral award106.
Arbitration is a creature of agreement. An agreement to arbitrate is therefore really an

agreement between the parties to substitute a tribunal other than the courts of the land to
determine their rights and substitution of the decision or award of such tribunal for the
judgment of the established courts of justice.107 The object of arbitration is to obtain fair
resolution of disputes by an impartial tribunal without unnecessary delay or expense and the
parties are free to agree how their disputes are resolved and intervention by the courts should
be restricted.108
103
Halsbury’s Laws of England (2) 502 (Butterworths, London, 4th edition, 1991).
104
Ashwanie Kumar Bansal, Arbitration and ADR 5 (Universal Law Publishing Co. Pvt. Ltd., Delhi, 2005).
105
Arbitrator is a private judge and arbitration is private adjudication. See Latha K., “The Need for the Proper
Utilization of ADR Facilities in India”, XLIII ICA Arbitration Quarterly 18 (October – December 2008).
106
S. 31, Arbitration and Conciliation Act, 1996.
107
Merton C. Bernstein, Arbitration – What is it, Private Dispute Settlement – Cases and Materials on Arbitration
(The Free Press, New York, 1968); Party autonomy is a commendable feature of arbitration. The parties are free
to choose not only the arbitrator, but also the law, procedure, venue and almost everything related to the dispute
resolution process. See Anurag K. Aggarwal, “Party Autonomy in Commercial Arbitration”, XLI (3) ICA
Arbitration Quarterly 9 (October – December 2006).
108
Davit St. John Sutton, Judith Gill, Mathew Gearing (Eds.) Russel on Arbitration 4 (Sweet and Maxwell,
London, 23rd Edn., 2007).
Page | 44
The nature of most ADR processes is fundamentally non-adjudicatory whereas arbitration is
essentially an adjudicatory process and is similar to litigation in that sense. However, since it
is still an alternative to the conventional litigative process109 of dispute resolution conducted
before law courts established under the writ of the state, arbitration finds its place in the
galleries of what has been described as ADR.110 In India also the availability of arbitration as
a dispute resolution process in section 89 CPC indubitably endorses its status as an ADR
mechanism.
5.2. HISTORICAL BACKGROUND OF ARBITRATION IN INDIA
Arbitration as a mode for settlement of disputes between the parties has a tradition in India.10
The decisions rendered by Panchayats, which are recognized since times immemorial in India,
represent a crude form of arbitration.111 With the advent of the British Rule commenced the era
of codified legislation, rules and regulations and arbitration also made its way into the statute
books.112 The first comprehensive law on the subject was enacted in India in the year 1899 viz.
the Indian Arbitration Act, 1899.113 The Code of Civil Procedure, 1908 also contained various
provisions relating to arbitration under section 89 and section 104.114 In 1940 the Government
of India passed the Arbitration Act, 1940, the precursor to the contemporary legislation.115
However, with the passage of time, experience revealed that the Arbitration Act, 1940 was
laden with inadequacies and defects. The Arbitration Act, 1940 even had to face stringent
criticism time and again from none other than the Apex Court itself.116 The functioning of the
Act of 1940 in fact dented the conception of arbitration in India and the government decided
109
G.K. Kwatra, Arbitration & Conciliation Law of India 9 (Universal Law Publishing Co. Pvt. Ltd., Delhi, 7th
Edn., 2008).
110
Luke R. Nottage, “Is (International) Commercial Arbitration ADR?”, 20 The Arbitrator and Mediator 83
(2002), available at: http://papers.ssrn.com (last visited on 12.04.2012). See also D.K. Jain, “Arbitration as a
Concept and as a Process”, XLI (4) ICA Arbitration Quarterly 1 (January – March 2007); K.D. Raju, “Alternative
Dispute Resolution System: A Prudent Mechanism of Speedy Redress in India”, available at:
http://papers.ssrn.com (last visited on 21.04.2012).
111
H.K. Saharay, Law of Arbitration and Conciliation 6 (Eastern Law House, Calcutta, 2001).
112
The Bengal Regulations of 1772, the Bengal Regulations of 1793 and Regulation VI of 1813 dealt with
arbitration in pre-independence India.
113
Rao R., “Trend and Developments in Arbitration in India and the Region”, XLIII (2) ICA Arbitration Quarterly
1 (July – September 2008).
114
Section 89 CPC was repealed by the Arbitration Act, 1940. However, it got reincarnated with the passing of
the Code of Civil Procedure (Amendment) Act, 1999 w.e.f. 1st July, 2002.
115
The Act was on the lines of its English counterpart i.e. the English Arbitration Act, 1934.
116
Guru Nanak Foundation, M/s. v. M/s. Rattan Singh and Sons, AIR 1981 SC 2075; Food Corporation of India
v. Joginderpal Mohinderpal, AIR 1989 SC 1263.
Page | 45
to refer the matter to the Law Commission of India, pursuant to which the Law Commission117
recommended far-reaching amendments in the Arbitration Act of 1940.
During this period the UNCITRAL after exhaustive research and due deliberations adopted the
Model law on Arbitration.118 The necessity to amend the Arbitration Act of 1940 had become
evident and imminent. The General Assembly of the United Nations119 had also recommended
that all countries give due regard to the UNCITRAL Model Law on Arbitration, to bring about
uniformity and consistency in arbitration law all across the globe so as to develop arbitration
as a wide spread and international mode of dispute resolution. Consequently, the government
decided that enactment of a new comprehensive legislation in sync with the international
standards was a better course of action rather than effecting radical amendments to the existing
Arbitration Act, 1940. The result was the enactment of the Arbitration and Conciliation Act of
1996 on the lines of the UNCITRAL Model Law.120 While the UNICITRAL Model Law on
Arbitration primarily applied only to international commercial arbitrations, the Arbitration and
Conciliation Act of 1996 aimed to consolidate and amend Indian laws relating to domestic
arbitration, international commercial arbitration and enforcement of foreign arbitral awards.121
5.3. TYPES OF ARBITRATION
5.3.1 Domestic, Foreign and International Arbitration:
The term “Domestic Arbitration” denotes an arbitration which takes place in India and the
resultant arbitral award is considered to be a domestic award.122 “Foreign Arbitration” is an
arbitration which is conducted at a place outside India and the resultant award is designated as
117
Law Commission of India, 76th Report, The Arbitration Act, 1940 (1978) - Eighth Law Commission headed
by Justice H.R. Khanna.
118
The UNCITRAL Model Law on International Commercial Arbitration, 1985 (The Model law has lately been
amended in 2006).
119
Vide its resolution dated 11th December 1985; Prior to this the UNCITRAL Arbitration Rules, 1976 were
adopted by the United Nations General Assembly and recommended for use in the settlement of disputes arising
in the context of international commercial relations. See also 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)
120
See Preamble to the Arbitration and Conciliation Act, 1996.
121
Fuerst Day Lawson Ltd. v. Jindal Exports Ltd., AIR 2001 SC 2293. The Arbitration and Conciliation Act,
1996 repealed the Arbitration Act, 1940 and allied legislations i.e. the Arbitration (Protocol and Convention) Act,
1937 and the Foreign Awards (Recognition and Enforcement) Act, 1961.
122
S. 2(7), Arbitration and Conciliation Act, 1996.
Page | 46
a “foreign award”.123 “International Arbitration”124 is an arbitration where at least one of the
parties involved is a not a resident of India, or is domiciled outside India, or is a company
incorporated outside India125 and such an arbitration may take place in India or outside India.
5.3.2 Institutional Arbitration
“Institutional Arbitration” is the arbitration conducted by an established permanent arbitral

institution. There are various such institutions/ organizations126 which offer facilities for
conduct of arbitration and have their own set of rules for conduct of arbitral proceedings which
are managed and supervised by the institution from the stage of appointment of arbitrator till
the passing of the award.127
“Ad hoc Arbitration” is arbitration agreed to and arranged by the parties themselves without
recourse to any permanent arbitral institution. In other words, arbitration which is not
‘institutional’ is referred to as ad hoc arbitration.
5.4. THE ARBITRATION PROCESS
The genesis of arbitration is the arbitration agreement. An arbitration agreement is plainly an

