Dispute Resolution

Mediation of Consumer Disputes

Dispute Resolution, Mediation /

Mediation of Consumer Disputes Date: 20/10/2020 Author: Ibban Javed Institute of Author: NLIU, Bhopal Year: 3rd Introduction Litigation is often a resource-intensive endeavor that involves the investment of large amounts of money, time, and other resources that consumers have limited access to. Most consumer disputes that lead to litigation are tilted in favor of the relatively dominant producers by default, stemming from the disparity in access to these resources. Litigation is neither a cost-effective solution to consumer disputes nor does it save time – India Today reports that the average pendency of a civil suit in India is about six years[1], which is much longer than what most consumers can dedicate themselves to. This is an issue that has been deliberated upon since the introduction of the three-tier consumer dispute redressal mechanism of The Consumer Protection Act, 1986 until it was finally addressed in The Consumer Protection Act, 2019 which introduced mediation as an effective means to resolve consumer disputes. Mediation is an alternative dispute resolution (ADR) mechanism whose purpose is to settle disputes between parties amicably and efficiently through the mutual understanding of all parties involved. As part of the process, the parties discuss their disputes while an impartial third-party – the mediator — facilitates communication between them until a mutually agreeable settlement is reached. The Consumer Protection Act, 2019 makes provisions for mediation in cases of consumer disputes under Chapter V. Further, the Draft Consumer Protection (Mediation) Regulations, 2019 issued by the Department of Consumer Affairs under the Ministry of Consumer Affairs, Food and Public Distribution, Government of India proposes the framework for the mediation procedure to be employed in the settlement of consumer disputes, as per the provisions of the Consumer Protection Act, 2019. Sections 37 and 38 of The Consumer Protection Act, 2019 With a change in how consumers and producers transact and the evolution of e-commerce, multi-level marketing schemes, and other nouveau approaches to do business, The Consumer Protection Act, 1986 required an overhaul that would encompass situations such as those listed above to better protect the interests of consumers. The Consumer Protection Act, 2019 was passed to address these concerns and to better protect consumers at a time when producers could take advantage of the legal grey area that the lack of relevant legislation gave rise to. The revamped Act envisaged the establishment of a Central Consumer Protection Authority that would seek to protect the interests of consumers and enforce their rights while making interventions as may be necessary to prevent unfair trade practices. Sections 37 and 38 of the Act make provisions to simplify the adjudication process of consumer disputes by employing mediation, an alternative dispute resolution mechanism. This addressed the primary shortcoming of the erstwhile Consumer Protection Act of 1986, which was the long delay in the disposal of cases presented by the three-tier redressal system. Section 37 provides that post-admission of the complaint and at the first hearing if the District Commission believes that has elements of a settlement that may be acceptable to the parties, it may direct the parties to give it consent to have the dispute settled by mediation within five days and if such consent is given, the District Commission may then refer the dispute for resolution through mediation as per the provisions of Chapter V.[2] Section 38 details the procedure on the admission of a complaint and allows the District Commission to: Refer the copy of the admitted complaint to the opposite party and seek their version of the case within thirty days Examine the evidence and seek its analysis by a designated laboratory Provide a reasonable opportunity for parties of both sides to represent their cases Decide the case on the merit of the affidavit and documentary evidence on record Pass interim orders as per the situation Have the same powers as those vested in civil courts as per the Code of Civil Procedure, 1908, insofar as this section is concerned. Chapter V of the Consumer Protection Act, 2019 The provisions mentioned herein are subject to the Draft Consumer Protection (Mediation) Regulation, 2019. §74 Establishment of consumer mediation cell[3] This section allows the State Government to establish consumer mediation cells that shall be attached to the State and District Commissions of each state. Likewise, it allows the Central Government to establish such consumer mediation cells that shall be attached to the National Commission as well as each of the regional benches. Further, it provides that the consumer mediation cell must maintain lists of the empaneled mediators, cases handled by the cell, record of proceedings, and any other information that might be required as per regulations. §75 Empanelment of mediators[4] Section 75 details the process by which mediators may be empaneled, that is, by recommendation of a selection committee consisting of the President and a member of either the National, State, or District Commission as the case may be. The panel of mediators as nominated by the selection committee mentioned above is valid for five years and can be considered for re-empanelment for a maximum of two terms. The specifics of the qualifications of the mediators, fees payable to them, training to be undergone, and other terms and conditions of empanelment are subject to the Draft Consumer Protection (Mediation) Regulations, 2019. §76 Nomination of mediators from panel[5] Section 76 provides that the District, State, or National commissions must consider the suitability of a mediator for the present case before nominating to resolve a dispute. §77 Duty of mediator to disclose certain facts[6] As per the provisions of Section 77, the mediator is dutybound to disclose any personal, professional, or financial interest that he may have in the outcome of the dispute. He is also required to furnish the circumstances that may raise doubt on his impartiality as a mediator. §78 Replacement of mediator in certain cases[7] Based on what is disclosed by the mediator, the District, State, or National Commissions are vested with the power to replace such a mediator if a conflict of interest

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Conciliation as a DR Mechanism: Merits & Demerits

