MEDIATION AND ARBITRATION

1. Mediation

Introduction
Mediation, a form of alternative dispute resolution (ADR) is a way of resolving disputes between
two parties. Mediation is a facilitated and structured negotiation presided over by a facilitator
with the skill, training and experience necessary to help the parties reach a resolution of their
dispute1. A Mediator uses special negotiation and communication techniques to help the parties
to come to a settlement2. A third party is involved in order to structure the meetings and come to
a final settlement based on the facts given through the discussions. Third-party intervention is
used when a negotiation reaches a deadlock. It is used to restore belief in the possibility of a
beneficial resolution for the parties, future dialogue, and restored relationships, while leaving the
control over the decisions with the parties3.

A neutral third party, the mediator assists the parties to agree on their own solutions to the
disputes. The third party in some cases help in evaluation of issues, explore interests, concerns
and options of parties4. The mediator has to deal effectively with emotional and hidden factors
and assist the parties towards resolution of disputes. It is a process that is confidential, non-
binding and devised to assist the parties in structuring a mutually acceptable resolution to
whatever dispute has prompted the mediation5. In litigation, the courts impose binding decisions
on the disputing parties in a determinative process operating at the level of legal rights and
obligations. A Mediator does not decide what is fair or right, nor renders any opinion on the
merits or chances of success if the case is litigated. A mediator acts as a medium to bring the two
disputing parties together by defining issues and limiting obstacles to communication and
settlement. Mediation does not create binding agreements unless the parties consent to it and the
Mediator has no say in the outcome6.

1Tom Arnold, Mediation Outline: A Practical How-to Guide for Mediators and Attorneys in P.C. Rao and William
Sheffield (Eds.), Alternative Dispute Resolution 210 (Universal Law Publishing Company Pvt. Ltd., Delhi, 1997)

2
Ronit Zamir, The Disempowering Relationship between Mediator Neutrality and Judicial Impartiality: Toward a
New Mediation Ethic, 11 Pepperdine Disp. Res. L. J. 467 (2011)

3
1. Joanne Goss, An Introduction to Alternative Dispute Resolution, 34 (1) Alta. L. Rev. 1 (1995)
(Can.)

Rajiv Chelani, Promoting Mediation as a Conflict Resolution Tool, 1(4) The Indian Arbitrator 9 (May 2009).

5R.V. Raveendran, Mediation An Introduction, available at:

http://bombayhighcourt.nic.in/mediation/index_articles.htm (last visited on 11.10.2017)
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Concept of Mediation

Mediation is more than mere compromise 7. The focus in mediation is no problem solving
exercise, but searching a solution that satisfies everyones interest. It is an exercise for looking
for joint gains in a collaborative manner for helping all the parties to dispute to meet their needs.
It gives the parties the freedom to suggest options for settlement. Mediation involves
communication and commitment to settle8. Mediation is a voluntary process where the parties
retain decision-making rights all through and are only bound when they enter into a written
agreement concluding the mediation. Rules of evidence do not apply to the conduct of a
mediation proceeding9.

Parties are at liberty to place whatever information that they consider relevant. Information
which cannot legally be received in evidence in a Court of law may yet be relevant to a practical
resolution of the issues between parties. Hence, all such information can be received. Parties to
mediation can be represented by legal advisors but they are invited to directly participate by
speaking in the course of mediation10. A direct interface with the mediator is encouraged.
Mediation is a process which is structured but, which at the same time does not involve the
rigidity inherent in conventional litigation settings. The mediator conducts the proceedings in an
informal manner bearing in mind the fundamental principle that his role is neither to advice nor
to adjudicate. The process leaves control of the settlement in the hands of the disputants and it is
oriented to produce solutions that accommodate the fundamental needs of each side.

In his famous book The Mediation Process: Practical Strategies for Resolving Conflict,
Christopher W. Moore tells11 what mediation is, in the following words, Mediation is essentially
a negotiation that includes a third party who is knowledgeable in effective negotiation procedures
and can help people in conflict to coordinate their activities and to be more effective in their
bargaining. Mediation is an extension of the negotiation process in that it involves extending the
bargaining into a new format and using a mediator who contributes new variables and dynamics
to the interaction of the disputants.
6Dhananjaya Y. Chandrachud, Mediation Realizing the Potential and Designing Implementation Strategies,
available at: http://lawcommissionofindia.nic.in (last visited on 11.10.2017)

7Delhi High Court Mediation and Conciliation Centre, Mediators Tool Box (Volume I).