agreement whereby the parties to the agreement consent to submit to arbitration all or certain
disputes, which have arisen or which may arise between them in respect of a defined legal
relationship.128 The sine qua non for a valid arbitration agreement is that the parties must be ad
idem and must intend to settle their disputes by arbitration and bound by the decision of the
arbitral tribunal.129
123
However only those foreign awards which are recognized by ss. 44 and 53, Arbitration and Conciliation Act,
1996, which in turn relate to the New York Convention for Recognition and Enforcement of Arbitral Awards,
1958 and Geneva Convention, 1937 respectively, can be enforced in India.
124
S. 2(1)(f), Arbitration and Conciliation Act, 1996 defines International Commercial Arbitration in a similar
manner.
125
G.K. Kwatra, Arbitration & Conciliation Law of India 5 (Universal Law Publishing Co., Delhi, 7th Edition,
2008).
126
Eg. International Chamber of Commerce (ICC), London Court of International Arbitration (LCIA), Singapore
International Arbitration Centre (SIAC), American Arbitration Association (AAA), Indian Council for Arbitration
(ICA), FICCI Arbitration and Conciliation Tribunal (FACT), etc.
127
A.K. Bansal, “Fast Track Arbitration” in P.C. Rao and William Sheffield (Eds.), Alternative Dispute Resolution
312 (Universal Law Publishing Company Pvt. Ltd., Delhi, 1997).
128
129
K.K. Modi v. K.N. Modi, 1998 (3) SCC 573; Bihar State Mineral Development Corporation v. Encon Builders
(India) Pvt. Ltd. (2003) 7 SCC 118.
Page | 47
The arbitration agreement may be in the form of a separate agreement or may be incorporated
in the form of an arbitration clause in the primary contract. 130 However the arbitration
agreement must be in accordance with the requirements enshrined under section 7 of the
Arbitration and Conciliation Act, 1996.131
5.5. APPOINTMENT OF ARBITRATOR(S)
The parties are free to determine the number of arbitrators, however there cannot exist an
arbitral tribunal with an even number132 of arbitrators.133 The parties are also free to agree on a
procedure for appointment of arbitrator(s). The arbitrator(s) may be named in the agreement or
the parties may nominate them themselves or through any other person or institution as and
when the dispute arises. Where the parties fail to agree on the name of the arbitrator the
appointment can be made, upon request of a party, by the Chief Justice of the High Court or
his designate.134 In case of International Commercial Arbitration the arbitrator(s) can be
appointed by the Chief Justice of India or his designate only.
The power exercised by the Chief Justice of the High Court or the Chief Justice of India under
Section 11 of the Arbitration and Conciliation Act, 1996. is not an administrative power but a
judicial power? Hence the same can be delegated, by the Chief Justice of the High Court only
to another judge of that court and by the Chief Justice of India to another judge of the Supreme
Court only. The Chief Justice or the designated judge has the right to decide the preliminary
aspects on such an application being made including his own jurisdiction to entertain the
request, the existence of a valid arbitration agreement, the existence or otherwise of a live
claim, the existence of the condition for the exercise of his power and the qualifications of the
arbitrator or arbitrators.135
130
S. 7(2), Arbitration and Conciliation Act, 1996; See National Agricultural Coop. Marketing Federation India
Ltd. v. Gains Trading Ltd., (2007) 5 SCC 692.
131
Centrotrade Minerals & Metal Inc. v. Hindustan Copper Ltd., 2006 (2) Arb. L.R. 547 (SC).
132
In M.M.T.C. Ltd. v. Sterlite Industries (I) Pvt. Ltd., AIR 1997 SC 605 the Supreme Court held that where the
arbitration agreement provides for appointment of two or an even number of arbitrators the same is not ipso facto
void and the two appointed arbitrators can appoint the presiding arbitrator and proceed with the arbitral
proceedings; In Narayan Prasad Lohiya v. Nikunj Kumar Lohiya, AIR 2002 SC 1139 it was further held that even
where the two arbitrators appointed proceed with the arbitration and do not disagree and a common award is
passed the same would be treated as valid and the requirement of appointment of third presiding arbitrator would
step into picture only where they disagree.
133
134
135
M/s S.B.P. & Co. v. M/s Patel Engineering Ltd., 2005 (8) S.C.C. 618 overruling the previous view that the
power under s. 11, Arbitration and Conciliation Act, 1996 is a judicial power in Konkan Railway Corpn. Ltd. v.
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5.6. INTERIM MEASURES IN ARBITRATION
Any party to the arbitration agreement, before or during arbitral proceedings or at any time
after making of the arbitral award but before it is enforced, may apply to the court for interim
relief in connection with the dispute.136 However where such an application for grant of interim
relief is made before the commencement of arbitral proceedings there must be a manifest
intention on the part of the party to refer the dispute to arbitration137 and it is incumbent upon
the applicant thereafter to commence arbitral proceedings within a reasonable time and on
failure to do so the court may recall the interim order, if granted.138
The arbitral tribunal may also order for interim relief, although, this power can be excluded by
the parties by way of an agreement.139 However, the power of the court is much wider and in
fact the interim order passed by the arbitral tribunal has been described as a toothless order as
the same cannot be enforced by the arbitrator.140
5.7. ARBITRAL PROCEEDINGS
The arbitral proceedings before the arbitrator in respect of a particular dispute commence on
the date on which a request for reference of the dispute to arbitration made by one party is
received by the opposite party.141 The parties are free to agree on the procedure and venue of
arbitration and the language in which the arbitration proceedings are to be conducted. In the
absence of any such agreement the arbitral tribunal has the power to determine the same in the
manner it considers appropriate. However, the parties are to be treated with equality and each
party has to be given full opportunity to present his case.142 The arbitrator otherwise is not
bound by the provisions of the Code of Civil Procedure, 1908 or the Indian Evidence Act,
1872.143
Mehul Construction Co., (2000) 7 SCC 201 and Konkan Railway Corpn. Ltd. v. Rani Construction Pvt. Ltd.,
(2002) 2 SCC 388.
136
137
Sundaram Finance Ltd. v. NEPC Ltd., (1999) 2 SCC 479.
138
Ashok Traders v. Gurmukh Dass Saluja, AIR 2004 SC 1433.
139
140
Kanak v. U.P. Avas Evam Vikas Parishad, AIR 2003 SC 3894; M.D. Army Welfare Housing Organization v.
Sumangal Services Pvt. Ltd., AIR 2004 1344.
141
S. 21, Arbitration and Conciliation Act, 1991; Maharaj Singh v. Vulcan Insurance Company Ltd., AIR 1976
Delhi 182.
142
143
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5.8. ARBITRAL AWARD
The final decision of the arbitrator is referred to as the arbitral award. The arbitral award has
to be in writing and has to be signed by the members of the arbitral tribunal.
The arbitral award must state the reasons upon which it is based, unless the parties have agreed
that no reasons144 are to be given.145 Parties to an arbitration particularly the losing party, are
entitled to know the reasons for the tribunal’s decision by which they are bound.146 The
Supreme Court has also emphasized the mandatory nature of this provision requiring the
arbitrator to give reasons unless the arbitration agreement provides otherwise.147 The
requirement of a reasoned award is also excluded where the award is an arbitral award on
agreed terms under section 30 of the Arbitration and Conciliation Act, 1996.148
A signed copy of the award is to be delivered to each party. The award must bear the requisite
stamp duty149 and if the award creates any right title or interest vested or contingent in
immovable property it is required to be registered also.150
5.9. SETTING ASIDE OF ARBITRAL AWARD
The arbitral award passed by an arbitrator can be assailed in terms of section 34 of the
Arbitration and Conciliation Act, 1996 and can be set aside by the principal civil court of
competent jurisdiction on an application by any party.151 However, the arbitral award can only
be set aside on certain specified grounds152 which are: incapacity of a party, invalidity of the
arbitration agreement, lack of proper notice or opportunity to one party, the arbitral award being
144
'Reason' is a ground or motive for a belief or a course of action, a statement in justification or explanation of
belief or action. See Poyser and Mills’ Arbitration Re, (1963) 2 QB 467; The contractual stipulation of reasons
under arbitration law means proper and adequate reasons. See Anirudh Wadhwa and Anirudh Krishnan (Eds.),
R.S. Bachawat’s Law of Arbitration and Conciliation (Lexis Nexis Butterworths Wadhwa, Nagpur, 5th Edn.,
2010).
145
146
See Davit St. John Sutton, Judith Gill, Mathew Gearing (Eds.) Russel on Arbitration (Sweet and Maxwell,
147
Konkan Railway Corporation Ltd. v. Mehul Construction Company, (2000) 7 SCC 201; This exception
however gives a tool in the hands of dominant parties to misuse arbitration law; In Raipur Development Authority
v. Chokhamal Contractors, AIR 1990 SC 1426 the Supreme Court had criticized the practice of unreasoned
awards.
148
Tamil Nadu Electricity Board v. Bridge Tunnel Construction, AIR 1997 SC 1376.
149
In Delhi the award is required to be stamped with stamp duty as per article 12 of the schedule to the Indian
Stamp Act, 1889 as applicable to Delhi, which is 2% where the value does not exceed Rs. 1000/- and thereafter
one rupee for every one thousand rupees or part thereof of the value of the property to which the award relates
where such value exceeds Rs.1000 (roughly 0.1%).
150
Sardar Singh v. Krishna Devi, 1994 (4) SCC 18 interpreting s. 17(1)(b), Registration Act, 1908.
151
S. 2(e), Arbitration and Conciliation Act, 1996.
152
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beyond the scope of the agreement, improper constitution of the arbitral tribunal, the dispute
being non arbitrable, the arbitral award being in conflict with the public policy of India.153
The application for setting aside of the arbitral award is to be made within 3 months of receipt
of copy of the arbitral award. In case the party is able to show sufficient cause, the court may
also entertain such an application within the further period of 30 days. 154 However no further
delay can be condoned having recourse to section 5 of the Limitation Act, 1963.155
In a petition for setting aside of the award, however, the court does not exercise appellate
jurisdiction. The court is not supposed to re-appreciate evidence or go into the reasoning given
by the arbitrator and the award can be set aside on the specified grounds only.156This is a very
important provision rendering finality to the arbitral award to a considerable extent and
permitting only limited judicial review.
5.12. ENFORCEMENT OF ARBITRAL AWARD
The arbitral award can be enforced under the Code of Civil Procedure, 1908 in the same manner
as if it were a decree of the court when the time for making an application to set aside the
arbitral award under section 34 of the Arbitration and Conciliation Act, 1996 has expired, or
such application having been made, it has been refused.157
5.13. ADVANTAGES AND MERITS OF ARBITRATION
5.13.1 Privacy and Confidentiality
The baseline for appreciating the advantages of arbitration is litigation since arbitration as an
ADR mechanism and litigation both are adjudicatory in character. Judicial proceedings in
courts are conducted in an open court in the gaze of the general public. Everything right from
pleadings, evidence, proceedings to the final decision is open and accessible for all and sundry.
In contradistinction to judicial proceedings arbitration is a private affair. Some parties prefer
to have that their disputes determined out of public gaze and for them arbitration is a good
option.158 Arbitration is closed door adjudication where the general public is excluded and
153
Oil & Natural Gas Corporation Ltd. v. SAW Pipes Ltd, 2003 (5) S.C.C. 705.
154
155
Union of India v. Popular Construction Co., AIR 2001 SC 4010.
156
Arosan Enterprises Ltd. v. Union of India, AIR 1999 SC 3804.
157
Delta Construction Systems Ltd. v. Narmada Cement Company Ltd, 2002 (2) Arb.L.R. 47.
158
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therefore offers privacy and confidentiality for those whose circumstances or wishes require a
private adjudication. Confidentiality is therefore an institutional security in arbitration.
5.13.2. Convenience of Parties and Flexibility of Procedure
Another principal feature of arbitration is convenience of parties. In the judicial process the
parties have no control over the proceedings and they have no say as regards the procedure,
venue and time of judicial proceedings. The procedure is largely predetermined, the venue is
fixed and the time is controlled by the presiding judge. However, arbitration caters to the
convenience of the parties which is a very important advantage of arbitration. In arbitration the
parties are free to choose the venue and time of arbitration, the procedure governing arbitration,
the arbitrators etc. Further as arbitration is consensual and is based on the edifice of party
autonomy, the parties can choose the most suitable procedure.159 The arbitral process is also
very flexible unlike litigation before national courts which is governed by detailed intricate and
time consuming rules of procedure and evidence.160 This is because the arbitrator is not bound
by the Code of Civil Procedure, 1908 or the Indian Evidence Act, 1872.161This flexibility of
procedure and convenience of parties makes arbitration an excellent dispute resolution process.
5.13.3. Liberty to choose Arbitrator
The arbitrator is a private judge chosen by the parties to adjudicate their dispute. Arbitration
provides flexibility to the parties to choose any person of their choice to adjudicate their
disputes. The right to choose or to have a say in the choice of one or more members of the
arbitral tribunal is also regarded as an important advantage.162 This permits the parties and
gives them an option to have their dispute resolved by experts and professionals having
specialized knowledge and experience in the applicable arena. This is most important in case
of complex matters requiring technical or special expertise so as to understand and appreciate
the issues in a better manner. It is also important as it enables the parties to appoint a person as
159
Id.
160
Tarun Chatterjee, “Need for Speed: International Institutional Arbitration”, XLIII (4) ICA Arbitration
Quarterly 1 (January-March, 2009); Arbitration embodies a trial process grounded on common sense, flexibility,
and an ethic of problem-solving. See Thomas E. Carbonneau, “Arguments in Favour of Triumph of Arbitration”,
10 Cardozo J. Conflict Resol. 395 (2009).
161
162
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an arbitrator who is readily available and inclined to accommodate and cooperate with the
parties so as to expedite the dispute resolution process.
5.13.4. Arbitration is Potentially Expeditious
Arbitration is potentially faster in comparison to litigation and can be expedited to suit the
needs and requirements of the parties. The parties may also take recourse to a summary form
arbitration referred to as Fast Track arbitration. Complex commercial/ business disputes require
expeditious resolution as high stakes are involved and expeditious resolution is in the interest
of trade and commerce. If the dispute needs urgent resolution the parties can choose a tribunal
which will act promptly rather than wait for their turn in the queue.163 In arbitration the
arbitrator can fix up a schedule for hearing of the case as per the convenience of the parties and
without any institutional constraints so as to decide the dispute as expeditiously as possible.
The arbitral tribunal follows a simplified procedure and is not bound by the provisions of the
Code of Civil Procedure, 1908 or the Indian Evidence Act, 1872. Thus, the arbitral procedure
can be moulded so as to suit the requirements of the parties which results in expeditious
adjudication of the dispute.164
5.13.5. Finality of Awards
The biggest and most important advantage of arbitration is the finality attached with an arbitral
award. The arbitral award is treated to be final and binding between the parties.165 The award
can be set aside by the court only on certain specified grounds as enunciated under section 34
of the Arbitration and Conciliation Act, 1996. The ambit and scope of section 34 of the
Arbitration and Conciliation Act, 1996 is also limited and the court does not exercise appellate
jurisdiction. Thus, while in judicial proceedings we have provisions for successive appeals
where at least the first appellate court appreciates the factual evidence also, in arbitration there
is no provision for an appeal against the award. Where no application under section 34 of the
Arbitration and Conciliation Act, 1996 is made or such application is made and refused the
award is treated as a decree of the court and can be executed as such. The recourse against the
163
Miles B. Farmer,” Mandatory and Fair? A Better System of Mandatory Arbitration”, 121 Yale L.J. 2346 (2012);
See also Davit St. John Sutton, Judith Gill, Mathew Gearing (Eds.) Russel on Arbitration (Sweet and Maxwell,
164
Sarah Rudolph Cole, “Uniform Arbitration: “One Size Fits All” Does Not Fit”, 16 Ohio St. J. on Disp. Res.
759 (2001).
165
WIPO Arbitration and Mediation Center, “Dispute Resolution for the 21st Century”, available at:
http://www.wipo.int (last visited on 30.05.2012); See also S. 35, Arbitration and Conciliation Act, 1996.
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award is limited in other jurisdictions also. This finality attached to the award coupled with
limited judicial review results not only in expeditious final resolution but also expeditious
enforcement of the decision.
5.13.6. Extensive Enforceability of Arbitral Awards
Another important advantage associated with arbitration is the extensive enforceability of the
arbitral award.166 An arbitration award passed in India can be enforced in other countries as
well. Various countries including India are the signatories of the Geneva Protocol, 1923 and
the New York Convention on Recognition and Enforcement of Foreign Awards, 1958 which
facilitate enforcement of arbitral awards. Similarly, foreign awards which have been passed in
the other countries, which are signatories to the Geneva Protocol and the New York Convention
and have made reciprocal arrangements, are enforceable in India.167 Thus arbitral awards can
be enforced in most countries untrammeled by national boundaries.
5.14. JUDICIAL INTERVENTIONS IN THE ARBITRAL PROCESS
The role of courts in arbitration matters has also been a subject of much discussion. One view
is that the process of arbitration is dependent on the underlying support of the courts, which
alone have the power to rescue the system when one party seeks to sabotage it168 and it is only
a court possessing coercive powers which could rescue the arbitration if it is in danger of
foundering.169 When viewed in this perspective it cannot be disputed that arbitration being a
process of adjudicatory dispute resolution must be regulated in some form or the other and
judicial intervention is one form of regulation which legal systems all over the world have
experienced.170 However the resistance to judicial regulation appears to be not on account of
the fact that the judicial system might not be an efficient regulator but on account of the delay
and expense which have come to be associated endemically with the judicial system.
166
167
In terms of the provisions of Part II of the Arbitration and Conciliation Act, 1996 dealing with enforcement of
foreign awards.
168
Adhunik Steels Ltd. v. Orissa Manganese and Minerals Pvt. Ltd., AIR 2007 SC 2563.
169
Levalin NV v. Ken-Ren Fertilisers and Chemicals, 1994 (2) Lloyds Report 109.
170
States possess the power to adopt standards for the conduct of arbitration proceedings and review of arbitration
awards that are significantly different from law standards. See Stephen K. Huber, “State Regulation of Arbitration
Proceedings: Judicial Review of Arbitration Awards by State Courts”, 10 Cardozo J. Conflict Resol. 509 (2009);
In fact proposals for arbitration reform often focus on granting individuals the means to appeal unjust decisions.
See Sarah Rudolph Cole, “Revising the FAA To Permit Expanded Judicial Review of Arbitration Awards”, 8
Nev. L.J. 214 (2007).
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The other view is that the interference of the courts should be minimal in view of the fact that
the parties have themselves opted for ADR and they being legally entitled to do so their will
must be respected and the impulse to decide the issue again must be resisted by the courts.171
One of the main reasons for discontent under the Arbitration Act, 1940 was excessive judicial
intervention. Therefore, the Arbitration and Conciliation Act, 1996 was enacted to inter alia
achieve the twin goals of cheap and quick resolution of disputes by giving more powers to the
arbitrators and reducing the supervisory role of the court in the arbitral process.172 In this
background judicial intervention in arbitration matters is expressly prohibited in the Arbitration
and Conciliation Act, 1996 unless provided in the Act itself.173
There are primarily four stages of judicial intervention in the arbitral process. One is at the
stage of appointment of arbitrator, the second at the stage where interim orders are sought for
preserving the subject matter of arbitration proceedings or for securing the amount in dispute,
the third at the stage of assailing an arbitral award and the fourth at the stage of enforcement
of an arbitral award. It is the intervention at the first and the third stage which has been a matter
of concern.
To begin with the scope and ambit of the proceedings under section 11 of the Arbitration and
Conciliation Act, 1996 dealing with appointment of Arbitrator has been increased lately by the
judiciary. The Supreme Court has held that the power exercised by the Chief Justice under
section 11 of the Arbitration and Conciliation Act, 1996 is a judicial power.174 As a result the
same can be delegated by the Chief Justice of a High Court to a Judge of the High Court only
and by the Chief Justice of India to a Judge of the Supreme Court only. This has first of all
augmented the cost factor as a party has to compulsorily approach the High Court or the
Supreme Court for the purpose of appointment of an arbitrator.
Secondly the scope of the proceedings has also been widened in as much as the Chief Justice
is supposed to decide whether the party making the application has approached the appropriate
High Court and whether there is an arbitration agreement and whether the party who has
171
Lord Mustill, Foreward to O.P. Malhotra’s The Law and Practice of Arbitration and Conciliation (Lexis Nexis
Butterworths, Delhi, 1st Edn, 2003); See also Thomas E. Carbonneau, “Arguments in favour of Triumph of
Arbitration” 10 Cardozo J. Conflict Resol. 395 (2009).
172
Fuerst Day Lawson Ltd., M/s. v. Jindal Exports Ltd., AIR 2001 SC 2293; See also S K Dholakia, “Analytical
Appraisal of the Arbitration and Conciliation (Amendment) Bill, 2003”, XXXIX (4) ICA Arbitration Quarterly 3
(Jan. – Mar., 2005).
173
174
S. B. P.and Co., M/s. v. M/s. Patel Engineering Ltd., AIR 2006 SC 450.
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applied under section 11 of the Act, is a party to such an agreement. Further the Chief Justice
also has an option to decide whether the claim is a dead claim or a live claim and whether the
parties have concluded the contract/ transaction by recording satisfaction of their mutual rights
and obligation or by receiving the final payment without objection.175 For this purpose the
Chief Justice can either proceed on the basis of affidavits and the documents or take such
evidence or get such evidence recorded as may be necessary.176Thirdly the order passed by the
Chief Justice of a High Court or his designate would be open to challenge by way of an appeal
to the Supreme Court under Article 136 of the Constitution of India thereby bringing in one
more round of a court battle.
This has made the proceedings for appointment of arbitrator, which were once branded as
administrative, more complex, multifaceted and exhaustive, thereby resulting in multiplication
of delay and costs.
Judicial intervention at the third stage i.e. at the stage of assailing the arbitral award has evoked
even greater concern. An arbitral award can be challenged in the courts on certain limited
statutorily specified grounds.177 The courts, however through judicial interpretation, have
expanded the scope of judicial review in arbitration matters. Therefore, although the role of
Courts has been expressly minimized the courts have widened their role165 by giving an
extremely wide interpretation to the expression “the arbitral award being in conflict with the
public policy of India” in section 34, Arbitration and Conciliation Act, 1996 thereby expanding
the scope of judicial review of arbitral awards.178
Under the Arbitration Act, 1940 the Supreme Court179 had held that an award can be said to be
contrary to public policy if such enforcement would be contrary to (i) fundamental policy of
Indian law; or (ii) the interests of India; or (iii) justice or morality. In 2003 the Supreme Court
further expanded the ambit of the expression public policy for the purpose of section 34,
Arbitration and Conciliation Act, 1996 holding that an award which is, on the face of it, patently
in violation of statutory provisions cannot be said to be in public interest and accordingly the
175
National Insurance Co. Ltd. v. M/s. Boghara Polyfab Pvt. Ltd., AIR 2009 SC 170.
176
177
178
Janson v. Driefontein Consolidated Gold Mines Ltd., (1902) AC 484]; In Richardson v. Mellish, (1824) 2 Bing
229.
179
Renusagar Power Co. Ltd. v. General Electric Co., 1994 Supp (1) SCC 644.
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same would also be contrary to public policy and can be set aside in terms of section 34 of the
Arbitration and Conciliation Act, 1996.180
Thus the boundaries of permissible challenge delineated by section 34 of the Arbitration and
Conciliation Act, 1996 have been virtually done away with by a process of judicial
interpretation.181 Markanda has also criticized the ONGC judgment saying that the Supreme
Court has vastly enlarged the scope of challenge to awards much more than what was available
under the Act of 1940 and it is thus contrary to the very spirit of the Act of 1996.182 It has been
commented that as a result of SAW Pipes183 and Patel Engineering184, arbitration appears to
have been reduced to a mere prelude to protracted litigation in Indian courts, thereby increasing
the “risk premium” associated with Indian transactions.185
Be that as it may, there can be no dispute about the proposition that the process of arbitration
needs to be regulated.186 The ad hoc arbitrators are not subject to any kind of regulation at all
and the shift from ad hoc to institutional arbitration and implementation of other remedial
measures may take quite some time. The setting up of an Arbitral Council of India on the lines
of Press Council of India and Bar Council of India may be a plausible solution for regulating
arbitration.187
Till such time the courts can fill the vacuum and exercise supervisory jurisdiction over the
arbitration process within the parameters under the Arbitration and Conciliation Act, 1996.
There is also a need to draw a distinction between international arbitrations and domestic
arbitrations and ad hoc and institutional arbitration in this respect. The ad hoc domestic
180
Oil and Natural Gas Corporation Ltd. v. SAW Pipes Ltd., AIR 2003 SC 2629.
181
Ruma Pal, “Arbitrations and Arbitrators”, 1(1) Dispute Resolutions (Nani Palkhivala Arbitration Centre
Quarterly) 3 (September 2010), referring to Security Printing and Minting Corporation of India Ltd. v Gandhi
Industrial Corporation, (2007) 13 SCC 236; Oil and Natural Gas Corporation Ltd., v. Saw Pipes Ltd., (2003) 5
SCC 705; ONGC Ltd., v. Garware Shipping Corporation Ltd., (2007) 13 SCC 434 and DDA v. R.S. Sharma and
Co., (2008) 13 SCC 80.
182
P.C. Markanda, Law relating to Arbitration and Conciliation (Wadhwa and Company, Nagpur, 6th Edn.,
2006).
183
184
Oil and Natural Gas Corporation Ltd. v. SAW Pipes Ltd., AIR 2003 SC 2629
185
Aloke Ray and Dipen Sabharwal, “What Next for Indian Arbitration?” The Economic Times, Mumbai, 29th
August 2006; Arbitration has now become closer to litigation because it has to be in accordance with the statutory
provisions and therefore it has become virtually an adjudicatory process with all formalities of the functioning of
a court. See Mathew Thomas, “Conciliation as a necessary Precursor to Arbitration”, 1(3) The Indian Arbitrator
7 (April 2009).
186
Miles B. Farmer, “Mandatory and Fair? A Better System of Mandatory Arbitration”, 121 Yale L.J. 2346 (2012).
187
Janak Dwarkadas, “A Call for Institutionalised Arbitration in India : A step towards Certainty, Efficiency and
Accountability”, 3 SCC (Journal) 1 (2006); Department related Parliamentary Standing Committee (Rajya
Sabha), Ninth Report On Personnel, Public Grievances, Law and Justice on the Arbitration and Conciliation
(Amendment) Bill, 2003, presented to the Rajya Sabha on 4th August 2005.
Page | 57
arbitration definitely requires judicial intervention and regulation at this stage. The
minimization of the supervisory role of the courts though indubitably one of the primary objects
of the Act, however, the restraint cannot logically be conceded a primacy to override the
provisions permitting judicial intervention in the interest of ensuring a fair, efficient and
capable arbitral procedure.188 It is on this rationale that the aforesaid judicial decisions appear
to have been based. But the parameters may be different for institutional arbitrations or
international arbitrations and there the concept of minimal judicial intervention may be applied.
188
State of Arunachal Pradesh v. Subhash Projects & Marketing Ltd., (2007) 1 Arb.LR 564.
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CHAPTER VI
PRACTICAL TRAINING
6.1. REPORT ON NATIONAL SEMINAR ON “EMERGING TRENDS IN

