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This article is written by Amit Sharma, pursuing  Certificate Course in Introduction to Legal Drafting: Contracts, Petitions, Opinions & Articles from LawSikho. The article has been edited by Prashant Baviskar (Associate, LawSikho).

This article has been published by Shoronya Banerjee.

Introduction

‘Ayodhya temple’, these two words can evoke a spectrum of emotions in India. With the emotions follow flashes of memories. And one of those memories is when in March of 2019, The Supreme Court had ordered the mediation in the Ayodhya case to be completed within 8 months and the first report to be submitted within four weeks. 

Former Supreme Court judge FM Kalifulla, Sri Sri Ravi Shankar, and senior advocate and mediator Sriram Panchu constituted the “three-team mediation panel.” Many wondered how did “mediation” come into play, and why did SC order a mediation instead of just passing a decision?

This article will take you on a journey to the family to which “mediation” belongs- it’s called ADR or Alternate Dispute Resolution. Will explore briefly why ADR came to being, what it is, its journey, what it means in the Indian context, and where it is headed.

Let’s dive in

The world is now a village, they say. The credit of connecting the world is usually given to the advent of air travel, turbo-charged by digital transformation. But if you look at Maha Upanishads, which are said to be written between 500 CE and 1000 CE, the idea of Vasudhaiva Kutumbakam, which means “the world is one family”, is mentioned there too.

So be it the jet setters and space tourists of today or the ancient folks of bow and arrow of the past, this concept of the world being one nice, happy family, has been deeply ingrained in the human psyche. 

And come to think of it, we do breathe the same air, are glued to the planet by the same invisible gravity, and the beautiful ball does indeed exist because of the same dazzling sun. So in a way, it is indeed accurate to say that the world is just one unit, village or family. Just a dysfunctional one. A family with a complex history of colonialism, cultural exchange, and class struggle. 

A family whose members are still evolving and learning how to navigate the subtle traps of human weaknesses of greed, anger, lust, pride. A family with members who have tempers flaring, minds changing, and other variables leading to lots of conflicts. It is this conflict that has led to 4.5 crore pending cases in Indian Courts alone. And India is just about 17% of the global population, mostly the “non-litigation-loving” population. One can only imagine the number of conflicts in our “global village” where people are comfortable with litigation. Now throw in the increased cross-border trade continuously blurring the international boundaries. (See where I’m going with this?)

The need for alternate dispute resolution

This continuous blurring of the international boundaries aka the advent of globalization caused people and businesses to interconnect which, on one hand, led to great partnerships and successful enterprises, but on the other hand, created a realization that people had to look beyond traditional courts. The number of conflicts and disputes that were emerging had to be resolved and managed not just locally within countries but across borders. And this had to happen as quickly, quietly, and efficiently as possible. This premise led to the popularity of arbitration or the method of Alternate Dispute Resolution (ADR). 

What is ADR ? 

Harvard Law School’s site says, “Alternative dispute resolution (ADR) refers to a variety of processes and techniques designed to help disagreeing parties come to an agreement short of litigation. 

These processes can include everything from facilitated settlement negotiation, in which disagreeing parties are encouraged to consult directly with each other prior to some other legal process, to arbitration, which can look and feel very much like a standard trial. 

The most commonly used ADR systems are negotiation, mediation, collaborative law, and arbitration. 

Lawyers often play a major role in ADR processes, either by advising clients on and representing them in proceedings, or by serving as adjudicators, arbitrators, conciliators, and/or mediators.”

ADR across the global village

While the need for a mechanism was tangible, there was a disparity between states and countries of the global village regarding the rules controlling the process, and the standards that both the parties could expect. 

It was in response to this that the UNCITRAL (United Nations Commission on International Trade Law) designed & adopted the Model Law on International Commercial Arbitration. It was adopted in 1985 on 21st June.

Model Law : UNCITRAL

The Model Law was adopted with the idea that all states of the global village while setting up their own domestic legislation on arbitration, will give the required consideration to the Model Law in order to preserve uniformity in the law of arbitral proceedings and to keep in mind the specific requirements of international commercial arbitration. (1)

The Model Law was enacted keeping in mind the necessary features in order to remove difficulties in regulating international arbitration by providing uniformity/standardization in the procedural and substantive rules/practices of arbitration.

Arbitration’s journey In India

This Model Law was framed after reviewing and taking into consideration the provisions related to arbitration under various legal systems. The rigor followed in the above-said process is what eventually created the possibility to integrate the Model Law into the legal systems of almost every nation, including India.

