ALTERNATE DISPUTE RESOLUTION SYSTEM

UNIT 1

Introduction
Today’s world has become globalised and commercial with the advent of technology. People
can now contact each other and settle business deals and disputes when they are sitting at the
opposite ends of the world. Most people no longer have the time to go and file papers at the
courts and then wait long periods for a hearing. We are rapidly approaching a stage where
litigation is being replaced with alternative dispute resolution (ADR), due to the
inefficiencies and drawbacks of litigation. India hasn’t quite reached a stage where litigation
has been completely displaced by ADR methods, but the legal system is beginning to see the
benefits of ADR. This article shall be helpful to give you an overview of the ADR methods
and how it is beneficial.

The Constitution of India is this country’s fundamental norm; it includes provisions that
signify a harmonious integration of individual behaviour with the general welfare of society
to achieve justice. A person’s behaviour or action is said to be solely if it supports the
community’s general well-being.

The attainment of the common good, therefore, as distinct from the good of individuals, is the
essence of justice. Legal justice is part and parcel of social justice. As often the culture gets
upset when the legal justice is refused. A legal system forms part of a state which maintains
social stability by resolving disputes. In a country aimed at protecting citizens ‘ socio-
economic and cultural rights, it is extremely necessary to settle cases in India rapidly, as the
courts alone cannot handle the huge backlog of cases. This can be effectively achieved by
applying the mechanisms of Alternative Dispute Resolution.

Article 21
Article 21 states that “no person shall be deprived of his life or his personal liberty except
according to procedure established by law”.

The word life and liberty are not to be read narrowly; it is supposed to be interpreted in its
widest sense.

Right to a speedy trial

It has been described in Hussainara Khatoon I Vs. Home Secretary, Bihar that the right to
speedy trial is also a part of the right to life and personal rights. The Supreme Court allowed
Article 21 to expand goals as widely as legally possible. The explanation for this liberal
interpretation was very simple that Article 21 is intended to alleviate the mental anguish,
expenses and burden that a person has to endure in litigation and which, combined with
delay, which result in deterioration of the accused’s capacity or ability to defend himself.

Article 39-A Free Legal Aid

Article 39-A obliges the State to ensure that the operation of a legal system that promotes
justice on the basis of equal opportunities and, in particular, grants free legal assistance,
through appropriate legislation or schemes or in any other way, ensures that opportunities for
justice are not denied to any citizen on account of economic or other disabilities

Through all of this we can see that the protection of justice is the most important function of a
state and helps in it by the processes of ADR. Hence a great deal of legislation such as the
Arbitration and Conciliation Act 1996; Section 89 of the CPC; the 1987 Legal Services
Authority Act to facilitate justice.

Legal Provisions
In India, arbitration has been a statutorily recognized form of dispute resolution
since the end of the nineteenth century. Initially, the arbitration was regulated
by the rules found in various acts, including those in the Civil Procedure Code;
the first India Arbitration Act was passed in 1899, which was replaced by the
Arbitration Act of 1940 and arbitration was a known practice as an alternative
to the litigation. But under this Act, arbitration endured the same illnesses as the
courts as it forced parties to appeal to the courts in every trivial matter and
eventually frustrate the purpose of arbitration as an alternative to litigation .

What is alternative dispute resolution?

Alternative dispute resolution (ADR) refers to a range of dispute settlement methods which
help the parties in the dispute to come to a settlement without going to court, or without
litigating on the said matter. These methods usually involve a third party, who helps them in
settling the disputes. In many cases, ADR methods are used alongside the litigation process
as well through court authorization
DIFFERENT METHODS OF DISPUTE RESOLUTION;
1. Inquisitorial Method;
A trial or legal procedure- characterized by the judge performing an
examining role.
It a legal system where the court is actively involved in proof taking
by investigating the facts of the case.
2. Adversarial Method;
It is also a legal system used in the common law countries where two
advocates represent their parties’ case or position before an impartial
person or group of people, usually a jury or judge, who attempt to
determine the truth and pass judgment accordingly.
It is an informal legal process of settling the dispute.
3. Other Methods-
Both formal and informal – like
a. ARBITRATION,
b. CONCILIATION,
c. NEGOTIATION,
 d. MEDIATION, ETC;

The following table outline contains the fundamental differences between

typical adversarial and inquisitorial systems-

Adversarial System Inquisitorial System

The adversarial system aims to get the The inquisitorial system is generally
truth through the open competition aims to get the truth of the matter
between the prosecution and the through extensive investigation and
defence. examination of all evidence.

In an adversarial system all parties In an inquisitorial system the conduct

determine what witnesses they call of the trial is in the hands of the
and the nature of the evidence they court. The trial judge determines
give. The court overseeing the process what witnesses to call & order in
by which evidence is given. which they are to be heard.

In adversarial systems previous There is little use of judicial

decisions by higher courts are binding precedent in inquisitorial systems.
on lower courts. This means Judges are free to decide
each case independently of previous
decisions by applying the relevant
statutes.

In an adversarial system the rule of In an inquisitorial system the rule of

lawyers is active. lawyers is passive.

The judges pronounce judgment The judge plays an active rule for
depending on the hearing, evidence or questioing & hearing the parties
on the basis of examination & cross- directly.
examination.

In an adversarial system the rule of In an inquisitorial system the rule of

the judges are merely passive in the judges is very active.
nature.
The case management does not The case management depends upon
depends upon the judges so the judges the judges so the judges contribution
contribution is very low for the is very high for the disposal of any
disposal of any case. case.

In an adversarial system all references In an inquisitorial system references

are presented by the respective also presented by the judge & they
lawyers of both the parties. play’s an active rule.

The case management depends upon The case management depends upon
the lawyer’s of both the parties & they the judges and the judges fixes the
get unfattered opportunity for the case term for the disposal of any case.
management upon there own wishes.

In an adversarial system the hearing, In an inquisitorial system documents

evidence or examination & cross- and information about the real facts
examination done by the lawyer get get priority.
priority.

Case management is not effective Case management is effective under

under this system because the judges this system & the judges sits with the
can not exchange views with the parties and can exchange views for
parties for taking any decision. So no taking any decision for speedy
initiative can be taken for speedy disposal of any case.
disposal of any case.

In an adversarial system judges has In an inquisitorial system judges have

discretionary power but that is not wide discretionary power.
wide by the evidence.

Repeated time petition (common The main object of this system is to

practice) is permitted at the time of reduce the time for disposing a case
continuance of the case & the and to ensure speedy justice. Judge
lawyer’s take the opportunity of plays an active role in deciding time
making time petition. So delay occurs petition & may honored or reject
in disposal of any cases. time petition.
Arbitration:
The dispute is submitted to an arbitral tribunal which makes a
decision (an "award") on the dispute that is mostly binding on the
parties.
It is less formal than a trial, and the rules of evidence are often
relaxed.
Generally, there is no right to appeal an arbitrator's decision.
Except for some interim measures, there is very little scope for
judicial intervention in the arbitration process.
Conciliation:
A non-binding procedure in which an impartial third party, the
conciliator, assists the parties to a dispute in reaching a mutually
satisfactory agreed settlement of the dispute.
Conciliation is a less formal form of arbitration.
The parties are free to accept or reject the recommendations of the
conciliator.
However, if both parties accept the settlement document drawn by the
conciliator, it shall be final and binding on both.
Mediation:
In mediation, an impartial person called a "mediator" helps the parties
try to reach a mutually acceptable resolution of the dispute.
The mediator does not decide the dispute but helps the parties
communicate so they can try to settle the dispute themselves.
Mediation leaves control of the outcome with the parties.
Negotiation:
A non-binding procedure in which discussions between the parties are
initiated without the intervention of any third party with the object of
arriving at a negotiated settlement to the dispute
It is the most common method of alternative dispute resolution.
Negotiation occurs in business, non-profit organizations, government
branches, legal proceedings, among nations and in personal situations
such as marriage, divorce, parenting, and everyday life.
Methods of ADRS
In India the parliament has amended the civil procedure code by
inserting section 89 as well as order 10 rule 1-A to 1-c.
Section 89 of the CPC provides for settlement of disputes outside the
court.
It is based on the recommendations made by the law commission of
India and Malimath Committee.
Justice malimath committee report
 In its report it was recommended that “if a law is enacted giving
legal sanction to such machinery for resolution of disputes and
resort thereto is made compulsory, much of the inflow of
commercial litigation in regular civil courts gradually moving
up hierarchically would be controlled and reduced.
C.P.C (AMENDMENT) BILL 1999
 This bill clarified the rationale of the new provisions
 Clause 7 provides for the settlement of disputes outside the
court.
  The provisions of this clause are based on the recommendations
of Law commission and Malimath committee.
CPC Amendment Act 1999 was passed by parliament on 20/12/99.
Section 89 of the Code of Civil procedure was introduced with a
purpose of amicable, peaceful and mutual settlement between parties
without intervention of the court.
Section 89 of the Code of Civil Procedure States that:
(1) Where it appears to the court that there exist elements of a
settlement which may be acceptable to the parties, the court shall
formulate the terms of settlement and give them to the parties for their
observations and after receiving the observation of the parties, the
court may reformulate the terms of a possible settlement and refer the
same for
(a) Arbitration;
(b) Conciliation
(c) Judicial settlement including settlement through Lok Adalat; or
(d) Mediation.
(2) Where a dispute had been referred-
(a) For arbitration or conciliation, the provisions of the Arbitration
and Conciliation Act, 1996 shall apply as if the proceedings for
arbitration or conciliation were referred for settlement under the
provisions of that Act.
(b) to Lok Adalat, the court shall refer the same to the Lok Adalat in
accordance with the provisions of sub-section (1) of section 20 of the
Legal Services Authority Act, 1987 and all other provisions of that
Act shall apply in respect of the dispute so referred to the Lok Adalat;
(c) for judicial settlement, the court shall refer the same to a suitable
institution or person and such institution or person shall be deemed to
be a Lok Adalat and all the provisions of the Legal Services Authority
Act, 1987 shall apply as if the dispute were referred to a Lok Adalat
under the provisions of that Act;
(d) For mediation, the court shall affect a compromise between the
parties and shall follow such procedure as may be prescribed.]
It was suggested that the court may require attendance of any to the
suit or proceedings to appear in person with a view to arriving at an
amicable settlement of dispute between the parties and make attempt
to settle the dispute.
The committee also makes court obligatory to refer the case to
Arbitration, Conciliation, Mediation, judicial settlement through Lok
Adalat.
There are five different methods of ADR
1.Arbitration
2. Conciliation
3. Mediation
4. Judicial Settlement and
5. Lok Adalat

Order X- Examination of Parties

Rule 1
Ascertainment whether allegations in pleadings are admitted or
denied.
Rule 1A
  Direction of the Court to opt for any one mode of alternative
dispute resolution:-
 The court shall after hearing the admission and denial it shall
direct the parties to the suit to opt either mode of the settlement
outside the court as specified in sub-section (1) of section 89.
 On the option of the parties, the court shall fix the date of
appearance before such forum or authority as may be opted by
the parties.
Rule 1 B :- Appearance before the court consequent to the failure of
efforts of conciliation:-
Where a suit is referred under rule 1-A the parties shall appear before
such forum or authority for conciliation of the Suit.
Rule 1-c
Appearance before the court consequent to the failure of efforts of
conciliation:
where a suit is referred under rule 1-A and the presiding officer of
conciliation forum or authority is satisfied that it would not be proper
in the interest of justice to proceed with the matter further then , it
shall refer the matter again to the court and direct the parties to appear
before the court on the date fixed by it.

