Arbitration,

Conciliation
and
Mediation
Alternative Dispute Resolution (ADR) Methods

A dispute is a disagreement between two or

more parties.

Civil disputes occur when :

A persons rights have been infringed
An Individual has been injured as a result of
another persons actions or inaction.
Most common forms of dispute concern
money, property, employment, accidents,
marriage breakups and family separations.

Many disputes may require some form of

legal action to resolve.

ADR involves settling a civil legal dispute by

a method other than a decision before a
court.
 Modes of Resolution of Disputes
LITIGATION ARBITRATION NEGOTIATION MEDIATION CONCILIATION

Disputes are Arbitration is Both parties sink

Mediation is a Adjustment and
taken to court. quite similar to their differences
process of settlement of a
Result in a court hearing. and try to reach
negotiation in dispute in a
abnormal delay Disinterested an amicable
which the friendly and
and heavy ,impartial third settlement.
disputing parties non-antagonistic
expenditure party is come together manner by using
appointed to to discuss their a non binding
adjudicate. differences
procedure.
under the
supervision of a
mediator.
Arbitration is the most popular mode of settlement of disputes relating to
building and engineering contracts.

The reasons for disputes :

Vagueness and negligence in drafting contract document
Delay in fulfillment of contractual obligations
Delays results in damages or suffering or either parties
Variation in scope
Inadequate compensation
One sided conditions of contract
Lacking fair play
ARBITRATION

Arbitration involves an independent

third party who actually makes
suggestions and actually imposes
a decision on the parties.

Form of Alternative Dispute Resolution

Alternative to court room litigation
Parties submit their disputes to a
NEUTRAL third party called the
Arbitrator (s) or Arbiter (s) for
resolution
Binding dispute resolution, equivalent
to litigation in the courts
Benefits of Arbitration

Confidentiality Confidential unlike a court which is open to public.

Speed - takes less time than courts
Expert Neutrals
Cost Savings generally cheaper than litigation
Preservation of Business Relationships- not advertisal and therefore both
parties can come away from the process feeling as if they have won.
Held at more suitable Venues
Less formal than courts.

Disadvantages of arbitration
Not suitable for all disputes.
Disputes may still end up in court.
 The Arbitration and Conciliation
Act-1996
The Arbitration and Conciliation Act 1996 provides legal frame
work for settlement of disputes by mutual settlement out side the
court.

Central Government may make rules for carrying out the

provisions of this act subjected to the approval of the Parliament.

An act to consolidate the law relating to :

Domestic arbitration
International and commercial arbitration
Enforcement of foreign arbitral awards
Make provision for an arbitral procedure which is fair, efficient and
capable
To minimise supervisory roles of the court in arbitral process.
To permit an arbitral tribunal to use mediation ,conciliation or
other procedure to encourage settlement of disputes
It extends to the whole of India
Reference to arbitration
A judicial authority before which an action is brought in a matter
which is the subject of an arbitration agreement shall, refer the
parties to arbitration.
If the issue is pending before a judicial authority, arbitration may
be commenced or continued and an arbitral award made.

Composition of arbitral Tribunal

Number of arbitrators.
The parties are free to determine the number of arbitrators,
provided that such number shall not be an even number.
Failing the determination referred above the Arbitral Tribunal
shall consist of a sole arbitrator.
Appointment of Arbitrators
Arbitrator-Arbitrator is a judge appointed to settle disputes.
Attributes of arbitrator:
Fairness,Integrity,
full confidence of the parties,
disinterested nature in either party,
capacity to think logically.

A person of any nationality may be an arbitrator, unless otherwise agreed by the

parties.

The parties are free to agree on a procedure for appointing the arbitrator or
arbitrators.

An arbitration with three arbitrators, each party appoints one arbitrator, and the
two appointed arbitrators appoints the third arbitrator who shall act as the
presiding arbitrator.

