Alternate Dispute Resolution Questions 101 to 121 (3 Marks)

Law > Civil Laws > Alternate Dispute Resolution > Concept of ADR

Q101.Write a note on Lok Adalat as an ADR mechanism.

Alternative Dispute Resolution or ADR refers to an assortment of dispute resolution procedures that primarily serve as alternatives to litigation and are generally conducted with the assistance of a neutral and independent third party.

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. Other objects are to reduce burden on the Courts so that the problem of law’s delay may be solved and people may get justice within due time. Lok Adalat provides alternative resolution or devise for expeditious and inexpensive justice.

Q102. Under what grounds can an Arbitral award be 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.

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.

Q103.What is the procedure for termination of arbitral proceedings?

Section 32 of the Act deals with the termination of proceedings of arbitration. Section 32(1) of the Act unequivocally provides that only ‘final award’ shall terminate the arbitral proceedings. In Kifayatullah Haji Gulam Rasool Vs Bilkish Ismail Mehsania (2001) case, the Court held that arbitration proceedings shall automatically stand terminated only after making of final award, which decides or completes decision of claims which are presented.

Under Section 32(2) of the Act arbitral proceedings can also be terminated by an order of the Tribunal, which order can only be passed

when the claimant withdraws the claim or
when the parties agree on the termination of the proceedings or
when the Tribunal finds that continuation of proceedings has become unnecessary or impossible.

Subject to section 33 and subsection (4) of section 34, the mandate of the arbitral tribunal shall terminate with the termination of arbitral proceedings.

Q104. What is the procedure for appointment of the conciliator?

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.

Q105.A dispute between “A‟ and “B‟ was pending before the court. Upon the request of both the parties the matter was referred to Lok Adalat. The presiding officer of Lok Adalat was the friend of Mr. ‟A‟. “B” came to know about this fact after the award was passed.

a. Can “B‟ appeal against the award?

b. What is the method adopted by Lok Adalat for settlement of disputes?

a) Yes, B can appeal against the award.According to Section 12(1) of the Arbitration and Conciliation Act,when a person is approached in connection with his possible appointment as an arbitrator, he shall disclose in writing any circumstances likely to give rise to justifiable doubts as to his independence or impartiality. Here B came to know that the presiding officer of Lok Adalat is friend of A after the award was passed. Actually, presiding officer of Lok Adalat must have informed B and would have said that this case cannot be heard by him as he is friend of A at the beginning itself. It is breach of duty under the Section on the part of the presiding officer.

b) The Lok Adalat will have similar powers of a Civil Court and is governed under the Code of Civil Procedure. A Lok Adalat has the authority to resolve all matters which may be pending before any court by way of agreement between the parties, as well as pre-litigative matters. Such matters may be of a civil or criminal nature (compoundable). The award granted by the Lok Adalat is the court’s own decision because it has been reached through the simplified form of conciliation rather than the court’s argument procedure. It focus 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. 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.

Q106. In case of international transaction in terms of a contract, a dispute arose between the parties. Petitioner filed an application for the appointment of arbitrator under Sec.11 of the Arbitration and Conciliation Act.

Whether court can appoint an arbitrator, when the alleged dispute under the contract was an international transaction?
Can provisions of Part I of the Arbitration and Conciliation act, 1996 be made applicable t5o commercial Arbitration held outside the country?
Cite decided cases.

Yes, Under Section 11 of the Arbitration and Conciliation act, 1996, the Court has power to appoint an arbitrator in case of an international transaction in accordance with the terms of the contract.
As per precedents, provisions of Part I of the Arbitration and Conciliation act, 1996, are equally applicable to international commercial arbitration held outside country unless any or all the provisions of the Act have been excluded by the agreement between the parties.
Bhatia International v. Bulk Trading S.A., AIR 2002 SC 1432 and Aurohill Global Commodities Ltd. v. MSTC Ltd. AIR 2007 SC 2706

Q108. Explain the procedure of international arbitration proceedings.

‘International arbitration’ or ‘Foreign arbitration’ is often taken to mean ‘international commercial arbitration’. Companies frequently include international arbitration agreements in their commercial contracts with other businesses, so that if a dispute arises with respect to the agreement, they are obligated to arbitrate rather than to pursue traditional court litigation.

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-

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

109. Mr. Kulkarni was appointed as an arbitrator in the matter of dispute relating to a building construction. Mr. Kulkarni informed the petitioner regarding his appointment and directed him to appear for the hearing. But the petitioner did not attend the hearing despite several adjournments. A final notice was sent that if the petitioner does not appear of the given date the proceedings will take place ex-parte and the award will be passed accordingly.

a. Can an arbitrator proceed ex-parte?

b. What is the remedy available to the party against whom ex-parte award is passed by the arbitrator?

Q110. An arbitration agreement was drawn between the parties and they decided to appoint a sole arbitrator. But the dispute arose between the parties regarding the appointment of the arbitrator and hence the parties could not appoint the arbitrator within the prescribed period of time.

What is the time limit to appoint an arbitrator?
What is the procedure of appointment of the arbitrator?

The Arbitration and Conciliation (Amendment) Act, 2015 introduced a new provision wherein a stipulated time limit is prescribed for the completion of the arbitration proceedings. Section 29A of the Act provides that an arbitration award shall be passed within 12 months from the date when the arbitral tribunal enters upon the reference. This duration can be extended by 6 months with the consent of both the parties.

