Introduction to The Arbitration and Conciliation Act, 1996

CHAPTER 1 INTRODUCTION LEARNING OUTCOMES At the end of this chapter, you will be able to understand:  Various Modes of Alternate Dispute Redressal Mechanism  Basic Idea of Arbitration and Conciliatio...

CHAPTER 1 INTRODUCTION LEARNING OUTCOMES At the end of this chapter, you will be able to understand:  Various Modes of Alternate Dispute Redressal Mechanism  Basic Idea of Arbitration and Conciliation  Mediation – Concept, History, Key Points and Stages of Mediation, role of Mediator  Negotiation – Principles, Negotiation Process, Role of Negotiator, Importance of Negotiation  Lok adalats.  Advantage of Alternate Dispute Redressal Mechanism. ©The Institute of Chartered Accountants of India  1.2 1.2 THE ARBITRATION AND CONCILIATION ACT, 1996 CHAPTER OVERVIEW Arbitration Features Conciliation Features History of Mediation in India Key Points Mediation Stages Alternate methods of Dispute Resolution Role of Mediator Principles Negotiation Process Negotiation Role of Negotiators Lok Adalats Importance in ADRs Advantages of ADR ©The Institute of Chartered Accountants of India  INTRODUCTION 1.3 1.3 1. ALTERNATE METHODS OF DISPUTE RESOLUTION Alternate methods of dispute resolution (ADR) are used to resolve disputes outside the ordinary court system. In other words, these methods are an alternative to litigation. Two of the most common methods of ADR are Arbitration and Conciliation. Other methods include Mediation, Negotiation, Lok Adalats, case evaluation, neutral fact-finding, ombudsperson, etc. All the methods differ from each other. Alternate Methods of Dispute Resolution Arbitration Conciliation Mediation Negotiation Lok Adalats 2. ARBITRATION One of the popular methods of alternate dispute resolution is Arbitration. It could be understood as a method of dispute resolution involving one or more neutral third person/s selected by the disputing parties and whose decision is binding. Thus, arbitration has a few defining features: Flexibility in procedure to be adopted; Disputing parties have a choice to select decision makers; Existence of privacy and confidentiality; Renders final and binding decision; Normally, no appeal against decision of Arbitrator; Comparatively less formal than trial. (Note: Arbitration will be discussed in detail in coming chapters) ©The Institute of Chartered Accountants of India  1.4 1.4 THE ARBITRATION AND CONCILIATION ACT, 1996 3. CONCILIATION Conciliation is a less formal form of arbitration. The process of conciliation is to facilitate the settlement between the parties. In this process, the parties to the dispute engage a conciliator who meets to hear both parties separately to settle their dispute. That conciliator meets each party with intention of improving communication and interpretation to issue an order. Conciliation has the following features: Comparatively less formal form of No prior agreement is essential; arbitration; If all the parties accept the Parties are not bound by the recommendations of the conciliator, conciliation. They can reject the those shall be final and binding on recommendations of the conciliator; them. (Note: Conciliation will be discussed in detail in coming Chapters) Difference between Arbitration and Conciliation Basis Arbitration Conciliation 1. Third- Involves a neutral third party, called Involves a neutral third party, known as Party an arbitrator or a panel of arbitrators, a conciliator, who facilitates intervention who acts as a decision-maker. The communication and negotiation arbitrator reviews the evidence, between the parties but does not make listens to arguments, and renders a a binding decision. final, binding decision on the dispute. 2. Decision- The arbitrator(s) have the authority to The conciliator does not have decision- Making render a final, binding decision. This making authority. Instead, the focus is Authority decision is enforceable by law, and on helping the parties find common ground and reach a mutually acceptable ©The Institute of Chartered Accountants of India  INTRODUCTION 1.5 1.5 the parties are generally bound to agreement. The agreement can be adhere to the arbitrator's decision. binding only when the parties choose to formalize it through a separate contract. 3. Level of The process is typically more formal The process is generally less formal. the Process and structured, resembling a The conciliator facilitates simplified version of a court trial. communication, encourages Evidence is presented, witnesses discussion, and helps in generating may be called, and a final decision is creative solutions. issued by the arbitrator. 4. Role of The arbitrator acts as a judge and has The conciliator acts as a facilitator, the Neutral a more directive role in the process. helping the parties understand each Third Party The decision is based on the other's perspectives and guiding them evidence presented and the relevant toward a mutually acceptable solution. law or contractual provisions. 