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ARMY INSTITUTE OF LAW

Mediation and Arbitration

Submitted in partial fulfillment of requirements for BA.LL.B. degree

Submitted to: Submitted by:

Dr. Kulpreet Bhullar Tulip Josh


Assistant Prof. of Law 1405(Sec-A)

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INDEX
SNO. TOPIC PG.NO.
1 INTRODUCTION 3
2 ARBITRATION 3
 TYPES OF ARBITRATION

 ITS PRINCIPAL CHARACTERISTICS


 ADVANTAGES AND DISADVANTAGES OF
ARBITRATION

3 MEDIATION 6
 PRINCIPAL CHARACTERISTICS

 TYPES OF MEDIATION
 KEY QUALITIES OF THE MEDIATION PROCESS
 STAGES TO THE MEDIATION PROCESS

4 KEY DIFFERENCES BETWEEN MEDIATION AND 10


ARBITRATION

5 CONCLUSION 12
6 BIBLIOGRAPHY 13

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INTRODUCTION

ARBITRATION

Arbitration is "a legal technique for the resolution of disputes outside the courts, wherein the
parties to a dispute refer it to one or more persons (the "arbitrators", "arbiters" or "arbitral
tribunal"), by whose decision (the "award") they agree to be bound." 1

It is a formal meeting, which begins as a claim and ultimately the dispute is submitted to one
or panel of arbitrators, who makes the judgment after taking into account all facts and evidences
relating to the dispute.2The process is much like a court room proceeding; it is a private trial
wherein the dispute is settled outside the court. The parties provide testimony, the third party
looks after evidence and impose a decision which binds both the parties and is legally
enforceable.3Arbitration should not be confused with mediation. In the arbitration, the
arbitrator obliged to determine the dispute by reference to certain rules, rather than to seek
compromise which is mediator's task.

There are two types of arbitration: ad hoc arbitration and arbitration organized in permanent
institutions. Ad hoc arbitration is conducted independently from any influence of institutions
and according to the rules chosen by the parties. In this type of process, the arbitrators are
appointed by case-by-case basis, usually by parties. One option is that the parties select an
appointing authority who will appoint arbitrators for the proceeding. The composition of the
tribunal can vary from one to several arbitrator depending on procedural rules. In the arbitration
process organized by permanent institutions, the process is more bound to the rules of the said
institution. The institution provides arbitral services and normally appoints the arbitrators. One
example of this kind of institution is the International Chamber of Commerce.

Arbitration is a procedure in which a dispute is submitted, by agreement of the parties, to one


or more arbitrators who make a binding decision on the dispute. In choosing arbitration, the
parties opt for a private dispute resolution procedure instead of going to court.4 The
UNCITRAL Model Law on International Commercial Arbitration reflects the worldwide

1
Barraclough, Andrew and Jeff Waincymer. “Mandatory Rules of Law in International Commercial
Arbitration". Melbourne Journal of International Law at
http://www.austlii.edu.au/au/journals/MelbJIL/2005/9.html.
2
HG.org – Worldwide Legal Directories, Definition of Arbitration, http://www.hg.org/arbitration-
definition.html
3
Pooja Mahant, Mediation and Arbitration, https://keydifferences.com/difference-between-mediation-and-
arbitration.html#ComparisonChart.
4
http://www.wipo.int/amc/en/arbitration/what-is-arb.html

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consensus on key aspects of arbitral process accepted by different states and it is designed to
assist States in reforming and modernizing their laws on arbitral procedure.The UNCITRAL
Arbitration Rules provides a set of procedural rules upon which parties may agree for the
conduct of arbitral proceedings arising out of their commercial relationship. These rules are
widely used both in ad hoc arbitration and in permanent arbitration institutions.5

Its principal characteristics are:

 Arbitration is consensual

Arbitration can only take place if both parties have agreed to it. In the case of future disputes
arising under a contract, the parties insert an arbitration clause in the relevant contract. An
existing dispute can be referred to arbitration by means of a submission agreement between the
parties. In contrast to mediation, a party cannot unilaterally withdraw from arbitration.

