UNIT-IV

Arbitration Agreements
Introduction

The term arbitration in very lucid terms means the disputes of the parties with one another, gets referred to a
neutral party where this neutral party solves the disputes. Arbitration is a form of alternative dispute resolution,
where the settlement of the dispute takes place outside the Courtrooms. This third party who solves the dispute
is known as an arbitrator. His decisions regarding the dispute are always binding uponthe parties. It is an
adequate way to save time and resources. This method of settlement outside the court is governed by an Act
called, “The Arbitration and Conciliation Act, 1966”. This Act saves the parties from the hassle of spending
years in the Courts and saves them a lot of time and money, which otherwisewould have been a lot to invest.
Arbitration is a quasi-judicial process and the parties are referred to a domestic tribunal.

Arbitration agreements

The formation of an arbitration agreement takes place when two parties, enter into a contract and in which,the
contract states that any dispute arising between the parties have to be solved without going to the courts with
the assistance of a person, who would be a neutral person, a third party, appointed by both of the parties, known
as the Arbitrator, who would act as a judge. The arbitrator so appointed should have been previously mentioned
in the contract that they made. They should also state who should select the arbitrator, regarding the kind of
dispute the arbitrator should give decisions on, the place where the arbitration would take place. Furthermore,
they should also state the other kinds of procedures mentionedor that has to be required during an arbitration
agreement.

The parties are generally required to sign an Arbitration Agreement. The decision taken by the arbitrator
regarding any issue, is binding on both the parties, as stated by the agreement. In any event, where one party
decides that an agreement must be made prior to entering the contract, it can be stated that the agreement was
made to deviate from the hassles of the court. These agreements are like contingent contracts, which means that
these agreements shall only come into force or become enforceable if any dispute happens, and on the basis of
the same dispute between two parties mentioned in the contract. It also takes place or is enforceable in the light
of any dispute that arises between the parties to the contract.

Essentials of an Arbitration Agreement

 There must be a dispute that should take place, only then the agreement will be valid. The presenceof a dispute
amongst the parties is an essential condition for the contract to take place. When the
 parties have already settled the dispute, in no case, they can invoke the arbitration clause to refute the settlement.
 Another essential is the written agreement. An agreement related to the arbitration must always bein writing.
An arbitration agreement will be considered as a written agreement when:

1. It has been signed by both parties and it is in the form of a document.

2. It can be the exchange of the telex, the letters, the telegrams, or any other means of communication which
provides the record of the exchange and the agreement for arbitration.
3. There must be an exchange of statements between the parties that gives the statement of claim anddefence in
which the existence of the agreement of the arbitration is agreed by one of the parties and which is not defined
by the other party.

 The third essential intention. The intention of the parties while forming the contract is of utmost importance and
it forms the basis of the agreement. There have been no prerequisite citations of terms such as an “arbitrator” or
“arbitration” to be made in the agreement. Therefore, it is necessary to note that the intention of both parties
plays a very important role in such an agreement. However,one must keep in mind that even if the words have
not been mentioned, the intention must show that both the parties have agreed to come to the terms with the
Arbitration Agreement.
 The fourth essential element is the signature of the parties. The signature of the parties is an essential element
to constitute an arbitration agreement. The signature can be in the form of a document signed by both the parties
to the contract which comprises all the terms and conditions,or it can also be in the form of a document which
is signed by only one party to the contract whichcontains the terms and acceptance by the other party to the
contract. It will be sufficient if one party puts up a signature in the agreement and the other party accepts that.

Essentials of an arbitration agreement: what you can and should put in

The Act provides parties with tremendous liberties in choosing the manner in which they prefer to arbitrate.
This is often the downfall as most parties fail to take adequate care of the contents of this all-so- important
clause. Parties to an arbitration agreement can, amongst other things, choose the number of arbitrators, their
qualifications, the seat of the arbitration, the rules to be followed, the kind of hearings that may take place and
even agree that the arbitrator will pass an unreasoned award (however illogical that may appear).

In light of so many choices, it is important that the arbitration clause so drafted is not vague, confusing or
uncertain in any manner whatsoever. It must clearly bring out the intention of the parties to refer all or certain
disputes, as the case may be, to arbitration, as well as the manner in which such arbitration is to beconducted.
Some essentials of an arbitration agreement can be as under:

1. An arbitration agreement must be in writing;

2. An arbitration agreement must comply with the requirements of a valid contract;
3. An arbitration agreement must be in respect of a dispute that is arbitrable;
4. Parties may agree on the number of arbitrators and their nationalities (subject to it being an oddnumber);
5. Parties may agree on the seat and the venue of the arbitration proceedings;
6. Parties may agree on their choice of procedure or even to have the arbitration administered by an arbitral
institution under its rules;
7. Parties may agree on the language of proceedings and pleadings;

8. In cases of an international commercial arbitration, in addition to the above:

9. Parties can choose the governing law of the contract and the governing law of the arbitrationagreement;
10. Depending upon the seat of the arbitration, parties can also choose whether they prefer toexclude any or all
provisions contained in Part 1 of the Act.

