END SEMESTER

Sec 28 - Rules applicable to the substance of the dispute.

1. Where the place of arbitration is situated in India;

a) In an arbitration other than an international commercial arbitration, the arbitral
tribunal shall decide the dispute submitted to arbitration in accordance with the
substantive law for the time being in force in India.
b) in international commercial arbitration:-
i. The arbitral tribunal shall decide the dispute in accordance with the rules of
law designated by the parties as applicable to the substance of the dispute;
ii. any designation by the parties of the law or legal system of a given country
shall be construed, unless otherwise expressed, as directly referring to the
substantive law of that country and not to its conflict of laws rules
iii. failing any designation of the law under clause (a) by the parties, the arbitral
tribunal shall apply the rules of law it considers to be appropriate given all the
circumstances surrounding the dispute.

2. The arbitral tribunal shall decide ex aequo et bono or as amiable compositor only if the
parties have expressly authorized it to do so.

3. Section 28(3) of the Arbitration and Conciliation Act, 1996 : unamended, reads as follows:

“In all cases, the arbitral tribunal shall decide in accordance with the terms of the contract
and shall take into account the usages of the trade applicable to the transaction.”

Under the unamended Section 28(3), the Tribunal was bound to decide the dispute in
accordance with the terms of the contract and also take into account the trade usage
applicable to the transaction.

Therefore, under the unamended Section 28(3), the scope for the Tribunal to make a liberal
interpretation of the Contract was unavailable. Resultantly, the scope of the Tribunal to
interpret a term of the Contract was also limited. The Tribunal could at best, interpret the terms
of the Contract taking into consideration the intent of the parties and the trade usage applicable
to the transaction.

In ONGC vs. SAW Pipes, [(2003)5 SCC 705]- The Hon’ble Supreme Court held that any
Award passed by the Tribunal which goes against the terms of the Contract is violative of

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Section 28(3) of the Arbitration and Conciliation Act, 1996, and was ground to set aside the
Award under section 34.

This narrow or strict interpretation of Section 28(3) of the Arbitration and Conciliation Act,
of 1996, caused a problem in rendering justice.

While entering into the Contract with the Government / PSUs / big Corporates, the scope
of another party to negotiate on the terms of the Contracts is very limited or not available.
This results in one party exploiting the situation, coercing the other party to sign such terms,
which practically goes against the basic nature of fair opportunity or equal bargaining power
of both parties.

For example, in various contracts related to infrastructure, the employer puts a clause that the
land will be provided on an ‘as is where is the basis’.Now, while executing the work, if the
Contractor encounters hindrances beneath the land, the Employers always try to take shelter of
this Clause and deny any extension of time or escalation of price, as the Contractor has signed
the ‘as is where is’ clause. Sometimes, the Employer also puts restrictions on the claims /create
exceptions to raise dispute/restrict the timeline to raise claims.

Also, in arbitration, the Tribunal’s scope to expand the scope of the contract was very limited
and in view of the judgment of the Hon’ble Supreme Court in ONGC vs. SAW Pipes any
attempt of the Tribunal to go beyond the terms of the Contract could be a ground to set aside
an Award, which otherwise could be very reasonable.

Sec 29-A and Sec 29-B have been added. - Amendment Act, 2015
Section 29–A (1) Time limit for the arbitral award - has been added to provide a time limit for
making an award within 12 months from the time Arbitrator/s enters into reference.

Explanation- For the purpose of this subsection, an arbitral tribunal shall be deemed to have
entered upon the reference on the date on which the arbitrator or all the arbitrators, as the case
may be, have received notice, in writing, of their appointment

2) It provides that Arbitral Tribunal shall be entitled to such additional fee as may be agreed by
parties if an award is made within a period of six months from the date the arbitral tribunal
enters upon the reference.

3) The parties may, by consent can extend the time only up to 6 months

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4)After that the mandate of the arbitrators shall terminate. - Thereafter Court may extend the
time – provided that while extending the period, if the delay is attributable to the arbitral
tribunal, then, it may order the reduction of fees of the arbitrator(s) their fees will be reduced
by the court not exceeding 5% for each month of delay

Sec 29 B - Fast Track Procedure

Section 29 B has been inserted to provide for the resolution of the dispute by Fast track
procedure.

(1) Parties to arbitration may either before or at the time of appointment of the Arbitral Tribunal
agree in writing to adopt fast track procedure to resolve their dispute.

(2) The Parties to the Arbitration Agreement, while agreeing to the resolution of the dispute by
fast-track procedure, may agree that the arbitral tribunal shall consist of a sole arbitrator who
shall be chosen by the parties

(3) Procedure to be followed while conducting the Arbitral proceedings under sub-section (1)

(a)The dispute shall be decided by Tribunal on the basis of written pleadings,

documents, and submissions and without oral hearings.

(b) The arbitral tribunal shall have the power to call for any further information or
clarification from the parties in addition to the pleadings and documents filed by them.

(c) An oral hearing may be held only, if, all the parties make a request or if the arbitral
tribunal considers it necessary to have oral hearings for clarifying certain issues.

(d) The Arbitral Tribunal may dispense with any technical formalities, if an oral
hearing is held, and adopt such procedure as deemed appropriate for the expeditious
disposal of the case.