ALTERNATIVE DISPUTE RESOLUTION IN INDIA”
Considering the significance of Alternative Dispute Resolution Mechanism, the Faculty of

Law, Jamia Millia Islamia organized a National Seminar on Emerging Trends of “Alternative
Dispute Resolution in India” on 9th October 2018 with the following objectives:
1. To enhance the knowledge, understanding and scope of ADR;

2. To explore and expound the understanding of the emerging trends of ADR;
3. To create awareness of importance of ADR as part of justice delivery system;
4. To strengthen the implementation of ADR effectively;
5. To equip the students and professionals with practical aspect of ADR techniques to
promote independent career in the field; &
6. To look for futuristic assessment of best practice in the area of ADR.
Therefore, the Seminar was graced with Research Papers from their respective authors on the
following themes:
1. Alternative Dispute Resolution System

2. Emerging Issues in Arbitration, Conciliation, Mediation and Negotiation
3. Legislation and ADR Practices in India
4. Role of Judiciary in ADR
5. ADR and Criminal Justice System in India
6. Scope of Institutional Arbitration in India
7. International Commercial Arbitration
8. Recognition and Enforcement of Foreign Arbitral Awards
9. Mediation in Family and Matrimonial Disputes
10. Online Dispute Resolution
11. Emergency Arbitration
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The Seminar was henceforth graced with the presence of the following legal luminaries,
wherein they enlightened us as follows in the Inaugural Session:
1. Mr. P.K. Malhotra, Former Law Secretary, Ministry of Law and Justice, New Delhi: -
Spoke specifically on the importance of Alternative Dispute Resolution in Indian legal setup.
He, emphatically explained the nuances and efficacies of the different modes of Alternative
Dispute Resolution in India. Amidst, all of it, he vociferated to aware the legal practitioners as
well as the people of this country about the available different modes of ADR instead of
resorting to adversarial form of adjudication.
2. Mr. Ajay Thomas, Vice Chairperson, ICC India Arbitration Group, New Delhi: -
Owing to his stupendous expertise in Arbitration, especially in International Commercial
Arbitration, he outcasted the issues still persisting in Commercial Arbitration under Indian
Law. Appreciating the viable move of the Government of India for attaining an International
Arbitration seat of India in August, he enlightened the students and delegates with all the merits
of such achievement. Mr. Thomas, thereafter chaired the Panel Discussion as well wherein the
discussion was followed by the following panelists:
i. Mr. Nikhil Chopra, Co-Ordinator, Delhi International Arbitration Centre, New

Delhi
ii. Dr. Aman Hingorani, Advocate-on-Record & Accredited Mediator, Supreme
Court of India, Delhi
iii. Mr. Ratan K. Singh, Fellow of Chartered Institute of Arbitrators, Advocate &
Arbitrator, South Delhi, Delhi
The Round Table Panel Discussion witnessed the discussion mainly on Arbitration, Mediation
and Conciliation. The panelists shared their professional experiences in courts, tribunals, and
mediation. In the meanwhile, they also emphasized on the professional ethics of Arbitration
and Mediation. In case of a mediation, where a mediator cannot be biased, he must assure the
parties that he is neutral throughout the mediation process. However, on the other hand, in
arbitration, though an adjudicator in the matter, he is equally expected not to be biased against
any of the parties. Therefore, the panelist heavily emphasized on the conduct that a litigant,
arbitrator, or a mediator is expected to carry out during any concerned ADR process.
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6.2. WORK EXPERIENCE
Arbitration is extensively resorted to in Delhi as a mode of dispute resolution. In fact, it is

one of the most common methods of dispute resolution in commercial matters and there are
numerous avenues for arbitration in Delhi. Therefore, based on my internship experiences I
have visited and worked at following Arbitration Authorities in Delhi: -
6.2.1. Delhi High Court Arbitration Centre (DAC)