11. Parties must also decide whether they wish to refer disputes to an arbitral institution instead of ad-hoc
arbitration. It may be noted here that institutional arbitration in India has now come of age and reputed
institutions like the London Court of International Arbitration and the Singapore International Arbitration
Centre have a presence in India.

12. Simply put, parties must take care to ensure that the arbitration agreement is crystal clear and leaves no room
for creative and ingenious misinterpretation. Their intention to resolve disputes by way of arbitration and the
manner in which such arbitration is to be conducted must come through without a doubt. It must be
remembered that the devil can and often does lie in the details.

Validity of an Arbitration Agreement:

Arbitration agreement must satisfy a number of conditions to be valid
Without a valid arbitration agreement, no arbitration can take place or award can be rendered
Valid arbitration agreement is the corner stone of any arbitration proceedings
The arbitration agreement can be valid and enforceable by law when it contains the following requirements
a) The agreement should be in writing as document
b) It should be a legal relation between parties related to any contract to deal any current and future disputes
with a defined legal relationship
c) It should be concern to a matter capable of settlement by arbitration
d) The parties to the arbitration agreement have legal capacity under the law applicable to them
The agreement should be valid under the law, which parties has chosen, if there is no such choice or under the
law of the country where the award is made

Reference and Interim measures by Court:

Introduction

The Arbitration and Conciliation Act, 1996 (1996 Act) contains provision relating to interim measures ordered
by an arbitral tribunal under Section 17. Formerly, there was no such provision in the ArbitrationAct, 1940 and
the said provisions of Section 17 have been inserted in the 1996 Act. However, analogousprovisions in
UNCITRAL Model Law (Model Law) are contained in Article 17 and UNCITRAL Arbitration Rules analogous
provision is contained in Article 26.

Background

According to the 1996 Act, under Section 17 the arbitral tribunal could, at the request of any party, pass interim
measures for protection as it may ponder necessary in respect of the subject matter of the dispute. It was indeed
development and a revamped version from the 1940 Act where a similar power like the above was not conferred
on the arbitral tribunal. However, even this provision had its shortcomings.
 The 2015 Amendment brought about the much-needed changes to Section 17 with respect to the grant of interim
reliefs and the various kinds of the reliefs that can be granted by the arbitral tribunal keeping the section at par
with Section 9 where the Court has been empowered to grant interim reliefs. It also introduced that any order
issued by the arbitral tribunal under this section shall be deemed to be an orderof the Court for all purposes and
shall be enforceable under the Code of Civil Procedure, 1908 in the samemanner as if it were an order of the
Court. Section 17 is reproduced under for a bare perusal:
“17. (1) A party may, during the arbitral proceedings or at any time after the making of the arbitralaward but
before it is enforced in accordance with section 36, apply to the arbitral tribunal —

 for the appointment of a guardian for a minor or person of unsound mind for the purposes of arbitral
proceedings; or
 for an interim measure of protection in respect of any of the following matters, namely —

(a) the preservation, interim custody or sale of any goods which are the subject-matter of the arbitration
agreement;

(b) securing the amount in dispute in the arbitration;

(c) the detention, preservation or inspection of any property or thing which is the subject-matter of the
dispute in arbitration, or as to which any question may arise therein and authorising for any of the aforesaid
purposes any person to enter upon any land or building in the possession of any party, or authorising any samples
to be taken, or any observation to be made, or experiment to be tried, which may be necessary or expedient for
the purpose of obtaining full information or evidence;

(d) interim injunction or the appointment of a receiver;

(e) such other interim measure of protection as may appear to the arbitral tribunal to be just andconvenient,

and the arbitral tribunal shall have the same power for making orders, as the court has for the purpose of,and in
relation to, any proceedings before it.”

(2) Subject to any orders passed in an appeal under section 37, any order issued by the arbitral tribunal under
this section shall be deemed to be an order of the Court for all purposes and shall be enforceable under the Code
of Civil Procedure, 1908, in the same manner as if it were an order of the Court.”

The 2019 Amendment amended this Section by omitting “or at any time after the making of the arbitral award
but before it is enforced in accordance with Section 36” from subsection (1) which means that all interim
measures after the declaration of an award but prior to its enforcement will be dealt under Section9 by the
concerned Court. This amendment has evidently succeeded in clearing the inconsistency of whichauthority
(Tribunal or Court) is to be approached once an arbitral award has been passed by a tribunal andbefore it is
enforced by one of the parties to the Arbitration.

