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ALTERNATIVE DISPUTE RESOLUTIONPART 1: HISTORY OF ADR
First ADR act came in India in 1899 which had a limited scope. Before the enactment of Arbitration and Conciliation Act,1996 the statutory provisions on arbitration in India were contained in three different enactments, namely, The Arbitration Act, 1940, The Arbitration (Protocol and Convention) Act, 1937 and The Foreign Awards (Recognition and Enforcement) Act, 1961. The Arbitration Act, 1940 laid down the framework within which domestic arbitration was concluded in India, while the other two Acts dealt with foreign awards. The Arbitration and Conciliation Act, 1996 has repealed The Arbitration Act, 1940, The Arbitration (Protocol and Convention) Act, 1937 and The Foreign Awards (Recognition and Enforcement) Act, 1961. The interpretation to 1940 Act was difficult. It was held in the case of Food Corp. of India v. Joginder Lal Mohan Lal, where Supreme Court criticised 1940 act for its complications and technicalities. In M/S Guru Nanak Foundation v. M/S Ratan Singh & Sons, the Honble Supreme Court observed that the Act was ineffective and the way the proceedings under this Act were conducted in the Courts made the lawyers laugh and legal philosophers weep. The 1940 Act repealed sec. 89 of CPC which provided for dispute resolution outside the court through four methods. The 124th Law commission report studied the backlog of cases through 1940 Act. The 129th Law commission report studied Arbitration and Conciliation specifically and recommended to make them compulsory. Malimath Committee studied the above two reports and recommended to make it obligatory for the Court to refer the dispute, after issues are framed, for settlement either by way of arbitration, conciliation, mediation, judicial settlement or through Lok Adalat. Arbitration and Conciliation Act, 1996 was brought on the lines of the Malimath Committee report and UNCITRAL model laws for ADR. In view of the above, by Amendment of 1999 a new section 89 has been inserted in order to provide for alternative resolution.
DIFFERENCE BETWEEN 1996 ACT AND 1940 ACT1. Under the old Act, an Arbitrator was not a conciliator. He was only to adjudicate the disputes referred to him by the parties. However, the new law under Sec.30(1) has recognized the Arbitrator as a Conciliator, and there is a separate chapter for conciliation in the new Act.2. Under the old Act, an aggrieved party to get an Arbitrator appointed has to approach the jurisdictional Civil+ Court either under Sec.8 or Sec. 20. This was again time consuming ordeal. Under the new Act, the Chief Justice of the High Courts have been named under Sec.II for the purpose of appointment of Arbitrator. The Chief Justice can delegate the power of appointment to any other person or institution.3. Under 1940 Act the 'Court' was defined as Civil Court having Jurisdiction to decide the question forming the subject matter of reference if the same had been the subject matter of suit but did not include a small causes court except for the purposes of arbitration proceedings under Sec.21.Now the new Act provides that the Principal Civil Court of Original Jurisdiction in a district which includes High Court in exercise of its Original Jursidction but does not include any Civil Court of a grade inferior to such Principal Civil Court or any Court of Small Causes.4. Under the Old Act, if more than one Arbitrator was contemplated it was incumbent that the forum shall consist of an Umpire to be appointed by the Nominated, Appointed Arbitrators and the Umpire should enter on reference upon the disagreement between the Arbitrators.Under the New Act the Umpire will be the Chairman of the tribunal who shall also sit with the Arbitrators and take part in the proceedings unlike under the old Act.
