Subject : Arbitration

 
   Title :       Alternative Dispute Resolution : Is It always an alternative?
   Author : Mr. Abhinav Chandrachud  
   
 

Abhinav Chandrachud*

"To be, or not to be: that is the question: ...For who would bare the whips and scorns of time, the oppressor's wrong, the proud man's contumely, the pangs of despised love, the law's delay..."

 William Shakespeare, Hamlet

I. Introduction

The Arbitration and Conciliation Act of 19961 marked an epoch in the struggle to find an alternative to the traditional adversarial system of litigation in India. It heralded the dawn of a new regime of negotiated settlement and consensual dispute resolution, as a means of combating the insuperable impediments posed by the decrepit and anachronistic civil justice system. The progeny of the Act, section 89 of the Civil Procedure Code,2 which infused the Court with the duty of referring certain disputes for alternative remedies, was a stepping-stone towards achieving the ineffable ideal of judicial efficiency.

The progression of time has led to a gradual realization of the fact that the judicial institution must perpetuate economic growth and financial stability. The role of the judiciary goes beyond the mere setting of precedents. Ordinary litigants do not concern themselves with the finer deliberations of the law, preferring rather, an expeditious settlement of their own disputes. Market reforms, globalization and liberalization, the encouragement of foreign direct investment, and several other institutional reforms in the Indian economy have led to the emergence of global partnerships and business interests which transcend national boundaries. These concerns have a special interest in the efficient, effective and expeditious administration of justice. The judicial institution therefore, must facilitate and encourage economic development.

The objective of this essay is to highlight the viability of alternative dispute resolution in achieving the aforementioned ideals of institutional efficiency. The utility of ADR in resolving the problems of the traditional litigative system has been emphasized and the focus has also been placed on the successes of mediation and conciliation vis a vis arbitration.

II. Travails of the Litigative System

Our judicial system is based on the Anglo-Saxon model of jurisprudence, better known as the adversarial system of law. Under this model, two opposing parties represented by their respective counsel, present conflicting views as a necessary adjunct to the pursuit of justice. This system is rooted in the belief that by means of such adverse opinions and contentions, eventually the truth will emerge. However, one finds that in the bargain, the adversarial system acts as an impediment to efficiency and expedition.

The rationale behind the adoption of a system of ADR is undoubtedly the need to find a method of circumventing and eventually effacing the tremendous problems which beset the litigative system. These problems can be broadly classified into:

(1) delay;

(2) expense;

(3) rigidity of procedures; and

(4) a reduction in the participatory role of parties.

1. Delay

Delay and backlog go hand in hand. The typical life span of a civil litigation depicts a morose picture of the litigative system of India. The Parliamentary Standing Committee on Home Affairs found that as of 2001, there were 21 High Courts in the country and 35.4 lakh cases pending.3 The position in the subordinate courts was even more alarming, as there was a backlog of 2 crore cases for as long as 25 to 30 years. The result of this tremendous backlog is an inordinate delay in the disposal of matters, spanning a period of 15-20 years.

Delay in the judicial system of a country results inevitably in a loss of public confidence in the concept of justice. It has a corrosive effect on the canons of public interest, which enunciate the maxim: 'justice delayed is justice denied'. Consequently, it acts as a deterrent to those who have been legally wronged, as they stay away from the Courts, fearful of the time that would have to be spent on litigation.

2. Expense

Justice Brennan of the U.S. Supreme Court has stated: "Nothing rankles more in the human heart than a brooding sense of injustice...when only the rich enjoy the law as a luxury and the poor who need it the most cannot have it because its expenses put it beyond their reach."4

The expenses that ordinarily have to be incurred by the litigant, such as court fees, lawyers fees etc., exclude the poor from the purview of judicial remedy, whereas it is they who are in the greatest need of it. The multiplicity of procedures and the inordinate delay adds to the burgeoning cost of litigation.

3. Rigidity of Procedures

The functioning of courts is governed by a prescribed set of procedures brought about either by statute or custom. Over a period of time, these procedures have attained a substantial amount of rigidity. While the rigidity of procedures does subserve the object of dispensing even handed justice, this objective is fulfilled at a pyrrhic cost.

