NATIONAL AND INTERNATIONAL

INITIATIVE

Lecture by- Dr. Saltanat Sherwani

INTERNATIONAL INITIATIVES:

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.

In the late 1980s and early 1990s, many people became increasingly
concerned that the traditional method of resolving legal disputes in the
United States, through conventional litigation, had become too expensive,
too slow, and too cumbersome for many civil lawsuits (cases between
private parties). As of the early 2000s, ADR techniques were being popular,
as litigants, lawyers and courts realized that these techniques could often
help them resolve legal disputes quickly and cheaply and more privately
than court process also ADR approaches are being more creative and more
focused on problem solving than litigation through court.

International arbitration has risen in popularity over the last 50 years.

WORLDWIDE

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.
ADR has given fruitful results not only in international political arena but
also in international business world in settling commercial disputes among
many corporate houses for e.g. Settlement of a longstanding commercial
dispute between General Motors Co. and Johnson Matthey Inc., which
was pending in US District Court since past few years.

UNCITRAL [United Nation Commission on International Trade

Law] model on INTERNATIONAL COMMERCIAL ARBITRATION.

The United Nations Commission on International Trade Law is a subsidiary

body of the U.N. General Assembly responsible for helping to facilitate
international trade and investment.

The biggest stepping stone in the field of International ADR is the adoption
of UNCITRAL [United Nation Commission on International Trade
Law] model on INTERNATIONAL COMMERCIAL ARBITRATION.
An important feature of the said model is that it has harmonized the concept
of arbitration and conciliation in order to designate it for universal
application. General Assembly of UN also recommended its member
countries to adopt this model in view to have uniform laws for ADR
mechanism.

The Arbitration and Conciliation Act, 1996 has been enacted to

accommodate the harmonisation mandates of UNCITRAL Model.

Other important international conventions on arbitration are:-

• The Geneva Protocol on Arbitration clauses of 1923.

• The Geneva Convention on the execution of foreign award,1927
• The New York Convention of 1958 on the recognition and
enforcement of foreign arbitral award.
Another step in strengthening the international commercial
arbitration is the establishment of various institutions such as:

• ICC – International Court of Arbitration of the International

Chamber of Commerce.
• Arbitration and mediation centre of World Intellectual Property
Organization.
• AAA – International centre for dispute resolution of the American
Arbitration Association and others have explored new avenues in
the ADR field.
Alternate Dispute Resolution Mechanism.

NATIONAL

Alternate Dispute Resolution system is not a new experience for the people
of this country also. It has been prevalent in India since time immemorial.
Legal history indicates that down the ages man has been experimenting
with procedure for making it easy, cheap, unfailing and convenient to
obtain justice. ADR system is not new in India, the Panchayat System
was prevalent in India from centuries, which in reality is not very different
from modern ADR system. It is a process by which a neutral third party
usually a person of higher stature and reputation deemed to be unbiased
during adjudication will be rendering legally binding decision.
Unfortunately, this system has lost its credibility with time.

ADR UNDER DIFFERENT INDIAN STATUTORY LAWS

(A)INDIAN ARBITRATION ACT, 1899:

This Act was enacted in the year 1899. The act was based on the British
Arbitration Act, 1889. Although it was effective only in presidency towns
such as Calcutta, Madras and Bombay.
(B)THE ARBITRATION ACT, 1940:
India became a signatory to the Geneva Protocol on Arbitration Clauses,
1923 (1923 Protocol), and the Execution of Foreign Arbitration Awards,
1927 (Geneva Convention of 1927) in the year 1937. In result of the
reformation, The Arbitration Act 1940 was enacted. It was based on the
British Arbitration Act, 1934. It came into force on the 1 st day of July,
1940.