Informally, arbitration existed in the form of Panchayats, the good old days when elders of the village (the Indian village) would sit together and resolve disputes between quarreling members.

Formally, like most of the other Indian laws, this too was codified by the British in 1899, and it was called The Indian Arbitration Act, 1899. This statute was applicable only in the erstwhile Presidency towns (Calcutta, Bombay, and Madras).

It was after the CPC (Code of Civil Procedure, 1908) was promulgated, that the law of arbitration was codified. It was then put in the Second Schedule, and that is when it finally extended/got implemented across the other States across India. The domestic arbitration was later consolidated in The Arbitration Act,1940. This was based on the English Arbitration Act, 1934.

India kept evolving and made changes to the law on Arbitration in 1937, then in 1940, and in 1961 too, but it was The Arbitration and Conciliation Act, 1996 that consolidated all the aspects and created a law that addressed international commercial arbitration and domestic arbitration, enforcement of foreign arbitral awards and even made rules related to conciliation.

(On a side note: If you are wondering what is the difference between Arbitration and Conciliation:

Arbitration: If both the parties involved would like an independent third party to set a binding & enforceable determination to the dispute,  then arbitration may be preferred. This is more formal. Proper rules of evidence etc. are followed. The decision is an award that is enforceable.

Conciliation: The choice of resolving the dispute is left to the disputing parties. If at all there is a possibility that both the parties may agree to a mutually acceptable outcome, then conciliation could be considered. This is more of friendly guidance and finding a way out.) 

But it was after the 2015 amendments came into effect on October 23, 2015, that gave legislative approval to a pro-arbitration policy that was adopted by Indian courts. The Supreme Court’s subsequent decision in the case of Bharat Aluminium Co v. Kaiser Aluminium

Technical Services (2012 SC), which overruled the earlier position decided in

Bhatia International, Venture Global, and other similar judgments, that held that where

any arbitration was seated outside India, Indian courts would not have jurisdiction.

The 2015 amendments also included other clarifications and provisions, such as the introduction of various timelines to enable speeding up the arbitration (process). The orange and the red lists of the IBA Guidelines were included as schedules to the Arbitration Act. 

For the most part, however, it was the Amendments in 2015 that put Incredible India on the trajectory to becoming a jurisdiction considered as “arbitration-friendly.” The law continues to evolve in India as is evident from the amendments as recent as in 2019 to enable a better positioning on “ease of doing business”. 

Though there have been certain contentious issues which the government flirted with aka not allowing appointment of foreign law graduates as arbitrators (yet not notified) overall the chinks continue to get ironed out in order to speed up sorting out of complex commercial matters. Given the evolution of the law, the perception of India as an arbitration-unfriendly jurisdiction is slowly but surely changing.

Road ahead

Before I start invoking my magical crystal-ball-gazing powers to comment on the road ahead for ADR, it is important to understand the principles of the Model Law:

In fulfilling the requirements of international commercial arbitration, the Model Law observes the following principles:

“(1) That the parties should be free to agree on how their arbitration should be conducted. 

(2) That, in the absence of agreement, the arbitral tribunal should be able to fashion the arbitration to suit the parties’ needs. 

(3) That the arbitration should be conducted in accordance with rules, enforceable in courts. 

(4) That the arbitration should be conducted fairly. 

(5) That the arbitration should not be unduly affected by the municipal law of the country in which it is held. 

(6) That there should be the uniform treatment of all awards, irrespective of their place of origin. 

(7) That there should be certainty as to the extent of court involvement. 

(8) That national legislation should take account of the principal international instruments, especially the New York Convention”.

In an ideal world, these would be acceptable to all reasonable people. But we don’t live in an ideal world. As we had established earlier, we are a family alright, but a dysfunctional family.

We, the people, and our politicians and the powers that be are still evolving, but at the moment, we find it difficult to look beyond personal gains, protectionism, and human weaknesses (which has been addressed earlier). 

And it is not just a few people, but the geo-politics at the moment. The battle amongst nations for becoming a superpower, China, Russia, US and others trying to shift the tectonic plates to move the power centers of the world. The list of roadblocks is long.

So keeping in mind the existing climate, implementing the Model Law in spirit where these principles are fully implemented/imbibed by nations, by people, by businesses even, may take time. But we’ve taken massive strides in the right direction. And if we keep inching forward, maybe a generation or two later, these principles listed in the Model Law could become a reality.  

References


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