By Tanishka Tiwari
In India, there is a long-awaited queue for the disposal of cases and people become economically frustrated and weaker for the remedies, and lastly either they compromise the case instead of remedial measures pronounced through judgments or they die and never receive justice for which they spend their entire life. India has a large number of pending cases and in every one million there is one Judge, which makes the Justice delivery mechanism collapse. The procedural laws followed by courts are time-consuming as well as very expensive for many individuals. For facilitating speedy as well as cost-effective justice, the disputant parties can take recourse to the ADR methods for the settlement of disputes and negotiate directly on the terms and conditions by mutually agreeing upon them. It is a method in which an impartial practitioner of ADR tries to resolve the disputes by amicable means instead of taking the long procedural methods of the Courts. It does not supplant the formal courts but supplements them and resolves the disputes without litigation. It should also be remembered that ADR methods are not always the solution to every dispute and every conflict of the parties cannot be solved by the ADR mechanism.
KEYWORDS
Commercial disputes, Alternative Dispute Resolution, Amicable settlement, speedy disposal
Alternative dispute resolution methods are an out-of-court settlement approach having an extrajudicial structure without having the judicial procedure and are globally recognized. The Law Commission in its 14th report suggested that the justice methodology should be devised in a manner that will ensure swift, easily accessible without much load on pockets, uncomplicated, and effective Justice. In ADR methods of Arbitration and conciliation, the party's consent plays an important role, and for making the recourse effectual the agreement should be there. If the parties in case fail to go for arbitration and conciliation, the courts refer the parties to other methods of ADR like Lok Adalat, Mediation, and Judicial Settlement under compulsion. ADR methods allow the parties to directly participate and settle their disputes by amicable means, it gives the parties the right to negotiate their terms in the presence of each other and encourage direct dialogue to resolve their disputes, which makes this mechanism more flexible and effective. In the ADR mechanism, the rules of procedure are less formal without any need to file the plaint, presentation of evidence, and written statement. ADR methods are an alternative for those who are scared of the long procedures of courts which are competitive, expensive, time, and utmost disregard for the disadvantaged groups of society. Sometimes courts also adopt the reforms that are adopted by both parties in their disputes so that it can be well served to the other people of the society as well.
NEED OF ADR AT PRESENT TIMES
The bulk of pending cases is going in an upward trend which makes the justice delivery mechanism almost collapse, and we often see that people blame the judiciary for the same but the contribution of overpopulation and the modern day's complexities are equally responsible. Altercations between the commercial parties rise day to day which makes the parties go for alternative methods to resolve their disputes at the earliest otherwise it clogs the transactions as well as badly affects the business and hamper their progress.
The repeated adjournments in the court's proceedings are also the cause to refer the disputes to the ADR methods which makes the court's proceedings delayed and crumbled. Order XVII Rule 1 of the Civil Procedure Code 1908 states that:
"The Court may, if sufficient cause is shown, at any stage of the suit, grant time to the parties or any of them, and may from time to time adjourn the hearing of the suit for reason to be recorded in writing:
Provided that no such adjournments shall be granted more than three times to a party during the hearing of the suit."
In Salem Advocate Bar Association 2nd v. Union of India the Supreme Court observed that before granting the adjournments the legislative intent should be kept in mind and consider the situations in which the adjournments have been sought for. In extremely hard cases, the court would grant the adjournments even after three adjournments only if the circumstances are beyond the control of either party.
The Allahabad High Court in the case of Shiv Nath Sardeo v. Bamgai Sardeom holds the view that if the court's finding the illness of a party is found to be false then the court has the right to reject the prayer of granting adjournments. As in the present case the court refused the prayer for granting an injunction is nothing but the provision centered in the proviso to Rule 1 of Order XVII of the Civil Procedure Code, 1908 and that does not appear to be a just and proper approach and interpretation of the court to that provision.
SCOPE OF ADR METHODS IN INDIA
India is heading toward the globalization of resources and needed economic reform and its implementation effectively. The Arbitration and Conciliation Act 1940 was not enough to meet the present-day requirements and subsequently, the Arbitration and Conciliation 1996 which is based on the model law of UNICITRAL came to ensure the appropriate methods for deciding the rights and liabilities of the disputant parties so that they continue their commercial dealings without being late.