6.2.2. Arbitration Cases in Courts at Delhi
6.2.3. Indian Council of Arbitration (ICA)
6.2.4. The International Centre For Alternative Dispute Resolution (ICADR)
6.2.1. Delhi High Court Arbitration Centre (DAC): -
The Delhi High Court Arbitration Centre (DAC) is an independent and professional institution,
providing institutionalized arbitration services, which has been recently established70 by the
Delhi High Court and works directly under the supervision of the Delhi High Court. The DAC
was created pursuant to the Charter of the Delhi High Court with a view to secure fair, speedy
and inexpensive justice to the litigants by adopting recourse to arbitration and for giving effect
to the provisions of section 89 CPC. The charter further directs the DAC to ensure that the
arbitration proceedings are inexpensive and are concluded within a reasonable time frame.189
The DAC also has its own set of rules – the Delhi High Court Arbitration Centre (Arbitration
Proceedings) Rules have been framed for conduct of the arbitral proceedings; the Delhi High
Court Arbitration Centre (Arbitrators’ Fees) Rules govern the matters with respect to the fee
payable for arbitration and the Delhi High Court Arbitration Centre (Internal Management)
Rules, 2010 govern the management of the DAC.
The Chief Justice of the Delhi High Court is the patron-in-Chief of the Delhi High Court
Arbitration Centre. An Arbitration Committee has also been constituted under the
chairmanship of a Judge of the Delhi High Court to take decisions for the smooth and effective
functioning of the DAC and for making appointments to the panel of arbitrators.
The matter can be referred to arbitration by DAC by virtue of a contract between the parties
providing for the reference of all future disputes under that contract to DAC or even by a
separate agreement providing for the reference of an existing dispute to DAC. Apart from that
189
DAC was inaugurated on 25.11.2009 by Justice K.G. Balakrishnan, Chief Justice of India and is housed in the
premises of the Delhi High Court, Sher Shah Road, New Delhi.
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the matter can also be referred to DAC under section 89 CPC and even under section 11, 8 and
9 of the Arbitration and Conciliation Act, 1996.
6.2.2. Arbitration Cases in Courts at Delhi: -
The Arbitration and Conciliation Act, 1996 provides for recourse to the court in arbitration
matters primarily at four stages - at the stage of appointment of arbitrator, for obtaining interim
orders, at the stage of setting aside the award and lastly at the stage of enforcement of an arbitral
award.
Petitions for appointment of arbitrator under section 11, Arbitration and Conciliation Act, 1996
can only be filed before the Delhi High Court and such petitions are registered as Arbitration
Petitions. In Delhi all the Judges of the Delhi High Court exercising ordinary civil jurisdiction
have been nominated by the Chief Justices of the Delhi High Court as his designates under
Section 11(6) of the Arbitration and Conciliation Act, 1996 for the purpose of appointment of
arbitrators.190
The Petitions for interim relief under section 9, Arbitration and Conciliation Act, 1996 and
petitions for setting aside of the award under section 34, Arbitration and Conciliation Act, 1996
can be filed before the district courts191 at Delhi as well as the Delhi High Court depending
upon the valuation of the subject matter and the pecuniary jurisdiction. Such petitions are
registered as Original Misc. Petitions (OMP)192 before the Delhi High Court. The petitions for
enforcement of awards under section 36, Arbitration and Conciliation Act, 1996 are filed in the
form of regular execution petitions before all courts193 and are registered as Execution
Petitions.
The extensive resort to arbitral proceedings in Delhi can well be imagined from the fact that
with effect from 01.04.2007 to 31.03.2008, 536 Arbitration Petitions under section 11,
Arbitration and Conciliation Act, 1996 and 686 Original Miscellaneous Petitions under section
190
Vide Notification No. 253/Rules/DHC dated: 23.07.2010 of the High Court of Delhi.
191
Such petitions are however maintainable only before the principal civil court of original jurisdiction as defined
in s. 2(1)(e), Arbitration and Conciliation Act, 1996; See also Rahisuddin v. Gambit Leasing & Finance,
MANU/DE/033/2010 and Surat Singh v. State of Himachal Pradesh, (2003) 3 Arb.L.R. 606 (DB); As far as the
question of territorial jurisdiction is concerned we have to fall back to the provisions of the Code of Civil
Procedure, 1908. See Jagson Airlines Ltd. v. Bannari Amman Exports (P) Ltd., (2003) 104 DLT 957; The situs of
arbitral proceedings does not govern the jurisdiction of the court. See GE Countrywide Consumer Financial
services Ltd. v. Surjit Singh Bhatia, 129 (2006) DLT 393; See also M/s. Gulati Construction Co., v. Betwa River
Board, AIR 1984 Delhi 299. This is however subject to s. 42, Arbitration and Conciliation Act, 1996.
192
OMPs also include petitions under ss. 14, 15, 33, Arbitration and Conciliation Act, 1996.
193
Kinetic Capital Finance Ltd. v. Anil Kumar Misra, 2000 (56) DRJ 774.
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9, 14, 15, 33 and 34 of the Arbitration and Conciliation Act, 1996 were filed before the High
Court of Delhi.194
Similarly, with effect from 01.04.2008 to 31.03.2009, 445 Arbitration Petitions under section
11, Arbitration and Conciliation Act, 1996 and 684 Original Miscellaneous Petitions under
section 9, 14, 15, 33 and 34 of the Arbitration and Conciliation Act, 1996 were filed before the
High Court of Delhi. Thereafter with effect from 01.04.2009 to 31.03.2010, 453 Arbitration
Petitions under section 11, Arbitration and Conciliation Act, 1996 and 762 Original
Miscellaneous Petitions under section 9, 14, 15, 33 and 34 of the Arbitration and Conciliation
Act, 1996 were filed before the High Court of Delhi.195
Further as on 01.06.2011, 3668 applications/petitions under the Arbitration and Conciliation

Act, 1996 were pending in the Courts of Additional District Judges in Delhi. That apart several
petitions under sections 9 and 34 of the Arbitration and Conciliation Act, 1996 and execution
petitions for enforcement of arbitral awards are filed daily before the district courts in Delhi.
All this shows that arbitration is quite a popular mode of dispute resolution in Delhi and has
tremendous potential in times to come.
6.2.3. Indian Council of Arbitration (ICA): -
The Indian Council of Arbitration (ICA) is also a premier arbitral institution in Delhi196 which
was established in the year 1965. The ICA provides high class infrastructure facilities for
conduct of institutional arbitration. The ICA has also entered into mutual cooperation
agreements with various international permanent arbitral institutions including International
Chamber of Commerce (ICC), American Arbitration Association, etc.
The ICA has framed rules known as the Rules of Arbitration of the Indian Council of
Arbitration dealing with appointment of arbitrators, commencement and conduct of arbitral
proceedings, confidentiality etc. The rules also provide for fast track arbitration. The ICA has
also framed ICA Maritime Arbitration Rules for resolution of maritime disputes. The ICA has
also formulated an ICA Code of Conduct to be followed by the arbitration committee,
arbitrators, parties and their counsel and has also issued a set of guidelines for arbitrators and
parties for expeditious conduct of arbitration proceedings.The idea is to ensure expeditious and
impartial arbitration proceedings. The ICA also publishes an official arbitration journal i.e. the
194
Delhi High Court, Annual Report (2007-2008).
195
Ibid.
196
The ICA has its office at Room No. 12, Federation House, Tansen Marg, New Delhi.
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ICA Arbitration Quarterly incorporating articles and latest developments in the field of
arbitration and ADR.
The ICA has an arbitration committee constituted in accordance with the Rules of Arbitration
of the Indian Council of Arbitration and the President of ICA is the ex officio chairman of the
arbitration committee. The arbitration committee of ICA appoints arbitrators in arbitration
cases referred to ICA and also approves the empanelment of arbitrators. The ICA has a broad
based panel of more than 2000 arbitrators comprising of retired judges, advocates. engineers,
chartered accountants, experts, foreign nationals, etc. The ICA also charges fixed fee as per
rule 31 of the Rules of Arbitration of ICA on the basis of the claim amount.
The ICA Arbitration services are frequently utilized by the parties. The ICA has administered
more than 2000 arbitration cases and every year numerous cases are referred to arbitration by
ICA. Various business entities incorporate arbitration clauses in their contracts for reference of
disputes to arbitration by ICA. Various ministries and PSUs have recommended the use of ICA
arbitration clauses in their contracts. Thus ICA has been providing quality arbitration
services197 in Delhi which are being extensively used by the parties.198
6.2.4. The International Centre for Alternative Dispute Resolution (ICADR)
The International Centre for Alternative Dispute Resolution (ICADR) with its headquarters at
Delhi provides quality facilities for resolution of disputes by arbitration as well as by fast-track
arbitration. ICADR functions under the aegis of the Ministry of Law and Justice, Government
of India and the Chief Justice of India is the patron of ICADR.
The ICADR has also framed ICADR Arbitration Rules, 1996 (including provisions for Fast
Track Arbitration) dealing with appointment of arbitrators, commencement and conduct of
arbitral proceedings, confidentiality, etc. The ICADR has also entered into cooperation
agreements with the WIPO Arbitration and Mediation Centre, the Chartered Institute of
Arbitrators, London etc. for facilitating arbitrations. The ICADR has its own fixed schedule of
197
The ICA mission is: The ideal forum for institutional arbitration which is Les Justes (a French word meaning
‘The Just’) used as an acronym for L- Low Cost, E- Efficient, S- Simple, J- Just, U- User friendly, S- Speedy, T-
Trustworthy, E- Equitable, S- Serviceable. See ICA, Annual Report (2010-2011).
198
The extensive resort to ICA arbitration can also very well be gathered from the fact that ICA received advance
from the parties to arbitration to the tune of Rs. 4,42,27,441 during the financial year 2009-2010. See ICA, Annual
Report (2009-2010).
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arbitrator’s and administrative fees chargeable on the basis of the claim amount along with
other miscellaneous charges.199
The matter can be referred to arbitration by ICADR by virtue of a contract between the parties
providing for the reference of all future disputes under that contract to institutional arbitration
by ICADR or even by a separate agreement providing for the reference of an existing dispute
to arbitration by ICADR.
On some occasions, even where the matter is not referred to institutional arbitration by ICADR,
the arbitrators on ICADR’s panel are engaged by various government departments and PSUs
for conduct of ad hoc arbitration. As per the ICADR, Annual Report, 2009-2010 the ICADR’s
New Delhi centre received 38 cases for arbitration. Furthermore, the arbitration halls at
ICADR’s centre at New Delhi are frequently utilized by the government departments, PSUs
and even private parties for conduct of arbitration cases on payment of nominal fees. Since
October 2005, 362 arbitration cases have been conducted by ministries and other parties and
319 hearings have been conducted by arbitrators appointed by ICADR in various cases till
2009-10 in ICADR’s new Headquarters building.200
199
Eg. In domestic commercial arbitration where the amount in dispute does not exceed Rs. 5 lacs, the ICADR
charges arbitrator’s fees of Rs. 30,000/- per arbitrator administrative fees of Rs. 15000/-, appointment fee of Rs.
10,000/- and facilitation fee of Rs. 2500/- per day. The fee may appear to be on the higher side but when compared
with the fee in ad hoc arbitration it appears to be more economical. Moreover the important aspect is that the fee
is fixed as per the schedule and is not left to the discretion of the arbitrator.
200
ICADR, Annual Report (2009-2010).
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CHAPTER VII
COMMERCIAL ARBITRATION
7.1. INTRODUCTION
Current Indian arbitration law, the Arbitration and Conciliation Act, 1996 (hereafter the
Arbitration Act, 1996 or the Act, 1996), came into force in 25th January 1996. This Act is a
unification statute in the sense that it was intended to give effect to multiple international
commitments undertaken by India, namely, the Model Law, 1985 (the ML, 1985), the New
York Convention, 1958 (the NYC, 1958) and the like. The present Act, 1996 not only
consolidate, but also to unify Indian Law both on Domestic and International Commercial
Arbitration (ICA).201
With an increase in international trade and investment coupled with the growth in cross-border
alliances, disputes and conflicts are a given. It is for this reason that there is an undeniable need
and necessity to have an efficient, effective and a well-organized dispute resolution
mechanism. Therefore, for resolving disputes arising out of commercial transactions between
private parties across national borders the system, rather the preferred method is international
commercial arbitration. It enables parties to sort out their conflicts and issues while avoiding
increasing litigation in various national courts. It is the preferred option for resolving cross-
border commercial disputes for it also saves and preserves business relationships.
With the convergence of foreign investments, overseas commercial transactions, and open-
ended economic policies going about as an impetus, international commercial disputes
including India are consistently rising. This has drawn huge concentration from the
international community on India’s international arbitration regime.
With the aim to address growing concerns in international commercial disputes and conflicts
coupled with the intention of encouraging arbitration in such conflicts as a time-efficient and
cost-effective mechanism for the settlement of such commercial disputes at the national and
international level, the Arbitration and Conciliation Act, 1996 was adopted and enacted. It was
201
Jayagovind, A. “International Commercial Arbitration under the Arbitration and Conciliation Act, 1996”, 37,
Indian J. Int’l Law, (1996); 658-59.
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brought in to offer a prompt and effective dispute resolution mechanism in the existing judicial
system that was blemished by a backlog of cases and excessive and unwarranted delays.
In order to address several issues faced with the Act, significant changes were made to clarify
the issues in the right direction, bearing in mind the Act’s objectives and aims, the Arbitration
and Conciliation Act, 1996 was amended in 2015. Moreover, the amendment also tackles the
problem of delays by providing strict timelines for the completion of the arbitral proceedings
in addition to widening the scope for resolving such disputes vide a fast track mechanism.
The Arbitration and Conciliation Act, 1996 defines an ‘international commercial

