Alternate Dispute Redressal Mechanism · Alternate Dispute Redressal Mechanism -Lok Adalats,...
Transcript of Alternate Dispute Redressal Mechanism · Alternate Dispute Redressal Mechanism -Lok Adalats,...
Alternate Dispute Redressal Mechanism
-Lok Adalats, Conciliation, Arbitration etc.
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Presented By Group 9: Agneeshwar Vyas, Bikash Malick, Damcho Lham, Jasleen Kaur, Jayant Singh, Mira Sethi, Rahul Patel, Rajat Singh
Outline
• Introduction-Historical Perspective & Legislations
• ADR or Conventional Judicial System?
• Modes of ADR
• Arbitration & Conciliation Act (1996)
• Arbitral Tribunals- Scope & mechanism
• Lok Adalats- Scope & mechanism
• Limitations of ADR
• Role of ADR (Case Studies)
• Summary
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Introduction Alternate Dispute Redressal-Historical Perspective & Legislations
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Connecting the dots…….
WHAT’S COMMON
• Yashu – “Taarekh Pe Taareekh”
Jayaprakash Narayan- Do you think Justice Delivery System has worked????
• Ravali- Informal System has worked more than the Formal System of Justice Delivery.
What did they mention…
Justice Delivery Scenario in India…
Judicial System is severely stressed
• Too formal
• Expensive
• Full of delays and
• Adversarial
Arbitration: A way forward...
• “The notion — that ordinary people want black-robed judges, well-dressed lawyers, and
fine paneled courtrooms as the setting to resolve their disputes, is not correct. People
with legal problems like people with pain, want relief and they want it as quickly and
inexpensively as possible.”
-Justice Warren Burger,
Chief Justice of the American Supreme Court
• This observation with greater force applies in the Indian context.
“Arbitrate, not Litigate”
• Different Modes of ADR available.
• Minimising the role of courts to the extent
possible in settlement of disputes.
• Creative Problem Solving.
• ‘Legal Process’ outside the Court for resolution of dispute by neutral person.
Scope of ADR Methods
• Family Disputes
• Personal Injuries
• Employment Disputes
• Commercial Disputes
• Consumer Disputes
• Property Disputes
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Historical Perspective: Ancient & Medieval India
• Village panchayat flourished in India not due to
anarchy as was but, because the central government
was itself refusing to entertain any suit at the first
instance and were deliberately referring all of them
back to the village Panchayat.
Sir Henery Maine (Jurist & Historian)
• Intervention of several informal bodies before the king came to adjudicate on disputes.
– Kulas (family or clan assemblies),
– Srenis (guilds of men following the same occupation)
– Parishads (assemblies of learned men who knew law
Historical Perspective and Legislations
Bengal Regulation Act 1772
Indian Arbitration Act-1899.
CPC-1908
Arbitration Act 1940
Dec 3 1993, New Delhi Conference
Arbitration and Conciliation Act
1996 Legal Services Authorities Act, 1987
CPC-1908, 1999 Amdt -Sec89
ADR or Conventional Judicial System?