5. Binding of The decision reached through The outcome is non-binding by default. Decision arbitration is binding and legally If the parties reach an agreement during enforceable. It provides a final conciliation, it becomes binding only if resolution to the dispute. they choose to formalize it through a separate agreement. 4. MEDIATION Mediation is an alternative dispute redressal mechanism that facilitates the resolution of conflicts between parties through an impartial third party, called the mediator. This method is gaining quite popularity as an Alternative Dispute Resolution (ADR) mechanism. The reason behind this is its effectiveness in promoting communication and increasing collaboration. This is an easy and uncomplicated negotiation process where a third party acts as a mediator to resolve disputes amicably by using appropriate communication and negotiation techniques. History of Mediation in India In India, mediation has ancient roots. Before adopting the formal British judicial system in India, community issues were resolved by a group of village elders called Panchayat. Some disputes were also referred to Mahajans, respected businessmen of society. However, Mediation got formal recognition in the late 20th century. Further, the 2002 amendment to the Code of Civil Procedure mandated court-annexed mediation. In the year 2005, the Honorable Supreme Court of India ©The Institute of Chartered Accountants of India  1.6 1.6 THE ARBITRATION AND CONCILIATION ACT, 1996 established the Mediation and Conciliation Project Committee (MCPC) to promote and regulate mediation. The Commercial Courts Act of 2015 was another step to promote mediation for resolving commercial disputes. Key Points Voluntary and Self- Impartiality and Neutrality Determination Key Points Confidentiality Explicit Consent 1. Mediation is Voluntary and Self-Determined: Mediation is a voluntary process, and all concerned parties must participate willingly. Each party retains control over the outcome and also actively engages in finding a solution that best suits their interests due to the voluntary nature of mediation. 2. Impartiality and Neutrality: Impartiality and neutrality of mediator is central to the effectiveness of mediation. The mediator serves as a neutral facilitator, refraining from taking sides or imposing decisions. This nurtures an environment where parties feel safe expressing their concerns and exploring potential solutions. Example: X and Y entered into a contract to supply certain goods which was duly supplied by X. Y found that the goods were not as per the quality contracted and he refused to make the payment. Both X and Y decided to settle the dispute through mediation. For this purpose, X wants to appoint Z, his brother as mediator. Here, Z couldn’t be impartial and neutral in the mediation process. 3. Confidentiality: Confidentiality is the foundation of the mediation process. Discussions and arguments done during mediation are private and cannot be used as evidence in court. This encourages open communication and allows parties to explore creative solutions without fear of consequences. Example: During the discussion by Z, the mediator found that X and Y, parties to the dispute shared some personal information belonging to Y. Now Z is supposed not to disclose these information to the other party i.e. X neither these can be taken as evidence in the court. ©The Institute of Chartered Accountants of India  INTRODUCTION 1.7 1.7 4. Explicit Consent: Before starting the mediation process, all parties must provide informed consent, acknowledging their understanding of the process and its voluntary nature. This ensures that parties enter the mediation with a clear understanding of what to expect and the potential benefits of resolving. Stages of the Mediation Process Start Introduction and Opening Statements Joint discussion with parties Private discussion with parties Negotiation and Problem- Solving Agreement Closure ©The Institute of Chartered Accountants of India  1.8 1.8 THE ARBITRATION AND CONCILIATION ACT, 1996 1. Introduction and Opening Statements: The mediation process typically begins with an introduction by the mediator, outlining the ground rules and emphasizing the voluntary nature of the process. Each party then presents an opening statement, sharing their perspective on the issue at hand. 2. Joint discussion with parties: Following the opening statements, the mediator facilitates a joint discussion where parties can express their concerns, needs, and goals. This phase aims to identify common ground and areas of disagreement while encouraging active communication. 