Alternative Dispute Resolution PDF

ALTERNATIVE DISPUTE RESOLUTION CLASS: B.A.LL.B. & B.COM.LL.B. SEMESTER : 5 SECTION : A & B _________________________________________________________ TEACHER: SUKHWINDER SINGH REHAL ASST. PROF., RAYAT COLLEGE OF LAW...

ALTERNATIVE DISPUTE RESOLUTION CLASS: B.A.LL.B. & B.COM.LL.B. SEMESTER : 5 SECTION : A & B _________________________________________________________ TEACHER: SUKHWINDER SINGH REHAL ASST. PROF., RAYAT COLLEGE OF LAW  UNDERSTANDING DISPUTES Discords bound to arise in society. Human minds have always devised means to resolve disputes. Law, can be seen as a result of the quest to resolve potential problems. Nature has endowed people with rationality – attempted to discover methods to establish cohesive society. Dispute resolution is one of the major functions of stable society. State as a medium of dispute resolution. DISPUTE starts with a difference and if unresolved at one stage, it leads to next stage and may even end up in WAR DIFFERENCES DISAGREEMENT PROBLEM DISPUTE CONFLICT VIOLENCE WAR  DISPUTE contd… Oxford English Dictionary – Dispute is a disagreement or an argument. It is the clashing or variance of opposed principles, beliefs, interests etc. Merriam Webster – Dispute is to engage in an argument; to struggle against or oppose.  DISPUTE TRIANGLE  Thereare three elements in a DISPUTE: PEOPLE: Relationships, ego, PEOPLE personalities. PROBLEM: The content of dispute, issues and interests. PROBLEM PROCESS: Different ways of fight, interaction.. PROCESS  TYPES OF DISPUTES  MANY TYPES: Family, Personal, Matrimonial, Contractual, Other ImpWorkplace Disputes, etc.  Nested Conflict.  OTHER IMPortant Disputes:  Relationship Disputes  Value Disputes  Structural Disputes  Data Disputes MODELS OF DISPUTE RESOLUTION Diverse causes of dispute – varied models of them. Categorized mainly into four types:  Rights based model  Power based model  Interest based model  Legislative model These models promise results either on a win-lose or win- win proposition.  MODELS OF DISPUTE RESOLUTION contd… 1. Rights based model  Adopted in litigation or adjudication.  Parties contest on claims of right.  Final decision is considered to be a vindication of the right agitated.  Creates winners and losers. 2. Power based model  Disputes could be settled within power structures, which are social, economic or political.  When one party is domineeringly situated over the other, the relative positions determine the outcome of the dispute.  Creates a win-lose situation.  MODELS OF DISPUTE RESOLUTION contd…  E.g. in a claim for workmen compensation it will be easy for the defendant to force a settlement for a lesser sum due to the weaker financial position of the claimant.  The model is used either independently or in combination with litigation. 3. Interest based model  Accommodative of the interests of the parties to a dispute.  Rather than an endorsement of one’s right through adjudication, the dispute is sought to be resolved by varied method of intervention.  Designed to bring out a win-win situation.  Based on consensual scheme where disputants themselves are responsible for the result.  MODELS OF DISPUTE RESOLUTION contd… 4. Legislative model  Rules or laws will be made by the competent authority to resolve the conflict.  Rules could either provide a process or could determine the issue itself.  May result in win-lose situation.  RESPONSES TO DISPUTES AVOIDANCE ACCOMMODATION COMPROMISE COMPETITION COLLABORATION  NEED FOR ADR  Justice is the foundation of any civilized society.  The quest for justice has been an ideal, which mankind has been aspiring for since times immemorial.  In a country like India, which aims to protect the socio-economic and cultural rights of its people, it is extremely important to dispose of the cases; Justice delayed is justice denied.  Preamble of the Constitution – Justice – social, economic and political.  Article 39-A, ensures equal access to justice.  The process of protection of justice involves – protection of the innocent, punishment of the guilty and satisfactory resolution of disputes.  NEED FOR ADR contd…  Cardinal principle on which the entire system of administration of justice is based is EQUAL JUSTICE FOR ALL.  The dominant forum for the resolution of the dispute across the world is litigation i.e. the parties take their fight to the court for resolution.  General perception – people tend to trust institutionalized mechanisms, esp. those estd. in the public sphere for dispute resolution.  On the other hand, it is also argued, that the faith in present justice administration system is eroded.  Widespread feeling – judicial system is on the verge of collapsing  The existence of ADR must be validly estd.  