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Advantages of ADR over Courts…
• Flexibility
• Speed
• Less Expensive
• Confidentiality • Party Autonomy • Relationship
Some contrasting features…
ADR COURTS
Lawyer
Legal Precedent
Adversarial
Reluctant Opponent
Modes of ADR Arbitration, Conciliation, Mediation, Judicial Settlement through Lok Adalats
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Modes of ADR
• Arbitration
• Conciliation
• Judicial settlement through Lok Adalat
• Mediation
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Arbitration and Conciliation Act, 1996
Recourse to ADR process u/s 89 CPC is mandatory. If
case is unsuited for reference to ADR, court
has to record reasons for not resorting to it
Order 10 Rule 1-A: Direction of the Court to opt for any one mode of
alternative dispute resolution
Order 10 Rule 1-B: Appearance before the conciliatory forum or
authority
Order 10 Rule 1-C: Appearance before the
Court consequent to the failure of efforts of
conciliation
Sec. 89 of the Civil Procedure Code provides for Settlement of disputes outside the court through
Legal Services Authority Act, 1987
Court shall effect a compromise b/w the parties
Types of ADR Procedures
Adjudicatory
Adjudication: Neutral party imposes decision that is binding
Adversarial: Win-Lose outcome
Arbitration
Non-Adjudicatory
Resolution: Neutral party suggests settlement options
Non-Adversarial: Win-Win outcome
Conciliation, Mediation, Lok Adalat
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Arbitration
• Parties in dispute refer the matter to one or more arbitrators, by whose
decision they agree to be bound
• A valid arbitration agreement must exist between the parties prior to the
emergence of dispute
• Advantage: Fast, flexible, confidential, choice of arbitrator with expertise,
Limited rights of review and appeal of arbitration awards
• Disadvantage: parties waive rights to access courts if arbitration in
contracts is mandatory, pressure from powerful parties, high fees charged
by arbitrators, Limited avenues of appeal to overturn erroneous decision
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Conciliation
• Conciliators resolve disputes by providing technical assistance, improving communication between
parties and proposing possible solutions taking into account parties’ position and interests
• Resolution is non-binding till both disputing parties agree to sign.
• Disputes conducive for conciliation: Commercial, financial, family, insurance, labor, consumer protection,
• Conciliator is not bound by rules of procedure and evidence
• ACA, 1996 Sec 67(1)-proposal for settlement need not be accompanied by statement of reasons
• ACA, 1996 Sec 30, 64(1), 73(1): pro-active, interventionist role of conciliator in formulating terms of
settlement
• Cannot produce as evidence in arbitral proceedings views expressed, admissions or proposals made in
conciliatory proceedings. Conciliator cannot be produced as witness in judicial proceedings
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Mediation
• Voluntary, informal, party-centered, structured negotiation process
• Mediator is only a facilitator and cannot propose solution
• Parties control the outcome
• Cases are conducive for mediation if
• There exist communication problem, emotional barriers
between parties
• Resolution is important than vindicating legal principles
• Parties have incentive to save time, cost, drain on productivity
due to litigation
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Sum
mar
y Feature Arbitration Conciliation Mediation
Neutral Third Party Arbitral Tribunal/Arbitrator (Adjudicator)
Conciliator (Interventionist)
Mediator (Facilitator)
Prior Agreement Required Voluntary Voluntary
Process Adversarial (Adjudication)
Non-Adversarial (Resolution)
Non-Adversarial (Negotiation/collaborative)
Award/Decision Binding Non-Binding Non-Binding
Rights of Review/Appeal Limited - -
Degree of Formality
Role of Third Party
Role of Parties
Cost
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Arbitration & Conciliation Act,1996 Overview of Important Sections of the Act
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Introduction
• The Arbitration & Conciliation Bill was introduced in the Parliament in 1995 and
was passed in 1996 as an Act
• Earlier to this, the law on arbitration was contained in three enactments:
1. The Arbitration (Protection & Convention ) Act 1937
2. The Arbitration Act 1940
3. Foreign Awards Act 1961
• The present act has 86 sections & 3 schedules
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Background of the Act • The United Nations Commission on International Trade Law
(UNCITRAL) adopted a model law on international commercial
arbitration, 1985
• The General Assembly of United Nations advised all the member
countries to adopt the law
• The law commission in India had been asking for change in the
existing laws
• It is in the above context that the new act was passed by the
parliament
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Objectives of the Arbitration & Conciliation Act, 1996
• To provide for fair and neutral settlement
• To minimize supervisory role of court
• To cover international commercial arbitration
• To enforce every final arbitral award in same manner as per the decree of the
court
• To permit arbitral tribunal to use conciliation during arbitral proceeding
• To define work area of arbitrator and conciliator
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Important Sections of the Act w.r.t. Arbitration
• Section 2 provides that Arbitral Award includes an interim award.