In perpetuating such rigid procedures, we forego the possibility of amicable settlement, which can only be achieved through a moderate amount of flexibility. Further, apart from adding to the delay of the litigative system, rigid procedures are responsible for the apprehension of ordinary persons who shy away from courts, fearful of the sacrosanct procedures of which they know nothing.

4. Participatory Role of Parties

The adversarial system often results in the marginalization of litigants, whose participation in judicial proceedings is extinguished. Bereft of legal advice, litigants who appear before the court in person are often seen giving vent to their emotions, opinions, perceptions and interests, none of which are of any significance in a court of law.

Simple justice therefore demands a system of redressal of disputes, where the emotions, opinions, perceptions and interests of the litigant are taken into consideration, while moving toward an amicable settlement.

III. Alternative Dispute Resolution

In devising a system of alternative dispute resolution, two principles must be adhered to. Firstly, such a system must remedy the self-reinforcing problems which beset the traditional litigative system. However, it is of aphorismic importance that at the same time, the peremptory norms of law, such as those of judicial accountability and integrity, are not lost in our impassioned search for an alternative. Therefore, it is imperative that the system of ADR overcomes the litigative impediments through the permissible means, ensuring that the pillars of justice do not crumble in the name of an efficient alternative system.

It must be thoroughly understood that ADR is not intended to replace nor supplant the courts of the land. It is not an 'alternative' in such a restrictive sense. The need for public adjudication and normative judicial pronouncements on the momentous issues of the day, is fundamental to the evolution of the laws of the land. ADR is necessary to complement and preserve this function of the Courts. The objective of ADR is the provision of an outlet where petty and non-contentious disputes can be disposed of, in a simple and speedy manner.

Thus, a system of ADR has certain instrumental and intrinsic functions. It is instrumental insofar as it enables the amicable settlement of disputes through means which are not available to courts. It is intrinsic because it enables the parties themselves to settle their disputes.

1. The Comparative Failure of Arbitration

Arbitration was the first method of ADR recognized by statutory law in India.5 Realizing the need for the expeditious settlement of disputes to promote business prospects, contracting parties decided to enter into arbitration agreements, to settle disputes between themselves in the performance of the contract. Arbitration acknowledged the pivotal role of the parties in resolving their own disputes, and for the first time, the participatory role of parties was enhanced by enabling them to choose an arbitrator who would best suit their needs.

While arbitration did avoid some of the problems of the litigative system, it did not fulfill the intrinsic function of ADR, failing to become an end in itself. The extent of judicial interference which was permitted under the Act of 1940 defeated the very purpose of speedy justice, making "lawyers laugh and legal philosophers weep."6 This failure of arbitration was further emphasized by the High Court at Calcutta which stated: "[t]he law of arbitration [is] a cripple, which walks permanently on the crutches of legal precedents. It is no exaggeration to say that almost every controversial arbitration of any importance always waits for a second bout of legal fight in the public courts proving the truth of the old cynical statement that only fools go to arbitration because they pay two sets of costs: one before the arbitrators, and the other before the courts where they came home to roost."7

The Act of 1996 thereafter, did remedy some of the shortcomings of the 1940 Act. The procedural rigidity involved in the ordinary courts of law was done away with in an arbitration, as the Civil Procedure Code and the Indian Evidence Act were both excluded from the ambit of arbitration. Judicial intervention under the new Act was limited to:

(1) reference of parties to arbitration where there is an arbitration agreement [Section 8];

(2) issuance of interim orders as 'measures of protection' [Section 9];

(3) appointment of arbitrators [Section 11];

(4) termination of the mandate of arbitrators [Section 14 (2)];

(5) providing evidence to arbitral tribunals [Section 27];

(6) setting aside or remission of the award [Section 34];

(7) power to hear appeals [Section 37];

(8) power to order delivery of awards on payment of costs to the court [Section 38(2)];

(9) power to make an order on cost of arbitration where no sufficient provision is made in the award [Section 39 (4)];

(10) power to direct determination of any question in connection with insolvency proceedings by arbitration under certain circumstances [Section 41 (2)];

(11) power to extend time for reference to arbitration to time barred future disputes [Section 43 (3)].

