Alternative Dispute Resolution – Arbitration, Mediation, Conciliation (Concept; Purpose and Application) ( As Speaker at Refresher Training Programme for Additional District Judges in Institute of Judicial Training, Lucknow. U.P. on 20-7-2012)

************* CONCEPT: In 1927 an English Judge Justice Marten of Bombay High Court said “It (arbitration) is indeed a striking feature of ordinary Indian life. And I would go further and say that it prevails in all ranks of life to a much greater extent than is the case in England. To refer matters to a Panch is one of the natural ways of deciding many a dispute in India”. Corpus Juris Secundum ( Volume VI) defines an arbitration as under:- “ The settlement of controversies by arbitration is a legally favoured contractual proceeding of common law origin by which the parties by consent submit the matter for determination to a tribunal of their own choosing on substitution for the tribunals provided by the ordinary process of the law” CODIFIED LAW IN INDIAN CONTEXT FOR ALTERNATIVE DISPUTE RESOLUTION: The history of codified law on Arbitration is India is Indian Arbitration Act, 1899; Indian Arbitration Act, 1940 and now Arbitration and Conciliation Act, 1996 each enacted keeping in view the development of law in the sphere and keeping in pace with the requirements in law with changing times. PURPOSE OF LAW Arbitration and Conciliation Act, 1996 is an Act to consolidate and amend the law, relating to domestic Arbitration and International Commercial Arbitration. Untied Nations Commission on International Trade Law (UNICITRAL) adopted the UNICITRAL Model law on International Commercial Arbitrations in 1985; thereafter the General Assembly of the United Nations had recommended that all countries give DUE CONSIDERATION TO THE SAID Model Law, in view of desirability of uniformity of law of arbitral procedures and the specific needs of international commercial arbitration practice. Keeping in view the international norms our Parliament enacted the Arbitration and Conciliation Act, 1996. The scope of the topic will be incomprehensive if we do not notice the statement and objects of the legislature which is the bedrock of the New Arbitration law in India. Quote : 1) To comprehensively cover international and commercial arbitration and conciliation as also domestic arbitration and conciliation; 2) To make provision for an arbitral procedure which is fair, efficient and capable of meeting the needs of the specific arbitration. 3) To provide that the arbitral tribunal gives reasons for its arbitral award; 4) To ensure that the arbitral tribunal remains within the limits of its jurisdiction; 5) To minimize the supervisory role of Courts in the arbitral process; 6) To permit an arbitral tribunal to use mediation, conciliation or other procedures during the arbitral proceedings to encourage settlement of disputes; 7) To provide that every final arbitral award is enforced in the same manner as if it were a decree of the Court; 8) To provide that a settlement agreement reached by the parties as a result of conciliation proceedings will have the same status and effect as an arbitral award on agreed terms on the substance of the dispute rendered by an arbitral Tribunal; and 9) To provide that, for purposes of enforcement of foreign awards, every arbitral award made in a country to which one of the two international Conversations relating to foreign arbitral awards to which India is a party applies, will be treated as a foreign award. If we cull out the settled law from various Judicial pronouncements it would be clear that settlement of disputes between the parties has a tradition in this country as I had pointed out in the beginning of this article. We cannot deny the overburden of litigation in courts. It is also true that the Judicial System prevalent in courts is governed by procedures prescribed by various enactments and several of which are technical and obstruct the adjudication resulting in delays. We have to appreciate that the litigant of today is often frustrated and exhausted due to delays. All his enthusiasm of his rights enforcement dies with time and soon comes a time when he just wants the decision irrespective of its outcome; this I have clearly observed as a lawyer in last two decades of my practice. Therefore I feel that the purpose of alternative mechanism for resolution of disputes has been evolved for resolution of disputes through the process of Arbitration; Conciliation and Mediation to ensure fair and efficient, speedy trial giving finality to the decision. Russel on Arbitration is one of the Classic legal reference works. Courts and Practitioners and all those involved in arbitrations use this as one of the most powerful reference tool. Russel on Arbitration (23rd Edition) states as under:- Arbitration Features:- • Party Autonomy is recognized as paramount and court intervention is expressly excluded except as specified in the Act; • A general duty is imposed on the arbitral tribunal to act fairly and impartially and to adopt procedures that avoid unnecessary delays or expense. • The object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense. • The parties should be free to agree how their disputes are resolved subject only to such safeguards as are necessary in public interest; and • Intervention by courts should be restricted. APPLICATION OF LAW Looking to the significance and necessity of Alternative Disputes