NEED FOR ADRS;

 Search for a better approach
 Court is not the only place
Pros and cons of ADR

Pros of ADR
 It is less expensive.
 It is less time consuming.
 It is free from the technicalities that are present in the court system.
 The parties are free to differ in their opinion and can discuss their opinions with
each other, without any fear of disclosure of this fact before the courts.
 There is no feeling of enmity between the parties as there is no winning and losing
side. They also get their grievances redressed and their relationship remains as it
was before, therefore, they can conduct future business deals with each other.
 ADR is more suitable for multi party disputes, as all the parties can put forward
their opinions at the same place and in one go, rather than going to court again and
again. Also, it provides for a wider perspective of the dispute.
 The parties often have the choice of the ADR method to be used. They sometimes
also have the choice to select the individuals or bodies who will settle the dispute.
 The process is also very flexible, according to what suits the parties.
 The parties also have the option of being confidential. The ADR system also
enables the parties to put focus on practical solutions.
 A wider range of issues are considered and shared future interests of the parties are
protected.
 ADR system also allows for risk management.

Cons of ADR
 ADR is not helpful where a dispute is to be decided on the basis of a precedent.
 When there is a need for court and interim orders, ADR would not be useful.
 ADR is less suitable when there is a need for enforcement.
  When there is a need for live and expert evidence and analysis in a case, then ADR
would not be useful.
 When there is an imbalance of power, between the parties in the dispute, then
ADR would not work.
 If the case is of a complex nature, then the adjudicating body must look into minor
details and may need expert advice and suggestions. Here, ADR would probably
not work

Alternative dispute resolution system is being increasingly acknowledged in

field of law and commercial sectors both at National and International levels.
This paper discussed several International organizations, including the
International Chamber of Commerce (ICC) and the United Nations Commission
on International Trade Law (UNCITRAL) which facilitate the use of ADR
options such as arbitration, mediation and conciliation.

International Perspectives on ADR: The ADR “movement” started in the United

States in the 1970s in response to the need to find more efficient and effective
alternatives to litigation.

Today, ADR is flourishing throughout the world because it has proven itself, in
multiple ways, to be a better way to resolve disputes. The search for efficient
and better ways to resolve disputes, and the art of managing conflicts, are as old
as humanity itself, yet it has only been within the last thirty years or so that
ADR as a movement has begun to be embraced enthusiastically by the legal
system. More recently, ADR has become institutionalized as part of many court
systems and system for justice as a whole throughout the world. As trade,
investment and private business expand throughout the world at an increasing
speed, dispute resolution systems face growing challenges. In fact, just as
domestic courts have been overwhelmed by the demand on their services arising
from expanding economies and social life, so too International dispute
resolution is facing the need to develop the appropriate responses.

An International Alternative Dispute Resolution system, combining renewed

traditional mechanisms with new approaches, is already in place and will no
doubt be much perfected in the years ahead.
 Alternative, private forms of dispute resolution are deeply rooted in the
Western legal tradition. With the dawn of modern International commerce, a
number of International commercial dispute resolution mechanisms developed
that were effectively independent of traditional sovereign based adjudicatory
powers.

Both the Law Merchants, which developed from arbitration commissions of

merchants organized by the courts, and the Law of Nations (International Law),
evolved into uniform bodies of trade customs and practices that were
independent of any one sovereign Nation.

International institution for ADR system: Over the past few decades,
International commercial dispute resolution has witnessed substantial change
and improvement. A notable feature has been a move away from the traditional
court-based litigation model, allowing exploration of other methods and
techniques.

The United Nations Commission on International Trade Law (UNCITRAL) has

played an important role in development of alternative dispute resolution. Since
its establishment in 1966, UNCITRAL has made improving International
commercial dispute resolution one of its priorities. Two important achievements
arising from its efforts are the UNCITRAL Arbitration Rules (1976) and the
UNCITRAL Conciliation Rules (1980). The Arbitration Rules were adopted by
UNCITRAL on 28 April 1976 and by the General Assembly of the UN on 15
December 1976.

The products of active participation of International experts from various legal,

economic and social backgrounds, both have made a significant contribution to
the more efficient resolution of International commercial disputes. The
Conciliation Rules were adopted by UNCITRAL on 23 July 1980 and by the
General Assembly of the UN on 4 December 1980. Like the Arbitration Rules,
they are written in plain English and sequentially correspond with the process
they describe. They are also concise, consisting of just 20 articles and a short
Model Conciliation Clause.

In 1999 UNCITRAL commenced a process of evaluating the ‘extensive and

favorable experience with the use of the UNCITRAL Arbitration Rules and the
UNCITRAL Conciliation Rules’ with a view to their future development.
UNCITRAL entrusted this work to the Working Group on Arbitration. In
relation to conciliation, the Working Group was instructed to consider the
development of a model law to support the increased use of conciliation and,
specifically, to facilitate the enforcement of settlement agreements and reduce
the potential for delay in conciliation proceedings.

At UNCITRAL’s 35th session (19 to 30 November 2001), the Working Group

completed its draft model law on International commercial conciliation. In
relation to arbitration, the Working Group was instructed to examine the
requirement that arbitration agreements be in writing, the enforceability of
interim protection measures issued by arbitral tribunals, and the enforceability
of awards that have been set aside in the state of origin.

The Working Group is continuing its work on these issues. International

Commercial Arbitration: There are two primary International Conventions that
can assist parties in enforcing ADR awards.

The most important of these is the Convention on the Recognition and

Enforcement of Foreign Arbitral Awards is the New York Convention Awards.
By signing the New York Convention, countries agree to recognize and enforce
arbitral awards rendered in the territory of other signatories.

The 1958 New York Convention on the Recognition and Enforcement of

Foreign Arbitral Awards is the most widely accepted treaty regarding the
recognition and enforcement of arbitral awards, providing a solid foundation for
International commercial arbitration.

Applicability of ADRs in different types of

disputes

 Family Disputes
Family disputes take place usually when members of the family have different views or
perspectives that clash with each other. Owing to emotions, family members often
misunderstand each other and jump to the wrong conclusions. Conflicts in such matters can
result in disagreements and family quarrels.

Mediation is the most common method of solving family disputes where a neutral person
facilitates the process. Families are usually encouraged to go for mediation instead of
approaching the family courts.

Main instances of family disputes are:

 Divorce and Separation

 Inheritance
 ElderCare
 Family business and partnerships
 Extended family conflicts
 Divorced parents conflict over care and discipline of children

In the case of mediation in a family dispute, a mediator is expected to continuously diminish
the gaps in the proposed solutions from both parties to find some common grounds which
lead to the satisfaction of both sides to the dispute.

Keeping in mind that once the matters related to emotional and social factors are taken care
of, it becomes relatively easier to resolve the disputes further and reach an amicable solution
with the satisfaction of both the parties to the dispute. As a result, the parties to the dispute
become comfortable and relatively feel more secured to deal with the monetary and legal
matters effectively.

Justice Manju Goel in a report, laid down strategies to be adopted by the mediator while
resolving family disputes. They are:

 Inquiry of facts;
 Recognizing the real cause of the dispute;
 Exploration of possibilities of reconciliation or divorce;
 Bringing the parties to the dispute to an agreed solution; and
 Shaping the solution in the legal formats.
The legal elements subjecting to the resolution of family disputes through mediation is given
under:
Section 5 of the Family Courts Act, 1984 states the provision that the State Government after
consulting the High Court provides for the association of Social Welfare Organization to hold
the family court proceeding to arrive at a settlement.

Section 6 of the Family Courts Act, 1984 states the provision for the appointment of
counselors, officers, and other employees who are needed to facilitate and aid the family
courts arriving at settlements in family disputes.

Section 9 of the Family Courts Act, 1984, Section 89, and Order XXXII-A of the Civil
Procedure Code, 1908 makes it obligatory for the courts to make sure that a fair chance is
given to a negotiated settlement before the procedure of adjudication begins.

Also, Section 23 of the Hindu Marriage Act, 1955 focuses on seeking reconciliation by the
judges.

 Commercial Disputes

A commercial dispute usually arises as part of a defined deal or transaction that

has taken place between business entities. Most of the commercial agreements
involve clauses for alternate dispute mechanisms to resolve disputes or to
approach courts for redressal of its grievances.

Main instances of Commercial disputes are:

 Contractual disputes, including breaches and lack of delivery.

 Disputes between the shareholders, directors, and other ranking business
entities.
 Professional and commercial negligence.
 Construction disputes, including contractual, building, and regulatory
issues.
 Partnership disputes.
 Reputation management, including countersuits, defamation, Non-
Disclosure Agreement breach.
 Patent and Intellectual Property disputes.

Commercial disputes are usually resolved using the mechanisms of conciliation

or arbitration. It mostly depends upon the cultural and legal traditions of the
parties for choosing a mechanism to resolve the dispute. Conciliation is mostly
preferred because it is relatively quicker, cost-effective, and informal.
Moreover, the win-win situation established by conciliation for both the parties
encourages the maintenance of a harmonious business relationship that could
have been damaged if complex legal dispute resolution mechanisms had been
used.

Conciliation has its legislative framework laid down by Part III of the
Arbitration and Conciliation Act, 1996(“ the Act”). Section 66 of the act also
states that the conciliator is not restricted by the Code of Civil Procedure 1908
or the Indian Evidence Act, 1872. Section 67 of the act states the role of the
conciliator which shall be to help the parties impartially while reaching for an
amicable settlement for the dispute. The conciliator has to be conscious about
the principles of fairness and justice, usages of trade, consideration of the rights
and obligations of the party, surrounding circumstances to the dispute, etc. Also
according to section 74 of the act, if an agreement is signed by the parties it
shall have the same binding status and effect as that of the agreement signed in
arbitration proceedings. Conciliation is simple in itself and because of its
simplicity, it is commonly followed by business entities to solve their
commercial disputes.

Mediation usually provides an instant and effective dispute resolution setup

which is time-saving when compared to the normal court proceedings resolving
the same dispute between parties. Business individuals usually agree to
mediation as it provides for a faster resolution and disposal of the commercial
disputes between and also, for the same reason it encourages foreign investors
to rely on the Indian legal system to provide them with a simple, cost-effective,
and fast dispute resolution mechanism.

The Arbitration and Conciliation Act has been divided into two parts; the first
part lays down the rules for the conduction of arbitration in India and the second
part for arbitration held in foreign lands. Parties in a commercial dispute usually
go for arbitration as this dispute resolution mechanism gives them the liberty to
decide as to whether to go for a particular arbitrator or to go for a panel of
arbitrators who are skilled in the subject matter in dispute and arbitration saves
their time that they would have wasted in court proceedings and have a strict
code for confidentiality.

The latest amendment in the Arbitration and Conciliation Act, 2019 aspires to
provide fruitful dispute resolutions through the process of international
commercial arbitration. Also, the recent amendment attempts to institutionalize
and outline the procedure of arbitration in India by creating the Indian Council
of Arbitration.

 Industrial Disputes

Industrial disputes are created because of differences that arise between the
employers and the employees or between the employer and the workmen or
among the workmen. There are two types of reasons for industrial disputes:

 Economic: disputes relating to wages, bonuses, allowances, etc.

 Non-economic: disputes relating to ill-treatment of the workmen,
workmen discipline, victimization of the workmen, political factors,
etc.
Industrial disputes can be in the following types:

 Strikes

 Lockouts

 Picketing

 Gherao (to surround)

The States takes a major interest in matters relating to industrial relations and
intervenes as it has obligations to safeguard the interest of the industrial section
along with maintaining the growth rate of the economy in the country. In the
year 1947, the Indian Government enacted the Industrial Dispute Act under
which the mechanisms for prevention and settlement of industrial disputes were
provided. Conciliation is one of the mechanisms suggested by the State to
resolve industrial disputes.
Section 4 of the Industrial Disputes Act, 1947 empowers the government to
indulge appropriate persons in as many numbers as is deemed necessary by
notification in the Official Gazette as conciliation officers for carrying out the
process of settlement of the industrial disputes.