In the case of appointment of sole or third arbitrator in an international commercial

arbitration, an arbitrator of a nationality other than the nationalities of the parties
where the parties belong to different nationalities may be appointed
 ARBITRATION AGREEMENT

"Arbitration Agreement" means an agreement to submit to arbitration all or

certain disputes in respect of a defined legal relationship, whether
contractual or not
which have arisen or
which may arise between them.

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) a document signed by the parties;
b) an exchange of letters, telex, telegrams or other means of telecommuni
cation which provide a record of the agreement; or
c) 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.
Proceedings
Proceedings of the arbitration commences from the date of receipt of
communication by the respondents, for reference of the matter to the
arbitration.
The parties shall be treated equally and shall be given full opportunity to
present their case.
The procedure, place of hearing, time limit for production of documents /
evidence etc can be agreed upon by the parties or otherwise decided by the
arbitrator.
The arbitration procedure need not follow the Civil court procedures or
evidence act, but shall ensure the principles of natural justice.
The tribunal shall decide its own jurisdiction.
The parties can counter if the tribunal exceeds its authority.
The arbitral tribunal may appoint an expert/institution to examine and to give
expert report.
If the respondent fails to communicate his defense or fails to appear for oral
hearing / fails to produce documents, tribunal shall not treat it as admission by
the defaulting party but proceed with the evidences before it and make award.
Arbitration cost

The tribunal may direct the parties to deposit an amount towards

cost etc. as decided by it during the course of proceedings.

The tribunal shall fix the cost of arbitration, the fee of arbitration,
for witness, administrative charges, fees for experts etc.

It decides cost payable by the each party and also decides the
cost payable to one party by the other.
 Arbitration Award
Award: It is a written decision given by the arbitrator(s) on issues
referred to him/them on completion of arbitration proceedings.
Arbitration award will be decided as per the substantive law in force
in India taking into account the terms of contract and usage of trade
If the parties arrive at a settlement agreement and request the
tribunal to give award accordingly and if tribunal has no objection it may
give award accordingly which will have the same effect of the award.
The arbitral award is issued under the signature of all or majority of
arbitrators on the basis of the decision or stating it as mutually agreed
upon by the parties. Signed copy shall be delivered to all parties.
The award is binding on all the parties.
Award is enforceable as if it were a decree of the Court.
Concluding the procedure

On issuance of award arbitration proceedings are terminated.

The tribunal is empowered to issue corrections to the Clerical errors set
in the award issued, without effecting the decision concluded

Setting Aside Arbitral Award

As per section 34 of the act,
The Court may set aside arbitral award on application by the parties in
time, if
The party was under incapacity to participate in the arbitral
proceedings
Arbitration agreement is invalid.
Non-receipt of proper notice of arbitral proceedings, non adoption
of proper procedure, partiality shown by the Tribunal or exceeding
the Jurisdiction by the Tribunal on examining the case in detail.
Setting Aside Arbitral Award
As per section 34 of the act,
However the Court may set aside arbitral
award on application by the parties in time, if
The party was under incapacity to participate in
the arbitral proceedings
Arbitration agreement is invalid
Non-receipt of proper notice of arbitral
proceedings, non adoption of proper procedure,
partiality shown by the Tribunal or exceeding the
Jurisdiction by the Tribunal on examining the case
in detail.
The Arbitration and Conciliation
Act-1996
Part I - Arbitration
Chapter 1 General Provisions
Chapter 2 Arbitration Agreement
Chapter 3 Composition of Arbitral Tribunal (AL)
Chapter 4 Jurisdiction of Arbitral Tribunal
Chapter 5 Conduct of Proceedings
Chapter 6 Making of Arbitral Award & termination of proceedings.
Chapter 7 Recourse against Arbitration Award
Chapter 8 Finality and Enforcement of Arbitration Award
Chapter 9 Appeals
Chapter 10 - Miscellaneous

Part II - Enforcement of Certain Foreign Awards

Chapter 1 - New York Convention Award
Chapter 2 - Geneva Convention Award

Part III - Supplementary Provisions

Consolidate and amend the law relating to domestic Arbitration.
International commercial arbitration
Enforcement of Foreign arbitral awards
Define the law relating to Conciliation and matters related to it.
Conciliation

Adjustment and settlement of a dispute in a

friendly and non-antagonistic manner by using a
non binding procedure.
As compared with arbitration ,conciliation and mediation
by a third party is quicker and still less expensive as an
ADR.