Interim measures granted by arbitral tribunal

Under Section 17 of the 1996 Act, the arbitral tribunal was granted the power to issue interim measures during
ongoing arbitral proceedings at the request of a party but the power was not as wide as provided tothe Hon’ble
Courts under section 9. A major flaw in this section was that the arbitral tribunal was grantedthe power to pass
an order but was neither given the power under legislature to enforce its own orders norissue any orders against
third parties or even hear ex-parte applications. Adding to the same, such powers
could also be excluded by an agreement between parties. This made the parties hesitant to file an application
asking for interim measures before an arbitral tribunal.

The amendment in 2015 brought significant changes to the wordings of Section 17. The arbitral tribunal now
possesses the power to grant all interim measures similar to that which the Hon’ble Courts have thepower to
grant under Section 9 of the Arbitration Act.

Selection and Appointment of Arbitrators in India

The Arbitration and Conciliation (Amendment) Act, 2015 grants the liberty to the parties to appoint an arbitrator
mutually.

The Act provides that the parties are free to determine the number of arbitrators, provided that such numbershall
not be an even number. However, if the parties fail to do so, the arbitral tribunal shall consist of a sole arbitrator.1

The procedure in relation to appointment of arbitrator(s) is provided under Section 11 of the Act. A personof
any nationality may be an arbitrator, unless otherwise agreed by the parties. The aforesaid section also deals
with the contingency wherein the parties fail to appoint an arbitrator mutually. In such a situation, the
appointment shall be made, upon request of a party, by the Supreme Court or any person or institution designated
by such Court, in the case of an International Commercial arbitration or by High Court or any person or
institution designated by such Court, in case of a domestic arbitration.

Before the appointment of arbitrator is made, the concerned Court or the person or institution designatedby such
Court is required to seek a disclosure in writing from the prospective arbitrator in terms of Section 12(1) of the
Act and also give due regard to any qualifications required for the arbitrator by the agreement of the parties and
the contents of the disclosure and other considerations as are likely to secure the appointment of an independent
and impartial arbitrator.

It may be noted that under Section 12(1) of the Act, an obligation has been cast upon the prospective arbitrator
to make an express disclosure on (a) circumstances which are likely to give rise to justifiable doubts regarding
his independence or impartiality; or (b) grounds which may affect his ability to completethe arbitration within
12 (twelve) months.

The purpose of this provision is to secure the appointment of an unbiased and impartial arbitrator.

Fifth Schedule to the Act (Annexure-A) contains a list of grounds giving rise to justifiable doubts as to the
independence or impartiality of an arbitrator. The Seventh Schedule (Annexure-B) lays the grounds which make
a person ineligible to be appointed as an arbitrator.

The Act provides that in an International Commercial Arbitration, an arbitrator of a nationality other thanthe
nationalities of the parties may be appointed where the parties belong to different nationalities.
Expeditious disposal of application for appointment of an arbitrator(s) is emphasized by the Act and an
endeavour shall be made to dispose of the matter within a period of sixty days from the date of service of notice
on the opposite party.

Challenge of Arbitrators - UNCITRAL Arbitration

The procedure concerning the challenge of arbitrators differs in some respects depending on whether the
arbitration is subject to the 1976 Rules or 2010 and 2013 Rules.

Arbitral Tribunal:
 Arbitral Tribunal or Arbitration Tribunal or arbitration commission or arbitration committee or arbitration
committee or arbitration council
 Arbitral Tribunal is a panel of unbiased adjudicators( who makes formal judgements) which is convened
and sits to resolve a dispute by way of arbitration
 Arbitral Tribunal refers to panels of one or more arbitrators responsible for adjudicating disputes between
parties

Appointment of Arbitral Tribunal:

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 arbitrators
 The appointment of the arbitrator is to be made by mutual consent of all the parties to the dispute
 Appointment of three arbitrators is mandatory, with the third one being the presiding arbitrator
 If the two appointed arbitrators fail to agree on the third arbitrator with in thirty days from the date of
appointment
 Then the appointment can be made by the request of a party by the supreme court or High court or any
person or institution designated by the court
Procedure for appointment:
Section:11 only confers power on the High Court to appoint an arbitrator or presiding arbitrator only when the
following conditions are fulfilled:
a) Where there is a valid arbitration agreement

b) The agreement contains for the appointment of one or more arbitrators

c) The appointment of the arbitrator is to be made by mutual consent of all the parties to the dispute
d)Differences have arisen between the parties to the arbitration agreement or between the appointed arbitrators
e)The differences are on the appointments of arbitrators
The arbitrator should be chosen carefully because of his special knowledge of the subject matter which is in
dispute
He should be able to keep the atmosphere clear at the tribunal
He must give attention to the facts in dispute placed before him and his decision should be practical and
impartial and in the best interest of justice, good conscience and equity

