Alternate Dispute Resolution Questions 21 to 40 (3 Marks)

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

Q21. Analyze any three differences 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.

Q22. Importance 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 Preamble of the Act makes it clear that the it has been connected to constitutes the Legal Services Authorities to provide free and Competent legal services to the weaker sections of the society to ensure that opportunities for securing justice are not denied to any citizen by reason of economic or other disabilities and organise Lok Adalats to secure that operation of the legal system promotes Justice on a basis of equal opportunity.

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.

Q23. Mr. Ram filed a suit in court against Mr. Shyam but the court has referred it to Lok Adalat. However, Mr. Ram doesn’t want to settle it in Lok Adalat.

Can court compel parties to a case to go for settlement in Lok Adalat?
Can Mr. Ram challenge the decision of the Court about reference to Lok Adalat? Why?
What is the procedure for settlement of dispute outside the court?

According to Section 20 of the Legal Services Authority Act, 1987, if the court is satisfied that the matter is an appropriate one to be taken cognizance of by the Lok Adalat, the court shall refer the case to the Lok Adalat. Thus. the court can refer the matter to Lok Adalat.
Yes, Mr. Ram can challenge the decision of the Court about reference to Lok Adalat. The Supreme Court has held in many cases that if there is no agreement, the Lok Adalat award is not effective and even if the parties do not agree to settle the conflict through Lok Adalat, the normal litigation process remains open to the contesting parties.
The procedure for settlement of dispute outside the court is known as Alternate Dispute Resolution (ADR). Parties to the dispute must agree to settle their dispute outside the court by making an application before the court. Parties must file their motion for dismissal of the suit pending before the court. Such application must be signed by the parties to the dispute.

Q24.What do you mean by Foreign Award under New York Convention Awards.?

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.

The New York Convention defines “foreign award” as an arbitral award on differences between persons arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India, made on or after the 11th day of October, 1960

Q25. The Role of Court in appointment of Arbitrator.

Section 11 of the Arbitration and Conciliation Act, 1996 deals with the appointment of arbitrators. The parties are free to agree on a procedure for appointment of arbitrator or arbitrators. Section 11 only confers power on the High Court to appoint an arbitrator or presiding arbitrator only when the following conditions are fulfilled:

where there is a valid arbitration agreement;
the agreement contains for the appointment of one or more arbitrators;
the appointment of the arbitrator is to be made by mutual consent of all the parties to the dispute.
differences have arisen between the parties to the arbitration agreement; or between the appointed arbitrators;
the differences are on the appointment or appointments of arbitrators.

Q26. Commencement of Conciliation proceedings.

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.

Section 62 of the Arbitration and Conciliation Act, 1996 provides for the commencement of proceedings for conciliation. For the purpose of settling the dispute through the process of conciliation all what is required is a proposal in writing and its acceptance thereof. When a proposal is made by one party the other party has the option of the acceptance of proposal or its rejection. Rejection does not always have to be expressed it may be implied. If the party who sends the proposal does not receive any follow up or reply within a period of thirty days or other stipulated period it shall amounts to rejection and hence the process of conciliation will not commence. Thus conciliation procedure shall commence when the other paty accepts in writing the invitation to conciliate.

Q27. Mr. Suhas was appointed as a conciliator by parties. After few meetings with the parties, Mr. Suhas draws up a settlement agreement and signs

Can such agreement be recognized as a settlement agreement? Why?
When does a settlement agreement have binding effects?

According to Section 73(1) of the Arbitration and Conciliation Act, 1996, when it appears to the conciliator that there exist elements of a settlement which may be acceptable to the parties, he shall formulate the terms of a possible settlement and submit them to the parties for their observations. After receiving the observations of the parties, the conciliator may reformulate the terms of a possible settlement in the light of such observations. In this case it is mentioned that after few meetings with the parties, Mr. Suhas draws up a settlement agreement and signs. Involvement of parties is not mentioned. Thus, the agreement drawn by Suhas cannot be considered as settlement agreement.
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. According to Section 73(3) of the Arbitration and Conciliation Act, 1996, when settlement agreement is signed by both the parties then it is binding on both the parties. As per section 74 of The Arbitration and Conciliation Act, 1996 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.

Q28. Can a couple appoint an Arbitrator on a wife’s application for divorce? Give reason for your answer.

No, the couple cannot appoint an Arbitrator on a wife’s application for divorce. Generally, all disputes involving private rights (disputes about property or money, or about the amount of damages payable for breach of contract etc.) and which can be decided by a civil court, can be referred to arbitration. However, according to the general practice,matrimonial matters, like divorce or conjugal rights, etc. cannot be resolved through arbitration.

Q29. Lien on Arbitral 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.

Q30. Time limit for Arbitral award.

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.

Therefore, this Section provides a total period of 12+6 months i.e. 18 months, for the completion of the arbitral proceedings and to pass an award. If the arbitrator fails to pass an award within this stipulated time frame, then his mandate shall be terminated, unless this period is further extended by the grant of a competent court.

