Sem 2 Proj
Sem 2 Proj
Sem 2 Proj
(Synopsis)
1. Research Questions: The major questions dealt in the paper are pertaining to the
arbitrational mechanisms to deal with the situation of contractual obligations. The main
focal point of the paper would deal with two of them, i.e Arbitration and Mediation. The
paper would also deal with the implication of such mechanisms post-COVID’19.
2. Objectives: Basic objective behind the research paper is to deeply understand the
Alternative Dispute Redressal System in India and beyond in context of contractual
obligation. It is to also analyse as to how these mechanisms are developed and explored
post-COVID era,
3. Relevant Literature Sources: Major sources that would be used in lieu to prepare for
this research paper are as follows:
• Web Materials,
• Incorporated Legislations,
• Legal news articles pertaining to the usage of ADR Mechanisms,
• Books based on Contracts Act or Indian Contracts Act, 1872.
INDEX OF AUTHORITIES
Cases
1. Energy Watchdog v. Central Electricity Regulatory Commission, 2017 Latest Caselaw 307
SC........................................................................................................................................ 6
2. Halsey v Milton Keynes General NHS Trust, [2004] EWCA Civ 576. ............................. 8
3. Ohpen Operations UK Ltd v. Invesco Fund Managers Ltd, [2019] EWHC 2246 (TCC). . 6
4. Standard Retail Pvt. Ltd. v. M/s. G. S. Global Corp & Ors, (No 404 of 2020). ................. 6
5. Suo Motu Writ, (CIVIL) NO.5/2020. ............................................................................... 10
Statutes
Introduction
Before analysing the effects of ADR mechanisms, especially Arbitration and Negotiation, the
paper would briefly describe what is an Alternative Dispute Redressal and how it works on the
very basic level:
Alternative Dispute Resolution ("ADR") refers to any means of settling disputes outside of the
courtroom. ADR typically includes early neutral evaluation, negotiation, conciliation, mediation,
and arbitration. As burgeoning court queues, rising costs of litigation, and time delays continue
to plague litigants, more countries and legal institutions residing under it have begun
experimenting with ADR programs. Some of these programs are voluntary; others are
mandatory.
The Code of Civil Procedure, 19081 has laid down those cases must be encouraged to go in for
ADR under section 89(1). Under the First Schedule, Order XXXII A, Rule 3 a duty is cast upon
the courts that it shall make an endeavour to assist the parties in the first instance, in arriving at a
settlement in respect of the subject matter of the suit. Calcutta High Court has played a
significant role in the development of arbitration as an ADR mechanism in India. It has often
upheld the requirement of preventing unnecessary court intervention in the enforcement of
arbitral awards.
1
The Code of Civil Procedure § 89(1) (1908).
2
Arbitration and Conciliation Act, (1996).
enforcement of foreign arbitral awards as also to define the law relating to conciliation and for
matters connected therewith or incidental thereto.” Awards are basically the decisions passed by
the arbitration tribunals after the conduct of the proceedings of any case.
1. Ad Hoc Arbitration: one which is not administered by an institution and therefore, the
parties are required to determine all aspects of the arbitration.
3. Statutory Arbitration: When a law specifies that if a dispute arises in a particular case it
must be referred to arbitration, the arbitration proceedings are called “statutory
arbitration”.
4. Fast track arbitration: Fast track arbitration is a time-bound arbitration, with stricter
rules of procedure, which do not allow any laxity for extensions of time, and the resultant
delays, and the reduced span of time makes it more cost effective.
Most Commercial Contracts will have an ADR (Alternative Dispute Resolution) clause that
requires the parties to engage in non-Court methods to resolve a dispute rather than launching
straight into Court action. The Courts have been taking a more robust approach in making it clear
to parties that such clauses should be followed and are not optional.
For the Court to enforce the use of such a clause, it must be satisfied that:
1. The non-Court method of ADR is clear and certain in terms of its process; and
2. The administrative mechanism for selecting the party to resolve the dispute must be clear.’
ADR clauses are kept in most of the commercial contracts to uphold the privity of the contract
and to keep the arbitrary redressing as smooth as possible in case of a dispute
In Ohpen Operations UK Ltd -v- Invesco Fund Managers Ltd [2019] EWHC 2246 (TCC)3 the
Court was clear that the parties had to use the ADR clause in the contract that required them to
engage in Mediation before issuing Court proceedings.
