With the recent new guidelines for arbitration and mediation in contracts related to domestic public procurement ostensibly promoting mediation, it explicitly signals a shift away from arbitration for government undertakings. Consequently, once the current pipeline of arbitration cases dries out, future contracts are likely to resort to litigation through the traditional court system, thereby significantly increasing the burden on an already stretched legal system. Despite representations from industry bodies and the Arbitration Bar of India advising against this memorandum, it appears, at least for the time being, to be a fait accompli.
ALTERNATE DISPUTE RESOLUTION IN INDIA:
Alternate Dispute Resolution (ADR) refers to the processes and techniques used to resolve disputes outside of the traditional courtroom setting. ADR includes methods such as arbitration, mediation, conciliation and negotiation.
India has a long history of ADR, with its roots traced back to ancient times. Traditional methods like Panchayats (village councils) and Nyaya Panchayats were commonly used to resolve disputes at the community level.
During the British colonial period, the Indian legal system began to take a more formal shape, influenced by British legal principles. However, traditional ADR methods continued to coexist.
The Arbitration Act, 1940, was the first significant legislation governing arbitration in India. It provided a legal framework for arbitration agreements, procedures, and enforcement of awards.
The concept of Lok Adalats (People's Courts) emerged in the 1980s. Lok Adalats are informal forums where disputes are resolved amicably with the consent of both parties.
A major milestone in the evolution of ADR in India was the enactment of the Arbitration and Conciliation Act, 1996. This legislation was based on the UNCITRAL Model Law on International Commercial Arbitration and aimed to modernize and streamline arbitration procedures.
In 2004, the Mediation and Conciliation Rules were introduced under Section 89 of the Code of Civil Procedure, 1908. These rules provided a structured framework for mediation and conciliation, promoting these methods as effective alternatives to litigation.
Prominent institutions that give professional ADR include the Indian Council of Arbitration (ICA), the International Centre for Alternative Dispute Resolution (ICADR), and the Mumbai Centre for International Arbitration (MCIA).
The Supreme Court of India and various High Courts have set up mediation centres and encouraged the use of ADR to resolve disputes. Judicial pronouncements have emphasized the importance of ADR in reducing the backlog of cases and delivering timely justice.
The Commercial Courts Act, 2015, aimed to improve the ease of doing business in India by providing a fast-track mechanism for commercial disputes.
Subsequent amendments to the Arbitration and Conciliation Act, 1996, in 2015, 2019, and 2021, have further refined the legal framework for arbitration in India.
The Mediation Act, 2023, enacted recently, lays down the legal framework for mediation to be adopted by parties to a dispute, especially institutional mediation where various stakeholders have been identified to establish a robust and efficacious mediation ecosystem in the country. The bill establish the Mediation Council of India to promote and regulate mediation services.
NEED OF ADR IN THE JUDICIAL LANDSCAPE OF INDIA:
Reduction in Case Backlog: ADR mechanisms, such as arbitration, mediation, and conciliation, have played a crucial role in reducing the backlog of cases in Indian courts.
Example: The National Legal Services Authority (NALSA) organizes Lok Adalats, which have settled millions of cases. In 2020 alone, Lok Adalats disposed of approximately 1.2 million cases across the country, significantly reducing the burden on regular courts.
Time Efficiency: ADR provides a faster resolution of disputes compared to the traditional court system, where cases can drag on for years.
Example: Family courts often use mediation to resolve matrimonial disputes quickly. In Delhi, mediation centres have resolved many family disputes within months, compared to years in regular courts.
Cost-Effectiveness: ADR is generally less expensive than litigation, making it an attractive option for individuals and businesses.
Example: Companies often prefer arbitration for commercial disputes due to its cost-effectiveness. For instance, the Delhi International Arbitration Centre (DIAC) offers affordable arbitration services, reducing legal costs for businesses.
Confidentiality: ADR processes are private and confidential, which is particularly beneficial in sensitive matters.
Example: Companies prefer mediation for intellectual property disputes to keep sensitive information out of the public domain. Successful mediation sessions at the Bombay High Court's Mediation Centre have preserved the confidentiality of trade secrets and business strategies.
Flexibility and Party Autonomy: ADR allows parties more control over the dispute resolution process, including choosing the mediator/arbitrator and tailoring the process to their needs.
Example: Many contracts now include customized arbitration clauses that specify the rules, venue, and language of arbitration, providing flexibility that traditional courts cannot offer.
Preservation of Relationships: ADR methods, especially mediation and conciliation, focus on collaborative solutions, helping preserve relationships between disputing parties.
Example: In business partnerships, mediation has successfully resolved conflicts without damaging professional relationships, as seen in the mediation services offered by the Bangalore Mediation Centre.
Empowerment of Communities: ADR empowers communities by providing accessible and culturally sensitive dispute resolution mechanisms.
Example : These traditional ADR methods continue to play a vital role in rural areas, resolving local disputes effectively and maintaining social harmony such as Panchayats and Nyaya Panchayats.
Enhanced Access to Justice: ADR increases access to justice by providing alternative forums for dispute resolution, particularly for those who may find the formal judicial system daunting or inaccessible.
Example: Initiatives by legal services authorities at the state and national levels promote ADR methods, making justice more accessible to marginalized communities.
Specialized Dispute Resolution: ADR allows for specialized resolution of disputes, with experts in specific fields acting as arbitrators or mediators.
Example: The Construction Industry Arbitration Council (CIAC) specializes in resolving construction disputes with experts in engineering and construction law serving as arbitrators.