(C)ARBITRATION & CONCILIATION ACT, 1996

129th Law Commission Report21 in the year 1988 advocated the need for
amicable settlement of disputes between parties. The Committee
submitted that there is a need for decentralisation of the system of
administration of justice by:-
(i) Establishing other tiers or systems within the judicial hierarchy to
reduce the volume of work in the Supreme Court and the High
Court.
(ii) Establishing, extending and strengthening in rural areas the
institution of Nyaya Panchayats or other mechanism for resolving
disputes.
Hence, to improvise the 1940 Act, Government came up with “The
Arbitration & Conciliation Act, 1996”. This act was made to
consolidate and amend the law relating to domestic arbitration,
international commercial arbitration and enforcement of foreign arbitral
awards as also to define the law relating to conciliation.
Law Commission Report 245th titled “Arrears and Backlog:
Creating additional Judicial (WO) man power” says that huge backlog of
cases are only due to current judges strength which is inadequate. The
system is not being able to keep pace with the new cases being instituted,
and is not being able to dispose of a comparable no. of cases.
Further, Law Commission of India under the chairmanship of Justice AP
Shah had constituted an expert committee to work on the 246th Report
titled “Amendment to Arbitration and Conciliation Act. 1996.” It
proposed several changes to the Arbitration and Conciliation Act 1996.

(D)ARBITRATION & CONCILIATION (AMENDMENT) ACT, 2015

In 2015, Government came up with the Arbitration and Conciliation
(Amendment) Act, 2015. There was a need to amend the act of 1996
in order to make the arbitration in India more popular, cost effective
method of dispute resolution. The main objective was to shift the people
from the court’s tyrannical method of dispute resolution to the speedy
justice of Arbitration Tribunal. The Act came into force on October 23,
2015.
The purpose was also to make the country’s dispute resolution
mechanism in conformity with the International standards.
Changes which were brought up by the Act:-
Section 11 of the Act allowed the judicial appointment of arbitrators
which shall be final and would not be subject to appeal. The application of
appointment of Arbitrator shall be disposed of within 60 days.
Section 17 of the Act grants power to the arbitral tribunal to provide all
kind of interim measures which the Court is empowered to grant under
the Section 9 of the Arbitration Act.
Section 34 provides that for challenges to arbitral award to be disposed
of by courts within a year.
In case of International Commercial Arbitration, it gives the power to
appoint an arbitrator to the Honourable Supreme Court of India.

(E)THE ARBITRATION & CONCILIATION (AMENDMENT) ACT, 2019

Sub- section 3A is added in the Section 11 of the Act. It gives power to
the Supreme Court and the High Court to designate, arbitral institutions,
from time to time, which have been graded by the Council under section
43-I, for the purposes of this Act. Chief Justice of the concerned High
Court is allowed to review the panel of arbitrators. It is an irony that point
4(v) of Objects & Reasons, Arbitration & Conciliation Act restricts the
supervisory role of Courts in the arbitration process while Section 11 of
the Act demands the procedure for appointment of arbitrators. The
procedure for appointment of Arbitration has never been free of judicial
intervention.
The Arbitration & Conciliation (Amendment) Act 2019 (Amendment Act
2019) aims to diminish the intervention of Court in the appointment of an
Arbitrator of Arbitration Tribunal.
In the case of Duro Felguera SA v Gangavaram Port Ltd. (2017) 9
SCC 729 , it was held that after the amendment, all that the Courts need
to see is whether an arbitration agreement exist or not. Not more or less
than it.
(F) THE CODE OF CIVIL PROCEDURE, 1908
The provision under Section 89 is an attempt to bring about resolution of
disputes between parties, minimize costs and reduce the burden of the
Courts. It came into being in its current form on account of the
enforcement of the CPC (Amendment) Act, 1999 with effect from
1/7/2002. Earlier it was repealed by Act 10 of 1940. Section 89 of the
Code talks about the settlement of disputes outside the Court. It
empowers the Civil Courts to refer those matters to alternate dispute
resolution methods which may be acceptable to the parties.
Clause 1 of the Section 89 lays down the various mechanism of Alternate
Dispute Resolution. It says that if 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 observations of the parties, the Court may
reformulate the terms of a possible settlement and refer the same for:-