3. Private discussion with parties: The mediator may hold private discussions with each party individually. This allows for confidential discussions where participants can share sensitive information or discuss specific concerns. This private discussion may provide an opportunity for the mediator to explore potential solutions and strategies with each part. 4. Negotiation and Problem-Solving: The main part of the mediation process is negotiation and problem-solving. Parties engage in negotiation to refine and agree upon potential solutions. The mediator guides this process, facilitating communication, managing emotions, and assisting in the development of mutually acceptable agreements. 5. Agreement: Once parties reach a consensus on specific terms, a formal agreement is drafted. The agreement outlines the agreed-upon resolution and may be reviewed by the parties and their legal advisors. 6. Closure: The mediator summarises the key points and ensures parties understand the terms of the agreement. Parties may express their thoughts on the mediation process. The session concludes with a sense of closure, marking the end of the formal mediation process. Role of Mediator Facilitation Impartiality and Neutrality Role of Mediator Communication Skills Conflict Resolution Expert Creator ©The Institute of Chartered Accountants of India  INTRODUCTION 1.9 1.9 The mediator plays a pivotal role in guiding the mediation process to a successful resolution. This involves various key functions: 1. Facilitation: The mediator acts as a facilitator, guiding the conversation, managing time, and ensuring that all relevant issues are addressed. They create an atmosphere conducive to open communication and collaboration. 2. Communication Skills: Effective communication is paramount in mediation. Mediators must be skilled in active listening, paraphrasing, and reframing to help parties understand each other's perspectives and foster a sense of empathy. 3. Impartiality and Neutrality: Maintaining neutrality is crucial for a mediator. They must avoid favoritism, biasedness, or any actions that could compromise their impartiality. This ensures that the mediation process remains fair and unbiased. 4. Conflict Resolution Expert: Mediators are trained in conflict resolution techniques and possess a deep understanding of the dynamics of interpersonal disputes. Their expertise allows them to navigate complex issues and guide parties toward mutually acceptable solutions. 5. Creator: A mediator encourages creative problem-solving by helping parties think beyond traditional solutions. They assist in generating options and finding compromises that address the underlying interests of all parties involved. In conclusion, mediation stands as a transformative force in conflict resolution, embodying principles of collaboration, communication, and compromise. The mediator's impartiality, guidance, and commitment to fostering understanding create an environment conducive to mutually satisfactory agreements. Mediation's adaptability transcends cultural and legal boundaries, offering a flexible and efficient alternative to traditional adversarial methods. By prioritizing voluntary participation, confidentiality, and empowerment, mediation not only resolves disputes but preserves relationships. As we navigate an evolving global landscape, the enduring relevance of mediation underscores its indispensable role in promoting justice, understanding, and sustainable resolutions for individuals, communities, and nations alike. ©The Institute of Chartered Accountants of India  1.10 1.10 THE ARBITRATION AND CONCILIATION ACT, 1996 Difference between Arbitration and Mediation Basis Arbitration Mediation 1. Neutral Third- Involves a neutral third party, called Involves a neutral third party, known Party Role an arbitrator or a panel of arbitrators, as a mediator, who facilitates who acts as a judge and makes a communication between the parties binding decision on the dispute after but does not have the authority to considering evidence and impose a decision. arguments from both parties. 2. Decision- The arbitrator(s) have the authority The mediator does not have Making to render a final, binding decision, decision-making authority. Instead, Authority which is enforceable by law. The the parties retain control over the decision is typically based on the outcome and decide whether to facts presented and the relevant law accept any proposed agreement. or contractual provisions. 3. Binding of The decision reached through The outcome of mediation is non- Decision arbitration is binding on the parties binding by default. The parties are involved. It is a legally enforceable free to accept or reject the proposed resolution, and the parties are settlement. If parties reach to an generally obligated to adhere to the agreement, it becomes binding on arbitrator's decision. them. 4. Adversarial The process is generally more The process is often more vs. Collaborative formal and adversarial, resembling a collaborative and less formal. The simplified version of a court trial. mediator focuses on helping the Each party presents its case, and parties understand each other's the arbitrator(s) make a decision perspectives, facilitating based on the evidence and communication, and finding common arguments. ground. 