The Supreme Court in the case of R.M Investment and Trading Co. Ltd. V. Boeing Company has clarified the term commercial in the Arbitration Act and observed that while construing the meaning of "commercial" in section 2 of the Arbitration law, it has to be kept in mind that the Arbitration Act came to facilitate the International trade and dealings and promotion thereof, any dispute arising between the parties shall be solved by the arbitration and conciliation methods provided that the parties had the agreement in respect thereof, and ensures the speedy remedies by having the liberal construction.”
ADR METHODS
ARBITRATION
Arbitration refers to the method by which the disputant parties solve their conflicts arising during their commercial trading by appointing a professional arbitrator or settling their disputes by the intervention of a third party other than the court of competent jurisdiction under an arbitration agreement. The appointed party should decide the matter in a Judicial manner by hearing both the parties and should not proceed ex parte.
The Parties are free to decide their arbitrator which constitutes the arbitral tribunal, if the parties fail to appoint their arbitrator the courts have the authority to appoint an arbitrator by taking professionals from an Arbitration Institution. The arbitral tribunal consists of an odd number of arbitrators, if both parties decide on their arbitrator then the appointed arbitrators will choose their Presiding Arbitrator, and the decision passed by the arbitral tribunal known as the Arbitral Award is binding on both parties.
INGREDIENTS OF AN ARBITRATION AGREEMENT
There is a clear indication to resolve the dispute by employing the ADR mechanism.
The intention of the parties must be clear by using indicative words like “Conclusive and Binding” and “Reference and Final” in their Arbitration Agreement.
The parties must have consensus ad idem.
The Arbitration Agreement must always be in writing, the oral agreement does not have validity in the eyes of the law.
COMPOSITION OF THE ARBITRAL TRIBUNAL
The parties are free to choose their arbitrator who is a distinct 3rd party and not related to the matter present in dispute, and the parties need the assistance of that party for their dispute resolution. The third party who was appointed by both the parties by their mutual agreement is known as the Sole arbitrator and when both parties appoint their sole arbitrator, they will appoint 3rd arbitrator who is known as the presiding arbitrator who has a specialization in the field of the matter in dispute. Generally, it has been seen that most of the matters of the arbitration are related to technical advancement, industries, and commerce and the appointed arbitrator should have the expertise in the respective field for the decision to be binding upon the parties. Thus, it becomes of utmost importance that the arbitrators have the requisite qualifications to decide the matter in hand, non-possession of the qualification will lead to the challenge of the appointments.
WHAT IS INTERNATIONAL COMMERCIAL ARBITRATION?
“International Commercial Arbitration is a necessary adjunct of international commerce, an indispensable catalyst for promoting world trade.. and means different things in different parts of the world” -
-JUSTICE. F.S NARIMAN
The Indian Arbitration and Conciliation Act, 1996 defines International Commercial Arbitration under S. 2(1)(f) as "an arbitration relating to disputes arising out of legal relationships, whether contractual or not, which must be considered commercial, and where either of the parties is a foreign national or resident or is a foreign body corporate, or is a company, association or body of individuals whose central management or control is in foreign hands."
The term “commercial” was interpreted by the Apex Court, by holding up the view that “commercial” is not confined to limited activities but has a broader perspective and includes manifold activities in international trade. By putting it simply international commercial arbitration arises when there is an international commercial dispute. International Commercial disputes could be resolved in two ways firstly, by taking recourse to Institutional Arbitration which means the parties decide that they will refer their dispute to an Arbitration Institution for Resolution, and secondly by ad-hoc arbitration which means that the parties themselves decide who will be their arbitrator, the forum and the procedures followed by an arbitrator in resolving their disputes.
Before the Arbitration and Conciliation 1996, industries are growing rapidly worldwide. It was felt that the present act of 1996 failed to cover the disputes and also did not fulfill the growing business needs in the era of globalization, so more comprehensive and business-friendly laws were needed. The Supreme Court on various occasions affirmed the view that a more effective arbitration law is needed in this growing commercial era.
The Apex Court in M/s. Guru Nanak Foundation v. M/s. Rattan Singh & Sons thus opined:
“Interminable, time-consuming, complex and expensive court procedures impelled jurists to search for an alternative forum, less formal, more effective and speedier for resolution of disputes avoiding procedural claptrap and this led them to Arbitration Act, 1940 ('Act' for short). However, how the proceedings under the Act are conducted and without exception challenged in Courts, has made lawyers laugh and legal philosophers weep. Experience shows and law reports bear ample testimony that the proceedings under the Act have become highly technical and accompanied by unending prolixity, at every stage providing a legal trap to the unwary. Informal forum chosen by the parties for expeditious disposal of their disputes has by the decisions of the Courts been clothed with 'legalese' of unforeseeable complexity.”