arbitration’202 as one ascending out of a legal relationship that is considered commercial203
irrespective of whether either of the parties is a foreign national or resident or is a foreign body
corporate, a company, association, body of individuals, whose central management or control
is in foreign hands. Therefore, an arbitration having its position in India, but including a foreign
party shall also be considered to be an international commercial arbitration, and thus is
naturally subject to provisions of the Act. But in the event that the international commercial
arbitration is held outside the territory of India, the Act obviously has no applicability owing
to a lack in jurisdiction.
As the quantity of international commercial disputes bourgeons, the use of arbitration in order
to resolve them does too. Being non-judicial in nature, international commercial arbitration has
turned into both an attractive as well as an effective choice for several reasons. This includes a
possibility of a distrust in a foreign legal system on the part of one or more of the parties
involved in the dispute. Coupled with this is also the problem of time-consuming, expensive
and complex nature of litigation in a foreign judicial system. A decision or judgement of a
foreign or international court is also extremely and potentially difficult and problematic to be
implemented, rendering it practically unenforceable.
In contrast to this, awards passed in international commercial arbitrations have a high degree
of recognition and enforceability. Examples include the 140 odd nations that have subscribed
202
Section 2(1)(f), Arbitration and Conciliation Act, 1996.
203
R.M. Investments & Trading Co. Pvt. Ltd. v. Boeing Co., AIR 1994 SC 1136.
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to abiding by the terms of the Convention on the Recognition and Enforcement of Foreign
Arbitral Awards of 1958, also known as the New York Convention.
Moreover, such arbitrators are specialists and competent in their respective and relevant fields.
The panel of arbitrators who administer the proceedings are also chosen, agreed and concurred
upon by all parties concerned. This accords the arbitral awards binding and enforceable value.
They are hence final, making the long-drawn procedure of the appeals process infructuous.
7.2. GROWTH OF INTERNATIONAL COMMERCIAL ARBITRATION
In the late 19th century, international arbitration began to gather significant momentum but its
governance remained the preserve of national law. Without any international regulation of
arbitration, the enforcement of awards was handled differently in different States.204 The seeds
of ICA saw know it today were sewn in the late 19th and early 20th centuries as a response to
growing international business, mainly in Europe continental, and the desire for an
internationally enforceable, commercially sensible mechanism to resolve disputes.
Arbitral institutions contributed substantially to the growth of international arbitration during

this period. A large number of institutions with arbitration rules for merchants had developed
already during the 19th century. In London, for example, the well-known Grain and Feed Trade
Association (GAFTA), was established in 1878 and The London Court of International
Arbitration (hereafter ‘LCIA’).205 The LCIA celebrated its centenary in September 1993. The
LCIA goes back to ‘The London Chamber of Arbitration’, that was set up in 1892 and that
altered its name to ‘The London Court of Arbitration’ in 1903 and then, after 92 years in 1995,
to ‘LCIA’.206
The amicable settlement of disputes between States is the subject of the Hague Conventions of
29th July 1899 and 18th October 1907. As a result of the Hague Convention, 1899, the
Permanent Court of Arbitration (hereafter “the PCA”) was set up at The Hague, in the Peace
Palace (offered by Mr. Carnegie). It became the first worldwide institution for the resolution
of international disputes between States or between States and private individuals (cf. Article
204
Lembo, Sara. "The 1996 UK Arbitration Act and the UNCITRAL Model Law - a Contemporary Analysis ",
PhD Thesis, (January 2010), 19.
205
Blessing, Marc. “Introduction to Arbitration: Swiss and International Perspectives.”, Helbing und Lichtenhahn,
(1999), 75.
206
Id.
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20 of the Hague Convention, 1899 and Article 41 of the Hague Convention, 1907). The PCA
provides for mediation, good offices, inquiry/fact-finding commissions, and conciliation and
arbitration services. However, the PCA does not have any authority to intervene in a dispute in
any way on its own initiative; its sole objective is to enable or facilitate the amicable resolution
of disputes.207
Over the decades that followed, a group of international businessmen who called themselves
‘Merchants of Peace’ set up the International Chamber of Commerce (ICC) with the inception
of the former occurring in 1919 and the later in 1923.208 It quite rightly claims to be the most
important private international organization in the world’s economy209 and quickly realized
that an effective mechanism for resolving international business disputes would foster growth
in international trade and commerce and assist in achieving world peace. It covers
approximately 5,000 large firms and 1,500 industrial organizations, is established in over 50
States through its own national groups and provides a worldwide operating and discussion
forum for the main concerns of economic activity throughout the world. Its many expert
committees, made up of representatives from all over the world, compile commentaries and
reports on central topics in the law of Finance, International Payment Transactions, Credit
Insurance, Insurance Law, Tax Harmonization, Environmental Protection Law, Energy Law,
privatization, Merger Controls, Marketing, International Transportation (including Maritime
Law and Air Traffic Law), Telecommunications, Commercial Practices (to name just a few of
the committees).210
The vital part played by the ICC in international arbitration, particularly through two
institutions: the ICC’s Institute of International Business Law and Practice as a scientific
institution (presided over by Professor Pierre Lalive, Geneva) and, even more importantly, the
International Court of Arbitration of the ICC, the world’s foremost arbitral institution.
Recently, the ICC registered its 10,000th cases.211 The ICC began administering international
disputes in 1921 and had dealt with 15 such cases before the ICC International Court of
Arbitration (‘ICC Court’) was set up in the year 1923 which become a truly universal institution
headquartered in Paris. The ICC Court’s mission was to foster international trade and
commerce by providing a framework for the resolution of international commercial disputes.
207
Id.
208
Id.
209
Id.
210
Id.
211
Id.
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Various ICC congresses in the early 1920s called strongly for better legal recognition of
arbitration, which was rapidly gaining popularity among international businessmen. The
following resolution was adopted at an ICC Congress in Rome in March 1923:
“The International Chamber of Commerce considers that for the purpose indicated in the
preceding resolutions it is desirable that one or more international conventions should be
negotiated with the least possible delay, to embrace the largest possible number of States,
particularly those of commercial importance. Such conventions should pledge the contracting
States to recognize and make effective arbitration clauses in international commercial
contracts, and to provide that if two disputant parties of different nationalities agree to refer
disputes that may arise between them to arbitration, an action brought by either party in any
country shall be stayed by the Court, provided that the Court is satisfied that the other party
is, and has been, willing to carry out the arbitration.”212
During the first decades of the twentieth century, businesses community and legal fraternity in
developed States called for legislation to facilitate the use of arbitration in resolving domestic
and, particularly, international commercial disputes.213 In 24 September 1923, initially under
the auspices of the newly founded ICC, major trading nations negotiated the Geneva Protocol
on Arbitration Clauses (hereafter the GP, 1923) in Commercial Matters.214 The GP (1923) was
ultimately ratified by the Brazil, France, Germany, India, Japan, United Kingdom (UK), and
about 24 other Nations. Although the United States of America (USA) did not ratify the GP
(1923), the nations that did so represented a very significant portion of the international trading
community at the time. The GP (1923) was the first genuine international convention especially
concerned with commercial arbitration to be adopted internationally.
212
International Chamber of Commerce, Resolutions Adopted at the Second Congress, Rome, Brochure No.31,
(March 1923), 37.
213
Gary B. Born. “International Commercial Arbitration”, Vol.1.Kluwer Law International, (2009), 58.
214
Van den Berg, Albert Jan. “The New York Convention of 1958 6-7: Towards A Uniform Judicial
Interpretation.”, (1981); 113-18.
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The GP (1923) played a vital and critical—if often underappreciated—role in the development
of the legal framework for ICA. Among other things, provisions I215, III216 and IV217 of the GP
(1923) planted the seeds for a number of principles of enormous future importance to
international arbitral process.
Afterwards, the next step forward was the Geneva Convention on the Execution of Foreign
Arbitral Awards of 1927 (hereafter the GC, 1927), which did not replace, but complemented
the GP (1927). The Convention’s focus was enforcement of foreign awards, and, unlike the GP
(1923), did not limit itself to enforcement of domestic arbitral awards. The Convention set
requirements for recognition and enforcement of awards, as well as conditions for refusing
enforcement of such awards,218 and listed the documents necessary for requesting enforcement
of an award.219 With the growth of international commerce in the Post War era, it became more
and more clear that the GC (1927), too, did not meet the requirements of ever-expanding
international arbitration. Under the Convention, for recognition and enforcement of an award,
not only must it have been made in the territory of a signatory State, but also the disputant
parties to the dispute must have been subject to the jurisdiction of a High Contracting Party.220
On many occasions, however, both these conditions cannot be met, as arbitration is usually
conducted in a country to whose jurisdiction none of the disputant parties were subject. The
disputants prefer a third neutral country as the seat of arbitration. Hence, enforcement of
foreign arbitral awards needed a more pro-enforcement and comprehensive regulatory regime.
The outbreak of Second World War halted international business.221 Thought the two decades
from 1927 the outbreak of Second World War there was a steady development in Europe
continental of arbitration as recognized means of dispute settlement in international
215
Each of the Contracting States recognizes the validity of an agreement whether relating to existing or future
differences between parties subject respectively to the jurisdiction of different contracting states by which the
parties to a contract agree to submit to arbitration all or any differences that may arise in connection with such
contract relating to commercial matters or to any other matter capable of settlement by arbitration, whether or not
the arbitration is to take place in a country to whose jurisdiction none of the parties is subject.
216
The tribunals of the Contracting Parties, on being seized of a dispute regarding a contract made between persons
to whom Article 1 applies and including an arbitration agreement whether referring to present or future differences
which is valid by virtue of the said article and capable of being carried into effect, shall refer the parties on the
application of either of them to the decision of the arbitrators.
217
Each Contracting State undertakes to ensure the execution by its authorities and in accordance with the
provisions of its national laws of arbitral awards made in its own territory.
218
Articles 2 and 3 of the Geneva Convention, 1927.
219
Article 4 of the Geneva Convention, 1927.
220
Article 1 of the Geneva Convention, 1927.
221
Greenberg, Simon, Christopher Kee, and J. Romesh Weeramantry. "International Commercial Arbitration: An
Asia Pacific Perspective”, Cambridge University Press. (2011), 7.
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commercial matters.222 However, its immediate aftermath saw huge economic growth and
trade, particularly from the 1950s onwards when global commerce between private parties
began to flourish.223
7.3. THE GIGANTIC GROWTH OF INTERNATIONAL COMMERCIAL

ARBITRATION: 1950 TO THE PRESENT
It turned out that the language of these Protocol and Convention was far from ideal, with
various shortcomings and ambiguous provisions. Neither of these Convention has much
practical effect today because they have been superseded by the New York Convention, 1958.
Perhaps the most important milestone in the entire history of ICA was the adoption of the New
York Convention. Clearly, the impressive upturn of international arbitration and the success of
arbitral institutions such as the ICC and others are closely linked to the significance of the New
York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards
(hereafter the NYC, 1958). It placed the GP (1923) and the GC (1927) on a new basis.224 The
NYC (1958) is one step beyond the GC (1927), in the sense that it applies to arbitral awards
irrespective of where they are made.
The Convention was adopted—like many national arbitration statutes— specifically to address
the needs of the international business community, and in particular to improve the legal regime
provided by the GP (1923) and the GC (1927) for the international arbitral process. The first
draft of what became the Convention was prepared by the ICC in 1953. The ICC introduced
the draft with the observation that “the Geneva Convention, 1927 was a considerable step
forward, but it no longer entirely meets modern economic requirements”, and with the fairly
radical objective of “obtaining the adoption of a new international system of enforcement of
arbitral awards.”225
Preliminary drafts of a revised convention were prepared by the ICC and the United Nations’
Economic and Social Council (“ECOSOC”), which then provided the basis for a three-weeks
222
The UN Working Group. “International Commercial Arbitration – UNCTAD”, 5.1: United Nations, New York
and Geneva), 21(2005), < http://unctad.org/en/Docs/edmmisc232add38_en.pdf.>, accessed date on (11/01/2013).
223
Greenberg, Simon, Christopher Kee, and J. Romesh Weeramantry. "International Commercial Arbitration: An
Asia Pacific Perspective”, Cambridge University Press. (2011), 9.
224
(1999), 121.
225
ICC, Report And Preliminary Draft Convention Adopted By The Committee on International Commercial
Arbitration At Its Meeting of 13 March 1953(ICC Publication No.174, 1953), Reprinted In Vol. 9(1) ICC Ct.Bull.
(1998), 32.
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conference in New York (USA)—the United Nations Conference on Commercial Arbitration
- attended by 45 States in the Spring of 1958.226
7.4. THE NEW YORK CONFERENCE AND THE NEW YORK CONVENTION
The New York Conference resulted in a document- the New York Convention-that was in
many respects a radically innovative instrument, which created for the first time a
comprehensive and a universal legal regime for the international arbitral process. The original
drafts of the NYC (1958) were focused entirely on the recognition and enforcement of arbitral
awards, with no serious attention to the enforcement of international arbitration agreements.227
This drafting approach paralleled that of the Geneva treaties (where the GP (1923) dealt with
arbitration agreements and the GC (1927) addressed awards). It was only late in the Conference
that the delegates recognized the limitations of this approach and considered a proposal from
the Dutch delegation to extend the treaty from the recognition of awards to international
arbitration agreements. That approach, which was eventually adopted, and the resulting
provisions regarding the recognition and enforcement of international arbitration agreements
form one of the central elements of the Convention.
The text of the Convention was approved on 10 June 1958, by 35 votes to none with 4
abstentions of the Conference (with only the United States and three other countries
abstaining).228 The Convention is set forth in English, Chinese, French, Russian and Spanish
texts, all of which are equally authentic.229 The text of the Convention is only a few pages long,
with the instrument’s essential substance being contained in five concisely drafted provisions
(Articles I through V). Despite its brevity, the Convention is now widely regarded as “the
cornerstone of current International Commercial Arbitration.”230 In the suitable words of Judge
Stephen Schwebel, earlier President of the ICJ, “It works” or, as the late Sir Michael Kerr put
it; the NYC (1958) “is the foundation on which the whole of the edifice of international
arbitration rests.”231
226
Van den Berg, Albert Jan. “Improving the Efficiency of Arbitration Agreements and Awards: 40 Years of
Application of the New York Convention”, Kluwer Law Intl, (1999).
227
228
United Nations Economic and Social Council, United Nations Conference on International Commercial
Arbitration, Summary Record of the Twenty-fourth Meeting, UN Doc E/CONF.26/SR.24 (12 September 1958).
229
The New York Convention, Art. XVI.
230
Van den Berg, Albert Jan., 1981, op.cit., 1. See also Mustill, Michael John. "Arbitration: History and
Background." J. Int'l Arb. 6 (1989), 43.
231
Id.
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The NYC (1958) made a number of significant improvements in the regime of the Geneva
Protocol and Geneva Convention for the enforcement of international arbitration agreements
and arbitral awards. Particularly important were the NYC’s to establish a single uniform set of
international legal standards for the enforcement of arbitration agreements and arbitral awards.
And also, it has been applied in over 700 State court decisions in which the national courts
have generally supported the Convention to a significant extent. Nevertheless, it was still felt
that ICA practice needed more back-up in the form of specialist as well as regional multilateral
treaties. Specialist conventions may address particular requirements of trade relationships in a
specific area of commerce, while regional conventions provide more incentive and confidence
for encouraging countries to join.
The essential merits of the NYC (1958) are:
(i) the recognition of arbitration agreements (as per Article II of the NYC, 1958).
(ii) the setting of the yardsticks and criteria for the recognition and enforcement of international
arbitral awards (as per Articles IV and V). It is according to these principles and criteria that
national legislators have successfully been guided in international arbitration matters ever since
1958. The the Model Law also reflects these criteria.232
The Convention is noteworthy as being the first international instrument to have the words
“International Commercial Arbitration” in its title. This was more than a curiosity. It signaled
a change in the attitude towards arbitration of international commercial disputes. The nation-
State would be in charge of the rules, but those rules should recognize the special requirements
of an arbitration which involves international economic matters and in which one or both
disputant parties may be foreign.233
The Convention addresses the three principal phases of the international arbitral process;
1) Arbitration Agreements: in this regard, the Convention provides for a limited,