However, arbitration does not do justice to the term 'Alternative Dispute Resolution'. First and foremost, the traditional adversarial system based on the Anglo-Saxon model of jurisprudence continues in arbitral proceedings, where there is a claimant and a respondent. Secondly, arbitral proceedings are emasculated by delay as both parties take a significant amount of time in presenting their submissions, resulting in adjournments and delays in the final award. Thirdly, the cost of arbitration is as hefty as that of the litigative system, automatically excluding the poor from the conveniences of arbitration. Lastly, the participatory role of parties, though an improvement from the litigative system, is not satisfactory as submissions are almost always made by the parties' counsel.

2. Mediation and Conciliation: A Better Alternative

Mediation is structured facilitated negotiation. It is an informal, confidential, consensual and non-binding process aimed at enabling the parties to a dispute, to discuss their differences in total privacy with the assistance of a neutral third party

(mediator). The process is interest based, future looking, and aimed at a durable win-win situation. It must be noted that there is no great difference between the terms 'mediation' and 'conciliation',8 the latter of which is given statutory recognition in the 1996 Act.9

Mediation is absolutely consensual. The proceedings are instituted at the written behest of both parties, and any party can opt out of the proceedings at any time. Any information which is submitted to the mediator may be kept confidential, if the party providing such information requests the same. Further, the proceedings of mediation cannot be used as evidence in a court of law, nor can the mediator be asked to give evidence in judicial proceedings. This enables the parties to engage in risk-free communication, fostering a healthy and amicable environment for facilitated negotiation.

It is often seen that two parties which have a healthy business relationship, wish to continue their relationship in spite of a prevalent dispute between themselves. The adversarial system in traditional courts ruptures relationships as it sets one party against the other. Further, in a court of law, a decision tends to result in one party 'winning' the dispute and the other 'losing' it. The striking feature of mediation is that both parties 'win' the dispute as they find solutions that accommodate the fundamental needs of each party. The mediator does not make a binding decision, and such a decision is not thrust upon the parties. He may present the parties with a solution, reformulate the same etc., and such a solution can either be agreed upon or rejected by both parties. This inevitably engenders and encourages a continuing business relationship.

Role of the Mediator

The mediator is not an adjudicator. The facilitative role of the mediator signifies the quintessence of mediation. The mediator is neither a trier of fact nor an arbiter of disputes. The role of the mediator is to create an environment in which parties before him are facilitated towards resolving the dispute in a purely voluntary settlement or agreement. The mediator may invite the parties to meet him together, or may ask each of them to meet him separately in order to open the channels of communication. The mediator must review the dispute from an overall business, professional or personal perspective.

A mediator is equipped with certain tools of negotiation which are not available to a judge in a court of law:

(a) Position Based Bargaining

The mediator may narrow the differences between the parties and their conflicting positions in law. This may be done by exposing them to the uncertainties of the legal process, and the advisability of settling their disputes in a consensual manner.

(b) Interest Based Bargaining

Interest based bargaining can be illustrated by means of the apocryphal story of the two girls, each of whom wanted an orange. The judge will consider the questions: who had it first? (property), who purchased it? (contract), who needs it more? (equity). The arbitrator will split the difference awarding half to each girl. However, the mediator will ask the girls why they each need the orange. If one wants juice and the other wants the rind from the skin, the girls themselves will quickly agree to a distribution that meets the interests of both.

(c) Integrative Bargaining

The mediator may integrate the interests and needs of both parties to reach an amicable solution. An example is seen in our daily lives, where two law students required the same book for an essay competition. After much dispute, a senior student finally tells them to write the essay jointly, thus increasing both their chances, and enabling both of them to participate in the competition.

Armed with these tools of negotiation, the mediator must have personal qualities which enable him to relate comfortably with the parties. He must have the humility to be non judgemental in relation to each party's mind-set and the readiness to empathize with their respective points of view. In essence, he is an information gatherer, a reality-tester and a problem solver.

Why does mediation work?

