Alternate Dispute Resolution Questions 81 to 100 (3 Marks)

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Q81. State Salient features of Arbitration and Conciliation Act, 1996.

Following are some of the key features of the Arbitration and Conciliation Act, 1996 (Write only Three):

1. Replacement of three old statutes: The Act is a consolidation of three laws of arbitration previously in force – viz, the Arbitration Act, 1940, the Arbitration (Protocol and Convention) Act, 1937, and the Foreign Awards (Recognition and Enforcement) Act, 1961 into one enactment. Though the three Acts have been consolidated the provisions regarding each of the acts have been kept distinct within the 1996 Act.
2. Necessity of Arbitration Agreement: The Act emphasizes the importance of the Arbitration agreement without which arbitration proceedings cannot be instituted. The arbitration agreement is a clause in a contract or an agreement between parties stating that any dispute will be referred to arbitration proceedings. The Act mentions that the arbitration agreement or arbitration clause must contain the following information – the subject matter of dispute, the timing of dispute (past/present/future), number of arbitrators, qualifications of arbitrators, jurisdiction, and composition of the tribunal.
3. Application to Domestic and International Arbitration: The Act provides the procedure not only for domestic arbitration but also includes International Commercial Arbitration. The 1996 Act is a law that relates to the enforcement of foreign Arbitration awards and ensures greater autonomy in the process of arbitration and puts a limit on the intervention of the judiciary.
4. Procedural Advantage:  Arbitral Tribunal has full powers to decide the procedure to be followed unless parties agree on the procedure to be followed. The Tribunal also has powers to determine the admissibility, relevance, materiality, and weight of any evidence. The place of arbitration will be decided by mutual agreement. However, if the parties do not agree to the place, the same will be decided by a tribunal. Similarly, language to be used in arbitral proceedings can be mutually agreed upon. Otherwise, Arbitral Tribunal can decide. The Act allows parties to choose the substantive law to be applied by the arbitration tribunal and this must also be mentioned in the arbitration agreement.
5. Party Autonomy: The concept of party autonomy is the central theme of the Act. The expressions used in the Act – ‘unless otherwise agreed by the parties’, ‘with the agreement of parties’, `if the parties in dispute have expressly authorized’ etc., strengthens the idea of party autonomy.
6. Minimal Interference by Judiciary: One of the major defects of earlier arbitration law was that the party could access court almost at every stage of arbitration – right from the appointment of an arbitrator to implementation of the final award. Thus, the defending party could approach the court at various stages and stall the proceedings. Now, the approach to court has been drastically curtailed. In some cases, if an objection is raised by the party, the decision on that objection can be given by Arbitral Tribunal itself. After the decision, the arbitration proceedings are continued and the aggrieved party can approach Court only after Arbitral Award is made.
7. Arbitral Award: Decision of Arbitral Tribunal is termed as ‘Arbitral Award’. The arbitrator can decide the dispute ex aequo et bono (In justice and in good faith) if both the parties expressly authorized him to do so.  The decision of the Arbitral Tribunal will be by majority. The arbitral award shall be in writing and signed by the members of the tribunal. The award should be dated and the place, where it is made, should be mentioned. Copy of award should be given to each party.
8. Reasoned Award: The award must be in writing and signed by the members of the Arbitral Tribunal. It must state the reasons for the award unless the parties have agreed that no reason for the award is to be given. Previous to this Act reasoning of the award by the arbitrator was not mandatory.
9. Enforceability of Award: Under this Act, every final arbitral award is enforceable as a decree of the court of law and not required to be made a “rule of court”.
10. Over-Riding Effect of the Act: Section 5 of the Act clarifies that notwithstanding anything contained in any other law for the time being in force, in matters governed by the Act, the judicial authority can intervene only as provided in this Act and not under any other Act.
11. Applicability of the Limitation Act: For this purpose, the date on which the aggrieved party requests another party to refer the matter to arbitration shall be considered. If on that date, the claim is barred under Limitation Act, the arbitration cannot continue. If the Arbitration award is set aside by Court, time spent in arbitration will be excluded for purpose of the Limitation Act. 
12. Aligning Procedure with the UNCITRAL Model Law: The Act has been enacted taking into account the United Nation’s Commission on International Trade Law (UNCITRAL) Model Law and UNCITRAL Conciliation Rules. This promotes unification and harmonization of International Tarde Law by harmonizing concepts of Arbitration and Conciliation of the legal system of the world.
13. Clear Distinction Between Arbitration and Conciliation: The provisions that relate to the process of Arbitration are contained in Part I which includes Chapters I to IX, while the provisions that relate to the process of Conciliation are dealt with in Part III that includes section 61 to 81.