(4) The award shall be made within six months from the date the Arbitral Tribunal enters upon
the reference.

(5) If the award is not made within the period mentioned in Sub-sec (4) the provisions of Sec
29 A Sub-sec (3) to (9) will apply.

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6) The fees payable to the arbitrator and the manner of payment shall be such as may be agreed
between the arbitrator and the parties.

Sec 30 – SETTLEMENT

Permissible for parties to arrive at a mutual settlement - even during an arbitration proceeding
itself. The scheme of the Arbitration Act allows the Arbitral Tribunal to make efforts to
encourage mutual settlement.

Consequence and Implication

i. If parties settle the dispute by mutual agreement, the arbitration shall be terminated.
Also, if both parties and the Arbitral Tribunal agree, the settlement can be recorded in
the form of an arbitral award on agreed terms.
ii. Such arbitral award shall be made in accordance with section 31 and shall state that it
is an arbitral award.
iii. Shall have the same status and effect as any other arbitral award on the substance of the
dispute. Practical Implication for the Party.

Making of an Arbitral Award

What is an Award?

The award is not defined under the Arbitration Act.

However, Sec 2 (c) defines Arbitral Award as – "arbitral award includes an interim award"

According to Wharton’s Law Lexicon - “An Award is an instrument embodying the decision
given by the Arbitral Tribunal after adjudicating upon the disputes referred in a quasi-judicial
manner. The award means a final award declared by a Sole Arbitrator or by an Arbitral
Tribunal.”

Apart from the ‘final award’ the Act also contemplates: -

1. An interim award- It is not tentative in the sense that it may be changed, but it is
tentative in the sense that more would follow.
2. additional award-
3. An award on agreed terms i.e. arrived at by a settlement between the parties during
the course of the Arbitral proceedings

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One significant question which arises for consideration is whether a final award is final in the
sense that it is no longer possible to modify it.

No, not a final award, in the sense –

• that it can be corrected and interpreted by taking recourse to the provisions in the Arbitration
Act.

• Final means complete in all respects leaving nothing more to be done by the Arbitral Tribunal.

According to Russell an award is called as an award and is valid, if it:-

• must be final

• certain

• consistent

• possible

• must decide matters submitted and no more submitted

Sec 31- Form and contents of the arbitral award-

(1) An arbitral award shall be made in writing and shall be signed by the members of the arbitral
tribunal.

(2) Signatures of the majority of all the members of the arbitral tribunal shall be sufficient ---
so long as the reason for any omitted signature is stated.

3) The award shall be a reasoned award unless

a) the parties have agreed no reasons are to be given, or

b) the award is an arbitral award on agreed terms under section 30.

4) The arbitral award shall state its date and place of arbitration as determined in accordance
with section 20 and the award shall be deemed to have been made at that place

(5) After the arbitral award is made, a signed copy shall be delivered to each party.

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Sec 32 – Termination of proceedings

(1) The Arbitral proceedings shall be terminated by the final award or by an order of the Arbitral
Tribunal under sub-sec (2)

(2) The arbitral tribunal shall issue an order for termination of arbitral proceedings where -

(a) Claimant withdraws his claim, unless the respondent objects to the order and the
arbitral tribunal recognizes a legitimate interest on his part in obtaining the final settlement
of dispute, (b) the parties agree on termination of proceedings

(c) Arbitral tribunal finds that the continuance of the proceedings has for any other reason
become unnecessary or impossible.

(3) Subject to section 33 and sub-section of section 34, the mandate of the arbitral tribunal shall
terminate with the termination of the arbitral proceedings

Sec 33. Correction and interpretation of award; additional award. -

1. Within thirty days from the receipt of the arbitral award, unless another period of
time has been agreed upon by the parties---

(a) a party, with notice to the other party, may request the arbitral tribunal to correct any
computation errors, any clerical or typographical errors, or any other errors of a similar
nature occurring in the award;

(b) if so, agreed by the parties, a party, with notice to the other party, may request the arbitral
tribunal to give an interpretation of a specific point or part of the award.

2. If the arbitral tribunal considers the request made under sub-section (1) to be
justified, it shall make the correction or give the interpretation within thirty days
from the receipt of the request and the interpretation shall form part of the arbitral
award.
3. The arbitral tribunal may correct an error of the type referred to in clause (a) of
sub-section (1), on its own initiative, within thirty days from the date of the arbitral
award.
4. Unless otherwise agreed by the parties, a party with notice to the other party, may
request, within thirty days from the receipt of the arbitral award, the arbitral
tribunal to make an additional arbitral award as so claims presented in the arbitral
proceedings but omitted from the arbitral award.

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 5. If the arbitral tribunal considers the request made under sub-section (4) to be
justified, it shall make the additional arbitral award within sixty days from the
receipt of such request.
6. The arbitral tribunal may extend, if necessary, the period of time within which it
shall make a correction, give an interpretation or make an additional arbitral award
under sub-section (2) or sub-section (5).
7. Section 31 shall apply to a correction or interpretation of the arbitral award or to
an additional arbitral award made under this section

What is the difference between an appeal and recourse to an Arbitration award?

