–Authored By- Shikhar Shrivastava
INTRODUCTION
Alternative dispute resolution (ADR) is considered to be a body of dispute-resolution methods outside of the litigation process. Participation in ADR has important legal consequences. The parties that have agreed by contract are subject to binding arbitration to bring their complaint to the court. This process is faster, less costly, and private as far as litigation practice is concerned. Thus, ADR is often a well-liked dispute-resolution method. The methods of dispute resolution are conciliation, mediation, and arbitration.
MECHANISMS OF ADR
In Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd.[1], the court held that if the dispute is going to be referred to arbitration or conciliation then, both parties must give their consent; whereas, if the dispute is going to be referred to mediation or Lok Adalat then, there is no requirement of the parties consent. The Hon’ble Supreme Court listed out the disputes which are capable and non-capable of settlement through ADR mechanisms.[2]
ADR mechanisms are broadly classified into two major types ie Adjudicatory ADR mechanisms, and Non-Adjudicatory ADR mechanisms. In the adjudicatory ADR mechanisms, the decision of the dispute shall be decided on merits whereas (for instance- Arbitration), in non-adjudicatory ADR mechanisms, the dispute shall be resolved through compromise or cooperative resolution (for instance- Negotiation, Mediation, Lok Adalat excluding permanent Lok Adalat).
Section 89[3] of the Civil Procedure Code, 1908 (CPC) contains the referral of disputes to adjudicatory (Arbitration) as well as non-adjudicatory (Conciliation, Mediation, Lok Adalat, and Judicial settlement) ADR mechanisms, the courts have to be cautious while choosing suitable ADR mechanisms for the resolution of the dispute. As if once any matter has been referred by adjudicatory or non-adjudicatory mechanisms of ADR, it cannot be heard by the court.
The Hon’ble Supreme Court is also of the opinion that section 89[4] has mandated the court to explain the various ADR options to the parties for the resolution of the disputes. If the parties themselves have chosen any one of the ADR mechanisms under section 89[5] then, the court shall refer the dispute to that particular ADR mechanism only, and if the parties haven’t agreed on the choice of ADR then, the court can refer the dispute to any non-adjudicatory form of ADR mechanism.”
CLASSIFICATION OF THE MECHANISM OF ALTERNATE DISPUTE RESOLUTION
During the method of Mediation, the parties retain the power to make a decision themselves without vesting that power in outdoor decision-makers. However, it relies on neutral mediators who facilitate the mediation process to help the parties in achieving a suitable, voluntary agreement. It is considered to be a more formal tool of mechanisms than negotiation but less formal than arbitration or litigation. It is comparatively inexpensive, fast, and confidential, unlike litigation. Though nonbinding mediation resolutions aren’t binding on the parties, these resolution agreements could also be incorporated into a legally binding contract, which is binding on the parties who execute the contract. This mechanism doesn’t follow a consistent set of rules, though mediators typically make rules. There is no uniform set of rules which have to be followed by the mediators to become licensed or acquire it, and rules vary by state regarding requirements for mediator certification.[6]
Arbitration is considered to be a type of ADR within which parties vest authority to make a decision a dispute with a third-party arbitrator, who hears the evidence and issues an arbitration award. It could also be binding or nonbinding, and it’s going to be mandatory or voluntary. Arbitration awards issued by arbitrators are often confirmed to judgments by judges. Issues of fairness arise in arbitration when disputants possess unequal power, like arbitration employed or consumer disputes.[7]
Conciliation is a voluntary process also the conciliator has no authority to impose on the parties imparting a solution to the dispute. Unlike the other ADR mechanisms, the sanctity of the conciliation is that the mutual determination of the parties to resolve their disputes through an ADR procedural law. Its cheap and expeditious mechanism for the resolution of disputes as compared to litigation and arbitration makes it a wonderful ADR Mechanism. The cost management tools and expertise of the conciliator prevent the multiplication of actual costs to the parties and seek to form it cost-efficient.[8]
ETHICS TO BE FOLLOWED WHILE PRACTICING THE MECHANISMS OF ARBITRATION
VALUES IN ARBITRATION
Arbitrators should prescribe with their best endeavors to conduct fair and expedient proceedings. Although they ought to not act as mediators themselves, they ought to conduct the proceedings in a way that encourages the parties to settle the dispute if they want to try and do so. The decision that arbitrators render, doesn’t only need to be correct actually and in law, but has also, to satisfy the requirements of parties as far as possible. Indeed fairly often the law allows a spectrum of remedies from which the arbitrator has got to choose the one that best corresponds to parties’ needs and possibilities.