Q82. State any three differences between Arbitration & Conciliation.

Arbitration	Conciliation
Arbitration is a procedure in which parties submit present or future disputes, to one or more arbitrators (arbitral tribunal) who make a binding decision on the dispute.	Conciliation is a process of persuading parties to reach settlement in existing and ongoing conflict with the help of third impartial party called conciliator with the to preserve the relationship they have with each other.
The third impartial party is called arbitrator.	The third impartial party is called conciliator
An arbitrator has the power to enforce his decision.	A conciliator do not have the power to enforce his decision.
Pre-agreement is required for starting arbitration process.	There is no need of pre-agreement for starting the process of conciliation but acceptance to the process by both parties is necessary.
Arbitration is available for existing and future disputes.	Conciliation is available only for the existing disputes.
Sections 1 – 61 of the Arbitration and Conciliation Act, 1996 deals with the process of arbitration.	Sections 62 – 81 of the Arbitration and Conciliation Act, 1996 deals with the process of conciliation.
The ultimate decision to agree on the settlement remains with the parties.he parties are bound by the decision of the arbitrator.	The ultimate decision to agree on the settlement remains with the parties.

Q83.What is the settlement agreement?

When the conciliator sees the possibility of settlement of dispute, the settlement process takes place under section 73 of The Arbitration and Conciliation Act, 1996. Generally, decision of the conciliation proceedings is not binding on the parties but if the parties resort to settlement of award under this section then the settlement agreement becomes binding on the parties. Parties have the option of either drawing up the terms settlement agreement by themselves or take the assistance of conciliator and at last the agreement is signed by both the parties and authenticated by the conciliator.  Such agreement reached is called settlement agreement or conciliation agreement. As per section 74 of The Arbitration and Conciliation Act, 1996, the settlement agreement drawn under section 73 is kept in par with arbitral award in the arbitration proceedings under section 30 of The Arbitration and Conciliation Act, 1996 and it is binding like arbitral award.

Q84. What is the status of the award of Lok-Adalat?

The word “Lok Adalat” means ‘People’s Court. The Legal Services Authority Act makes provisions in relation to the establishment, powers and functions etc. of the Lok Adalat. The object of establishment of Lok Adalat is to settle the disputes quickly by counselling and discussions, etc.  Its basis is to provide quick justice with the mutual and free consent of the parties.

The Lok Adalat will have similar powers of a Civil Court and is governed under the Code of Civil Procedure. Every award of Lok Adalat shall be deemed as a decree of civil court. Every award of Lok Adalat shall be final and binding on all the parties to the disputed parties. No appeal shall lie from the award of Lok Adalat. It focusses on the compromise between the parties, if compromise is reached an award is made and it is binding on all the parties of the dispute. The evidence act and procedures law are not strictly followed, while assessing the merits of the case.

Q85.Write short note on New York Convention

The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done in New York, 10 June 1958 (the New York Convention), is described as the most successful treaty in private international law. It is adhered to by more than 160 nations. Sections 44 to 52 of the Arbitration and Conciliation (Amendment) Act, 2015 deals with foreign awards passed under the New York Convention.

In its simplest terms, the Convention incorporated two radical principles which, at that time, revolutionised the resolution of disputes with international elements, namely, enforcement of arbitration agreements and enforcement of foreign arbitral awards. Whilst the former provision upholds the principle of party autonomy by requiring national courts to refer the parties to arbitration, the latter incorporates a system of recognition of foreign arbitral awards in States bound by the Convention subject to limited exceptions. Furthermore, the Convention establishes a minimum legal framework, but it permits national courts to enforce arbitral awards under higher standards than those included in its provisions.

Two pre-requisites for enforcement of foreign awards under the New York Convention. These are:

1. The country must be a signatory to the New York Convention.
2. The award shall be made in the territory of another contracting state which is a reciprocating territory and notified as such by the Central Government.

Q86. When award Can be set aside?

Section 34 of the Arbitration and Conciliation Act 1996 deals with the setting aside of the arbitral award. In order to set aside an arbitral award, individual needs to file an application in court. The court in general accepts an application of challenge only if it comes under the ambit of Sec. 34 only. Prior to filing an application in the court to set aside the award, the party filing the application has to hand over a notice of such filing to the opposite party. Application for setting aside award to the Court as defined in the Act (Principal Civil Court of Original Jurisdiction) should be made within 3 months from the date of receipt of the final award of arbitration. Extension of further 30 days can be given at the discretion of the Court. Section 20 and Section 44 of CPC are applicable. The effect of the order setting aside the arbitral award is that where only a part of the reward is set aside, the rest of the award is final and binding on parties and can be enforced under the Code of Civil Procedure.