Dispute Resolution /

Conciliation as a Dispute Resolution Mechanism: Merits & Demerits Date: 10/11/2020 Author: Ashhab Khan Institute of Author: NLIU Bhopal Year: 2nd Introduction Conciliation is one of the alternative dispute resolution (hereinafter “ADR”) methods, wherein the parties go out-of-court to seek remedy. The Halsbury’s Laws of England defines conciliation as a process of persuading the parties to reach an agreement. It is a procedure where a neutral third person is appointed as a conciliator by the parties to the dispute to reach a settlement. The mutual consent in this allows parties to engage in a friendly search for a solution, without litigation and formal technicalities and enables parties to envision alternatives which provide solutions keeping in view the interests and priorities of both. Conciliation under Arbitration & Conciliation Act of 1996 Section 61 of the Arbitration & Conciliation Act, 1996 (hereinafter “Act”) defines the application and scope of conciliation. Section 61 says that the process of conciliation applies to disputes, whether contractual or not, arising out of a legal relationship. This means that the one party to the dispute has the right to sue the other party and the other party can be sued. Secondly, the Part III of the Act will not be applied to any disputes which cannot be submitted to conciliation by the virtue of any law for the time being in force.  A written invitation to conciliate is sent to the other party briefly identifying the subject matter of the dispute by the party initiating the conciliation. Conciliation proceedings commence when the other party accepts the invitation in writing.  Section 64 of the Act provides for the appointment of the conciliators. When the other part accepts the written invitation to conciliation, the parties must agree on the composition of the conciliation tribunal. There will be only one conciliator in the absence of any agreement to the contrary. The conciliation process may be conducted by a single conciliator, appointed with the consent of both sides. If it is failed, then two conciliators may conduct the same (maximum number is three), where each party appoints its own conciliator, and all parties jointly appoint the third conciliator. The third conciliator so named shall be the conciliator who shall preside. The conciliator may ask each of the parties to send, with a copy to the opposing side, a brief written statement outlining the basic nature of the dispute and the points at issue. The conciliator can require a party to submit such additional details to him at any point of the conciliation process as it considers necessary. Section 67 provides that the conciliator should assist the parties in an independent and impartial manner to reach a settlement. Further it says that he must follow the principles of objectivity, fairness and justice considering the rights and obligations of the parties, the usages of the trade concerned and the circumstances surrounding the dispute, including any previous business practices between the parties.  The conciliator and the parties to the dispute are obliged to keep all matters relating to conciliation confidential. Also, when a party provides the conciliator with some information on the condition that it shall be kept confidential, the conciliator should not reveal such information to the other party. The parties should act in good faith and cooperate with the conciliator. They should provide the conciliator with written materials, evidence and attend meetings, when asked by him for the purpose of proceeding.  If it occurs to the conciliator that there are aspects of a settlement that might be agreeable to both the parties, the conciliator may develop the terms of a settlement and send them to the parties for their input. After obtaining the observations of the parties, the conciliator may, in the light of those observations, reformulate the conditions of a potential settlement. The legislative provisions instruct the conciliator to draw up a settlement document and to authenticate it. He should ensure the parties are well informed of the terms of the settlement. It is available to the parties, by conciliation, to settle some of their disputes and to leave the pending disputes between them for resolution by other forms of adjudication. The settlement document must have the parties’ signatures. Until the parties have signed the agreement, the parties and individuals suing under them, respectively, shall be valid and binding. Merits and Demerits of Conciliation Merits: Demerits: Conclusion Conciliation is a beneficial mode of dispute resolution due to the fact that it is cost effective, flexible because parties the control the proceedings, fast and convenient as opposed to that of litigation. It is also secure due to the confidentiality of the process. However, its effectiveness relies on the attitude of parties, competence of the conciliator and proper environment. But overall, it is should preferred over litigation to resolve disputes.

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Principles and Applications of Conciliation

Dispute Resolution /

Principles and Applications of Conciliation Date: 05/12/2020 Author: Shadab Mohammad Shah Institute of Author: NLIU, Bhopal Year: 3rd Conciliation is a form of Alternate Dispute Resolution (hereinafter to be referred to as ADR); therefore all the proceedings and sessions of conciliation are done outside the court. How is conciliation different from other forms of ADRs? What are the principles of conciliation? Is the outcome of conciliation binding on the parties? Who appoints the conciliator? Who has the final say in conciliation proceedings? Can the decision of conciliation be challenged in the court of law? These are the few questions we’ll be dealing with in this article. Conciliation and other forms of ADR There are many forms of ADR, majorly used and most popular are, Arbitration, Mediation, Med-Arb, Conciliation, and Negotiation. Only common thing among the former four forms is the presence of third party, by virtue third party is neutral; negotiation on the other hand does not necessarily involve a presence of third party and it is usually done by the parties-in-dispute. Principles of Conciliation Part III of the Arbitration and Conciliation Act, 1996 governs the functioning of Conciliation in the territory of India. Application and Procedure of Conciliation in India The Arbitration and Conciliation Act, 1996 describes the process of conciliation in part III of the act. Procedure is as follows: Once the settlement agreement has been authenticated the process of conciliation comes to an end; the settlement agreement has the same status as that of an arbitral award rendered by the Arbitral Tribunal.

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Virtual Hearings in Arbitration: A Mistouted Panacea?