NEED FOR ADR contd…  Itis the duty of every lawyer to make efforts to settle disputes and that by doing so lawyers would not be the losers – Mahatma Gandhi  The consequence of judicial model is that the solution may not be adapted well to the needs and interests of both the parties, as the range of remedies available with the courts is limited.  polarizes the parties, creates the need for self-justification and escalates the dispute into an emotionally charged process.  Alternative dispute resolution offers efficiency and can enhance the quality of dispute resolution by permitting a wider array of outcomes and more client participation.  NEED FOR ADR contd… Problems of Formal Legal System The world has experienced that adversarial litigation is not an ideal method of resolving the disputes. Sermon on the Mount – ‘If someone sues you, come in terms with him promptly when you are both on the way to the court’. An average litigant faces inordinate delay, lack of manpower and resources, excessive costs, lengthy and formal proceedings……. Need to generate better options, approaches and avenues. ADR presents itself as a viable option.  NEED FOR ADR contd… Nature of adversarial process gives clue to the need of ADR ◦ Complex procedure ◦ Adversarial approach ◦ Costly affair ◦ Win-lose mode ◦ Loss of social harmony ◦ Real issues stayed unaddressed ◦ Shifting of control ◦ Time consuming process ◦ Multiplicity of appeals.  MEANING OF ADR It is the duty of every lawyer to make efforts to settle disputes and that by doing so lawyers would not be the losers – Mahatma Gandhi  Mahatma Gandhi- Sharp critic of litigation and proponent of ADR methods.  Saw ADR as the master key unlocking the solution to rule by the sword.  Through ADR Gandhi resolved his satyagraha at Ahemdabad, where the lesson to Gandhi and his followers was that the citizens could use ADR to empower themselves in a way that pursues truth, justice and unity rather than mere submission.  MEANING OF ADR contd… Discourage litigation. Persuade your neighbors to compromise whenever you can. Point out to them how the nominal winner is often the real loser- in fees and expenses, and waste of time. As a peace-maker the lawyer has a superior opportunity of being a good man. There will still be business enough- Abraham Lincoln.  MEANING OF ADR contd…  ADR- an attempt to devise machinery/mechanism, capable of providing an alternative to conventional method of resolving disputes.  Alternative- privilege of choosing one of the options at one’s choice- does not mean an alternative court but something which is an alternative to court procedure.  Also defined as a technique to resolve disputes through intervention of a third party.  Avoids rigidity and inflexibility.  Aims to provide cheap, speedy and less formalistic remedy- to provide remedy which is most appropriate in a given situation.  MEANING OF ADR contd… In its ideal form, ADR is perceived not only as a method for resolving disputes but also as placing back the relationship of the parties status quo. Perceived both as a preventive as well as a curative measure.  Nature of ADR ADR is simple and free from procedural technicalities. Consist of various simple methods. Covers civil and commercial matters. CRIMINAL? Involves the role of the third person. The mechanism is economical. Avoids scope of future litigation. An art of settlement.  Scope of ADR An extra judicial remedy to resolve disputes outside legal fora. Can be used in all the cases capable of being resolved under the law by mutual agreement between the parties. The scope is wider and can cover the cases of civil nature, commercial, industrial, family disputes and other cases of urgent nature.  Characteristics of ADR Seeks to provide cheap, simple, quick and accessible justice. A process distinct from normal judicial process. Attempts to resolve disputes expeditiously with less expenditure of time and money- emphasis on settlement and justice maintaining confidentiality. Aims at not only resolving disputes but also harmonizing relations. Signifies “Access to justice approach”.  Viewed as a compromise where no one loses or wins but everyone walks out as a winner.  LEGISLATIVE RECOGNITION OF ADR The movement for ADR began by a resolution at Chief Ministers and Chief Justices of the States in a Conference at New Delhi on 4th Dec. 1993, under the Chairmanship of the then PM and presided over by CJI. It was noted in meeting – courts not in a position to undertake entire burden of administration of justice – that number of disputes capable of being resolved by ADR. Emphasized that litigants be encouraged for other methods of resolving disputes, which would be flexible, save time, money, etc.  