Post COVID: Clauses such as force majeure, frustration of contracts has been raised during and
post the pandemic and the principle of unforeseeable circumstances has been invoked in plenty
of contractual obligations, that are mostly commercial in nature. These contractual disputes are
also advised to be dealt using the ADR mechanisms, especially when the physical hearings of the
courts are not functioning to its extent in these times. These ADR mechanisms has helped
numerous aggrieved parties to settle claims, especially when it comes to the principle of force
majeure. Parties in case of delays in court proceedings are opting for Alternative Dispute
Redressal Mechanisms by using clauses in commercial contracts to empower arbitrators to adapt
in these new and tiring conditions.
However, in the cases such as that of Standard Retail Pvt. Ltd. v. M/s. G. S. Global Corp & Ors
(No 404 of 2020)4, the Bombay High Court explicitly mentioned that ‘lockdown’ cannot be held
as an excuse for the petitioners to not perform their contractual obligations. Similarly, in Energy
Watchdog v. Central Electricity Regulatory Commission5, Supreme Court clearly laid down that
only those events, which are explicitly included in the contract, can excuse a party from
performance. Meaning, that a force majeure clause, always, will be strictly interpreted.
Hence, taking the remedies and fast-paced settlement procedure established by the ADR
mechanism has been promoted even by the High Courts of our country,
Mediation is a form of dispute resolution, found outside the adjudicative space of the courtroom
or tribunal, where parties in dispute or conflict utilise the assistance of a third-party neutral to
attempt to resolve their dispute. It is different from other forms of ‘alternative’ dispute resolution
– such as negotiation, conciliation, arbitration, and early-neutral evaluation – in that the third-
3
Ohpen Operations UK Ltd v. Invesco Fund Managers Ltd, [2019] EWHC 2246 (TCC).
4
Standard Retail Pvt. Ltd. v. M/s. G. S. Global Corp & Ors, (No 404 of 2020).
5
Energy Watchdog v. Central Electricity Regulatory Commission, 2017 Latest Caselaw 307 SC.
party neutral, the mediator, is present and assigned a number of qualities that are not as evident,
or strictly adhered to, in the other forms of dispute resolution.
Many commentators and adherents to traditional mediation practices maintain that a mediation is
comprised of five distinct philosophies (confidentiality, voluntariness, empowerment, neutrality,
and a unique solution), and that without these core components the mediation is impoverished, or
not a true mediation. We explore these philosophies further in Chapter 3.
Why is mediation so important? Why do we use mediators and why do we mediate? Simply,
many disputes cannot be resolved by the parties involved. This may be because of impasses to
communication as a result of power or cultural differences between the parties. Impasses may
also be due to historical factors such as a previous animosity and distrust between the parties or
the absence of a relationship between the parties prior to the dispute arising. A mediator is
someone who is able to assist the parties who are ‘stuck’ in their dialogue with each other to get
together, communicate in a relatively polite and semi-structured way, and exchange information.
Process of Mediation
The basic motive of mediation is to provide the parties with an opportunity to negotiate, converse
and explore options aided by a neutral third party, to exhaustively determine if a settlement is
possible. Mediation is negotiation carried out with the assistance of a third party. The mediator,
in contrast to the arbitrator or judge, has no power to impose an outcome on disputing parties.
The Village Panchayats and the Nyaya Panchayats are good examples for this. A brief perusal of
the laws pertaining to mediation highlights that it has been largely confined to commercial
transactions. The Arbitration and Conciliation Act, 1996 is framed in such a manner that it is
concerned mainly with commercial transactions that involves the common man rather than the
common man’s interest.