Dispute Resolution /

Virtual Hearings in Arbitration: A Mistouted Panacea? Date: 01/03/2021 Author: Neeraja Rajesh Institute of Author: B.B.A LL.B. (Hons.), JSS Law College, Mysuru Introduction Countries across the world are yet again clamping down on physical gatherings and travel in a bid to fight the second wave of the pandemic. Parallelly, the most promising vaccine candidates threaten to be a logistical nightmare to administer, not just by the sheer volume of the exercise, but also due to their ‘sub-zero temperature’ storage requirements. Ultimately, the second wave in most nations strike at a time when vaccines offer little to no refuge, rendering lockdowns a sine qua non and making it abundantly clear that virtual hearings will continue to be an integral part of dispensation of justice for the foreseeable future. International Arbitration was quick to adapt to the new normal. Several major arbitral institutions were keen on facilitating a smooth transition from in-person hearings to ODR to ensure expeditious and cost- effective resolution of existing and emerging disputes. The Seoul Protocol on Video Conference in International Arbitration promoted by the KCAB and Seoul IDRC led the way with ICC, CIArb, HKIAC and others following suit. This rapid adaptation, undoubtedly made virtual hearings practicable but there still prevails inhibitions as to the sanctity of the proceedings in a virtual space and the enforceability of the final award. These concerns are compounded in cases where one of the parties raise objections to a virtual hearing, setting the stage to challenge the award on due process grounds. The right to equal treatment of parties is set out under Article 18 of the UNCITRAL Model law. Article V of the New York Convention lays down exhaustive grounds for refusal of enforcement of an award. Art.V(1)(b) and (d) allow for such a challenge where an award debtor was unable to present his case or the arbitral procedure was not in accordance with the arbitration agreement or the law of the seat of arbitration. Hence, outside of ensuring that there is no manifest bar on virtual hearings in an arbitration agreement, the arbitrators need to follow “due process” by meting out equal treatment and by giving each party a fair opportunity to be heard. Due Process Concerns Though virtual hearings seem the inevitable answer during the current health emergency, they are plagued by a multitude of apprehensions. The most detrimental of all would be unequal access to technology. The parties to an international commercial dispute may be from any corner of the world. If the objecting party is prejudiced due to lack of internet access and other ancillary amenities, it allows for the challenge of the award based on unequal treatment or inability to present the case under Sec.18 and Sec. 34(2)(a)(iii) of the Arbitration and Conciliation Act, 1996 (hereinafter “Arbitration Act”), respectively. The fairness of the arbitral process also comes into question due to the possibility of witness coaching, the difficulty in cross-examination and the impediments when interpreters are needed (especially when the translation is simultaneous instead of consecutive). The inability to be in the same physical space and the involvement of numerous parties, further complicate the process due to the difference in time zones, intensity of Covid-19 restrictions and legitimate concerns about confidentiality. However, all such trepidations must be juxtaposed and ultimately balanced against the counterparty’s right against undue delay due to an indefinite adjournment, necessitated by the current situation, if an in-person hearing is insisted upon.[1] In fact, most major arbitral institutions have express provisions, empowering the tribunal, to prevent unnecessary delay and expense due to dilatory tactics.[2] The Path Ahead Despite evident concerns about the integrity of virtual hearings and final awards emerging therefrom, embracing the new normal and remedying existing lacunas seems to spell the way ahead. It must be noted that the transition to ODR is merely more conspicuous in the present scenario but the foundations to this transition have for long been in subsistence. Rule 32(c) of the AAA Arbitration Rules (2013), Art. 19.2 of LCIA (2014) and Art. 50(3) of the JCAA Commercial Arbitration Rules (2019) expressly provide for the possibility of virtual hearings. Other major arbitral institutions including SIAC Rules, 2016 give tribunals ample discretion in the conduct of proceedings to ensure the fair, expeditious, economical and final resolution of the disputes.[3] In India, the institutional impetus to this shift is evidenced by the 103rd Parliamentary Standing Committee Interim Report on the functioning of virtual courts, the guidance note issued by Delhi High Court to the DIAC and the discretionary powers granted to the tribunal under Sec.19(3) of the Arbitration Act. In addition to such recognition of virtual proceedings, arbitral institutions across the world have released protocols and guidance notes to ensure that a robust institutional framework is in place to support the transition. The International Institute for Conflict Prevention & Resolution provides an annotated Model Procedural Order for Remote Video Arbitration Proceedings, covering various facets of virtual hearings. The ICC Guidance Note encourages increased reliance on documents in resolution, and the replacement of “live testimony” of witnesses or experts with written question and answers, wherever possible, to tackle access related issues. Other suggestions in tackling impediments include: the use of screen sharing, 360° cameras and hot-tubbing in ensuring the integrity of witness and expert testimony; management of time difference by commencing hearing at different hours; early dismissal of claims or defences that are manifestly without merit;[4] making provisions to accommodate technical interruptions by ensuring flexibility in the hearing schedule; and agreement on the use of electronic hearing bundles, VPN and other encryption methods, and recording or transcribing the hearing.  The Courts on Enforceability The Contracting States under the New York Convention, overwhelmingly adopt a pro-enforcement approach to arbitral awards. Most notably, the Austrian Supreme Court pronounced a landmark decision[5] holding that the conduct of virtual hearings despite one party’s objection, lies within the discretionary power of the arbitrator. The Court clearly held that fair and equal treatment did not mean that the involvement of one party must be

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Arbitration Tribunal Appointment Procedure: The Conflict between Party Autonomy and Principles of Natural Justice