The most important method for prevention and

settlement of industrial disputes through third party
intervention.
It is a process by which discussion between parties is
kept going through the participation of a conciliator.
It brought both the parties of dispute into harmony.
Conciliator
The Conciliator is a person who brings about conciliation between the
parties the parties to a dispute.
The Conciliator is a neutral party, who without using any force, seeks
to find some middle course for mutual agreement between the
disputants so that the dispute is brought to an end at the earliest
possible moment and normal peace restored.
He tries to bridge the gulf between the two contending parties; and if
he does not succeed, he tries to reduce the differences as far as
possible, by tendering advice to them and working out an amicable
settlement.

Attributes of a Conciliator
Suitably qualified person who can decide the matter if it of technical
nature.
Parties should be able to trust him.
He should be confident.
Posses the power of Persuasion
Maintain Confidentiality.
Open and transparent in his conduct.
Basic Stages in Conciliation
Stage 1: Exploring to establish facts and discover respective
attitudes of parties.
Stage 2: Exploring possibility of finding equitable common
ground.
Stage 3: Bringing about conciliation between the parties.

Responsibilities of the conciliator

To draft the terms of agreement once the dispute is resolved.
Sign the agreement as a witness.
Meet the parties together as well as differently whenever
required.
Persuading the parties to reach an agreement
Appointment of conciliators

Conciliators shall be appointed by the parties to the dispute.

It shall be a sole conciliator or a panel of conciliators of 1 to 3
In case of 3 one shall be identified as presiding person.
Institutions may also be appointed as conciliators

What Can Be Referred To

Conciliation?
Matters of a
Civil nature
Breach of contract
Disputes of movable or immovable property
Criminal nature
Illegal transactions
Matrimonial matters like divorce suit etc.
Proceedings
Party wanting conciliation shall INVITE other party to conciliate by
sending a written invitation.
Proceedings commence only when a reply is received within 30 days
in writing , else deemed rejection of invitation.
The parties may appoint a sole conciliator or a panel of conciliators.
If 3 conciliators are appointed one is appointed by each party the third
shall act as presiding conciliator.
The conciliator may request each party to submit a brief written
statement ,the dispute and points at issue. Each party will send the
copy to one another.
The conciliator is not bound by the Code of Civil Procedure,1908 or
the Indian Evidence Act,1872.
The conciliator may at any stage make oral proposals without stating
any reasons.
The conciliator may with the consent of other parties ask for
administrative assistance.
The conciliator may communicate with parties orally or in writing
either together or separately.
The parties shall co-operate with the conciliator and submit to the
suggestions of the conciliator.
Settlement
If the parties agree on a settlement they may draw up and sign a
written settlement agreement.
When settlement is signed by the parties it is authenticated by
the conciliator and is binding on the parties.
This settlement agreement will have the same status as of the
arbitral award by mutual settlement.

Termination of Proceedings
The conciliation proceedings shall be terminated if same are no
longer justified or if either of the parties agree that same
need to be terminated.
The parties shall not initiate any arbitral or judicial
proceedings while conciliation proceedings are in progress.

Cost
Fee for conciliation, cost of administration, fee payable to expert
opinion etc. are to be borne by the parties equally unless parties
agree to pay in other ratio.
Conciliator may also be asked to deposit the probable cost in
advance in equal share by the parties concerned.