5. Status of The decision is final and legally Since the mediator does not impose Decision binding, with limited options for a decision, the parties can choose to appeal. Courts usually uphold and continue with other dispute resolution enforce arbitration awards, methods if mediation does not lead to providing a relatively swift resolution a resolution. to the dispute. ©The Institute of Chartered Accountants of India  INTRODUCTION 1.11 1.11 Difference between Mediation and Conciliation Basis Mediation Conciliation 1. Role A mediator plays a facilitative role The Conciliator plays a more and attempts to guide the parties proactive role. He acts as a facilitator, toward a solution. Thus the evaluator, and intervener. In other solution should come from the words, he can also along with the parties themselves. parties suggest solutions. 2. Outcome The outcome is an agreement The outcome is a settlement between the parties. agreement. 3. Agreement The agreement reached by the The settlement agreement reached parties is a contract enforceable by between the parties has the same law. status as an arbitral award on agreed terms. In other words, it is executable as a decree of the civil court. 4. Governing Law Mediation is governed by Section Conciliation is governed by Part III of 89 of the Code of Civil Procedure, the Arbitration and Conciliation Act, 1908. 1996. 5. Extent of Mediation is governed by Conciliation is bound by confidentiality confidentiality. However, confidentially. The extent of confidentiality in mediation is often confidentiality is defined by the law. A based on trust. breach of confidentially could be fatal to the entire process. 6. Breach of If the agreement is breached, the The settlement agreement is Agreement parties would have to proceed in enforced as an arbitral award. A the usual process adopted for breach of the settlement agreement, breach of contract. would be the same as a breach of an arbitral award. The Arbitration and Conciliation Act, 1996 provides mechanisms for enforcing arbitral awards and recourse in instances the award is not followed. ©The Institute of Chartered Accountants of India  1.12 1.12 THE ARBITRATION AND CONCILIATION ACT, 1996 5. NEGOTIATION Negotiation is a dynamic process through which parties seek to reach a mutual agreement to settle a dispute. It is the most common method of alternative dispute resolution. It is a non-binding procedure in which discussions between the parties are initiated without the intervention of any third party with the object of arriving at a negotiated settlement to the dispute. Negotiation occurs in business, non-profit organizations, government branches, legal proceedings, among nations, and in personal situations such as marriage, divorce, parenting, and everyday life. Principles of Negotiation Voluntary Process Honest Communication Principles of Negotiation Mutual Agreement Flexibility 1. Voluntary Process: Negotiation is a voluntary process, and all parties must willingly engage in discussions. 2. Honest Communication: Parties are expected to approach negotiations with sincerity and good faith. Honest communication and a genuine commitment to finding common ground are vital for successful negotiations. 3. Mutual Agreement: Negotiation thrives on the principle of mutual agreement. Parties work collaboratively to identify shared interests and develop solutions that satisfy each party's concerns. 4. Flexibility: Negotiation is inherently flexible, adapting to the unique characteristics of each dispute. The process accommodates various negotiation styles and can be tailored to different cultural, legal, or interpersonal contexts. ©The Institute of Chartered Accountants of India  INTRODUCTION 1.13 1.13 Negotiation Process Preparation: Successful negotiations begin with thorough preparation. Each Opening Statements: Next stage of party must understand its own negotiation process is the opening of interests, priorities, and potential areas statements. Parties initiate of compromise. This stage may involve negotiations after opening statements. legal research, financial analysis, or consultation with experts. Bargaining and Concession: The Closure and Agreement: As main part of negotiation process is negotiations progress, parties aim to bargaining and concession. Parties reach a final agreement. This stage exchange proposals, make involves clarifying terms, documenting compromises, and work towards a the agreement, and ensuring that all mutually acceptable resolution. Skilled parties are satisfied with the proposed negotiators understand the art of give- resolution. and-take, recognizing that concessions contribute to building trust. Role of Negotiators Role of Negotiators Effective Communication Creative Solutions High Emotional Intelligence ©The Institute of Chartered Accountants of India  1.14 1.14 THE ARBITRATION AND CONCILIATION ACT, 1996 1. Effective Communication: Effective communication is the cornerstone of successful negotiation. Skilled negotiators listen actively, express themselves clearly, and navigate the complexities of interpersonal dynamics. 