 The parties choose the arbitrator(s)

The parties are free to agree on a procedure for appointing the arbitrator or arbitrators. The
parties can select a sole arbitrator together. If they choose to have a three-member arbitral
tribunal, each party appoints one of the arbitrators; those two persons then agree on the
presiding arbitrator. Where a party fails to act as required under that procedure; or The parties,
or the two appointed arbitrators, fail to reach an agreement expected of them under that
procedure; or A person, including an institution, fails to perform any function entrusted to him
or it under that procedure, A party may request the Chief Justice or any person or institution
designated by him to take the necessary measure.6

 Arbitration is neutral

In addition to their selection of neutrals of appropriate nationality, parties are able to choose
such important elements as the applicable law, language and venue of the arbitration. This
allows them to ensure that no party enjoys a home court advantage.

 The decision of the arbitral tribunal is final and easy to enforce

Domestic and foreign awards are enforced in the same manner as a decree of the Indian court.
While the enforcement and execution of an India - seated arbitral award (“domestic award”)

5
Ellen E. Deason , Combinations of Mediation and Arbitration with the Same Neutral: A Framework for
Judicial Review , https://elibrary.law.psu.edu/cgi/viewcontent.cgi?article=1091&context=arbitrationlawreview
6
THE ARBITRATION AND CONCILIATION ACT, 1996, Section 11

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would be governed by the provisions of Part I of the Act, enforcement of foreign - seated
awards (“foreign award”) would be governed by the provisions of Part II of the Act. 7 Under
the WIPO Rules, the parties agree to carry out the decision of the arbitral tribunal without
delay. International awards are enforced by national courts under the New York Convention,
which permits them to be set aside only in very limited circumstances. More than 140 States are
party to this Convention.8

ADVANTAGES AND DISADVANTAGES OF ARBITRATION

The arbitration process has some advantages and disadvantages, when compared to public
litigation. First of all, it is a confidential process, which can be important in disputes involving
commercial secrets. On the other hand, because of the confidentiality, the disputes settled in
the arbitration do not gain such publicity that disputes resolved in the public litigation. The
arbitration process usually also gives the parties the freedom to select their arbitrators. Thirdly,
it is usually quicker and more flexible than public litigation. However, one disadvantage is that
arbitration is normally more expensive than public litigation because of high salary of the
arbitrators.

Arbitration Agreement-

The UNCITRAL Model Law defines an arbitration agreement as "an agreement by the parties
to submit to arbitration all or certain disputes which have arisen or which may arise between
them in respect of a defined legal relationship, whether contractual or not.". As the wording of
the definition states, the arbitration agreement can be drafted before or after the dispute has
arisen. There are two types of arbitration agreements: "separate" arbitration agreements and
arbitration clauses.

Seat of Arbitration-Basically, the concept of the seat of arbitration determines the procedural
rules of the arbitration proceedings. It refers to the geographical and legal jurisdiction to which
the arbitration process is tied. For example, the arbitration agreement can state that the
proceedings are to be held "in London under the rules of the ICC".

The issue of choosing the law governing the arbitration proceedings depends on the fact
whether the arbitration agreement refers a matter to the permanent arbitration institution or to

7
Enforcement of Arbitral Awards and Decrees in India ,
http://www.nishithdesai.com/fileadmin/user_upload/pdfs/Research%20Papers/Enforcement_of_Arbitral_Award
s.pdf
8
Ibid.

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the ad hoc arbitration. Basically, if the matter is referred to permanent arbitral institution,
proceedings are held in accordance with the rules of said institution. For example, if the dispute
is referred to ICC International Court of Arbitration, the proceeding is governed by their
rules.In ad hoc tribunals, the law governing the arbitration proceedings is determined from the
seat of arbitration, meaning that the governing law in this case is the law of the seat of
arbitration. If the parties have not designated the seat of arbitration, the proceedings are

The best-known institutional arbitrations are the ICC, the LCIA and the ICDR (AAA)

MEDIATION

Mediation is described as a method of dispute settlement, wherein the parties need not go to
the court, for a solution, rather an informal meeting takes place in which neutral third party,
i.e. mediator, helps them to arrive at a decision, accepted to both the partiesAny settlement is
recorded in an enforceable contract.The mediator, is independent, does not pass any judgement
or give guidance, but build consensus between the parties concerned, through communication
and negotiation techniques. He/She plays the role of a facilitator, by encouraging interaction
between the parties.

The process aims at arriving at a decision, which is agreeable to both the parties. In case, the
mediation does not result in any agreement; then the parties can resort to arbitration or
litigation.