Dispute Resolution /

Arbitration Tribunal Appointment Procedure: The Conflict between Party Autonomy and Principles of Natural Justice Date: 11/01/2021 Author: Abhinav Jain Institute of Author: USLLS, GGSIPU Year: 3rd. Introductory Remarks  Party autonomy has always been a key element of arbitration that distinguishes it from regular court proceedings. Among other things, it includes the right of the parties to decide and agree upon an appointment procedure of the arbitral tribunal. This is usually done in the main contract itself wherein an arbitration clause is provided. Court intervention through Section 11 of the Arbitration and Counciliation Act[1], thus, is further limited with the presence of such agreed procedures. It may be apparent that a given appointment procedure, in a way, allocates certain power into the hands of the parties involved. On one hand, with appointment procedures that have been agreed to in a contract or arbitration clause, there is an implied consent and approval to such ‘allocation of power’. On the other hand, an appointment procedure which gives more power in the hands of one party, may lead to the appearance, if not also the possibility, of bias in the decision making process, through the considerations of the lack of independence and impartiality of the arbitrators so appointed, thereby violating the principles of natural justice. While section 12 of the Act, provides for grounds of challenge against the appointment of certain arbitrators, such grounds are exercised on the considerations of apparent relations of the party to the arbitrator so appointed or nominated, and not the appointment procedure, as such. The Fifth Schedule and the Seventh Schedule, inserted by the 2015 Amendment Act[2], which find mention in sections 12(1)(b) and 12(5), delineate certain relations that give justifiable doubts as to the independence and impartiality of the arbitrator. These grounds are exercisable before the arbitral tribunal so formed,[3] or the court depending on the stage of the proceeding and the Schedule referred therein. However, the question of unequal power through the appointment procedure still remains a concern. In this article, the author will be looking at four recent landmark judgments that have shaped the judicial position relating to the appointment procedure of the arbitration tribunal. The Conundrum in the status quo  In TRF vs. Energo Engineers Limited,[4] the Supreme Court held that a person, who has been held ineligible to arbitrate, is also de jure ineligible to nominate an arbitrator. The court implicitly equated the power and effect of nomination with that of delegation, and applied the maxim ‘Qui facit per alium facit per se’ (What one does through another is done by oneself). In this regard, the court observed that if the nomination of an arbitrator by an ineligible arbitrator, is allowed, it would tantamount to carrying on the proceeding of arbitration by the ineligible arbitrator himself:  “Needless to say, once the infrastructure collapses, the superstructure is bound to collapse. One cannot have a building without the plinth. Or to put it differently, once the identity of the Managing Director as the sole arbitrator is lost, the power to nominate someone else as an arbitrator is obliterated.” In Voestapline vs. DMRC[5], the arbitration clause provided for selection from a panel of arbitrators of certain qualifications, maintained by DMRC. A list of five would be forwarded from the panel, from which both the parties would appoint their respective nominee arbitrators, who would then appoint the third (presiding) arbitrator from the said list. The court, first held that clause 1 of the Seventh Schedule pertains only to the relationship of the arbitrator with the Respondent DMRC, and not, in general, with any and all government undertakings/departments. Thus, the panel was not ineligible as per section 12(5). But, more important to the present discussion, the court went on to hold that the procedure, wherein DMRC would unilaterally select a list of only five arbitrators for the tribunal to be selected from – limited the choice given to Voestapline, and also created a room for suspicion against the neutrality and independence of the arbitrators, so appointed. The court held that the parties should be free to nominate from the entire panel providing for a wider range. This was an interesting development in the aspect of fairness in the appointment procedure. The Supreme Court in Perkins Eastman Architects DPC vs. HSCC,[6] further developed and expanded on the reasoning in TRF vs. Energo, and held the unilateral appointment of a sole arbitrator to be invalid. The court observed that the element of invalidity would arise from the interest of the nominating person in the outcome of the dispute; and thus, an interested person cannot and should not have any role in charting out any course to the dispute resolution by having the power to appoint an arbitrator. The court following the TRF decision carved out an exception where both the parties have equal nominating powers, and thus observed: “16. …cases where both the parties could nominate respective arbitrators of their choice were found to be completely a different situation. The reason is clear that whatever advantage a party may derive by nominating an arbitrator of its choice would get counter balanced by equal power with the other party.” As clarified by Bharat Broadband,[7] an ineligibility flowing from the Seventh Schedule would terminate the mandate of the arbitrator, and this effect would also extend to appointments that had already been made before the TRF decision. The same principle was followed for the law laid down in Perkins Eastman, in Proddatur Cable vs. SITI Cable[8] by the Delhi High Court. This Perkins exception became critical in the Supreme Court decision of Central Railways vs. ECI-SPIC-SMO-MCML[9] wherein arbitration jurisprudence was moved towards party autonomy, away from the overarching principles of natural justice that had been glorified in the previous judgments, as well as in the 246th Law Commission Report.[10] In this case, the clause provided for a panel of 4 retired Senior Railway Officers selected by the Appellant, from within which the nomination of the tribunal would take place; creating an issue of

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Chess Clock Method – Alley to the Due Process and Oral Hearing