2. Creative Solutions: Negotiators function as problem-solvers, identifying common interests and creative solutions. This requires a strategic way to find options that address the underlying concerns of all parties. 3. High Emotional Intelligence: Understanding and managing emotions play a crucial role in negotiation. Negotiators with high emotional intelligence can navigate tense situations, build rapport, and foster a positive atmosphere for resolution. Importance of Negotiation in ADR Preservation of Tailored Solutions: Time and Cost Effective: Relationships: Negotiation Negotiation allows parties to Negotiation is faster and cost- process is based on craft personalized solutions effective process. By avoiding collaboration. Parties have the that address their unique lengthy court processes, opportunity to maintain or even needs and concerns. This parties can swiftly resolve enhance their relationships flexibility contributes to the disputes, saving both time and while working towards a durability and sustainability of resources. solution that satisfies both the agreements reached. sides. In conclusion, Negotiation, as a foundation of Alternative Dispute Resolution, illustrates the power of collaborative problem-solving. As it is based on voluntariness, good faith, mutuality, and flexibility its adaptability is better. By prioritizing the interests of disputing parties, negotiation not only resolves conflicts efficiently but also fosters relationships and promotes enduring solutions. ©The Institute of Chartered Accountants of India  INTRODUCTION 1.15 1.15 Difference between Arbitration and Negotiation Basis Arbitration Negotiation 1. Third-Party Involves a neutral third party, known May or may not involve a third party. Involvement as an arbitrator or a panel of Negotiation typically involves direct arbitrators, who acts as a decision- communication between the parties maker. The arbitrator renders a in conflict, without the presence of a binding decision on the dispute after neutral facilitator. However, third considering evidence and parties, such as lawyers or arguments from both parties. mediators, may be involved in some negotiations. 2. Decision- The arbitrator(s) have the authority The parties involved retain control Making Authority to make a final and binding decision over the decision-making process. on the dispute. The decision is There is no neutral third party with enforceable by law, and the parties the authority to impose a decision. are generally obligated to adhere to The outcome is determined by the the arbitrator's ruling. parties through mutual agreement. 3. Formality of The process is more formal and The process can be formal or the Process structured, resembling a simplified informal, depending on the context. It version of a court trial. The parties often involves a less structured and present evidence, witnesses may be more flexible exchange of offers, called, and the arbitrator issues a counter offers, and concessions final decision. between the parties. 4. Confidentiality The proceedings are generally more The level of confidentiality varies private and confidential. The depending on the parties' arbitrator's decision may be legally agreements. While negotiations can required to be kept confidential, and be conducted privately, they may the process is less public than court also be subject to disclosure, proceedings. especially in business or legal contexts. 5. Finality The decision is typically final and The outcome is not necessarily final legally binding, with limited options until an agreement is reached. The for appeal. Courts generally uphold parties have the flexibility to continue and enforce arbitration awards. negotiations until they are satisfied with the terms. If an agreement is reached, it is binding only to the extent specified in the agreement itself. ©The Institute of Chartered Accountants of India  1.16 1.16 THE ARBITRATION AND CONCILIATION ACT, 1996 6. Adversarial The process is more adversarial, The process is generally more vs. Collaborative resembling a simplified court trial collaborative, as the parties work where each party presents its case together to find mutually acceptable to the arbitrator, who makes a terms. While there may be decision based on the presented differences and conflicts, the evidence. emphasis is on reaching a voluntary agreement. Difference between Mediation and Negotiation Basis Mediation Negotiation 1. Involvement of Involves a neutral third party, Can occur with or without a third Third-Party known as a mediator, who party. Negotiation typically involves facilitates the communication direct communication between the between the parties in conflict. The parties in conflict, and there may not mediator does not have decision- be a neutral facilitator. making power but helps the parties reach a voluntary agreement. 