Srikrishna Panel suggests amendments to ACA 2015

One of the laudable achievements of the Modi Government is the amendment to Indian Arbitration and Conciliation Act 1996 as amended by the Arbitration and Conciliation (Amendment) Act 2015 (ACA 2015). These amendments came into effect from 23rd October 2015 .  Some of the important amendments were made to reduce delays in the conclusion of arbitration and reduce the possibility of Court intervention. It enabled use of electronic documents for communication, suggested a schedule for Arbitrator’s fees. The amendment suggested a one year time for completion of arbitration and introduced incentives for early completion and disincentives for delays. Some strict measures on the eligibility criteria of arbitrators were also suggested to avoid conflicts. Judicial challenges have also been made more difficult and over all the system of Arbitration was changed substantially for the better.

However,  the community of arbitrators who are already in the game consisting mainly or retired judges have not been happy with the limitations imposed by the suggested fee structure as well as the imposition of the time limits for completion. At the same time some genuine and not so genuine doubts were also raised on some provisions leading to a very low adoption of Arbitration in the last 18-20 months the amended Act has been in place in India.

Now the Srikrishna panel which was mainly looking at the “Institutionalization of Arbitration Mechanisms” also went into suggesting some more amendments to ACA 2015 Many of the amendments suggested are to correct some omissions and some of the more important suggestions are as follows:

  1. The time limit of 12 months (extendable by another 6 months with Court permission) under Section 29A should be applicable to domestic arbitration only and not to international arbitration.
  2. Time limit should be counted from the completion of pleadings with 6 months time given for submission of pleadings.
  3. When the application is under a Court the time limit should be kept in deference.
  4. If the application is not disposed of by a Court within the period mentioned there in it is deemed to be granted. (29A(9))
  5. When the Court seeks to reduce the fees of the arbitrator for delay, opportunity should be given to the arbitrator to be heard.
  6. The period of outer limit under Section 34(6) should not be mandatory
  7. Imposition of costs in connection with Court proceedings should be incorporated
  8. Fourth schedule may be amended to provide a model fee for disputes between INR 10 to 20 crores which has been omitted
  9. An immunity to be granted for Arbitrator that he shall not be liable except when there is bad faith.
  10. Provision for confidentiality of proceedings unless disclosure is required by legal duty, to protect or enforce legal right or to enforce or challenge an award before a Court.
  11. A model set of rules have been proposed as a default rule.
  12. Power to appoint an arbitrator where there is no agreement should be done by an Arbitral institution designated by  Supreme Court. (This will be part of the designation and grading)
  13. Provision for an “Emergency” award from an “Emergency Arbitrator” to be made
  14.  A New part to be introduced for establishment of APCI.
  15. A repositroy of Arbitral awards may be maintained by APCI.
  16. All arbitral institutions shall be constituted as Section 8 companies.

Excepting some suggestions made earlier, regarding the necessity for a separate institution such as APCI, other recommendations are more to reduce the practical difficulties and no specific comments can be made.

There is also a recommendation regarding Foreign Advocates to be allowed to participate in the international awards which is reasonable if India has to develop as a global center. Some other suggestions regarding how the recommendations may be implemented also have been made.

Committee has also recommended that every arbitral institution should provide mediation services and standardization of mediation law should be drafted.

We have some reservations on the “Mediation” since “Mediation” by definitions should be a mutually arrived settlement and hence some flexibility is required in the regulations. Too much of legal constraint is nor desirable.

Additionally, ICADR is recommended to be converted into an Apex organization for International ADR in India which also has been commented earlier.

Naavi

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Srikrishna Panel Proposes more Institutions to Improve Existing Institutions.. Is it a good strategy?

(P.S: This is In continuation of the Earlier Article/s) on the subject

The High Level Committee which gave its recommendations on Arbitration was named as a “Committee to review Institutionalization of Arbitration Mechanism in India”. I am not sure if there was a typographic error in the title of the report which could have been “Review of Institutional Arbitration Mechanism in India”.

The title “Institutionalization” suggests that it was a “Fixed” objective of the Committee to “Institutionalize” the Arbitration mechanism in India. The objective was not to “Review the Institutional Arbitration and suggest improvement”. Just as Government agencies define a specification of a tender document so as to suit a particular objective, this Committee was given a myopic objective to suggest how to institutionalize the system rather than how to improve the efficiency of the system.

It is therefore not surprising that the Committee went about conducting its work with the sole objective of turning all its survey observations to the direction of further institutionalization of the ADR process in India rather than making the existing system more efficient.

The approach of the Committee is therefore not keeping with the objective of Mr Modi to have “Less Government and More Governance”. It follows the good old preference of the bureaucracy to have “More Government and Less Governance”. In the process public money is being looted by the Government machinery as expenses while the tax payer keeps contributing to the kitty.