LEGISLATIVE RECOGNITION OF ADR contd… 1. The Arbitration and Conciliation Act, 1996 2. The Constitution of India – Article 51 3. The Code of Civil Procedure, 1908 [Section 89] 4. The Hindu Marriage Act, 1955 [Section 23(2)] 5. The Special Marriage Act, 1954 [Section 34(2)] 6. The Legal Services Authorities Act, 1987 [Lok Adalats] 7. The Code of Criminal Procedure, 1973 [Ch. 21-A, Ss. 265 A-L].  ADVANTAGES OF ADR  Less adversarial and Possibility of resolving Collaborative multiple disputes  Confidentiality Can be invoked during  Party centric pendency of court litigation Reduces burden of the  Less formality  Inexpensive courts Delivers justice to the  Choice of neutral third party disadvantaged  Amicable resolution Quick resolution  Finality of outcome Legal representation not  Interest based procedure required.  LIMITATIONS OF ADR Lack of adequate infrastructure Privatization of justice No precedents Lack of public accountability Lack of awareness Shrouded in unequal social powers Still in its cradle  ADR Techniques 1. NEGOTIATION 2. MEDIATION 3. ARBITRATION 4. CONCILIATION  NEGOTIATION Negotiation systems create a structure to encourage and facilitate direct negotiation between parties to a dispute, without the intervention of a third party. In negotiation, participation is voluntary and there is no third party who facilitates the resolution process or imposes a resolution. It is based on the principle of "Helping People Help Themselves”  Mediation and conciliation systems are very similar in that they interject a third party between the disputants, either to mediate a specific dispute or to reconcile their relationship. In mediation, there is a third party, a mediator, who facilitates the resolution process (and may even suggest a resolution, typically known as a "mediator's proposal"), but does not impose a resolution on the parties.  CONCILIATION Conciliators may simply facilitate communication, or may help direct and structure a settlement, but they do not have the authority to decide or rule on a settlement.  ARBITRATION Arbitration systems authorize a third party to decide how a dispute should be resolved. In arbitration, participation is typically voluntary, and there is a third party who, as a private judge, imposes a resolution. Arbitrations often occur because parties to contracts agree that any future dispute concerning the agreement will be resolved by arbitration.  NEGOTIATION  “If two friends ask you to judge a dispute, don't accept, because you will lose one friend; on the other hand, if two strangers come with the same request, accept because you will gain one friend” – Saint Augustine  Negotiation is self counseling between the parties to resolve their dispute.  The word "negotiation" is from the Latin expression, "negotiatus", past participle of negotiare which means "to carry on business".  "Negotium" means literally "not leisure".  Negotiation is a process that has no fixed rules but follows a predictable pattern.  Negotiation is the simplest means for redressal of disputes.  In this mode the parties begin their talk without interference of any third person.  The aim of negotiation is the settlement of disputes by exchange of views and issues concerning the parties.  If there is understanding and element of patience between the parties this mode of redressal of dispute is the simplest and most economical. Negotiation is a dialogue intended to resolve disputes, to produce an agreement upon courses of action, to bargain for individual or collective advantage, or to craft outcomes to satisfy various interests. Is something, we generally do in our lives with family, friends, business connections. Mutually accommodating and adjusting, giving and taking, yielding on some points to get something more important. An art of finding answers to differences. An interchange, an attempt to reach a compromise. Non-binding procedure, involving direct interaction. Proposals are made from one party to other, until a mutually acceptable settlement is found, called ‘Shuttle Diplomacy’. Negotiation based on merits and interests of both parties is ‘Principled Negotiation’. Negotiation involves: a. Parties b. Issues c. Positions d. Interests Why Negotiate? 1. To elicit one’s view points, claims and interests. 2. To prevent exploitation/harassment. 3. To seek cooperation of the other side. 4. To avoid litigation. 5. To arrive at mutually acceptable agreement. How to we negotiate? a. By being nice b. By being provocable c. By being forgiving d. By being transparent e. By being flexible Criteria for Judging Negotiation: a. Production of wise agreement b. Should be efficient c. Should improve/at least not damage the relationship between the parties. Negotiating styles: 1. Competing style 2. Accommodating style 3. Compromising style 4. Avoiding style 5. Collaborating style  Scope of Negotiation  Parties can on their own motion, can start a process of negotiations through correspondence or face to face interaction, with a view to find a mutually acceptable solution to the problem.  