2. Decision- The mediator does not make The parties involved have direct Making Power decisions or impose solutions. The control over the decision-making power to make decisions rests with process. There is no neutral third the parties involved, and the party influencing the outcome. mediator's role is to assist them in reaching a mutually agreeable resolution. 3. Communication The mediator often employs active Communication may vary and can Style listening and communication include a range of tactics and techniques to help parties strategies used by the parties to understand each other's achieve their individual goals. It can perspectives. The focus is on be more adversarial in nature, improving communication and especially in competitive finding common ground. negotiations. 4. Goal The primary goal is to reach a The goal is often to secure the best mutually acceptable agreement possible outcome for each party. that satisfies the interests of both While reaching an agreement is parties. The emphasis is on finding desirable, negotiations may end common ground and preserving without a formal agreement if the relationships. parties cannot find mutually acceptable terms. ©The Institute of Chartered Accountants of India  INTRODUCTION 1.17 1.17 5. Confidentiality Generally, mediation proceedings Confidentiality depends on the are confidential. The discussions context and the agreements made that occur during mediation are between the parties. In some cases, private, and the mediator is negotiations may be confidential, typically bound by confidentiality while in others, they may be more agreements. open. 6. Formality Can be a more formal or informal The formality of negotiations can process, depending on the vary widely. It may involve legal preferences of the parties and the professionals and follow established mediator. The focus is on creating procedures or be more informal, a collaborative environment such as in business negotiations. Difference between Conciliation and Negotiation Basis Conciliation Negotiation 1. Involvement Involves the intervention of a neutral May or may not involve a third party. of Third-Party third party, known as a conciliator, Negotiation typically involves direct who facilitates communication communication between the parties between the disputing parties. The in conflict, without the assistance of a conciliator's role is to help the neutral facilitator. However, third parties understand each other's parties, such as lawyers or perspectives and guide them toward mediators, may be involved in some a mutually acceptable resolution. negotiations. 2. Role of the The conciliator actively participates If a third party is involved, their role Third Party in the resolution process by may vary. In some cases, a mediator encouraging dialogue, suggesting or facilitator may assist in solutions, and helping the parties communication and problem-solving, reach an agreement. However, the but the ultimate decision-making conciliator does not have decision- power rests with the parties. making authority and cannot impose a resolution on the parties. 3. Decision- The conciliator does not have The parties involved retain control Making decision-making authority. The goal over the decision-making process. In Authority is to assist the parties in reaching a negotiations, the parties themselves voluntary agreement, and any determine the terms of the agreement reached is non-binding agreement, and any outcome is unless the parties choose to voluntary. formalize it separately. ©The Institute of Chartered Accountants of India  1.18 1.18 THE ARBITRATION AND CONCILIATION ACT, 1996 4. Formality of The process is typically less formal Negotiations can be formal or the Process than arbitration and may involve informal, depending on the context more informal discussions and and the preferences of the parties interactions. The conciliator fosters involved. They often involve the an atmosphere of collaboration to exchange of offers, counteroffers, help the parties find common and concessions. ground. 5. Finality The outcome is generally non- The outcome is determined by the binding by default. If the parties parties' agreement. If they reach a reach an agreement during mutually acceptable solution, it is conciliation, it becomes binding only binding to the extent specified in the if they choose to formalize it through agreement itself. a separate agreement. 6. Adversarial The process is generally more While negotiations can be vs. collaborative, as the conciliator collaborative, they can also involve Collaborative actively works to foster adversarial elements as parties communication, understanding, and advocate for their interests. The cooperation between the parties. emphasis is on reaching an agreement through direct communication. 