specified number of bases for the invalidity of such agreements in proceedings
concerning recognition of arbitral awards, but instead does not expressly provide for
their presumptive validity.
232
(1999), 122.
233
The UN Working Group, 2005
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2) Arbitral Procedure: in this regard, the Convention limits the role of State courts and
confirms the maximum autonomy of the parties and the arbiters (or arbitral institution)
to link the arbitration proceedings. And,
3) Arbitral Awards: in this regard, the Convention is designed to supplement the NYC
(1958), substantially dealing solely with the effects of a judicial decision annulling an
arbitral award in the arbitral seat in other jurisdictions (and not with other recognition
obligations).234
7.5. UNITED NATIONS COMMISSIONS ON INTERNATIONAL TRADE LAW

ARBITRATION RULES (UNCITRAL AR):
Alongside multilateral conventions and bilateral treaties, national statutes play an

indispensable essential role in regulating arbitration. Divergence among national laws of
various States has appeared as an impediment to facilitation of international arbitration. Thus,
the law on ICA first emerged as a patchwork of diverse national laws on arbitration. The
increasing complexity of international transactions, the growth of international trade and the
disappointment with the regulation of international trade by these various State laws fostered a
climate conductive to harmonization and unification of these laws under the auspices of various
international organizations, including the United Nations. Thus, there have been some attempts
at harmonizing such laws. Chief among such attempts was the adoption of the United Nations
Commission on International Trade Law Arbitration Rules (hereafter the UNCITRAL AR)
which were shaped in the mid-1970s out of the need to create an instrument for the settlement
of disputes arising in international trade in the form of internationally accepted rules for Ad
hoc arbitration.
The UNCITRAL AR provide a real and attractive option for Ad hoc arbitration: first, as an
option or alternative to institutional arbitration under the aegis of an arbitral institution (such
as that of the International Chamber of Commerce (Paris), the Zürich Chamber of Commerce
(Switzerland), the London Court of International Arbitration (London), the Vienna Arbitral
Centre (Austria), etc.). And, second, as an alternative to “pure” Ad hoc arbitration (i.e.
arbitration which is solely governed by the national arbitration Act – for instance, in
Switzerland, by Chapter Twelve of the Private International Law). Moreover, the UNCITRAL
234
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AR have been designed to serve as a model for arbitral institutions as their single or optional
rules.235
The UNCITRAL AR acquired particular importance after 1981 because they were chosen as
the arbitration rules applicable to the Iran-US Claims Tribunal (hereafter the IUSCT), based on
the 1981 Algers Agreement236 between the USA and Iran. In the past 32 years, therefore,
thousands of arbitration cases have been decided on the basis of the UNCITRAL AR, and a
substantial arbitration practice in the IUSCT has been developed in relation to the individual
provisions of the UNCITRAL AR.237
The UNCITRAL AR was also the starting point so to speak for the very extensive work done
for creating the UNCITRAL Model Law. Their close contacts can be seen from a comparison
of numerous provisions. Shortly after adopting the UNCITRAL AR, in effort to break down
the remaining barriers to international trade as a resolute the disparities in national trade law,
the United Nations Commission on International Trade Law (UNCITRAL) and the UN General
Assembly in 1985, also approved UNCITRAL Model Law (the ML, 1985). This proposed the
ML (1985) was to be based on the provisions of the NYC of 1958 and the provisions of the
aforementioned the UNCITRAL AR.238
The UNCITRAL is a body of world experts which has as its main purpose the progressive
harmonization and unification of the national laws governing international trade. Its approach
to harmonization has been to rely on Model Laws rather than on international conventions. The
ML was adopted in 1985. It was drafted by a Working Group of UNCITRAL for extensive
consultation and debates consisting of States, the business and international arbitration
community (between representatives of the UNCITRAL Secretariat, International Council for
Arbitration; ICC International Court of Arbitration and the ICC), and regional organization
235
(1999), 128.
236
‘The Iran-United States Claims Tribunal came into existence as one of the measures taken to resolve the crisis
in relations between the Islamic Republic of Iran and the United States of America arising out of the November
1979 hostage crisis at the United States Embassy in Tehran, and the subsequent freezing of Iranian assets by the
United States of America. The Government of the Democratic and Popular Republic of Algeria served as
intermediary in the search for a mutually acceptable solution. Having consulted extensively with the two
Governments as to the commitments each was willing to undertake in order to resolve the crisis; the Government
of Algeria recorded those commitments in two Declarations made on 19 January 1981. The "General Declaration"
and the "Claims Settlement Declaration", collectively "Algiers Declarations", were then adhered to by Iran and
the United States’.
237
(1999), 129-130.
238
Id. at 135.
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(Asian–African Legal Consultative Committee “AALCC”). The main policy objectives of the
ML (1985) are as follows:
"[a] the liberalization of International Commercial Arbitration by limiting the role of national
courts, and by giving effect to the doctrine of the 'Autonomy of the Will', allowing the disputant
parties freedom to choose how their disputes should be determined;
[b] The establishment of a certain defined core of mandatory provisions to ensure fairness and
due process;
[c] The provision of a framework for the conduct of international commercial arbitration, so
that in the event of the disputant parties being unable to agree on procedural matters, the
arbitration 'would nevertheless be capable of being completed; and, [d] The establishment of
other provisions to aid the enforceability of awards and to clarify certain controversial
practical issues.”239
The ML (1985) was designed to be implemented by national legislators, with the purpose of
further harmonizing the treatment of ICA in different States. The ML (1985) consists of 36
Articles, which deal widely with the issues that arise in State courts in connection with ICA.
Among other things, the ML (1985) comprises provisions as follows;
a) Enforcement of arbitration agreements. [Articles. 7-9]
b) Appointment of and challenges to arbiters. [Articles. 10-15]
c) Jurisdiction of arbiters. [Article. 16]
d) Provisional measures. [Article. 17]
e) Arbitral proceedings, including language, seat (or place) of arbitration, and

procedures. [Articles. 18-26]
f) Evidence-taking and discovery. [Article. 27]
g) Applicable substantive law. [Article. 28]
h) Arbitral Awards [Articles. 29-33]
i) Setting aside or vacating awards. [Article. 34]
239
UN Doc. A/CN.9/207 (14 May 1981) paragraphs 16-17 cited in Alan Redfern & Martin Hunter. “Law and
Practice of International Commercial Arbitration”, London: Sweet and Maxwell, (1999), 509.
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j) Recognition and enforcement of foreign arbitral awards, including bases for non-
recognition. [Articles. 35-36]
Under the ML (1985), written international arbitration agreements are presumptively valid and
enforceable, subject to limited, specified exceptions.240 Article 8 of the Law provides for the
enforcement of valid arbitration agreements, regardless of the arbitral seat, by way of a
dismissal or stay of national court litigation.241 The ML (1985) also adopts the Separability
Doctrine242 and expressly grants arbiters the authority (Kompetenz-Kompetenz Theory or
Competenz Competenz Theory)243 to consider their own jurisdiction.244
The ML (1985) prescribes a principle of judicial non-intervention in the arbitral proceeding.245