The principal characteristics of mediation are9:

 Mediation is a non-binding procedure controlled by the parties

A party to a mediation cannot be forced to accept an outcome that it does not like. Unlike an
arbitrator or a judge, the mediator is not a decision-maker. The mediator's role is, rather, to
assist the parties in reaching a settlement of the dispute.10

 Mediation is a confidential procedure

In a mediation, the parties cannot be compelled to disclose information that they prefer to keep
confidential. If, in order to promote resolution of the dispute, a party chooses to disclose
confidential information or make admissions, that information cannot, under the WIPO

9
http://www.wipo.int/amc/en/mediation/what-mediation.html
10
Mediation in The Indian Legal System ,
http://chetananand.co.in/index.php?route=product/category&path=103_108

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Mediation Rules, be provided to anyone - including in subsequent court litigation or arbitration
- outside the context of the mediation. Mediation's confidentiality allows the parties to negotiate
more freely and productively, without fear of publicity.

 Mediation is an interest-based procedure

In court litigation or arbitration, the outcome of a case is determined by the facts of the dispute
and the applicable law. In a mediation, the parties can also be guided by their business interests.
As such, the parties are free to choose an outcome that is oriented as much to the future of their
business relationship as to their past conduct.

Because mediation is non-binding and confidential, it involves minimal risk for the parties and
generates significant benefits. Indeed, one could say that, even when a settlement is not
achieved, mediation never fails, as it causes the parties to define the facts and issues of the
dispute, thus in any event preparing the ground for subsequent arbitration or court proceedings.

TYPES OF MEDIATION

Statutory-There are some types of cases that are required by law to go through the mediation
process. Labor disputes and domestic (family law) disputes are two prime examples. In India,
however, this type of mandatory mediation is rare.

Court ordered-Most jurisdictions in India require some form of alternative dispute resolution
before a case may be resolved through the traditional judicial process. As soon as a case is
filed, the parties are provided a number of ADR options. They must, unless exempted by the
Court, select and pursue one of these options The Court maintains a list of mediators skilled
and experienced attorneys selected by the Court who are available to the parties

Contractual-The parties to a contract, as part of the terms of their agreement, may include a
mediation clause as a mechanism to resolve disputes

Voluntary-The parties to a dispute may decide to seek mediation without being compelled by
law, court order, or contract. They may choose to mediate their dispute at any time: as the
dispute is developing, before initiating legal action, or even while legal action is pending.

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KEY QUALITIES OF THE MEDIATION PROCESS11

Voluntary - You can leave at any time for any reason, or no reason.

Collaborative - As no participant in mediation can impose anything on anyone, everyone is


motivated to work together to solve the issues and reach best agreements.

Controlled - Each participant has complete decision-making power and a veto over each and
every provision of any mediated agreement. Nothing can be imposed on you.

Informed - The mediation process offers a full opportunity to obtain and incorporate legal and
other expert information and advice. Individual or mutually acceptable experts can be retained.
Expert advice is never determinative in mediation. The participants always retain decision-
making power.

Impartial, Neutral, Balanced and Safe - The mediator has an equal and balanced responsibility
to assist each mediating party and cannot favour the interests of any one party over another,
nor should the mediator favour a particular result in the mediation.

Self-Responsible and Satisfying - Based upon having actively participated in voluntarily


resolving issues, participant satisfaction and the likelihood of compliance are found to be
elevated through mediation compared to court options.

Mediation is forward-looking; the goal is for all parties to work out a solution they can live
with and trust. It focuses on solving problems, not uncovering the truth or imposing legal rules.
This, of course, is a far different approach than courts take. In court, a judge or jury looks back
to determine who was right and who was wrong, then imposes a penalty or award based on its
decision.Also, if mediation does not produce an agreement, either side is free to sue.

Fast, Flexible, Cost Efficient and Convenient-- the amount of time necessary for the parties and
the mediator to prepare for the mediation is significantly less than that needed for trial or
arbitration, Procedures can be modified to meet the needs of a particular case. Because
mediation generally requires less preparation, is less formal than trial or arbitration, and can
occur at an early stage of the dispute, it is almost always less expensive than other forms of
dispute resolution.12 The parties can control the time, location, and duration of the proceedings

11
Jim Melamed, What is Mediation? , https://www.mediate.com/articles/what.cfm.

12
What is Mediation?, https://adr.findlaw.com/mediation/what-is-mediation-.html

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to a significant extent. Scheduling is not subject to the convenience of overworked and
sometimes bureaucratic courts.