Also, Section 12 of the Industrial Dispute Act, 1947 states the duties of the
conciliation officers concerning industrial disputes.

Section 5 of the Industrial Disputes Act 1947 states that in necessary

circumstances the Government can constitute a board of conciliation for
enhancing the process of settlement. But in contrast to conciliation officers, the
functionality of the board of conciliation can be temporary or permanent and is
usually set up when the necessity arises. The board usually consists of 2 to 4
members representing each of the parties to the dispute in equal proportions and
a chairman who is an impartial and independent person in the conciliation
board. The board also has the same status as that of the civil court and has the
authority to issue summons and administer oaths upon individuals.

 Property Disputes

Disputes relating to property usually arise because of claims from legal family
members,co-owners, neighbours, landlords, and tenants, etc. Property disputes
are very common in India. Some common property disputes in India are shown
below as:

 Disputes regarding title of the property.

 Disputes involving the title of the property.
 Disputes relating to the transaction of property between builders and
buyers.
 Inherited properties disputes.
 Disputes where buyers cannot move into his new residential property,
until and unless the builder or developer of the property gets an
occupancy certificate from necessary authorities.
 Disputes regarding misuse of leased or rented property by the tenant.
Usually, in property disputes, the parties involved are hesitant to go ahead with
court proceedings because it is well known that litigation is a cumbersome
process and the results are always unknown. It is to be noted that property
disputes are common in India because feuds like poor land maintenance, unclear
land titles, and other types of issues have arisen because of ignorance and this
mostly results in disputes and also property disputes take a long time to get
resolved. To avoid such difficulties parties usually go for negotiation as it helps
them by bringing a way of settlement and it also is a time-saving procedure
where both parties along with time, save a lot of money.

Negotiation can be seen in most of the arbitration clauses. These clauses

mention that if any disputes arise out of their agreement, the parties shall try to
resolve the dispute in a friendly manner within a month and if the parties are
unable to resolve, the same shall be resolved by the procedure of arbitration.
These clauses ensure that even the trivial issues arising out of an agreement are
resolved without being dragged into court proceedings.

Conclusion
The current pandemic scenario has only worsened the problem of pending cases
in India. The courts are flooded with files and people are having a hard time
reaching the courts because of the travel restrictions and fear of coming in
contact with coronavirus. It is high time that the promotion of ADR
mechanisms should be encouraged and the government can develop the state of
ADR in the country by training personnels, laying down appropriate guidelines,
incorporating legal support, etc. Also, ADR mechanism can be coupled with the
digital platform and conduction of ADR online can come in handy as it will
encourage asynchronous communication between the parties all the way making
it easier for reaching an amicable solution for the dispute. It is upon all the
stakeholders to take a holistic approach for accomplishing the appropriate
changes required in the process of alternate dispute resolution mechanisms and
establish a peaceful, quick, and cost-effective resolution technique.

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UNIT 2
Introduction
Disputes happen frequently between parties in the world of business
and in today’s fast-paced commercial world, time is nothing less
valuable than money. Both parties suffer losses if the dispute becomes
the victim of a long-drawn, complex court battle. The solution to this
comes in the form of Alternative Dispute Resolution (ADR)
mechanisms that have eased and simplified the resolution of disputes
between parties. Arbitration is a key ADR method that can be
historically traced to the village panchayat days, when the elders used
to resolve disputes between persons based on principles of natural
justice. In simple words, arbitration is a method of resolving disputes
between parties without going to court.

Alternative Dispute Resolution mechanism

The term ADR or Alternative Dispute Resolution signifies any out of
court processes adopted to solve disputes. Arbitration, mediation,
conciliation, and negotiation are usually the most common methods of
ADR. When the courts are understaffed and overburdened with cases,
ADR serves the purpose of providing faster and simpler means of
dispute resolution. All ADR methods are mostly private in nature.
The typical methods of ADR are briefly discussed as follows:

Arbitration

Arbitration is outside the court settlement of a dispute by one or more

(odd number) persons who are appointed as arbitrators by both the
parties. According to Section 2(1)(a) of the Arbitration and
Conciliation Act, 1996 “Arbitration means any arbitration whether
or not administered by permanent arbitral institution”. In other
words, any form of arbitration irrespective of its nature has been
recognised statutorily in India by bringing such arbitration under the
ambit of the Arbitration and Conciliation Act, 1996. It consists of a
simplified trial, with simplified rules of evidence and with no
discovery. Arbitration hearings are usually not a matter of public
record. The arbitral award is binding on the parties just like a court
decree or order.

General principles of arbitration

Following are the general principles of the arbitration:

 Arbitration is Consensual: Arbitration is a mutual process that

requires the consent of both parties. Arbitration can only be
initiated, if parties have agreed to initiate it. Parties can insert
any arbitration clause if it is relevant utilizing a submission
agreement between parties. The parties are also not allowed
to unilaterally withdraw from the arbitration.
 Arbitration is Neutral: Arbitration is a neutral process hence it
provides equal opportunity to the parties such as; Arbitrator,
Arbitration Panel, applicable law, language, and venue of the
arbitration. This also ensures that no parties should enjoy the
home-court advantage.
 Arbitration is a confidential procedure: The arbitration rule
specifically protects the confidentiality of the matter. The
arbitration process provides privacy and restricts unnecessary
controversies regarding the case and parties. Any disclosure
made during the procedure may result in decisions and
awards. In some circumstances, the parties are allowed to
restrict the access of trade secrets and other confidential
information submitted to the arbitration tribunal.
 The parties choose the arbitrator: Each party has the right to
choose their arbitrator to whom they think will fit to handle
 their case. If the parties have chosen a three-member
arbitration tribunal, then each party appoints one of the
arbitrators. Then the two selected arbitration shall agree on
the presiding arbitrator. The center can also suggest the
potential arbitrator with relevant expertise or may directly
appoint members of the arbitration tribunal.
 The decision of the arbitral tribunal is final and easy to
enforce: The decision of the arbitral tribunal is final and
known as Award. The decision of the arbitration tribunal
must be final and binding on both parties. Arbitration awards
can be easily enforced in other nations than court
proceedings.

Types of arbitration
There are various types of arbitration depending upon the nationality of the
parties, the arbitral award or the arbitrators involved. They are discussed as
follows:

Ad Hoc Arbitration
Ad hoc arbitration is the type of arbitration where the parties mutually agree to
resolve their disputes by arbitration proceedings conducted by mutually
appointed arbitrators but not by an institution. This is one of the most common
forms of arbitration in India where the parties themselves agree to and arrange
for arbitration. Here, in this method of arbitration, both the parties and the
arbitrators mutually and independently decide the procedures of arbitration,
without the involvement of an arbitral institution. Example: When the parties
decide to keep the arbitration seat in India, the dispute would be resolved as per
the provisions of the Arbitration and Conciliation Act, 1996.
Institutional Arbitration
Institutional Arbitration is the form of arbitration where an institute, which has
been set up for the purpose of settling disputes by arbitration or other ADR
methods, is employed to conduct arbitration. Such institutes may be national or
international in character and they usually lay down their own rules of
arbitration. But such rules cannot override the provisions of the Arbitration and
Conciliation Act, 1996. These institutes maintain a panel of arbitrators from
which arbitrators are recommended to the parties. Besides that, these institutes
also offer administrative and consultancy services. So, with the proper
infrastructure and experience that these institutes bring to an arbitral
proceedings, some parties really find institutional arbitration beneficial. Some
of the prominent institutes that offer institutional arbitration are as follows:

 Chartered Institute of Arbitrators,

 The London Court of International Arbitration,
 The National Arbitration Forum USA,
 Singapore International Arbitration Centre,
 The International Court of Arbitration,
 International Arbitration and Mediation Centre, Hyderabad
 Delhi International Arbitration Centre
 Permanent Court of Arbitration

Domestic Arbitration
When the arbitration takes place in one jurisdiction and both the parties come
under that jurisdiction, then such an arbitration is called domestic arbitration. In
other words, both the parties must be nationals of the same jurisdiction as that
of the seat of arbitration or in case of body corporates, they must be
incorporated under the same jurisdiction as that of the seat of arbitration.
Eaxmple: when the seat of arbitration is in India to resolve a dispute between
two Indian companies, then it is a domestic arbitration.
International Arbitration
International arbitration is the type of arbitration where at least one of the
parties at dispute is a foreign national or in the case of a body corporate, has
been incorporated in a foreign country. In other words, at least one of the parties
must be a foreign national or habitually resident in a foreign country. And in
case of a body corporate or an association or body of individuals, the core
control and central management must be operated from outside India. Also, one
of the parties may be a foreign government too. Then such an arbitration is
construed as international arbitration. Section 2(1)(f) of the Arbitration and
Conciliation Act, 1996 has defined international commercial arbitration in the
light of international arbitration for commercial disputes.

Emergency Arbitration
Emergency arbitration is a form of arbitration where interim relief is given by
the arbitral tribunal to a party who wants to protect their assets and/or evidence
from being otherwise lost or altered. It can be roughly compared to the concept
of interim injunctions granted by civil courts. In India, there is no mention of
the term ‘emergency arbitration’ in the Arbitration and Conciliation Act, 1996
till date, and regarding the enforceability of the same, the picture is still unclear.
But the concept of emergency arbitration has been adopted in India by various
arbitral institutions like Delhi International Arbitration Centre, Court of
Arbitration of the International Chambers of Commerce-India, International
Commercial Arbitration (ICA), Madras High Court Arbitration Centre
(MHCAC), Mumbai Centre for International Arbitration etc. within their rules.

Legislative framework
The legislation governing the mechanism of arbitration in India are:
The Arbitration and Conciliation Act, 1996
The Arbitration and Conciliation Act, 1996 was substantially a result of three
enactments namely, the Arbitration Act, 1940, the Arbitration (Protocol and
Avocation) Act, 1937, and the Foreign Awards (Recognition and Enforcement)
Act, 1961. The Act was introduced to comprehensively cover the disputes
related to domestic and international regimes. It aimed at providing free,
impartial, and fair justice to the disputing parties. The process also helps in
reducing the workload of the judicial system and the courts; thereby giving it
worldwide recognition.

The Indian Contract Act, 1872

The Indian Contract Act, 1872 does not directly deal with the procedure of
arbitration nor consist of any provisions related to the process, but does give
recognition to the contracts involved in arbitration, and enables the
enforceability of the courts for the arbitration contracts.

Arbitrator – A crucial identity in the

mechanism of arbitration

Meaning of arbitrator
As per the dictionary meaning, ‘An arbitrator is the person who has been
officially chosen to decide between two people or groups who do not agree’. In
other words, an arbitrator can be defined as a person who acts as a neutral
dispute resolution authority, in deciding the issues between the parties in a
dispute. The arbitrator acts as a supreme authority in the process of arbitration
and holds the same position as that of a judge. Hence, he is bound to follow the
principles of natural justice, and act in a just way in providing justice to the
parties.
Qualifications of an arbitrator
The Indian legislation does not specify the qualifications required to become an
arbitrator. Under the Arbitration and Conciliation Act, the person can only be
appointed as an arbitrator if he is not a minor and is of sound mind. The
arbitrators in India are appointed by the arbitral institutions and associations,
which includes a panel of experts who appoint arbitrators on their
understanding.

Essential qualities that an arbitrator should

possess
Arbitration is a process to settle disputes in the commercial arena. But the
process cannot flourish if there are no arbitrators to resolve the issues between
the parties. A person to be appointed as the arbitrator should retain some
specialized skills and qualities to get that superior position and authority in the
arbitral proceedings.

Let’s take a look into some of the qualities that a person must possess –

Competency
Even though there has been no mention of the essential qualities and
qualifications in the Arbitration and Conciliation Act,1996, the basic
requirements that the person must possess to be appointed as an arbitrator are
that he must have completed the age of majority i.e., he must be more than 18
years of age and should be of sound mind i.e, not a lunatic and has not been
framed under any charges either of a criminal and a civil nature under the
various provisions of law.