Q31. As the dispute arises Mr. B requests Mr. A for an appointment of an arbitrator, but an arbitration agreement fails to make provision for the number of arbitrators.

How many numbers of arbitrators can be presumed in above case?
State remedy to B, if Mr A fails to appoint an arbitrator.
If Mr. A and Mr. B agrees to appoint 3 arbitrators but fails to agree on procedure for appointing the arbitrator. Advice Mr. A and B.

Arbitration agreement is there, means arbitration must take place. There is no mention of number of arbitrators. 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. In this case one or three arbitrators can be appointed.

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.
If A fails to appoint an arbitrator, then according to Section 11(5) of the Arbitration and Conciliation act, 1996, if the parties fail to agree on the arbitrator within thirty days from receipt of a request by one party from the other party to so agree the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him.
Mr. A and Mr. B may request the Chief Justice or any person of institution designated by party to do the necessary measures, unless the agreement on the appointment procedure provides other means for securing appointment.

Q32. An arbitration agreement was existed between Mr. X and Mr. Y for some dispute. After having a dispute Mr. Y without informing to Mr. X submit the dispute to an arbitrator.

Can Mr. Y do so? Advice Mr. X.
What will be the effect on arbitration procedure if Mr. X fails to communicate his statement of defence to an arbitrator?
An Arbitrator without giving sufficient notice to Mr. X declares an ex-parte award. Advice Mr. X.

No, Mr. Y cannot submit dispute to arbitrator without informing X. In case of a dispute between the parties arise, the aggrieved party will send a notice to the defaulting party for initiating the procedure of arbitration known as arbitration notice. In this case Mr. Y is not informing Mr X i.e., he is not sending arbitration notice. Thus, Mr X can challenge the appointment of arbitrator.
There is no fair hearing in front of arbitrator because Mr. X is not informed and he cannot communicate with the arbitrator. Mr. X is not allowed to submit his statement in his defence.
Mr. X can appeal against the ex-parte award as he was not informed by Mr. Y about the arbitration procedure and thus the award is violation of the principles of natural justice. The arbitrator cannot be said to be independent and impartial. Such award can be set aside.

Q33. Parties in a dispute willing to appoint a conciliator for settlement of dispute. But they have some queries. advise them.

Who is conciliator?
What is settlement agreement?
What is judicial status of settlement agreement?

Conciliator is a third impartial party appointed by disputing parties to reach settlement in existing and ongoing conflict to preserve the relationship they have with each other.
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. Parties have the option of either drawing up the terms settlement agreement by themselves or take the assistance of conciliator. Such agreement reached is called settlement agreement or conciliation agreement.
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. When it is signed it is binding on both the parties. Such agreement reached is called settlement agreement or conciliation agreement. As per section 74 of The Arbitration and Conciliation Act, 1996, 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.

Q34. The Arbitration agreement was entered into on 8th November, 1995. Thereafter due to dispute one party addressed a letter, to other requesting to refer the matter for Arbitration, which was received by other party on 19th January, 1996. Thereafter Arbitrator was appointed on 3rd February, 1996 who commenced the arbitration 4th March, 1996. Explain in detail as to which Act will govern these proceedings.

The Arbitration and Conciliation Bill, 1995, was passed by both the Houses of the Parliament in August 1996 and received the assent of the President on 16 August 1996, which became the Arbitration and Conciliation Act, 1996. However, it is deemed to have commenced from 25 January 1996.

According to Section 21 of the Act, 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.

In this case parties are agreeing. Arbitrator was appointed on 3rd February, 1996 who commenced the arbitration 4th March, 1996.Thus, the Arbitration and Conciliation Act, 1996 is applicable.

Q35. A mediator in the process of mediation, has received a document. Which Mr. P, a party to mediation, was not aware, which will help him to prove his case. After the mediation failed, Mr. P applied the Court to issue summons to the Mediator to produce the said document before the Court. Can the Court issue the summons as applied? Substantiate your answer with reason.

Section 70 of the Arbitration and Conciliation Act, 1996, provides provision of disclosure of information. According to Section 70 of the Act, when the conciliator receives factual information concerning the dispute from a party, he shall disclose the substance of that information to the other party in order that the other party may have the opportunity to present any explanation which he considers appropriate: Provided that when a party gives any information to the conciliator subject to a specific condition that it be kept confidential, the conciliator shall not disclose that information to the other party.

Section 75 of the Act, deals with confidentiality. According to Section 75 of the Act, notwithstanding anything contained in any other law for the time being in force, the conciliator and the parties shall keep confidential all matters relating to the conciliation proceedings. Confidentiality shall extend also to the settlement agreement, except where its disclosure is necessary for purposes of implementation and enforcement.

Thus mediator is bound to keep confidentiality of all the matters in the conciliation proceedings. Hence Court cannot issue summons to the mediator.

Q36. One party in the Arbitration desire to examine the Rationing Officer and the Engineer of the Municipal Corporation. Therefore, has made application before the Arbitrator. Can the arbitrator require them to come and give evidence? Explain the procedure in that behalf.

