ADR system in India

Though the Alternate Dispute Resolution system have gained momentum only in the recent years that to specifically said to be the resultant of globalisation and liberelisation, the System was very much present and well organized in the Ancient Indian Legal System more particularly the Hindu law.

1. Who conducted the Arbitration Proceedings in Ancient India?
There were systemised hierarchical boards to decide the disputes. There were also Panchayats which functioned as subordinate authorities to the regular Courts and their decisions were binding as a decision of a Court of Law.

2. How were these boards named?
Kula the groups of persons bound by family ties. Sreni or Assemblies of tradesmen and artisans belonging to different tribes but connected in some way with each other. Puga or a Board of persons belonging to different sects and tribes but residing in the same locality;
The decision of Kula or Kinsman was subject to revision by Sreni which in turn could be revised by the Puga. From the decision of the Puga, appeal was maintainable to Pradvivaca and finally to the sovereign, and prince.

3. How advantageous was the Panchayat system?
The advantage of this system lay in its location. In a rural settings it was difficult for a witness to conceal the truth before his co- villagers, Panchayats, however, were often influenced by local sentiments and factions and thereby became susceptible to prejudice and bias. Harsh and unfair decisions of village Panchayats relating to caste matters are notorious. The simple and informal system of arbitration through panchayats though useful was ineffective to deal with the complexities arising out of the social and economic changes.

4. How did Panchayats evolved to its present position.
The system of Alternate dispute redressal was found not only as a convenient procedure but was also seen as a politically safe and significant in the days of British/ Company Raj. Hence, There were several regulations and legislation that were brought in resulting considerable changes from 1772. Few among them are:
Bengal Regulations - The regulation of 1781 contained a provision that “the judge do recommend, and so far as he can without compulsion, prevail upon the parties to submit to the arbitration of one person to be mutually agreed upon by the parties.” And that “no award of any arbitrator of arbitrators, can be set aside, except upon full proof made by oath of the credible witness that arbitrators have been guilty of gross corruption or partiality to the cause in which they had made their awards.”
The Regulation of 1787 empowered the court to refer suits to arbitration with the consent of parties.
The Regulation of 1793 authorised the court to promote references of cases not exceeding Rs. 200 in value to arbitration and disputes relating to partnership account, debts, disputed bargain and breach of contract. The procedure for conducting the arbitration proceedings was also stipulated.
In 1795, the regulation of 1793 was extended to Benaras and the regulation of 1802, 1814, 1822 and 1883 extended the limits and jurisdiction of arbitration proceedings in various ways.
Madras Presidency Regulation VII of 1816 authorised the Districts Munsiffs to convene districts panchayats for the determination of Civil Suits relating to real and personal property. The Regulation was repealed by Act VII of 1870.
Bombay Presidency Regulation VII of 1827 provided for arbitration of civil disputes. The arbitration had to be in writing to a named arbitrator, wherein the time for making the award had to be mentioned.
Under the Charter Act of 1833 the Legislative Council for India was established in 1834 It Passed Act IX of 1840. But the aforesaid Regulations of Bengal, Madras and Bombay continued to operate till 1859.
The Act VIII of 1857 codified the procedure of Civil Courts except those established by the Royal Charter. Sections 312 to 325 dealt with arbitration in suits. Sections 326 and 327 provided for arbitration without the intervention of the court. The Act VIII of 1857 was replaced by Act X of 1877.
The Code of Civil Procedure was revised in the year 1882 and by the Act XIV of 1882 the provisions relating to arbitration were reproduced verbatim in sections 506 to 526. No change in the law of arbitration was effected by the said acts of 1877 and 1882.
The Indian Arbitration Act IX of 1899 was based on the English Arbitration Act of 1889. Act IX of 1899. It was the first substantive law on the subject of arbitration but its application was limited to the Presidency – towns of Calcutta, Bombay and Madras. Act, however suffered from many defects and was subjected to severe judicial criticisms.
In 1908 the Code of Civil Procedure was re-enacted. The Code made no substantial changes in the law of arbitration.
The Arbitration Act of 1940 was enacted replacing the Indian Arbitration Act of 1899 and section 89 and clauses (a) to (f) of section 104(1) and the Second Schedule of the Code of Civil procedure 1908. It amended and consolidated the law relating to arbitration in British India and remained a comprehensive law on Arbitration even in the Republican India until 1996.
The changing international Political and Economic situations emphasised need for further changes in the lawand thereby The Arbitration and Conciliation Act, 1996 was passed. This was particularly guided by the UNCITRAL Model Law, 1985 and the UNCITRAL Conciliation Rules, 1980.

5. What is Arbitration?
The law lexicon by N.M. Mulchandani, defines Arbitration as The hearing and determining of a dispute between parties by persons chosen or agreed to by them.

6. What is conciliation?
Conciliation is a process of facilitating an amicable settlement between the parties. Unlike the Arbitration there is no determination of a dispute. There need not be a prior agreement and it cannot be forced on a party not intending for conciliation.

7. When can an Arbitrator be appointed?
An Arbitrator can be appointed if there is a written agreement by the contracting parties either as a separate agreement or as one of the clause in the main contract. There can be an agreement by exchange of letters or any other mode of communication which can be recorded.

8. Who appoints an Arbitrator?
Either party to a dispute can appoint an arbitrator. If there is an agreement for appointment of an Arbitrator for settlement of dispute and one party do not agrees to refer the matter for Arbitration then the party willing to refer the matter to Arbitration can approach the Chief Justice of the concerned High Court for appointment of an Arbitrator. When there is a dispute in the performance of a contract in which there is a clause for reference to Arbitration and one party ignores the arbitration clause and proceeds with a civil suit before a judicial authority then the other party if prefers to refer the matter to Arbitration can apply to the same court before he files his defence statement for referring the matter to the Arbitration.

9. Who and How many Arbitrators can be appointed to resolve a dispute?
Person of any nationality can be appointed as an Arbitrator but he should possess necessary qualification to understand the nature of dispute. An Arbitrator need not be a graduate in law. The parties to the contract can agree on the number of Arbitrators. But the condition is that it should be an odd number.

10. Can we challenge the appointment of an Arbitrator?
Yes, if we can prove that he is not qualified to handle that particular dispute or if we could show that he is interested in deciding the dispute in favour of either of the parties his appointment can be challenged. The objections should be raised before the same Arbitrator within 15 days of his appointment or within 15 days from the date on which we come to know the existence of either of these conditions. The Arbitrator would himself decide his jurisdiction.

11. Can an Arbitrator pass an interim order?
Yes, he can pass an interim order, direct to produce sureties and even appoint an expert committee to deal with specific issues if necessary.

12. Is there any Appeal against the award of the Arbitrator?
There is an appeal against the grant or refusal of interim measures, on issues relating to the Jurisdiction of the Arbitrator and on determination of the issue relating to scope of Arbitration. Appeal is also allowed against the Order in the Application to set aside the Arbitral Award.

13. When can an Arbitral Award be set aside?
If it can be proved that the Arbitration Agreement is not valid under the law or the party preferring to set aside the Arbitral Award was prevented by some justifiable reasons from presenting his case or that the Award was beyond the scope of submission to dispute or either the composition of the Arbitral tribunal or the procedures of the Tribunal was different from what has been agreed by the parties.