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.

Q111. Reliance Industries, an Indian Company enters into a contract with Suzuki Industries from Japan. This contract also included arbitration clause. Mr. Lobo, an Indian was appointed as an arbitrator and the award was drawn according to the laws in India. a. What is foreign award? b. Can the foreign award be executed in India?

Part II of the Act deals with foreign awards based on New York and Geneva conventions. An arbitral award is said to be a foreign award if it has a foreign element in it or has one or more of the following factors:

If the award is made in a foreign country.
If the subject matter of the arbitration agreement involves international transaction that, is it is related to international trade, commerce, investment, etc.
Where atleast one of the parties to arbitration agreement is a foreign national
If the award is made in accordance with the foreign law.

Yes. 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”.

Q112. Elaborate briefly about International Commercial Arbitration.

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

Q113. Briefly explain any 3 roles of the Conciliator under Arbitration and Conciliation Act, 1996.

According to section 67 of the Act,

the conciliator shall maintain his independence and impartiality and persuade the parties in away to help them reach an amicable settlement.
the conciliator should not only uphold the principles of objectivity, fairness and justice but should also keep in mind the rights and obligations of the parties and various circumstances surrounding the 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.
a settlement of the dispute can be proposed by the conciliator at any time when the proceedings are still in force. Any such settlement proposition need not be in writing or accompanied by a statement of reasons, necessarily.

Q114. Define the term “Court‟ as defined under Arbitration and Conciliation Act, 1996.

According to Section 2(c) of the Arbitration and Conciliation Act, 1996,” Court” means a Civil Court having jurisdiction to decide the questions forming the subject- matter of the reference if the same had been the subject- matter of a suit, but does not, except for the purpose of arbitration proceedings under section 21, include a Small Cause Court.

Q115.Write in brief about “Lien on Award‟.

An arbitrator is well within his right to demand payment before final pronouncement of award, for his services rendered. The ordinary practice is for him to notify the parties the charges for his services as soon as the award is ready. He may retain the award until the charges are paid by the parties. This retention of award may be called the arbitrator’s lien on the award. This lien, however, does not extend to the documents and other information rendered by the parties to the arbitrator. Thus, the arbitrator cannot hold and retain the official documents of any party, until they have paid the charges. Arbitrator only has a lien on the arbitral award and nothing else.

It sometimes happens that at the absolute end of an arbitration proceeding, one or both of the parties refuse to pay the fees of the arbitrator. The arbitrator can send a time bound notice to the parties for them to pay the appropriate amount. If the parties on completion of the time don’t pay the fees, then the arbitrator sends a final notice informing them of the pronouncement of the award and the failure to pay his fees will lead to lien on the award and retention of the same.

Q116. Briefly explain any three powers of the Lok Adalat.

Under Section 22 of Legal Services Authority Act, 1987, Powers of Lok Adalats are as follows:

The Lok Adalat will have similar powers of a Civil Court and is governed under the Code of Civil Procedure.
It has the power to summon and enforce the attendance of a witness and their examination under oath;
It has power to order the discovery and production of any document;
It has power to receive evidence on affidavits;
It has power to receive evidence regarding a particular case.
It has power to ask for any public record or document or copy of such record or document from any court or office;
The Lok Adalat has the power to follow its own procedure for determining any dispute.
The proceeding of a Lok Adalat is considered to be judicial proceedings.

Q117. Elaborate briefly about Arbitration Agreement.

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. Thus, the existence of a dispute is a pre-requisite to invoke arbitration and such a dispute must be covered by the arbitration clause to enable arbitrator to assume jurisdiction. An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.

A valid arbitration agreement is the founding stone of the arbitration procedure. It is a written agreement between the parties to submit their existing or future disputes or differences to arbitration. The jurisdiction of the arbitral tribunal emanates from the agreement between the parties. By agreeing to arbitration, the parties voluntarily opt-out of the right to have their disputes settled through adjudication by a civil court.

Q118.Write in brief about the “New York Convention Award‟.

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:

The country must be a signatory to the New York Convention.
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.

Q119.Elaborate briefly the provisions relating to Court‟s assistance in taking evidence under Arbitration and Conciliation Act, 1996.

There may be situations when parties do not cooperate with the tribunal during the evidence stage. Although the Tribunal is not bound to follow the rules of the Code of Civil Procedure and the Evidence Act, there is no provision under the Arbitration and Conciliation Act that gives the tribunal the power to compel production of documents and summon witnesses in the same way that a civil court can. Hence, in such situations, for an arbitral tribunal, assistance of the court may be necessary to obtain evidence.

Section 27 of the Arbitration and Conciliation Act, 1996,states the procedure that one has to follow for asking the Court for assistance in taking evidence in an arbitration proceeding. Either the Arbitral Tribunal or any party after taking approval of the Tribunal may apply to the court for assistance in taking evidence. After the application is made, the Court may:

accept the application and conduct all evidence taking procedures by itself
consider passing the same authority to a neutral administrator
order that the evidence be provided directly to the Arbitral Tribunal
decide on the procedure that the Tribunal and the parties have to abide by, but

But the execution of the procedure has to be done by the Tribunal itself.

Q120. Mr. A and B had appointed an arbitrator Mr. C for their present dispute. Mr. A submitted a statement of claim. What will happen if Mr. A dies during procedure? Explain what will the procedure be terminated if Mr. B fails to submit the statement of defence to Mr. C?

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