ADR- Module I

Smita Tyagi
 Module I-Concept
• Arbitration is a quasi-judicial adjudicatory
process where the arbitrator(s) appointed by
the Court or by the parties decide the dispute
between the parties.
 Need
• Access to Justice
• Basic Human Right
• Effective access to Justice
• Law and Poverty dimension- Cost effective and
economical
• Afcons Infrastructure Ltd. v. Cherian Varkey
• Construction Company Pvt. Ltd.
• (2010) 8 SCC 24 -(Process of referral to different
modes of ADR under Section 89 of CPC, 1908)
 National and International initiatives in
India
• ICC, UNCITRAL, ICSID.
• Indian Council of Arbitration
• FICCI
 Arbitration and Conciliation Act, 1996

• Based on Model Law adopted by UNCITRAL

• Types of Arbitration:
• Foreign arbitration
• Arbitration in India
• Ad Hoc
• Institutional Arbitration
 General Provisions
• The following types of disputes are usually conducive for Arbitration:
• commercial,
• financial,
• family,
• real estate,
• employment, intellectual property,
• insolvency,
• insurance,
• service,
• partnerships,
• environmental and product liability.
• Apart from commercial transactions, the mechanism of
• Arbitration is also adopted for settling various types of disputes such as labour
disputes, service matters, antitrust matters, consumer protection, taxation, excise
etc
 Definitions
• Arbitration
• Arbitrator
• Arbitral Award
• Court
• International Commercial Arbitration
• Arbitration agreement
Receipt of written communications
• According to this Act, any receipt of written
communication is deemed to have been
received when it is delivered to the residential
or business place of the person concerned.
And if in any case his place is not described
under the agreement then the receipt is sent
to the addressee’s last known place of work
and habitual residence.
 waiver of right to object
• A party who knows that any provision of the
applicable arbitration law from which the parties
may derogate or any requirement under the
arbitration agreement has not been complied
with and yet proceeds with the arbitration
without stating his objection to such non-
compliance without undue delay or, if a time-limit
is provided therefore, within such period of time,
shall be deemed to have waived its right to
object.
 extent of Judicial Intervention
• This Statement of principle in Section 5 of the Arbitration and Conciliation
• Act 1996 is a clear recognition of the need to limit and define the Court’s role in
• arbitration. Party Autonomy and the independence and authority of arbitrators
are the
• hallmarks of this Act. The prevalence of party autonomy over court intervention
with
• the object of achieving the two fold objective of speed and economy in
resolution of
• disputes by ‘domestic’ and ‘international commercial arbitration’ is the core of
this
• legislation. In order to eliminate any possibility of intervention by courts, Section
5
• of the Act begins with non obstante clause – “Notwithstanding anything
contained in
• any other law’.
 Administrative Assistance
• In order to facilitate the conduct of the
conciliation proceedings, the parties, or the
conciliator with the consent of the parties,
may arrange for administrative assistance by a
suitable institution or person.
 Arbitration Agreement
• “Arbitration agreement” means an agreement referred to in Section 7 [Section 2(1)(b)].
• Under Section 7, the Arbitration agreement has been defined to mean 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.
• 􏰁 An arbitration agreement shall be in writing.
• 􏰁 An arbitration agreement is in writing if it is contained in-
– a document signed by the parties;
– an exchange of letters, telex, telegrams or other means of telecommunication including
communication through electronic means which provide a record of the agreement; or
– an exchange of statements of claim and defence in which the existence of the agreement is
alleged by one party and not denied by the other.
• 􏰁 The reference in a contract to a document containing an arbitration clause
constitutes an arbitration agreement if the contract is in writing and the reference is
such as to make that arbitration clause part of the contract.
 Power to refer parties to arbitration where
there is an arbitration agreement
• Section 8(1) provides that a judicial authority, before which an action is
brought in a matter which is the subject of an arbitration agreement shall,
if a party to the arbitration agreement or any person claiming through or
under him, so applies not later than the date of submitting his first
statement on the substance of the dispute, then, notwithstanding any
judgment, decree or order of the Supreme Court or any Court, refer the