- In an appeal from a lower court to a higher court, the higher court can vary modify, set
aside and substitute the orders of the lower court.
- However, a recourse against the award is not the same thing as an appeal.
- The application made in the court against the award is an independent proceeding and
not an appeal and is not an appellate court. The court examining the award examines it,
only to the extent it is challenged and shall confine it to the grounds urged. It cannot
traverse beyond the award. It means - The Court hearing the application for setting the
award cannot include a thing that is not the subject matter of Arbitration or exclude a
thing that is within the arbitration.

Recourse Against Arbitral Award.

Sec 34. Application for setting aside an arbitral award.

1. Recourse to a Court against an arbitral award may be made only by an application for
setting aside such award in accordance with sub-section (2) and sub-section (3).
2. An arbitral award may be set aside by the Court only if---

(a) establishes on the basis of the record of the arbitral tribunal that

(i) a party was under some incapacity, or

(ii) the arbitration agreement is not valid under the law to which the parties have
subjected it or, failing any indication thereon, under the law for the time being
in force; or

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 (iii) the party making the application was not given proper notice of the
appointment of an arbitrator or of the arbitral proceedings or was otherwise
unable to present his case; or

(iv) the arbitral award deals with a dispute not contemplated by or not falling
within the terms of the submission to arbitration, or it contains decisions on
matter beyond the scope of the submission to arbitration: Provided that, if the
decisions on matters submitted to arbitration can be separated from those not so
submitted, only that part of the arbitral award which contains decisions on
matters not submitted to arbitration may be set aside; or

(v) the composition of the arbitral tribunal or the arbitral procedure was not in
accordance with the agreement of the parties unless such agreement was in
conflict with a provision of this Part from which the parties cannot derogate, or
failing such agreement, was not in accordance with this part, or the Court finds
that

(i) the subject matter of the dispute is not capable of settlement by arbitration under
the law for the time being in force, or
(ii) the arbitral award is in conflict with the public policy of India.

Sec 36 – Enforcement.

1. Where the time for making an application to set aside an arbitral award under Sec 34
has expired, then, subject to the provisions of sub-section (2), such award shall be
enforced as if it were a decree of the court.
2. Where an application to set aside the arbitral award has been filed in the Court under
section 34, the filing of such an application shall not by itself render that award
unenforceable, • unless the court grants an order of stay of the operation of the said
arbitral award in accordance with the provisions of sub-section (3) on a separate
application made for that purpose.

Sec 37. Appealable orders. –

1. "Notwithstanding anything contained in any other law for the time being in force, an
appeal" (2019 Amendment) shall lie from the following orders (and from no others) to
the Court authorized by law to hear appeals from the original decree of the Court
passing the order, namely:

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 a) refusing to refer the parties to arbitration under section 8 (Amendment)

b) granting or refusing to grant any measure under sec. 9.

c) setting aside or refusing to set aside an arbitral award under sec 34.

2. An appeal shall also lie to a court from an order of the arbitral tribunal ---

(a) accepting the plea referred to in sub-section (2) or sub-section (3) of section
16; or

(b) granting or refusing to grant an interim measure under section 17

3. No second appeal shall lie from an order passed in appeal under this section, • but
nothing in this section shall affect or take away any right of appeal to the Supreme
Court.

Now which court has jurisdiction to decide about setting aside the award?

Sec 2(1) (e) read with Sec 42.

- Sec 2 (1) (e) "Court" means the principal Civil Court of original jurisdiction in a district,
and includes the High Court in exercise of its ordinary original civil jurisdiction, having
jurisdiction to decide the questions forming the subject-matter of the arbitration if the
same had been the subject-matter of a suit, • but does not include any civil court of a
grade inferior to such principal Civil Court, or any Court of Small Causes.

Section 42.

- Notwithstanding anything contained elsewhere in this Part or in any other law for the
time being in force, where with respect to an arbitration agreement any application
under this Part has been made in a Court, that Court alone shall have jurisdiction over
the arbitral proceedings and all subsequent applications arising out of that agreement
and the arbitral proceedings shall be made in that Court and in no other Court.

Section 42A.

- Notwithstanding anything contained in any other law for the time being in force, the
arbitrator, the arbitral institution and the parties to the arbitration agreement shall
maintain confidentiality of all arbitral proceedings except award where its disclosure is

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 necessary for the purpose of implementation and enforcement of award. (2019
Amendment)

Section 42B

- "No suit or other legal proceedings shall lie against the arbitrator for anything which is
in good faith done or intended to be done under this Act or the rules or regulations made
thereunder.”. (2019 Amendment)

Section 43 –Limitations. –

- The Limitation Act, 1963 shall, apply to arbitrations as it applies to proceedings in

court.
- For the purposes of this section and the Limitation Act, 1963 an arbitration shall be
deemed to have commenced on the date referred in section 21.
- Where the Court orders that an arbitral award be set aside, the period between the
commencement of the arbitration and the date of the order of the Court • shall be
excluded in computing the time prescribed by the Limitation Act, 1963 for the
commencement of the proceedings (including arbitration) with respect to the dispute so
submitted. The question which arises for determination in this case is whether the
provisions of Section 5 of the Limitation Act, 1963 are applicable to an application
challenging an award, under Section 34 of the Arbitration and Conciliation Act, 1996.

Sec 5 of Arbitration Act, 1996 - Extent of judicial intervention.