Challenge to arbitration Tribunal:

Any Arbitrator may be challenged
The parties has freedom to decide the challenge procedure
If circumstances exist, that give rise to justifiable doubts, as to the arbitrators impartiality or independence
Section:13 provides that, the parties are free to agree to the procedure and to challenge an arbitrator with in 15
days
The challenge has to be by way of written application stating the correct reason to the Tribunal

Jurisdiction of Arbitral tribunal

Introduction

Arbitration was conceived as a procedure to avoid the troubles faced in the procedure of civil litigation in courts.
In India, it subsisted early in the guise of panchayats, which comprised people who were asked to determine on
matters presented before them, and their verdicts were conceded by the parties to the [Link] British made
the first and foremost use of the concept of arbitration for in the Bengal regulations of 1772 and 1813 provisions
related to the arbitration of disputes were applied to immovable property and the Arbitration Act of 1899 was
repealed by the Arbitration Act, 1940.

These statutes mainly focused to institutionalize the procedure of arbitration in India. But in some durationof
time, it was clear that the Arbitration Act of 1940 was not capable enough to tackle the requirements of a rapidly
changing India. Therefore, it was substituted by the Arbitration and Conciliation Act in 1996.
 It is based on the UN Model Law to make our law agreement with the law embraced and acquired by the United
Nations Commission on International Trade Law (UNCITRAL). The Act is of amending and consolidating in
nature and not exhaustive. It has a much-extended scope of the 1940 Act. It aims for the domestic Arbitration
and enforcement of foreign arbitral awards.

Jurisdiction of arbitration tribunals

It would not be appropriate to say that an arbitral tribunal has statutory jurisdiction. The tribunal determines its
jurisdiction to adjust the needs of the parties. The arbitral agreement mainly determines the ambit of jurisdiction
of the arbitral tribunal. The focal of party-autonomy declares that when the two parties have the remedy to
resolve their disputes on their own then they have the remedy to show this rightto any third party, to determine
overt that squabble.

Thus it is very essential to contemplate a well-drafted agreement because it results in giving complete strength
to the tribunal to determine matters related to the jurisdiction. The Arbitration and Conciliation Act, 1996 also
specifically mentions the jurisdiction to determine explicit matters in Section 17 of the Act.

 Appointment of a guardian for a person who is of unsound mind or minor age in between theprocess of
arbitration
 Safety/Security/ Confinement/ provisional injunction of the subject matter of the arbitration.

There are some cases in which the competency of the arbitral tribunal is contingent on gaining questions.

Powers of the arbitrator in an arbitration proceeding

The arbitrator is the one who will give the arbitral award, therefore, The Arbitration and Conciliation Act,1996
provides several powers to him in order to decide the award.

Power to administer an oath to the parties and witnesses

The arbitrator has the power to administer the oath to the parties and witnesses. He also could issue
interrogatories to the parties if he thought it necessary to do so. There is no express provision relating to that
power being given under The Arbitration and Conciliation Act, 1966. However, it is implicitly appliedto the fact
that he acts like a quasi-judicial authority in arbitration.

Power to take interim measures

According to Section 17 of this Act, when any party during the arbitration proceeding or at any time after making
of the arbitral award, may seek the interim measure before the arbitration tribunal. The arbitration tribunal has
the power to take an interim measure relating to:

 Appointment of guardian for minor or person of unsound mind;

 For the protection of:-

1. Interim custody and sale of goods which are subjected to the arbitration agreement;
2. Securing amount which is disputed in the arbitration;
3. Detention, prevention or inspection of any property or thing which is subjected to arbitration;
4. Appointment of receiver;
5. Such other interim measure is necessary for the eyes of the Court.

Power to proceed to ex-parte

In any arbitration proceeding, the arbitrator has the power to proceed to ex-parte i.e in the favor of one party if
another party contravenes any provision of this Act. According to Section 25, there are three conditions under
which the court may pass an ex- parte award:

1. When the claimant fails to communicate his statement of claim in accordance with Section 23(1)of the Act.
2. When the respondent fails to communicate his statement of claim in accordance with Section 23(1)of the Act.
3. When any party fails to appear at an oral hearing or to produce the document or to produce documentary
evidence.

The court, however, doesn’t proceed ex-parte against any party without giving him the notice regarding the
court’s intention to proceed ex parte on a specific date, time and place.