8Alternative Dispute Resolution 210 (Universal Law Publishing Company Pvt. Ltd., Delhi, 1997).

9P.M. Bakshi, The Obligation of Secrecy in Mediation, in P.C. Rao and William Sheffield (Eds.),

10Sunil Deshta, Lok Adalats in India (1995), p35.

11Cited by Justice M.M. Kumar, Judge, Punjab and Haryana High Court, Chandigarh, in a paper entitled
Relevance of Mediation to Justice Delivery in India presented in the National Conference on Mediation, organised
by the Mediation & Conciliation Project Committee, Supreme Court of India, held on July 10, 2010 at New Delhi,
http://highcourtchd.gov.in/right_menu/events/events/NCMediationNewDelhi.pdf (site visited on 11.10.2017)
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 Mediation involves a determination of interests the interests of the parties. A concept
frequently not found in the litigators lexicon, interests are the needs, wants, and desires that are
of importance to the parties the answer to the question what is this dispute really all about for
you? To get there, mediation provides a forum for principled negotiations. These negotiations
may at times become frustrating and troubling, but with the mediators help the parties keep
moving forward. Principled negotiations stimulate exploration of settlement alternatives and an
opportunity to evaluate those alternatives, weighing them against the likely outcome of going to
trial and viewing proposals through the lenses of reality. Mediation - compared to litigation, trial
and appeal is a veritable bullet train to certainty and finality. If the dispute settles at the
mediation, it settles on a basis acceptable to the parties; the Spector of trial is removed; and, the
threat of being tied up on appeal is eliminated 12. Mediation is no panacea, no magic solution to
overcome the institutional challenges of national court systems. Similar to other alternative
dispute resolution techniques, however, it does offer a cluster of features that differ from the
formal judicial systems of Europe that have had global influence over the primary ways in which
legal conflicts are resolved. In this regard, mediation both builds and diversifies the capacity for
resolving conflicts in society. With many qualifications and exceptions, European style courts
(both common law, Anglo-Saxon, and their continental European, civil law counterparts) are
state institutions, conducting public, formal proceedings, that presuppose literacy, posture the
parties in a conflictual, legal position-based, backward looking, fact finding processes that result
in binary, win-lose remedies, subsequently enforced through social control over the losing party.
In contrast, mediation (and other clusters of consensual dispute resolution techniques, except for
arbitration) is private, informal, oral, more collaborative, facilitative, future-looking, interest-
based processes that bring parties to a calibrated, multi-dimensional, win-win remedy that is
more durable because of the parties consent in the outcome.13

Because of these basic contrasting features, for many non-European legal cultures, mediation
bears a comforting alternative and similarity to traditional forms of dispute resolution that
predate colonial influence. Reformers have grown increasingly interested in reviving or
extending traditional forms of dispute resolution (such as the process of sulha in the Middle East
or methods used by the traditional panchayats in India) and integrating them into the formal
litigation system.14 For giving statutory recognition to ADR including mediation, the Law
Commission in its 129th Report made recommendation for making it obligatory for the Court to
refer the dispute to ADR including mediation for settlement. The court may refer the case when
the pleadings have been filed and after the issues are framed.

12Kuljit Kaur, Mediation: As a Technique for Alternative Dispute Resolution System, Nyaya Kiran 19 (D.L.S.A.,
AprilJune, 2008).

13Hiram E. Chodosh, Mediating Mediation in India, http://lawcommissionofindia.nic.in/adr_conf/chodosh4.pdf site

visited on 11.10.2017.