Dispute Resolution, Mediation /

Chess Clock Method – Alley to the Due Process and Oral Hearing Date: 10/05/2021 Authors: Simran Kaplish Institute of Authors: Institute of Law, Nirma University, Allahabad. Year: 4th Arbitration in India is significantly thriving, as one of the most effective procedure of dispute resolution. The disputes being solved with the help of arbitration process have undoubtedly witnessed accession.  The working mechanism of the judiciary has always been criticised for various black holes which includes a tedious procedure, along with incredibly long proceedings. As per a report, there were 3.4 crore cases in the district court pending between February 1 – August 31, 2020.  The condition of High Court and Supreme Court seems to be miserable, subjected to lots of work. At this point of time, the arbitration tribunals come into Play. The main objective of the arbitral tribunal was speedy redressal along with relaxation of procedural complexities to cut short the time of proceedings and make it cost-effective. Besides, it is seen that arbitration proceedings have baffled the objective of the act by bringing in procedural complexities where parties are involved in long proceedings. The whole process of gathering evidence and examination of witnesses has disrespected the objective of the act. Not only this, the consistent interference of the judiciary by granting interim relief and setting aside applications of greater concern. Initially, India had greater scope for arbitration as people preferred it to be a redressal with a speedy procedure and flexible procedure. In today’s time, the courts and tribunals have ended up at the same level, creating lots of chaos and discrepancies.  Introduction Arbitration as defined by the American Bar Association is a private process where disputing parties agree that one or several individuals can decide the dispute after receiving evidence and hearing arguments[1]. As per the black’s law dictionary, arbitration is a dispute resolution process in which the disputing parties uses one or more neutral third parties to make a final and binding decision resolving the dispute. Relying on both these definitions, we can bring arbitration to a crux of three major elements, including a speedy redressal, amicable procedure and cost-saving proceedings. Focusing stress upon the flexible procedure has created a juggle in the functioning of these tribunals. The Due Process It is essential to follow a due process of law, for a free and fair trial. These rules of due process protect the rights of people. The term due process of law can be understood from two perspectives. A procedural due process includes following the concept of natural justice whereas the substantive due process is subjected to the restrictions imposed by the Constitution, for the protection of rights. Being particular, in the case of Maneka Gandhi versus the Union of India[2], the concept of due process was elaborated to control the excessive and arbitrary powers of authorities. Similar to the Constitution of the USA, the due process includes a fair trial along with “Audi alteram partem”. Examination of witnesses along with close examination forms to be a very essential element of Indian proceedings. The drawback here is that these procedures are time consuming and tiresome. Hitting on the point, most of the High Court judges act as arbitrators, having the mentality of the functioning of a court[3]. This is a huge reason, due to which the objective of the arbitration act is being violated in India. When we have Arbitral tribunals it becomes a necessity to keep a balance between following the due procedure of law and giving autonomy to the arbitrator and parties to decide for their own. The UNICITRAL Model Law[4] defines a boundary line for the judiciary to intervene, which has not been adopted by the Indian judiciary for dispute resolution. It is necessary to have bars and waiver of some procedural formalities, to keep intact the essence of the arbitration act in India. The Indian evidence act has a cumbersome procedure to follow methods of recording evidence and checking that admissibility. The arbitration tribunal acts as an exception, for speedy redressal. Justifying this statement, in the year 2015 the amendment brought in a limitation of 12 months, which made the tribunal bound to finish off and pass the award[5]. If the parties mutually agree, the time period can extend by not more than six months at the last and hence becomes mandatory to pass the award unless court extends the application[6] Whether to follow or not? The question that arises here is whether the arbitral tribunal has the right to not conduct cross-examination or deny oral hearing from the party, just to achieve the objective of the act. In this case, we can rely on the Chess clock method. This method has not been implemented in India but has shown its positive existence in Singapore and London. As per this, when the parties entered into an arbitration agreement, the tribunal should allow a particular time limit for recording evidence and cross-examination. This should not be based upon the concept of quality but should be equitable. Parties have the superior ability to justify claims and relieve their burdens, within a sleep-related time. This is a sole solution to the two basic problems of arbitration in India, including the proper follow-up of law along with Speedy redressal. The chess-clock system prohibits one party from devouring an undue amount of time. Using a chess clock to center parties’ attention on the benefits and shortcomings of their respective positions motivates them to seek commercial settlement sooner than they would otherwise. Moreover, in this time where video conferencing has become the new normal, the concept of fast redressal seems to be paved out totally.  In the case of RateGain Travel Technologies Private Limited v. Ujjwal Suri[7], the Delhi HC gave power to arbitral tribunals to conduct the recording of evidence and oral hearing by way of video conferencing[8]. Calcutta High Court in the case of Saraf Agencies Private Limited v. Federal Agencies for State Property Management[9],   allowed witnesses for cross-examination, through videoconferencing who was present in

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Arbitration Council of India: The Regulator in Disguise