Yes, The party can make application for such examination to arbitrator. Section 27 of the Arbitration and Conciliation Act, 1986 provides for court assistance in taking evidence.

According to Section 27(1) of the Act, the arbitral tribunal, or a party with the approval of the arbitral tribunal, may apply to the Court for assistance in taking evidence.

Section 27(2) of the Act, gives procedure to be followed to call them for examination.

According to Section 27(2) of the Act, the application shall specify –

(a) the names and addresses of the parties and the arbitrators;

(b) the general nature of the claim and the relief sought;

(i) the name and address of any person to be heard as witness or expert witness and a statement of the subject-matter of the testimony required;

(ii) the description of any document to be produced or property to be inspected.

According to Section 27(3) of the Act, the Court may, within its competence and according to its rules on taking evidence, execute the request by ordering that the evidence be provided directly to the arbitral tribunal.

Q37. The dispute arose between the parties as regards to the venue of the arbitration under the Arbitration Agreement. The Decision is to be given by the Joint Arbitration committee on such issue. The question before the court was whether such a decision is appellable –

Do you think that such a decision is appellable?
The decision given by the Joint Arbitration Committee be considered as an Interim Award is award? Explain

This decision is not appellable. 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.

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.

This list doesn’t contain dispute on place of arbitration.

2. It is not interim award. Section 20 of the Arbitration and Conciliation act, 1996, deals with the place of arbitration. According to Section 20 of the Act, the parties are free to agree on the place of arbitration. Failing any agreement referred to in sub-section 20(1), the place of arbitration shall be determined by the arbitral tribunal having regard to the circumstances of the case, including the convenience of the parties. Notwithstanding sub-section 20(1) or sub-section 20(2), the arbitral tribunal may, unless otherwise agreed by the parties, meet at any place it considers appropriate for consultation among its members, for hearing witnesses, experts or the parties, or for inspection of documents, goods or other property. Thus it is a statutory provision and not interim award.

Q38. The Arbitration agreement was rendered on 8th November, 1995 thereafter due to dispute one party addressed the letter to the other requesting to refer the matter to arbitration which was received by the other parties on 19th January 1996. Thereafter arbitrator was appointed on 3rd February, 1996 to commence the arbitration on 4th March, 1996. Explain in details as to which is govern these proceedings.

In this case parties are agreeing. Arbitrator was appointed on 3rd February, 1996 who commenced the arbitration 4th March, 1996.Thus, the Arbitration and Conciliation Act, 1996 is applicable.

Q39. Mr. Prabhu’s name was mentioned as an arbitrator in the arbitration agreement between the parties. After having an dispute parties appointed Mr. Arun as an arbitrator. After few months Mr. Arun shows his unwillingness to work so both parties appointed Mr. Shulka as an arbitrator.

Can Mr. Prabhu takes any action against parties? Why?
Can Mr. Arun submit his resignation during arbitration
Whether Mr. Shulka has to work from initial stage of arbitration?

No, Mr. Prabhu cannot take action against the parties. If the procedure of appointment of arbitrators is not agreed upon under the Section 11(2), and the arbitration is with the Sole Arbitrator, then one party to arbitration agreement makes a request to the other party to the arbitration agreement, to agree upon the appointment of Sole Arbitrator, then parties must agree within a period of 30 days from the date of receipt of the request.
Yes, Mr. Arun can submit his resignation. He can do it with the provisions of Section 14 of the Arbitration and Conciliation Act, 1996.
Mr. Shukla can be substituted as arbitrator under provisions of Section 15(2) of ththe Act. He may, at the discretion of the arbitral tribunal, start with a new procedure or may repeat any hearing previously held by Mr.Arun.

40. Mr Z appointed as an arbitrator by Mr C and Mr. D for the settlement of dispute. Mr. Z has some personal relations with Mr C an award was declared by Mr Z on the basis of some personal information which he get it from Mr.C.

Can Mr. Z declare an award on the basis of personal information?
Whether there is any breach of duty from Mr. Z?
What are remedies available to Mr. D?

No, Mr. Z cannot declare an award on the basis of personal information. Arbitrator must be independent and impartial. He should give chance to Mr. D to present his statement in response.
Yes, there is a breach of duty from Mr. Z. Under Section 12(1), a duty is imposed on the person who is to be appointed as an arbitrator, to disclose in writing existence of circumstances which may raise justifiable doubts against his independency and impartiality.
He can challenge arbitrator. Under Section 12(3) of the Arbitration and Conciliation Act, 1996, if circumstances exist that give rise to justifiable doubts as to his independence or impartiality, the party can challenge arbitrator. The procedure of challenge is given in Section 13 of the Act. Under Section 13(2) of the Act, a party who intends to challenge an arbitrator shall, within fifteen days after becoming aware of the constitution of the arbitral tribunal or after becoming aware of any circumstances referred to in sub-section (3) of section 12, send a written statement of the reasons for the challenge to the arbitral tribunal.

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