Grounds of Setting Aside of Arbitration Award:

The following are the grounds on which an award can be set aside:

• Incapacity of a party.
• Unlawful agreement.
• No notice to the other party.
• Subject matter extent to the scope of the arbitration agreement.
• Formation of Tribunal not as per the agreement.
• Subject matter not under the arbitration law.
• Award in conflict with the public policy of India.

Q87. What is Geneva convention? Write important provisions.

Sections 53-60 of the Arbitration and Conciliation (Amendment) Act, 2015 contains provisions relating to foreign awards passed under the Geneva Convention. The conditions for enforcement of foreign awards under the Geneva Convention are provided under Section 57 of the Arbitration and Conciliation Act, 1996. These are as follows:

1. the award has been made in pursuance of a submission to arbitration which is valid under the law applicable thereto;
2. the subject-matter of the award is capable of settlement by arbitration under the law of India;
3. the award has been made by the arbitral tribunal provided for in the submission to arbitration or constituted in the manner agreed upon by the parties and in conformity with the law governing the arbitration procedure;
4. the award has become final in the country in which it has been made, in the sense that it will not be considered as such if it is open to opposition or appeal or if it is proved that any proceedings for the purpose of contesting the validity of the award are pending;
5. the enforcement of the award is not contrary to the public policy or the law of India.

Q88. Write short note on Arbitrator.

Arbitration is a procedure in which parties submit present or future disputes, to one or more arbitrators (arbitral tribunal) who make a binding decision on the dispute. Chapter III of the Arbitration and Conciliation Act, 1996 lays down the arrangements for the Composition of an Arbitral Tribunal. Section 10(1) of the Arbitration and Conciliation Act, 1996 gives provision for the number of arbitrators in the arbitration tribunal. The parties to the dispute are allowed to mutually choose the number of arbitrators that shall establish the arbitral tribunal to adjudicate the dispute. It is, in any case, necessary that the number of arbitrators appointed shall be an odd number and not an even. This provision guarantees that there are no ties.

According to Section 10(2) of the Arbitration and Conciliation Act, 1996, if the parties to the dispute are unable to choose the number of arbitrators, in that case, just a single arbitrator shall be appointed. Section 11(1) of the Arbitration and Conciliation Act, 1996, a person of any nationality may be an arbitrator unless otherwise agreed by the parties. According to Section 11(2) of the Arbitration and Conciliation Act, 1996, the parties are free to agree on the procedure of appointment of the arbitrator or arbitrators.

Q89. How Conciliator is appointed?

Conciliation is a process of persuading parties to reach settlement in existing and ongoing conflict with the help of third impartial party called conciliator with the to preserve the relationship they have with each other.

Once the proposal of conciliation is accepted by the other party the next important step is to have a conciliator. Section 63 of the Arbitration and Conciliation Act, 1996 act provides that there under usual circumstances there will be only one conciliator and in no case the number of conciliators shall exceed three [section 63(2)] which is the maximum limit and the general rule is that they shall act jointly. Under Section 64 of the Act, Parties may enlist the assistance of a suitable institution or person in connection with the appointment of conciliators.

Q90. When is a written communication deemed to have been received?

According to Section 21 of the Arbitration and Conciliation Act, 1996, unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent. According to Section 3 of the Act, any written communication is deemed to have been received if it is delivered to the addressee personally or at his place of business, habitual residence or mailing address.

Q91. What are interim reliefs? Name a few of the interim reliefs that can be granted by the Court in the arbitration proceedings

some interim measures or interim relief be granted by the arbitral tribunal or the court in order to protect the rights of the aggrieved party. In some particular instances, the interim relief may involve directives to some third parties also. Interim relief is like an urgent remedy granted in exceptional circumstances.

Under Section 9 of the Arbitration and Conciliation Act, 1996 interim relief is given by the court. Court exercises powers in certain matters of arbitration. This power can be invoked any time before the arbitral tribunal is constituted.

Some interim measures by Court are:

1. Appointment of guardian for a minor or person of unsound mind;
2. Preservation, interim custody or sale of goods (if the goods are of perishable nature) for any goods related to the arbitration agreement;
3. Securing the amount of claims;
4. Allowing the detention, preservation or inspection of any property or thing, authorizing any person to enter upon any land or building, authorizing any samples to be taken or observations to be made or experiments to be tried in order to expedite the process and obtain accurate & complete information or evidence;
5. Allowing interim injunction or appointment of receiver;
6. Any other reliefs which the court considers proper taking into account the facts and circumstances of the case.