In pursuance of this principle, the Committee observes ” Arbitral Institutions are not working well and therefore we shall create more institutions to supervise institutions”.

Everybody in the Government is happy with this approach since it gives an impression of something being done without any movement on the ground. But more positions are created for the Delhi Babus and the Retired Judges in this case along with more offices, more office staff, more office cars etc.

I would like Mr Modi and Arun Jaitely to review this approach. Recently Mr Jaitely scrapped Cyber Appellate Tribunal unmindful of the consequences on the Citizens in the pretext of saving costs. At the same time scores of CERTs are being created and now several new institutions are being recommended by the High Level Committee when the ADR system itself is not yet adopted by the community fully. Is there any logic in such a move?

At one time we used to make fun of bureaucracy that whenever a decision is to be postponed they are in the habit of creating a c”committee”. Now the trend is whenever a decision is to be taken, suggest a “New Institution”.  Either the decision will be endlessly delayed or if it happens, there are many executive positions at Government cost that become available to the influential people who swarm Delhi’s power corridors.

Modi Government is being cheated by the bureaucracy with this approach which in the long run will increase the number of needless departments and institutions that are running at the cost of the tax payer’s money.

Keeping this tradition, this Committee suggests

a) Arbitration Promotion Council of India, (APCI) an autonomous body which will grade arbitral institutions and provide accreditation for arbitrators.

b) Specialist Arbitration Bar consisting of arbitration lawyers, providing courses etc

c) Specialist Arbitration bench  consisting of Judges who will be trained by National Judicial Academy

d) International Center for Alternate Dispute Resolution as a “Flagship Arbitral Institution”.

e) Creating a post of an International Law Adviser

f) Establishing a 5 member permanent Inter-Ministerial Committee

etc.

We need to justify whether the above institutions are actually required to be set up or they can be carved out of the existing institutions so that costs and administrative lag can be reduced.

The suggestion will ultimately create a ADR structure which will be a shadow of the Judicial structure with multiple institutions each trying to outdo the other and end up preventing a smooth functioning of the system.

There is already bar councils of several description in the country which serve the entire community of advocates. Other professionals such as Chartered Accountants, Computer Specialists, Civil Contractors, etc have their own industry organziations overseeing professionals in their respective domains.

It should therefore be possible for a “Committee to be formed under say the Law Ministry” which can take up the responsibility of creating “Arbitrator Capacity Building” within their domains and share the knowledge on a common platform so that litigants can chose their preferred Arbitrators. Ultimately it is the rating given by the litigants that should build the value of the Arbitrators. A review system where litigants submit their reviews and is supervised by the committee of experts should be sufficient to create a system of “Grading” of the Arbitrators and also the “Arbitratral Institutions”.  Similarly the academic institutions including the Judicial academies can take up education aspects without the need for the APCI.

I therefore suggest that there is no need for an APCI as an institution and instead an adhoc committee of stake holders under the Law Ministry should be able to handle this responsibility. The Law Secretary or an Additional Secretary can lead this committee with his present secretariat. This will enable possibility of action from tomorrow without the need to create a new institution by a further amendment of ACA2015 as the committee proposes.

Ministerial committee can be called from time to time as required without any permanent cost again under the supervision of the Law Ministry.

The need for International Law Adviser might have been felt after the Kulbhushan Jadhav case and this requirement is not restricted to Arbitration but extends to all matters of international legal issues. The External affairs ministry may coordinate with the Law Ministry and the CJI informally to identify the best talent available for this purpose which may differ from case to case depending on the nature of the issue. A Permanent International Law Adviser has the risk of ending up as an adviser to advise who else has to be appointed to handle a particular assignment and nothing else.

The need for an International Center of ADR is a misnomer since every “Institutional Arbitration Council” should have the necessary expertise for undertaking “International Arbitration”. Domain/Sector specialization is key to the acceptance of the International Community and hence each of the existing Arbitral Institutions should develop a “Domestic Wing” and an “International Wing” and develop the International Expertise within its own sector specialization.

There is actually a need for an International Center for ADR for the IT industry because no such institution exists in India and India is in the forefront of IT industry on a global platform and can claim both a stake in this arbitration and also an expertise.

Effort should be to encourage the industry bodies to think of such bodies with the assistance of the Law Ministry. For example, NASSCOM or STPI could very well take up the initiation of such a project for the IT industry and this has already been proposed by the undersigned to some decision makers.

There could be similar opportunities in other industries such as Auto industry or Pharma Industry and representatives from each of such sectoral International arbitral institutions  can form a “Federation of International Arbitration Institutions of India” which ultimately may emerge as an industry led apex representative body for International Arbitrations making it possible for India to be considered as an International Center for Arbitrations.

