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Article By - Taiba Khan
(This Article was written by her during the Internship tenure at Legal Soch Foundation)
ABSTRACT:
In this article we will be studying about the various globally accepted methods of dispute resolution, their process, binding nature and the statutes governing each method. This article will also provide a cursory view of the history behind each method.
INTRODUCTION:
Everyone will definitely concur on the point that since different people think differently, every society is bound to have disputes within it. This gave rise to the development of a machinery called as “the Judiciary”. The main purpose of this body called the Judiciary is to resolve all kinds of disputes. It is now well established that the judiciary is considered as the primary source of dispute resolution since it is regarded as the most efficient redressal forum.
But there were instances when it was felt that this organ of the government was suffering considerably in providing speedy justice due to the sudden & rapid increase in litigation. Also, the number of the judges was relatively low in comparison to the number of cases which were pendente lite. Thus, need was felt to introduce various other dispute resolution mechanisms. The main motive behind it was to reduce the burden of the Judiciary, encourage amicable settlement of disputes and to avoid unnecessary delay caused due to adversarial litigation which will indirectly result into reduction of litigation.
What is Alternative Dispute Resolution?
The term literally means a substitute method of resolving disputes. But in general parlance, these are methods which provide the parties in dispute the opportunity to seek assistance of a 3rd person of their choice, who helps them to come to an agreement without going to court and settle the matter outside court. Thus, these are non-litigation methods which are recognized by courts.
Origin & History
Arbitration prevailed in India prior to the British Rule where the Panch’s of a village Panchayat would use informal mediation / arbitration as a method to resolve the dispute at their levels. Later, the Britishers institutionalized the concept of Arbitration by bringing about a legislation titled The Indian Arbitration Act, 1899. The modern-day ADR methods are a result of the Geneva Convention which can be traced back to the year 1949. In the early 20th Century India brought about a legislation called the Arbitration & Conciliation Act, 1996 which governs the process of Arbitration & Conciliation, it is based on the widely accepted UNCITRAL Model. The first ever provision which recognized the concept of ADR was Sec.89 of the Civil Procedure Code, 1908 inserted by the Civil Procedure Code (Amendment) Act of, 1999 under which a civil court can refer a matter before it to Arbitration, Conciliation, Lok Adalat or Mediation.
Types of ADR
Although, all types of ADR seem quite similar to the laymen, there exists crucial differences in each type with respect to the statute governing their functioning, jurisdictional scope and their binding nature.
These major differences are discussed hereunder-
A) LOK ADALATS
As the name suggests the term refers to a “PUBLIC COURT”. These courts are deemed civil courts and an award (decree) passed by these courts is considered final and binding. The function of these courts is to perform conciliation and persuade the parties to a dispute to come to a settlement amicably before they opt litigation. Thus, any dispute which is not brought before the courts can be referred to a Lok Adalat for resolution.
These Lok Adalat’s were given statutory base by enacting the Legal Services Authorities Act, 1987. The main object behind passing this act was –
1) To constitute legal services authorities to provide free and competent legal services to the weaker sections of the society
2) To ensure justice is not denied to any citizen by reason of economic or other disabilities
3) To organise Lok Adalat’s
The said act was enacted in view of Art. 39A of the Constitution which states that- “The State shall secure that the operation of the legal system promotes justice, on a basis of equal opportunity, and shall, in particular, provide free legal aid, by suitable legislation or schemes or in any other way, to ensure that opportunities for securing justice are not denied to any citizen by reason of economic or other disabilities”
So, Art. 39A creates an obligation on the Government to frame legislations or schemes to ensure that no citizen is denied justice due to technical disabilities.
Hence, to effectively implement the said constitutional provision the Central & State Governments constituted bodies namely- the National Legal Services Authority, State Legal Services Authorities & District Legal Services Authorities u/s. 3, 6 & 9 respectively of Legal Services Authorities Act, 1987 or the Supreme Court Legal Services Committee, High Court Legal Services Committee or Taluka Legal Services Committee under the said act. The primary functions of these bodies were to organize or constitute Lok Adalat’s at such intervals and places as it deems fit.
Types of Lok Adalat’s
1. Temporary Lok Adalat-
Generally, Lok Adalat’s are organised at State, District & Taluka levels whereas the National Lok Adalat is held at regular intervals on a single day throughout the country.
2. Permanent Lok Adalat-
This is organised u/s. 22B of the said act, it is a permanent body which deals with disputes relating to Public Utility Services like transport, telegraph etc. It has a pecuniary jurisdiction of Rs. 10 Lakhs.
3. Mobile Lok Adalat-
A mobile Lok Adalat travels from one place to another in order to resolve the disputes of a particular place.
The functioning of these Lok Adalat’s are governed by the provisions enumerated in the form of Chapter 6 of the said act containing Sec.19-22E. It is pertinent to note that Lok Adalat’s perform conciliation while resolving the disputes before it. The term conciliation is discussed further in this article.
B) ARBITRATION
As per the Merriam Webster dictionary the term Arbitration is derived from a Latin word “Arbiter” meaning eyewitness or a judge or a person appointed to resolve a dispute. Today, Arbitration in India is governed by the Arbitration & Conciliation Act, 1996. This act was a result of the United Nations Commission on International Trade Law (UNCITRAL) held in 1985. The said Commission had adopted a Model Law on Commercial Arbitration and the UN further requested its member nations to adopt the Model Law within their domestic legislations with a view to bring about a Global Uniformity in international arbitration.
