Mediation and Arbitration as Alternative Dispute Resolution in India

Bhavya Gautam, 5th year/9th semester law student from RNB Global University. Read More

Abstract

Alternative Dispute Resolution (ADR) has gained considerable importance for managing disputes without resorting to the courts in the Indian context. This paper focuses on two distinctive forms of ADR: mediation and arbitration. It examines their importance, legal aspects, procedures, benefits, and difficulties. The increasing popularity of these approaches is discussed in light of the existing laws in India pointing to their usefulness in relieving the courts and expeditious settlement of disputes. Finally, the article calls for the urgent need for further infusion of ADR mechanisms, and second, offers proposals to improve their functioning within the Indian legal framework.

Keywords: Alternative Dispute Resolution, Mediation, Arbitration, India, Legal Framework, Efficiency, Judicial System

Introduction

The Indian justice system is very powerful in provisions and institutions. However, it encounters serious problems especially due to the huge number of cases pending in Courts. In 2024, more than 4.8 million cases are still waiting to be resolved thus responding to justice takes a very long time. This has made it indispensable to search for better and faster ways of resolving conflicts. Alternative Dispute Resolution (ADR) presents bright prospects in this regard through such techniques as mediation and arbitration.

In mediation, a mediator assists the disputing parties by encouraging serious interaction between them in a bid to come up with an amicable solution[1]. This is useful especially in situations where a need to keep the parties without altercations after the situation is resolved. Hence, in family disagreements or within business negotiations, mediation becomes the most preferred option. It allows the parties to determine the outcome of the conflict, which guarantees that the solutions are consistent with the problems of the persons involved.

When it comes to arbitration however, the disputes are put before one or more arbitrators and are resolved by way of an award made on the documents and contained materials only. In trade related conflicts resolution, arbitration is appropriate since it offers a determination that is conclusive, binding and also confidential.

The history of ADR in India can be traced back to the arbitration Act 1940, however, its growth was more pronounced with the arbitration and conciliation Act 1996 when attempts were made to make Indian legislation in sync with the international provisions. Resulting also from the amendment of the civil procedure code (CPC) in the year 2002 was the entrenchment of mediation in the justice system, as the courts were allowed to direct cases to mediation, conciliation or arbitration.

[2]The implementation of these mechanisms has grown with limiting awareness, varying standards of mediators and arbitrators and cumbersome processes among other issues. This article examines the structures, procedures, benefits, and limitations of mediation and arbitration in India and discusses their significance in promoting access to justice and reducing the pressure on courts.

Definition and Significance

As a resolution of conflicts, ADR includes mediation, arbitration, conciliation, and negotiation processes. The significance of ADR is that it deals with disputes quicker, cheaper, and more effectively than litigation. It enables the parties to have control over the results also encourages harmonious interactions that are important in maintaining relationships.

Indian Respective Legal provisions related to Mediation, Arbitration and Conciliation Mediation in India

Mediation has come to be an indispensable component of the legal system in India, as it projects an option to the conventional corridors of justice. Mediation In India is fundamentally governed by the Mediation and Conciliation Act, 1996, which provides for the procedural aspects of mediation and also contains the basic principles governing the process.

Mediation and Conciliation Act of 1996: Legal Structure

The Mediation and Conciliation Act, 1996 was passed with the intention of encouraging the practice of mediation and conciliation and to depend on the outcomes of these processes. The Act is in harmony with international norms, promoting mediation for not only civil conflicts but also in matters involving families and businesses. Its provisions are directed towards making mediation as an option possible without deterring the availed rights by the parties in dispute.

Key Features of the Act:

1. Participation is Voluntary:

[3]One of the founding principles of mediation is that under the Law, participation in mediation is voluntary. Rather the parties are prompted to engage in mediation effort at their own choice and not under duress. This is crucial considering it promotes an amicable interaction between the disputing parties as their worst fears and worrying issues are allowed to be voiced. Ideologically, mediation attempts to place the parties in control of the resolution process so that the resolution reached is based on their consensus rather than imposed on them.

2. Confidentiality:

There is strict prohibition against any disclosure during the entire mediation process as per the dictate of the Act. Any and every communication, utterance and document presented during mediation cannot be splashed out for any other indefinitely future court hearing. This aspect is most important because it allows for open and candid communication that would be discouraged in the absence of such protection. This guarantee of confidentiality serves effectively to promote interaction with a view to resolving disputes which in turn enhances the chances of productive mediation.

3. Functions of a Mediator –

Mediators are the people who facilitate the whole mediation. Their main function is to help the parties reach a level of communication and look for resolution options. Mediators operate without taking sides and do not make any decisions, but direct the discussion to enable the parties to define their positions and interests and understand each other. The skills of the mediator in listening actively, understanding people and negotiating them are important in drawing up a useful conversation. Furthermore, while they may make recommendations and provide options for resolution, the mediators do not make the decisions for the parties.