Q92. Who can be appointed as an Arbitrator?

The requisite qualification of arbitrator are as follows:

• The arbitrator must have requisite qualifications and none of the disqualifications prescribed in the arbitration agreement.
• The arbitrator should possess all the required capacity by law to assume the office of the arbitrator.
• H must be a person of the general reputation of fairness, integrity, and capable of applying objectivity in arriving at settlement in the dispute.
• The arbitrator should be free from any bias
• The arbitrator must be free from any connection with parties and the subject matter.

Q93. Explain the various methods of ADR available in India.

• Arbitration: Arbitration is a procedure in which a dispute is submitted, by agreement of the parties, to one or more arbitrators who make a binding decision on the dispute. In choosing arbitration, the parties opt for a private dispute resolution procedure instead of going to court. The decision given by the arbitral tribunal is called an award.
• Conciliation: Conciliation is a process of persuading parties to reach a settlement in existing and ongoing conflict with the help of a third impartial party called a conciliator with the intention to preserve the relationship they have with each other.
• Mediation: Mediation is a mode of dispute resolution, where an amicable decision arises with the help of a third party known as a ‘mediator,’ without recourse to the court of law.
• Negotiation: Negotiation is a method of dispute resolution whereby a dispute between two individuals or groups is settled amicably by an impartial third person called as a negotiator, using different techniques.
• Lok Adalat: “Lok Adalat” means ‘People’s Court. The object of establishment of Lok Adalat is to settle the disputes quickly by counselling and discussions, etc.  Its basis is to provide quick justice with the mutual and free consent of the parties. 

Q94. Sanjay and Mohit partners in a partnership firm make an agreement in writing to refer a dispute between them in business to an arbitrator. In spite of this agreement Sanjay files a suit against Mohit relating to the dispute in a court. – What will be the implication here? Give a detailed explanation.

According to Section 7(1) of the Arbitration and Conciliation Act, 1996, the “Arbitration Agreement” means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement. It is written agreement.

Once arbitration agreement is made for present or arising disputes, it bars jurisdiction of the court. Thus, court will not entertain request of suit by Sanjay. The dispute should be resolved through arbitration. Sanjay can only appeal to set aside the award on the following grounds:

• Incapacity of a party.
• Unlawful agreement.
• No notice to the other party.
• Subject matter extent to the scope of the arbitration agreement.
• Formation of Tribunal not as per the agreement.
• Subject matter not under the arbitration law.
• Award in conflict with the public policy of India.

Q95. What are the types of cases that the Lok Adalats deal with?

Lok Adalat has the jurisdiction to determine and to arrive at a settlement between the parties.                             

1. Any case pending before any court.
2. Any dispute which has not been brought before any court and is likely to be filed before the court.

Provided that any matter relating to an offence not compoundable under the law shall not be settled in Lok Adalat.

Q96. What are the disadvantages of Arbitration?

The disadvantages of arbitration are as follows:

• Inability to Appeal: There is a very limited avenue for appeals. As a general and practical rule, the arbitrator’s decision cannot be appealed. Only in certain limited situations, such as when the arbitrator exceeded his or her authority or upon proof of corruption, fraud, or undue influence, will an arbitrator’s decision be reviewed by a district court.
• Lack of Formal Evidence: There is a lack of a formal evidence process. The parties have to rely on the skill and experience of the arbitrator to sort out the evidence, rather than a judge or jury. No interrogatories or depositions are taken, and no discovery process is included in the process.
• Mandatory Arbitration Contracts: Arbitration agreements are sometimes contained in ancillary agreements, or in small print in other agreements, and consumers and employees sometimes do not know in advance that they have agreed to mandatory binding pre-dispute arbitration by purchasing a product or taking a job.  If arbitration is mandatory as per the contract between the parties, then their right to approach the court is waived. Mandatory arbitration clauses in consumer contracts, employment contracts, and nearly every online agreement often work in favour of the company rather than the employee or consumer. Sometimes such agreements make the complainant pay for the arbitration process. It is not in favour of small consumers.
• Possibility of Bias: Arbitrator is presumed to be neutral, impartial. It is also assumed that he has no personal interest in the subject matter before him. But considering human nature we can say that arbitrators may not be unbiased. If an arbitrator has a history of siding against one side in a dispute, that arbitrator may not be chosen, against one who has a history of being impartial to either side. if the arbitrator depends on the party for repeat business, there may be an inherent possibility of bias.
• No Interlocutory orders: The process does not provide for the grant of interlocutory measures against a party, making it easier for a party to take steps to avoid enforcement of an award, such as the relocation of assets offshore.
• Execution of Award: Arbitration awards are not directly enforceable; they are executable subject to judicial sanction. A party seeking to enforce an award must resort to judicial remedies. Efforts to enforce the award can be fiercely fought, which necessitates legal costs. Thus the advantage of arbitration incurring less cost is lost.
• No Public Hearing: If the subject matter is important to the general public, it is necessary that the public should know about the proceedings. Arbitration is not done publicly. Hence general public cannot know the outcome and reasoning behind that outcome. There is a possibility of a settlement between parties, against the public interest.

