ADR TUTORIAL III SUBMISSION

Submitted by

Nikhil

Division: D

PRN - 16010324336

Program: BBA.LLB

Semester IX

Symbiosis Law School, Hyderabad”

Submitted in

August, 2020

“Under the guidance of”

Prof. Shailendra Kumar

Asst. Professor

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Question-1. What are the various Alternate Dispute Resolution methods available? Explain the
limitations of each of the ADRs, which are legally recognized in India.

ANSWER -

Methods of Alternative Dispute Resolution System

ADR’s techniques or modes may vary from region to region, though widely accepted worldwide.
That fluctuation is dependent on a country's legal framework. The following are the widely
accepted methods of settlement in India.

● Mediation
● Conciliation
● Negotiation
● Lok Adalat
● Arbitration
Arbitration

Arbitration is an ADR mode in which the dispute between the parties goes through a process of
reaching an amicable settlement by an impartial third party known as an 'arbitrator,' without
recourse to litigation. The arbitrator, in the case of arbitration, comes to a settlement after
reviewing the dispute between the parties. Such an arbitrator’s decision shall be binding upon all
parties

Limitations of Arbitration

1. If arbitration is mandatory as per the contract between the parties, then their right to
approach the court is waived.
2. There is a very limited avenue for appeals.
Mediation

Mediation is a form of dispute settlement where, with the aid of a third party known as a
'mediator,' a friendly decision occurs without recourse to the law court. It is a voluntary process
and unlike arbitration, it is more flexible; therefore, there is no obligation on the parties to the
dispute to agree to the settlement. An agreement reached by mediation shall therefore be binding
on the parties only so long as they agree to it

Limitations of Mediation

1. Since the decision is at the discretion of the parties, there is the possibility that a
settlement between the parties may not arise.
2. It lacks the support of any judicial authority in its conduct.

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Conciliation

Conciliation is a form of conflict resolution in which the parties to a dispute arrive at a settlement
with the aid of a conciliator. The conciliator meets both jointly and separately with the parties to
conclude an amicable agreement. The final decision can be made here by rising stresses,
strengthening contact and other methods

Limitations of Conciliation

1. The process is not binding upon the parties to the dispute.

2. There is no avenue for appeal.
Negotiation

Negotiation is a form of conflict settlement through which a third party appointed as a negotiator,
using various methods, resolves a disagreement between two persons or groups amicably. During
this type of mediation the negotiator uses different means of communication to carry the parties
to a settlement of the conflict.

Limitations of Negotiation

1. The parties to the dispute may not come to a settlement.

2. Lack of legal protection of the parties to the conflict.
Lok Adalat:

Lok Adalat (Court of the People) is one of the main conflict resolution systems in India. It is
where such lawsuits are pending or are decided in a court of law at the pre-litigation level. This
method, based on Gandhian values, aims at resolving conflicts through grass-root arbitration.
Lok Adalats was given statutory status under the Legal Services Authority Act, 1987 This Act
allows law enforcement authorities to offer free legal services to the weaker sections of society
under Article 39 A of the Indian Constitution.

Limitations of Lok Adalat:

Also though it is true that "Justice deferred is denied justice," it is also true that justice buried is a
rushed justice.Thus, speedy resolutions must not impair the rights of parties. In reality, Judges
are pressured to quickly dispose of the cases for political gains, leading to limited consideration
to the parties’ rights and needs. Lawyers are sometimes reluctant to refer the matter for
settlement in Lok Adalat.

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Question-2. Explain the Mediation and conciliation as ADRs and discuss the method of
enforceability of the settlement agreements resulting from these ADRs.

ANSWER -

Mediation and conciliation are two most common strategies adopted by Alternative Dispute
Resolution groups. Mediation is a process in which the parties to the dispute appoint a neutral
third party which helps the parties to the dispute find a solution through negotiation and
discussion. Mediation is of various forms including Evaluative Mediation, Virtual Mediation,
Facilitative Mediation, Arbitration Mediation and Transformative Mediation. In the aspect that
the latter is binding on the parties while mediation is not, mediation is different from arbitration.

Conciliation is an alternative conflict resolution mechanism where the parties are designated by
mutual consensus to settle their dispute by a third party, who then proposes a settlement
agreement after initiating contact, mediation and negotiation between the parties for a solution.
The most important element of conciliation which has an appeal for the parties is the importance
given to the confidentiality of the issues and details of the parties' dispute and privacy by the
procedure itself.