- Notwithstanding anything contained in any other law for the time being in force, in
matters governed by this Part, no judicial authority shall intervene except where so
provided in this Part. "If there were any residual doubt on the interpretation of the
language used in Section 34, the scheme of the 1996 Act would resolve the issue in
favour of curtailment of the Court’s powers by the exclusion of the operation of Section
5 of the Limitation Act. In the circumstances and for the reasons earlier stated we
answer the question posed at the outset in the negative. The appeal is accordingly
dismissed without any order as to costs.

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INTERNATIONAL COMMERCIAL ARBITRATION
Defined in Section 2(1) (f) of the Arbitration and Conciliation Act, 1996

"International commercial arbitration" means

• an arbitration relating to disputes

• arising out of legal relationships,
• whether contractual or not,
• considered as commercial under the law in force in India
• and where at least one of the parties is-
a) an individual who is a national of, or habitually resident • in, any country
other than India; or
b) a body corporate that is incorporated in any country other than India; or
c) an association or a body of individuals whose central management and
control is exercised in any country other than India; or
d) the Government of a foreign country;

(2) This Part shall apply where the place of arbitration is in India.

Section 44-Enforcement of Certain Foreign Awards-

"Foreign award" means

• an arbitral award on differences

• between persons arising out of –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
i) in pursuance of an agreement in writing for arbitration to which the
convention set forth applies and
ii) in one of such territories as the Central Government, being satisfied that
reciprocal provisions have been made, may by notification in the official
gazette declare • to be territories to which the said convention applies.

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Circumstances under which a foreign award is binding?

Section 46

- Any foreign award which would be enforceable under this chapter shall be treated as
binding for all purposes on the persons as between whom it is made by way of a defense,
set-off, or in any legal proceedings in India.

Section 49

- Enforcement of foreign awards. - Where the Court is satisfied that the foreign award is
enforceable under this Chapter, the award shall be deemed to be a decree. • Sec 50
Appealable orders. -

(1) Notwithstanding anything contained in any other law for the time being in force, an appeal
(2019 Amendment) shall lie from the order refusing to---

(a) refer the parties to arbitration under section 45;

(b) enforce a foreign award under section 48, to the court authorized by law to hear appeals
from such order.

(2) No second appeal shall lie from an order passed in appeal under this section, but nothing in
this section shall affect or take away any right to appeal to the Supreme Court

Meditation
- Mediation is a voluntary, party-centered and structured negotiation process where a
neutral third party assists the parties in amicably resolving their dispute by using
specialized communication techniques.
- In mediation, the parties retain the right to decide for themselves whether to settle a
dispute and the terms of any settlement. Even though the mediator facilitates their
communications and negotiations, the parties always retain control over the outcome
of the dispute.
- This right of self-determination is an essential element of the mediation process. It
results in a settlement created by the parties themselves and is therefore acceptable to
them.
- The parties have ultimate control over the outcome of mediation.
- Mediation is a party-centered negotiation process. The parties, and not the neutral
mediator is the focal point of the mediation process.

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 - Mediation encourages the active and direct participation of the parties in the
resolution of their dispute.
- Though the mediator, advocates, and other participants also have active roles in
mediation, the parties play a key role in the mediation process. They are actively
encouraged to explain the factual background of the dispute, identify issues and
underlying interests, generate options for agreement, and make a final decision
regarding the settlement.
- The goal of mediation is to find a mutually acceptable solution that adequately and
legitimately satisfies the needs, desires, and interests of the parties.
- The mediator’s personal preferences or perceptions do not have any bearing on the
dispute resolution process. - he has no authority to make any binding decisions, -
however helps the parties to resolve their dispute by negotiated agreement without
adjudication.
- Mediation can apply in a variety of disputes - commercial, legal, diplomatic,
workplace, community and divorce, or other family matters.
- Mediation is a party-centered negotiation process. - The parties are the focal point of
the mediation process.
- Thus, mediation encourages the active and direct participation of the parties in the
resolution of their dispute. In Mediation the mediator works together with parties to
facilitate the dispute resolution process and does not adjudicate a dispute by imposing
a decision upon the parties.
- A mediator’s role is both facilitative and evaluative. A mediator facilitates when he
manages the interaction between the parties, encourages and promotes communication
between them and manages interruptions and outbursts by them and motivates them to
arrive at an amicable settlement.
- A mediator evaluates when he assists each party to analyze the merits of a
claim/defence, and to assess the possible outcome at trial.

Stages of Mediation

• Stage I – Pre-Mediation & Opening the Session

• Stage II – Identification of Issues
• Stage III – Generating Options and Problem-Solving
• Stage IV – Agreement Writing and Post-Mediation Stage I Pre-Mediation &
Opening the Session "Setting the Tone" This is the most important phase in the

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 mediation process. It provides you with the opportunity to make a good "first
impression". How the mediator(s) performs during this phase will impact either
positively or negatively on the remaining mediation process.

Objectives

• Establish neutrality
• Create an awareness and understanding of the process
• Develop rapport with the parties
• Gain the confidence and trust of the parties Establish an environment that is
conducive to constructive negotiations
• Motivate the parties for an amicable settlement of the dispute
• Establish control over the process

Stage I -
To begin with, the mediator introduces himself.