Experience
An arbitrator must have knowledge and experience over the matters in which he
is asked to preside. A mediocre arbitrator can conduct normal arbitral
proceedings but lacks adequacy when it comes to framing the issues or solving
the disputes between the parties. The person must have excelling skills in
examining the facts and pronouncing the judgment, following the due process of
law which can only be attained and achieved with maturity and proficiency in
life. Not only the judicial proceedings but the arbitral proceedings are also
judged and determined on the facts and circumstances of the case. The facts of
the cases can only be ascertained if the person to be appointed as an arbitrator
has been well versed with the functioning of the systems, people, and the
principles of law.

Professionalism
Not only the legal professionals, practitioners, and young lawyers but the
arbitrators should also possess professional behaviour. He must keep in his
mind that he is assisting and providing legal aid to the parties in the dispute and
then come to a final and binding conclusion. They should be respectful,
diplomatic, and professional in their work. He is not a judge, so does not have
any inherent powers and his powers and efficacy are derived from respect,
consistency, and diplomacy.

Task management
The person to be appointed as an arbitrator must avail attributes in managing the
tasks and must possess leadership qualities. As the procedure of arbitration is
lengthy and extensive, he should not lose his calm during the arbitral
proceedings. The deprivation in his managing work can challenge his power as
an arbitrator and he can even lose his position because of his unprofessionalism
at the workplace and task management.

Legal educational expertise

It would be beneficial in the process of arbitration if a person to be elected as an
arbitrator is from a legal background. The person must be well versed with the
judicial laws of the land and must have credentials for the same. In the arbitral
proceedings, they must justify and state the rationales for their respective
decisions, as the decisions of the arbitrators can be challenged and reviewed by
the judges. The selection of an arbitrator with formal legal education and legal
experience with justiciable credentials will increase his likelihood of handling
the complex questions in the dispute responsibly and ensuring justice to the
parties

Drafting and writing skills

The legal practitioners and young lawyers are always advised to have adequate
writing and drafting skills as they are the ones responsible for drafting the
agreements, contracts, and legal petitions. In the same way, the arbitrator must
have efficient and exemplary writing skills as it is his evident duty to make an
award enforceable in the dispute. The documents sent to the disputing parties in
the written form either an agreement, files, or even emails, and granting an
award in the arbitral proceedings should be clear, consistent, and unambiguous.

Attending certified courses

The arbitrators can enhance their skills in arbitration by attending certified
training and diploma courses that are initiated by the various dispute resolution
organizations and forums such as the Chartered Institute of Arbitrators (Carib).
The organizations offer distance learning diplomas in the reign of arbitration.
The diplomas are organized to benefit those who want to represent themselves
as arbitrators and could help the parties in the arbitration situation. Once the
person has been certified for attending the diploma courses and training, he
should take initiatives in building his career professionally and attend arbitral
proceedings to get exposure to the processes of arbitration practically. The
person can also opt for internships and can even assist the manager of the firm
or can join as a legal staff.

Impartial and fair

The person appointed as an arbitrator or to be appointed as an arbitrator by the
council should be independent. He should not have any kind of social, familial,
and/or business relationships with the parties in the disputes as this could lead to
biases. He should be neutral and must be impartial and fair. The person while
pronouncing the judgment in the form of an award should act on the principles
of natural justice, equity, and rule of law.

Management skills
The person to be appointed as an arbitrator must have efficient communication
skills. He should have an able and proper understanding of managing people
involved in the proceedings. The management skills should also include the
ability to stride the line between laxity and undue delay on the one hand and the
dictatorial and unreasonable demands on the other hand. If the management
skills are not exercised properly then the speedy justice and cost-effectiveness
correlated with the arbitral proceedings cannot be comprehended.

Demonstration of communicative proficiency and

judicial open-mindedness
Communication skills act as a primary tool in listening to the parties in dispute,
synthesizing their respective positions, and obtaining satisfactory skills. They
also have the right to put further arguments in their defence, pose questions,
make decisions and articulate the problems persuasively adequately.

Managing the caseload

The person, if appointed as an arbitrator, should schedule matters to be solved
in advance. This would help in providing speedy resolution of the cases and
equitable justice to the parties. If the matters are scheduled in advance, it would
reduce the caseload on the arbitrators, and prevent a further backlog of the
cases.

Conclusion
An arbitrator holds a very eminent position in the arbitral proceedings, and the
procedure is not similar to those of the court proceedings and the petitions and
files are drafted in a very different way. The process of arbitration is gaining
momentum in this present world. Even though there have been legislations for
arbitration, there are no adequate qualifications on how an arbitrator should be
appointed.

The person should always be appointed as an arbitrator after the recognition of

his skills and credentials. At the same time, it is also important that amendments
should be made regarding the appointment of the arbitrator in the Arbitration
and Conciliation Act,1996 and a new provision should be introduced stating the
qualifications and all the sufficient details of an arbitrator, as he is the person
who is at an eminent and a superior position to decide the case of arbitration.

Appointment of arbitrators under Section

11 of the Arbitration and Conciliation Act

Clauses
1. The nationality of an arbitrator is not essential unless the parties
otherwise agree upon it.
2. The parties can also form an agreement on the procedure for
appointing arbitrators.
3. In case of failure to reach an agreement on the procedure of
appointment, clause (3) prescribes the following procedure for the
appointment of three arbitrators:
1. Each party appoints an arbitrator.
2. The two arbitrators then jointly appoint the third arbitrator,
who acts as the presiding arbitrator.
4. The Supreme Court and high courts have the power to designate
arbitral institutions. The arbitral institutions are graded by the
Arbitration Council of India under Section 43-I of the Act. If a high
court has no graded arbitral institution, the Chief Justice of the
concerned high court may maintain a panel of arbitrators and also
review it from time to time.
 5. Clause 4 states that when the procedure mentioned in clause (3) is
applied, there are two conditions, which are the following:
1. Each party must appoint an arbitrator within thirty days of
receiving the request from the other party to do so.
2. The two arbitrators must reach an agreement on appointing
the third arbitrator within thirty days from the date of their
appointment.
In case of failure of either of the two conditions, the appointment shall be made
by the arbitral institution designated by the Supreme Court or a high court upon
the application or request of a party.

6. Clause 5 provides that in case of failure to reach an agreement on the

procedure of appointment, the parties must agree on appointing a sole
arbitrator within thirty days of receipt of the request by either party.
If there is no such appointment within thirty days, an appointment shall be made
by the arbitral institution designated by the Supreme Court or a high court upon
the application or request of a party.

7. Clause 6 states that where an agreement on the appointment procedure

has been made by the parties, if
1. A party fails to act as prescribed by the procedure, or
2. The parties or the appointed arbitrators fail to reach an
agreement as prescribed by the procedure, or
3. The person or institution entrusted with a function by the
procedure fails to perform it,
then the parties may perform the alternative steps provided by the agreement, if
any. Or, an appointment shall be made by the arbitral institution designated by
the Supreme Court or a high court upon the application or request of a party.

8. Designation by the Supreme Court or the high court shall not be

treated as a delegation of judicial power.
9. When the decision is given by the arbitral institution, it should be done
while considering the following factors:
1. Qualifications required for an arbitrator as per the agreement
of the parties,
 2. Contents of disclosure and other considerations for
appointing an independent and impartial arbitrator
10.In cases where the parties belong to multiple nationalities and there is
a need to appoint a sole arbitrator or a third arbitrator, the arbitral
institution designated by the Supreme Court or a high court may
appoint an arbitrator of a nationality other than the nationalities of the
parties.
11.If there has been more than one request or application made to several
arbitral institutions during the application of any of the
aforementioned provisions, the arbitral institution receiving the first
request alone will be competent.
12.In matters concerning international commercial arbitration, only the
arbitral institution of the Supreme Court gets involved and not those of
the high courts.
13.An application or request for the appointment of arbitrators shall be
disposed of expeditiously by the arbitral institution. It shall be
disposed of within thirty days from the date of service of notice on the
opposite party.
14.When there is an involvement of a high court, it is always the high
court within whose local limits the principal civil court of the district
is situated.
15.The arbitral institution shall determine the fee and manner of its
payment to the arbitral tribunal after considering the rates prescribed
in the Fourth Schedule of the Act. However, the explanation of this
subsection provides that in the case of international arbitration in non-
commercial matters, the parties may agree to determine fees as per the
rules prescribed by an arbitral tribunal.

Typical steps in an arbitration

In arbitration, if the party has wanted to resolve their dispute by the arbitration
process then the party has to send a notice to the defaulting party to initiate the
process of arbitration, known as arbitration notice. Then each party has to
appoint an arbitrator of their choice. Then there are mainly six stages in the
arbitration process:

Initial pleading
It is the initial process where the attorneys first meet with their respective
clients and discuss the facts of their cases. The attorneys identify and track
down all of the relevant documents, information, and witnesses they will need
to present their claims and defenses at the final hearing. After that, they prepare
their respective Statements of Claim and Answers with their clients accordingly
and will send a copy of it to other parties.

Panel Selection
After the Statement of Claim and Answers have been filed in the arbitration
tribunal. A list of panels is provided to each arbitrator to decide who will judge
their dispute. In panel selection, each party can strike up to four proposed
arbitrators, and then each arbitrator to sit on the panel and then appoint the
highest-ranked arbitrators to the arbitration panel who fit to resolve the dispute.

Scheduling
It is an initial pre-hearing conference. The arbitrators and the parties’ attorneys
have to attend this initial pre-hearing usually by telephone and agree on a date
for the final hearing and any necessary preliminary deadlines.

Discovery
Discovery is the pre-trial phase. This phase was initiated just before the final
hearing during which the parties attempt to identify and track down all of the
relevant documents they will need to present their claims and prepare their
defenses.
Final hearing
At first, the Panel Chairperson will explain the procedures, and any preliminary
issues will be resolved. After that, the hearing will begin and the parties will
make their opening statements, and then be permitted to present their case by
calling witnesses and submitting evidence. After the parties will make their
closing arguments, and then the Panel will deliberate their decision.

Arbitral Award
The decisions given by the arbitration tribunal are known as the ‘Arbitration
Award’. The arbitration award is binding on both parties and has to be executed
by both parties.

Important concepts related to arbitration

Arbitration Agreement and its essentials

Arbitration agreement is a written agreement between the parties whereby both
the parties resolve to submit themselves to arbitration in the event of a dispute.
It has been defined in Section 2(1)(b) of the Arbitration and Conciliation Act,
1996. According to this provision, “Arbitration Agreement” means an
agreement referred to in Section 7. And according to Section 7(1), “arbitration
agreement” means an agreement by the parties to submit to arbitration all or
certain disputes which have arisen or which may arise between them in respect
of a defined legal relationship, whether contractual or not.

It may be noted in this regard that the form of arbitration agreement is not
important. In other words, an arbitration agreement may be a separate written
agreement or it may be inserted in the clauses of the contract between the
parties or it may be present in any form of electronic communication between
the parties.
Conditions to be fulfilled to enforce an arbitration
clause
In the event there is a contract between the parties and that contract refers to
another document which contains the arbitration clause, then for such
arbitration clause to be construed as an arbitration agreement, certain essential
conditions need to be fulfilled, which are as follows:

 The contract must be in writing.

 The reference to the arbitration clause in the separate document is
made in a manner so as to signify that the arbitration clause is a part of
the contract.
 The reference to the arbitration clause must be in clear and
unambiguous terms.
 The arbitration clause should be well framed, clearly portraying the
intention of the parties to resort to arbitration, so that in cases of
disputes under the contract, such clause can be made applicable.
 The arbitration clause should not be repugnant to any other terms of
the contract.
 Whether the arbitration agreement is an independent agreement or a
composite agreement, it is important that the arbitration clause should
be severable from the rest of the agreement or contract. This ensures
that the arbitration agreement survives if the main agreement gets
terminated or invalidated.
 In case the arbitration agreement is an independent agreement, it must
fulfil the criteria of a valid contract.

