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Choosing ADR: Mediation vs. Arbitration & Conciliation for Effective Dispute Resolution

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Added on: 2024-08-02 06:35:06
Order Code: CLT319767
Question Task Id: 0

Question 1

A. In light of the urgent circumstance Naresh's perhaps unlawful demand, & the importance of the funds' utilization, several factors ought to be taken into account:

1. Selecting an ADR Approach: Arbitration or mediation or conciliation are 3 procedures which should take ahead of the common litigation practice.

Because of the nature of the controversy and the need for a solution, mediation seems more suitable at the beginning of the process, and then arbitration if mediation is not successful.

2. Mediation: This step is recommended firstly due to being less aggressive or assertive so that relationships would not be damagedand because it would be quicker. The procedure wherein a 3rd person helps each side to reach a mutually acceptable agreement is known as mediation[ Civil Procedure Code 1908, s 89].

3. Arbitration: As a last resort, arbitration may be used if mediation is ineffective. It is somewhat more official than mediation but less official than trials or hearings. Arbitration offers a mandatory solution withthe likelihood of a quicker and unique procedure of handling the conflict.

It is advised to use mediation since it offers a quicker & peaceful method of resolution & frequently helps to keep connections unbroken. Furthermore, the Civil Procedure Code of 1908 promotes mediation as a dispute resolution approach.

4. Conciliation where the aim is to have an appointed conciliator assist the disputing parties find an acceptable solution to the problem. Conciliation is quite close to arbitration but is not as formal as the latter. The conciliators recommendation must be voluntary in nature, and either party can accept or refuse them. But where both the parties agree to the settlement document regressive by the conciliator, the document shall be conclusive for both the parties.

5. Venue and Jurisdiction: The clause should also state the proper place and proper law to be applied when solving the dispute. Hence, in view of the location of the case being from Sonipat, it would be more realistic to recommend a local arbitration centre or a mediator who has adequate knowledge of the laws andjurisdiction.

6. Confidentiality: It is recommended to add a language that preserves the rights of both parties in this context because the business's aspects entail highly confidential matters like monetary transactions & personal circumstances.

7. Expenses: The section should specify how the expenses of both arbitration & mediation will be addressed; for illustration, it could indicate that each party would pay a portion of the initial fees, but that the mediator or arbitrator ultimately decides the total cost. Specify how the expenses of both arbitration & mediation will be addressed; for illustration, it could indicate that each party would pay a portion of the initial fees, but that the mediator or arbitrator ultimately decides the total cost.

Sample dispute Resolution Clause:

"Anydisagreementemanatingfromorrelatedtothisagreementwillbesettledusingthesubsequentdisputeresolutionprocedure.:

1.Mediation: The parties also acknowledge that the first step to the settlement of the dispute should be mediation with a mediator [from the local mediation centre]. The mediation process shall begin within a period of fifteen days from the date of a partys notice for mediation in writing.

2.Arbitration: The conflict will be referred for arbitration under the norms of the local arbitration centre that is Sonipat if it fails to settle within 30 days of the mediation session starting. There is going to be just one arbitrator on the arbitral panel. The arbitration will be organized in Sonipat. The arbitration will be carried out in English language.

3.Confidentiality: Every action taken under this article shall be kept confidential, & the individuals involved commit not to provide any 3rd party with details about the proceedings.

4.Costs: The mediation & arbitration procedures are going to begin at the original costs for both parties. The mediator or arbitrator will eventually decide how expenses are split.

B. ADRs are formally defined as practices or procedures that help to facilitate the resolution of a conflict other than by going to trial, that is, by taking a traditional legal course of action. Some of these methods include mediation, arbitration, conciliation, and negotiation. However, within the last few years, ADR has become fashionable owing to certain benefits that it has been observed to possess over litigation. However, the ambiguity of the concept of ADR and its application in the practice reveals its similarity with traditional forms of litigation.

Role of ADR:

a.The role of ADR process is that such processes are usually quicker than the legal actions taken in courts. This is especially true in matters of essentials like in the case illustrated where such a resolution is most essential. Returning to the courts often comes with challenges such as backlogs and hence, the continuous nature of the disputes which can be addressed by ADR.

b.An important role of ADR is that it is usually cheaper than a legal trial. Compared to the traditional litigation processes, the costs incurred on issues like court fees, discovery exercises, and trial time are minimized in ADR methods.

c.ADR is far more flexible when it comes to the actual procedures to be followed and the time frame to be taken. The parties have more discretion in the process than the court has set the system and therefore can easily adapt it to suit their needs.