Arbitration - procedure and court assistance

Procedure
Commencement of arbitral proceedings
Does the law provide default rules governing the commencement of arbitral proceedings?
Unless the parties agree otherwise, an arbitral proceeding of a dispute commences on the date on which a request
for that dispute to be referred to arbitration is received by the respondent (section 21, Arbitration Act).
Applicable procedural rules
Section 19 of the Arbitration Act recognises the right of the parties to agree on the procedural rules applicable
to the arbitral proceedings.
Parties can adopt procedural rules or agree to have their arbitration administered by an institution with itsown
rules in exercise of this choice. If the parties fail to decide on a procedure, the arbitral tribunal can conduct the
proceedings in the manner it considers appropriate. The arbitral tribunal is not bound to followthe procedural
rules that apply to domestic court proceedings. However, the procedure devised by the parties or the tribunal
must meet the basic tenets of an adjudicatory process (such as the parties must be treated with equality and each
party must be given a full opportunity of presenting his/her case).
 Following are the stages of arbitration or arbitration process step by step:

 Arbitration Clause - An agreement or the clause specifically stating that if the dispute arises between the
parties they will resolve it through the process of arbitration.
 Arbitration notice - In case a dispute has arisen and the party has opted to follow the procedure of arbitration
then the party against whom the default has been committed will send an arbitration notice for invoking
arbitration process steps between the parties.
 Appointment of Arbitrator- After receiving the notice by other parties both the parties will appoint the
arbitrators in the manner as specified in the arbitration agreement or arbitration clause.
 Statement of Claim- Next step in an arbitration proceeding in India is to draft a statement of claim. Statement
of claim contains the dispute between the parties, events which lead to the disputeand the compensation claimed
from the defaulting party. The other party can file a statement of counterclaim along with reply to the statement
of claim. Get your statement of claim, reply to thestatement of claim or counterclaim through top arbitration
lawyers.
 Hearing of Parties - Arbitral tribunal will hear both the parties and their evidence.
 Award - After hearing the parties, the arbitral tribunal will pass the decision. The decision of the tribunal is
known as ‘Award’ and is binding on the parties. However, an appeal against the arbitral award can be filed
before the High Court.
 Execution of Award - Once the award has been passed by the tribunal it has to be executed. The party in whose
favour the award has been passed has to file for execution or enforcement of awardwith the help of a good
arbitration lawyer.

Arbitration process in India does not follow the procedure of the Civil Procedure Code and the arbitratoralso
the arbitration proceeding does not need to follow the procedures enlisted in the Civil Procedure Code, 1908(1).
Arbitrator in India, however, has the following powers:

 To make awards
 To take assistance
 To rule on its jurisdiction
 To pass interim relief
 To determine procedures
 To decide on the official language of the proceedings
 To appoint an expert
 To seek the court’s assistance for evidence
 To terminate proceedings
 To impose interest and deposits

Other than the above powers, the arbitrator has also given certain powers of civil court as under the Civil
Procedure Code:

 To administer the oath to parties and witnesses appearing before him;

 To state a special case for the opinion of the court on any question of law or state the award in theform of a
special case for the opinion of the court;
 To make the award conditional or in the alternative;
 To correct in an award any clerical mistake or error arising from any accidental slip or omission;
 To administer any party interrogatories
The Limitation Act 1963(2) applies to all proceedings under the Arbitration and Conciliation Act, just as it
applies to proceedings in the Indian courts, except to the extent expressly excluded by the Arbitration and
Conciliation Act. Any arbitration proceedings commenced after the limitation period (three years fromthe date
on which the cause of action arose) will be time-barred.

Local courts can intervene in domestic arbitration proceedings. This includes the power to issue interim orders
and appoints arbitrators.

While arbitrators cannot compel third parties to appear before them, the tribunal or a party, with the tribunal’s
approval, may apply to the court for assistance in taking evidence. The court may make an orderrequiring third
parties to provide evidence directly to the tribunal. If a person fails to attend in accordancewith such order of
the court, it is subject to the same penalties and punishments as it may have incurred during court proceedings.

Grounds of challenge:
[Link] relation with parties
[Link] relationship with dispute
[Link] interest in dispute
1. Arbitrators past involvement with the dispute
[Link] of co-arbitrators
[Link] of the arbitrator with parties and others in thee dispute
If any case falls under any of the above headings then the arbitrator my be challenged

Difference Between Arbitration, Conciliation, Negotation And Mediation

Introduction:

Alternate Dispute Resolution (ADR) is a dispute resolution method that employs non-adversarial (i.e. outof
court) ways to adjudicate legal controversies. ADR methods are informal, cheaper and faster, in comparison to
the traditional litigation process. It includes arbitration, conciliation and mediation.

