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Alternative Dispute Resolution (ADR) [LLB -309]

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Alternative Dispute Resolution has become the primary means by which cases are resolved now days, especially commercial, business disputes. It has emerged as the preferred method for resolving civil cases, with litigation as a last resort. Alternative Dispute Resolution provides an overview of the statutory, procedural, and case law underlining these processes and their interplay with litigation. A significant theme is the evolving role of
professional ethics for attorneys operating in non-adversarial settings. Clients and courts increasingly express a preference for attorneys who are skilled not only in litigation but in problem-solving, which costs the clients less in terms of time, money and relationship. The law of ADR also provides an introduction to negotiation and mediation theory.

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Alternative Dispute Resolution (ADR) [LLB -309]

  1. 1. SEMESTER: FIFTH BBALLB/BALLB NAME OF THE SUBJECT: ALTERNATIVE DISPUTE RESOLUTION UNIT – 1 TOPIC: CONCEPT OF ADR FACULTY NAME: Ms. Anubha Jain (Assistant Professor)
  2. 2. a. Meaning, Nature and Genesis of ADR • What is ADR? ADR is the abbreviation used for the term “Alternate Dispute Resolution” Society is a web of social relation-Human Conflicts or Conflicts of Interests. Therefore an attempt is made to resolve them speedily and cheaply , so for speedy actions it is desired that people must not approach court but to ATERNATE DISPUTE RESOLUTION
  3. 3. • When system of Court was becoming complex and justice could not be provided two needs were emphasized:  Search for a better approach  Court is not the only place to resolve disputes Thus to fulfill these two needs concept of ADR was introduced
  4. 4. • Now we need to understand the meaning of this term As name suggests it is an alternative to the traditional judicial system.  It involves dispute resolution methods and techniques that act as means for incompatible parties to reach to an agreement without resorting to litigation.  As per this techniques litigation should be LAST RESORT and efforts must be made to achieve settlement before court proceedings.
  5. 5. • Formal Definition: As such no universally accepted definition ADR is the blistering new fangled socio legal concept of 1990s. Everyone is espousing it, becoming a connoisseur in it and lauding it as the magic potion for all the languishing sufferers of our high priced,inefficient and intransient legal system..
  6. 6. • When we use the term alternate it means privilege of choosing one of the two things. It does not mean picking up of alternate court but something which is alternative to court. According to Karl Makie,” It is a structured dispute resolution process whereby parties to a dispute themselves negotiate their own settlement with the help of an independent intermediary.
  7. 7. • To sum up we can say: Non-Judicial Procedure Out of Court Approach Complementary to Courts
  8. 8. Nature and Need of ADR • It is based on direct participation by the disputants rather than being run by lawyers and judges. • Utmost Peoples satisfaction can be achieved In Moti Ram v/s Ashok Kumar (2011) 1 SCC 466, it was observed that ADR proceedings are private and confidential .Any oral and written exchanges between the parties cannot be relied upon in any subsequent legal proceedings.
  9. 9. Need Of ADR • Due to lack in our judicial system need and necessity of ADR raises: 1. Speedy Relief 2. Economical Alternate 3. Best Approach 4. Simple Modus Operandi 5. Enhance Community involvement in dispute resolution process
  10. 10. Genesis of ADR • To understand from where did we actually got this techniques we need to understand the same in three different periods  Ancient India- Justice administered by King  Mughal Period- Muslims regulated by Islamic law and courts were divided into 3 sub categories- Qazi , Governor and Emperor  British Regime- discuss in detail
  11. 11. British Regime • Modern Law of Arbitration in India owes its source to BRITISH RAJ IN INDIA  Bengal Regulation made provision for resolution of dispute to arbitration  1st substantive law-Indian Arbitration Act 1899 -due to defects in 1940 Arbitration Act 1940 was made based on English Arbitration Act 1934 and modify all existing laws.
  12. 12. • But the act could not meet the expectations thus supreme Court highlighted few defects in cases • Guru Nanak Foundation v/s Rattan Singh & Sons, AIR 1981 SC 2075 • Food Corporation of India v/s Joginder Pal Mohinder Pal ,AIR 1989 SC 1263 Thus need felt for revising 1940 Act. Recommendation made by Malimath Committee-Finally in 1994 in sync with international laws(UNICITRAL Model Law) the 1996 Act came.
  13. 13. • Following recommendations by MC CPC Amendment Bill 1999 was introduced wherein Section 89 of CPC introduced provision for settlement of Dispute outside Court • Also inserted Rules 1A,1B& 1C TO Rule 1 of Order X of CPC • Afcons Infrastructure Limited V/s Cherian Varkey Construction Co. (P)Ltd & ors (2010) 8 SCC 24 ( very important Case) ( Write few points) • Salem Advocate Bar Association, TN V/s UOI ( 2003) 1 SCC 49.
  14. 14. Advantages of ADR • Party Autonomy • Neutrality • Confidentiality • Efficacy • Flexible • Superior Solutions • Lessening Workload of Courts • Cost Savings
  15. 15. Disadvantages of ADR • Not a magical pill for every case • Wastage of time and money if case not resolved • Possibility of bias • Limited Judicial Review • Abuse of Power • Unfamiliarity • Prerequisite of Consent
  16. 16. Difference between ADR and Litigation Alternative dispute resolution is any means used to resolve a conflict other than through litigation. Examples include negotiation, facilitated discussion and mediation. Key features • Allows for a custom-made win-win outcome on all or part of the issues • Focuses on consensus-building and is future-oriented • Aims to determine the parties’ interests • Involves the participation of a neutral and impartial alternative dispute resolution practitioner, selected or agreed upon by all parties, to facilitate participants’ negotiations and discussions • Voluntary participation, except where court-appointed, and participants can withdraw from process at any stage • Usually informal, less structured and flexible • Emphasizes mutuality over self-interest and reconciliation over termination
  17. 17. Litigation Litigation is the act or process of bringing about or contesting a claim (that is, using the traditional court system). Key features • May result in an “all-or-nothing” decision • Focuses on the facts and is past-oriented • Aims to determine the parties’ legal rights • Determines winners and losers • Usually involves a judge who is appointed by the court to determine the outcome based on the law and legal precedents • Mandatory participation once legal action is initiated • Formalized and highly structured • Costly and long delays
  18. 18. b. Forms Of ADR • We Studied that ADR gives an opportunity to settle disputes by mutual consent by parties through more or less informal and flexible process. • Techniques Informal techniques Advance techniques Hybrid Techniques
  19. 19. Informal Techniques Methods which have been developed by society or people themselves: • Forceful Private Enforcement • Escaping • Belief in God’s Justice • Advice of Elderly People • Apology of Guilt
  20. 20. Advance Methods • We will be discussing these in further units: These are: • Negotiation • Arbitration • Conciliation • Mediation • Judicial Settlement • Lok Adalat
  21. 21. Negotiation • By itself is not an ADR technique but considered as main component of ADR if negotiation fails then resort to other ADR techniques • In simple words discussion to bring amicable settlement to a dispute or process or process we use to satisfy our needs when someone else controls what we want. • A non-binding procedure in which discussions between the parties are initiated without the intervention of any 3rd party ,with the object of arriving at a negotiated settlement of disputes.
  22. 22. Arbitration Arbitration, a form of alternative dispute resolution (ADR), is a technique for the resolution of disputes outside the courts, where the parties to a dispute refer it to one or more persons – arbitrators, by whose decision they agree to be bound. It is a resolution technique in which a third party reviews the evidence in the case and imposes a decision that is legally binding for both sides and enforceable. There are limited rights of review and appeal of Arbitration awards. Arbitration is not the same as judicial proceedings and Mediation. Arbitration can be either voluntary or mandatory.