- Then he furnishes information about his appointment as a mediator, the assignment of

the case to him for mediation, and his experience if any in successfully mediating
similar cases in the past.
- Then the mediator declares that he has no connection with either of the parties and he
has no interest in the dispute.
- He also expresses hope that the dispute would be amicably resolved. This will create
confidence in the parties about the mediator's competence and impartiality.
- Thereafter, the mediator requests each party to introduce himself.
- He may elicit more information about the parties and may freely interact with them to
put them at ease.
- The mediator will then request the counsel to introduce themselves.
- The mediator will then confirm that the necessary parties are present with authority to
negotiate and make settlement decisions.
- The mediator will discuss with the parties and their counsel any time constraints or
scheduling issues

• Mediator’s Opening Statement

• Concept and process of mediation

• Stages of mediation

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 • Role of the mediator

• Role of advocates

• Role of parties

• Advantages of mediation

• Ground rules of mediation

Stage II-

Identification of Issues With the mediator’s assistance, parties will:

- Identify issues in their disputes

- Express their views and perspectives
- Identify areas of agreement and disagreement on the issues
- Identify common ground

(Note: this stage does not include reaching an agreement or selecting options to resolve
disputes)

Elements of Stage II Joint Session In the opening statement mediator will:

⚫ Explain what will happen at Stage II

⚫ Remind parties they will have time to present their perspectives Mediation Ground
Rules • Established by the mediator

– Whoever is speaking has floor, no interruptions

– Take notes and bring points up later

– Any party can stop the process for break at any time or request a caucus

– Negotiate in good faith; our common goal is to resolve dispute

– Listen

– Follow the ground rules and direction of the mediator

• Other ground rules requested by parties

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• Mediator summarizes common ground Elements of Stage II Individual/Separate Sessions •
Objectives-

⚫ Understand the dispute at a deeper level

⚫ Provide a forum for parties to further vent their emotions

⚫ Provide a forum for parties to disclose confidential information which they do not wish to
share with other parties

⚫ Understand the underlying interests of the parties

⚫ Help parties to realistically understand the case

⚫ Shift parties to a solution-finding mood

⚫ Encourage parties to generate options and find terms that are mutually acceptable
Caucuse/s-

• Used by mediator to: – Gain control of mediation – Allow party to vent or share
information – Ensure party heard/understood what was said – Move beyond
deadlock – Provide an opportunity for each party to explore strengths/weaknesses
of case Caucuses – Provide an opportunity for party to explore
strengths/weaknesses of other party’s case – Find out more on party’s interests –
Reinforce confidentiality – Encourage information sharing – Set agenda for next
joint session – Identify information that can be shared in joint sessions Validation

• Mediator acknowledges party’s views and feelings on the issue, while remaining neutral.

Paraphrasing

• Paraphrasing is critical to the mediation process.

– Mediator re-states what was said in his/her own words – Not verbatim, instead provide a
shorthand summary which includes all-points made.

– Ensures everyone heard what party intended to convey –Parties may correct mediator’s
paraphrasing.

– Builds trust, demonstrates mediator was listening and understood what was said.

– Coming from neutral mediator, facilitates understanding by other party.

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– Provides "breather" as parties go back and forth expressing views.

• ASKING EFFECTIVE QUESTIONS

• Mediator may ask parties more questions that can gather information to clarify facts or alter
perceptions of the parties with regard to their understanding and assessment of the case and
their expectations.

• Examples of effective questions: - • ‘Tell me more about the circumstances leading up to the
signing of the contract’. • ‘Help me understand your relationship with the other party at the
time you entered the business’. • ‘What were your reasons for including that term in the
contract?’

CLOSED QUESTIONS: which are specific, concrete and which bring out specific
information.

For example, ‘it is my understanding that the other driver was going at 60 kilometers per hour
at the time of the accident, is that right?’ • ‘On which date the contract was signed?’ • ‘Who are
the contractors who built this building?’

QUESTIONS THAT BRING OUT FACTS: • ‘Tell me about the background of this matter’.
• ‘What happened next?’

QUESTIONS THAT BRING OUT POSITIONS: • ‘What are your legal claims?’ • ‘What
are the damages?’ • ‘What are their defences?’

QUESTIONS THAT BRING OUT INTERESTS: •

- What are your concerns under the circumstances?’ ‘What really matters to you?’ •
‘From a business / personal / family perspective, what is most important to you?’ •
‘Why do you want divorce?’ ‘What is this case really about?’‘What do you hope
to accomplish?’‘What is really driving this case?’ Stage III Generating Options &
Problem-Solving Generating Options.

DISCUSSING THE STRENGTHS AND WEAKNESSES OF THE RESPECTIVE

CASES OF THE PARTIES :

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 - The mediator may ask the parties and/or counsel for their views about the strengths
and weaknesses of their case and the other side’s case. The mediator may ask
questions such as, • ‘How do you think your conduct will be viewed by a Judge?’
or ‘Is it possible that a judge may see the situation differently?’ or ‘I understand the
strengths of your case, what do you think are the weak points in terms of evidence?’
or ‘How much time will this case take to get a final decision in court?’ Or ‘How
much money will it take in legal fees and expenses in court?