The primary difference between arbitration, conciliation and Mediation is based on the role played by thethird
party who is selected by the parties seeking a settlement, in consensus. That Arbitration is the process by which
parties select an independent person, who renders a decision regarding the case. Conversely Conciliation
attempts to make parties come to an agreement about the problem at hand. In Mediation, the mediator acts as
a facilitator who helps the parties in agreeing.

Effects on industry:

Industrial disputes are always harmful to all the stakeholders-employees, society, management, Government
etc. Resulting in loss of revenue, production profit and much more. However, it is the employees who are worst
affected by the industrial disputes, as the consequences would be a lockout which may lead to loss of wages and
even jobs. Industries are the backbone of the economy, and if the strife may continue for long, the whole economy
may collapse. So, the settlement of industrial disputes should be done as soon as possible.

Arbitration, Conciliation and Mediation are such methods of resolving industrial disputes out of the court.
So, look at the article to understand the differences between Arbitration, Conciliation and Mediation
 Content: For Differences amongst Arbitration, Conciliation and Meditation:

1. Definition
2. Comparison chart
3. Key Features
4. Conclusion

Definition of Arbitration:

Arbitration is a powerful means of resolving disputes between the organization and its employees. It is a process
in which an independent third party analyses the bargaining situation, listens to both parties and collects
necessary data and make recommendations which are binding on the parties concerned.

Arbitration is proved successful in resolving disputes between labour and management. The parties themselves
establish arbitration and decision is acceptable to them. The decision taken by the arbitrator is accompanied by
a written opinion providing reasons supporting the decision.

Further, the procedure is comparatively expeditious than courts and tribunals. However, the process is a bit
expensive, and if there is a mistake in selecting an arbitrator, the judgement becomes arbitrary.

Definition of Conciliation:

Conciliation can be described as the method adopted by the parties for resolving the dispute, wherein the parties
out of their free consent appoint an unbiased and disinterested third party, who attempts to persuadethem to arrive
at an agreement, by way of mutual discussion and dialogue.

Conciliation is characterized by the voluntary will of the parties who want to conciliate the dispute. Its basic
component is confidentiality in which the parties and the conciliator are not permitted to share or disclose to the
external party, anything associated with the proceedings The conciliator plays an advisory role, wherein he/she
suggests potential remedies to the problem. The conciliation process completes with a settlement between the
parties which is final and binding upon the parties.
Definition of Mediation:
Mediation is a form of alternate dispute resolution, wherein parties mutually appoint an independent and
impartial third party, called as the mediator who helps the parties in reaching an agreement which is mutually
accepted by the parties concerned.

Mediation is a systematic and interactive process, which employs negotiation techniques to assist the parties in
finding the best possible solution to their problem.

As a facilitator, mediator attempts to facilitate discussion and build an agreement between the parties with an
aim to settle the dispute. The decision made by the mediator is not binding like an arbitral award.

Negotiation:
1. Negotiation is a dialogue between two or more people or parties intended to reach a beneficial outcome over
one or more issues
2. Where conflict exists with respect to at least one of these issues
3. Negotiation is an interaction and process between entities who aspire to agree on matters
4. It is aimed to resolve points of difference to gain advantage for an individual or collective or to craft
 outcomes to satisfy various interests
5. The degree to which the negotiating parties trust each other to implement the negotiated solution is a major
factor in determining whether negotiations are successful

Comparison Chart:

Basis for
Arbitration Conciliation Mediation
Comparison
Mediation is
Meaning Arbitration is a Conciliation is a
a process of
dispute settlement method of resolving
resolving
process in which an dispute wherein an
issues
impartial third party is independent person
between
appointed to study the helps the parties to
parties
dispute and hear both arrive at the negotiated
wherein a
the parties to arrive at settlement.
third party
a decision binding on
assist them
both the parties.
in arriving at
an
agreement.
The decision
A conciliator does not
An arbitrator has the made by the
Enforcement have the power to
power to enforce his mediator is
enforce his decision.
decision. not
enforceable
like an
arbitral
award.
The Arbitration and Arbitration and Code of
Regulated by
Conciliation Act, ConciliationAct, 1996 Civil
1996 Procedure,
1908
Prior Required Not Required Not
Agreement Required
Available for Existing and future Existing disputes. Existing
disputes. disputes.
Commercial
transactions
Damages in case of in patents,
Resolving disputes
breach of contract, trademark
Example between contractors
matters of the right to licenses,
and subcontractors
the office, time barred Joint
etc.
claims etc. ventures and
R & D
Contracts,
music and
film
contracts etc.
Key Features:

1. Arbitration refers to a method of resolving industrial disputes, wherein the management and the labour
present their respective positions to the neutral third party, who takes a decision and imposesit. Conciliation is
a method of resolving the dispute, wherein an independent person, who meet theparties jointly and severally
and helps them to arrive at the negotiated settlement or resolve their differences. The process of dispute
resolution in which a third party intervenes in an attempt to resolve it, by enabling communication between
parties is called mediation

2. The decision made by the arbitrator is acceptable to the parties concerned. On the other hand, the conciliator
& Mediator does not have the right to enforce his decision.