  23. 23. Conciliation • Conciliation is an alternative dispute resolution process whereby the parties to a dispute use a conciliator, who meets with the parties separately in order to resolve their differences. They do this by lowering tensions, improving communications, interpreting issues, providing technical assistance, exploring potential solutions and bring about a negotiated settlement. It differs from Arbitration in that. • Conciliation is a voluntary proceeding, where the parties involved are free to agree and attempt to resolve their dispute by conciliation. The process is flexible, allowing parties to define the time, structure and content of the conciliation proceedings. These proceedings are rarely public.
  24. 24. Mediation Mediation settlement is a voluntary and informal process of resolution of disputes. It is a simple, voluntary, party centered and structured negotiation process, where a neutral third party assists the parties in amicably resolving their disputes by using specified communication and negotiation techniques. Mediation is a process where it is controlled by the parties themselves. The mediator only acts as a facilitator in helping the parties to reach a negotiated settlement of their dispute. The mediator makes no decisions and does not impose his view of what a fair settlement should be.
  25. 25. Judicial Settlement Section 89 of the Civil Procedure Code also refers to the Judicial Settlement as one of the mode of alternative dispute resolution. Of course, there are no specified rules framed so far for such settlement However, the term Judicial Settlement is defined in Section 89 of the Code. it has been provided therein that when there is a Judicial Settlement the provisions of the Legal Services Authorities Act, 1987 will apply. It means that in a Judicial Settlement the concerned Judge tries to settle the dispute between the parties amicably. If at the instance of judiciary any amicable settlement is resorted to and arrived at in the given case then such settlement will be deemed to be decree within the meaning of the Legal Services Authorities Act, 1987
  26. 26. Lok Adalat • The concept that is gaining popularity is that of Lok Adalat or people’s courts as established by the government to settle disputes through conciliation and compromise. It is a judicial institution and a dispute settlement agency developed by the people themselves for social justice based on settlement or compromise reached through systematic negotiations. Lok Adalat accept even cases pending in the regular courts within their jurisdiction. Section 89 of the Civil Procedure Code also provides as to referring the pending Civil disputes to the Lok Adalat. When the matter is referred to the Lok Adalat then the provisions of the Legal Services Authorities Act, 1987 will apply.
  27. 27. Hybrid Techniques Different types of Hybrid Techniques are: • Med-Arb • Mini Trial • Medola • Rent a Judge
  28. 28. Med-Arb • It is one of the hybrid processes for resolution of disputes, combination of mediation and arbitration. It is an attempt to integrate these two processes to reach a solution dispute. It a procedure which combines first conciliation/mediation and if it fails then arbitration. • Med-Arb, involves commencing with mediation and if this does not result in the dispute being resolved it continues with a binding arbitration. The parties may agree for the following clause where they desire to try mediation first and then other ADR process.
  29. 29. Mini- Trial • It is one of the ADR techniques which is being adopted in various parts of the world. It has proved to be very successful and is gaining popularity. This techniques was first made public in New York times in a report on the first opinion case being decided by mini-trial. • The case was concerning a major patent infringement. It is a non- binding procedure where the disputing parties present their respective cases before their senior executives who are competent to take decisions and they are assisted by a neutral third party. • It is a form of evaluative mediation or non-binding arbitration in which the disputing parties are presented with summaries of their cases to enable them to assess the strength, weakness and prospects of their case and then an opportunity to negotiate a settlement with the assistance of a neutral third adviser. This has nothing to do with a trial in a court room. • It is a private conference to settle pending disputes. The neutral not only presides over mini trial but acts like an adviser to both the parties.
  30. 30. We will be discussing the following: • Concept Of Legal Aid • Outline of the Act • Its Provisions • Recent Scenario
  31. 31. Introduction to Legal Service Authority Act “ Legal Aid scheme was first introduced by Justice P.N.Bhagwati under the Legal Aid Committee formed in 1971. Article 39A of the Constitution of India provides that State shall secure that the operation of the legal system promotes justice on a basis of equal opportunity, and shall in particular, Articles 14 and 22(1) also make it obligatory for the State to ensure equality before law and a legal system which promotes justice on a basis of equal opportunity to all.
  32. 32. • Legal aid may be taken to mean free legal assistance to the poor persons in any judicial proceedings before the Court, Tribunals or any authority. It intends to provide free legal assistance to the poor persons who are not able to enforce the rights given to them by law. • Justice P.N. Bhagwati has clearly stated that legal aid means providing an arrangement in the society which makes the machinery of administration of Justice easily accessible and in reach of those who have to resort to it for enforcement of rights given to them by law. • He has rightly said that the poor and the illiterate should be able to approach the courts and their ignorance and poverty should not be an impediment in the way of obtaining justice from the Courts. The constitution of India gives much importance to rule of law. • In India, it is regarded as a part of the basic structure of the Constitution and also of natural justice. Free legal aid to the poor and weak persons has been held to be necessary adjunct of the rule of law
  33. 33. Supreme Court on Legal Aid • The linkage between Article 21 of Constitution of India and the right to free legal aid was forged in the decision of Hussainara Khatoon v. State of Bihar (AIR 1979 SC 1369). The court declared that "there can be no doubt that speedy trial, is an integral and essential part of the fundamental right to life and liberty enshrined in Article 21 and that State is under a mandate to provide a lawyer to an accused person if it requires. • In Sheela Barse vs. State of Maharashtra, it was held that legal assistance to a poor accused who is arrested and put in jeopardy of his life or personal liberty is constitutional imperative mandated not only by article 39-A but also by article 21 and 14 of the constitution.
  34. 34. • The Legal Services Authorities Act, 1987, was enacted to give a statutory base to legal aid programmes throughout the country on a uniform pattern. • This Act was finally enforced on 9th of November, 1995 after certain amendments were introduced therein by the Amendment Act of 1994. Hon. Mr. Justice R.N. Mishra the then Chief Justice of India played a key role in the enforcement of the Act Legal Services Authorities Act,1987
  35. 35. Creation of National Legal Service Authority (NALSA) :- • The first Member Secretary of the authority joined in December, 1997 and by January, 1998 the other officers and staff were also appointed. By February, 1998 the office of National Legal Services Authority became properly functional for the first time. In October, 1998, His Lordship Hon. Dr. Justice A.S. Anand assumed the Office of the Chief Justice of India and thus became the Patron-in-Chief of National Legal Services Authority. His Lordship Hon. Mr. Justice S.P. Bharucha, the senior- most Judge of the Supreme Court of India assumed the office of the Executive Chairman, National Legal Services Authority. • Legal Services Authorities after examining the eligibility criteria of an applicant and the existence of a prima facie case in his favour provide him counsel at State expense, pay the required Court Fee in the matter and bear all incidental expenses in connection with the case. The person to whom legal aid is provided is not called upon to spend anything on the litigation once it is supported by a Legal Services Authority.
  36. 36. Provisions of the Act Section 2(1) • According to section 2(1)(a) of the Act, defined the word 'case' which includes a suit or any proceeding before a court. • Section 2(1)(aaa) defines the 'court' as a civil, criminal or revenue court and includes any tribunal or any other authority constituted under any law for the time being in force, to exercise judicial or quasi-judicial functions. • As per section 2(1)(c) 'legal service' includes the rendering of any service in the conduct of any case or other legal proceeding before any court or other authority or tribunal and the giving of advice on any legal matter.