Enforcement:

The agreement drawn up in mediation between the parties to the conflict has equal contractual
value as any other contract, while in the case of conciliation, the settlement arrangement has an
equal force of law to that of an Arbitral Award.

Implementing settlement agreements in India

With Mediation:

A mediation arrangement has the same status as an arbitral award, and may thus be contested for
the same reason as an arbitral award. The vitiating factors are the essence of a party's fraud,
violence, corruption, incapacity or settlement which is contrary to public policy or a fundamental
Indian law policy. For compliance, as per section 36 of the Arbitration and Conciliation Act of
1996, a 'Settlement Arrangement' like an arbitral award is enforceable as a court decree. In cases
of agreements in court-annexed mediations, arbitration shall be upheld in court as the court
passes an order or decree in terms of arbitration settlement.

With Conciliation:

Part III of the Indian Arbitration & Conciliation Act, 1996 (the A&C Act) deals with the
'conciliation' of conflicts resulting from a legal arrangement between the parties, whether formal
or not. A settlement agreement reached by conciliation has the same meaning and effect as
though it were an arbitral award on the content of a dispute made by an arbitral tribunal in
accepted terms. This is recognised and enforceable on the basis as if it were a court order.

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Question-3. Explain the salient features of the Arbitration and Conciliation Act, 1996, and
factors influenced the legislature in bringing Arbitration and Conciliation Act, 1996.

ANSWER -

The Arbitration and Conciliation Act, 1996 contains the following salient features:

1. Party Friendly-much friendlier in terms of Arbitrator, applicability of law, place, procedure of

appointment language etc.

2. An Explanatory Code-The old Act of 1940 had no provision for international arbitration
whereas this Act of 1996 is an explanatory and a complete Code in itself, rather it is an
exhaustive Code.

3. Curtailment of the Courts’ Powers - The Act has limited the powers of court rather restricted
the exercise of judicial power.

4. Procedure for Conduct of Arbitration and Awards in detail-Chapter V of the Arbitration and
Conciliation Act, 1996 from Section 18 to Section 27 provides detailed procedure and practice in
hearings as well as statements of claim and defense.

5. A Comprehensive Statute-The Arbitration and Conciliation Act, 1996, is related to the

domestic, international and inter-state arbitrations. This Act provides importance to enforcement
of international arbitral awards and conciliation matters as well.

The Arbitration Act, 1940 was outdated andtherefore, the Act of1996sought to consolidate and
amend the law relating to domestic arbitration and International commercial arbitration. Prior to
the promulgation of the Arbitration and Conciliation Ordinance, 1996 the law on arbitration in
India was substantially contained in three enactments, namely the Arbitration Act, 1940, the
Arbitration (Protocol and Convention) Act, 1937 and the Foreign Awards (Recognition and
Enforcement) Act, 1961.

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In the statement of Objects and Reasons appended to the Bill it was stated that the Arbitration
Act, 1940, which contained the general law on arbitration, had become outdated. The said
Objects and Reasons stated that the United Nations Commission on International Trade Law
(UNCITRAL) adopted in 1985 the Model Law on International Commercial Arbitration.

The General Assembly had recommended that all countries give due consideration to the said
Model Law which alongwith the rules, was stated to have harmonised the concepts on arbitration
and conciliation of different legal systems of the world and thus contained provisions which were
designed for universal application. The abovesaid statement of Objects and Reasons in para 3
states that "though the said UNCITRAL Model Law and Rules are intended to deal with
international commercial arbitration and conciliation they could, with appropriate modifications
serve as a model for legalisation on domestic arbitration and conciliation.

The Arbitration and Conciliation Act, 1996 seeks to consolidate and amend the law relating to
domestic arbitration, international commercial arbitration, enforcement of foreign awards and to
define the law relating to conciliation, taking into account the said UNCITRAL Model Law and
Rules.

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Question- 4. Define Arbitration Agreement. What are the forms and formality of arbitration
agreement?

Arbitration agreements-The formal requirements of an enforceable arbitration agreement are

contained in section 7 of the Indian Arbitration Act , which provides that an arbitration
agreement is an agreement to arbitrate all or certain disputes, whether contractual or not, that
may arise in respect of a defined legal relationship. An arbitration agreement must, apparently,
be in writing and the same may be in the form of an arbitration clause in a contract or a separate
contract. If an arbitration agreement and relevant rules are silent on the issue of no appointment
of arbitrators, the arbitral tribunal would consist of a sole arbitrator to be appointed by the
parties' mutual consent. On failure of consensus, parties can approach the court having
jurisdiction for appointment of a sole arbitrator.