STAGE III-

CONSIDERING THE CONSEQUENCES OF ANY FAILURE TO REACH AN

AGREEMENT (BATNA/WATNA /MLATNAANALYSIS).

1. BATNA - Best Alternative to Negotiated Agreement

2. WATNA - Worst Alternative to Negotiated Agreement

3. MLATNA - Most Likely Alternative to Negotiated Agreement

Brain Storming Techniques

• Brain Storming is a technique used to generate options for agreement.

There are 2 stages to the brain storming process:

1. Creating options:- Parties are encouraged to freely create possible options for agreement.

• Options that appear to be unworkable and impractical are also included.

• The mediator reserves judgment on any option that is generated and this allows the parties
to break free from a fixed mind set.

• It encourages creativity in the parties. Mediator refrains from evaluating each option and
instead attempts to develop as many ideas for settlement as possible.

• All ideas are written down so that they can be systematically examined later.

2. Evaluating options:- After inventing options the next stage is to evaluate each of the options
generated. The objective in this stage is not to criticize any idea but to understand what the
parties find acceptable and not acceptable about each option.

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In this process of examining each option with the parties, more information about the
underlying interests of the parties is obtained. This information further helps to find terms that
are mutually acceptable to both parties.

• Brainstorming requires lateral thinking more than linear thinking.

• Lateral thinking: Lateral thinking is creative, innovative and intuitive. It is non-linear and
non-traditional. Mediators use lateral thinking to generate options for agreement.

• Linear thinking: Linear thinking is logical, traditional, rational and fact based. Mediators use
linear thinking to analyse facts, to do reality testing and to understand the position of parties.

SUB- SESSIONS :

a) The separate session is normally held with all the members of one side to the dispute,
including their advocates and other members who come with the party.
b) However, it is open to the mediator to meet them individually or in groups by holding
sub- sessions with only the advocate (s) or the party or any member(s) of the party.
Mediator may also hold sub-session(s) only with the advocates of both sides, with the
consent of parties.
c) During such sub-session, the advocates can be more open and forthcoming regarding
the positions and expectations of the parties.
d) If there is a divergence of interest among the parties on the same side, it may be
advantageous for the mediator to hold sub- session(s) with parties having common
interest, to facilitate negotiations.
e) This type of sub-session may facilitate the identification of interests and also prevent
the possibility of the parties with divergent interests, joining together to resist the
settlement

EXCHANGE OF OFFERS:

• The mediator carries the options/offers generated by the parties from one side to the other.
The parties negotiate through the mediator for a mutually acceptable settlement.

• However, if negotiations fail and settlement cannot be reached the case is sent back to the
referral Court.

STAGE IV-

CLOSING and Agreement Writing •

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(A) Where there is a settlement

Once the parties have agreed upon the terms of settlement, the parties and their advocates re-
assemble and the mediator ensures that the following steps are taken:

1. Mediator orally confirms the terms of settlement;

2. Such terms of settlement are reduced to writing;

3. The agreement is signed by all parties to the agreement and the counsel if any
representing the parties;

4. Mediator also may affix his signature on the signed agreement, certifying that the
agreement was signed in his/her presence;

5. A copy of the signed agreement is furnished to the parties;

6. The original signed agreement sent to the referral Court for passing appropriate order
in accordance with the agreement;

7. As far as practicable the parties agree upon a date for appearance in court and such date
is intimated to the court by the mediator;

8. The mediator thanks the parties for their participation in the mediation and,
congratulates all parties for reaching a settlement

THE WRITTEN AGREEMENT:

• Clearly specify all material terms agreed to;

• be drafted in plain, precise and unambiguous language; • be concise; • use active voice,
as far as possible.

• Should state clearly WHO WILL DO, WHAT, WHEN, WHERE and HOW (passive voice
does not clearly identify who has an obligation to perform a task pursuant to the
agreement);

• use language and expression which ensure that neither of the parties feels that he or she
has ‘lost’;

• ensure that the terms of the agreement are executable in accordance with law; • be
complete in its recitation of the terms;

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 • avoid legal jargon, as far as possible use the words and expressions used by the parties;
• as far as possible state in positive language what each parties agrees to do;

• as far as possible, avoid ambiguous words like reasonable, soon, co-operative, frequent
etc;

Where there is no settlement?

• If a settlement between the parties could not be reached, the case would be returned to
the referral Court merely reporting "not settled".

• The report will not assign any reason for non settlement or fix responsibility on any one
for the non-settlement.

• The statements made during the mediation will remain confidential and should not be
disclosed by any party or advocate or mediator to the Court or to anybody else.

• The mediator should, in a closing statement, thank the parties and their counsel for their
participation and efforts for settlement.

CONCILIATION
• The Law Commission - 129th Report examined at and highlighted the
staggering pendency of cases in various Courts in the Country.
• In respect of suits involving disputes as to inheritance, succession, partition,
maintenance and those concerning wills, which are generally blood relations,
• the Law Commission recommended that Conciliation must be made
compulsory by an effective amendment to the Code of Civil Procedure on the
lines of Rule 5B, order XXVII.
• In respect of all other kinds of suits, it was recommended that an attempt should
be made at the pre-trial stage to settle the issue and that in case the dispute is
not resolved, the matter should be referred to the Conciliation and if such Court
finds that its persuasion to the parties to go in for a amicable settlement has
failed, the party who was recalcitrant and unjust in approach must be fined with
heavy costs.