In the Food Corporation of India v. Joginderpal Mohinder Pal judgment, the Supreme Court observed that,
“We should make the law of arbitration simple, less technical, and more responsible to the actual realities of the situations but must be responsive to the canons of justice and fair play and make the arbitrator adhere to such process and norms which will create confidence not only by doing justice between the parties but by creating the sense that justice appears to have been done.”
CONCILIATION
The term “Conciliation” means the settlement of disputes with the assistance of the third neutral party, known as the Conciliator who offers both parties a non-binding resolution, and the parties are free to either accept or reject the proposed resolution. It is an out-of-court settlement approach and is mostly used in business, labor, and personal matters. It is now statutorily recognized in India. In the opinion of Bunni, Conciliation is a more formal process than Mediation, and it needs legal representatives for the settlement which makes the process expensive.
The difference between “Conciliation” and “Arbitration” is given under HALSBURY’S LAWS OF ENGLAND as follows:
“The term arbitration is used in several senses. It may refer either to a judicial process or to a non-judicial process is concerned with the ascertainment, a declaration, and enforcement of rights and liabilities, as they exist, in accordance with some recognized system of law. An industrial arbitration may well have for its function to ascertain and declare, but not to enforce, what in the parties, and such a function is non-judicial. Conciliation is a process of persuading parties to reach an agreement, and is plainly not arbitration; nor is the chairman of conciliation boards an arbitrator.”
Arbitration is more technical and complex than Conciliation and the people preferred to go for conciliation instead of Arbitration having simple procedures to be followed by the parties. In Conciliation the parties are not under compulsion to form an agreement unlike in arbitration in which the prior agreement for the reference of arbitration is an essential element. The responsibility of resolving the issues is upon the Conciliator who is appointed by the parties themselves (either Sole Conciliator or two or more Conciliators) and he has to win the faith of the parties in a pocket-friendly way and to ensure Speedy Conciliation. When the parties appoint more than one conciliator they ought to act jointly and they all have some strategic understanding to resolve the disputes efficiently. There is no time limit for the appointment of a Conciliator but the parties should try to take the earliest initiative to settle the dispute by appointing a professional Conciliator. When the Parties appoint a conciliator, the appointed Conciliator will request the parties to submit their Written Statement which describes their nature of nature and points of issue summarily, and both parties should exchange their copy of their submission, and the Conciliator can call any party to clarify the points made in a Written Statement in an additional Written Statement.
The Conciliators are not bound by any legislative enactments like the Civil Procedure Code, of 1908, or the Indian Evidence Act, of 1872. They should work on the Principles of Natural Justice, Equity, and Good Conscience, and give Impartial Assistance to the parties.
NEED FOR CONCILIATION IN THE INDIAN JUDICIAL SYSTEM
At present, the Indian Judiciary is backed by huge arrears of pending cases, and the parties are more likely to go for the conciliation process which is less cumbersome and less expensive instead of Arbitration which is more complex and technical. Initially, the Conciliation process was not recognized by the Indian judiciary, it was lacking in the judicial system because of the legislative recognition, but later it was duly recognized through legislative enactments like the Legal Service Authorities Act, 1987, Family Court Act, 1984, Industrial Dispute Act 1947, Code of Civil Procedure, 1908 (Section 89, Order XXXII-A) and also Hindu Marriage Act 1955.
CONCLUSION
Currently, India is facing a dearth of Arbitration centers which is the utmost requirement at present time because the backlog of cases reached a deadlock. Amid the surge in litigation cases, ADR methods open a new way a party can resort to, and parties can negotiate their best possible solutions by reaching to an agreement. The court system requires more formalities and adopts a long procedure which makes the cases decades pending and this maxim gets affirmed JUSTICE DELAYED IS JUSTICE DENIED. Hence, the ADR mechanism is more suitable for resolving disputes amicably, efficiently, and Collaboratory which does not require a rigid procedure, formalities, and tailored solutions which often is not in the interest of the parties.
The author of this article is Tanishka Tiwari, a fifth-year BALLB student at Shambhunath Institute of Law.
This article contains the view of the author and the publisher in no way associates with the views or ideologies of the author. All the moral rights vests with the Author(s).
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