4. Finality of settlement agreements:

[4]After the parties complete the entire process and come to a resolution, this mediated agreement can be put into writing. This settlement has legal status as far as the Indian Contract Act, 1872 is concerned. If one of the parties does not perform according to this agreement, another one may request courts for its performance, which gives the mediation a legal effect.

5. Court Involvement:

The Act provides an additional authority to the courts to send cases to mediation where appropriate. Section 89 of the Civil Procedure Code (CPC) gives authority to the judges to recommend that the parties resolve their differences using mediation at any moment during the litigation process. Such encouragement from the judges helps in enhancing the quality of mediation practice since mediation helps to reduce the case load in the courts.

Arbitration in India

[5]Arbitration plays an important role in the resolution of disputes without resorting to the court. In India, the arbitration process is regulated by the Arbitration and Conciliation Act, 1996, which provides an extensive regulatory structure that is consistent with the most international standards and Rule, particularly the UNCITRAL Model Law on International Commercial Arbitration. Due to many reasons, the Act has been amended several times in order to make it more effective and implement the new changes in Law Practice.

Legal System: Arbitration and Conciliation Act, 1996

[6]The Arbitration and Conciliation Act, 1996 was enacted with the intention of ensuring that there exists an effective and efficient mechanism for arbitration and conciliation. In this Act, arbitration is seen as the first choice of the option of resolving conflicts, particularly in the case of business disputes because of it seeking to attain resolution, being final and enforceable.

Key Features of the Act:

1. Arbitral agreement:

One of the most important features of arbitration is the arbitral agreement. It is simply an agreement between the parties to resolve their disputes through arbitration instead of going through the courts. This agreement can be:

• Incorporated: Most of the times, at the beginning of the negotiations parties agree to insert willingness to arbitrate the arising disputes as an arbitration clause, where the scope of the disputes is clearly defined.
• Stand-Alone Agreement: The parties may also agree to arbitrate their claims after the conflict has escalated into the dispute and pleadings filed.

[7]The agreement has to be necessarily in writing and must demarcate the ambit of arbitration, enumerate the number of arbitrators, and detail any rules and procedures such to assist the course of arbitration. It should be noted that the agreement to arbitrate is critical since without it there cannot be any arbitration.

2. Appointment of Arbitrators:

The Act has distinct provisions regarding the appointment of arbitrators aimed at ensuring that the process is direct and free of complications. The most salient aspects are:

Party Autonomy: The parties to an arbitration may choose how many arbitrators they want, usually one or three, if they want to vary the number agreed by the parties, and if no one agrees to the number then one arbitrator will be appointed as per provisions of the Act.

Qualifications: The Act by its provisions does not restrict the qualifications of an arbitrator but provides for the appointment of persons that have knowledge and skill applicable to the issues in dispute. This is particularly notable in areas such as construction, finance, and international commerce where various specialist areas exist.

Appointment Procedure: If the disputing parties are unable to agree on an arbitrator, one or both of the parties may apply to the competent court for the appointment of an arbitrator. The court may make an order for an arbitrator which may be specific to the qualifications and experience for the particular matter.

3. Finality and Enforcement:

The finality of the arbitral award is one of the more pronounced benefits of arbitration. Notable aspects include:

Mandatory Effect: An award made in an arbitration is usually binding upon the parties. Therefore a decision once made becomes obligatory for the affected parties to follow.

Executability As If A Court Judgment: An arbitration award is as executable as a judgment delivered by the court. In particular the Act states, any person eligible under the award may go back to the court for the purpose of enforcing the award making it status like that of a court judgment.

4. Interim Measures:

Before, during, or even after the arbitration proceedings, the Act permits parties to request the court for interim measures. This provision is very important when it comes to safeguarding the rights and interests of the parties when the arbitration is being conducted especially in certain exigent circumstances.

5. Role of Courts:

[8]The Act specifies the role of the court within the arbitration process with emphasis on the circumstances of appointing arbitrators, enforcement and interim relief. It is directed that the courts should be supportive of arbitration and assist in the process instead of intervening excessively.

6. Amendments and Developments:

The Arbitration and Conciliation Act, 1996 has been amended on multiple occasions with significant amendments in 2015, 2019 and 2021. The purpose of such amendments has been to improve the overall functioning of the arbitral process, to encourage institutional arbitration and to enhance the regulation of arbitration institutions.

Mediation: Process and Benefits

1. The Mediation Process

Mediation usually has the following phases:

• Initiation: Mediation is suggested by one party and accepted by the other.
• Selection of Mediator: The parties choose a mediator, who is often qualified in regards to the subject.
• Pre-Mediation Conference: A preliminary meeting may be held to confer on the system and draw some rules.
• Mediation Sessions: The disputing parties are engaged in discussion by the mediator who helps them to arrive at a solution.
• Agreement: If the parties settle the dispute, the mediator drafts the settlement agreement.

2. Benefits of Mediation

• Cost-Effectiveness: Mediation is more affordable than undertaking court proceedings of litigation.
• Speed: Resolutions can often take place faster than going through the court system.
• Control: The parties have greater influence over the outcome, and the solutions may be customized to address their requirements.
• Preservation of Relationships: Since mediation focuses on problem-solving, it helps in preserving business and personal relations.