d.Confidentiality is maintained when ADR proceedings are conducted in camera and this is advantageous in preventing the parties to the dispute from being exposed or tarnished or having sensitive material exposed. On the other hand, trials can be embarrassing for the parties involved, and many times they are conducted in open court which is not healthy particularly when maintaining the reputation of an individual or business enterprise is at stake.

e.ADR especially mediation does not involve an aggressive stance but rather strives for finding common ground to resolve the dispute. This is beneficial in protecting business or personal relationships that may otherwise be strained by adversarial legal processes.

f.Parties to ADR can select arbitrators or mediators from a particular profession or with proficiency in certain areas, which means that the person handling the dispute understands the issue at hand and not necessarily a judge who may not know anything about it.

Blurring of procedural and other differences between ADR and litigation in the current times:-

Court Participation: Alternative dispute resolution techniques are being backed by courts more often & at times enforced. Prior to allowing the matter to go to trial, judges might refer it to arbitration or mediation. The difference between ADR & court procedures has blurred as a result of this court endorsement.

Formalizing of ADR: dispute resolution processes have grown into a more defined framework over time. Primarily in arbitration, many procedural aspects of judicial proceedings such as specialized rules of evidence & procedure have been established. As a result, there is a view that arbitration has become just as complicated & costly as litigation.

Hybrid Procedures: More blurring of boundaries arises with the growth of hybrid methods of dispute resolution. Such hybrid procedures offer an agreement between informality & finality through the combined components of arbitration & mediation.

Enforceability of ADR Results: Like judgments from courts, arbitration awards are enforced in court & have legal implications. If the parties consent to an agreement, mediation agreements may also become legally enforceable. The differentiation between the results of ADR & decisions by courts gets blurred by this legal support[ Arbitration and Conciliation Act 1996, s 36.].

Question 2

Mediation Settlement Agreements- Section 89 of the Civil Procedure Code, 1908, & the Mediation & Conciliation Rules, 2004 provide constitutional support for mediation in India, even though it is not as structured as arbitration[ Civil Procedure Code 1908.]. A mediation settlement agreement's legality is heavily reliant on its voluntary character & the parties' common acceptance.

An agreement reached via mediation is regarded as a contract between each of the parties. By forming a decree of consent in conformity with Rule 3 of the Civil Procedure Code, 1908, its legal force can be guaranteed13. It entails presenting the deal of settlement to the court & getting a ruling that incorporates the terms that had been decided upon during mediation. It is legally enforceable under the law as a declaration of consent, with the same status as a court ruling.

Even if it is enforceable as a contract, problems could occur if 1 party doesn't follow down. The opposing party will subsequently have to bring an action in court, which could be lengthy & costly to obtain certain outcomes or compensation.

Conciliation Awards- The Arbitration & Conciliation Act of 1996 governs conciliation. A settlement obtained by conciliation has precisely the same status & consequence as an arbitral award on agreed conditions, as per Section 74 of the Arbitration & Conciliation Act, 1996. It implies that under Section 36 of the Act12, which provides instantaneous enforcement via the judiciary without the necessity for an additional suit, it is executable in the same way as a final arbitral ruling.

A conciliation award's main benefit is that it is easily enforceable. The settlement agreement becomes binding as an arbitral award as soon as it gets signed by both parties & the conciliator. It lowers the possibility of failing to comply.

Since conciliation is binding & has a stated regulatory structure according to the Arbitration & Conciliation Act of 1996, it could be the most effective choice if the client's primary issues are enforceability & lessening the probability of future lawsuits. Yet, mediation might be preferable if sustaining the parties' association & having an extensive amount of authority & versatility over the procedure is vital. In the final analysis, selecting between conciliation & mediation should be decided with consideration of the facts of the disagreement, the parties' relationship, & its ultimate resolution[ Arbitration and Conciliation Act 1996. Both options have several advantages over conventional litigation, however, choosing effectively involves an understanding of their unique characteristics & methods of enforceability.

The binding effect of a mediation settlement agreement as a stand-alone contract may require extra-legal actions if one party fails to repay, although it can be transformed into a decree of consent. On the contrary, in conciliation, the deal of settlement achieved via conciliation is instantly binding without the need for additional lawsuits, having the same legal power as an arbitral decision15.

In many types of differences, conciliation is the most favoured resolution approach. Conciliation is an adaptable, informal, & private procedure. It has become popular as it enables quick conflict resolution & is far less costly generally than going to trial. The conciliation procedure can be tailored to the parties' unique requirements & goals while retaining the parties' authority over the final results.

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  • Posted on : August 02nd, 2024
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