We have already highlighted many times that being the “International Center for ODR” is a step in the direction of India developing into an “International Center for ADR” and hence we need to focus on this niche position which is not occupied by countries like Singapore in the ADR space.

Just as the Specialist Bar will only serve the advocates and does not accommodate professionals from other areas, Specialized Bench will also be only serving the current Judicial members. They can be supported within the current systems so that it does not appear that Arbitration becomes the sole preserve of Lawyers and Judges.

The net suggestion therefore is “Donot Create Multiple Institutions, Make use of the existing infrastructure of bureaucrats and the industry led associations to meet the objectives for which APCI, Specialist Bar and Bench etc are being contemplated.

Also Keep the basic principle that Arbitration (and more so the Mediation) can be effectively handled by Non-Advocates and Non Judges and any attempt to make it the sole preserve of Judiciary and Lawyers is dysfunctional and should be avoided.

Naavi

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Adhoc Arbitration Vs Institutional Arbitration-Srikrishna Committee

If ADR (Alternate Dispute Resolution) in India has failed to take off even after the Amended Arbitration and Conciliation Act (ACA 2015), the root cause has been that the system is being controlled by a few Arbitral Institutions which are not able to effectively transform themselves and keep pace with the development.

During the last few years, I have personally contacted most of these Arbitral Institutions and tried to discuss the possibility of using Online Dispute Resolution mechanism (Check at www.odrglobal.in) to establish a transparent, accountable, economic and faster arbitration system in India. But none of them have shown interest in exploring the possibilities.

The Srikrishna Committee’s major failure is that it has not recognized and addressed the issue of “ODR as an instrument of Improvement of ADR in India”.

Was every member of the committee ignorant about ODR? If so, it speaks bad about their preparation and the quality of secretarial support they got and undermines the value of the entire report.

Even assuming that the websites adr.ind.in or naavi.org or odrglobal.in are too insignificant for the High Level Committee to look at, since the UNCITRAL model law on ODR is under discussion in the international circles, and several academic institutions and blogs have been discussing ODR as a concept, it is unthinkable that the “High Level” Committee was unaware and did not consider it necessary to at least make a mention of ODR and reject it if necessary in its deliberations.

It cannot therefore be accepted that the Committee was ignorant of ODR nor the issue was not brought before it for discussion. We must presume that the Committee did not want to make even a mention of ODR in its report and wanted to completely suppress any discussion there of.

One of the terms of reference of the committee was evolving an effective and efficient arbitration eco system for commercial dispute resolution. Under this it was imperative that the committee should have considered the use of technology which would have led them to a discussion on ODR.

The omission of ODR discussion by the committee directly indicates the mindset that is also the root cause for the failure of ADR becoming popular in India.

Without addressing this “Mindset Problem”, merely creating more institutions for regulation will only increase the overhead for the Government and will not lead to any improvement of Justice Delivery on the ground.

The Mindset Problem

The Committee recorded that there are presently over 35 arbitral institutions in India. (though only six of them responded to the Committee in its survey).

The Committee recognized that the rules and practices followed by these institutions as well as the infrastructure are outdated and inadequate. The committee also acknowledged several oter drawbacks in the existing arbitral institutions.

These observations could have been a used to make a case for promotion of “Adhoc Arbitration”. But the Committee used all its observations on the weaknesses of the Arbitral Institutions to make a case for investing more time, effort and money to strengthen these Institutional arbitration system rather than giving a thought to improvement of the Adhoc Arbitration System.

The real problem that afflicts the Institutional Arbitration system in India is because they are not being run with the objective of being an institution that can ease the grievances of the public. It is the reason why (as the committee itself notes) many of them donot have even a website let alone other public over reach programs. Most of the e-mail addresses of the enrolled arbitrators in these institutions are not reachable or perhaps donot exist. Public are therefore not the first priority of these institutions. Even the enrollment of eligible members of the profession is also not a priority though a few do conduct training programs and generate revenue in the process.

I am sorry to observe that most of the time, it appears that these arbitral institutions become a place for accommodating retiring judges with some position of power and an opportunity to take up lucrative assignments.

I have no objection for retired judges to have an opportunity to use their knowledge and skill for their own post retirement benefit as long as it does not become a hindrance to the development of the society and block the development of “Alternate” means of Dispute Resolution.

When ODRGLOBAL suggested online arbitration with a “Recording” of the arbitration proceedings, most existing institutions saw it as a threat to their current system which hides the inefficiencies and possible biases that may creep into the arbitration process which may get exposed if the proceedings are recorded.