  37. 37. Criteria for providing legal aid :- Section 12 of the Legal Services Authorities Act, 1987 prescribes the criteria for giving legal services to the eligible persons. Section 12 of the Act reads as under :- • Every person who has to file or defend a case shall be entitled to legal services under this Act if that person is– a) a member of a Scheduled Caste or Scheduled Tribe; b) a victim of trafficking in human beings or beggar as referred to in Article 23 of the Constitution; c) a woman or a child; d) a mentally ill or otherwise disabled person; (e) a person under circumstances of undeserved want . (f) an industrial workman; or (g) in custody, including custody in a protective. (h) in receipt of annual income less than Rs. 1 lakh.
  38. 38. Hierarchy of bodies created under the act :- • A nationwide network has been envisaged under the Act for providing legal aid and assistance. National Legal Services Authority is the apex body constituted to lay down policies and principles . • In every State a State Legal Services Authority is constituted to give effect to the policies and directions of the Central Authority (NALSA). • District Legal Services Authority is constituted in every District to implement Legal Aid Programmes and Schemes in the District. • Taluka Legal Services Committees are also constituted for each of the Taluka or Mandal or for group of Taluka or Mandals to coordinate the activities of legal services. Discuss the Provisions of Act
  39. 39. Lok Adalat in India • The advent of Legal Services Authorities Act, 1987 gave a statutory status to Lok Adalat, pursuant to the constitutional mandate in Article 39-A of the Constitution of India, contains various provisions for settlement of disputes through Lok Adalat. The first Lok Adalat was held on March 14, 1982 at Junagarh in Gujarat the land of Mahatma Gandhi. • Lok Adalats have been very successful in settlement of motor accident claim cases, matrimonial/family disputes, labour disputes, disputes relating to public services such as telephone, electricity, bank recovery cases and so on.
  40. 40. Section 19 :- Organization of Lok Adalat 1.Central, State, District and Taluka Legal Services Authority has been created who are responsible for organizing Lok Adalats at such intervals and place. 2.Conciliators for Lok Adalat comprise the following: A. A sitting or retired judicial officer. B. Other persons of repute as may be prescribed by the State Govt. in consultation with the Chief Justice of High Court.
  41. 41. Jurisdiction of Lok Adalat :-19(5) • A Lok Adalat shall have jurisdiction to determine and to arrive at a compromise or settlement between the parties to a dispute in respect of : (i) any case pending before; or (ii) any matter which is falling within the jurisdiction of, and is not brought before, any court for which the Lok Adalat is organized. • The Lok Adalat can compromise and settle even criminal cases, which are compoundable under the relevant laws.
  42. 42. Section 20: Cognizance of Cases • Cases can be referred for consideration of Lok Adalat as under :- 1. By consent of both the parties to the disputes. 2. One of the parties makes an application for reference. 3. Where the Court is satisfied that the matter is an appropriate one to be taken cognizance of by the Lok Adalat. 4. Compromise settlement shall be guided by the principles of justice, equity, fair play and other legal principles. 5. Where no compromise has been arrived at through conciliation, the matter shall be returned to the concerned court for disposal in accordance with Law.
  43. 43. Section 21 :- Award of Lok Adalat After the agreement is arrived by the consent of the parties, award is passed by the conciliators. The matter need not be referred to the concerned Court for consent decree. The Act provisions envisages as under: 1. Every award of Lok Adalat shall be deemed as decree of Civil Court . 2. Every award made by the Lok Adalat shall be final and binding on all the parties to the dispute. 3. No appeal shall lie from the award of the Lok Adalat.
  44. 44. Section 22:- Powers of Lok Adalat Every proceedings of the Lok Adalat shall be deemed to be judicial proceedings for the purpose of :- 1. Summoning of Witnesses 2. Discovery of documents 3. Reception of evidences 4. Requisitioning of Public record
  45. 45. The Legal Services Authorities (Amendment) Act, 2002 • The major drawback in the existing scheme of organization of the Lok Adalat under Chapter VI of the said Act is that the system of Lok Adalat is mainly based on compromise or settlement between the parties. This causes unnecessary delay in the dispensation of justice. Further, the cases which arise in relation to public utility services need to be settled urgently so that people get justice without delay even at pre-litigation stage and thus most of the petty cases which ought not to go in the regular courts would be settled at the pre-litigation stage itself which would result in reducing the workload. • Pre-Litigation Conciliation and Settlement ( Section 22 A to 22E) • Permanent Lok Adalat
  46. 46. Cases suitable for Lok Adalat • Motor accident cases. • Damage cases. • Family disputes. • Unpaid loan’s cases. • Land related cases. • Some civil and criminal cases. • Cases related to unpaid bills.
  47. 47. Advantages of Lok Adalat :- • Justice at no cost. • Speedy Justice and saving from the lengthy court procedures. • Solving problems of backlog of cases. • Maintenance of cordial relations.
  48. 48. Recent Scenario Challenges for Legal Service Authority Act :- • Access to Justice • Reaching out • Legal Aid Clinics in Village • Free & Competent Legal Service • Children’s rights, A neglected field
  49. 49. Good responses to National Lok Adalat over 8000 cases settled :- NAGPUR: As many 8523 cases including a 21-year-old criminal dispute were settled during the Third National Lok Adalat here. Many old civil and criminal matters which were kept for hearing were amicably settled yesterday resulting in many senior citizens getting benefited. The settlement/success ratio of National Lok Adalat was described as 50 percent. The District Legal Services Authority, Nagpur under the aegis of National Legal Services Authority and Maharashtra State Legal Services Authority, Nagpur had organized the third edition of the Lok Adalat for pending matters and pre-litigation disputes at district court premises here.
  50. 50. UNIT – II TOPIC: NEGOTIATION AND MEDIATION
  51. 51. Negotiation • Negotiation means discussion to bring amicable settlement to a dispute or process we use to satisfy our needs when someone else controls what we want. We participate in negotiation almost everyday. • There is a very popular maxim underlying the concept of Negotiation as a mode of ADR. 'Omnia prius verbis experiri, quam armis sapientem decet.' It puts forth that 'It is a part of wisdom to exhaust negotiation before resorting to arms.' Following are the key terms to understand the concept of Negotiation: • Non-Binding procedure • Less intervention of 3rd Party • A communication based process • Process of managing relationships
  52. 52. Pre-requisite Conditions/ Essentials • There must be 2 or more parties that are prepared to interact on an interpersonal level or intergroup process. • There must be a conflict of interest • There shall also be an expectation of a better deal via the process of negotiation • Parties involved in the dispute must be seeking for an agreement and not argument or fight. • There must be mutual expectations of 'give and take.' • Negotiation tends to be a voluntary exercise, i.e, can be resorted to only upon mutual consent of the parties. • The resolution arrived by means of Negotiation is non-binding in nature, i.e, it doesn't legally bind the concerned parties to any decision. • The Parties carrying out the process always retain control over result and procedure. • There is a significant possibility of wide-ranging solutions.
  53. 53. The 4 important C's in Negotiation: • Common Interest • Conflict of Interest • Compromise • Criteria
  54. 54. Elements of Negotiation There are 7 elements of Negotiation: • Interests • Legitimacy • Relationships • Alternatives(BATNA & WATNA) • Options • Commitments • Communication
  55. 55. Phases of Negotiation The negotiation process can essentially be understood as a four-stage process. These four phases/steps are: Preparation Opening Discussion , Proposal & Bargaining Closure Phase
  56. 56. Lose-Lose Win-Lose Win-Win No Outcome Theories of Negotiation There are four theories of Negotiation:
  57. 57. Types of Negotiation There are two types of Negotiation • Fixed pie ( Competitive or Distributive Negotiation) Negotiator is solely concerned with achieving his own goals without considering impact on the other side • Cooperative or collaborative Negotiation Usually in this everyone wins as parties join to achieve something together.