ETHICS TO BE FOLLOWED WHILE PRACTICING THE MECHANISMS OF MEDIATION
The Commercial Courts as well as Commercial Division and Commercial Appellate Division of the High Court (Amendment) Ordinance of 2018, inserted section 12A to the Commercial Courts Act, 2015[9], contemplating pre-institution mediation and settlement, before the filing of any disputes or matter pertaining to commercial disputes. This legislative amendment to the Commercial Courts Act making it mandatory for disputing parties to try mediation prior to that of litigation practice.[10]
The four effective principles which could be considered for the concept of mediation are as follows- voluntariness, neutrality, confidentiality, and party’s autonomy which makes the process more collaborative, and there comes the way of resolution findings.
The first key pillar is neutrality, where the third-party facilitator is expected to remain unbiased in action and words. Many mediators, serving at court-annexed mediation centers in India, cross this thin line and begin behaving like arbitrators. A neutrality breach could occur due to the lack of communication skills.[11]Secondly, it is a voluntary process, differentiated from a courtroom listing. It is considered to be a mutual decision to meet. As far as consent is concerned, when it comes to referring a case to arbitration and conciliation, courts will refer cases to arbitration and conciliation, finding the existence of a clause in the contract. In this mechanism, courts can refer disputing parties to mediation without consent.[12] Disputing parties at court mediation centers don’t have a chance to choose their mediators and are often allotted a neutral mediator. Parties can be reminded that they can request for a change in the neutral at any stage during the process if a conflict of interest arises or a mediator loses neutrality.[13]Keeping mediation matters confidential is crucial to setting the process apart from the public court hearing, where privacy of conversations is not a luxury.[14] Party autonomy is the fourth pillar on which makes mediation stand apart from the courtroom. The parties decide for themselves and by themselves, as to how they wish to resolve the dispute.[15]
According to the Indian Civil Procedure Code (CPC), in mediation, the neutral is not supposed to even suggest or advise, and the role is limited to simply facilitate. This gets complicated if the neutral is a conciliator, where the legislation permits you to advise or suggest in an evaluative style. In both cases, however, the final decision-making authority is the disputing party.[16] A mediator must be monetarily compensated irrespective of whether the case is settled or not. Thus, a correct education of the process (skill-based training and knowledge of the law) is necessary to avoid such bad branding of the profession.[17]
ETHICS TO BE FOLLOWED WHILE PRACTICING THE MECHANISMS OF CONCILIATION
COST-EFFECTIVE AND EXPEDITIOUS PROCESS
The conciliator follows a simplified procedure as per aspirations of the parties; necessity for quick settlement of the dispute; prevents dragging of conciliation proceedings for extended periods; ensure its conclusion within an inexpensive time period, so specified.
AUTONOMY AND CONVENIENCE OF PARTIES
Conciliation is flexible and convenient. The parties are liberal to agree on the procedure to be followed by the conciliator, the time, venue of the proceedings, controlling the method. The conciliator may conduct the conciliation proceedings in such a way as he considers appropriate, taking under consideration the circumstances of the case, the convenience of the parties, and therefore the wishes the parties may express. However, the parties control the result within the settlement agreement on mutual agreement; can devise creative solutions for his or her disputes; can decide how their rights and liabilities are getting to be figured out on the parties thereby not only controlling the conciliation proceedings, but also the final outcome of the proceedings.
PARTY SATISFACTION AND HARMONY
Unlike litigation and arbitration where one party wins and the other loses, in conciliation, both parties are in favor of the decision, until both parties comply with a proposal, the settlement or agreement doesn’t happen. Thus, it’s a win-win situation for both parties as both the parties are satisfied with the agreement, enabling them to retain good relationships for times to return.
CONFIDENTIALITY
In contradistinction to judicial proceedings, conciliation may be a private closed-door affair and thus offers privacy and confidentiality. The conciliator and therefore the parties are alleged to keep confidential, all matters concerning the proceedings of conciliation. The parties also are precluded from relying upon or introducing as evidence in subsequent arbitral or judicial proceedings with the course of the method of conciliation. During the course of conciliation proceedings where a party gives any information, it’s kept confidential, and even the conciliator isn’t authoritative to disclose that information to the other party. Also, if there is a failure of conciliation proceedings, parties involved are not in a position to derive undue benefit out of any proposal, view, statement, admission, etc. made by the opposite party during conciliation proceedings.