The reason why most arbitrations end up in litigation and prolong the resolution (which has been addressed to some extent in the ACA 2015) is that the party which has lost the Arbitration does not trust the neutrality of the Arbitrator. The recording of the ODR deliberations would have eliminated this distrust. But inefficiencies of the arbitrators and their biases would have come out into the open. The same judges who today oppose recording of Court proceedings have objections to the recording of the arbitration proceedings also.

We often hear about nepotism in  Judicial appointments. Similarly the allocation of arbitration opportunities in the arbitration institutions often are not fairly distributed and donot give opportunities based on special skills and domain knowledge that some potential arbitrators may bring in.

The mindset of vested interests controlling different arbitral institutions prevent any major change in the rules of appointment of arbitrators and hence qualified and efficient arbitrators without a God Father in the Judiciary donot like to be part of the system and rather would prefer Adhoc Arbitrations.

Without addressing these type of contentious issues, the High Level Committee makes a case for discouraging Adhoc Arbitrations and recommends investments in Institutional Arbitration. This is not the right strategy for development of the ADR System.

The Advantage of Adhoc Arbitration System

If Adhoc Arbitration is encouraged, it will be able to provide an opportunity for young Advocates to look at “Arbitration” as a career (Which also will provide a stock of Mediators). It will also provide many non advocate domain specialists to take up arbitration.

Once all advocates see the opportunity to create a career in Arbitration, they will automatically ensure that every Contract automatically incorporate arbitration clauses and encourage their clients to go for arbitration even as an after thought.

Today advocates encourage litigation because they are only familiar with this system and are not concerned about the delays.

In the new ACA 2015 which provides for time bound completion of Arbitrations and incentives for early completion as well as dis-incentives for delays, the commercial disputants would be happy to resolve the issue one way or the other quickly and go ahead with their activities rather than pursuing litigation in Courts for years.

The new ACA 2015 also makes it difficult to challenge the arbitration on flimsy grounds and hence the delays due to judicial challenges can be reduced if the Judiciary actually responds positively.

The Committee’s conclusion that Adhoc Arbitration results in delays is therefore unfounded.

The only argument in favour of Institutional Arbitration against Adhoc Arbitration is that Institutions can put in efforts to bring efficient and honest persons in their panel, train them and ensure that a person who is unworthy of sitting as an arbitrator does not get an opportunity.

However, the Arbitral Institutions have failed to adequately discharge this responsibility of creating better talents and giving them a fair opportunity and they may not do so in future also.

This comment is not to be construed as a criticism of all Arbitral Institutions. If a few of the institutions do discharge their responsibilities properly, they can continue to do so without the need for any discriminatory preference under the regulations.

The recommendations of the committee is in the nature of supporting inefficient arbitral institutions  instead of leaving it to market forces to provide an opportunity for  efficient adhoc arbitrators to fight on their individual strengths.

Discouraging the growth of Adhoc Arbitral systems and encouraging inefficient Arbitral institutional mechanism is to be considered as the Second most important failure of the High Level Committee. 

(…. to be continued)

Naavi

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Ten Commandments of Justice Srikrishna Committee on Arbitration…

The High Level Committee to Review the Institutionalization of Arbitration Mechanism in India under the Chairmanship of Justice B.N.Srikrishna, (HLC-IA) was constituted with the specific objective of examining the roadblocks to the development of institutional arbitration and prepare a roadmap for making India a “Robust center for International and Domestic Arbitration”.

The Committee has now produced its report and contains several suggestions. Given the reputation of Justice B.N.Srikrishna, the recommendations would be given due consideration and implemented in due course.

The Committee’s recommendations and the follow up actions by the Government have the potential to bring significant changes to our society and it is essential for Citizens and Professionals in the related areas to ensure that the Government’s future actions in this regard do not get derailed from the central objective of “Freedom from inefficiency in Dispute Resolution System in India”.

We therefore raise certain issues for debate through these columns with the hope that the Government would take note of some positive suggestions that may arise out of this debate.

I invite public to join this debate and add their views to make the debate useful.

The principal recommendations of the committee consist of

  1. Grading of Arbitral Institutions through Arbitration Promotion Council of India (APCI)
  2. Accreditation of Arbitrators through APCI
  3. Creation of specialist arbitration bar and bench
  4. Legislative support for institutional arbitration
  5. Amendments to Arbitration and Conciliation Act to remove some ambiguities
  6. Setting up of the International Center for Alternate Dispute Resolution (ICADR)
  7. Some Recommendations on the Management and Resolution of Bilateral Investment Treaty (BIT)
  8. Creation of the post of an “International Law Adviser”
  9. Permission to Foreign Lawyers to represent clients in International arbitrations held in India
  10. Separate legislation governing Mediation

We shall discuss these Ten  Major recommendations individually to take on record what the committee has suggested and also to point out further changes that may be considered.