Dispute Resolution /

Introduction India is on the run to become an arbitration-friendly jurisdiction and a hub for International Commercial Arbitration. A high-level committee was recently formed under the chairmanship of Justice B.N Srikrishna which suggested reforms related to accreditation and institutionalization of arbitration in India. The idea of establishing an Arbitration Council of India [“ACI”] was put forth to give birth to an autonomous body. The ACI is supposed to be established by virtue of the 2019 Amendment[1] which is yet to be notified to come into effect. It was emphasized in the report[2] that ACI is not a regulator and would merely act to grade arbitral institutions and evolve minimum standards for the institutions that are administering arbitration in India. The need of such an autonomous body is questioned given the fact that various institutions already exist with a set of rules and pool of experts. These existing institutions could have served the purpose instead a regulator-like body was established and added stock to the issue of intervention with Arbitration in India. Compositions and Functions of ACI The members of ACI include Retired Judges and members of various ministries appointed by the Central Government. Central government not only has huge involvement in appointment of the members but also in grant of salary and allowance. The functions of ACI include, framing policies for grading arbitral institutions and accrediting arbitrators, making policies for a uniform professional standards and maintaining a repository of arbitral awards. Moreover, ACI has been given powers as wide as making regulations in accordance with the Act, in consultation with the Central Government. Thus, the functioning of ACI corresponds to that of a regulator which can be a start of the new licensing raj[3] in arbitration. The creation of ACI has encouraged problems of intervention as the composition is not autonomous but appointed by the central government and has functions of a regulatory body. Problems of Intervention with Arbitration in India ACI is to help the parties in a way that they can apply to the designated appointing authorities by relevant Supreme Court or High Court instead of taking assistance of court in appointment. One of the objectives of ACI seems to be minimizing the judicial intervention by the courts. However, its effect can potentially drive international arbitration away from India. India has long witnessed the issue of judicial intervention in Arbitration which inarguably slows down the process. The courts have tried to curb the judicial intervention to make India arbitration friendly jurisdiction. However, the creation of ACI has contributed to the issue of intervention not by the judiciary but by the central government. The creation of such a body by the legislature is encouraging another kind of intervention which can be coined as executive intervention in arbitration. The amendment is very complex in nature and may create mistrust[4] among foreign investors. We might do away with judicial intervention to some extent in future but involvement of the central government in appointment of members and thus directly in accreditation will encourage a whole different kind of intervention. Foreign parties prefer to remain away from the seats which have substantial interference from the government, thus it will act as a deterrent for foreign parties to choose India as their preferred seat of arbitration. Effects on Party Autonomy Party autonomy is a guiding principle of arbitration. The parties have autonomy to choose various aspects of arbitration such as procedure to be followed, arbitrators, laws applicable etc. It makes arbitration a more favorable and attractive option for dispute resolution. However, the establishment of ACI will result in curtailment of party autonomy. The uncertainty over appointment of arbitrator who is of other nationality than India not only leads to India being less of a preferred seat but also it restricts Indian parties in appointing foreign origin arbitrators. Moreover, the restricted pool of arbitrators to be maintained by ACI limits the options of parties to appoint an arbitrator overall. The mandate of High Courts and Supreme Court in appointment of arbitrators is also restricted and subject to accreditation by the council. It can be said that party autonomy will be compromised to a certain extent owing to increased intervention. ACI can also set standard procedure, and make regulations with respect to the Act, which can further curtail the party autonomy. This is although for the purpose of maintaining a minimum standard in arbitration, however, will curtail party autonomy and increase intervention. This makes the situation in arbitration similar to conventional litigation and these restrictions are against the very objective of minimum intervention. Arbitrator’s Expertise in Question The ACI is bestowed with a task of accreditation of arbitrators and the 2019 amendment only brought in Section 43J of the Act which specifies 8 categories which are eligible to be the arbitrators. These categories are: Judges, Advocates, Engineers, Chartered Accountants, Executives, Maritime experts, Businessmen and Foreign Nationals having degree of their expertise and a minimum 10-year experience. A party cannot choose a judge as per its whims but it can do so while appointing an arbitrator. This feature of ‘arbitrator shopping’ is thus of great importance and one of the main characteristics of the arbitration which differentiates it from conventional litigation. The major issue lies where legislature has equated requirement of expertise with years of experience or a person’s association with government. In other words, it can be put as judges or ex-judges with 10-year experience may get the accreditation and perhaps still be unqualified in their job as arbitrators. The applicability of the amendment has been notified as it will apply to proceedings commencing after October 23, 2015. However, there are several in contracts which have been entered before the above mentioned date. There are cases such as Aravali Power Company Pvt. Ltd. v. M/s. Era Infra Engineering Ltd.[5] where the dispute resolution clause specifically states that the project manager shall be the sole arbitrator as and when the dispute arises. Technically, the arbitrator shall be ineligible to act post the amendment and the amendment

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The Shadow of the Indian Courts on Pre-Arbitration Clauses- A Pro-Arbitration Dilemma

Dispute Resolution /

  Introduction India has been observed as the hub of start- ups and a growing attraction for foreign direct investments.  However, this advancement shown in the business world is not the reality of the legal world. For decades, courts have been overloaded with pending cases.  Arbitration has become the much approachable way of solving disputes due to its speedier resolution process. These advantages have paved the way for establishment of pro-arbitration regimes in places like London, New York, and Singapore.  A pro-arbitration regime gives utmost importance to a party’s autonomy which is reflected through their selection of arbitration and minimal intervention of the judiciary in the arbitration proceedings.  The reference to arbitration can be found embedded in the history of India, the same did not translate into a pro-arbitration stance, as can be perceived from the applicability of Arbitration act, 1940 being limited to domestic arbitration. [1] The amendments and the position taken by the system in the recent times has showcased the increased desire of India to join the pro-arbitration league.  The quest for a flexible, quick and less adversarial process of dispute resolution has resulted in more and more parties choosing Alternate dispute resolution mechanisms (ADR) through inclusion of Multi-tier clauses in complex contracts like construction contracts, joint venture agreements and other long-term relationships. [2] Pre-arbitration clauses/Multi-tier clauses/escalation clauses have been a progressive trend in the contracts drafted in the modern times. These clauses are an additional means of resolving disputes through distinct stages and separate definitive procedures prior to arbitration. [3] The intervention of courts in regard to the jurisdiction and admissibility of such clauses has taken India a step backwards from its aim to enter the pro-arbitration regime. India on Pre-Arbitration Clauses Pre-arbitration clauses help to avoid expensive arbitration processes and continue their long built relationships unscathed. Even though such clauses are gaining momentum, there exists clouded controversies surrounding the same.  The parties are not often aware of the future consequences of such clauses and it may result in futility if not drafted with certainty. In India, the dilemma regarding the mandatory nature of such clauses has been largely settled by the Supreme Court in two cases being Oriental Insurance Company vs M/s Narbheram Power and Steel Pvt. Ltd. and United India Insurance Co Ltd. vs Hyundai Engineering and Construction Co. Ltd. & Ors which took the view that arbitration clauses must be strictly construed. Thereby, the parties are to adhere to the completion of the ‘pre-conditions’ to arbitration.  The clauses so drafted in these cases were mandatory in nature and it was found that in order to trigger arbitration, the pre-conditions had to be mandatorily adhered to.   In a recent case, the Bombay High Court in Quick Heal Technologies Limited Vs. NCS Computech Private Limited and Ors, relying on Visa International Ltd. Vs. Continental Resorts (USA) Ltd held that though the clause was mandatory in nature if from the correspondence between the parties it can be inferred that the pre-condition would have resulted in futility then the invocation of arbitration immediately will be valid. The current India stand is in congruence with the majority view that the pre-arbitration clause will be mandatory and is a pre-condition based on the nature of drafting of the clause. This being said, it has a long way to go in determining the standard of compliance and reducing the intervention of courts in arbitration proceedings. Admissibility Question by the Arbitration Tribunal This brings us to a much unacknowledged dilemma regarding the jurisdiction of the courts to address the mandatory nature of the pre-arbitration clause. The stepping stone to limit the intervention of the judiciary thereby, respecting the party autonomy to arbitrate was brought about in the 2015 Amendments.  The legislative intent behind this amendment was to make the arbitral tribunal address such issues and not the courts.  Moreover, pre-arbitration clauses are considered to be a matter of admissibility and thereby, the tribunal is the forum that has to decide if the pre-conditions are met in order for it to initiate arbitration. The thin line of distinction between jurisdiction and admissibility is that, in the former the outcome of the claim cannot be given by the prescribed forum while in the latter the claims pertaining to merits cannot be heard before the forum. [4] The pre-arbitration procedural requirements should not constitute jurisdictional bars to arbitration proceedings and is to be regarded as matters of admissibility or procedure that can be cured.  [5] Thereby, limiting the possibility of interlocutory judicial decisions and annulment of arbitral awards on jurisdictional grounds. [6]  The competence- competence principle is internationally recognized and has been provided for in 1996 Act. [7] As per, this principle the arbitral tribunal has the power to address the questions on its own jurisdiction and the same is prerequisite to adjudicate upon the admissibility. [8] There exists no measurable standard to address the fulfilment of the pre-arbitration clause in case of its failure and thereby, barring the jurisdiction of the tribunal will be in violation of the parties’ right to be heard.  Around the World Arbitration agreements being vital to the distinction of the jurisdiction of the arbitral tribunal is to be construed in the right spirit.  The Singapore High Court in Ling Kong Henry v Tanglin Club [2018] SGHC 153 in concurrence with House of Lords in the Channel Tunnel Group v Balfour Beatty Ltd. [1993] 1 All ER 664 and Westco Air-conditioning Ltd v. Sui Chong Construction & Engineering Co Ltd [1998] 1 HKC 254 held that a multi-tier dispute resolution clause is in its entirety an agreement to arbitrate and the obligation to arbitrate is invoked only when the preconditions to the commencement of arbitration have been adhered. These international precedents pave the way for construing a multi-tier arbitration clause as an arbitration agreement.   Further, the English High Court in Republic of Sierra Leona v. SL Mining Ltd [2021] EWHC 286 (Comm) held that the alleged non-compliance of a pre-condition to arbitration was a question of admissibility