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 • Conciliation is a – binding procedure in which a neutral third party assists the
disputed parties in mutually reaching an agreed settlement of the dispute.
• Conciliation is a term used interchangeably with mediation, involving a more
pro-active role, and the other involving a more facilitative mediator role
• The concept of conciliation got impetus in India in 1984 in Himachal Pradesh
where a concept of reconciliation was started.

SCOPE OF CONCILIATION: -

• The settlement of disputes through conciliation covers a wide range of issues.

Among others, they include commercial and civil disputes and claims for breach
of obligations.
• These may be factual, legal, or technical disputes that can range from simple
disagreements to complex and substantial technical or commercial disputes.
They may arise in relation to virtually any kind of disputes
• e.g. issues arising under contracts; commercial or corporate disputes; torts and
breach of duty, insurance claims; consumer disputes; disagreements
relationships such as partnership, principal and agent, franchiser/ franchisee,
and many others. Industrial and Labour disputes, family disputes including
issues arising on separation and divorce, there are many other fields in which
conciliation is being used for settlement of disputes – in academia, hospitals,
and health care systems for consumer disputes, to deal with farmer/ lender debt
issues.
• The second impetus came from statutory recognition accorded to conciliation
in the Arbitration and Conciliation Act, of 1996 which lays down a well
structural law of conciliation.

What is the difference between a normal conciliation and the Himachal model of
conciliation?

- In a normal conciliation - disputing parties willingly come together with the aim
of a mutually agreeable settlement of their dispute with the assistance of a neutral
third party, mutually chosen.
- Whereas the HP model is court-induced conciliation making it mandatory for the
parties to attempt a conciliation for the settlement of their dispute.

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 Role of the Conciliator

- The conciliator assists the parties in an independent and impartial manner in their
attempt to reach an amicable settlement of their dispute.
- He is guided by the principles of objectivity, fairness and justice, giving
consideration to, among other things,
• the rights and obligations of the parties,
• usages of the trade concerned and
• the circumstances surrounding the dispute, including any previous business
practices between the parties.
- When the matter is settled through conciliation the settlement shall have the same
effect and status as if it is an arbitral award. – Sec 73 (3) and 74 Arbitration and
Conciliation Act, 1996. - Therefore, it is also enforceable as a decree of the Court

Scheme of the - Arbitration and Conciliation Act, 1996 :

- As the name itself suggests, deals with two types of proceedings: arbitration
proceedings and conciliation proceedings.
- While provisions relating to arbitration proceedings are contained in part-I in which are
included Chapters 1 to X, the conciliation proceedings are dealt with in part-Ill which
includes sections 61 to 81.

Section 61 which deals with the Application and Scope of the provisions,

- in part-Ill provides, inter alia, that save otherwise provided by any law for the time
being in force and unless the parties have otherwise agreed, this Part shall apply to
conciliation of disputes arising out of a legal relationship, whether contractual or not
and to all proceedings relating thereto.

Section 65

- It is provided, interalia, that on being appointed the conciliator shall request each
party to submit to him a brief written statement describing the general nature of the
dispute and the points at issue.
- Each party shall send a copy of such statement to the other party.

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Section 73

In which provision is made regarding the settlement agreement reads as follows:

- If the parties reach an agreement on a settlement of the dispute, they may draw up
and sign a written settlement agreement.
- When the parties sign the settlement agreement, it shall be final and binding on the
parties and persons claiming under them respectively.
- The conciliator shall authenticate the settlement and furnish a copy thereof to each
of the parties. It follows therefore that a successful conciliation proceeding comes
to an end only when the settlement agreement signed by the parties comes into
existence. It is such an agreement which has the status and effect of legal sanctity
of an arbitral award under section 74.

Lok Adalats

Background:

- When courts are there, what is the necessity and the need for the Lok Adalat?
- It was a historic necessity in a country like India in the backdrop of ever-increasing
litigation, inordinate delay in the dispensation of justice,
- The illiterate and the poor are losing interest in their rights and belief in the adjudicatory
mechanism.
- The word ‘Lok Adalat ‘means ‘People’s Court’ albeit
- It is strictly not a court in the conventional sense in as much as the Lok Adalat does not
adjudicate on facts by application of the law.
- It is a forum where disputes between the parties are resolved by conciliation and
participation
- The concept of Lok Adalat is an innovative Indian contribution to world jurisprudence.
- The introduction of Lok Adalats added a new chapter to the justice dispensation system
of this country and succeeded in providing a supplementary forum to the victims for
satisfactory settlement of their disputes.
- It is one of the components of ADR systems
- In 1980 the Government of India appointed a Committee on Implementation of Legal
Aid Schemes (CILAS) to coordinate the implementation of legal aid programs, which
inter alia recommended the establishment of Lok Adalats.