6. LOK ADALATS Lok Adalats, meaning "People's Courts", are a distinctive feature of the Indian legal system, established to provide accessible and swift justice. Operating under the Legal Services Authorities Act, of 1987, Lok Adalats focus on alternative dispute resolution through mediation and conciliation. What sets Lok Adalats apart is their voluntary nature, allowing parties to approach them willingly or based on court recommendations. These forums prioritize easy settlements, encouraging active participation from the disputing parties. With jurisdiction over family disputes, property conflicts, motor accident claims, and more, Lok Adalats operates at various levels, including National, State, and District forums. The success of Lok Adalats lies not only in their ability to resolve disputes efficiently but also in their contribution to reducing the backlog of cases in the formal judicial system. As an integral part of India's legal landscape, Lok Adalats exemplifies a people-centric approach, embodying the principles of accessibility, inclusivity, and expeditious justice. ©The Institute of Chartered Accountants of India  INTRODUCTION 1.19 1.19 7. ADVANTAGES OF ALTERNATION DISPUTE RESOLUTIONS (ADR) 1. It is more viable, economical, and efficient. 2. The procedural flexibility saves valuable time and money and there is no burden of a conventional trial. 3. As the resolution of disputes takes place usually in private, they help maintain confidentiality. 4. The possibility of ensuring that specialized expertise is available on the tribunal in the person of the arbitrator, mediator, conciliator, or neutral adviser. 5. This results in the form of creative solutions, sustainable outcomes, greater satisfaction, and improved relationships. 6. Personal relationships may also suffer less. TEST YOUR KNOWLEDGE Multiple Choice Questions (MCQs) 1. Lok Adalat means _____ (a) Session Court (b) Local Court (c) District Court (d) People’s Court 2. Panchayat is the form of ______ (a) Arbitration (b) Conciliation (c) Mediation (d) All the above ©The Institute of Chartered Accountants of India  1.20 1.20 THE ARBITRATION AND CONCILIATION ACT, 1996 3. A dispute arose between Kapil and Amit due to a collision between two vehicles riding by these two, resulting in injuries to both. The dispute involves claims for compensation and damages. Kapil claims that the accident occurred due to Amit’s reckless driving. Amit argues that he had the right of way, and the accident was caused by Kapil’s failure to yield. The court has referred the case to the Lok Adalat for a speedy resolution. Now, what is the primary objective of a Lok Adalat in this case? (a) To determine criminal liability for the accident and punishment for it. (b) To impose a binding decision on the parties involved. (c) To facilitate a voluntary settlement between Kapil and Amit. (d) To prioritize financial compensation over reconciliation. 4. A dispute arose between a small business owner, Mrs. Megha, and her supplier, Mr. Raghvendra when Mr. Raghvendra failed to deliver a consignment of raw materials on time, causing production delays for Mrs. Megha's business. Mrs. Megha claims that the delayed delivery has resulted in financial losses and damaged her business reputation. Mr. Raghvendra argues that the delay was due to transportation issues and that was beyond his control. Both parties express a desire to continue their business relationship but are firm on their respective claims. To address the transportation issues raised by Mr. Raghvendra, the conciliator should: (a) Disregard the reasons provided by Mr. Raghvendra and focus solely on Mrs. Megha's losses. (b) Investigate the transportation issues to determine fault. (c) Encourage Mr. Raghvendra to accept full responsibility for the delay. (d) Explore possible solutions and compromise to prevent future delays. 5. M/s Nalanda Builders entered into a contract with M/s Life Design Architects for a construction project. The construction contract specifies the quality standards and payment milestones. A dispute arose where both parties have differing views on the quality of work delivered and the payment owed. M/s Nalanda Builders claims that M/s Life Design Architects did not meet the agreed-upon standards, leading to delays and additional costs. M/s Life Design Architects insists that issues are minor and within acceptable industry standards. Both parties express ©The Institute of Chartered Accountants of India  INTRODUCTION 1.21 1.21 a willingness to resolve the dispute through arbitration as outlined in their contract. How does the arbitrator ensure impartiality and avoid conflicts of interest? (a) By openly expressing biases during the proceedings (b) By maintaining a transparent and fair decision-making process (c) By favouring the party with a stronger legal argument (d) By disregarding evidence that contradicts one party's claims Answers to the Multiple Choice Questions 1. (d) 2. (c) 3. (c) 4. (d) 5. (b) ©The Institute of Chartered Accountants of India