Seat of arbitration
The place of arbitration is referred to as the seat of arbitration. Usually, both
parties agree to a seat of arbitration within the terms of the arbitration clause or
arbitration agreement itself. The importance of the seat of arbitration is
paramount because it is the seat of arbitration that governs the arbitration rules
and procedures to be followed in resolving the dispute in case the parties have
not predetermined any procedure. In other words, the seat of arbitration
determines the situs of arbitration. But in case the parties fail to agree on the
place of arbitration as per Section 20(1) of the Arbitration and Conciliation Act,
2015, then the arbitral tribunal can fix the seat of arbitration for the parties
depending on the circumstances of the case and as per the convenience of the
parties vide Section 20(2) of the Act.

In the case of Bharat Aluminium Company Ltd v. Kaiser Aluminium Technical

Service Inc (BALCO case) (2012), the Hon’ble Supreme Court held that if the
disputing parties have agreed to a seat of arbitration in a different country, then
it necessarily implies that the parties have accepted the law of that country
governing the rules and procedures of arbitration. However, after the enactment
of the Arbitration and Conciliation (Amendment) Act, 2015, Part I of the Act,
such as Section 9 (interim relief), Section 27 (court assistance for
evidence), Section 37(1)(a) (appealable orders) of the Act will apply even to an
international commercial arbitration where the seat of arbitration is outside
India subject to an agreement to the contrary vide Proviso to Section 2(2) of the
Act.

In the recent case of PASL Wind Solutions (P) Ltd. v. GE Power Conversion
(India)(P) Ltd. (2021) the Hon’ble Supreme Court, stressing on party
autonomy, held that two Indian parties have the liberty to choose a foreign seat
of arbitration.

Venue of arbitration
Sometimes confusion arises when the words ‘venue’, ‘seat’, ‘place’ of
arbitration get used interchangeably in the arbitration agreement or arbitration
clause. Although the seat of arbitration and the place of arbitration mean the
same thing, the venue of arbitration usually means the convenient geographical
place where the arbitration proceedings are being conducted. So, the seat of
arbitration refers to the place whose rules and procedures are to be applied to
the arbitration proceedings and it also determines which courts will have
supervisory jurisdiction over the arbitration proceedings. Thus, the venue of
arbitration may not be the same as the seat of arbitration. When the seat of
arbitration has been fixed, i.e., the governing rules and procedures have been
fixed, the proceedings can go on at any geographical place or venue, even
across countries. Hence, it can be said that the term ‘venue of arbitration’
carries less weightage than the term ‘seat of arbitration’.

Arbitrability of subject matter

All matters cannot be resolved outside the court by arbitration since arbitration
is a private forum of resolution. This brings us to the crucial word ‘arbitrability’
which determines if a subject matter can be submitted to the process of
arbitration or not. The legislature and judicial authority decide which matters
cannot be subjected to arbitration.

The legislature has barred certain types of disputes from being subjected to
arbitration by stating in Section 2(3) of the Arbitration and Conciliation Act,
1996 that if by any law in force some matters are barred from arbitration then
such law will override any provisions of Part I of this Act. In other words, the
non-obstante provision mentioned in Section 5 of the Act will not override any
law in force that bars a subject matter from being submitted to arbitration.
Also, Section 34(2)(b)(i) of the Act enables the courts to set aside an arbitral
award if the subject matter of the arbitration was non-arbitrable in nature.
Basically, no list has been provided by the legislature which dictates which
subject is arbitrable and which is not arbitrable. Section 2(3) read with Section
34(2)(b)(i) of the Act empowers the judiciary to decide the principles for non-
arbitrability of a subject matter within the parameters of law and this was held
in the recent case of Vidya Drolia v. Durga Trading Corporation (2020).

To make the principles of arbitrability of a subject matter comprehensible, the

Hon’ble Supreme Court, for the first time, in Booz Allen & Hamilton Inc. v. SBI
Home Finance Ltd. (2011) laid down the following three conditions that need to
be met for a subject matter to become arbitrable, viz:

1. The disputes between the parties must be capable of being settled and
adjudicated by the private forum of arbitration.
 2. The disputes must come under the ambit of the arbitration agreement
or arbitration clause.
3. The parties to the dispute must refer the same to arbitration.

Arbitral Award
In simple words, the judgement or order of the arbitral tribunal (consisting of
the appointed or chosen arbitrators) is called the arbitral award. Section 2(1)
(c) of the Arbitration and Conciliation Act, 1996 defines arbitral award.
According to this provision, “arbitral award includes an interim award.” It is
clear from this definition that the statutory definition is not exhaustive in nature
and basically includes any order of the arbitral tribunal.

The arbitral award must be duly written, signed by the arbitrator(s) and dated
with proper mention of the place of arbitration. The arbitral award must contain
due reasons for the granting of such an order unless the parties have waived the
necessity of a reasoned decision or speaking order. It may be noted in this
regard, that an arbitral award is binding on the parties just like a judgement of
the court. Also, any party within thirty days of the receipt of the award may
request the tribunal to correct any errors in the award and if all the parties so
wish, can even ask for interpretation of a specific part or portion of the arbitral
award.

After the time has expired to make an application for setting aside of the arbitral
award under Section 34 of the Act and no such dismissal or stay order has been
granted by the court, then the arbitral award in a domestic arbitration shall
become enforceable just like a decree of a Civil Court under the Code of Civil
Procedure, 1908.

In general, when the seat of arbitration is in India, whether it is a domestic

arbitration or an international commercial arbitration, the award granted is a
domestic arbitral award. In other words, a domestic award is granted under Part
I of the Act.
Foreign Arbitral Award
Foreign arbitral award or foreign award is the award granted by an arbitration
tribunal recognised by the New York Convention (1958) (as defined in Section
44 of the Act) and under the Geneva Protocol and Geneva Convention (as
defined in Section 53 of the Act). In a way, because of a lot of dissatisfaction,
the New York Convention (1958) replaced the Geneva Protocol (1923) and
Geneva Convention (1927).

Recognition and enforcement of foreign arbitral awards

A foreign arbitral award is enforceable under Part II of the Arbitration and
Conciliation Act, 1996. But in order to be enforceable, certain conditions laid
down under Section 48 of the Arbitration and Conciliation Act, 1996 (for
awards granted under the New York Convention, 1958) and Section 57 of the
Act (for awards granted under the Geneva Convention, 1927) need to be
fulfilled. Some of these conditions are mentioned below:

 The arbitral award is granted in matters considered to be commercial

matters by laws in force in India because India has adopted the
commercial reservation under the New York Convention and the
Geneva Convention.
 The arbitral award must be granted in pursuance of an arbitral
agreement that comes under the ambit of the New York Convention
and the Geneva Convention.
 The arbitral award should be granted in relation to parties where at
least one person is subject to the jurisdiction of a territory duly
notified in the Official Gazette by the Indian government and passed
in one such notified territory.
 The award must be final in nature to become enforceable in India, and
such award will be deemed to be final when no proceedings
challenging the award are pending or ongoing in that foreign country.
 The foreign arbitral award must not be against the public policy in
India.
  The foreign award must be an arbitrable subject matter in India.
 The foreign award must not have been set aside or suspended by
competent authorities in the foreign country.
 The executing court for a foreign award may be a High Court which
has jurisdiction over the territory in which the award debtor’s assets
are situated or where a suit for the recovery of money can be filed.
 In order to enforce a foreign award, the enforcing party must duly
submit before the executing court the following:

 The original or authenticated copy of the arbitral award.

 The original or certified copy of the arbitration agreement.
 Evidence demonstrating that the arbitral award is a foreign award.

Following are the stages of arbitration or arbitration process step by

step:

 Arbitration Clause - An agreement or the clause specifically

stating that if the dispute arises between the parties they will
resolve it through the process of arbitration.
 Arbitration notice - In case a dispute has arisen and the party has
opted to follow the procedure of arbitration then the party
against whom the default has been committed will send an
arbitration notice for invoking arbitration process steps between
the parties.
  Appointment of Arbitrator- After receiving the notice by other
parties both the parties will appoint the arbitrators in the manner
as specified in the arbitration agreement or arbitration clause.
 Statement of Claim- Next step in an arbitration proceeding in
India is to draft a statement of claim. Statement of claim
contains the dispute between the parties, events which lead to
the dispute and the compensation claimed from the defaulting
party. The other party can file a statement of counterclaim along
with reply to the statement of claim. Get your statement of
claim, reply to the statement of claim or counterclaim through
top arbitration lawyers.
 Hearing of Parties - Arbitral tribunal will hear both the parties
and their evidence.
 Award - After hearing the parties, the arbitral tribunal will pass
the decision. The decision of the tribunal is known as ‘Award’
and is binding on the parties. However, an appeal against the
arbitral award can be filed before the High Court.
 Execution of Award - Once the award has been passed by the
tribunal it has to be executed. The party in whose favour the
award has been passed has to file for execution or enforcement
of award with the help of a good arbitration lawyer.

Arbitration process in India does not follow the procedure of the Civil
Procedure Code and the arbitrator also the arbitration proceeding does
not need to follow the procedures enlisted in the Civil Procedure
Code, 1908(1). Arbitrator in India, however, has the following
powers:

 To make awards
 To take assistance
 To rule on its jurisdiction
 To pass interim relief
 To determine procedures
  To decide on the official language of the proceedings
 To appoint an expert
 To seek the court’s assistance for evidence
 To terminate proceedings
 To impose interest and deposits

Other than the above powers, the arbitrator has also given certain
powers of civil court as under the Civil Procedure Code:

 To administer the oath to parties and witnesses appearing before

him;
 To state a special case for the opinion of the court on any
question of law or state the award in the form of a special case
for the opinion of the court;
 To make the award conditional or in the alternative;
 To correct in an award any clerical mistake or error arising from
any accidental slip or omission;
 To administer any party interrogatories

The Limitation Act 1963(2) applies to all proceedings under the

Arbitration and Conciliation Act, just as it applies to proceedings in
the Indian courts, except to the extent expressly excluded by the
Arbitration and Conciliation Act. Any arbitration proceedings
commenced after the limitation period (three years from the date on
which the cause of action arose) will be time-barred.

Local courts can intervene in domestic arbitration proceedings. This

includes the power to issue interim orders and appoints arbitrators.

While arbitrators cannot compel third parties to appear before them,

the tribunal or a party, with the tribunal’s approval, may apply to the
court for assistance in taking evidence. The court may make an order
requiring third parties to provide evidence directly to the tribunal. If a
person fails to attend in accordance with such order of the court, it is
subject to the same penalties and punishments as it may have incurred
during court proceedings.

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 UNIT 3

Conciliation
Conciliation means settling disputes without litigation. It is an
informal process in which conciliator i.e. third party tries to bring the
disputants to agreement. He overcomes the disputable issues by
lowering the tension, improvement in communication, interpreting
issues, providing technical assistance, exploring potential solutions
and bringing the negotiated settlement before the parties. Conciliator
adopts his own method to resolve the dispute and the steps taken by
him are not strict and legal. There is no need of agreement like
arbitration agreement. The acceptance of settlement is needed by both
of the parties.