Arbitral tribunal means a sole arbitrator
• Section 3 provides that receipt of any communication means a proof
of delivery to the party
• Section 7 provides that Arbitration Agreement should be in writing
and signed by both the parties
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Arbitration Agreement
• It is an agreement between parties (A & B) in which dispute is to be
submitted
• There should be legal relation b/w parties (whether contractual/not)
• Both the parties agree to go to arbitrator
• Features of this agreement:
a. It must include of all the essentials of a valid contract
b. It should be in writing
c. It should contain either present/future dispute
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Important Sections of the Act w.r.t. Arbitrator
• Section 8 provides that judicial authority possess power to refer parties to
arbitrator (Example)
• Section 10 provides that number of arbitrators (Arbitral Tribunal) will be decided
by the parties
o If parties don’t concur in the appointment then court will make the appointment
of the arbitrator
o The appointment has to been made within 30 days from the date of request
proposed by the other party.
o If the number of arbitrators can’t be decided then the arbitral tribunal shall consist
of a single arbitrator. In case of more than one arbitrator there must be a
chairman of the tribunal.
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AKASH BIKASH
File Suit
Remedy
(section 8)
Write An
Application With a
Certified copy of Arbitration
Agreement
ARBITRATOR
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COURT
• Section 14 provides for FAILURE OR IMPOSSIBILITY TO ACT: a person will cease to be an
arbitrator, if
• he fails to act without undue delay
• he withdraws from his office or the parties agree to the termination of his mandate
• Section 19 provides for DETERMINATION OF RULES AND PROCEDURE: the parties are
free to agree all the procedure to be followed by the arbitral tribunal
• Section 20 provides for PLACE OF ARBITRATION: the parties have to agreed on the
place of arbitration. If the parties can’t decide then arbitral tribunal will decide
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Important Sections of the Act w.r.t. Arbitrator
Important Sections of the Act w.r.t. Arbitration
• Section 21 provides for the COMMENCEMENT OF ARBITRATION PROCESS: the
arbitration proceedings in respect of any dispute commence on the date on which a
request for arbitration is received by the opposite party
• Section 23 provides for STATEMENT OF CLAIM: the claimant shall state with the fact
supporting his claim within the period of time agreed upon by the parties or by the
arbitrator
• Section 25 provides for DEFAULT OF A PARTY: the arbitral tribunal shall terminate
the proceeding if the claimant fails to lodge his claim as prescribe in section 23
above
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Summary
Keeping in view the large number of pending cases in the courts, this Act has
become the need of hour to solve the small disputes between the two parties. This
Act not only provides the mechanism to solve the dispute within the boundary of
the country but also in solving disputes at international level.
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Arbitral Tribunals Scope & Mechanism
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Framework
• In the interests of public policy, the Arbitration Act contains a number of mandatory
provisions, including in relation to:
• Limitation periods
• The form of the arbitration agreement
• An arbitrator being ineligible for appointment
• The court being required to refer parties to arbitration if the dispute is subject to an
arbitration agreement
• The court's power to terminate the arbitrator's mandate
• The grounds on which an arbitral award can be challenged or appealed
What legal fee structures can be used? Are fees fixed by law?
In an institutional arbitration, the fee is prescribed by the institution.
However, for domestic arbitration with a seat in India, recent amendments
have given the powers to the states to prescribe fees.
Limitation Period
The same limitation period that applies to a civil suit also applies
to an arbitration. Therefore, the limitation period under the
Limitation Act for a civil suit is also applied by arbitrators. The
period of limitation varies from one to three years, depending on
the nature of the dispute.
Arbitrator’s Independence and Impartiality
• Arbitrators must give a statement that they are independent and impartial on appointment. If
an arbitrator is not independent or impartial, an objection in this regard must to be raised
before the arbitral tribunal itself.
• Two schedules (Schedule V and VII) have recently been added to the Arbitration Act(2015),
which provide the grounds by which an arbitrator can be considered ineligible or an
arbitrators independence can be reasonably questioned. This is a mandatory non
obstante clause. It is not entirely cleared how these amendments will be put into practice
but at present it appears that such a challenge will have to be made before the Arbitral
Panel itself (under the existing judgments). However, it is possible that the courts may also
exercise power in this regard.