It also affirms the parties’ autonomy (subject to specified due process limits) with regard to the
arbitral procedures246 and, absent agreement between the disputant parties, the tribunal’s
authority to prescribe such procedures.247 The basic approach of the ML (1985) to the arbitral
proceedings is to define a basic set of procedural rules which - subject to a very limited number
of fundamental, non-derogable principles of fairness, due process, and equality of treatment248
- the disputant parties are free to alter by agreement. The ML (1985) also provides for judicial
assistance to the arbitral process in prescribed respects, including provisional measures,
constitution of a tribunal, and evidence-taking.249
The ML (1985) mandates the presumptive validity of international arbitral awards, subject to
a limited, exclusive list of grounds for annulment of arbitral awards in the arbitral seat; these
grounds precisely parallel those available under the NYC (1958) for non-recognition of an
240
UNCITRAL Model Law, Arts. 7-8; The original 1985 Model Law’s “writing” requirement for arbitration
agreements is broadly similar to, but somewhat less demanding than, Article II of the New York Convention. See
UNCITRAL Model Law, Art. 7(2).
241
UNCITRAL Model Law, Art. 8(1);
242
UNCITRAL Model Law, Art. 16.
243
The doctrine of Kompetenz–Kompetenz overcomes the conceptual problems arising out of any decision by the
arbitrator on his own jurisdiction. Any decision by the tribunal that no valid arbitration agreement exists would
include at the same time a corollary finding that the tribunal also lacked jurisdiction to decide on its own
jurisdiction (since there was no basis for such a jurisdiction). The doctrine of Kompetenz - Kompetenz is a legal
fiction granting arbitration tribunals the power to rule on their own jurisdiction. To justify the assumption of these
powers, reference was first made in Article 36(6) Statute of the International Court of Justice (ICJ) which allows
the ICJ which to rule on its own jurisdiction. A comparable competence was recognized for arbitration tribunals
in the European Convention Article V (3). Since then the doctrine has found recognition in the ICSID Convention
Article 41(1) and is now firmly established in most modern arbitration laws. However, even if such provisions
did not exist arbitration tribunals have traditionally assumed a right to rule on their own jurisdiction.
244
245
246
UNCITRAL Model Law, Art. 19(1).
247
UNCITRAL Model Law, Arts. 19(2), 24(1).
248
249
UNCITRAL Model Law, Arts. 9, 11-13, 27.
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award (i.e., lack or excess of jurisdiction, non-compliance with arbitration agreement, due
process violations, public policy, and non-arbitrability).250 The ML (1985) also requires the
recognition and enforcement of foreign arbitral awards (made in arbitral seats located outside
the recognizing State), again on terms identical to those prescribed in the NYC (1958).251
During the 28 years since the ML’s adoption (in 1985), significant developments have occurred
in the field of international commercial arbitration. In 2006, UNCITRAL adopted a limited
number of amendments to the ML (1985).252 The principal revisions were made as follows:
a) The addition of general interpretative principles. [Article. 2]
b) The definition and written form of an arbitration agreement. [Article. 7]
c) The availability of and standards for provisional measures from international arbitral
tribunals and national courts. [Article. 17]
d) Procedures for recognition of awards. [Article. 35]
The 2006 revisions of the ML make useful improvements (for the most part). Nonetheless, the
most important accomplishment of the revisions is their tangible evidence of the ongoing
process by which States and business representatives seek to improve the international legal
regime for the arbitral process.
The ML (1985) and its revisions represent a significant further step, beyond the NYC (1958),
towards the development of a predictable “pro-arbitration” legal framework for commercial
arbitration. But the ML (1985) goes beyond the Convention by prescribing in significantly
greater detail the legal framework for international arbitration, by clarifying points of
ambiguity or disagreement under the Convention,253 and by establishing directly applicable
nationallegislation.
7.6. INTERNATIONAL COMMERCIAL ARBITRATION IN INDIA
The provisions enacted in the Arbitration Act, 1996 aim to achieve the above objectives but
statement of objects and reasons which accompanies a Bill does not form part of the Act as
250
251
UNCITRAL Model Law, Arts. 35, 36.
252
UNCITRAL Model Law, 2006.
253
In particular, the Model Law makes clear the grounds for annulling international arbitral awards, defines the
(limited) scope of national court interference in the arbitral process, and prescribes the types and extent of judicial
support for international arbitrations.
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passed by the legislature and it is not permissible to refer to it in interpreting the provisions of
the present Act, 1996. In 1997, the Supreme Court (SC) in case State of Haryana v. Chanan
Mal254 emphasis that the objects and reasons give an insight into the background as to why a
particular provision was introduced. Though objects and reasons cannot be the ultimate guide
in interpretation of statues, it often times aids in finding out what really persuaded the
legislature to enact a particular provision. And also, the SC observed in Narain Khamman v.
Parduman Kumar: “It is now well settled that though the statement of objects and reasons
accompanying a legislative Bill cannot be used to determine the true meaning and effect of the
substantive provisions of a statute, it is permissible to refer to the statement of objects and
reasons accompanying a Bill ,for the purpose of understanding the background ,the antecedent
state of affairs ,the surrounding circumstances in relation to the statute, and the evil which the
statute sough to remedy.”255
Major thrust and legislative intent of the Act, 1996, as stated in the Objectives to the Arbitration
and Conciliation Bill, 1995, is to reduce excessive judicial intervention due to which the earlier
Arbitration Act, 1940 suffered serious infirmities. Section 8 (1) of the Act, 1996, therefore it
makes mandatory duty for the judicial authority i.e Court to stay legal proceeding if started,
where the subject matter has already been referred to an arbitral tribunal. Similar provisions
are made in connection with the New York Convention, 1958 (the NYC, 1958) and Geneva
Convention, 1927 (the GC, 1927) under Sections 44 and 54 of the Act respectively.
The SC in its decision in Food Corporation of India v. Indian Council of Arbitration256 has
pointed out that the legislative intent of the Arbitration Act of 1996 is to minimize the
supervisory role of the court in arbitral process and expeditious appointment of arbiter so that
all contentious issues may be decided by the process of arbitration without recourse to
litigation.
Emphasizing the need for interpreting the provisions of the Act in the light of it objects and
reasons, the Apex Court in Fuerst Day Lawson Ltd. v. Jindal Exports Ltd.,257 observed that the
Act is meant to provide speedy and alternative solution of disputes so as to avoid protected
litigation. The Court further held that though objects and reasons of an enactment cannot be
254
Haryana v. Chanan Mal, (1977) 1 SCC 340,355.
255
Narain Khamman v. Parduman Kumar, (1985)1 SCC 8.
256
Food Corporation of India v. Indian Council of Arbitration, AIR 2003 SC 3011.
257
Fuerst Day Lawson Ltd. v. Jindal Exports Ltd., AIR 2001 SC 2291.
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the ultimate guide in interpretation of statutes but they do help in finding out the true legislative
intent behind enacting a particular provision of the Act.258
The SC has observed in P.Anand Gajapati Raju v. P.C.G.Raju259 , the legislative intention of
the Act has been provided in Sections 5&8 and such these Sections have been interpreted. In
Section 5, the effort is to curtail judicial intervention and to give solution through less costly
remedy, and in Section 8, arbitration has been made a compulsory step. Likewise, in Everest
Lasson Ltd. v. Jindal Exports Ltd.260 the SC while underlining the object of the Act, 1996, has
held that through alternative dispute resolution system, the dispute should be resolved quickly
and with lesser costs. The legislative attitude of the people should also be curtailed.
Scope
According to the Act of 1996, arbitration means any ‘Arbitration’ whether or not administered
by permanent arbitral institution. The definition covers all kinds of arbitration conducted
through any mode of arbitration but does not focus any light on the term arbitration itself.
Further, the definition covers only part I of the enactment, though usually definitions cover
whole of particular statute. In this Act, this is a novel experiment which confines the scope of
definitions, perhaps to mitigate the disputes of interpretation, and them without enlarging the
scope of confusion.261
The Act of 1996 has a comprehensive coverage, and applies to all kinds of arbitration in India.
Article 2 of the Arbitration Act, 1996 provides that this law is applicable to any arbitration
between persons of public or private law, irrespective of the nature of their legal relationship,
provided the arbitration takes place in the India. In case of ICA taking place abroad, the law
would be applicable, if the disputants have agreed to make their arbitration subject to the
jurisdiction of the law. While the ML, 1985 applies only to International arbitration, the Act,
1996, following the English Arbitration Law of 1996, covers not only International arbitration,
but also Domestic arbitration.
The main focus of the Act, 1996 is ICA. Hence, it is very important to see how commercial
arbitration is defined, under Indian Law. Practically, the Indian arbitration law does not provide
258
Bharat Singh v. New Delhi Tuberculosis Center, AIR 1986 SC 842.
259
P.Anand Gajapati Raju v. P.C.G.Raju AIR 2000 SC 539.
260
Everest Lasson Ltd. v. Jindal Exports Ltd., AIR 2001 SC 356.
261
S.S.Misra. “Law of Arbitration & Conciliation in India with Alternative Dispute Resolution Mechanism.”, 2nd
Ed. Allahabad: Central Law Agency, (2010), 26.
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exhaustive definition of expression ‘Commercial’. However, in ordinary parlance the
expression “Commercial” means any activity involving commerce and trade and wherein
nature of relationship is commercial.
The Apex Court in Fetech Chand v. State of Maharashtra,262 laid down definition of expression
“commercial” - “Any service or activity which in modern business would be considered to be
lubricant for the wheels of commerce is Commercial.”263
In the view of the Foreign Awards (Recognition & Enforcement) Act, 1961 the term
“Commercial” should be interpreted broadly having regard to a number of activities which are
essential elements of modern international trade. The SC in R.M. Investments & Trading Co.
v. Boeing Co.264 has held that consultancy service is commercial nature. The court observed
that consultancy services including managerial assistance and relevant information are being
provided with the purpose to promote sale of Boeing aircrafts and as such are commercial
activities in nature.
Thus, it can be said that the term “Commercial” has wide scope to include various activities
pertaining to business and trade. The footnote annexed to Article 1(1) of the ML (1985) to
reads as follows:
“The term commercial should be given a wide interpretation so as to cover matter arising from
all relationships of a commercial nature, whether contractual or not. Relationships of a
commercial nature, include, but are not limited to the following transactions: any trade
transactions for the supply or exchange of goods and services; distribution agreement;
commercial representation or agency; factoring, leasing; construction of works; constructions;
engineering; licensing; investment; financing; banking; exploitation agreement of concession;
joint venture and other forms of industrial or business cooperation; carriage of goods or
passengers by air, sea, rail, or road.”265
The Act, 1996 in Article 2(1) (f) defines ‘Commercial’ as “Disputes arising out of a legal
relationship, whether contractual or not, considered as commercial under the law in force in
India.” This Article is inspired by the definition of “Commercial” given by Article 1(1) of the
262
Fetech Chand v. State of Maharashtra, AIR 1977 SC 1825.
263
Id.
264
R.M.Investments & Trading Co. v. Boeing Co., AIR 1994 SC 1136.
265
UNCITRAL Model Law on International Commercial Arbitration and Conciliation, Art. 1 (1985).
Page | 82
ML (1985), while emphasizing issues particular to India. While the ML (1985) provides for
the definition of the term ‘Commercial’ in a footnote for Article 2 of Indian Law, that is alien
to the above drafting technique, defines the term extensively in a separate Article.
In the view of the SC of India the expression commercial as occurring in Section (2) (f) of the
Act, 1996 and in Section (2) of the Foreign Awards (Recognition and Enforcement) Act, 1961
should be construed broadly having regard to manifold activities which are integral parts of
international trade today and the aid can also be taken from footnote annexed to Article 1 of
the ML (1985) for this purpose.266
7.7. COMPARATIVE ANALYSIS OF MODEL LAW WITH ARBITRATION AND

CONCILIATION ACT 1996
Another serious problem related to the concept of arbitrability267 in International arbitration is

defining what is meant by the term “International”. This warrants the attention for two main
reasons. First, whether a dispute is arbitrable may be defined differently under either domestic
or international rules of arbitration. As a result, a dispute which may be arbitrable under
international arbitration rules may not be so under domestic rules. Second, in context of the
Act of 1996, it follows that if a dispute was not considered “International,” then enforcement
of foreign awards found in Part II under the Act of 1996 and select provisions of Part I would
be inapplicable to an arbitral proceeding. Thus, how arbitration law defines an international
dispute become important for disputants that seek to take advantage of ICA rules.
7.7.1. Object and Nature of Disputes:
The ML considers an arbitration ‘International’ if:
a. The place of business of the disputants is in different States;
b. The place of arbitration is outside the State of which the disputants have their places
of business;
266
R.M.Investments & Trading Co. v. Boeing Co., AIR 1994 SC 1136.
267
Arbitrability determines the point at which the exercise of contractual freedom ends and the public mission of
adjudication begins. See more ; Carbonneau, Thomas E. “The Law and Practice of Arbitration.”, 2nd Ed., Juris
Publishing, Inc., (2007), 194.
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c. The place where a substantial part of the obligations of the commercial relationship
is to be performed is outside the State in which the disputants have a business;
d. The place with which the subject matter of the dispute is most closely connected is
in a State other than the one in which the disputants have their places of business; or
e. The subject matter of the arbitration agreement is related to more than one State.268
Thus, the ML focuses primarily on the place of the disputants, arbitration, or dispute. The Act
of 1996 definition of what constitutes “International” is at variance with the ML, 1985. Section
2(1)(f) of the Arbitration Act, 1996 provides that;
“An arbitration is international where at least one of the disputants is: (1) an individual who is
a national of, or habitually resident in, any country other than India; or (2) a body corporate
which is incorporated in any country other than in India; or (3) a company or an association or
a body of individuals whose central management and control is exercised in any country other
than India; or (4) the government of a foreign country.”269
It is a main feature of the Act, 1996 that it makes a crystal-clear distinction between
International and Domestic arbitrations. Overlooking such as distinction has been a
shortcoming of most legal systems in the world, leading to a uniform treatment of both types
of arbitration.270 The disputants to an ICA are permitted, under Article of the Act of 1996 to
make the arbitration process subject to the Act. International arbitration is defined by the law
as cases of arbitration where the subject-matter of the dispute is related to international trade,
in one of the following ways: i) the principal business centre of the disputants are located in
two different countries. While the wording of the ML revolves around the disputants “places
of business”,271 Indian Law emphasizes their “principal business centre”, in order to distinguish
between marginal and central business activities. If a party has several business centers, the
centre that is close relevant to the dispute is regarded as his business centre. If a party does not
have a business centre, his place of domicile is considered as his business centre. For instance,
under the Act of 1996 definition, any commercial contract between an Indian national and a
268
Dore, Isaak Ismail. “The UNCITRAL Framework for Arbitration in Contemporary perspective”,1 st Ed.,
Graham & Trotman/M. Nijhoff, (1993), 102.
269
Section 2(1)(f) of the Arbitration Act, 1996.
270
Saleh, Samir. “The Settlement of Disputes in the Arab World, Arbitration and Other Methods: Trends in
Legislation and Case Law”, Arab Quarterly Law, vol. 1, No. 2 (Feb 1986), 198.
271
Article 1(3), the UNCITRAL Model Law on International Commercial Arbitration.
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non-resident Indian habitually resident abroad or a foreign national automatically is considered
“International” and subject to international arbitration standards regardless of whether the
transaction was local in nature.272 By the same token, a foreign firm in India would not be
subject-matter to International arbitration under the Act of 1996 whose ‘management and
control’ is exercised within India.273 On the other hand, under the ML, the disputants has to
expressly agree that the subject-matter of the dispute is connected to more than one State, if
the arbitration is to be considered as international. However, Indian Law does not provide for
a criterion to determine that the subject-matter of a dispute is linked to more than one State. By
focusing on the status of the disputants, the Indian approach seems to ignore the disputants’
actual connections to international business and the forum related to that commerce. As a result,
there is a serious danger that International arbitrations will be categorized arbitrarily potentially
aggrieving a party wishing to arbitrate under international rules.
7.7.2. The Adversarial Procedure
Section 23 of the Act, 1996, which is equivalent to Article 23 of the ML, specifies the
requirements of statements of claim and defence by the disputants. Section 23(1) of the Act,
1996, reads; “within the period of time agree upon by the disputants or determined by the
arbitral tribunal, the claimant shall State the facts supporting his claim, the points at issue and
relief or remedy sough, and the respondent shall State his defence in respect of these
particulars, unless the disputants have otherwise agreed as to the required elements of those
statements.”274 Such a statement initiates the arbitral proceedings. It is worthy of mention that
a statement of claim requires much more details than that is required for a request to refer a
dispute to arbitration. A statement of claim must be provided within the period of time agreed
upon by the disputant parties or prescribed by the tribunal.275
Under the Arbitration Act, 1996, the disputants can enclose to their statements the copies of
some supporting documents or evidence, and can make reference to them in their statements.
The arbitration tribunal has the right to require a party to submit the original documents or
evidence relied upon in the statements. Section 24(3) of the Act, 1996 requires that each party
must be provided with the copies of the submissions, documents, evidence, experts’ reports
272
Vijay Reddy & V. Nagaraj. “Arbitrability: The Indian Perspective”,19 J. Int’l 117, 118 .No. 2, (2002) , 135.
273
Id.
274
Section 23(1), the Arbitration Act, 1996.
275
Section 23, the Arbitration Act, 1996.
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and any other record submitted to the arbitration tribunal by one of the disputants or others.276
Section 23(3) of the Indian Law permits a party to amend or supplement his claim or defence
during the course of arbitration proceedings, unless the tribunal rules that such modification is
inadmissible in order to prevent delay in making the arbitral award. This provision is equivalent
to Article 23(2) of the ML (1985). However, it has been argued that the authority and power
granted by Indian Law to the arbitral tribunal should be used with caution, in order not to
prejudice the right of a party to fair hearing.
7.7.3. Suspension and Interruption of the Arbitration Proceedings
Neither the ML, nor does India allows the suspension of arbitral proceedings in certain
circumstances set out in law. The arbitral proceedings are interrupted in the following cases:
the death of one of the disputants, his loss of capacity, the commencement of proceedings for
forgery, or the commencement of criminal proceedings for forgery or for other criminal
offences. Any procedural action taken during the interruption period is void, and this period is
not considered as part of the time limit for arbitration proceedings.
On the other hand, if an issue is raised that does not fall under the jurisdiction of the tribunal,
or if a legal action is taken regarding the forgery of a document submitted to the tribunal or any
other criminal offence, the arbitration proceedings can continue, on the condition that the
tribunal comes to the conclusion that the outcome of the above legal action will not have any
impact on the decision of the tribunal. However, if such an impact is predicted, the arbitration
proceedings must be suspended, until a final decision about the alleged offence is made by the
Court.
It is important to notice that, it is the arbitration tribunal that decides whether a matter outside
its jurisdiction may affect its decision, and hence halt the proceedings or not. Therefore, not
any matter outside the jurisdiction of the tribunal, but relating to the proceedings, can
automatically interrupt the proceedings.
7.8. CONCLUSION
In India, there has been a conscious attempt to revise those provisions and customary rules that
hinder arbitration, or to find some ways of reconciling those rules with the requirements of
276
This is similar to Article 24(3) of the UNCITRAL Model Law on International Commercial Arbitration.
Page | 86
modern arbitration. The Indian Law of arbitration has more and more become aligned with the
internationally accepted standards of arbitration, as it is heavily influenced by the ML, 1985. It
has also become more and more regulated and codified. More importantly, it has become more
reliable and facilitative of arbitration. International arbitration institutions have also been
established in India such as the London Court of International Arbitration, though mainly
domestic, rather than international disputes, are referred to them.
International arbitration, particularly in commercial disputes, is recognized, under the present