STAGES TO THE MEDIATION PROCESS

It is less formal than a trial or arbitration, but there are distinct stages to the mediation process.
Most mediations proceed as follows:

Stage 1: Mediator's Opening Statement. After the disputants are seated at a table, the mediator
introduces everyone, explains the goals and rules of the mediation, and encourages each side
to work cooperatively toward a settlement.

Stage 2: Disputants' Opening Statements. Each party is invited to describe, in his or her own
words, what the dispute is about and how he or she has been affected by it, and to present some
general ideas about resolving it. While one person is speaking, the other is not allowed to
interrupt.

Stage 3: Joint Discussion. The mediator may try to get the parties talking directly about what
was said in the opening statements. This is the time to determine what issues need to be
addressed.

Stage 4: Private Caucuses. The private caucus is a chance for each party to meet privately with
the mediator (usually in a nearby room) to discuss the strengths and weaknesses of his or her
position and new ideas for settlement. The mediator may caucus with each side just once, or
several times, as needed. These private meetings are considered the guts of mediation.

Stage 5: Joint Negotiation. After caucuses, the mediator may bring the parties back together to
negotiate directly.

Stage 6: Closure. This is the end of the mediation. If an agreement has been reached, the
mediator may put its main provisions in writing as the parties listen. The mediator may ask
each side to sign the written summary of agreement or suggest they take it to lawyers for
review. If the parties want to, they can write up and sign a legally binding contract. If no
agreement was reached, the mediator will review whatever progress has been made and advise
everyone of their options, such as meeting again later, going to arbitration, or going to court.13
The Supreme Court of India has, in the case of Moti Ram (D) Tr. LRs and Anr. Vs. Ashok

13
Mediation: The Six Stages , Legal Encyclopedia, https://www.nolo.com/legal-encyclopedia/mediation-six-
stages-30252.html

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Kumar and Anr,14 held that mediation proceedings are confidential in nature. The said
judgment takes a forward step in relation to court-directed mediation and asserts that such
mediation proceedings are confidential in nature

KEY DIFFERENCES BETWEEN MEDIATION AND ARBITRATION

The difference between mediation and arbitration lies in the nature of the judgement taken by
the experts. While the decision taken by the arbitrator is binding on the parties, the mediator
does not make the judgement but helps the parties in arriving at an agreement.

The occurrence of the dispute is very common in every field not only in business, especially
when the issue is related to an opinion, unanimous agreement of the parties is rare. There are
various alternatives of dispute settlement, like conciliation, mediation, arbitration,
adjudication, collective bargaining and so on. Of these, mediation and arbitration are two
processes which are employed in lieu of litigation process, so as to resolve conflicts between
the parties.15

Mediation and arbitration are both forms of alternative dispute resolution (ADR), meaning
alternatives to the expensive and time-consuming litigation of a lengthy court battle. Mediation
and arbitration are similar in that they bring together parties in conflict to resolve an issue
outside of the courtroom, but each has its own unique way of doing so.

Mediation Brings Parties Together to Find Voluntary Solutions

Mediation is an alternative process for conflict resolution that provides a number of advantages
over going to court. The parties, with or without counsel, engage a neutral third party Mediator
to facilitate productive conversation between them and help each side clarify its interests and
concerns. The parties retain control over the entire process, including the format of the process,
who can attend the mediation, and how to resolve the dispute. Mediation is less expensive and
considerably faster than a court proceeding, and can occur at any time during the pendency of
the dispute. Mediation is a confidential proceeding conducted in a less intimidating
environment than a courtroom. Solutions can be creative and more suited to the needs of the
parties than what the court might be empowered to order.

14
(2011) 1 SCC 466
15
Surbhi S , Difference Between Mediation and Arbitration ,https://keydifferences.com/difference-between-
mediation-and-arbitration.html#ComparisonChart

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Mediators do not make decisions or rulings. Rather, they help the parties create their own
voluntary agreement in a confidential setting. The agreement, when signed by each party, is a
binding contract. If a settlement cannot be reached in mediation, the parties reserve all of their
options to pursue another form of ADR or take their issue to court.