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The Conciliator: Power and Duties

Dispute Resolution /

Introduction “No civilised society leaves all issues of common concern to be resolved mutually between labour and management through a process of confrontation and conflict. The State shall lay down legislation to ensure a minimum protection of the interests of workers without waiting for trade unions to demand it.” [1] -A. Flander Hence, a step directed towards this was to recognize conciliation as a dispute resolution mechanism under the Industrial Disputes Act, 1947, furthered in the Arbitration and Conciliation Act, 1996. Conciliation is a process whereby the conciliator incentivises the disputed parties to discuss their differences and facilitates them in arriving to a mutually accepted agreement within the legal framework of the Act. Conciliation as a mechanism is completely recommendatory in nature and procedure. Ergo, Wood mentioned, “the Conciliator is a catalyst aiming to lead the parties to an agreement without himself interfering in the actual decision making”.[2] Who is a Conciliator? A Conciliator plays a role of neutral adjudicator in facilitating the conciliation proceedings by assisting the parties with his knowledge, abilities and skills for a perspicuous flow of the process by initiating a positive dialogue, alleviate sour situations, clarify any misunderstandings, develop cordial environment necessary for solving the dispute harmoniously and most importantly help creating faith upon one another. The conciliator shall win the confidence of both the parties, which will help him in better assistance as the parties would without any hesitation share their confidential information and thinking process with a belief that the same would not be disclosed to the opposite party without specific instruction in that regard. Section  64 of the Act[3] deals with the appointment of the conciliators. When the invitation to the conciliation is accepted by the other party, the parties have to agree on the composition of the conciliation tribunal. In the absence of any agreement to the contrary, there shall be only one conciliator. The conciliation proceeding may be conducted by a sole conciliator to be appointed with the consent of both the parties, failing to which the same may be conducted by two conciliators (maximum limit is three), then each party appoints own conciliator ,and the third conciliator is appointed unanimously by both the parties. The third conciliator so appointed shall be the presiding conciliator. The parties to the arbitration agreement instead of appointing the conciliator themselves may enlist the assistance of an institution or person of their choice for appointment of conciliators. But the institution or the person should keep in view during appointment that, the conciliator is independent and impartial.[4] [1] A. Flanders, The Fawley Productivity Agreements, (London: Faber and Faber), 1964. [2] G. M. Kothari and A.G. Kothari, A Study of Industrial Law, 4th edn.Vol. 1, (Bombay: N.M. Tripathi Pvt.  Ltd.,1987), p. 62 [3] S. 64, Arbitration and Conciliation Act, 1996. [4]  http://www.legalservicesindia.com/article/725/Principles-&-Procedure-of-conciliation-under-Arbitration-&-Conciliation-Act-1996.html [5] S. 67(1), Arbitration and Conciliation Act, 1996. [6] P.M. Bakshi, “Conciliation for Resolving Commercial Disputes”, 1 Comp. L. J. (Journal) 19 (1990). [7] Haresh Dayaram Thakur v. State of Maharashtra, AIR 2000 SC 2281. [8] S. 67(2), Arbitration and Conciliation Act, 1996. [9] S. 70, Arbitration and Conciliation Act, 1996. [10] S. 70, Arbitration and Conciliation Act, 1996. [11] S. 65, Arbitration and Conciliation Act, 1996. [12] S. 65, Arbitration and Conciliation Act, 1996. [13] S. 66, Arbitration and Conciliation Act, 1996. [14] S. 69, Arbitration and Conciliation Act, 1996. [15] Sarvesh Chandra, “ADR: Is Conciliation the Best Choice” in P.C. Rao and William Sheffield ds.),Alternative Dispute Resolution 82 (Universal Law Publishing Company Pvt. Ltd., Delhi, 1997). [16] S. 67, Arbitration and Conciliation Act, 1996. Roshita Shrivastava, Second-year Student at NLIU Bhopal.