Indian Law of arbitration. Broad definition of ICA, in India, facilitates arbitration in various
areas of international business, investment, development and technology transfer. However,
differences between domestic and international arbitration, with a view to providing a more
favourable environment for international arbitration, are not seriously taken into account.
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CHAPTER VIII
EPILOGUE
Section 89 CPC embodies the legislative mandate to courts for exploring the possibility of a
resolution of a dispute de hors the litigative process in matters pending for judicial
determination and if found appropriate, refer the dispute to any of the ADR processes provided
therein namely arbitration, conciliation, mediation, lok adalats and judicial settlement.
In case of arbitration and conciliation there can be no reference without the consent of the
parties and after reference the proceedings are to be conducted in accordance with the
provisions of the Arbitration and Conciliation Act, 1996. If the matter is referred to arbitration
it permanently moves out of the realm of the court and the suit stands disposed of at that very
juncture. In case of reference to other ADR procedures the matter can be referred to ADR fora
even without the consent of the parties if the court finds the existence of elements of settlement.
The proceedings before the court remain pending and if the matter is settled in the ADR process
the proceedings before the court are disposed of in accordance with the settlement.
The initiatives taken by the Supreme Court in Salem Advocate Bar Association v. Union of
India277 and Salem Advocate Bar Association v. Union of India (II),278 gave the initial
momentum to use of ADR in courts pursuant to section 89 CPC. Thereafter in Afcons
Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd.,279, which can be described as
a comprehensive practical guide for effective use of section 89 CPC, the Supreme Court has
given detailed practical guidelines so that section 89 CPC can be utilized so as to achieve the
best results. In Afcons Infrastructure Ltd. the Supreme Court has also directed interchange of
clauses (c) and (d) of section 89 (2) CPC by interpretative process to correct the draftsman's
error so that section 89 CPC is not rendered meaningless and infructuous.
The Supreme Court has pointed out serious errors in section 89 CPC which have also been
acknowledged by the Law Commission of India thereby underlining the need of an amendment
of section 89 CPC. However, despite these flagrant errors section 89 CPC has been made
workable by the Supreme Court by laying down detailed guidelines for efficient utilization of
section 89 CPC.
277
278
279
Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd., JT 2010 (7) SC 616,
Page | 88
Section 89 CPC is being efficiently utilized in Delhi. Mediation and Lok Adalats are the most
widely employed ADR mechanisms in terms of section 89 CPC in Delhi. Arbitration and
conciliation are being rarely resorted to in terms of section 89 CPC in Delhi and since there are
no rules in place for reference of the matters to judicial settlement after the Afcons judgment,
judicial settlement is also not being employed at all. The reference to Lok Adalats in terms of
section 89 CPC is also limited as majority of the matters referred to Lok Adalats are criminal
matters which are referred in terms of the Legal Services Authorities Act, 1987.
But the case of mediation stands on an entirely different footing. The mediation revolution
which has stormed Delhi with the establishment of numerous mediation centres is an upshot of
section 89 CPC only. The overall results peg mediation as the most efficient ADR mechanism
under section 89 CPC both in terms of quality of disposal as well quantum of disposal and
therefore mediation has emerged as the primary ADR process in courts in Delhi.
Be that as it may, even if the statistics are kept aside, section 89 CPC has given a massive boost
to the ADR revolution in Delhi and has helped in developing a settlement culture which is the
most important aspect to be taken care of as has been highlighted by none other than the Chief
Justice of India.280 The concept of employing ADR has undergone a sea change with the
insertion of section 89 CPC281 and it has resulted in a paradigm shift. The journey so far has
been good however there is still scope for improvement and definitely a need for progress.
280
Justice S.H. Kapadia, Chief Justice of India. See “Let litigation make way for settlement culture: Kapadia”,
The Hindu, New Delhi, July 11 2010.
281
S.B. Sinha, “ADR: Mechanism and Effective Implementation”, available at: http://bombay
highcourt.nic.in/mediation/index_articles.htm (last visited on 11.04.2012).
Page | 89
BIBLIOGRAPHY
PRIMARY SOURCES
• Constitution of India, 1950

• Alternative Dispute Resolution Act, 1998 (USA)
• Alternative Dispute Resolution Act, 2004 (Republic of Philippines)
• Arbitration Act, 1940 [Repealed]
• Arbitration and Conciliation Act, 1996
• Code of Civil Procedure, 1908
• Court Fees Act, 1870
• Family Courts Act, 1984
• Federal Arbitration Act, 1925
• Gram Nyayalayas Act, 2008
• Hindu Marriage Act, 1955
• Indian Stamp Act, 1889
• Industrial Disputes Act, 1947
• Legal Services Authorities Act, 1987
• Registration Act, 1908
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Quarterly 1 (July – September 2006).
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Page | 94
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Page | 95
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(Spring 2001).
Page | 96
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• R.C. Lahoti, “Envisioning ADR in the 21st Century”, Visionary address at the
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• All India Reporter

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Page | 99
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Page | 100

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ALTERNATIVE DISPUTE RESOLUTION

I, sincerely and gratefully acknowledge my primary obligation towards my supervisor

LIST OF CASES…………………………………………………………………. vii

2.6. THE ROLE OF REFERRAL JUDGES…………………………………………...14

CONCILIATION ACT 1996……………………………………………………….83

• Ahmed Pasha v. Gulnaz Jabeen, AIR 2001 Karnataka 412.

• Agarwal Engineering Co. v. Technoimpex Hungarian Machine Industries, Foreign

Trade Co., AIR 1977 SC 2122.

• All India Judges Association v. Union of India, (2002) 4 SCC 247.

• Alok Mishra v. Garima Mishra, 2009 (2) R.C.R.(Civil) 263.

• Ambika Kumary v. State of Kerala, AIR 2012 Kerala 16.

• Arosan Enterprises Ltd. v. Union of India, AIR 1999 SC 3804.

• Ashok Traders v. Gurmukh Dass Saluja, AIR 2004 SC 1433.

• Aviral Bhatla v. Bhawna Bhatla, 2009 (3) S.C.C. 448.

• B.S. Krishna Murthy v. B.S. Nagaraj, AIR 2011 SC 784

• Balwinder Kaur v. Hardeep Singh, AIR 1998 SC 764.

• Basheer v. Kerala State Housing Board, AIR 2005 Kerala 64.

(2003) 7 SCC 118.

2557 of 2008 decided on 25.02.2010 by the High Court of Jharkhand.

• Byram Pestonji Gariwala v. Union Bank of India, AIR 1991 SC 2234.

• Commissioner, Karnataka State Public Instruction (Education), Bangalore v. Nirupadi

Virbhadrappa Shiva Simpi, AIR 2001 Karnataka 504.

• DDA v. R.S. Sharma and Co., (2008) 13 SCC 80.

• Dinesh Kumar v. Balbir Singh, AIR 2008 Himachal Pradesh 59.

• Eastern Central Railway v. Ashok Kumar Verma, 2009 (4) J.L.J.R.129.

• Food Corporation of India v. Jogindarlal Mohindarpal, 1989 (2) SCC 347.

• Haresh Dayaram Thakur v. State of Maharashtra, AIR 2000 SC 2281.

• Inter Globe Aviation Ltd. v. N. Satchidanand, (2011) 7 SCC 463.

• Jagdish Chander v. Ramesh Chander, 2007 (6) SCC 719.

• Jagraj Singh v. Birpal Kaur, A.I.R. 2007 SC 2083.

• Janson v. Driefontein Consolidated Gold Mines Ltd., (1902) AC 484.

• K.K. Modi v. K.N. Modi, 1998 (3) SCC 573.

• K.N. Govindan Kutty Menon v. C.D. Shaji, (2012) 2 SCC 51.

• Kanak v. U.P. Avas Evam Vikas Parishad, AIR 2003 SC 3894.

• M. I. Ibrahim Kutty v. Indian Overseas Bank, AIR 2005 Madras 335.

20.05.2011 (Delhi High Court).

• Merlin Alias Sherly Augustin v. Yesudas, AIR 2007 Kerala 199.

Kumar, (2011) 1 SCC 466.

• Mysore Cements Ltd. v. Svedala Barmac Ltd., (2003) 10 SCC 375.

• N. Radhakrishnan v. Maestro Engineers, (2010) 1 SCC 72.

• Narayan Prasad Lohiya v. Nikunj Kumar Lohiya, AIR 2002 SC 1139.

• Naresh Chand Jain v. K.M. Tayal, MANU/DE/2014/2012.

(2007) 5 SCC 692.

• ONGC Ltd. v. Garware Shipping Corporation Ltd., (2007) 13 SCC 434.

• P. Anand Gajapathi Raju v. P.V.G. Raju, (2000) 4 SCC 539.

• P. T. Thomas v. Thomas Job, AIR 2005 SC 3575.

• Parmod v. Jagbir Singh, 2003 (2) R.C.R. (Civil) 184.

• Pu Lalkanglova Sailo v. Pi Ngurthantluangi Sailo, AIR 2009 Gauhati 39.

• Rahisuddin v. Gambit Leasing & Finance, MANU/DE/033/2010.

• Raipur Development Authority v. Chokhamal Contractors, AIR 1990 SC 1426.

• Rajan Kakar v. Vijaya Bank, AIR 2008 Delhi 17.

• Ram Niwas v. D.D.A., AIR 2007 Delhi 115.

• Sardar Singh v. Krishna Devi, 1994 (4) SCC 18.

• Security Printing and Minting Corporation of India Ltd. v. Gandhi Industrial

Corporation, (2007) 13 SCC 236.

• Shashi Prateek v. Charan Singh Verma, AIR 2009 Allahabad 109.

• Sitanna v. Viranna, AIR 1934 PC 105.

• State Bank of Indore v. Balaji Traders, 2003(3) R.C.R.(Civil) 339.

• State of Bombay v. K.P. Krishnan, A.I.R. 1960 SC 1223.

• State of Punjab v. Ganpat Raj, AIR 2006 SC 3089.

• Sundaram Finance Ltd. v. NEPC Ltd. (1999) 2 SCC 479.

• Surat Singh v. State of Himachal Pradesh, (2003) 3 Arb.L.R. 606 (DB).

• Surinder Kaur v. Pritam Singh, 154 (2008) DLT 598.