Naavi has been in the forefront of creating awareness about the benefits of Alternate Dispute Resolution as a necessary development in India and has highlighted the need for making India the International Hub for Arbitration, Establishing a Cyber Disputes Mediation and Arbitration Center, An International Arbitration Council for IT industry, Taking the global lead in ODR infrastructure etc. These have been discussed over a period of time under naavi.org and ADR Knowledge Center. (http://adr.ind.in/wp/).

It is therefore natural that we observe that the HLC-IA while providing some very essential recommendations has also failed to recognize some aspects that required to have been part of the considerations of the Committee.

It is our duty to make bring this to the notice of the public so that at least at the time of implementation of the suggestions, these issues will be given a due consideration.

The Committee set about with a given terms of reference which was to focus on the “Arbitral Institutions” and therefore it was constrained in its approach. The more important focus should be how to liberate the Indian Citizens from the inefficiencies of the dispute resolution mechanism in India led by the Judicial system where “Delays” are more the norm than the exceptions. Delay in Justice delivery encourages extra constitutional settlement of disputes and raise of corruption and violence in the society.

Hence improvement in the system of “Alternate Dispute Resolution Mechanism” should be our focus and not restricted to improvement in the system of “Institutional Arbitration”. We find this the major lacuna in the setting of the agenda of this Committee and the final outcome.

We shall elaborate on this in subsequent articles.

I request the Government and the Members of the committee to look at the views presented here in a series of articles as positive suggestions and not as criticisms.

Naavi

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More changes in Arbitration System Recommended..

India has been taking significant strides in popularizing Alternate Dispute Resolution mechanisms such as Arbitration and Mediation because of the special interest shown by the Modi Government. On 31st December 2015, the Indian Arbitration and Reconciliation Act 1996 was comprehensively amended (w.e.f. 23rd October 2015) which brought in significant changes to the system as has been prevailing in India. (Check for details at Naavi’s the ADR Knowledge Center). The changes were aimed at reducing delays in the arbitration process, bringing in higher level of discipline among the Arbitrators, Reducing the Cost and also encourage the use of electronic documents in the conduct of ADR.

On January 13, 2017, the Department of Legal Affairs, Ministry of Law and Justice formally constituted a ten member High Level Committee under the chairmanship of retired Judge of Supreme Court, Justice B.N.Srikrishna.

The committee was to look into various factors to accelerate arbitration mechanism and strengthen the arbitration ecosystem in the country as well as examining specific issues and drawing up a roadmap required to make “India a robust centre for international and domestic arbitration”. In particular the committee was required to suggest measures for institutionalization of arbitration mechanism, national and international, in India so as to make India a hub of international commercial arbitration.

After considering views of existing arbitral institutions in March 2017, the Committee has now come up with its recommendations which were released by the Honourable Minister Ravi Shakar Prasad today.

 The detailed report is yet to be available for discussion. However, as per the press reports the following recommendations have been made by the committee.

  • Setting up of an autonomous body, styled the Arbitration Promotion Council of India (APCI), which would recognize institutes providing accreditation to arbitrators, hold training workshops for advocates.
  • Creation of a specialist Arbitration Bench to deal with commercial disputes. Judges hearing such matters should be provided with periodic refresher courses in arbitration law and practice.
  • Creation of a specialist Arbitration Bar by encouraging the establishment of fora of young arbitration practitioners.
  • Changes in various provisions of the 2015 Amendments in the Arbitration and Conciliation Act to make arbitration speedier and more efficacious.
  • Declaring International Center for Alternate Dispute Resolution (ICADR) as an institute of National Importance and takeover of the institution by a statute.
  • Creation of the post of an ‘International Law Adviser’ who shall advise the Government and coordinate dispute resolution strategy for the Government in disputes arising out of its international law obligations particularly arising out of bilateral investment treaties (BIT).
  • Permission to foreign lawyers to represent clients in international arbitrations held in India and promoting India as a venue by easing restrictions related to immigration, tax etc.
  • Promotion of ADR mechanisms including provisions of mediation facilities by arbitral institutions and considering a separate legislation governing mediation

The changes proposed are of far reaching effect and requires to be closely followed.

We shall await the availability of the detailed report to comment on specific parts of the recommendations in due course.

Naavi

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Understanding Conciliation under Indian Arbitration and Conciliation Act 2015

The Arbitration and Conciliation Act 1996 as amended by the Arbitration and Conciliation (Amendment) Act, 2015 (ACA-2015), under Part III, Sections 61-81 address the issue of “Conciliation”.

Under Section 89 of CPC, a Court has the power to refer a dispute for settlement through arbitration, conciliation, judicial settlement including settlement through Lok Adalat or Mediation. In these ADR processes, Arbitration or Conciliation will be under the Arbitration Act. Mediation has been referred to differently and Section 89( 2) (d) states that for mediation, the Court shall effect a compromise between the parties and shall follow such procedure as may be prescribed.