Appointment of Arbitrators
Parties normally mention in their arbitration clause whether disputes will be
adjudicated by a sole arbitrator or by a panel consisting of an odd number of
arbitrators. The default provision is for a sole arbitrator. If the parties fail to agree on
the appointment of arbitrators, they have the option under section 11 of the
Arbitration Act to have the arbitrator(s) appointed by the court.
Removal of Arbitrators
• Parties can challenge the appointment of an arbitrator under sections 12 and 13 of the
Arbitration Act, if a justifiable doubt arises as to the arbitrator's independence or
impartiality or the arbitrator(s) does not possess the necessary qualification as agreed by
the parties. Certain categories of Arbitrators have been made ineligible under the
amended provisions of the Arbitration Act. In addition, an arbitrator can be removed
under section 14 if the:
• Arbitrator(s) is unable to perform his functions or for other reasons.
• Arbitrator fails to act without undue delay.
• Arbitrator withdraws from his office.
• Parties agree to terminate the arbitrator's mandate.
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Breach of Agreement
Court proceedings in breach of an arbitration agreement
If one of the parties to an arbitration agreement initiates court proceedings in
contravention of the arbitration clause, the other party can and should object to the
proceedings on the ground that there is an arbitration agreement between the
parties. The court must refer the parties to arbitration under section 8 of the
Arbitration Act. However, any objection to such proceedings must be dealt with
before filing the first statement. If the opposite party does not raise any such
objection, the proceedings in the civil court proceed.
Arbitration in breach of a valid jurisdiction clause
If arbitration is invoked where there is either no arbitration clause or where
the dispute is not arbitrable, the other side can make a preliminary objection
to the validity of the arbitration. There can be no arbitration in breach of a
valid jurisdiction clause.
Breach of Agreement (Contd.)
Courts Power to Remove an Arbitrator
If an arbitrator becomes legally or practically unable to perform his function or
withdraws from his office, the court can be approached to decide on the
termination of the mandate of the arbitrator and appointment of another
arbitrator (unless otherwise agreed by the parties). However, the arbitrator's
impartiality and independence must be raised in the first instance before the
arbitrators. If the arbitrators do not accept the submission, this can be a ground for
challenging the award. However, the court can also remove arbitrators if they are
found to be ineligible.
Appeal
Rights of appeal/challenge
Arbitration awards can be challenged in the local courts in India. Parties cannot waive the
right to challenge an award.
Grounds and procedure
The award can be challenged only if:
• A party was under some form of incapacity.
• The arbitration agreement was not valid under the law to which the parties had subjected it
• The party making the application was not given proper notice of the appointment of an
arbitrator or of the arbitral proceedings, or was otherwise unable to present his case.
• The award dealt with a dispute not contemplated by, or not falling within, the terms of the
submission to arbitration.
• The award contained decisions on matters beyond
• the scope of the submission to arbitration.
• The composition of the arbitral tribunal or the arbitral procedure was not in accordance
with the agreement of the parties or, failing such agreement, was not in accordance with
the provisions of the Arbitration Act.
• The subject matter of the dispute was not capable of settlement by arbitration.
• The award was in conflict with the public policy of India.
Appeal (contd.)
Main Arbitration Bodies in India
• Indian Council Of Arbitration
• Delhi International Arbitration Centre
• Construction Industry Arbitration Council
• International Chamber Of Commerce Industry
Challenges
Arbitrations have also become time consuming and expensive and, even
after an arbitral award, one party or the other tends to challenge the award
in court. This is particularly true when the unsuccessful party is a
government entity. In many states, the process of challenging the award
itself takes a long period of time, defeating the purpose of arbitration,
although some courts in India do decide such challenges quickly.