Thus, mediation can be construed as an effective and real alternative because it:

(1) facilitates communication and separates the people from the problem;

(2) helps overcome the deadlock and emotional blockages;

(3) restores the negotiation process;

(4) identifies and focuses on the real issues and needs of the parties;

(5) gets the right people and the right information to the table;

(6) helps parties to re-asses their case;

(7) increases the options for resolution;

(8) keeps ownership of the problem and the settlement with the parties;

(9) restores and safeguards relationships.

IV. Shortcomings of Alternative Dispute Resolution

In spite of the ameliorating position of ADR in India, one finds that the system is still lacking in certain respects. There is a dire need to modify section 89 of the Civil Procedure Code.10 The problem exists inasmuch as the section mandates that where it appears to the Court that there exists an element of settlement which may be acceptable to the parties, the Court shall formulate the terms of settlement and after receiving comments of the parties, may reformulate the terms of possible settlement after which parties may be referred to arbitration, mediation etc. This imposed function places on Courts a significant burden. The Court has to determine the terms of possible settlement whereas the objective of mediation is to place the parties under the facilitative function of a mediator who will then enable them to explore their options for negotiated settlement.

Further, the development of mediation as a viable alternative is in the incipient stages in India. ADR has met with a considerable amount of antipathy from the legal fraternity. Strategies for successful implementation must be carefully assessed and a conscious effort must be made towards encouraging the evolution of a process that will be acceptable to society at large. The chief issues in this regard include:

(1) Developing awareness;

(2) Advocacy;

(3) Building Capacities;

(4) Creation of an institutional framework;

(5) Actual Implementation.

V. Conclusion

Law derives its authority from the obedience of the people.11 However, the corpulent backlog and sluggish delay of our litigative system defeats the very purpose of a fair and just system of law. The procedural rigidity and extravagant expenses involved in the litigative system make inroads into our legal structure, as the faith of the people in our judicial system slowly wanes away.

Alternative Dispute Resolution, therefore, particularly in the form of mediation, does yeoman's service in restoring public faith in our system. Mediation affords to the people, a system of settlement of disputes which is free from the delay, costs and rigidity involved in our litigative system. It focuses on their interests conferring upon them the right to self determination.

Mediation, however, has not yet attained the position it is deserving of. A great many strides have to be taken in order to ensure a system which is free from the manacles of antipathy and resistance.

In this respect, it would be apt to note an incident that Justice Oliver Wendell Holmes had encountered on a train.12 A young conductor got on the train and asked the man for his ticket. Justice Holmes searched a great deal, but was unable to find it. Recognizing the distinguished judge, the young conductor said:

"That's all right Justice Holmes, we are very pleased to have you riding on our train. If you find where your ticket is, please send it to the railroad office."

To which Justice Holmes replied:

"Young man, the question is not where my ticket is. The question is where it is I am going!"

To the Holmesian question, 'Where it is that Alternative Dispute Resolution in India is going?' , the answer must always be:

"Hopefully, in the right direction."

  

__________________________

* The author is a second year law student at the Goverment Law College Mumbai. He can be reached at abhinav.chandrachud@gmail.com

1. Act no. 26 of 1996 [hereinafter the Act]. 

2. As amended by Code of Civil Procedure (Amendment) Act, 1999 (46 of 1999). The earlier section was repealed by Act 10 of 1940. 

3. J. Venkatesan, "Panel Concern over Backlog in Courts", The Hindu, New Delhi, March 10th, 2003. 

4. Quoted by S.S. Visweswariah in Legal Services presented at the National Seminar on service sectors organized under the auspices of the Institute of Management Education and Research, Belgaum, Karnataka, on the 22nd and 23rd of March, at p.2 

5. The Arbitration Act of 1940 (10 of 1940) [hereinafter the 1940 Act]. 

6. Guru Nanak Foundation v. Rattan Singh, AIR 1981 SC 2075. 

7. Saha & Co. v. Ishar Singh, AIR 1956 Cal 321 at 341. 

8. Bryan A. Garner, A Dictionary on Modern Legal Usage, p. 5554 , 2nd Edition, 1995. 

9. Part III, sections 61-81, the Arbitration and Conciliation Act, 1996. 

10. See Supra Note 2. 

11. Aristotle's Politiks 1269a. 

12. See The Arbitration and Conciliation Act, 1996, V.A. Mohta: Prefatory Comments by F.S. Nariman.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   

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