3. Arbitration requires a prior agreement between parties known as the arbitration agreement, whichmust be in
writing. As against this, the process of conciliation doesn’t require any prior agreement.

4. Arbitration is available for the current and future disputes whereas the conciliation & Mediation can be
adopted for existing disputes only.

5. Arbitration is like a courtroom proceeding, wherein witnesses, evidence, cross-examination, transcripts and
legal counsel are used. On the contrary, Conciliation is an informal way of resolving disputes between the
management and labour and in mediation, the role of the third party is a facilitator, who facilitates interaction
between the parties.

6. Minimizing the cost-exposure entailed in settling the dispute, maintenance of control over the dispute-
settlement process and speedy settlement of disputes.

Conclusion:

Industrial disputes are nothing but the differences and conflicts between the employer employees, stakeholders,
society, management and Government of the organization. It can arise because of unfair labour practices, wage
demand, Investment, political interference, labour laws and so on. The methods discussed above are alternative
dispute resolution, undertaken with the view to agreeably and peacefully settling the disputes, out of court. You
can choose any of these two methods, as per your choice and requirements.

Confidentiality v. Transparency

Often this issue has been a topic of discussion as to whether transparency is more important or confidentiality.
It can be argued that the general public has more faith in the court proceedings as there is transparency involved
in the process and the court proceedings are accessible to the general public whereas arbitral proceedings are
private and are not accessible to third parties. Neither the proceedings nor the award passed by the arbitrator is
accessible to any third party. Whereas the judgment of the court is pronounced in open court and available for
public. Moreover, transparency ensures fairness and builds thetrust of stakeholders in arbitration. Parties often
complain that there is no accountability on part of the arbitrator as the proceedings take place in a closed room
and as a result, the credibility of arbitrators is often challenged in court. For the said reasons, many people opine
that arbitral awards be published as it will cement the faith of the parties in arbitration and at the same time there
will be a development of jurisprudence in arbitration. Arbitrators will be careful while passing awards as they
would be concerned about their public image and quality of arbitral awards will be maintained. Publication of
awards will make it easier for parties to nominate an arbitrator based on his reputation. However exciting the
idea of transparency may sound but it cannot be ignored that confidentiality is one of the key features which
makes arbitration attractive to parties as a mode of dispute
resolution thereby, making it difficult to implement the idea of publication of awards.

Privacy and Confidentiality

Sometimes privacy and confidentiality are used interchangeably when in fact these two concepts are different.
Privacy in arbitral proceedings would mean that no third party can enter the arbitration proceedings and cannot
witness the same as these proceedings take place in a private set-up in a closed room. In other words, privacy
only means that arbitration proceedings cannot be attended by a third partywho is not a party to the dispute
except the counsels, witnesses and the arbitrator. Confidentiality on the other hand means that the content,
documents, information which is adduced during the proceeding and the award are to be kept confidential and
cannot be published or disclosed by any party.

Resort to Arbitral or judicial proceedings:

Section:77 deals with resort to arbitral or judicial proceedings

According to this section:77
The parties shall not initiate any judicial proceedings in respect of this dispute while arbitral or conciliation
proceedings are going on
Except in any situation if the party strongly feels that judicial proceedings necessary for preserving his rights

Costs of Arbitration:
The costs of Arbitration include arbitrator’s fee, administrative fee and secretarial expenses
Expenses on travel of Arbitrator
Stenographic charges, translation and interpretation charges
Stamp duty on Award, expenses of witnesses
Cost of legal or technical advice and other incidental expenses arising out of or in connection with the
arbitration proceedings or award
Amount the party liable to pay:
The rules of arbitration contained detailed provisions regarding costs and expenses of arbitration and the fee
payable to the arbitrator
In non institutional arbitrations, the fee were generally fixed in advance by arrangement with the arbitrator
The arbitrator might refuse to pronounce the award if his fees were not paid
All the costs of arbitration should bare by the parties

Remuneration of Arbitrator:
An arbitrator might fix his remuneration either at the time of his appointment or during the course of
Arbitration
The award contains costs and expenses of arbitration
An arbitrator has the right to refuse the delivery of award to the party, till his fee paid
He could also apply for court for an order for the payment of his fee
Any party who felt that the fee demanded by an arbitrator was excessive might apply to the court for the
determination of the fee