Arbitration: Its Process and Appreciation

1. The Arbitration Process

The arbitration process generally comprises the stages discussed below.

• Filing of Request: a party submits a request for arbitration, describing the conflict.
• Appointment of Arbitrators: the arbitrators are appointed as per the consensus reached by the parties or governing rules.
• Preliminary Hearing: a preliminary hearing takes place for the purpose of establishing deadlines, rules and procedures.
• Hearing: both sides make their case with supporting evidence and witnesses.
• Award: the award made by the arbitrator shall be conclusive on the parties, grounded on the evidence and submission made before the arbitrator.

2. Benefits of Arbitration

• Certainty: Arbitral Awards are often the last word of arbitration proceedings and most often, they cannot be challenged making everything certain.
• Specialty: The parties can appoint arbitrators of their own choice possessing relevant knowledge to the subject matter of the dispute.
• Convenience: Arbitration can be less rigid in terms of processes and scheduling than litigation.
• Recognition: Arbitral awards are enforceable in most countries under different International Conventions and agreements.

Challenges in Mediation and Arbitration

While mediation and arbitration offers some advantages, there are a few challenges in the Indian situation that remain:

1. Awareness and Acceptance: Most of the parties do not know about the ADR methods or even if they know them, they are not willing to use them.
2. Quality of Mediators and Arbitrators: Quality of mediation and arbitration greatly depends on the quality and impartiality of the mediator or an arbitrator. Lack of trained personnel may put the entire process in jeopardy.
3. Enforcement Issues: Arbitration awards are usually subject to enforcement, however difficulties may arise in the enforcement of such awards especially when public policy issues are involved.
4. Cultural Barriers: Societal values which place more emphasis in court litigation rather than negotiations or settlements make it difficult for ADR strategies to be embraced.

Conclusion

Mediation and arbitration have emerged as indispensable parts of the Indian jurisprudence as satisfactory substitutes to traditional litigation. Mediation is a process that seeks cooperation between the disputing parties so that an agreeable solution is found, whereas arbitration results in a conclusive resolution of the dispute by a third party who is authorized to make a decision. Both the few processes reduce the growing number of active cases in the Indian courts hence faster resolution of the contested issues. Strategies to popularize ADR have been implemented in the past, but the implementation of such strategies has met a number of hurdles, including among others; unavailability of information, geographic coverage of ADR bodies, and the intervention of the courts into the arbitration process causing unreasonable delays. Solutions to the problems outlined above will not be possible without the different participants in the justice system working together.

However, further changes in the legal reform, public awareness, and establishing more ADR centers all over India, mediation and arbitration can improve the present situation regarding the accessibility of justice. They are definitely going to change the way conflicts are dealt with in the country, relieving the deal offices of many purpose cases but still ensuring that results are provided in any situation, fast, private and fair.

Reference

1. https://articles.manupatra.com/article-details/THE-ROLE-OF-ARBITRATION-AND-MEDIATION-IN-INDIA-A-COMPREHENSIVE-ANALYSIS-OF-THEIR-EVOLUTION-BENEFITS-AND-SHORTCOMINGS-1-WHY-ADR-NOT-LITIGATION
2. https://blog.ipleaders.in/difference-between-mediation-and-arbitration/
3. https://byjus.com/free-ias-prep/alternative-dispute-resolution/
4. https://www.lexology.com/library/detail.aspx?g=c74be5b9-f8c1-4d5a-ae87-936d0ca6de8b
5. https://www.pon.harvard.edu/tag/mediation-and-arbitration/
6. https://blog.ipleaders.in/arbitration-conciliation-and-mediation
7. https://store.lexisnexis.in/professional-books/arbitration-and-conciliation-and-mediation?srsltid=AfmBOorwKkb1raGg5OlSQ5JQiNnkb0J2WmAkjiwEipLKwBxRtFPXmBIj
8. https://www.lawfinderlive.com/Articles-1/Article7.htm

[1] Manupatra, “The Role of Arbitration and Mediation in India: A Comprehensive Analysis of Their Evolution, Benefits, and Shortcomings”, available at https://articles.manupatra.com.

[2] iPleaders, “Difference Between Mediation and Arbitration”, available at https://blog.ipleaders.in.

[3] BYJU’s, “Alternative Dispute Resolution”, available at https://byjus.com.

[4] Lexology, “India: Alternative Dispute Resolution: Recent Developments and Future Directions”, available at https://www.lexology.com.

[5] Harvard Law School, Program on Negotiation, “Mediation and Arbitration”, available at https://www.pon.harvard.edu.

[6] iPleaders, “Arbitration, Conciliation and Mediation”, available at https://blog.ipleaders.in.

[7] LexisNexis, “Arbitration, Conciliation and Mediation”, available at https://store.lexisnexis.in.

1. [8] Law Finder Live, “ADR Process: Arbitration, Conciliation, and Mediation”, available at https://www.lawfinderlive.com.