Q97. Differentiate between a Mediator and a Conciliator.

Mediator	Conciliator
Mediation a mode of dispute resolution and the facilitation of a negotiated agreement by a neutral third party called a mediator who has no decision-making power without recourse to the court of law.	Conciliation is a process of persuading parties to reach settlement in existing and ongoing conflict with the help of third impartial party called conciliator with the to preserve the relationship they have with each other.
The mediator only acts as a facilitator and does not interfere in the decision of the dispute.	The conciliatorpersuades the parties in a way to help them reach an amicable settlement.
The role of the mediator is rather to assist the parties in reaching their own decision on a settlement of the dispute.	A settlement of the dispute can be proposed by the conciliator at any time when the proceedings are still in force.
The mediator should provide structure, focus, and assistance with communication to the parties in dispute.	The conciliator may conduct the proceedings of the case in a manner that is appropriate in his opinion. However, he should consider the circumstances leading to the case and the wishes of the parties or any other requests of the parties that are related to the subject of the dispute and are reasonable in the eyes of the law.

Q98. What are the advantages of using Conciliation as an alternative method of dispute resolution?

The advantages of conciliation are as follows:

• It offers a more flexible alternative, for a wide variety of disputes, small as well as large;
• It obviates the parties from seeking recourse to the court system;
• No prior agreement is required.
• It reserves the freedom of the parties to withdraw from conciliation without prejudice to their legal position inter se at any stage of the proceedings;
• It is committed to the maintenance of confidentiality throughout the proceedings and thereafter, of the dispute, the information exchanged, the offers and counter-offers of solutions made, and the settlement arrived at.
• It is cost-effective and produces a quicker resolution of disputes.
• f) It facilitates the maintenance of the continued relationship between the parties even after the settlement.
• There is no scope for corruption or bias.

Q99. Explain the term International Commercial Arbitration. How are they enforced in India?

According to Section 2(f) of the Arbitration and Conciliation Act, 1996, “international commercial arbitration” means an arbitration relating to disputes arising out of legal relationships, whether contractual or not, considered as commercial under the law in for in India and where at least one of the parties is-

1. an individual who is a national of, or habitually resident in, any country other than India; or
2. a body corporate which is incorporated in any country other than India; or
3. a company or ail association or a body of individuals whose central management and control is exercised in any country other than India; or
4. the Government of a foreign country;

The foreign award can be enforced in India only if the court is satisfied that the foreign award is enforceable as per Chapter I Part II of the Arbitration and Conciliation Act, 1996 and is made in accordance with Section 47 and 49 of the Act, after which it can be referred as “Deemed Decree”.

Q100. Explain the difference between arbitration and conciliation?

Arbitration	Conciliation
Arbitration is a procedure in which parties submit present or future disputes, to one or more arbitrators (arbitral tribunal) who make a binding decision on the dispute.	Conciliation is a process of persuading parties to reach settlement in existing and ongoing conflict with the help of third impartial party called conciliator with the to preserve the relationship they have with each other.
The third impartial party is called arbitrator.	The third impartial party is called conciliator
An arbitrator has the power to enforce his decision.	A conciliator do not have the power to enforce his decision.
Pre-agreement is required for starting arbitration process.	There is no need of pre-agreement for starting the process of conciliation but acceptance to the process by both parties is necessary.
Arbitration is available for existing and future disputes.	Conciliation is available only for the existing disputes.
Sections 1 – 61 of the Arbitration and Conciliation Act, 1996 deals with the process of arbitration.	Sections 62 – 81 of the Arbitration and Conciliation Act, 1996 deals with the process of conciliation.
The ultimate decision to agree on the settlement remains with the parties.he parties are bound by the decision of the arbitrator.	The ultimate decision to agree on the settlement remains with the parties.

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