14Ibid.
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Types of Mediation:
There are three types of mediation. First is Court Annexed Mediation, second is Court
Referred Mediation and the third is Private Mediation. Section 89 of the Code of Civil
Procedure, 1908 has introduced the concept of Court annexed mediation and Court referred
mediation. Under this section the court is under a duty to identify cases where amicable
settlement of disputes is possible. This applies to cases which are filed in the court or are pending
in the court. The court refers such cases to mediation according to Alternative Disputes
Resolution Rules, 2003. In court annexed mediation, the mediation services are provided by the
court as a part and parcel of the same judicial system as against court referred mediation,
wherein the court merely refers the matter to a mediator. In case of court annexed mediation
Civil Procedure Mediation Rules, 2003 which are framed by the Jagannadha Rao Committee, are
applicable. These Rules provide a framework for the appointment of a mediator, their
qualifications and disqualification, the conduct of the mediation process, and a code of ethics to
be followed by the mediator in order to arrive at a fair and unbiased settlement. In court referred
mediation, the parties are free to appoint their mediator and to agree on the procedure to be
adopted. If the disputing parties want to resolve their dispute by mediation privately, without any
reference of the court that is private mediation. In private mediation qualified mediators offer
their services on a private, fee for service basis, to members of the public, to members of the
commercial sector and also to the governmental sector to resolve disputes through mediation.
Private mediation is used in connection with disputes pending in court and pre-litigation
disputes.15 In these cases the parties to a dispute decide that mediation would be appropriate and
select a mediator from among the many private providers who have gone into the business of
offering these services. In fact, it is now probably the most popular form of alternative dispute
resolution used by litigants in civil cases in the United States. 16 In U.S. mediation arises in one of
two circumstances. The first is through court-ordered or court-annexed mediation. Such courts
maintain a panel of approved mediators who offer their services to litigants, at either the courts
direction or the litigants request. The second circumstance in which mediation arises is private
mediation.

The Civil Procedure Mediation Rules, 2003:

Taking into consideration the recognition and helpfulness of alternative disputes redressal
mechanisms as well as upon the recommendations of the Malimath Committee, Section 89 was
inserted into the Code of Civil Procedure, 1908 by section 7 of the Code of Civil Procedure
(Amendment) Act 1999. This amendment was challenged in the Supreme Court through a writ

15http://bombayhighcourt.nic.in/site/mediation/mediation_concpt_and_articles/concept_and_process.pdf site visited

on 11.10.2017.

16Robert A. Goodin, Mediation: An Overview of Alternative Dispute Resolution,

http://usinfo.org/enus/government/branches/goodin.html site visited on 11.10.17.

(2003) 1 SCC 49.

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petition by Salem Advocates Bar Association in Salem Bar Association, T.N. v Union of India.17
In this case the judiciary took the initiative in legitimizing the concept of ADR as well as
clarifying the role of judiciary in settling the disputes through alternative dispute resolution
mechanisms to provide speedy justice. The Supreme Court while holding the amendment intra-
virus observed, Subsection 2 of section 89 refers to different Acts in relation to arbitration,
conciliation or settlement through Lok Adalat, but with regard to mediation section 89(2) (d)
provides that the parties shall follow the procedure as may be prescribed. Section 89(2) (d),
therefore contemplates appropriate rules being framed with regard to mediation. 18 The court
suggested constituting a Committee to clarify the apprehensions which may exist in the mind of
the litigating public or lawyers. For this purpose a Committee under the chairmanship of Justice
Jagannadha Rao, the Chairman of Law Commission of India and former Judge, Supreme Court
of India comprising senior advocates K. Parasaran, C.S.Vaidyanahan, Arun Mohan and advocate
K.V. Vishwanathan was constituted to ensure that the amendment become effective within a
short span of time and the committee was also considered to devise a model case management
formula as well as rules and regulations to be followed while taking recourse to the ADR referred
to in section 89 of the Civil Procedure Code, 1908. The Committee circulated a draft consultation
paper with rules on mediation, conciliation and case management and finally submitted a set of
rules for approval. All these efforts were aimed at securing the valuable right to speedy trial, as
guaranteed under Article 21 of the Constitution of India to the litigants.

The matter was again considered by the Supreme Court in Salem Advocates Bar Association in
Salem Bar Association, T.N. v Union of India19

The Committee submitted its Report in three parts. Report 2 contained the consideration of
various points raised in connection with draft rules for ADR and mediation as visualized by
Section 89 of the Code of Civil Procedure, 1908 read with Order X Rule 1A, 1B and 1C which
also contain model rules. The Supreme Court adopted the model rules framed by the Committee
in this case.