  58. 58. Qualities of Negotiator • A negotiation is a situation of give and take and one of choosing the best alternative that will suit both parties. Therefore, unless negotiator is able to quickly assess the various consequences, he will be a failure in the negotiations. Mere analytical skills will be of no use, unless the negotiator possesses inter personal and communication skills as well. The most important thing in a negotiation is that your case is well appreciated by the other party. • The failure to reach a negotiated settlement often reflects the negotiator’s inability to recognize the basis of the disagreement and alternate routes that will lead ultimately to settlement. The approach of the deadline, the introduction of new information, shifting economic conditions or a change in the negotiating team, all affect negotiations. The basic job of a negotiator is to bring diverse interests to a single point of view.
  59. 59. The basic qualities which a negotiator should possess are: • Ability to analyze • Knowledge • Strategies employed by negotiator • Persistence and persuasiveness • Right place and Right atmosphere • Batna and Watna
  60. 60. International Negotiations • International negotiation is as it says: inter-national. It is about negotiation between countries. International negotiation occurs all the time between governments and is the main subject of this page. It also happens between individuals and companies, where the traps and tricks of cross-border negotiation can ensnare even the most experienced home-country negotiators. • As conflict rises, international negotiation also rises , but there are several issues effecting this. • The most attracting issue is influence of culture. • Apart from this other issues are war & destruction, water, international trade & finance, human rights etc.
  61. 61. Advantages & Disadvantages of Negotiation Following are the advantages of Negotiation: • Time Saving • Cost Effective • Party Oriented • Confidentiality • Preservation of Relationship • Non Binding • Greater control over Procedure • Swift, Economical Following are the disadvantages of Negotiation: • Impasse • Strained Relations • All issues not negotiable • Power Tactics
  62. 62. Mediation • Mediation is a people friendly, effective, efficient, time saving stressful process to resolve the disputes • It helps in building relationship and serves in the best interests of the parties • As per Black Laws dictionary ‘ Mediation is a method of non binding dispute resolution involving a neutral 3rd party who tries to bring the disputing parties reach a mutually agreeable solution. • It can also be said as assisted negotiation
  63. 63. Mediation In India Two things needs to be discussed under this: • Rules framed by Supreme Court and High Courts under Section 89 of the Code of Civil Procedure • Part III of Arbitration and Conciliation Act,1996 which deals with Private Mediation • Refer Case: Afcons Instrastructure v. Cherian Varket Construction ( 2010)
  64. 64. Need of Mediation • It is a critical part of the solution to the profound problem of arrears of cases in civil courts. • It is needed to lower down the tension between the parties by improving communication, interpretating issues and exploring solutions. • Most effective form throughout world as useful in many areas such as labour matter, consumer matters. • Refer case: Salem Bar Association v. Union of India (2005)
  65. 65. Elements in Mediation • Voluntary Process • Mediator controls the process • He must remain impartial • Solutions determined and accepted by the parties • Non-binding • Identification of options • Reducing the agreements into a written sketch
  66. 66. Advantages of Mediation • Reach a solution faster • Cost effective • Voluntary modus operandi • Reduce tensions • More control over the outcome • Speedier, Less Costly and Fairer • Easy training • Both parties Winner
  67. 67. Disadvantages of Mediation • Chances of getting the truth is rare • Impasse • Fairness of Decision • Waste of Time • If unsuccessful then court case becomes complex • Mediator only plays persuasive role • Easy Withdrawal
  68. 68. Good Offices • Internationally the term “good office” has been used with different meanings, but its increased use is probably more appropriate since international law regards it as a political-diplomatic means of peaceful settlement of disputes. • The expression "good offices" is used to denote a procedure whereby a third party or State either on its own initiative or upon request seeks through diplomatic means to bring the Parties to the disputes to a conference table to resume direct negotiations or to agree on a method of pacific settlement with the view to bringing an end to the existing conflict. • Good offices is often confused with mediation. Good offices" implies a more discreet action, limited to initiating direct negotiations between the parties concerned without active participation, whereas a mediator generally takes a more active part in the discussion and is often expected to suggest some solutions to the problem.
  69. 69. UNIT - III TOPIC: ARBITRATION AND CONCILIATION
  70. 70. Introduction ARBITRATION • Form of Alternative Dispute Resolution • Alternative to court room litigation • Parties submit their disputes to a NEUTRAL third party called the Arbitrator for resolution • Binding dispute resolution, equivalent to litigation in the courts • Governed by the Arbitration and Conciliation Act,1996
  71. 71. Advantages of Arbitration • Confidentiality • Finality • Speed • Expert Neutrals • Choice of Decision Making/Maker • Cost Savings • Preservation of Business Relationships Disadvantages of Arbitration • Cost • Splitting the baby • No Appeal • Pressure of Powerful Parties
  72. 72. Types of Arbitratiion • Contractual Arbitration • Ad-hoc Arbitration • Institutional Arbitration • Statutory Arbitration • Domestic or International Arbitration
  73. 73. Arbitration and Conciliation Act, 1996 • The Arbitration and Conciliation Act of 1996 is the main governing law for arbitration in India. This was enacted with the objective of “to consolidate and amend the law relating to domestic arbitration, international commercial arbitration and enforcement of the foreign award, and also to define the law relating to the conciliation”. This Act is divided into 4 parts: • Part-1 (Section 2 to 43) This part sets out general provisions of both types of arbitration, domestic as well as international commercial arbitration in India, • Part-2 (Section 44 to 60) This part sets out rules regarding the enforcement of foreign awards, • Part-3 (Section 61 to 81) This part sets out rules regarding conciliation and • Part-4 (Section 82 to 86) This part sets out certain supplementary provisions. This Act is a composite piece of the legislature, Parts I and Part II are the most significant parts that govern both domestic and international arbitration in India.
  74. 74. Part 1 (Section 2 to Section 43) Definitions ( Section 2): • Arbitration • Arbitration agreements • Arbitration tribunal • Court • International Commercial Arbitration • Arbitration award
  75. 75. Receipt of written communication( Section 3) • According to this Act, any receipt of written communication is deemed to have been received when it is delivered to the residential or business place of the person concerned. And if in any case his place is not described under the agreement then the receipt is sent to the addressee’s last known place of work and habitual residence. • Section 4 deals with Waiver of Right to object
  76. 76. Arbitration agreement ( Section 7 –9) • An arbitration agreement is a written document upheld by the parties of arbitration in order to settle their dispute outside the Court by the process of arbitration. There is no specified form given under which such agreement is required to be drawn, however, in order to constitute a valid arbitration agreement, the following attributes are necessary: • The agreement must contemplate that the decision of the tribunal will be binding on the parties; • The agreement must contemplate that the jurisdiction of the tribunal or rights of the parties must derive either from the consent or from the order of the Court; • The agreement must contemplate that parties substantive rights must be determined by the agreed tribunal; • The agreement must contemplate that the tribunal will impartially and in judicial manner determine the rights of parties; • The agreement must contemplate that the arbitration agreement of the parties must be intended to be enforceable in law; and • The agreement must contemplate that the tribunal will make a decision upon a dispute which is already formulated at the time when a reference is made to the tribunal.