Part III of the Arbitration and Conciliation Act, 1996 deals with
conciliation. it is a voluntary proceeding where parties in dispute
agree to resolve their dispute through conciliation. It is a flexible
process which allows the parties to decide the time and place for
conciliation, structure, content and terms of negotiations. In
Conciliation, the conciliators are trained and qualified neutral person
who help the conflicting parties to make them understand the issues in
dispute and their interest to reach mutually accepted agreements. The
conciliation process includes the discussion between the parties which
is made with the participation of the conciliator. It covers many
disputes like industrial disputes, marriage disputes, family disputes
etc. This allows the parties to control the output of their dispute. The
result is also likely to be satisfactory.
Conciliator

Conciliator is the third party who is involved in settling the dispute of

the parties. Generally, there is one conciliator for the settlement but
there can be more than one conciliator, if the parties have requested
for the same. If there is more than one conciliator then they will act
jointly in the matter. Section 64 deals with the appointment of
conciliator which states that if there is more than one conciliator then
the third conciliator will act as the Presiding Conciliator.

Kinds of Conciliation

1. Voluntary Conciliation- In this method parties can voluntarily

participate in the process of conciliation for resolving their
dispute.
2. Compulsory Conciliation- If parties do not want to take the
opportunity of voluntary conciliation then they can go for
compulsory conciliation. In this method, if the parties do not
want to meet the other party to resolve the dispute then the
process is said to be compulsory. This method is commonly
used in labour cases.

Procedure of Conciliation

The objective of the conciliation proceedings is to reach upon mutual

terms, speedy and cost-effective settlement of the dispute. Section
62 discuss the initiative of conciliation will start when one party will
send Written Invitation to conciliate upon the matter to the other
party. There will be the commencement of procedure if the other party
accepts the invitation in writing to conciliate. If the other party rejects
the invitation or the party who is willing for the conciliation does not
get a reply from the other party within Thirty days then it will be
treated as a Rejection of the Invitation.
Section 65 explains the submission of the statements of both the
parties to the conciliators. Each party should submit a brief written
statement regarding dispute as requested by the conciliator. The
statement should describe the general nature of the dispute and the
points of issue. Each party should send a copy of their statement to
the other party. The conciliator can also ask for the submission of
written statements which includes issues of the parties, grounds of
settlement etc. These statements must be supplemented by evidence,
documents or visual representation. The copy of the same statement
must be sent to the other party. Conciliator can also request for
additional documents whenever he needs them. According to Section
67(3) and 69(1), the conciliator can set up meetings for the parties or
he can meet parties together or separately. The place of meeting can
be decided by parties or conciliators. He can also communicate with
the parties orally or in written form. He must also consider the party’s
expressed wishes like quick settlement of the case which also depends
upon the circumstances of the case.

Advantages and disadvantages of Conciliation

Advantages

1. The conciliation procedure is of private nature. The

documents, evidences or any other information which are used
during the process are Confidential.
2. One of the most important advantages is that they are Informal
process and contains Simple procedures which can be easily
followed by the general people.
3. The process depends upon the circumstances of the case. In
these processes the need of the parties comes first like quick
settlement of their cases so there is no chance for delay.
 4. The selection of the conciliators depends upon the parties. The
parties can choose conciliator on the basis of their availability,
experience in particular field, previous track records of the
cases, knowledge in subject area.
5. The conciliation is cheap as compared to litigation. They are
cost effective and most opted process for resolving disputes. It
purely depends upon the nature of the dispute but is widely
acceptable.

Disadvantages

1. Conciliator is not a legally qualified person for resolving

disputes. His decision is not binding upon the parties.
2. As the procedure of conciliation is informal and simple there
is high possibility of delivering injustice.
3. Miscommunication of information: The role of the conciliator
to settle up the case by giving information of one party to
another and vice versa. The process of sending and receiving
information sometimes leads to mixed and incorrect
information. So, by these processes one can easily interpret
the information given.

A conciliator in a conciliation proceeding is a neutral adjudicator

whose role is to decide on the course of the proceedings, aid the
parties in reaching a settlement that is mutually beneficial and to
uphold and abide by the principles of fairness, neutrality, justice and
objectivity while striving to reach a settlement as well as during the
course of the decision-making process.
The Arbitration and Conciliation Act, 1996 bestows upon the
conciliator certain responsibiities and provides for some guidelines
that a conciliator has to follow. Unlike mediation, the conciliator is
pro-active in the conciliation process and autonomy is allowed to
him/her on certain grounds. However, that autonomy is limited unlike
arbitration.

The various aspects of a conciliator's role in conducting the

conciliation proceeding has been discussed below :
According to section 63 of the Act, there could either be a sole
conciliator or two or three conciliators, according to the wishes of the
parties. In case of more than one conciliator, they shall work jointly
and in cooperation with each other,
According to section 64 of the Act, to conduct the proceedings of the
conciliation, the parties may appoint the conciliator or conciliators, if
there are more than one. When there are three onciliators, the parties
shall appoint the two conciliators and they, in turn, shall apoint the
third conciliator. In the second part, the Act stresses that the parties
may take the assistance of a third party or institution in regards to the
appointment of the conciliator/conciliators. Such party may directly
appont the conciliator or recoomend his/her name to the parties for
appointment. The condition that has been attached to this clause is
that while making the appointment, such party or instituition shall
keep in mind such considerations as are required to ensure the
neutrality and independence of he conciliator. Also, the secton strsses
upon the fact that theparties and the conciliators should not be of th
same nationality.
According to section 67 of the Act,
-the conciliator shall miantain his independence and impartiality and
persuade the parties in away to help them reach an amicable
settlement.
-the conciliator should not onlyuphold theprinciples of of objectivity,
fairness and justicebut should also keep in mind the rights and
obligations of the parties and various circumstances surrounding the
dispute.
-the conciliator may conduct the proceedings of the case in a manner
that is appropritae in his opinion. However, he should consider the
circumstances leading to the case and the wishes of the parties or any
other requests of the parties that are related to the subject of the
dispute and are reasonable in the eyes of the law.
-a settlement of the dispute can be proposed by the conciliator at any
time when the proceedingsae still in force. Any such settlement
proposition need not be in writing or accompanied by a statement of
reasons, necessarily.
According to section 69 of the Act, the concliator may communicate
with the parties orally or in writing. The communication could take
place either individually or in groups as suits the needs of the
proceedings. The place of such meeting shall be decided by the
conciliator in consultation with the parties.
According to sections 70 ad 75, confidentiality should be ensured
from the ends of both the conciliator as well as the parties. No
information should be passed on to a third party except in cases of
enforcement or implemenattion of the conciliation proceedings.
According to setion 80 of the Act, a concliator should not be an
arbitrator or a representative of the parties in any kind of legal
proceedings in respect to a matter that is subject of the dispute. He/she
also cannot be presented as a witness for/against the parties in any
arbitral or judicial proceeding.

CONCILIATION UNDER STATUES :

CONCILIATION UNDER ID ACT 1947:Section 4 of Industrial
Disputes Act, 1947 authorizes the appropriate government to engage
such number of persons as may be deemed necessary by notification
in the Official Gazette as conciliation officers, for discharging the
responsibility of mediating in and promoting the settlement of
industrial disputes.
Section 12 of Industrial Disputes Act, 1947 provides duties of
conciliation officers.

The conciliation officers do not have the authority to impose upon the
parties a solution of or to dispute.

The contract shall clearly draft by setting out the conciliation process
not limited to as below:

 Scope and applicability

 Panel of Conciliators
 Appointment and Number of Conciliators
 Commencement of Conciliation proceedings
 Procedure to be followed by the Conciliation officers
 Role of the Conciliation officers
 Venue for Conciliation Proceedings
 Time Frame
 Remuneration & Cost
 Settlement Agreement
Termination of Conciliation proceedings
The Conciliation proceedings are concluded in the following manner:

 Where conciliation ended in settlement – the date on which

settlement is signed by the parties to the disputes or
  Where conciliation ended in failure, the date on which the
appropriate Govt receives the failure report of a conciliation
officer. or
 When a reference is made to a Labour Court/Industrial
Tribunal during the pendency of conciliation proceedings.
In the case of non settlement or failure of conciliation, copies of
failure report under Section 12 (A) of Industrial Disputes Act 1947
are required to be sent to the parties to the dispute.

If the party raising the dispute fails to turn-up without reasonable

cause, the case may be closed under intimation to it. If the opposite
party fails to turn-up, in spite of having been given reasonable no. of
opportunities, an adverse inference may be drawn, and the case is
proceeded with on ex-parte basis

Conciliation under Family Courts Act – The need for alternative

dispute resolution is increasing day by day. Due to alternative dispute
resolution, many major disputes were resolved in a very short time
and at a low cost. And that is why alternative dispute resolution can
be used in a very good way even in a family dispute.

The Conciliation method in alternative dispute resolution will be very

useful for resolving family disputes. India has the Family Courts Act,
1984 through which we can resolve our Family Disputes properly and
satisfactorily using Conciliation.

Family courts try to resolve the dispute through conciliation and

settlement. The Family Courts Act contains VI chapters deals in 23
sections. Section 9 contains the duty of the family court to make
efforts for settlement.
The Family Courts Act, in this act the act no. 66 of 1984 is provided
for the establishment of the family courts to raise or promote
conciliation and certain speedy affairs and for those matters related
therewith. Family Courts Act has created a clear process through
which we can resolve our family disputes.

1)In every suit or proceeding effort shall be made by the family court
in the first instance, Where it is possible to do to assist and persuade
parties to arrive at a settlement, with the nature and circumstances of
the case In relation to the subject matter of a suit or proceeding and
for this purpose a family court may be subject For any rule made by
the High Court, such procedure must be followed as it may see fit.

2)In family court, if any suit or proceeding at any stage appears then if
there is a reasonable possibility of a settlement between the parties,
the court may adjourn the proceedings for such a period.

CONCILIATION UNDER The Hindu marriage act 1955

The Hindu marriage act 1955’has cast a duty on the courts to make an
endeavor to bring about a reconciliation between the parties to the
marriage before granting decree of divorce, the Act has introduced the
principle that a broken marriage can be treated like other civil wrong.

Section 23 of the Hindu Marriage Act states that before proceeding to

grant any relief under it, there shall be a duty of the court in the first
instance, in every case, to make every endeavor to bring about
reconciliation between the parties where relief is sought on most of
the fault grounds for divorce.

This section provides that court on request of the parties or if the court
thinks it just and proper may adjourn the proceedings for a reasonable
period not exceeding 15 days to bring about Reconciliation. Efforts
for reconciliation should be made before the final stage of the case,
where in a case reconciliation efforts were not made, the case could
be remanded with the direction to make efforts to bring about
reconciliation.

Exceptions:

However, in case of a petition for divorce on the grounds of

conversion, unsoundness of mind, violent form of leprosy,
communicable form of venereal disease, renunciation of the world or
intractability of one of the parties to marriage, there is no duty cast on
the courts to attempt for reconciliation between the parties in such
cases.

It must be borne in mind that a Hindu marriage is a sacrament and not

a contract. Even if divorce is sought by mutual consent, it is the duty
of the court to attempt reconciliation in the first effort.

UNIT 4
NEGOTIATION:
Negotiation is also a form of dispute resolution, but there is no third party to adjudicate the matter,
therefore the parties work together to find a mutually acceptable solution or a compromise. The
parties may choose to be represented by their attorneys during their negotiations. Negotiation is not
statutorily recognized in India. There are no set rules for conducting a negotiation.

Essentials of negotiation-
  It is a process of communication which helps to resolve conflicts.
 It can be entered into voluntarily and its outcome is non-binding.
 The parties are benefitted here as they have control over the outcome and procedure and
the process is carried out keeping their interests in mind.

The Five Styles of Negotiation

 Introduction
 The Game of Negotiation
 The Stages of Negotiation
 The Five Styles of Negotiation
 Conclusion
 Bibliography
 Endnotes

Introduction
TOP
When we hear the word “negotiation” we often imagine an acrimonious process between management
and labor over contract terms or a stuffy boardroom of well-dressed people debating a complex
business acquisition. Certainly, these situations involve complex negotiation processes but the
concept of negotiation is much broader. Negotiation is a process whereby parties with differing needs
and objectives reach a solution that is mutually acceptable.