In the case of a challenge to appointment to be made before the so called arbitrator, the challenge
must be made within 15 days of the appointment being made public. The sole grounds for this
challenge are the existence of circumstances that give rise to justifiable doubts about the
arbitrator's independence and impartiality; or the arbitrator does not have the required
qualification.

Arbitral procedure- Under the Indian Arbitration Act, parties are free to agree on arbitration
proceedings. While strict evidentiary and civil procedure laws are not universal, these principles
usually govern the determination of the process.

The Indian Arbitration Law provides for minimal court intervention; however, it provides for
specific situations in which courts may intervene in arbitration proceedings, including the
appointment of an arbitrator (when the agreed procedure fails); the granting of interim reliefs; the
summonsing of witnesses and the production of documentary evidence; the termination of the
arbitrator's or the arbitrator 's mandate; setting aside of an arbitral and enforcement of the arbitral
award and appeals against the interim orders passed by arbitrator.

The persons or the parties to the arbitration agreement cannot contract to exclude the powers of
the court.

Interim relief- Under section 17 of the Indian Arbitration Act, an arbitrator has powers
equivalent to an Indian civil court to grant temporary relief in the form of injunctions, asset
attachment, and securities furnishing and receiving of immovable property.

Award-After the latest amendment to the Indian Arbitration Act in 2019, an arbitral award must
be made for matters other than international commercial arbitration within a period of 12 months
from the date of filing of pleadings (i.e., the statement of claim and the answer). This 12-month
term is extendable by the consent of the parties for a further six months. For any other extension,
an application must be produced to the court.

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The Indian Arbitration Law stipulates that an award must be in writing and signed by the tribunal
members. In addition, the award must state reasons on which it is based, unless the parties have
agreed otherwise or the award itself is a settlement.

Appeal-Section 34 of the Arbitration legislation sets out the grounds on which the courts may set
aside an arbitral award.

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Question-7. Discussed concept of waiver principle as provided under sec.4 Act.

ANSWER –

Section 4 of the Arbitration and Conciliation Act, 1996 states that -

“A party who knows that –

(a) any provision of this Part from which the parties may Derogate, or

(b) any requirement under the arbitration agreement,

has not been complied with and yet proceeds with the arbitration without stating his objection to
such non-compliance without undue delay or, if a time limit is provided for stating that
objection, within that period of time, shall be deemed to have waived his right to so object.”1

It states that if a party is having knowledge about the non-compliance of a non-mandatory

provision of Part I or any requirement under the arbitration agreement and even though proceeds
with the arbitration proceedings and he does not advance his objection within time stipulated for
submitting that objection, it amounts to waiver of right to object on the part of that party.

In the context of the Law of Arbitration there are several rulings regarding the principle of
waiver of right.2

(i) Expression "Waiver"—Meaning of.—The expression ‘waiver’ means relinquishing of a

claim freely. According to the Apex Court the term "waiver" connotes voluntary and intentional
giving up of a known right by conduct or by silence.3

(ii) Failure to raise objection within prescribed time—Amounts to waiver of right

(iii) Conditions necessary when a party waives his right.—

A party waives his right to object if the following conditions are fulfilled :—

A. There must be a voluntary relinquishment of a known right.

1Section 4 of the Arbitration and Conciliation Act, 1996

2M/s. Tarapore & Co. v. Cochin Shipyard Ltd., Cochin, AIR 1984 SC 1072; Chowdhri Murtaza Hussain v. Bibi
Bechunnisa, 3 Ind.. App. 209; Donald Campbells Co. v. J. Girdhari Lai, AIR 1920 PC 123.
3Bisheshwar Nath v. Commissioner, Income-tax, AIR 1959 SC 149.

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B. Arbitration under objection—Does not constitute waiver of right.

C. Objection to be raised "without undue delay".

D. Party proceeds with arbitration without objection.

(iv) Attending arbitration proceedings under protest does not amount to waiver of right.—
The Madhya Pradesh High Court in Govind v. Bhurelal & others,4 observed that if a party is
attending arbitration proceedings under protest, it does not amount to the waiver of right by that
party.

4(1994) 2 Arb. LR 103 (M.P.).

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