  77. 77. Points of Discussion • Wellington Association Ltd v. Kirti Mehta, AIR 2000 SC 1379 Essentials: • Agreement • Writing • Intention • Future or Present • Jagdish Chander v. Ramesh Chander (2007) 5 SCC 719 • Nimet Resources & Anr v. Essar Steel Ltd, AIR 2000 SC 3107 • Shakti Bhog Foods Ltd v. Kola Shipping Ltd, 2009 (2) SCC 134 • Q. Arbitration agreement different from agreement for Decision by an Engineer/ Expert- K.K Modi v. K.M Modi
  78. 78. Section 7 (2) recognises 3 Categories of Arbitration Agreement: • Arbitration Clause • Separate Agreement • Reference in a court Rule or Doctrine of Severability • Heyman v. Darwins Case Section 8 : Power to refer parties to Arbitration where there is an Arbitration Agreement • Essentials- Agreement, Parties bring an action to Court, Subject Matter, Party move court for referring to Arbitration • 2015 Amendment • Sukanya Holdings Pvt Ltd v. Jayesh H. Pandey, JT 2003 (4) SC 58 Section 9:Interim Measures, Etc by Court • Amendment 2015,2019
  79. 79. Composition of Arbitral Tribunal(Section 10-15) Number of arbitrators ( Section 10) • This Act leaves at parties to decide the number of the arbitrator with a condition that such number shall be an odd number. In case parties fail to determine the number the arbitrator shall consist of a sole arbitrator. • M.M.T.C Ltd v. Sterlite Industries ( India) Ltd, AIR 1997 SC 605 Appointment of the arbitrator (Section 11) • According to this Act, there are two ways to appoint an arbitrator. First, if the parties have agreed upon any specific procedure for the appointment then the dispute between them is decided in accordance with that and recourse to the Chief Justice or his designate cannot be taken straightway, however, if they fail to decide the said procedure, then the Chief Justice or any person or institution designated by him shall have to appoint an independent and impartial arbitrator. • Amendment of 2015 & 2019
  80. 80. Grounds for challenging the appointment ( Section 12) • This Act requires a prospective arbitrator to disclose any circumstances likely to give rise to justifiable doubts in the minds of the parties about his independence and impartiality. It seems to be an obligation upon the appointed arbitrator to make such disclosure even during the arbitral proceeding proclaim the unambiguous legislative disapproval of the appointment or continuance of a person against whom circumstances exist giving rights to justifiable doubts as to his independence and impartiality. • Section 13 lays down the Challenge Procedure • Section 14 deals with the provision related to Failure or impossibility to Act-De Jure or De Facto Grounds • Section 15:Termination of Mandate and substitution of Arbitrator-Complementary to Section 13 and 14
  81. 81. Jurisdiction of Arbitral Tribunals( Section 16-17) 16. Competence of arbitral tribunal to rule on its jurisdictional. - • The arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that purpose, - • An arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract; and • A decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.
  82. 82. (2) A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence; however, a party shall not be precluded from raising such a plea merely because that he has appointed, or participated in the appointment of, an arbitrator. (3) A plea that the arbitral tribunal is exceeding the scope of its authority shall be raise as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings. (4) The arbitral tribunal may, in either of the cases referred to in sub-section (2) or subsection (3), admit a later plea if it considers the delay justified. (5) The arbitral tribunal shall decide on a plea referred to in sub-section (2) or sub- section (3) and, where the arbitral tribunal takes a decision rejecting the plea, continue with the arbitral proceedings and make an arbitral award. (6) A party aggrieved by such an arbitral award may make an application forgetting aside such an arbitral award in accordance with section 34.
  83. 83. Case Laws: • Enercon ( India) Ltd v. Enercon GMBH and Another, AIR 2014 SC 3152 • SBP & Co. v. M/S Patel Engineering Ltd & Anr, AIR 2006 SC 450 • State of Orissa & Others v. Gokulnanda Jena, AIR 2003 SC 4207
  84. 84. 17. Interim measures ordered by arbitral tribunal. – • Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, order a party to take any interim measure of protection as the arbitral tribunal may consider necessary in respect of the subject matter of the dispute. • The arbitral tribunal may require a party to provide appropriate security in connection with a measure ordered under sub-section (1). • Amendment 2015 • Difference between Section 9 and 17
  85. 85. Conduct of Arbitral Proceedings( Section 18-27) Equal treatment of parties( Section 18) • This Act imposes a dual-duty on the arbitral tribunal, firstly it will act in an impartial manner and should give equal treatment to each party. Secondly, the arbitral tribunal should give each party a full opportunity to present its case. • Impex Corporation v. Electrical Aquamarine Exports Ltd, AIR 2008 Ker 119 • Associate Builders v. DDA, AIR 2015 SC 620 Determination of rule of procedure ( Section 19) • This Act expressly excludes the applicability of The Code of Civil Procedure in an arbitration proceeding that is required to be concluded and resolved by the arbitration tribunal and, if it fails to do so, the arbitration tribunal will conduct its proceeding in the manner in which it considers appropriate. • However, in the case of Municipal Corporation of Delhi v. International Security and Intelligence Agency Ltd 2003, the Apex Court said that “the applicability of the Code of Civil Procedure to the arbitral proceeding under the Arbitration and Conciliation Act 1996 shall be subjected to effecting any rights of the party under a special law or local law in force which relates to the arbitration proceedings”.
  86. 86. Place of arbitration( Section 20) • In this Act, the parties are free to agree to a place of arbitration, however, in case of failure of the parties to agree to a place of arbitration, the arbitral tribunal after considering the circumstances of the case and convenience of the parties will determine the place for holding the arbitral proceedings. Commencement of Arbitral Proceedings( Section 21) • Proceedings commences on the date on which request to refer the dispute is received by the respondent. • Reference-Unilateral or Bilateral? • Voltas Ltd v. Rotta (India) Ltd, AIR 2014 SC 1772
  87. 87. Language of arbitration ( Section 22) • In this Act, the parties have the freedom to decide the language or language to be used in arbitral proceedings by agreement. In case of no agreement on it. then power to determine the language has been vested in the arbitral tribunal. Statement of Claim and Defence ( Section 23) • This Section allows parties to prescribe the time-limit for submission of these statements to the arbitral Tribunal. • Amendment-2015 Section 24 deals with the provisions related to Hearings and Written Proceedings. • The Section empowers the Tribunal to decide whether hold oral or whether on the basis of documents. • Amendment-2015
  88. 88. Default of Party(Section 25): • This section empowers the Arbitral Tribunal to dismiss for default of the claimant on his failure. • Section 25( c )- Exparte Awards • Hemkunt Builders v. Punjab University, (1993) 1 Arb LR 348 (Del) Expert Appointed by Arbitral Tribunal ( Section 26) • This section permits the tribunal to seek the assistance of experts • Amendment-2019 Court assistance in taking Evidence( Section 27) • K.P. Poulose v. State of Kerala, AIR 1975 SC 1259 • Delta Distilleries Ltd v. United Spirits Ltd, AIR 2014 SC 113
  89. 89. Arbitral Award and Termination of Proceedings( Section 28-33) Rules applicable to the arbitration proceeding ( Section 28) • In this Act, excepting arbitration other than international commercial arbitration, an arbitral tribunal shall decide the dispute submitted to it for arbitration in accordance with the substantive law for the time being in force in India. However, in case of international commercial arbitration, the arbitral tribunal shall decide the dispute according to the law or legal system specified by the parties unless otherwise agreed, as referring directly to the substantive law of the specified country and not to its conflicts of laws, rules. If no law is specified by the parties, the arbitral tribunal shall apply the rules considered to be appropriate according to the overall circumstances of the dispute. • Gas Authority of India Ltd (GAIL) v. Spie Capag, 1994 (1) Arb LR 431 • Oil & Natural Gas Corppration Ltd v. SAW Pipes Ltd, AIR 2003 SC 2629
  90. 90. Decision making by Panel of Arbitrators ( Section 29) • Where more than one arbitrator, decision shall be taken by majority unless parties decide contrary. • Madani Construction Corporation (P) Ltd v. Union of India, AIR 2008 SC 989 • Section 29A and Section 29B ,inserted by 2015 Amendment. Settlement ( Section 30) • In this Act, it is the duty of the arbitral tribunal to encourage the party to settle their dispute by using conciliation, mediation or any other procedure at any time during the arbitration proceeding. And if the parties agree for settlement, the arbitral tribunal shall terminate the proceedings and record such settlement in the form of an award made in accordance with Section 31 of this Act. This award will have the same status and force as an award on merit i.e. an award made after completion of arbitration proceedings.