We negotiate to satisfy a need or want. The need or want is the currency of negotiation. All of us
negotiate in our personal and professional lives whether it is purchasing a vehicle, requesting a raise,
or hammering out an agreement with a contractor. However, negotiating can be more informal such
as persuading a child to go to bed, choosing a restaurant with a group of friends, or when to have the
neighbors over for dinner. And yes, you can negotiate with yourself. Should I eat that bowl of ice
cream or stick to my diet? Should I accept that “friend” request from my high school enemy that I
haven’t talked with in decades?

Negotiating becomes necessary because of differing needs. This causes conflict. Conflict is
pervasive in our lives. As illustrated above, dozens of conflicts occur every day because of differing
needs or objectives and negotiating resolves conflict. Simply stated, everyone negotiates something
every day. The question then is not why negotiate but how can we improve our negotiation skills to
attain our needs.

The purpose of this chapter is to emphasis the various styles of negotiation. Readers are encouraged to
ascertain the particular style they most often utilize and to understand how and when to apply the
various negotiation styles based upon the situation.
The Game of Negotiation
TOP
Negotiation can be examined as if it were a game. First of all, we can understand the game. It is not a
random process. It can be analyzed and understood and, thus, it can be controlled. It is controlled by
employing various tactics throughout the process to meet objectives. Secondly, there are players.
There can be one, two or multiple players involved in the game. Who the players are and the tactics
they employ will determine how you plan and execute your negotiations. Lastly, there are rules.
Some rules are clear and explicit such as laws. Other rules are informal such as ethical practices.

The Stages of Negotiation

TOP
The game of negotiation can be further understood because it has a predictable sequence of events or
stages. The game of negotiation includes the following stages:

1. Preparation
2. Opening and Exchanging information
3. Bargaining
4. Closing and Implementation

Preparation:

The first stage relates to planning and preparation. This is a time to assess the situation and the
relationship with the other party. You will want to begin collecting information needed for the
negotiations. Important information includes defining your needs and objectives. What are your
minimum expectations? How much are you willing to yield? Additionally, what do you anticipate
from the other party? What are their needs and objectives? What will they ask for?

With this information, you need to map out the negotiation process. What do you want to achieve?
What are the issues and their priority? What is your initial position? At this point it is important to
define your limits and determine available alternatives. It is important at this time to determine your
BATNA. (Best Alternative To a Negotiated Agreement). In other words, what is your action if you
are not able to reach a mutually acceptable agreement? By considering these factors, you have
essentially developed your negotiation strategy.

Opening and Exchanging information:

In this stage the parties exchange the information gathered in the preparation stage. The process
begins with each party laying out and explaining their opening positions. Once initial positions have
been exchanged, the parties will explain and justify their positions. It is important to ascertain the
other party’s wants and needs. Seek to uncover underlying interests, issues and perceptions. Identify
points of differences and conflict. Both parties should listen and question the other party’s positions
to determine points of leverage and counter arguments.
Bargaining:

This stage is the essence of the game of negotiation. It is the classic game of give and take. Each
party will utilize various negotiation strategies to achieve the objectives established during the
preparation process. A natural part of the bargaining process is making concessions, in other words,
giving up one thing to get something else in return. Typically, both parties expect concessions to
move from opening positions.

Closing and Implementation:

This is the final stage of the negotiation process where a final agreement is completed. Both parties
should review the terms of the agreement to avoid any misunderstanding. It is important to clarify
anything that was left ambiguous or incomplete. In this stage a course of action needs to be
developed to implement and monitor the terms of the agreement. The implementation of the
agreement is a critical part of the negotiations. Parties often discover that the agreement was
misunderstood, incomplete, or flawed. Unforeseen problems may arise or one of the parties didn’t do
things they said they would. Every good agreement includes opportunities for the parties to reopen
discussions as the result of problems in the implementation.

The Five Styles of Negotiation

Everyone negotiates something every day. As a result, people develop different negotiation styles [i].
Individuals tend to rely on a preferred negotiation style because it has worked in the past or because
of each person’s temperament. People often use the same negotiation style to resolve conflict instead
of adjusting the style to fit the specific situation. Always relying on the same style of negotiation can
result in an unsuccessful outcome.

In the game of negotiation, you should always think about using various negotiation styles to fit each
situation. There are many different ways to negotiate and they can be identified as competition,
collaboration, compromise, accommodation and avoidance.

Experienced negotiators know how and when to use the various negotiation styles. How do you know
the circumstances under which to select a specific style? To choose the right style you need to
consider two important factors:

1. The outcome – what you might lose.

2. The relationship – how the negotiation will affect you your relationship with the other party.

Every time you are set to begin an negotiation, these are the two critical factors to consider in
selecting your style. How important is the outcome to be gained by the negotiation? How important
is the past, present, and future relationship with the other party? With this model in mind, we can
examine the characteristics, strengths, and weaknesses of the five styles of negotiation as follows:

Competition (win-lose):
A competitive negotiation style is the classic model of “I win, you lose.” This style of negotiation
considers winning at all costs even at the expense of the other party. Competitive negotiators use
hardball tactics to achieve their needs without regard to the other party’s needs. A competitive
negotiation style is beneficial when the outcome is important, and the relationship is not. This style
might be useful when the goals of the party’s goals are short term and incompatible. The tangible
benefits are the most important. The competition style can be an effective counter balance when you
expect the other party to be competitive.

The competition negotiation style is, however, very risky. It can be costly and time consuming and
often lead to a deadlock. This style is often used by inexperienced negotiators who either believe it is
the only viable style or who have had success with its use in the past.

Collaboration (win-win):

In contrast to the competitive style, a collaborative negotiation style seeks a “I win, you win”
outcome. This win-win model focuses on making sure all parties have their needs met. With this
style, both relationship and outcome are important. The purpose is to maximize outcome and preserve
the relationship. A collaborative style is appropriate in situations where developing and maintaining a
relationship is important, where both parties are willing to understand the other party’s needs and
objectives, and when finding a long lasting and creative solution is desired.

A collaborative negotiation style is often the most difficult to employ because it requires an
investment in time and energy in finding innovative solutions. It is successful in situations where the
party’s goals are compatible such as within an organizational or family unit.

Compromise (split the difference):

Unlike the collaborative style, the compromising negotiation style follows a “I win/lose some, you
win/lose some” model. Compromising is the style most people think of as negotiation, but it is really
only bargaining. Compromisers use this style instead of finding a solution that fully benefits
everyone.

Often described as splitting the difference, a compromising style results in an agreement about half
way between both party’s opening positions. Compromising is an adequate style in many
circumstances. Compromising shows some concern for the relationship and does achieve gains on the
outcome dimension. It may result in satisfying some of each party’s needs, but it does not maximize
the situation as collaboration can. However, it can often bring about an unsatisfactory feeling that you
gave too much and didn’t get enough in return. Thus, this style is best used in circumstances where
factors, such as time, prevent the players form achieving a true collaboration but still wish to achieve
positive outcomes and relationships.

Accommodation (lose-win):

This style can be described as the “I lose, you win” model and is the direct opposite of the competitive
style. For accommodating negotiators, the relationship means everything and the outcome is not
important. The accommodating style might be used in situations where one party has caused harm to
another party and needs to repair the relationship. Additionally, this style might be preferred in order
to increase support and assistance from the other party and hope they will be accommodating in the
future.

Accommodation is sometimes the best style to employ because it serves to strengthen personal
factors. It can build trust, show respect, and enhance relationships. The major drawback, however, is
that it may appear to be condescending toward the other party or cause the other party to feel
uncomfortable because of an easy win.

Avoidance (lose-lose):

This style is the “I lose, you lose” model. This style is used when both outcome and relationship are
not important. Negotiations can be costly in terms of time and energy. Do the costs of negotiation
outweigh the likely outcome and relationship returns? If not, it may be preferable not to negotiate at
all. This strategy is implemented by withdrawing from active negotiations or by avoiding the
negotiations entirely. An avoidance style is used infrequently in negotiating and is often used when
the negotiation concerns a matter that is trivial to both parties.

The following graph illustrates the importance of relationship and outcome, with high and low
priorities represented for each. The vertical axis represents the degree of concern for the relationship
and the horizontal axis represents the degree of concern for the outcome.

UNIT-5

 MEDIATION
  MEANING

 QUALITIES OF MEDIATOR;

 ROLE OF MEDIATOR,

 ESSENTIAL CHARACTERISTICS OF THE MEDIATION PROCESS

 VOLUNTARY, COLLABORATIVE, CONTROLLED, CONFIDENTIAL,

INFORMAL, IMPARTIAL & NEUTRAL, SELF-RESPONSIBLE,

 DIFFERENT MODELS OF MEDIATION,

 CODE OF CONDUCT FOR MEDIATORS.

Mediation involves a determination of interests- the interests of the

parties. A concept frequently not found in the litigator’s lexicon,
interests are the needs, wants and desires that are importance to the
parties-the answer to the question ‘what is this dispute really all about
for you?’ to get there, mediation provides an environment for
principled negotiation. These negotiations may at times becomes may
at times become troubling, but with the mediator’s help the parties
keep moving forward.
Principled negotiations stimulate exploration of settlement
alternatives and an opportunity to evaluate those alternatives,
weighing them against the likely outcome of going to trial and
viewing proposals through the lenses of reality.
Mediation –compared to litigation, trial and appeal- is a veritable
bullet train to certainty and finality. If the dispute settles at the
mediation, it settles on a basis acceptable to the parties, the specter of
trial is removed, and the threat of being tied up on appeal is
eliminated.
Definition
Mediation is a course of action by which disputing parties use the
assistance of a neutral third party to act as a mediator a facilitating
intermediary-who has no authority to make any binding decisions, but
who uses various procedures, techniques and skills to help the parties
to resolve their dispute by negotiation and by agreement without
adjudication.
It is a non-binding procedure in which a neutral third party assists the
disputing parties in mutually reaching an agreed settlement of the
dispute.
MEDIATION :- IT STAGES.
The process of mediation can be easily divided into 10 stages as given
follows;
STAGE 1:- Selection of Mediation/Conciliation Centre.
STAGE 2:- Execution of Contract in mediation/ conciliation
STAGE 3:- Furnishing of information and correspondence
STAGE 4:- Meeting of parties;
STAGE 5:- Familiarizing mediator with facts about dispute
STAGE 6:- Gathering information
STAGE 7:- Faciiaating Negotiations,
STAGE 8:- A stage of Impase;
STAGE 9:- Termination of mediation or achieving agreement
STAGE 10:- Post-termination stage.
QUALTIES OF MEDIATOR
The mediator is expected to have the qualities of patience, sincerity,
maintenance, of confidentiality of the dispute and wisdom.
Henry Brown and Arthur Marriott have identified following traits and
qualities which a mediator should possess to succeed in his efforts in
achieving a settlement of a dispute.
1. UNDERSTANDING.
The ability to understand with sensitivity the issues, often complex,
and the concerns and aspirations of the parties, explicit and implicit.
2. JUDGMENT
A sound judgment, a judicious and rational approach and shrewd
commonsense.
3. INTUITION
An ability to sense information without any rationalization, obtained
through a perceptiveness to verbal and other signals received,
4. CREATIVITY
A creative and inventive response to the problems of the case,
generating options and encouraging the parties to explore ideas,
5. TRUST WORTHINESS.
Integrity couples with a sense that trust can be reposed in the
mediator.
6. AUTHORITY
A firmness of touch in managing the process effectively and
constructively.
7. EMPATHY
An ability to relate the parties in a sympathetic way and to reflect an
awareness of and respect for their concerns.
8. CONSTRUCTIVENESS.
A Practical turn of mind that sees positive possibilities and can
motivate the parties to deal constructively with settlement options.
9. FLEXIBILITY
An ability to cope with change, with unusual, ideas and solutions and
with rapidly varying circumstances.
10. INDEPENDENCE
It includes ability to work autonomously, without support or
feedback, and to maintain a neutral and independent stands.