There are several cases in which negotiation is applicable: Marital deadlock Business negotiation Contract based negotiation Administrative negotiation International negotiations.  MEDIATION A voluntary, party centric and structured negotiation process.  Neutral third party assists in resolving the dispute amicably.  Use of specialized communication and negotiation techniques,.  Parties retain the right to decide for themselves – how to settle a dispute and the terms of settlement.  The mediator facilitates communication and negotiation, yet the parties retain control over the outcomes.  Even if court has referred the dispute for mediation or is referred under some contract or statute, the decision to settle and the terms of settlement are always with the parties.  Any party may withdraw from mediation proceedings at any stage, before its termination and without reason. Though mediation process is informal, yet it is not a casual process. The process is itself structured and formalized, with clearly identifiable stages. It is an assisted negotiation. Focused on facts, laws and underlying interests of the parties. The goal is to find the mutually acceptable solution that adequately and legitimately satisfies the interests of the parties. Regulated by the Civil Procedure ADR Mediation Rules, 2003.  ROLE OF MEDIATOR  A neutral third party, who remains impartial, independent, detached and objective throughout.  Is a guide who helps the parties to find their solution to the dispute.  Personal preferences and perceptions do not have any bearing on the dispute resolution process.  Encourages active and direct participation of the parties in the resolution of the dispute.  Role is both facilitative and evaluative.  Employs certain specialized communication skills and negotiation techniques to facilitate a productive interaction.  Keeps the information given by either party confidential, does not disclose it to the other party, unless permitted to do so.  Cannot be called upon to testify in any proceeding or to disclose to the court as to what transpired during mediation.  TYPES OF MEDIATION 1. COURT-REFERRED MEDIATION – Applies to cases MEDIATION pending in the court and the court would refer to it under S. 89, CPC. 2. PRIVATE MEDIATION – Qualified mediators offer their services on a private, fee-for-service basis to the court, to members os the public, of commercial sector and even Governmental sector. - Can be used in pending as well as pre-litigation disputes.  ADVANTAGES OF MEDIATION If conceived properly, will ensure a wide access to justice for all sections of the people. A most effective way to address disputes emerging from relationships – personal, commercial or contractual CONTROL CONSIDERS THE PARTICIPATIVE LONG TERM AND VOLUNTARY UNDERLYING INTERESTS OF THE SPEEDY,EFFICIENT, PARTIES ECONOMICAL FOCUS ON MUTUALLY SIMPLE AND BENEFICIAL FLEXIBLE SETTLEMENT INFORMAL, CORDIAL, SETTLES RELATED CONDUCIVE AND CONNECTED  SCOPE OF MEDIATION Useful when parties have a relationship and want to preserve  APPROPRIATE IN FOLLOWING  MAY NOT BE APPROPRIATE CASES  Parties want third party to adjudicate  Parties desire  Party refuses to negotiate  Existence of relationship  Want to guarantee of final and  Merits of case make a favourable verdict binding decision unlikely  Want of public hearing of dispute  Cost exceeds projected value of the case  Want to establish precedent  Want of prompt resolution  Insufficient information to evaluate  Want of control by parties liability/damages  Want of right to select mediator  Delay in resolution benefits one  Case too complicated for trial party.  Opportunity to meet face to face  Opportunity to develop remedies. BASIC SKILLS FOR MEDIATION  LISTENING SKILLS: Good listening is listening to hear and not to answer; fully grasping what the speaker is saying.  Mediation is not decision-making; rather it is about getting the parties to a state of mind where they feel encouraged to work towards settlement.  To know where they stand, what they feel, help the parties to pent-up feelings, frustrations and disappointments.  BODY LANGUAGE: It is said that 7% of communication is by words, 35%by tone, and remaining 58% is by body language.  We communicate with our body, whether we are attentive to other person or not, while turning away from the speaker is a negative posture.  Facial expressions are a part of body language (frowning, serious faces, etc.); maintaining eye contact….  