  91. 91. Form and content of the arbitral award ( Section 31) • In this Act, an arbitral award is considered as the determination of arbitrator in the arbitral proceeding. It must be written and signed by parties. It also contains the following attributes: • The reason for passing the award; • The date and place of arbitration; • The amount of money if imposing on any party; • The parties who bear or who entitled for such amount of money; and • Any other information considered necessary by the arbitrator. • S.N Mukherjee v. Union of India, AIR 1990 SC 1984 • UOI v. Tesco Trichy Engineers & Contractors, AIR 2005 SC 1832 • Registeration of Award • Himachal Pradesh Housing Urban Development Authority & Anr v. Ranjit Singh Rana,AIR 2012 SC 1337
  92. 92. Termination of proceedings ( Section 32) In this Act, the arbitral tribunal is empowered to terminate the proceeding of arbitration through passing the final arbitral award or any other order. The termination shall be made in the following cases: • When the claimant withdraws his claim; • When the parties agreed on the termination of proceedings; or • When the arbitral tribunal finds that continuation of proceeding has become unnecessary and impossible. • Correction and interpretation of awards
  93. 93. Recourse Against Arbitral Award(Section 34) Setting aside of awards: • The grounds for setting aside an award rendered in India (in a domestic or international arbitration) are provided for under Section 34 of the Act. These are materially the same as in Article 34 of the Model Law for challenging an enforcement application. An award can be set aside if: a) a party was under some incapacity; or b) the arbitration agreement was not valid under the governing law; or c) a party was not given proper notice of the appointment of the arbitrator or on the arbitral proceedings; or d) the award deals with a dispute not contemplated by or not falling within the terms of submissions to arbitration or it contains decisions beyond the scope of the submissions; or e) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties; or f) the subject matter of the dispute is not capable of settlement by arbitration; or g) the arbitral award is in conflict with the public policy of India.
  94. 94. • Sanshin Chemical Industry v. Oriental Carbons & Chemical Ltd, AIR 2001 SC 1219 • Reliance Industries Ltd and Anr v. Union of India, AIR 2014 SC 3218 • Concept of Patent illegality-ONGC Ltd v. SAW Pipes, 2003 • Amendment-2015 • Associate Builders v. DDA , AIR 2015 SC 620 • Steel Authority of India Ltd v. Gupta Brother Steel Tyubes Ltd, 2009(10) SCC 63
  95. 95. Finality and Enforcement of Arbitral Tribunals ( Section 35-36) Finality of arbitral awards ( Section 35) • Subject to this Part an arbitral award shall be final and binding on the parties and persons, claiming under them respectively. Enforcement ( Section 36) • Where the time for making an application to set aside the arbitral award under section 34 has expired, or such application having been made, it has been refused, the award shall be enforced under the Code of Civil Procedure, 1908 (5 of 1908) in the same manner as if it were a decree of the court
  96. 96. Appeals ( Section 37) • An appeal shall lie from the following orders (and from no others) to the court authorised by law to hear appeals from original decrees of the court passing the order, namely: - (a) Granting or refusing to grant any measure under section 9; (b) Setting aside or refusing to set aside an arbitral award under section 34. (2) An appeal shall also lie to a court from an order of the arbitral tribunal-- (a) Accepting the plea referred to in sub-section (2) or sub-section (3) of section 16; or (b) Granting or refusing to grant an interim measure under section 17. (3) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court.
  97. 97. PART III CONCILIATION 61. Application and scope. – (1) Save as otherwise provided by any law for the time being in force and unless the parties have otherwise agreed, this Part shall apply to conciliation of disputes arising out of legal relationship, whether contractual or not and to all proceedings relating thereto. (2) This Part shall not apply where by virtue of any law for the time being in force certain disputes may not be submitted to conciliation.
  98. 98. 62. Commencement of conciliation proceedings: (1) The party initiating conciliation shall send to the other party a written invitation to conciliate under this Part, briefly identifying the subject of the dispute. (2) Conciliation proceedings shall commence when the other party accepts in writing the invitation to conciliate. (3) If the other party rejects the invitation, there will be no conciliation proceedings. (4) If the party initiating conciliation does not receive a reply within thirty days from the date on which he sends the invitation, or within such other period of time as specified in the invitation, he may elect to treat this as a rejection of the invitation to conciliate and if he so elects, he shall inform in writing the other party accordingly.
  99. 99. 63. Number of conciliators: (1) There shall be one conciliator unless the parties agree that there shall be two or three conciliators. (2) Where there is more than one conciliator, they ought, as a general rule, to act jointly. 64. Appointment of conciliators. – (1) Subject to sub-section (2), - (a) In conciliation proceedings with one conciliator, the parties may agree on the name of a sole conciliator; (b) In conciliation proceedings with two conciliators, each party may appoint one conciliator; (c) In conciliation proceedings with three conciliators, each party may appoint one conciliator and the parties may agree on the name of the third conciliator who shall act as the presiding conciliator.
  100. 100. (2) Parties may enlist the assistance of a suitable institution or person in connection with the appointment of conciliators, and in particular, - (a) A party may request such an institution or person to recommend the names of suitable individuals to act as conciliator; or (b) (b) The parties may agree that the appointment of one or more conciliators be made directly by such an institution or person: Provided that in recommending or appointing individuals to act as conciliator, the institution or person shall have regard to such considerations as are likely to secure the appointment of an independent and impartial conciliator and, with respect to sole or third conciliator, shall take into account the advisability of appointing conciliators of a nationality other than the nationalities of the parties.
  101. 101. 65. Submission of statements to conciliator: (1) The conciliator, upon his appointment, may request each party to submit to him a brief written statement describing the general nature of the dispute and the points at issue. Each party shall send a copy of such statement to the other party. (2) The conciliator may request each party to submit to him a further written statement of his position and the facts and grounds in support thereof, supplemented by any documents and other evidence that such party deems appropriate. The party shall send a copy of such statement, documents and other evidence to the other party. (3) At any stage of the conciliation proceedings, the conciliator may request a party to submit to him such additional information, as he deems appropriate. • Explanation. -In this section and all the following sections of this Part, the term “conciliator” applies to a sole conciliator, two or three conciliators as the case may be.
  102. 102. 66. Conciliator not bound by certain enactments: The conciliator is not bound by the Code of Civil Procedure, 1908 (5 of 1908) or the Indian Evidence Act, 1872(1 of 1872). 67. Role of conciliator: (1) The conciliator shall assist the parties in an independent and impartial manner in their attempt to reach an amicable settlement of their dispute. (2) The conciliator shall be guided by principles of objectivity, fairness and justice, giving consideration to, among other things, the rights and obligations of the parties, the usages of the trade concerned and the circumstances surrounding the dispute, including any previous business practices between the parties. (3) The conciliator may conduct the conciliation proceedings in such a manner as he considers appropriate, taking into account the circumstances of the case, the wishes the parties may express, including any request by a party that the conciliator hear oral statements, and the need for a speedy settlement of the dispute.