Arbitration Relies on a Neutral Third Party to Determine an Outcome

Like mediation, arbitration utilizes a neutral third party, called the Arbitrator, to resolve the
conflict between the parties outside of a courtroom. However, unlike mediation, the Arbitrator
serves as a private judge to listen to the evidence and make rulings to determine the outcome
of the dispute. Thus, in arbitration, the private judge is in control of the process and the
outcome, whereas in mediation, the disputing parties maintain control.

Most Arbitrators will be flexible and work around the schedules and needs of the parties. And
although arbitration is usually less formal than a courtroom trial, there will be a set of
procedures that will apply to both sides as they prepare for the hearing. In most cases, the award
of the Arbitrator is final and binding on both sides. The opportunity to appeal after a binding
arbitration is very limited.16

BASIS FOR
MEDIATION ARBITARTION
COMPARISON

Meaning Mediation refers to a process of Arbitration is a substitute of public trial,


resolving disputes wherein an with no need of going court, wherein an
independent third party, assist the independent third party analyses the
parties involved in arriving at entire situation and makes a decision
solution, agreeable to all. binding on the parties.

Nature Collaborative Adversarial

Process Informal Formal

Role of expert Facilitator Judge

16
https://www.ladrmediation.com/ladr-bulletins/what-is-the-difference-between-mediation-and-arbitration/

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BASIS FOR
MEDIATION ARBITARTION
COMPARISON

Number of expert One One or more

Private Meeting between the parties Only evidentiary hearings, no private


communication concerned and the counsel takes meetings with the arbitrator.
place jointly and separately.

Control over Parties Arbitrator


outcome

Basis of outcome Needs, rights and interest of Facts and evidences


parties

Outcome May or may not be reached. Definitely reached.

Decision The mediator does not pass any The decision of the arbitrator is final and
judgement, but makes settlement binding upon the parties.
only with the approval of parties.

Conclusion When the agreement is reached or When the decision is handed down.
parties are deadlocked.

CONCLUSION

Both the processes can be voluntary or compulsory; wherein the third party need not be trained.
Choosing between the two alternatives is very confusing and tedious task because both have
their pros and cons.

Mediation ensures confidentiality but the does not guarantee the attainment of the outcome. In
contrast, arbitration gives guaranteed result, but the confidentiality of the matter is at stake and
at the same time the cost of arbitration is greater than mediation. So, before opting any of the
two processes, first identify your requirements, suitability and the worth of the decison. Only
then you will make a right choice of process for the dispute.

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BIBLIOGRAPHY-

Source :

 Barraclough, Andrew and Jeff Waincymer. “Mandatory Rules of Law in International


Commercial Arbitration". Melbourne Journal of International Law at
http://www.austlii.edu.au/au/journals/MelbJIL/2005/9.html.
 HG.org – Worldwide Legal Directories, Definition of Arbitration,
http://www.hg.org/arbitration-definition.html
 Pooja Mahant, Mediation and Arbitration, https://keydifferences.com/difference-
between-mediation-and-arbitration.html#ComparisonChart.
 http://www.wipo.int/amc/en/arbitration/what-is-arb.html
 Ellen E. Deason , Combinations of Mediation and Arbitration with the Same Neutral:
A Framework for Judicial Review ,
https://elibrary.law.psu.edu/cgi/viewcontent.cgi?article=1091&context=arbitrationlaw
review
 Enforcement of Arbitral Awards and Decrees in India ,
http://www.nishithdesai.com/fileadmin/user_upload/pdfs/Research%20Papers/Enforc
ement_of_Arbitral_Awards.pdf
 http://www.wipo.int/amc/en/mediation/what-mediation.html
 Mediation in The Indian Legal System ,
http://chetananand.co.in/index.php?route=product/category&path=103_108
 Jim Melamed, What is Mediation? , https://www.mediate.com/articles/what.cfm.
 What is Mediation?, https://adr.findlaw.com/mediation/what-is-mediation-.html
 Mediation: The Six Stages , Legal Encyclopedia, https://www.nolo.com/legal-
encyclopedia/mediation-six-stages-30252.html
 Surbhi S , Difference Between Mediation and Arbitration
,https://keydifferences.com/difference-between-mediation-and-
arbitration.html#ComparisonChart
 https://www.ladrmediation.com/ladr-bulletins/what-is-the-difference-between-
mediation-and-arbitration/

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