The Conciliation mentioned here may be referred to as “Court Referred Conciliation” as against a purely voluntary “Mediation”. The Conciliator would be appointed by the Court and the decision arrived at in the form of a settlement in these Court referred Conciliation would be considered binding  since it is only a formality for  the Court to ratify.

Part III of the ACA 2015 is the guideline for the Court appointed conciliator to follow. It may be appropriate to consider that this needs to be followed strictly as a mandate under law.

However, in the case of a private “Mediation”, which is undertaken by a Mediator whom all the disputing parties have agreed on but he is a person Chosen by the parties and not from a Court annexed Council , the process suggested in Part III is still a guideline but the mediator may have a little more freedom to use procedures that are creative and leading to an amicable settlement.

It would be less probable that the Court appointed conciliator may accept a settlement that is not fully protecting the available legal rights of either of the parties without bringing it to the notice of the party who may be ignoring the legal rights available to him.

In the case of a Mediation, the mediator may not focus much on the legal rights of the parties but on the points of difference, the interests as identified by each of the parties and strive to obtain a mutually acceptable agreement.

There is an ethical issue in mediation where by a mediator may find a situation where one of the parties is ignoring what is legally his right and is agreeable to a settlement which is to the advantage of the other party. At this point of time, the Mediator has to take a view on whether it is his duty to point out to the person that he is foregoing his right or whether it would be considered as an “Escalation” of the dispute and introducing new elements of disputes which are not present when the conflict was first brought to the Mediator.

There could be differences of opinion on this point between experts. However, the undersigned considers this as a major difference between “Mediation” and “Conciliation”. In the Case of “Conciliation”, the parties recognize that the “Conciliator” is a man of knowledge and authority and is expected to intervene and obtain a fair justice in the matter. A certain level of intervention is considered acceptable and is also expected. Here the ethics of the Conciliator is to perhaps point out to the parties what are their mutual rights and what they are pressing or not pressing.

In the Case of the Mediation however, “Intervention” by the Mediator to introduce new points of conflict is not considered ethical nor strategically correct. Such suggestions should normally come from the counsels of the parties.

CDMAC would use the terminology of “Mediation” and “Conciliation” with appropriate distinction as to the level on intervention that is appropriate to the process as explained earlier. i.o.w.

when CDMAC considers a ADR process as a “Mediation”, the Mediator is expected to work within the list of conflicts that have been identified by the parties and try not to add more conflicts to the lists. During the process of mediation, it is possible that the parties may themselves realize that more conflicts do exist and bring it before the Mediator. That is fine. But the mediator should not instigate either parties to add more conflicts to the lists as they perceive.

When CDMAC terms a process as “Conciliation”, it is considered that the “Conciliator” is a trusted person of authority by both parties to strike a negotiation which is fair and reasonable. A certain element of introduction of clarification of mutual parties is therefore considered acceptable. Still the “Conciliator” is not like an “Advocate” appointed by either of the parties who may try to find new grounds to expand the zone of conflict and complicate the matter.

Managing the fine balance between the “Neutral, non -interventionist Mediator” and an “Advocate”, and finding a middle ground is the responsibility of a skilled “Conciliator”.

 

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Types of ADR

CDMAC shall recognize the following types of ADR as coming within its purview.

a) Assisted Negotiation

b) Mediation

c) Conciliation

d) Non Binding Arbitration

e) Binding Arbitration

The boundaries of each of these different types of ADR supported by CDMAC are explained below.

ADR is essentially a process that kicks in when there is a “Conflict” between two or more parties.

The Conflict could be personal between individuals in the course of their relationship and may not be based on any contractual obligations. Some of these disputes may be amenable to be resolved through the intervention of Courts as in the case of family disputes. Some may be outside the purview of law but may end up in a Police complaint or a petition in the Court only causing a burden on the system. In such cases, the authorities try to amicably reason with the parties to withdraw their complaints and in the process enter into some kind of mediation without even officially recognizing the conflict, failing which the complaint may be refused or the petition may be dismissed without being admitted.

Conflicts could also arise as  differences between parties to a “Contract” enforceable under law. These will be amenable to be resolved in a competent judicial authority subject to certain procedures and cost as per the law applicable to the type of contract.

Civil Courts , Adjudicating Authorities and Tribunals could be legally empowered to resolve the conflicts and impose their decision on the parties by interpreting the terms of the contract with reference to the evidences presented by the parties on why either party is right.

If the Civil Court system had been efficient enough, we would not have been in a position now where there are 4 plus crores of pending disputes in different Courts and many disputes do not get resolved during the lifetime of the disputing parties.