  103. 103. (4) The conciliator may, at any stage of the conciliation proceedings, make proposals for a settlement of the dispute. Such proposals need not be in writing and need not be accompanied by a statement of the reasons therefor. 68. Administrative assistance: In order to facilitate the conduct of the conciliation proceedings, the parties, or the conciliator with the consent of the parties, may arrange for administrative assistance by a suitable institution or person 69. Communication between conciliator and parties: (1) The conciliator may invite the parties to meet him or may communicate with them orally or in writing. He may meet or communicate with the parties together or with each of them separately. (2) Unless the parties have agreed upon the place where meetings with the conciliator are to be held, such place shall be determined by the conciliator, after consultation with the parties, having regard to the circumstances of the conciliation proceedings.
  104. 104. 70. Disclosure of information: • When the conciliator receives factual information concerning the dispute from a party, he shall disclose the substance of that information to the other party in order that the other party may have the opportunity to present any explanation, which he considers appropriate: • Provided that when a party gives any information to the conciliator subject to a specific condition that it be kept confidential, the conciliator shall not disclose that information to the other party. 71. Co-operation of parties with conciliator: • The parties shall in good faith cooperate with the conciliator and, in particular, shall endeavor to comply with requests by the conciliator to submit written materials, provide evidence and attend meetings. 72. Suggestions by parties for settlement of dispute: • Each party may, on his own initiative or at the invitation of the conciliator, submit to the conciliator suggestions for the settlement of the dispute.
  105. 105. • 73. Settlement agreements: (1) When it appears to the conciliator that there exist elements of a settlement, which may be acceptable to the parties, he shall formulate the terms of a possible settlement and submit them to the parties for their observations. After receiving the observations of the parties, the conciliator may reformulate the terms of a possible settlement in the light of such observations. (2) If the parties reach agreement on a settlement of the dispute, they may draw up and sign a written settlement agreement. If requested by the parties, the conciliator may draw up, or assist the parties in drawing up, the settlement agreement. (3) When the parties sign the settlement agreement, it shall be final and binding on the parties and persons claiming under them respectively. (4) The conciliator shall authenticate the settlement agreement and furnish a copy thereof to each of the parties.
  106. 106. 74. Status and effect of settlement agreement: • The settlement agreement shall have the same status and effect as if it is an arbitral award on agreed terms on the substance of the dispute rendered by an arbitral tribunal under section 30. 75. Confidentiality: • Notwithstanding anything contained in any other law for the time being in force, the conciliator and the parties shall keep confidential all matters relating to the conciliation proceedings. Confidentiality shall extend also to the settlement agreement, except where its disclosure is necessary for purposes of implementation and enforcement.
  107. 107. 76. Termination of conciliation proceedings.: The conciliation proceedings shall be terminated-- (a) By the signing of the settlement agreement by the parties on the date of the agreement; or (b) By a written declaration of the conciliator, after consultation with the parties, to the effect that further efforts at conciliation are no longer justified, on the date of the declaration; or (c) By a written declaration of the parties addressed to the conciliator to the effect that the conciliation proceedings are terminated, on the date of the declaration; or (d) By a written declaration of a party to the other party and the conciliator, if appointed, to the effect that the conciliation proceedings are terminated, on the date of the declaration.
  108. 108. 77. Resort to arbitral or judicial proceedings: • The parties shall not initiate, during the conciliation proceedings, any arbitral or judicial proceedings in respect of a dispute that is the subject-matter of the conciliation proceedings except that a party may initiate arbitral or judicial proceedings where, in his opinion, such proceedings are necessary for preserving his rights. 78 Costs 79 Deposits
  109. 109. UNIT – IV TOPIC:INTERNATIONAL PRESPECTIVE
  110. 110. International Commercial Arbitration • With the growth of globalization, liberalization regimes and rapid advancement in international business relationships, it is increasingly pertinent to have a flexible and quick method of resolving disputes. • Arbitration is a preferred process of dispute resolution chosen by parties, wherein parties intentionally agree to submit their case to a neutral third party and agree to be bound by his/her decision. • Meaning of Commercial: The word commercial includes the day to day international business activities that have become part of the international trade nowadays
  111. 111. • Section 2(1)(f) of The Arbitration and Conciliation Act, 1996, defines an International Commercial Arbitration which means: an arbitration relating to disputes arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India and where at • least one of the parties is— (i) An individual who is a national of, or habitually resident in, any country other than India; or (ii) A body corporate which is incorporated in any country other than India; (iii) A company or an association or a body of individuals whose central management and control is exercised in any country other than India; (iv) The Government of a foreign country • The scope of this section was determined by the Supreme Court in the case of TDM Infrastructure Pvt. Ltd. v. UE Development India Pvt. Ltd,2008 (2) uj sc 0721 ,where in spite of company having a foreign control, the Supreme Court concluded that, “a company incorporated in India can only have Indian nationality for the purpose of the Act.”
  112. 112. When Arbitration is Deemed to be International: • In the United Nation Commission on International Trade Law (UNCITRAL) Model Law, arbitration is deemed to be international if any one of four different situations is present: Article 1 (3) (a) The parties to the arbitration agreement have, at the time of the conclusion of the agreement, their places of business in different States. (b) One of the following places is situated outside the State in which the parties have their places of business: (i) The place of arbitration, if determined in or pursuant to, the arbitration agreement, is situated outside the State in which the parties have their places of business (ii) Any place where a substantial part of the obligations of the commercial relationship is to be performed or the place with which the subject-matter of the dispute is most closely connected (iii)The parties have expressly agreed that the subject-matter of the arbitration agreement relates to more than one country. •
  113. 113. Enforcement of Certain Foreign Awards New York Convention Awards (Section 44-52) Section 44. Definition • In this Chapter, unless the context otherwise requires, "foreign award" means an arbitral award on differences between persons arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India, made on or after the 11th day of October, 1960- (a) in pursuance of an agreement in writing for arbitration to which the Convention set forth in the First Schedule applies, and (b) in one of such territories as the Central Government, being satisfied that reciprocal provisions have been made may, by notification in the Official Gazette, declare to be territories to which the said Convention applies.
  114. 114. Section 45. Power of judicial authority to refer parties to arbitration. • Notwithstanding anything contained in Part I or in the Code of Civil Procedure, 1908 (5 of 1908), a judicial authority, when seized of an action in a matter in respect of which the parties have made an agreement referred to in section 44, shall, at the request of one of the parties or any person claiming through or under him, refer the parties to arbitration, 1[unless it prima facie finds] that the said agreement is null and void, inoperative or incapable of being performed. Section 46. When foreign award binding. • Any foreign award which would be enforceable under this Chapter shall be treated as binding for all purposes on the persons as between whom it was made, and may accordingly be relied on by any of those persons by way of defence, set off or otherwise in any legal proceedings in India and any references in this Chapter to enforcing a foreign award shall be construed as including references to relying on an award .
  115. 115. Section 47. Evidence (1) The party applying for the enforcement of a foreign award shall, at the time of the application, produce before the court— (a) the original award or a copy thereof, duly authenticated in the manner required by the law of the country in which it was made; (b) the original agreement for arbitration or a duly certified copy thereof; and (c) such evidence as may be necessary to prove that the award is a foreign award
  116. 116. . (2) If the award or agreement to be produced under sub-section (1) is in a foreign language, the party seeking to enforce the award shall produce a translation into English certified as correct by a diplomatic or consular agent of the country to which that party belongs or certified as correct in such other manner as may be sufficient according to the law in force in India. Explanation.—In this section and in the sections following in this Chapter, "Court" means the High Court having original jurisdiction to decide the questions forming the subject-matter of the arbitral award if the same had been the subject-matter of a suit on its original civil jurisdiction and in other cases, in the High Court having jurisdiction to hear appeals from decrees of courts subordinate to such High Court.