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Board of Conciliation and References of Disputes

Dispute Resolution /

  Conciliation is yet another process of alternative dispute resolution which is voluntary, time effective, ensures confidentiality, party autonomy and expertise of the decision-maker. It is flexible and allows the parties to define content, terms and structure of the conciliation proceedings. Conciliation as a method is used to resolve almost all types of civil disputes, however, in India, it is prevalent for industrial, family and trade matters. Arbitration and Conciliation Act, 1996 provides the legal framework for the conciliation along with the Code of Civil Procedure, 1908 and the Indian Evidence Act, 1872. The conciliator plays an active role in helping the parties to reach a settlement, that is binding or not binding as per the decisions of the parties. BOARD OF CONCILIATION History of Board of Conciliation or Conciliation in general, dates back to 1929 when the Trade Disputes Act was enacted and provided for the voluntary conciliation through the Board of Conciliation. The Act also provided for the reference of the disputes by the disputants themselves. However, owing to several implementational gaps and delays in setting the machinery in motion, the method was not resorted to by the parties even when they felt the need. Later, in 1947, the Industrial Disputes Act (‘Act’) provided detailed provisions for the appointment of the Board of Conciliation. It also incorporated the provisions for Conciliation officers, lack of which was one of the main criticisms of the Trade Disputes Act. The Industrial Disputes Act, 1947 to-date remains one of the most elaborate central legislations on the Board of Conciliation. Principles of the Board of Conciliation – To ensure that the process remains impartial, the conciliation office (or the Chairman in the Indian context) remains independent. The satisfaction of the parties and transparency in proceedings are the other principles which are given the highest priority. It is made sure that the parties have freedom of action and the opportunity to access all the necessary documents and information. The case is judged on the basis of merits giving the parties the right to put forth their arguments and argue on the disputed matters. In some jurisdictions, opportunities to act through the third party is also provided. Nature and Composition[1]– Board of Conciliation is usually an ad-hoc body constituted for a specific purpose; comprises of an independent Chairman and two or four members. The members represent the parties in equal numbers and are, therefore, appointed on the recommendations of the parties. If no such recommendation is received by the parties, then the authority itself appoints the members. In order to tackle the issue of delays, the Board is supposed to function in spite of the absence of any of its members (in the prescribed quorum), however, it cannot work if its Chairman ceases to be a chairman or until a new Chairman is appointed. Duties of the Board[2]– One of the primary duties of the Board is to employ all the necessary processes required to bring about a fair and amicable settlement of the dispute. Investigation of all the matters connected with and affecting the merits and right settlement of the dispute needs to be done to induce the parties to come to a settlement. After the settlement (complete or partial) is arrived at, the Board is required to submit the report along with the settlement agreement duly signed by the parties to the dispute. In case, the settlement is not arrived at, then also a detailed report is to be submitted highlighting all the facts & findings, steps taken and circumstances arisen during the course of the proceedings. The report has to be signed by all the members of the Board. A member may record his dissent or reservations from the report or recommendations made therein. The Board is also required to act in a time-bound manner. Under the Act, the Board is expected to conclude the case within a period of two months from the date on which the matter was referred to it. However, if the parties furnish in writing, the time can be extended. Powers of the Board of Conciliation – The Board is vested with the rights of a civil court and therefore, has powers such as to enforce the attendance and examine people on oath, impel the production of the documents and other material objects, and to issue orders for the examination of witnesses. It also has certain executive powers like, to enter the premises to conduct the enquiry. REFERENCE OF DISPUTES Conciliation has attained statutory recognition and it is preferred to refer the dispute for conciliation before referring it to the civil, industrial or family courts, etc. The Arbitration and Conciliation Act, 1996 applies when the matter is referred for conciliation.[3] Under Section 62 of the above-mentioned Act, the matter is referred for conciliation by agreement of the parties, while under Section 89 of the Arbitration and Conciliation Act, if the court deems fit, the matter can be referred to even when there is no consent of the parties. Post litigation conciliation was thus recognized as a mode of dispute resolution when Section 89 was incorporated in the Code of Civil Procedure, 1908 which affords an option for reference of sub-judice matters.[4] Conciliation as a dispute resolution method is often preferred at the pre-litigation stage. Various public and private companies incorporate the conciliation clause in their agreements agreeing to refer any disputes to conciliation. Parties may appoint individual conciliators or resort to institutional conciliation. It is a notion that usually corporates prefer institutional conciliation, however, trends show that various PSUs also go in for conciliation conducted by ad-hoc conciliators. Various legislations vividly provide for the method of conciliation and assign the responsibility to the court to make every possible effort to settle the matter between two parties, for e.g., the Hindu Marriage Act, 1955. CONCLUSION Even after the presence of the statutory frameworks, conciliation is becoming less popular and people are resorting to other modes of alternative dispute resolution. The reason for the same could be lack

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