Dispute Resolution
Introduction to the dispute resolution framework

As with most common law countries, Indian law may broadly be classified as substantive or procedural law.
While substantive law determines rights and liabilities of parties or confers legal status or imposes and defines
the nature and extent of legal duties, procedural laws prescribe practice, procedure and machinery for the
enforcement or recognition of rights and liabilities. 2 To put it another way, substantivelaws are those that are
enforced while procedure deals with the rules through which the substantive law isenforced.3
 Dispute resolution in India may be through courts, specialised tribunals (such as those for recovery of debtby
banks or company disputes, among others) or alternative dispute resolution (ADR) mechanisms that include
arbitration, mediation and conciliation. The amendment to the Commercial Courts Act 2015 (Commercial
Courts Act) provides for the constitution of commercial courts at a district level, except areas where the High
Court exercises ordinary civil jurisdiction and provides for commercial divisions (in all High Courts having
ordinary civil jurisdiction) and commercial appellate divisions in each High Court for the adjudication and
speedy disposal of commercial disputes4 of a specified value of not less than 10 million rupees or such other
notified value within the limits of the relevant territorial jurisdiction.5 The amendment mandates pre-institution
mediation in all cases except in suits or applications in which urgentrelief is sought and further prescribes a
maximum period of three months for the completion of the processof mediation.

Dispute Resolution Boards (sometimes referred to as Dispute Review Boards) and Dispute Adjudication Boards,
how they are established, and how they operate in practice.

Dispute Resolution Boards (DRB) administer a type of dispute resolution without any specific description.
DRBs have evolved over time and can be formulated in a number of different ways. The procedure is based on
contract rather than statute, and the parties to a contract are able to agree to a formulation that suits their
particular project. A few standard contracts have DRBs as part of their terms, of which the mostprominent are
the FIDIC contracts and the World Bank (Procurement of Works) contract.

It seems to be accepted that the first DRB was set up in 1975 for the Eisenhower Tunnel in Colorado, USA.
This followed the first tunnel bore that had been constructed between 1968 and 1973. The project was a disaster,
in that it overran in both time and money, with many disputes arising. When it came to the
second bore, notice was taken of a study entitled Better Contracting for Underground Construction published in
1974.

This report highlighted the incidence of claims, disputes and litigation together with the additional costs that
inevitably flowed from those claims. Based on the report, it was decided that the second bore of the Eisenhower
Tunnel contract would incorporate a DRB. The hope was that the high level of cost overrun and disputes
experienced on the first bore could be minimised by use of the DRB.

It was a tremendous success. Although disputes did arise, they were dealt with very swiftly and effectivelyby the
DRB, to the extent that there was no ensuing litigation.

The DRB was set up in the form of a Review Board rather than an Adjudication Board, and their findingswere
recommendations rather than binding decisions. The losing party was not obliged to follow the recommendation.
The dispute could thereafter be taken to a higher authority where a binding decision could be made.

Lok Adalats

Lok Adalat (People’s Court) is one of the alternative dispute resolution mechanisms, where the cases or disputes
which are pending in a court or which are at pre-litigation stage are settled in an amicable manner. It is a statutory
body under the Legal Services Authorities Act, 1987. This system is based on Gandhian principles. Lok Adalats
serve very crucial functions in India due to many factors like pendingcases, illiteracy, poverty, high vacancy in
courts etc.

Reason for establishment of Lok Adalats:

1. Equal justice and free legal aid: Article 39A of the Constitution states that citizens of India are entitled to
equal justice and free legal aid. Hence, the Parliament enacted the Legal Services Authorities Act, 1987 to
 create national, state and district level authorities to establish Lok Adalats.
2. Speedy trial of the disputes: The basic features of Lok Adalat are the procedural flexibility and speedy trial of
the disputes. There is no strict application of procedural laws like the Civil Procedure Code and the Evidence
Act while assessing the claim by Lok Adalat.
3. Reducing backlog: The other reason was to clear the massive backlog of pending cases in the Indian judicial
system as well as to bring speedy justice to all. The matters in Lok Adalat do not linger on for years but are
settled within a day.

Role of Lok Adalats:

1. Dispute settlement: To hear and settle long pending cases, which are disposed through compromise and
settlement. It can hear both civil and criminal cases.
2. Justice: The aim of Lok Adalats is to bring justice to poor and underprivileged people of India. Itensures that
opportunities for securing justice are not denied to any citizen by reason of economicor other disabilities.
3. Alternate dispute resolution: The system of Lok Adalat, which is an innovative mechanism for alternate
dispute resolution, has proved effective for resolving disputes in a spirit of conciliation outside the courts.
4. Reducing litigation: It can take up pending cases as well as those that are in pre litigation stage. The verdict
given by the Lok Adalat is final and binding, and there is no provision for appeal. But the party is free to initiate
a new litigation in court.