Lok Adalats Scope & Mechanism
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Outline
• Introduction
• Cases suitable for Lok Adalat
• The Need for Lok Adalat
• Constitution of Lok Adalat
• Working of Lok Adalat
• Jurisdiction of Lok Adalat
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Indian Judiciary (post-independence period)
Supreme court
High court
Subordinate courts or Lower courts in District Level
Criminal court Civil court
Village Panchayats
Introduction
• Innovative Indian contribution to the world of jurisprudence
• Based on Gandhian principle
• One of the components of ADR system
• In ancient times the disputes were referred to “Panchayat”
Cases Suitable for Lok Adalat
• Compoundable civil and Criminal and
Revenue Case
• Motor accident compensation claims
cases
• Partition Claims
• Damages Cases
• Matrimonial and family disputes
• Mutation of lands case
• Land Pattas cases
• Bonded Labour cases
• Land acquisition disputes
• Bank’s unpaid loan cases
• Arrears of retirement benefits cases
• Family Court cases
• Cases which are not sub-judice
Lok Adalats have competence to deal with a number of cases like:
The Need for Lok Adalat
As Justice Ramaswamy said: “Resolving disputes through
Lok Adalat not only minimizes litigation expenditure, it
saves valuable time of the parties and their witnesses and
also facilitates inexpensive and prompt remedy
appropriately to the satisfaction of both the parties”
Constitution of Lok Adalat
• Section 19 of the Legal Service Authority Act,1987 provides about the constitution of Lok Adalats.
According to section 19(1), every State Authority, District Authority, Supreme Court, Legal Service
Committee, Taluk Legal Services Committee can constitute Lok Adalats, from time to time or at a such
intervals, as they may deem fit.
• According to Section 19(2), The Lok Adalats will constitute by the merger of the following:
a) Serving or retired judicial officers
b) Other persons who have good knowledge about procedures
• The qualification and experience of the persons participating in the Lok Adalats will be decided
under section 19(3) and 19(4)
Jurisdiction of Lok Adalats
According to section 19(5) of Legal Services Authority Act, 1987, Lok Adalat
can decide case by compromise and settlement. The cases are:
a) Any case pending before or
b) Any matter which is falling within the jurisdiction of, and is not brought
before, any court for which the Lok Adalats are organized.
Working of Lok Adalats
• Section 20 of the Legal Services Authority Act, 1987 provides about the working of Lok
Adalat. According to it:
a) Any party can settle his case by Lok Adalat
b) It will hear the case after the case comes to it
c) If settlement is not reached then the case is returned back to the court
• As per Section 21, if a compromise is reached, an award is made and is binding on the
parties. Award has same effect as of a Civil Court decree.
• No appeal shall lie against award of Lok Adalat
Limitations of ADR
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Limitations of ADR Methods
1. Compatibility in blistering era of disputes
2. Confidentiality
a) The possibility of bias
b) Lack of power to establish legal precedents
3. Limited Judicial Review
4. Unfamiliarity with the procedure and Lack of Awareness
5. Wastage of time/money if case is not resolved
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Role of ADR Examples of some famous cases resolved through ADR
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Some Famous Cases
Ashoka Tubewell vs. Union of India (Supreme Court of India, 2014)
Scherk vs. Alberto Culver Co. (US Supreme Court, 1974)
Summary
• ADR methods such as Arbitration, Conciliation, Mediation, Lok Adalats can be effective
solution to reduce pendency of cases pertaining to civil, commercial, industrial, family,
consumer disputes etc.
• Major Legislations on ADR: Sec 89 Civil Procedure Code, Arbitration & Conciliation Act
1996, Legal Services Authority Act 1987
• ADR procedures have advantage of being cheaper, faster, more flexible & preserving
business and personal relationships
• However there are limitations pertaining to enforceability of awards, judicial review,
domestic policy considerations and lack of awareness which raise questions on the
effectiveness of ADR
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Thank You
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“I realized that the true function of a lawyer was to unite parties…The lesson was so
indelibly burnt into me that a large part of my time during the twenty years of my
practice as a lawyer was occupied in bringing about private compromise of hundreds
of cases. I lost nothing thereby not even money; certainly not my soul.”
- Mahatma Gandhi