Arbitration Agreement- A Pre-Condition:
Contrary to the process followed by a Lok Adalat’s, as per Sec.7 of the Arbitration & Conciliation Act, 1996 an arbitration agreement (as a separate document) or an arbitration clause within an agreement shall exist before referring the matter for arbitration.
An Arbitration Agreement is a document which contains the signatures of the parties agreeing to refer the dispute for arbitration, this consensus in the absence of arbitration clause/ agreement can be displayed via exchange of letters, telex, telegram or any other means of communication as well using which either party to the dispute can refer the case for arbitration. A decision by an arbitral tribunal without the Arbitration Agreement is null & void.
Adjudicating Authority:
Arbitration is a process which can be carried out by a sole as well as a panel of arbitrators which is called as the “Arbitral Tribunal”. This process empowers the parties to the dispute to select the number of arbitrators who will adjudicate their matter. As per Sec.10 of the said act the only condition in choosing the no. of arbitrators is that it shall not be an even number, reason being to avoid a situation of deadlock. If the parties fail to choose the number of arbitrators within reasonable time, then the matter shall be adjudicated by the sole arbitrator.
It is pertinent to note that the person being appointed as an arbitrator must be-
i) Independent
ii) Impartial
iii) And should have enough time to devote to adjudicate the matter
If either party has doubts regarding the impartiality or independence of the Arbitral Tribunal, they can challenge the same on the grounds provided in the 5th Schedule of the said Act.
Types of Arbitration:
1. Domestic Arbitration
When a dispute arises between parties who are both Indian residents due to a contractual or legal relationship within India the said arbitration is referred to as Domestic Arbitration.
2. International Arbitration
When either party to the dispute is –
A habitual resident of foreign country or
A body corporate incorporated outside India or
An Association controlled and managed by a Government outside India or
A government of a foreign country
in such a case the arbitration is referred to as International Arbitration.
Arbitral Award:
The decision given by an Arbitral Tribunal is referred as an “Arbitral Award” which shall be final & binding on both parties to the dispute and persons claiming under them. It can be set aside u/s. 34 of the said act by making an application only on the grounds provided therein.
C) CONCILIATION & MEDIATION
In legal sense the terms conciliation and mediation are considered synonymous since both these methods involve a similar process in reaching a settlement. At the option of parties, a 3rd person who is neutral, facilitates them to come to a consensus. Contrary to Arbitration, Conciliation usually involves 1 person as a conciliator unless the parties agree that there shall be 2 or 3 conciliators. The parties are free to choose the number of Conciliators, the point of difference is that there exists no condition that the number of conciliators should be odd as in Arbitration. Conciliation is also governed by the Arbitration & Conciliation Act, 1996.
Proceedings:
In conciliation a party initiates by sending the other party a written invitation to conciliate the matter in dispute. The primary requisite to commence conciliation proceedings is the acceptance of this invitation by the other party. If the other party rejects it, there will be no Conciliation proceedings. The reasonable time to reply to such invitation is 30 Days from the date of receipt. If the other party does not communicate its acceptance within the said period, the party making such invitation can elect it to be treated as rejected.
When acceptance is tendered by the other party the second step is the appointment of a Conciliator. The parties may agree on the name of a sole Conciliator in the Conciliation proceedings itself or request an institution for recommendations. After the Conciliator is duly appointed, he/she will primarily ask the parties to submit a Brief Written Statement describing the nature of their dispute and Points in Issue. The conciliator may at a further stage request the parties to submit all the relevant supplemented documents or evidences.
Role of Conciliator:
The role of a Conciliator in a conciliation proceeding is only to assist the parties administratively to conduct a constructive session by having private sessions with each party separately in private caucuses or calling them for a joint session to discuss the matter in issue. The Conciliator will only stimulate the parties who will themselves provide suggestions and resolve the dispute.
Confidentiality:
The element which makes conciliation different from all the other ADR methods is the element of Confidentiality. Whatever is discussed within a conciliation proceeding whether in private caucuses or a joint session remains confidential. Only facts which are to be necessarily told to the other party are disclosed with the permission of the parties themselves and all other information remains confidential.
Settlement Agreement:
If the parties are about to reach a settlement the conciliator formulates the terms of possible settlement and submits it before the parties for their observation. Then each party submits their observations to the Conciliator. If they reach at a consensus then a settlement agreement is drawn by them which is signed by both parties. A settlement agreement reached after a conciliation proceeding has the same effect as that of an Arbitral Award as per Sec. 74 of the Arbitration & Conciliation Act, 1996.
CONCLUSION:
We can thus conclude that although the main aim of all alternative methods of dispute resolution is the same i.e to resolve disputes and encourage amicable settlement, there lies a notable difference in the processes which are followed by each one of them. These processes create the thin line of difference and make each method a unique one. It is pertinent to note that ADR does not involve coercing the parties to a dispute to settle the matter somehow or the other, rather it is a means to empower the parties to elect the adjudicating authority in whom they truly believe.
References:
Domestic & International Arbitration (legalservicesindia.com)
The Genesis and Evolution of Arbitration in India – USLLS ADR Blog