Redressal ; the Civil Procedure Code (by Amending Act, 1999) carried out an amendment and inserted Section 89 of the Civil procedure Code; which reads as under:- Quote: S. 89. Settlement of disputes outside the Court – (1) Where it appears to the court that there exist elements of a settlement which may be acceptable to the parties, the court shall formulate the terms of settlement and give them to the parties for their observations and after receiving the observations of the parties, the court may reformulate the terms of a possible settlement and refer the same for – (a) arbitration; (b) conciliation; (c) judicial settlement including settlement through Lok Adalat; or (d) mediation. (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 of 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 resp9ect of the dispute to referred to the Lok Adalat; (c) for judicial settlement, the court shall refer the same to a suitable institution or person and such institution or person shall be deemed to be a Lok Adalat and all the provisions of the Legal Services Authority Act, 1987 (39 of 1987) shall apply as if the dispute were referred to a Lok Adalat under the provisions of that Act; (d) for mediation, the court shall effect a compromise between the parties and shall follow such procedure as may be prescribed. A bare perusal of Section 89 of CPC demonstrates that in all Civil litigations the courts have to encourage settlement of disputes outside the court. While discussing about the philosophy behind Section 89 of CPC; reference to Justice Malimath Committee report is a must “If a law is enacted giving legal sanction to such machinery for resolution of disputes and resort thereto is made compulsory, much of the inflow of commercial litigation in regular civil courts gradually moving up hierarchically would be controlled and reduced.” The Malimath Committee while elaborating the importance of conciliation also suggested “the senior members of the bar, amongst others are invited for personal discussions by the District Judge; Additional District Judges …….. with a view to impressing upon them ……..their willing participation in settlement…..which will result in saving time and sparing them of the trouble of calling witnesses, subjecting them to long drawn examination, cross examination and arguments.” ARBITRATION ACT, 1996 ( relevant provisions) Some of the provisions of the Arbitration Act, 1996 need a mention which would throw light on the application of law qua the courts and how they are to give effect to the philosophy of the Act. Section 5 of the Arbitration and Conciliation Act, 1996 (herein after referred to as Act) provides that “Notwithstanding anything contained in any other law for the time being in force, in matters governed by this part, no judicial authority shall intervene except where so provided in this part”. The mandate of Section 5 was considered by the Hon’ble Supreme Court of India in the case of P. Anand Gajapathi Raju Vs. P.V.G. Raju AIR 2000 SC 1886 where in the Hon’ble Court held:- “Section 5 brings out clearly the object of the New Act, namely, that of encouraging resolution of disputes expeditiously and less expensively and when there is an arbitration agreement, the courts intervention should be minimal.” Section 8 of the Act mandates that: A Judicial Authority before which an action is brought in a matter which is the subject matter of an arbitration agreement shall, if the party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration. The Hon’ble Supreme Court while interpreting the provision of Section 8 in the case of P. Anand Gajapati Raju (supra) held “The language of Section 8 is preemptory. It is, therefore, obligatory for the court to refer the parties to arbitration in terms of their arbitration agreement”. The next section dealing with courts jurisdiction is Section 9 of the Act, which provides:- A party may, before or during arbitral proceedings or at any time after making of the arbitral award but before it is enforced may apply to a court for interim measure of protection in respect of the preservation, interim custody or sale of any goods which are subject matter of arbitration agreement; securing the amount in disputes in the arbitration and so on and so forth. The decision of the Hon’ble Supreme Court of India in the Case of Sundaram Finance Ltd Versus NEPC India Ltd 1999 (2) SCC 479 is the lead case law giving all principles for application of Section 9 by the courts. In this case the Hon’ble Supreme Court also held that when an application under Section 9 is filed by a party, there has to be a manifest intention on part of the applicant to take recourse to the arbitral proceedings. Then finally post award stage in court is contained in Section 34 of the Act, when a party has recourse to a court against an arbitral award on the very limited grounds as provided for. The scope of the post award challenge is not the subject matter of this seminar ; suffice to say that there are catena of judicial decisions which define the limited grounds of interference in an arbitral award by the Courts primarily because it is a decision of the choice of forum of the parties and that an arbitral award should normally assume finality subject to the basic tenet of compliance of principles of natural justice by the Arbitral tribunal. All of which is in consonance behind the basic principle of an Alternative dispute Resolution its concept and its purpose.