Description

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Picture Courtesy: BARANDBENCH

Context

The Minister of State (Independent Charge) of the Ministry of Law and Justice updated the Lok Sabha about the steps taken to strengthen Arbitration and Mediation in India.

What are Arbitration and Mediation?

They are Alternative Dispute Resolution (ADR) mechanisms, offering alternatives to traditional court litigation.

They align with constitutional aspirations of accessible justice (Article 39A) and the right to a speedy trial (Article 21).

Arbitration => It is a quasi-judicial process where parties agree to submit their dispute to an impartial third party (arbitrator/arbitral tribunal) whose decision (arbitral award) is binding and enforceable.

Mediation => It is a voluntary, less formal, process where a neutral third party (mediator) facilitates communication and negotiation, helping parties to reach a mutually acceptable settlement.

Evolution of dispute resolution in India

Ancient Roots => Traditional dispute resolution mechanisms, such as the 'Panchayati Raj system' with 'Panchayats' resolving village disputes, are integral to Indian society.

Ancient texts “Bhradarnayaka Upanishad” mentioned various arbitration bodies like 'Sreni', 'Puga', and 'Kula' for dispute settlement.

British Era => Introduced formal arbitration: Bengal Regulation 1772, Indian Arbitration Act 1899, Code of Civil Procedure (CPC) 1908 included provisions for arbitration.

Post-Independence Evolution => The Arbitration Act of 1940 governed domestic arbitration; later replaced by the Arbitration and Conciliation Act, 1996, based on the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration.

The Legal Services Authorities Act of 1987 provided statutory backing to 'Lok Adalats', to promote community-level dispute resolution.

The 1999 amendment to Section 89 of the CPC empowered courts to refer disputes to various ADR methods.

Justice Saraf Committee Report (2004) stressed to establish an institution in India as per the international standards.

The India International Arbitration Centre Act (2019) established the India International Arbitration Centre (IIAC).

Arbitration Council of India (ACI)

Origin: Autonomous body established under the Arbitration and Conciliation (Amendment) Act, 2019.

Objective: To enhance the quality and effectiveness of arbitration and other alternative dispute resolution (ADR) mechanisms in India.

Head Office: Delhi

Chairperson: Appointed by the Union Government. A former Supreme Court judge, Chief Justice of a High Court, a High Court judge, or an eminent arbitration expert are eligible.

Functions and Duties: Promote and encourage arbitration, mediation, conciliation, and other alternative dispute resolution mechanisms through various measures

The Mediation Act 2023, provides a statutory framework for mediation, encourages pre-litigation mediation for civil and commercial disputes.

It makes mediated settlement agreements legally enforceable, and promotes online mediation.

Why India is promoting ADR?

Judicial Overburden => Over 5 crore cases pending, including more than 86,000 in the Supreme Court and over 63 lakh in High Courts.

ADR offers a mechanism to ensure faster resolution and upholding the 'Right to Speedy Justice'.

Economic Growth => A comprehensive ADR ecosystem can attract Foreign Direct Investment (FDI) and improve India's "Ease of Doing Business" ranking.

Post-Pandemic Shift => COVID-19 pandemic accelerated the adoption of Online Dispute Resolution (ODR), highlighting the scalability and efficiency of digital platforms for resolving disputes.

Government Focus => Push for "zero pendency" and promotion of ADR, referring government-related disputes to mediation.

What are the challenges in adoption and effectiveness of ADR?

Lack of Awareness => About ADR mechanisms, their benefits, and their enforceability.

Mindset => Preference for formal litigation through Courts due to a lack of trust in alternative mechanisms.

Judicial Intervention => Sometimes Courts' interference in arbitration, despite legislative limitations, undermine the finality of awards and disputes, hindering speedy resolution.

In the Shri Lal Mahal Ltd. vs Progetto Grano Spa (2014) case, the Supreme Court clarified that foreign awards should be enforced unless they clearly violate India's fundamental public policy.

Quality and Training => Inadequate standardized training, and legitimacy of arbitrators and mediators, leads to concerns about the quality, impartiality, expertise, and ethical conduct of practitioners.

Lack Legal Professionals => The dominance of retired judges as arbitrators led to replication of court procedures, increasing delays and costs.

Enforceability Issues => Despite legal provisions, delay in enforcing arbitral awards on various grounds, require parties to approach courts.

Reluctance of Legal Professionals => Some legal practitioners hesitant to fully adopt mediation and conciliation, viewing them as threats to their earnings.

Infrastructure Deficiencies => Infrastructure (dedicated centers, administrative support) outside metros is still developing.

What steps can be taken to strengthen the ADR ecosystem?

Strengthening the legal framework => Clearly define the enforceability of awards and integrate ADR into the judicial process.

Amend the Arbitration and Conciliation Act, 1996, and related laws to address ambiguities and align with best international practices.
Making mediation and other ADR methods mandatory, for early stages or certain types of disputes, as recommended by the Malimath Committee.

Awareness and education Campaign => Using various platforms like Digital India, Legal Literacy Mission, Startup India, and MSME Sambandh to inform the public and businesses about the benefits and processes of ADR.

Standardized Training and Accreditation => Develop comprehensive training programs for arbitrators, mediators, and other ADR professionals to ensure a sufficient pool of skilled individuals.

Establish a robust accreditation framework and certification processes for ADR practitioners, such as the proposed National Accreditation Board for Arbitrators.
Integrate ADR training into legal education and other professional development programs.

Strengthening Institutional Arbitration and Mediation => Develop parallel ADR institutions similar to courts, at remote levels, for easier access.

Establish Arbitration and Mediation Centers at each court to encourage early settlement.
Leverage the expertise and infrastructure of existing and newly established bodies, like the India International Arbitration Centre (IIAC) and Arbitration Council of India (ACI) to set high standards and promote institutional arbitration.

Utilizing Technology => Promote Online Dispute Resolution (ODR) platforms to expand access to justice and improve efficiency, especially for cross-border disputes.

Explore the use of Artificial Intelligence (AI) and other emerging technologies for case management, document review, and assisting in settlement proposals.

Ensuring Minimal Judicial Intervention => Clear guidelines and training for judges on the limited grounds for challenging arbitral awards.

Pre-litigation mediation, as promoted by the Mediation Act, 2023, should be encouraged by courts.

Periodic Review and Amendments based on practical experience and evolving needs.

For Prelims: SC Restores 3-Year Bar Rule I Arbitration and Mediation I SC To Examine Arbitration Act

For Mains: Real Indian Arbitrator Needs to Stand Up I Reviving Indian Arbitration System I ICA Lead Indo-UK Arbitration Talks

Source: PIB

PRACTICE QUESTION

Q. India's growing economy requires an efficient dispute resolution mechanism. In this context, critically examine the role of arbitration and mediation in achieving timely justice and attracting foreign investment. (250 words)