Judicial Efficiency: By diverting cases from the formal court system, ADR helps improve the overall efficiency of the judiciary.
Example: The Commercial Courts Act, 2015, encourages pre-litigation mediation for commercial disputes, enhancing judicial efficiency by reducing the number of cases that go to trial.
CHALLENGES OF ADR FRAMEWORK OF INDIA:
Lack of Awareness and Acceptance: People, especially in rural areas, are not aware of ADR mechanisms or their benefits. There is also a lack of acceptance among certain sections of society and legal professionals.
Example: A study by the Vidhi Centre for Legal Policy in 2020 found that a significant percentage of the population was unaware of mediation and arbitration as viable options for dispute resolution.
Enforcement Issues: The enforcement of arbitral awards and mediated settlements can be problematic, leading to delays and additional litigation.
Example: In the case of ONGC v. Saw Pipes Ltd. (2003), the Supreme Court of India set a precedent for judicial interference in arbitral awards on grounds of "public policy," which has led to uncertainty and delays in enforcement.
Cost Concerns: Although ADR is generally considered cost-effective, high-quality arbitration services can be expensive, sometimes making them inaccessible for smaller businesses and individuals.
Example: Arbitration fees at premier institutions like the International Chamber of Commerce (ICC) or even local institutions can be prohibitively high for many parties.
Judicial Intervention: Excessive judicial intervention in arbitration proceedings undermines the autonomy of ADR processes.
Example: The case of McDermott International Inc. v. Burn Standard Co. Ltd. (2006) highlighted issues of judicial intervention, where the court extensively reviewed the merits of the arbitral award, leading to delays.
Lack of a Uniform ADR Policy: There is no uniform policy or consistent framework governing ADR practices across different states and jurisdictions in India.
Example: Different states have varying rules and support mechanisms for ADR, creating inconsistencies and confusion for parties seeking resolution.
Training and Accreditation: There is a need for standardized training and accreditation for arbitrators, mediators, and conciliators to ensure a high level of professionalism and competence.
Example: The absence of a national accreditation body leads to a wide disparity in the skills and qualifications of ADR professionals and lack of enough trained professionals
Cultural and Societal Barriers: Cultural and societal attitudes towards dispute resolution can be a barrier, with a preference for traditional litigation over ADR methods.
Example: In certain communities, there is a distrust of non-judicial mechanisms and a belief that formal court decisions carry more weight and legitimacy.
Infrastructure and Technological Barriers: Inadequate infrastructure and lack of technological adoption hinder the efficiency of ADR processes. Many ADR institutions lack proper technological infrastructure for conducting virtual hearings, which became evident during the COVID-19 pandemic.
WAY FORWARD FOR ADR ECOSYSTEM:
Enhancing Awareness and Education: Introduce ADR modules in law schools and professional legal training programs. Conduct nationwide awareness campaigns to educate the public about the benefits and availability of ADR mechanisms.
The UK has integrated ADR education into its legal curriculum and conducts regular public awareness campaigns.
Standardizing Training and Accreditation: Establish a national accreditation body to standardize the training and certification of arbitrators, mediators, and conciliators. Ensure continuous professional development to maintain high standards of practice.
The Singapore International Arbitration Centre (SIAC) and Singapore Mediation Centre (SMC) provide rigorous training and certification programs for ADR professionals.
Establishing Robust Institutional Support: Strengthen existing ADR institutions and establish new centres across the country, especially in under-served regions. Provide these institutions with adequate resources, infrastructure, and technological support.
The Hong Kong International Arbitration Centre (HKIAC) is renowned for its efficient and well-resourced ADR services.
Improving Enforcement Mechanisms: Reduce judicial interference in arbitral awards by adhering to international standards, such as the New York Convention.
French courts have a streamlined process for the enforcement of arbitral awards, minimizing delays.
Promoting Mediation and Conciliation: Promote the use of mediation and conciliation in civil and commercial disputes. Implement mandatory mediation for certain types of cases before they proceed to litigation.
The US has institutionalized mediation through the Alternative Dispute Resolution Act of 1998, requiring federal courts to offer ADR services.
Leveraging Technology: Develop and implement ODR platforms to facilitate the resolution of disputes online. Encourage the use of video conferencing and digital document management in ADR processes.
Online Dispute Resolution (ODR): Platforms like eBay’s ODR system resolve millions of disputes annually without physical meetings.
Adopting a Uniform ADR Policy: Formulate a national ADR policy to ensure uniformity and consistency across all states.
The EU has a unified policy framework for ADR, ensuring consistency across member states.
Integrating ADR into the Judicial System: Institutionalize court-annexed ADR programs, where judges can refer cases to mediation or arbitration.
The Canadian judicial system actively integrates ADR processes into court proceedings.
Encouraging Public-Private Partnerships: Foster partnerships between government, private sector, and civil society organizations to promote ADR.
The Australian Dispute Resolution Association (ADRA) collaborates with private entities to promote ADR.
Providing Financial Incentives: Offer tax benefits and subsidies for parties opting for ADR. Provide financial support for ADR centres and programs to reduce costs for users.
Japan: The Japanese government offers subsidies and financial incentives to promote the use of ADR.
PRACTICE QUESTION:
Q. Discuss the need of Alternate Dispute Resolution (ADR) on the judicial landscape in India. Highlight the challenges faced by the ADR framework in India and suggest measures to improve it. (15 marks, 250 words)