ADVANTAGES OF MEDITATION.
1. Mediation deals with the root causes of the problems or conflicts.
Settlement through mediation is lasting because the parties are
encouraged to think about the basic reasons of dispute.
2. Mediation improves the communicative capacity of the
disputants.
3. Mediators are not strangers like courts but are friends and the
disputes are settled in a friendly manner and the disputants part as
friends.
4. Mediation is neither coercive nor threatening.
5. Mediation is voluntaristic as it allows the disputants to solve their
problem themselves.
6. Mediation is means reducing tension in the community.
Mediators attempts to reduce social conflict before it escalates
into violence. Mediators sometimes suggest the future course of
action to reduce tension. Mediators helps the parties to reshape
their thinking about each other and to recognize ways to minimize
their natural hostility. However at times it is not feasible to
mediate cases between parties unequal in power.
 7. Mediators are not professionalized and do not require long
training as is the case of judges, lawyers, court officials and
police.
8. Mediation is speedier, less costly and fairer than adjudication
because the procedure is less cumbersome and the chances of
misleading the mediator are remote.
Since the parties themselves evolve a solution to their dispute,
the decision is normally fairer and satisfactory.
Mediation can reduce court congestion and delay if all the cases
not appropriate for court process are directed to mediation
centres.
Mediation centres can relieve courts from handling minor
problems and leave them free to deal with more serious cases.
9. Unlike Judges, mediators represent the society and share its
values.
Mediation is more suitable for people, than litigation. The judge in
litigation deals with the case in an impersonal and detailed manner.
He depends upon material evidence and proofs and on rigid rules.
He deals with disputants mostly on papers and imposes a solution that
rests on command of authority.
The mediator on the other hand depends on his personal relations
with, and personal influence on, the disputants and on his own
information and personal observation of dispute and circumstances.
A mediator is more dynamic than the Judge and can persuade both
parties to give concessions and reach compromises. The role of the
mediator is to identify common ground of interest between the parties
by identifying and pointing out the weaknesses in each side’s
position. He also tries to understand and deal with the assumptions
and perceptions on each side.
Once this is done, then the parties are able to focus on the issues
which will bring about the settlement.

10. The most important thing is that there is no ‘winner’ or ‘looser’

as in the court decisions. Both parties are always winners, at least
in terms of saving, time, money and the hardships of litigation.
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ROLE OF THE MEDIATOR

Abraham Lincoln once said, “Discourage litigation. Persuade your

clients to compromise, whenever you can. Point out to them the
nominal winner is often a real loser- in fees, expenses and waste of
time. As a peace maker, the lawyer has a superior opportunity of
being a good person”.

The mediator is, however, typically a trained professional who has

extensive qualifications that allow her to foster settlement and assist
the parties in negotiating a settlement that is tailored to meet each
side’s needs

The principal role of the mediator is to facilitate communication

between the parties in conflict with a view to helping them reach a
voluntary resolution to their dispute that is timely, fair and cost-
effective. Although the mediator manages the meeting and is in
charge of the proceedings, he/she should not impose solutions or
decisions and has no power to force a settlement. A solution should
only be reached by agreement between the parties. They are
responsible for the ultimate resolution of the dispute. Furthermore, a
mediator has no right or duty to provide legal advice to the parties
 even if he/she happens to be a lawyer. The parties should seek legal
advice solely from their legal counsel. The mediator, however, may
raise issues and help parties explore options.
Setting up the first meeting

Following his/her appointment, the mediator will contact the parties

or their counsel to fix a date for the holding of the first meeting.

Mediation parties may be assisted by an advocate, legal procurator or

any individual designated by them whether before or during the
mediation proceedings.

First meeting and review of mediation procedures

At the first meeting, the mediator will:

 request the parties to sign, jointly with him, the Centre’s Model
Mediation Agreement setting out the terms and framework for the
conduct of the mediation process;
 give a brief description of his role and that of the parties and explain
the mediation process with particular reference to the statutory
provisions regulating confidentiality;
 discuss with the parties whether they agree to give their consent in
writing authorizing him/her to hold separate meetings with each of
them on an individual basis;
 Invite the parties to give a brief account of the facts of the dispute
from his/her perspective. This may be done either in joint session or it
may be done privately with the mediator provided the parties would
have agreed to hold separate meetings;
 Ask questions to clarify certain matters for the purpose of assisting
the parties overcome any obstacle and explore options for settlement.
ESSENTIAL CHARACTERISTICS OF THE MEDIATION
PROCESS
 involves two or more parties in dispute over one or more
contract issue(s)
 entirely voluntary for non-litigious disputes
 non-coercive, in that the mediator does not decide for the
parties, but rather encourages them to agree to a settlement
 'assisted negotiation', the third party neutral (mediator) remains
impartial
 mediator may provide relationship-building or procedural
assistance and options which had not been previously
contemplated by the parties
 mediator encourages parties to explore alternate
possibilities/options in settling the dispute
 more informal and relaxed than that of a court or an arbitration
 rules are those which are agreed to between the parties
 confidentiality is an important ingredient of mediation
 all communications are without prejudice and cannot be used as
evidence in subsequent arbitration or court action (those
normally available through Access to Information and Privacy
(ATIP) remain available)
 each of the disputing parties control the disclosure of
information to the mediator and what information can be
disclosed to the other parties

Voluntary - unless specifically provided in an agreement, parties enter

mediation voluntarily and can withdraw at any point during the
process;
Voluntary process to reach a mutually acceptable settlement of issues
in dispute. Voluntary generally refers to both freely chosen
participation and freely made agreements. Parties are not forced to
mediate and settle by either an internal or external party to a dispute.
There is no legal liability to any party refusing to participate in a
mediation process.
Voluntary participation does not however mean that there may not be
pressure to try mediation. Other disputants or external figures, such as
friends, colleagues at work, constituents, authoritative leaders, or
judges, may put significant pressure on a party to try negotiation with
the assistance of a mediator. Some courts in family and civil cases
rule that parties must make a good faith effort in mediation before the
court will be willing to hear the case. You can leave at any time for
any reason, or no reason.
Collaborative - As no participant in mediation can impose anything
on anyone, everyone is motivated to work together to solve the issues
and reach best agreements.
Controlled - Each participant has complete decision-making power
and a veto over every provision of any mediated agreement. Nothing
can be imposed on you.
Confidential - Mediation is generally confidential, as you desire and
agree, be that by statute, contract, rules of evidence and/or privilege.
Mediation discussions and all materials developed for a mediation are
generally not admissible in any subsequent court or other contested
proceeding, except for a finalised and signed Mediated Agreement.
The mediator is obligated to describe the extent of mediation
confidentiality and exceptions to that confidentiality. The extent of
confidentiality for any "caucus meetings" (meetings between the
mediator and individual parties) should also be defined.
Informed - The mediation process offers a full opportunity to obtain
and incorporate legal and other expert information and advice.
Individual or mutually acceptable experts can be retained. Expert
advice is never determinative in mediation. The participants always
retain decision-making power. Mediators are bound to encourage
parties to obtain legal counsel and to advise them to have any
Mediated Agreement involving legal issues reviewed by independent
legal counsel prior to signing. Whether legal advice is sought is,
ultimately, a decision of each mediation participant.
Impartial, Neutral, Balanced and Safe - The mediator has an equal and
balanced responsibility to assist each mediating party and cannot
favour the interests of any one party over another, nor should the
mediator favour a result in the mediation. The mediator is ethically
obligated to acknowledge any substantive bias on issues in discussion.
The mediator's role is to ensure that parties reach agreements in a
voluntarily and informed manner, and not because of coercion or
intimidation.
Self-Responsible and Satisfying - Based upon having actively
participated in voluntarily resolving issues, participant satisfaction
and the likelihood of compliance are found to be elevated through
mediation compared to court options.

VOLUNTARY, COLLABORATIVE, CONTROLLED,

CONFIDENTIAL, INFORMAL, IMPARTIAL & NEUTRAL,
SELF-RESPONSIBLE,

Mediation is a typical technique or strategy used to settle numerous kinds of disputes, from issues in
the classroom to issues in the workplace and numerous other cases too.

At the point when parties involved in a serious conflict or matter need to dodge a court fight, there are
types of mediation can be a viable option. In mediation, a well trained mediator attempts to help the
parties to discover common ground utilizing principles of collaborative, common and mutual-gains
negotiation. We in general think mediation forms are all alike, yet actually, mediators follow various
methodologies or approaches relying upon the type of conflict they are managing or dealing with.
Before choosing a mediator, consider the different styles and kinds of mediation that are accessible to
help settle or resolve conflict.

Types of Mediation:

 Evaluative Mediation: Evaluative Mediation is often thought of as being more "involved" in

terms of the mediator suggesting or proposing practical results and effectively attempting to
bring the parties to a resolutions. An unskilled evaluative mediator risks simply just telling
individuals what to do and calling it mediation. Mediation must abstain from turning out to be
adjudication, arbitration or celebrated legalized settlement. The draft Mediation and
Conciliation Bill, 2010 may have the impact of a discernment emerging that Mediation will
be "forced" in light of the fact that Judges and County Registrars will have the option to
arrange it in specific or certain circumstances and conditions. This may lead to an idea that
there will be another market around solving disputes; there will – and the new market will
require new instruments. The old devices utilized or used in suit and legal settlement won't
work. Mediation is not adjudication.

 Facilitative Mediation: In facilitative mediation or traditional Mediation, an expert or a

professional mediator attempts to facilitate negotiation agreement between the parties in
dispute. Rather than making recommendations and suggestions or forcing a decision, the
mediator urges and encourages disputants to arrive at their own voluntary solutions by
investigating each other's more profound interests. In facilitative mediation, mediators tend in
general keep their own perspectives with respect to conflict hidden.

 Court-Mandate Mediation: In spite of the fact that mediation is regularly characterized as a

totally deliberate procedure, it very well may be commanded by a court that is keen on
advancing a rapid and cost-productive settlement. At the point when parties and their lawyers
are hesitant to take part in mediation, their chances of settling through court-mandate
mediation are low, as they may simply be making a halfhearted effort. But, when parties on
both the sides see the advantages of participating in the process, settlement rates are much
higher.

 Transformative Mediation: In transformative mediation, mediators focus on engaging and

empowering disputants to resolve their conflict and urging them to perceive each other's
needs and interests. First described by Robert A. Baruch Bush and Joseph P. Folger in their
1994 book The Promise of Mediation, transformative mediation is established in the custom
of facilitative mediation. At its generally yearning, the procedure intends to change the parties
and their relationship through the way toward procuring the abilities they have to roll out
useful improvement.

 Med-Arb and Arb-Med mediation: In Med-arb, an mediation-arbitration hybrid, parties first

reach agreement on the terms of the procedure itself. Unlike in many mediations, they
commonly agree in writing that the result of the procedure will be official. Next, they attempt
to negotiate a resolution to their dispute with the assistance and help of a mediator.
In arb-med, another among the kinds of mediation, a trained, impartial and neutral third party hears
disputants' proof and declaration in an arbitration; composes an honor yet keeps it from the parties;
attempts to intervene the parties' contest; and unlocks and gives her recently decided restricting honor
if the parties neglect to agree, composes Richard Fullerton in an article in the Dispute Resolution
Journal.

Mediation is a tool that can be used across fields to assist individuals with settling and resolving
conflicts. Mediation can occur in place of going to court (yet at the same time associated with the
courts), in workplace, in community settings, between relatives and family members, etc. Sometimes
mediation skills are used to address huge and complex issues including environmental, political, and
educational challenges or difficulties.