PART 2: UNCITRAL MODEL LAWS
The UNCITRAL Model Law on International Commercial Arbitration was adopted by the United Nations Commission on International Trade Law (UNCITRAL) on 21 June 1985, at the close of the Commission's 18th annual session. The Model Law constitutes a sound and promising basis for the desired harmonisation and improvement of national laws. It covers all stages of the arbitral process from the arbitration agreement to the recognition and enforcement of the arbitral award and reflects a worldwide consensus on the principles and important issues of international arbitration practice. Chapter 1, tells the general definitions and scope of arbitration and conciliation. Scope of Judicial intervention also mentioned Chapter 2: Stage 1- Arbitration agreement. Can be in the form of separate agreement or clause. Chapter 3: Stage 2- Formation of Arbitral tribunal- Appointment of arbitrators, Grounds for challenge of appointment, Challenge procedure. Chapter 4: Stage 3- Jurisdiction of arbitral tribunal- deals with competence of arbitral tribunal to rule on its jurisdiction. Chapter 5: Stage 4- Conduct of arbitral proceedings- talks about Equal treatment of parties, Determination of rules of procedure, Place of arbitration, Commencement of arbitral proceedings etc. Chapter 6: Stage 5- Making of award and termination of proceedings- it talks about Rules applicable to substance of dispute, Decision-making by panel of arbitrators, Settlement, Form and contents of award etc. Chapter 7: Stage 6: Recourse against award- it talks about grounds on which arbitral awards can be challenged. Chapter 8: Stage 7- Recognition and enforcement of awards and Grounds for refusing recognition or enforcement. The 1996 Act has adopted all the above chapters in the same manner and added two more chapters. Chapter 9 deals with Appeals and Chapter 10 deals with miscellaneous provisions.
ADVANTAGES AND DISADVANTAGES OF ADRSome advantages of ADR are increased settlement improved satisfaction with the outcome or manner in which the dispute is resolved among disputants reduced time in dispute reduced costs in relating to the dispute resolution increased compliance with agreed solutions.Some disadvantages of ADR are: Lack of enforcement Increased costs Compromise of principles ADR practitioner may not have the technical skills required Need other party to be willing to come to the table No right to appeal. Award is final and binding. It can only be challenged.
AFCON CONSTRUCTIONS V. CHERIAN CONSTRUCTIONSThe Supreme Court of India in a recent decision in the matter of Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. Pvt. Ltd.has examined the law under the said provision of sec. 89 of CPC, which casts an obligation over the civil court to refer the parties to a cause to settle their dispute through the various forms of Alternate Dispute Resolution.
Even though whereas upon an examination of Section 89 of the Code along with the stipulations of Order X therein the Supreme Court was of the opinion that the provision is incorrectly worded and various faults in the legislative drafting to that effect were pointed out, the Bench applied the rule of interpretation to make it workable. The Bench also, on its own, took up the task of identifying which all cases could be referred to alternate forms of dispute resolution, given the nature of these disputes and also noted that "Section 89 refers to five types of ADR procedures, made up of one adjudicatory process (arbitration) and four negotiatory (non-adjudicatory) processes -conciliation,mediation,judicial settlementandLok Adalat settlement." The Bench further went on to clarify the meaning and ambit of each of thesefive forms of alternate dispute resolution.
Thereupon the Supreme Court passed the following guidelines to be adopted by the Courts in India;31. We may summarize the procedure to be adopted by a court under section 89 of the Code as under :a) When the pleadings are complete, before framing issues, the court shall fix a preliminary hearing for appearance of parties. The court should acquaint itself with the facts of the case and the nature of the dispute between the parties.b) The court should first consider whether the case falls under any of the category of the cases which are required to be tried by courts and not fit to be referred to any ADR processes. If it finds the case falls under any excluded category, it should record a brief order referring to the nature of the case and why it is not fit for reference to ADR processes. It will then proceed with the framing of issues and trial.c) In other cases (that is, in cases which can be referred to ADR processes) the court should explain the choice of five ADR processes to the parties to enable them to exercise their option.d) The court should first ascertain whether the parties are willing for arbitration. The court should inform the parties that arbitration is an adjudicatory process by a chosen private forum and reference to arbitration will permanently take the suit outside the ambit of the court. The parties should also be informed that the cost of arbitration will have to be borne by them. Only if both parties agree for arbitration, and also agree upon the arbitrator, the matter should be referred to arbitration.e) If the parties are not agreeable for arbitration, the court should ascertain whether the parties are agreeble for reference to conciliation which will be governed by the provisions of the AC Act. If all the parties agree for reference to conciliation and agree upon the conciliator/s, the court can refer the matter to conciliation in accordance with section 64 of the AC Act.f) If parties are not agreeable for arbitration and conciliation, which is likely to happen in most of the cases for want of consensus, the court should, keeping in view the preferences/options of parties, refer the matter to any one of the other three other ADR processes : (a) Lok Adalat; (b) mediation by a neutral third party facilitator or mediator; and (c) a judicial settlement,