  117. 117. Section 48. Conditions for enforcement of foreign awards (1) Enforcement of a foreign award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the court proof that— (a) the parties to the agreement referred to in section 44 were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or (b) the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
  118. 118. (c) the award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration: Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be enforced; or (d) the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place ; or (e) the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.
  119. 119. (2) Enforcement of an arbitral award may also be refused if the Court finds that— (a) the subject-matter of the difference is not capable of settlement by arbitration under the law of India; or (b) the enforcement of the award would be contrary to the public policy of India. Explanation 1.—For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,- (i) the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81; or (ii) it is in contravention with the fundamental policy of Indian law; or (iii) it is in conflict with the most basic notions of morality or justice. Explanation 2.—For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.
  120. 120. (3) If an application for the setting aside or suspension of the award has been made to a competent authority referred to in clause (e) of sub-section (1) the Court may, if it considers it proper, adjourn the decision on the enforcement of the award and may also, on the application of the party claiming enforcement of the award, order the other party to give suitable security.
  121. 121. Section 49. Enforcement of foreign awards Where the Court is satisfied that the foreign award is enforceable under this Chapter, the award shall be deemed to be a decree of that Court. Section 50. Appealable orders. (1) Notwithstanding anything contained in any other law for the time being in force, an appeal shall lie from the order refusing to— (a) refer the parties to arbitration under section 45; (b) enforce a foreign award under section 48, to the court authorised by law to hear appeals from such order. (2) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court. •
  122. 122. Section 51. Saving Nothing in this Chapter shall prejudice any rights which any person would have had of enforcing in India of any award or of availing himself in India of any award if this Chapter had not been enacted. Section 52. Chapter II not to apply Chapter II of this Part shall not apply in relation to foreign awards to which this Chapter applies.
  123. 123. Enforcement of Certain Foreign Awards Geneva Convention Award Section 53. Interpretation. • In this Chapter "foreign award" means an arbitral award on differences relating to matters considered as commercial under the law in force in India made after the 28th day of July, 1924,- • (a) in pursuance of an agreement for arbitration to which the Protocol set forth in the Second Schedule applies, and (b) between persons of whom one is subject to the jurisdiction of some one of such Powers as the Central Government, being satisfied that reciprocal provisions have been made, may, by notification in the Official Gazette, declare to be parties to the Convention set forth in the Third Schedule, and of whom the other is subject to the jurisdiction of some other of the Powers aforesaid, and
  124. 124. (c) in one of such territories as the Central Government, being satisfied that reciprocal provisions have been made, may, by like notification, declare to be territories to which the said Convention applies, and for the purposes of this Chapter an award shall not be deemed to be final if any proceedings for the purpose of contesting the validity of the award are pending in the country in which it was made.
  125. 125. Section 54. Power of judicial authority to refer parties to arbitration Notwithstanding anything contained in Part I or in the Code of Civil Procedure, 1908 (5 of 1908), a judicial authority, on being seized of a dispute regarding a contract made between persons to whom section 53 applies and including an arbitration agreement, whether referring to present or future differences, which is valid under that section and capable of being carried into effect, shall refer the parties on the application of either of them or any person claiming through or under him to the decision of the arbitrators and such reference shall not prejudice the competence of the judicial authority in case the agreement or the arbitration cannot proceed or becomes inoperative. Section 55. Foreign awards when binding Any foreign award which would be enforceable under this Chapter shall be treated as binding for all purposes on the persons as between whom it was made, and may accordingly be relied on by any of those persons by way of defence, set off or otherwise in any legal proceedings in India and any references in this Chapter to enforcing a foreign award shall be construed as including references to relying on an award. •
  126. 126. Section 56. Evidence (1) The party applying for the enforcement of a foreign award shall, at the time of application produce before the Court- (a) the original award or a copy thereof duly authenticated in the manner required by the law of the country in which it was made; (b) evidence proving that the award has become final; and (c) such evidence as may be necessary to prove that the conditions mentioned in clauses (a) and (c) of sub-section (1) of section 57 are satisfied. (2) Where any document requiring to be produced under sub-section (1) is in a foreign language, the party seeking to enforce the award shall produce a translation into English certified as correct by a diplomatic or consular agent of the country to which that party belongs or certified as correct in such other manner as may be sufficient according to the law in force in India.
  127. 127. • Explanation.—In this section and in the sections following in this Chapter, "Court" means the High Court having original jurisdiction to decide the questions forming the subject-matter of the arbitral award if the same had been the subject-matter of a suit on its original civil jurisdiction and in other cases, in the High Court having jurisdiction to hear appeals from decrees of courts subordinate to such High Court.
  128. 128. Section 57. Conditions for enforcement of foreign awards. (1) In order that a foreign award may be enforceable under this Chapter, it shall be necessary that- (a) the award has been made in pursuance of a submission to arbitration which is valid under the law applicable thereto; (b) the subject-matter of the award is capable of settlement by arbitration under the law of India; (c) the award has been made by the arbitral tribunal provided for in the submission to arbitration or constituted in the manner agreed upon by the parties and in conformity with the law governing the arbitration procedure; (d) the award has become final in the country in which it has been made, in the sense that it will not be considered as such if it is open to opposition or appeal or if it is proved that any proceedings for the purpose of contesting the validity of the award are pending; (e) the enforcement of the award is not contrary to the public policy or the law of India.
  129. 129. Explanation 1.—For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,- (i) the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81; or (ii) it is in contravention with the fundamental policy of Indian law; or (iii) it is in conflict with the most basic notions of morality or justice. Explanation 2.—For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.
  130. 130. (2) Even if the conditions laid down in sub-section (1) are fulfilled, enforcement of the award shall be refused if the Court is satisfied that- (a) the award has been annulled in the country in which it was made; (b) the party against whom it is sought to use the award was not given notice of the arbitration proceedings in sufficient time to enable him to present his case; or that, being under a legal incapacity, he was not properly represented; (c) the award does not deal with the differences contemplated by or falling within the terms of the submission to arbitration or that it contains decisions on matters beyond the scope of the submission to arbitration: Provided that if the award has not covered all the differences submitted to the arbitral tribunal, the Court may, if it thinks fit, postpone such enforcement or grant it subject to such guarantee as the Court may decide.
  131. 131. (3) If the party against whom the award has been made proves that under the law governing the arbitration procedure there is a ground, other than the grounds referred to in clauses (a) and (c) of sub-section (1) and clauses (b) and (c) of sub- section (2) entitling him to contest the validity of the award, the Court may, if it thinks fit, either refuse enforcement of the award or adjourn the consideration thereof, giving such party a reasonable time within which to have the award annulled by the competent tribunal.
  132. 132. Section 58. Enforcement of foreign awards • Where the Court is satisfied that the foreign award is enforceable under this Chapter, the award shall be deemed to be a decree of the Court. Section 59. Appealable orders (1) An appeal shall lie from the order refusing- (a) to refer the parties to arbitration under section 54; and (b) to enforce a foreign award under section 57,to the court authorised by law to hear appeals from such order. (2) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court. Section 60. Savings • Nothing in this Chapter shall prejudice any rights which any person would have had of enforcing in India of any award or of availing himself in India of any award if this Chapter had not been enacted. •
  133. 133. Leading Case Laws: • Bhatia International v. Bulk Trading SA, AIR 2002 SC 1432 • Bharat Aluminium Company v. Kaiser Aluminium Technical Service Inc, (2012) 9SCC 522
  134. 134. THANK YOU

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