KEEPING SILENCE: The art of remaining silent is a difficult skill to remain silent.  Though uncomfortable, yet a very powerful tool in the hands of mediator.  It conveys that the other person’s words are important , and that the mediator is listening him to hear and understand him and that the speaker must speak to the fullest.  UNDERSTANDING THE TELL-TALE SIGNS; including body language, posture, shifting eyes.  PROCESSING what has been said. Improve matters by lessening emotional content, separating feeling from issue and enabling parties to get better perspective to focus on content.  EFFECTIVE QUESTIONING TECHNIQUES; for clarification, for drawing information,  Mediator must make distinction between direct (yes/no – threatening) and open-ended questions (what/how – information drawing).  REPHRASING: When the parties trust the mediator and open-up their feelings.  Essential while dealing with highly emotionally-charged statements, like that of accusation, accounts etc.  Three-step process developed by mediator:  I understand……  That you feel……  Because of…….  SUMMARISING: Done after the party has finished its statement.  Mediator outlines the essential facts and pin-point the issues.  BASIC RULES FOR MEDIATION Parties to prescribe their own rule and other terms May be difficult for the parties to settle such terms – may consent to model rules and regulations by ADR institutions – with/without modifications. To be done at firsts meeting with the mediator.  SELECTING MEDIATOR ADR organizations/institutions help the parties to choose mediator. Can be selected by mutual decision of the parties. Person must have necessary knowledge of handling the dispute. Must possess essential skills necessary for mediation.  RESTRICTIONS ON MEDIATOR Cannot compel attendance or production of documents Cannot make ex-parte settlement Settlement lacks enforceability Can only persuade parties to reach settlement Acts as mediator only till the desire of the parties No power to penalize Cannot modify/alter the subject-matter.  STAGES IN MEDIATION  STAGE INITIAL  STAGE IV: LEGAL REALISM  Checking for conflict of interest  STAGE V: ALTERNATIVES TO  Participation in the process SETTLEMENT  STAGE I: THE OPENING  BATNA – BEST ALTERNATIVE TO NEGOTIABLE AGREEMENT ROUND  WATNA – WORST ALTERNATIVE TO  Mediator’s opening statement NEGOTIABLE AGREEMENT  Narration of facts by the parties  MLATNA – MOST LIKELY ALTERNATIVE  Gathering relevant information TO NEGOTIATED AGREEMENT   STAGE VI: OPTIONS FOR STAGE II: MEETING WITH SETTLEMENT PARTIES  Eliciting options  Joint meeting  Selecting options  Separate meeting  STAGE VII: FINAL STAGE  STAGE III: CREATIVE STAGE  AGREEMENT  Moving parties from position to  NO AGREEMENT interests  CONCILIATION A non-binding procedure.  An impartial third party assists the parties/disputants in reaching a mutually agreed settlement.  Mediation and conciliation – interchangeable expressions.  Halsbury’s Law of England – Conciliation is a process of persuading the parties to reach an agreement and is plainly not arbitration nor is the Chairman of Conciliation Board as Arbitrator.  A process that involves a neutral third party to communicate with the disputants in the exchange of information and settlement options.  Is essentially a non-judicial process as against arbitration.  As a technique of ADR, has acquired statutory recognition in the Arbitration and Conciliation Act, 1996.  The causes of dispute/differences are first identified and then resolved by the conciliator, thus protecting the interest of the parties.  Flexible and less formal process.  When the parties enter upon conciliation and reach an agreement on a settlement of dispute, the agreement so reached has the status and effect as it was an arbitral award – Ss. 73 & 74, A&C Act, 1996.  SCOPE OF CONCILILATION  May be most appropriate in cases in which there are technical issues that require special expertise to resolve.  Section 61, A&C Act, 1996 provides for the Application and Scope of Conciliation. It provides as under:  (1) Save as otherwise provided by any law for the time being in force and unless the parties have otherwise agreed, this Part shall apply to conciliation of disputes arising out of legal relationship, whether contractual or not and to all proceedings relating thereto.  (2) This Part shall not apply where by virtue of any law for the time being in force certain disputes may not be submitted to conciliation.  ADVANTAGES OF CONCILIATION  OFFERS MORE FLEXIBLE ALTERNATIVES FOR A WIDE VARIETY OF DISPUTES.  OBVIATES THE PARTIES FROM SEEKING RECOURSE TO THE COURT SYSTEM.  RESERVES THE FREEDOM OF PARTIES TO WITHDRAW AT ANY STAGE.  