There is therefore a need for ADR process to take over and Arbitration is the process which is suited for resolving the contractual disputes. In an Arbitration proceedings, the Arbitrator/s follow the legal principles applicable to the Contract based on a given jurisdiction and provide their award which is a shadow of what a similar Court should deliver. Arbitration therefore works like an alternate Court where the disputants chose their own Judges and they have time to hear the case exclusively and come to a decision within a short time. The Indian Arbitration Act sets the time of one year as the time within which the arbitration should be completed.

Negotiation is a process where the disputing parties themselves meet, discuss, argue and resolve their differences. It should normally be the first step parties to any business contract try. If this fails, then the conflict needs to be resolved with the assistance of an outside party.

The next step consists of “Mediation” which itself can be sub divided into “Assisted Negotiation”, “Mediation” and “Conciliation”.

In all these three forms of Mediation, there is an involvement of a trusted third party who intervenes at the invitation of the parties and helps in the resolution of the conflict.

The first approach of the Mediator can be to “Assist Negotiation” by separately providing clarifications to each of the conflicting parties so that every party has a correct perception of the conflict and the possibility of “Differences by Misunderstanding” are eliminated. With this independent assistance, the conflicting parties may sit together again for negotiation among themselves and try to resolve the conflict.

The second approach in continuation of this Assisted Negotiation is for the trusted third party appointed as a “Mediator’ with the consent of the parties to the dispute, sits through sessions of discussion in which the parties put across their points of view, try to understand the views of the other party, negotiate a Win-Win situation with the neutral facilitation of the Mediator.

The third approach is “Conciliation” which is a form of mediation in which the Mediator takes the responsibility to suggest remedies and convince the parties to the dispute to arrive at a settlement and may go the extent of suggesting the terms of the settlement also. This method works when the Conciliator is a little more than a mere “Trusted Third Party” as in the case of normal mediation and enjoys the respect of the disputing parties as an “Expert” whose words are “Authoritative”. The “Authority” is normally derived from the known expertise of the Conciliator and some time is presumed because another established authority designates him as a “Conciliator”. When a Court appoints a Mediator under Section 89 of Civil Procedure Code, he is seen by the parties as a person enjoys the confidence of the Court and one who will report back to the Court of any failure of the conciliation process. In such cases “Authority” is bestowed on the Conciliator because of his relationship with the bigger authority such as the Court.

Except for this difference, Conciliation is only an extension of “Mediation” and ends up with a settlement that is signed by the disputing parties.

When we come to “Arbitration” itself, a fine distinction can be made between “Binding” and “Non Binding” arbitration. generally, Arbitration is binding by default since it is governed by the Indian Arbitration and Conciliation Act (2015). However, all arbitration are subject matters of a “Contract” which is either a clause in the contract itself or entered into after the dispute has arisen and before the ADR process commences.

If Arbitration is part of the Contract, its terms cannot be changed without the consent of all the parties and hence after the dispute has arisen, it is unlikely to be changed though it cannot be ruled out.  However, if Arbitration contract is agreed to just before the commencement of the ADR process, the parties are free to chose any form of ADR including Mediation or Conciliation as well as Arbitration with or without any conditions. One of the Conditional Arbitration that the parties may chose at their discretion is to subject themselves to a limited Arbitration process where the Arbitration award is considered as a tentative award and not become operative until it is ratified by a competent Court.

A clause of an arbitration agreement which may state that the “Arbitration Award” shall not be binding could be considered as ultra vires the Section 34 of the Arbitration and Conciliation Act 2015 which proclaims that unless a “Stay” is specifically granted, the Arbitration Award which is challenged in a Court is deemed to be final.

However, since the entire foundation of “Arbitration” as well as other forms of ADR is the agreement between the parties, Courts may not take a view that a “Non Binding Arbitration” is not valid and is deemed only as a “Binding Arbitration”.

We need to await a Court decision in this regard as and when a dispute on this point comes up for discussion for further clarification that can be considered as a Judicial Precedence.

However, since “Non Binding Arbitration” is also a contract, it is unlikely that the Court may consider it invalid. In fact it may smoothen the spectrum of ADR processes available between Assisted Negotiation, Mediation, Conciliation, Non Binding Arbitration and Arbitration subject to Section 34 of ACA-2015.

Thus we can identify 5 distinct types of ADR processes based on the “Agreement between the disputing parties”. The wording of the arbitration clause will define what type of ADR process is agreed to between the parties and hopefully there will be no litigation even to clarify this aspect of the clause!.

Naavi

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We are tired of hearing “God Sees the Truth But Waits”

For those who know how the Judicial system functions, it is needless to say that it is always a pain to pursue justice through normal Courts. We are tired of the saying “God sees the truth but waits”. Many would say that I can tolerate injustice but not end less delay.