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 - The evolution of the contemporary system of Lok Adalats is, however, traceable to the
Lok Adalat run by a noted Gandhian social worker Harivallabh Parikh in a tribal area
of Rangpur in Gujarat.
- During the 1980s Lok Adalats were generally regarded as a species of legal aid program
meant especially to cater to the needs of poor and weaker sections of society and not as
a viable substitute for courts.
- The institution of Lok Adalats had been functioning as a voluntary and conciliatory
agency without any statutory backing for its decisions and had become very popular in
providing for a speedier system of administration of justice
- The demand for affording statutory recognition to Lok Adalats and to transform into
reality the salutary objective and mandate of Article 39A of the Constitution of India
culminated in to the enactment of the Legal Services Authorities Act, 1987.
- One of the objectives of the Legal Services Authorities Act, 1987 is to provide for
organization of Lok Adalats to secure that the operation of the legal system promotes
justice on the basis of equal opportunity.
- Thus, Lok Adalats have thus attained statutory recognition under the Legal Services
Authorities Act, 1987.

Cases suitable for Lok Adalat

• Lok Adalats have the competence to deal with a number of cases like: •
Compoundable civil, revenue, and criminal cases.
• Motor accident compensation claims cases
• Negotiable Instruments Act
• Matrimonial and family disputes Bank’s unpaid loan cases Arrears of retirement
benefits cases Family Court cases
• Cases which are not sub-judice Mutation of lands case Land Pattas cases

NEED FOR LOK ADALATS

- As Justice Ramaswamy said "Resolving disputes through Lok Adalat not only
minimizes litigation expenditure, it saves valuable time of the parties and their
witnesses and also facilitates inexpensive and prompt remedy appropriately to the
satisfaction of both the parties"

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JURISDICTION OF LOK ADALAT:

- A Lok Adalat shall have jurisdiction to determine and to arrive at a compromise or

settlement between the parties to a dispute in respect of any case pending before, or any
matter which is falling within the jurisdiction of, and is not brought before, any court
for which the Lok Adalat is organized. The Lok Adalat can compromise and settle even
criminal cases, which are compoundable under the relevant laws.
- Where the matter is settled before the Lok Adalat an award is passed by the Lok Adalat
on the basis of the settlement.
- However, the award of the Lok Adalat cannot travel beyond the compromise or
settlement arrived at between the parties.
- Further every award of the Lok Adalat is final and binding on all the parties to the
dispute and no appeal lies to any court against the award.
- This is a very valuable and vital provision that is meant to give finality to the decision
of the Lok Adalat.
- Even a review by the court which referred the case to the Lok Adalat is not permissible.
If any party wants to challenge such an award based on settlement, it can be done only
by filing a petition under Article 226 and/or Article 227 of the Constitution of India,
and that too on very limited grounds.
- The award of a Lok Adalat is deemed to be a decree of a civil court and is per se
executable.
- A Lok Adalat has the same powers as are vested in a civil court under the Code of Civil
Procedure, 1908 for summoning and enforcing the attendance of witnesses and
examining them on oath, the discovery and production of any document, requisitioning
of any public record, reception of evidence on affidavits, etc.
- All proceedings before a Lok Adalat are deemed to be judicial proceedings.

POWERS OF LOK ADALAT-

- Every Lok Adalat shall have the power to specify its own procedure for the
determination of any dispute coming before it.
- All proceedings before a Lok Adalat shall be deemed to be judicial proceedings within
the meaning of Sections 193, 219 and 228 of IPC.
- Every Lok Adalat shall be deemed to be a Civil Court for the purpose of Sec 195 and
Chapter XXVI of Cr.P.C.

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 - Relevant sections in the Legal Services Authority Act, 1987.
- Sec 20 - Reference of cases of Lok Adalat as follows:

Cases can be referred for consideration

- By consent of both parties to the dispute.

- One of the parties makes an application for reference where the court is satisfied that
the matter is an appropriate one to be taken cogniznce of by the Lok Adalat
- Compromise settlement shall be guided by the principles of justice, equity fair play and
other legal principles.
- Where no compromise has been arrived at through conciliation, the matter shall be
returned to the concerned court for disposal in accordance with Law.

Section 21

After the Agreement is arrived at by consent of the parties the award is passed. The matter need
not be referred to the concerned court for a consent decree.

1. Every award of the Lok Adalat shall be deemed to be a decree of the Civil Court.

2. Every award made by the Lok Adalt shall be final and binding and on the parties to the
dispute.

3. No appeal shall lie from the Award of the Lok Adalat.

Section 22

Every proceeding of the Lok Adalat shall be deemed to be judicial proceedings for the purpose
of:

1. Summoning witnesses

2. Discovery of documents

3. Hearing of pieces of evidence

4. Requisition of Public record

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Permanent lok adalat:

- In 2002, Parliament brought about certain amendments to the Legal Services

Authorities Act, of 1987.
- The said amendment introduced Chapter VI-A with the caption

Pre-litigation conciliation and settlement.

Section 22-B envisages the establishment of "PERMANENT LOK ADALATS (PLA)- " at
different places for considering the cases in respect of Public Utility Services (PUS).

- The Central or State Authorities may establish by notification, Permanent Lok Adalats
at any Permanent Lok Adalats, for determining issues in connection to Public Utility
Services.
- Public Utility Services include: Transport service, Postal, telegraph or telephone
services, Supply of power, light and water to public, System of public conservancy or
sanitation, Insurance services and such other services as notified by the Central or State
Governments.

Permanent lok adalat’s have the same powers that are vested on the Lok-Adalats, mentioned
under Section 22(1) of the Act.

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