MAINTENANCE OF CONFIDENTIALITY.  COST EFFECTIVE AND QUICK RESOLUTION.  FACILITATES MAINTENANCE OF CONTINUED RELATIONSHIPS.  NO SCOPE FOR CORRUPTION OR BIASNESS.  DIFFERENCE b/w MEDIATION & CONCILIATION  Both appear to be similar and interchangeable terms.  Subtle difference between the two.  In mediation, mediator plays an active role by working out compromise formulas after hearing both the parties. But in case of conciliation, the role of conciliator is to bring parties together in a frame of mind to forget the animosities and prepare them for compromise by adopting a mid-way approach.  The role of mediator is to make an endeavor to evolve an acceptable solution through careful negotiations with the parties and present his compromise formula which may be acceptable to both the parties.  Thus, conciliator is an active participant in bridging the gulf between the parties and suggest solution which is acceptable to the parties.  ARBITRATION A binding procedure.  Dispute is submitted for adjudication by an arbitral tribunal, consisting of a sole or an odd number of arbitrators.  Arbitrator(s) give decision in the form of an award that finally settles the dispute and is binding on the parties.  Is adjudicatory and results in a binding decision.  May be defined as a mechanism for the resolution of disputes which take place usually pursuant to an agreement between two or more parties, under which parties agree to be bound by the decision to be given by the arbitrator according to law or, if so agreed, other considerations, after a fair hearing such decision being enforceable by law.  Thus, it may be inferred that:  Arbitration is a process of dispute resolution  Through arbitral tribunal  Appointed by parties or by the court at the request of the parties.  Combines strength (enforceable decisions and backed by judicial framework) with flexibility (allows the disputants to choose the procedure which fits the nature of the dispute).  Arbitration may be categorized as: Ad hoc and institutional arbitration Domestic and International arbitration Foreign arbitration.  INTERNATIONAL PERSPECTIVE OF ARBITRATION  Efforts were being made by UN to work out comprehensive uniform Model Arbitration Law at the International Level, to be uniformly adopted by the member States with suitable modifications keeping in view the domestic needs and national laws.  The Model Law on International Commercial Arbitration was adopted, known as the United Nations Commission on International Trade Law [UNCITRAL] ON 21ST June 1985, in its 18th Session.  In its resolution, the General Assembly recommended that all the States should adopt UNCITRAL Model Law on International Commercial Arbitration.  Being a member State, India enacted A&C Act, 1996 to bring about uniformity in arbitration procedures and to meet the needs of International Commercial Arbitration.  SCOPE OF ARBITRATION LAW  Based on the principle of withdrawing dispute from the ordinary courts and enabling the parties to substitute a domestic tribunal consisting of persons on their own choice known as ‘arbitrators’.  Russel – An arbitrator is neither more nor less than a private Judge of a Private Court (arbitral tribunal) who gives a private judgment (award).  The Indian law relating to arbitration provides that any dispute or difference relating to commercial matters including shipping, sale, purchase, banking, insurance, etc. arising between the parties in India or a party in India and a party in foreign or foreign parties who have agreed for arbitration, shall be determined and settled in accordance with the A & C Act, 1996 and the rules framed thereunder.  Booz Allen and Hamilton Inc. v. SBI Home Finance Ltd; 2011(5) SCC 532  N. Radhakrishnan v. M/s Maestro Engineers; 2010 (1) SCC 72  Swiss Timing Ltd. v. Organising Committee, Commonwealth Games 2010, Delhi.  Cases for which Arbitration is Appropriate: i. Where the parties want the other person to decide, but want to avoid formality, time and expense. ii. May be appropriate for complex matters, where the parties want the decision –maker, having experience and training, to settle the dispute. iii. Where any special law prohibits the application of the A & C Act, 1996, not appropriate in such cases. If the parties agree for any such kind of matter, it shall be wholly void, illegal and against public policy.  ADVANTAGES OF ARBITRATION  The decision is final and binding on the parties. Award not subjected to appeal, except in few situations.  Awards enjoy greater international recognition.  Neutrality and mutuality are the most redeeming features.  Offers parties a unique opportunity to designate persons of their choice as arbitrators.  Faster and less expensive.  Confidentiality. THANK YOU…!!!