New Delhi: In December 2021, former Chief Justice of India N V Ramana, a staunch proponent of ADR, had said that the option of going to courts must be a last resort and stressed that it should be used only after exploring the option of Alternative Dispute Resolution (ADR) - arbitration, mediation, and conciliation. In the recent past, in an era dominated by judicial backlog and prolonged litigation, many judges’, in one voice, have emphatically said "Mediate, not litigate".
The Arbitration Bar of India (ABI), which was officially inaugurated in May this year, is seen as a vital step towards making the country a global hub for international arbitration and promoting arbitration for resolving legal disputes. The country is consistently making efforts to promote arbitration and incentivise parties to choose arbitration against the backdrop of pendency and delays in the judicial system, which leave parties reeling under uncertainty.
What is ADR
ADR mechanisms like arbitration, conciliation, and mediation etc., offer better and timely solutions for resolution of a dispute, as they are less adversarial and also capable of providing an amicable outcome. The enabling legal framework for the resolution of disputes through ADR has been provided under Section 89, Civil Procedure Code, 1908.
Section 89 recognises arbitration, conciliation, mediation, and judicial settlement including settlement through Lok Adalat. Indian courts’ have taken a supportive stance on arbitration, which has amplified the positive effects of these reforms. International Arbitration Centers are present in most commercial hubs - Paris, Singapore, Hong Kong, London, New York, and Stockholm. Despite the presence of some arbitration centres in the country, Indian parties that enter into an international arbitration agreement often opt for foreign arbitration. As a consequence, they incur huge expenses.
History of Arbitration in India
The first formal statute, relating to arbitration in India, was the Indian Arbitration Act, 1899, which was applicable only to the presidency towns of Madras, Bombay and Calcutta. In 1940, comprehensive legislation relating to arbitration was enacted, which was called the Arbitration Act, 1940. It was based on the English Arbitration Act of 1934 and was in force for over 50 years.
The Parliament, based on the UNCITRAL Model Law on International Commercial Arbitration 1985 enacted the Arbitration and Conciliation Act, 1996. It was amended in 2015 and 2019, for conducting time-bound arbitration proceedings and amenable to further litigation only on limited grounds. In 2019, the India International Arbitration Centre Act, 2019, was enacted. It provided for the establishment of an institution of national importance -- the India International Arbitration Centre for creating an independent and autonomous regime for institutional arbitration. In 2023, both Houses passed the Mediation Bill, 2023, and upon receiving the assent of the President of India, is referred to as the Mediation Act, 2023. Mediation is another mode of ADR which is more informal and facilitates negotiations between the disputant parties, culminating in a settlement.
Ex-CJI Ramana’s staunchly promoted ADR
In December 2021, speaking at the curtain raiser and Stakeholders' Conclave of International Arbitration and Mediation Centre, Hyderabad, Justice Ramana narrated the story of the Indian epic, the Mahabharata, and said that it provides an example of an early attempt at mediation as a conflict resolution tool. Justice Ramana stressed that we should leave aside our ego, emotions, and impatience and embrace practicality. He had also cautioned that once these conflicts enter a court, much gets lost in the practice and procedure.
"My advice, after participating in the legal profession for over 40 years in different capacities, is that you must keep the option of going to courts as a last resort. Use this last resort only after exploring the option of Alternative Dispute Resolution (ADR) - arbitration, mediation and conciliation. Arbitration and mediation are efforts at restoring a relationship," Justice Ramana had said.
Mediation Act, 2023
In Mediation, a dispute between two parties is resolved by a mediator, who is a neutral person. The Mediation Act, 2023, which deals with both domestic and foreign mediation, promises a transformative shift towards alternative dispute resolution, which formalises mediation. It also provides a comprehensive definition, which includes pre-litigation and court-annexed mediation, online platforms, and community mediation among its forms. The Act has provided for the establishment of the Mediation Council of India, Mediation Service Providers, and Mediation Institutes.
The Act provides for a speedy and cost-effective alternative method for resolving a civil/commercial dispute, and online dispute resolution would make both national and foreign mediation very cost-effective. According to the Act, the mediation process should end within 180 days but the period can be extended for another 180 days.