1. Arbitration- It utilizes the help of a third party. After hearing both

parties, the third party issues a decision that the disputes parties may
have agreed to be binding or nonbinding. If parties agree, the decision
can be enforced a Court.
2. Conciliation- The parties in a conciliation process seek to reach an
amicable dispute settlement with the assistance of a Conciliator.
Conciliation is a voluntary proceeding.
3. Judicial settlement including settlement through Lok Adalat: -
The Legal Service Authorities Act, 1987 brought another mechanism
under ADR with the establishment of Lok Adalat system. The Court shall
refer the matter to the Lok Adalat in accordance with the provisions of
sub-section (1) of section 20 of the LSA Act, 1987 and all other provisions
of that Act shall apply in respect of the dispute so referred to the Lok
Adalat.
4. Mediation: - It is one of the options for resolving disputes. A neutral
third party helps parties resolve their dispute. The mediator has no
decision-making authority and cannot tell the parties what to do. The job
of a mediator is to help the parties understand their interest, to formulate
creative ideas and to facilitate the negotiation.
JUDICIAL EFFORT TOWARDS ADR IN INDIA/
IMPORTANCE JUDGEMENTS ON ADR
(A)SALEM BAR ASSOCIATION V. UNION OF INDIA (WP (civil) 496
of 2002) In this case SC said that the main reason why Sec. 89, CPC has
been inserted is to ensure that all cases which are filed in court need not
necessarily to be decided by the Court itself. Seeing the delay in
judgment and limited availability of judges, it has now become important
to resolve disputes by alternative dispute resolution mechanisms. The
concept of ADR has been successful in certain countries to such a extend
that over 90 percent of the cases are settled out of the court.

(B) B.P. MOIDEEN SEVAMANDIR & ANR VS. A.M. KUTTY HASSAN
(CIVIL APPEAL NOS. 7282-7283 OF 2008) Court interpreted the
meaning of Lok Adalat in this case. It was held that:- “Lok Adalat is an
alternative dispute resolution mechanism. Having regard to Section 89 of
Code of Civil Procedure, it is the duty of court to ensure that parties have
recourse to the Alternative Dispute Resolution (for short 'ADR') processes
and to encourage litigants to settle their disputes in an amicable manner.
But there should be no pressure, force, coercion or threat to the litigants
to settle disputes against their wishes. Judges also require some training
in selecting and referring cases to Lok Adalats or other ADR process.” The
court further held that "If parties have not arrived at a settlement before
Lok Adalat, they can file a compromise Petition in court.

(C) ONGC V. COLLECTOR OF CENTRAL EXCISE34 (ONGC II) 1995

(79) ELT 117 Tri Del In this case it was held that public undertaking to
resolve the disputes amicably by mutual consultation in or through or
good offices empowered agencies of govt. or arbitration avoiding
litigation.

(D) CHIEF CONSERVATOR OF FORESTS V. COLLECTOR (2003) 3

SCC 472 It was said that state/union govt. must evolve a mechanism for
resolving interdepartmental controversies- disputes between departments
of Government cannot be contested in court.

(E) SUNDRAM FINANCE LTD VS. NEPC INDIA Appeal (civil) 141-
143 of 1999 Supreme Court said that the 1996 Act is different from that
of 1940 act. Some provisions of 1940 act lead to some misconstruction
and so the Act of 1996 was enacted or rather repealed. In order to get
help in construing these provisions made in Act of 1996, it is more
relevant to refer to the UNCITRAL Model Law besides the Act of 1996
rather than following the provisions of the Act of 1940.

(F) Guru Nanak Foundation V/S Rattan & Sons court observed that
Interminable, time consuming, complex and expensive court procedures
impelled jurists to search for an alternative forum, less formal, more
effective and speedy for resolution of disputes avoiding procedure
claptrap.

INFRASTRUCTURAL PROVISIONS OF ADR IN INDIA

Several statutory and infrastructural provisions have been made in the

country to make room for the ADR mechanism and its institutions. One
major step in the growth of ADR services in India is the establishment of
institutions such as:

• IIAM – Indian Institute of Arbitration and Mediation

• ICA – Indian Council for Arbitration
• Lok Adalats
• ICADR – International Centre for Alternate Dispute Resolution.