Further, Courts operate under the constraints of what the lawyers propose to them and not entirely on the basis of truth. More often we see Courts saying, based on the evidences before me, I come to this judgement. There are only a few honest and bold judges left in the system who can try to see the truth behind the powerful arguments put forth by the “Senior Advocates”. We know that these “Senior Advocates” collect crores of rupees as their fees based on their power to lie and also how much they can corrupt the system which we believe to be honest.

All litigants therefore should look to go the Courts only as a “Last Resort”.

In the case of business related disputes, normally both parties are normally reasonable and the dispute would be only because of a difference in interpretation of some terms. Hence both parties are not interested in wasting their time in Courts and hurting their further businesses.

Alternate Dispute Resolution therefore comes in as a relief to most. Only those persons who want to use Courts as an instrument of prolonging injustice prefer to litigate.

Hence there is no second thought that if an alternative dispute resolution process is available every litigant would like to avail of the same.

It was with this belief that Section 89 of Civil Procedure Code (Refer this article for details) provided that in any Civil Proceedings the Court  tries to persuade the litigants to try the ADR before the Case proceeds in the Court.  Such process could be through the process of a Court appointed mediator. However despite more than 10 years since the amendment came in force on 1st July 2002, not many litigants are using the facility.

The section states as follows:

(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 observation 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 had been referred-

(a) for arbitration or conciliation, the provisions of the Arbitration and Conciliation Act, 1996 shall apply as if the proceedings for arbitration or 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 and all other provisions of that Act shall apply in respect of the dispute so 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 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.

Unfortunately the established legal community  may not be keen on the success of the ADR process  since any curtailment of litigation in Courts directly affects their revenue potential. The new generation of advocates however may not be averse to striking settlements and acting as mediators since this is the only method by which they can break into the system otherwise firmly occupied by the senior advocates.

However, until recently the Arbitration system had its own weaknesses because of which it only prolonged the litigation rather than eliminating it. Also in most cases, arbitration was always thought of only as a part of the pre-dispute agreement and parties never trusted to enter into an arbitration when it was not mandated in the agreement.

Now with the new amended Arbitration and Conciliation Act 2015 (ACA 2015) being in force, the ADR process has got a big boost in terms of ensuring that there is no delay in the arbitration process nor there is an automatic stay of the arbitration award when an appeal is filed.  Additionally, the new Act tries to promote digital communications and opened the means for ODR (Online Dispute Resolution).

With the advent of the new ACA 2015, all judicial precedents of the past have lost meaning and we need to look at every thing afresh. We are in the After Amendment Era where the before Amendment Era judicial pronouncements are all amenable to be questioned and over turned.

It is therefore essential for all Civil disputes to make use of the benefits of ADR and this move has to be initiated by the parties at the time of contracting. Those contracts in which an Arbitration clause was not a part should be reviewed now or even after a dispute has formally arisen to introduce an ADR process.

An ADR process need not always be the Arbitration. It may be a “Mediation” or “Conciliation” that is an attempt to achieve a negotiated settlement with the assistance of a professional mediator. Arbitration however is more binding.

Legally, there is no difference between Mediation and Conciliation though technically, a Conciliation may be a process in which the Mediator may try to achieve a settlement with the force of the respect that the disputants place on  his stature and knowledge.  Ultimately however, a mediation/conciliation ends up with a settlement agreement between the parties out of their own free will.

Arbitration on the other hand may be a forced award which one party may not like and therefore wish to challenge.

As regards Criminal proceedings, there are provisions of “Compounding” (Sec 320 of CrPc) where there could be a negotiation between the accused and the victim which may result in the proceedings being dropped. (See the details here).

(P.S: CDMAC will address compounding under ITA 2000/8 which will be discussed separately in a subsequent article)

In summary we need to recognize that the time for ADR has arrived and without simply complaining about the delays in the Courts, inefficiency or corruption of Judges etc, we need to explore settlement of all our disputes through Negotiation, Mediation/Concilliation or Arbitration.

Courts are the last resort for seeking justice and the more we avoid them better it is.

Naavi

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Welcome to the ADR Knowledge and Facilitation Center for Cyber Disputes

Welcome to the new website in the network of Naavi.org. This website is set up with the objective of

a) Creating an ADR Knowledge Center to provide a platform for ADR practitioners in general and those interested in Cyber Disputes to exchange information and enhance their knowledge.

b) Creating an Alternate Dispute Resolution Mechanism where persons with Cyber disputes may settle their disputes outside the statutory remedies of Adjudication followed by the Appellate Tribunal (now with TDSAT)

I invite participation of all stakeholders in making this site useful.

Naavi

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