We are living in some tiring and testing times when COVID’19 has restricted our option to
physically settle court cases. There is, however, another tool in the dispute resolution armoury,
which is resistant to COVID-19, and perhaps could even thrive on it. That is mediation, which is
the polar opposite of the court process. It tries to achieve consensus between parties to come to
an amicable agreement, rather than the win-lose verdict of the adversarial system. At its core is
confidential discussion between mediator and parties, and between mediator and individual
parties. It focuses on uncovering interests and eliciting suggestions from the parties themselves
for practical solutions to end the dispute. As much as the essential attribute of the formal justice
system is the open courtroom hearing, mediation’s essence is closed door communication with
its guarantee of confidentiality. And, important in the present context, it has an inherent
flexibility and adaptability. So much so that the courts of the country has propagated the use of
mediation process to settle down claims. With the number of pending litigations before it is
touching 2.29 lakh, the Calcutta High Court is stressing on alternative dispute redressal
mechanism like mediation to reduce the backlog.
The High Court is encouraging litigants involved in various disputes, from commercial to
matrimonial issues, to go for mediation to resolve their differences, instead of fighting their cases
in the courts that may take a long time before any outcome is reached.
As Justice Harish Tandon of the Calcutta High Court put it, “Mediation is an effective tool for
redressal of disputes between contesting litigants, where parties can settle their differences in a
win-win situation.” However, the courts cannot compel parties to meditate given that they have a
reasonable assertation for asking such exemption. This verbatim was given in an International
Case of Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576.6
For the viability of this thesis, Contracts that were made pre/post/during COVID, that mentions
a date of performance effected due to the implications caused by Coronavirus are termed as the
COVID Contracts.
The ramifications of COVID-19 have made holding in-person hearings difficult. In response to
this problem, virtual hearings have emerged as an increasingly popular means of progressing
disputes, especially in international arbitration.
6
Halsey v Milton Keynes General NHS Trust, [2004] EWCA Civ 576.
As a party led, consent-based method of dispute resolution, international arbitration has been
well placed to adapt quickly and ensure that parties wishing to hold substantive hearings
remotely are able to do so as efficiently and securely as possible.
Arbitral institutions have produced guidance setting out how the relevant institutional rules can
be interpreted to permit virtual hearings;1 and a number of institutions and other arbitral bodies
have also issued helpful guidance on conducting a virtual hearing. Now as the number of COVID
Contracts has increased and the cases related to ‘force majeure, Impossibility Clauses’ has
arisen, Judges across the world has asked parties to opt for ADR through ‘Virtual Hearings.’
Virtual hearings are the court-monitored or arbitration institution monitored virtual rooms to
discuss and deliberate of negotiations and compromising factors in a dispute of performance-
based clause in COVID Contracts. As much convenience that has been provided by the virtual
platform, there are three major discrepancies showed in such hearings. These three are:
1. Hearing length: Anyone who has participated in a lengthy videoconference will attest that
it is more difficult to maintain focus than it is when meeting in person. Delays and
disruptions, possibly arising from technology failures, may be amplified over a prolonged
period.
2. Availability of internet: A fast, reliable and secure internet connection for each
participant is a necessity. While this is ordinarily taken for granted in many parts of the
world, internet performance is not guaranteed during this pandemic as telecommunication
networks come under increasing strain.
3. Independent observer: Ideally an independent observer should be present at the location
of each witness to ensure that the witness is properly sworn in and that they are
comfortable using the technology. This might not be possible for whatever reason,
including if a witness is required to isolate or quarantine.
Conclusion
The pandemic has engulfed over 100 countries and restoration of normalcy appears to be a
distant dream in India. But unconventional times warrant unconventional solutions. Realizing
this, RBI endorsements followed by the recent Supreme Court judgment Suo Motu Writ 7(CIVIL)
NO.5/2020 provides a conducive testing ground for modern technologies in courtrooms. It is
necessary that technologies be effectively implemented in regular course of business and move
away from SC's "Urgent only" requirement for using video conferencing and delve into full
swing application of online proceedings for all cases and promote ONLINE DISPUTE
REDRESSAL, wherever applicable. Therefore, the COVID-19 crisis has catapulted an archaic
industry such as law to adopt technology at a never-seen-before pace and as believed by many is
the way forward.
7
Suo Motu Writ, (CIVIL) NO.5/2020.