CONCLUSION
There are various advantages of choosing ADR over cumbersome and extended litigation processes. ADR is more flexible in nature, involves confidentiality, party autonomy, finality in enforcing awards, speedy resolution process, etc. But these qualities are now diluted with unethical practices, recurring interruptions with judicial decisions, unfeasible expenses, and undue delays. This has led to a decrease in the growth of effective mechanisms of the ADR process. One possible solution to all these problems can be institutional arbitration which should be promoted and encouraged in order to save the ADR from becoming another filthy litigation process. As long as, arbitrators, judges, and even common people are aware of their individual ethical duties, the ADR process will flourish and keep evolving to make a healthy contribution.
BIBLIOGRAPHY
1.) Jonathan Rodrigues, Safeguarding the Pillars of Mediation in India, mediate India- everything mediation, mediate.com, available at https://www.mediate.com/articles/rodrigues-mediation-in-india.cfm
2.) Dr. Marisport A, Resolving Pending Cases through Alternative Dispute Resolution under Section 89 of Civil Procedure Code: A Case Study, Gujarat National Law University, https://doj.gov.in/sites/default/files/GNLU.pdf
3.) Alternative Dispute Resolution (ADR) Mechanisms, Drishti home, drishtiias.com available at https://www.drishtiias.com/to-the-points/Paper2/alternative-dispute-resolution-adr-mechanisms-paper-2
4.) Alternative Dispute Resolution, available at https://saylordotorg.github.io/text_the-legal-and-ethical-environment-of-business/s07-alternative-dispute-resolution.html
[1] [[2010] 8 SCC 24]
[2] Dr. Marisport A, Resolving Pending Cases through Alternative Dispute Resolution under Section 89 of Civil Procedure Code: A Case Study, Gujarat National Law University, available at https://doj.gov.in/sites/default/files/GNLU.pdf last accessed April 2, 2020, 16:23.
[3] [89. Settlement of disputes outside the Court.–(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 observations 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) Were a dispute has been referred– (a) for arbitration or conciliation, the provisions of the Arbitration and Conciliation Act, 1996 (26 of 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 (39 of 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 (39 of 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 effect a compromise between the parties and shall follow such procedure as may be prescribed.]
[4] Ibid.
[5] Ibid.
[6] Alternative Dispute Resolution, available at https://saylordotorg.github.io/text_the-legal-and-ethical-environment-of-business/s07-alternative-dispute-resolution.html
[7] Supra note 6.
[8] Ibid.
[9] 12A. Pre-Institution Mediation and Settlement—(1) A suit, which does not contemplate any urgent interim relief under this Act, shall not be instituted unless the plaintiff exhausts the remedy of pre institution mediation in accordance with such manner and procedure as may be prescribed by rules made by the Central Government. (2) The Central Government may, by notification, authorize the Authorities constituted under the Legal Services Authorities Act, 1987 (39 of 1987), for the purposes of pre-institution mediation. (3) Notwithstanding anything contained in the Legal Services Authorities Act, 1987 (39 of 1987), the Authority authorized by the Central Government under sub-section (2) shall complete the process of mediation within a period of three months from the date of application made by the plaintiff under sub-section (1): Provided that the period of mediation may be extended for a further period of two months with the consent of the parties: Provided further that, the period during which the parties remained occupied with the pre-institution mediation, such period shall not be computed for the purpose of limitation under the Limitation Act, 1963 (36 of 1963). (4) If the parties to the commercial dispute arrive at a settlement, the same shall be reduced into writing and shall be signed by the parties to the dispute and the mediator. (5) The settlement arrived at under this section shall have the same status and effect as if it is an arbitral award on agreed terms under sub-section (4) of section 30 of the Arbitration and Conciliation Act, 1996 (26 of 1996).]
[10] Jonathan Rodrigues, Safeguarding the Pillars of Mediation in India, mediate India- everything mediation, mediate.com, available at https://www.mediate.com/articles/rodrigues-mediation-in-india.cfm last accessed April 2, 2020, 15:30.
[11] Ibid.
[12] Ibid.
[13] Ibid.
[14] Ibid.
[15] Ibid.
[16] Ibid.
[17] Ibid.