parties to arbitration unless it finds that prima facie no valid arbitration
agreement exists.
• Further sub-section (2) states that the application referred to in sub-
section (1) shall not be entertained unless it is accompanied by the
original arbitration agreement or a duly certified copy thereof.
• It may be noted that where the original arbitration
agreement or a certified copy thereof is not available with
the party applying for reference to arbitration under sub-
section (1), and the said agreement or certified copy is
retained by the other party to that agreement, then, the
party so applying shall file such application along with a
copy of the arbitration agreement and a petition praying
the Court to call upon the other party to produce the
original arbitration agreement or its duly certified copy
before that Court.
• Sub-section (3) states that notwithstanding that an
application has been made under sub- section (1) and that
the issue is pending before the judicial authority, arbitration
may be commenced or continued and an arbitral award
made.
 Interim measures by court
• Section 9(1) states that a party may, before, or during arbitral proceedings or at any time after
making of the arbitral award but before it is enforced in accordance with section 36, apply to
a court-
• i. for the appointment of a guardian for a minor or person of unsound mind for the purposes
of arbitral proceedings; or
• ii. for
• an interim measure of protection in respect of any of the following matters, namely:-
• the preservation, interim custody or sale of any goods which are the subject-matter of the
arbitration agreement;
• securing the amount in dispute in the arbitration;
• 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 part) 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;
• interim injunction or the appointment of a receiver;
• such other interim measure of protection as may appear to
the Court to be just and convenient, and the Court shall have
the same power for making orders as it has for the purpose of,
and in relation to, any proceedings before it.
• Further, sub-section (2) states that where, before the
commencement of the arbitral proceedings, a Court passes an
order for any interim measure of protection under sub-section
(1), the arbitral proceedings shall be commenced within a
period of ninety days from the date of such order or within
such further time as the Court may determine.
• Under sub-section (3) once the arbitral tribunal has been
constituted, the Court shall not entertain an application under
sub-section (1), unless the Court finds that circumstances exist
which may not render the remedy provided under section 17
efficacious.
 Case Study
• A Role Play to Demonstrate the Differences Between Adjudication and Mediation
“The Family Portrait”
• FACTS: Their father died recently, leaving the family property to the two sons. Their mother died earlier,
so both parties are the sole surviving heirs. Their father's will is clear regarding the family home and his
other personal property - everything has been divided fifty-fifty. However, the will mentions that the
family portrait, an original painting by a famous Indian Painter, of their parents and grandparents, and
which is a cherished family possession is to go to the father's "favourite child". The will does not name
his favourite child. The two brothers cannot agree on who the father's favourite child is.
• Exercise: Resolve the dispute using (i) arbitration (adjudication) and (ii) mediation.
• Exercise (i) Arbitration (Adjudication)
•  The arbitrator has to first decide upon what the “issue” in dispute is : Which child fits the definition of
the "favourite child"?
•  Each party (child) presents reasons to the arbitrator as to why they believe that they were the
favourite child.
•  The arbitrator evaluates the evidence and decides who fits in the definition of "favourite child"
• - the painting is awarded to that child.
 No compromise is permitted. The arbitrator must make a decision as to who is right and
• who is wrong depending on (i) the meaning of "favourite child" and (ii) an appraisal and comparison of
each party's evidence as to why they were the "favourite child".
• Exercise (ii) Mediation
Here, the mediator facilitates the negotiation of the
same issue. The parties will try and work out a solution
between themselves, rather than relinquishing control
over the resolution of the dispute to an arbitrator or
any other neutral. The parties are free to choose
creative compromises - there is no right and wrong,
and consequently, there need not be only one winner.
Mediator is to demonstrate
• Identifying need
• Creating options
• Controlling process
• Restoring relationship