These Rules provide a framework for the appointment of a mediator, their qualifications and
disqualification, the conduct of the mediation process, and a code of ethics to be followed by the
mediator in order to arrive at a fair and unbiased settlement.

Appointment and Removal of Mediator

17
18Salem Advocates Bar Association in Salem Bar Association, T.N. v Union of India, (2003) 1 SCC 49 at
p. 55.

(2005) 6 SCC 344.

19
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 Rule 2 deals with the appointment of mediators. Parties to a suit may all agree on the name of
the sole mediator. Where there are two sets of parties and are unable to agree on a sole mediator,
each set of parties shall nominate a mediator. It is also given that the mediator need not
necessarily be from the panel of mediators referred to in Rule 3 nor bear the qualifications
referred to in Rule 4 but should not be a person who suffers from the disqualifications referred to
in Rule 5. Where there are more than two sets of parties having diverse interests, each set shall
nominate a person on its behalf and the said nominees shall select the sole mediator and failing
unanimity in that behalf, the Court shall appoint a sole mediator. According to Rule 3 the High
Court shall, for the purpose of appointing mediators prepare a panel of mediators and publish the
same on its Notice Board. The Courts of the Principal District and Sessions Judge in each
District or the Courts of the Principal Judge of the City Civil Court or Courts of equal status
shall, for the purposes of appointing mediators prepare a panel of mediators after obtaining the
approval of the High Court to the names included in the panel. The consent of the persons whose
names are included in the panel shall be obtained before empanelling them. The panel of names
shall contain a detailed Annexure giving detail of the qualifications of the mediators and their
professional or technical experience in different fields.

Rule 4 provides for the qualifications of persons to be empanelled under

Rule 3. Retired Judges of the Supreme Court, High Courts, District and Sessions Judges or
retired Judges of the City Civil Court or Courts of equivalent status are eligible to be empanelled.
Legal practioners with at least fifteen years standing at the Bar at the level of the Supreme Court
or the High Court or the District Courts or Courts of equivalent status may be empanelled.
Experts or other professionals with at least fifteen years standing, retired senior bureaucrats,
retired senior executives or institutions which are themselves experts in mediation and have been
recognized as such by the High Court are eligible to be empanelled by the courts.

Rule 5 provides that a person who has been adjudged as insolvent or is declared of unsound
mind, a person against whom criminal charges involving moral turpitude are framed by a
criminal court and are pending or a person who has been convicted by a criminal court for any
offence involving moral turpitude or any person against whom disciplinary proceedings or
charges relating to moral turpitude have been initiated by the appropriate disciplinary authority
which are pending or have resulted in a punishment are disqualified to become mediators. Any
person who is interested or connected with the subject-matter of dispute or is related to any one
of the parties or to those, who represent them, unless such objection is waived by all the parties
in writing, any legal practitioner who has or is appearing for any of the parties in the suit or in
any other suit or proceedings or such other categories of persons as may be notified by the High
Court are also disqualified to become mediators.

Rule 7 stipulates to give preference to experienced and specialized persons while selecting any
person from the panel of mediators. The mediator has the duty to disclose any circumstances
likely to give rise to a justifiable doubt as to his independence or impartiality from the time of his
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appointment and throughout the continuance of the mediation proceedings, without delay. 20 If the
Court has a justifiable doubt as to the mediators independence or impartiality, it shall cancel the
appointment by a reasoned order, after giving a hearing to the mediator and replace him by
another mediator.21 In certain circumstances provided under Rule 10 the court may delete or
remove the name of any mediator from the said panel. The court shall pass a reasoned order after
hearing the mediator whose name is proposed to be deleted or removed.

Procedure of Mediation
A usual mediation involves several stages. One of the advantages of mediation is its flexibility. A
mediation session can be designed in any way that the parties believe would be most useful to
the resolution of their dispute. These stages are neither rigid nor inflexible and can be adjusted to
achieve the desired result. The parties may agree on the procedure to be followed by the mediator
in the conduct of the mediation proceedings. Failing any such agreement the mediator shall
follow the procedure prescribed by the Mediation Rules. 22 The mediator shall not be bound by
the Code of Civil Procedure, 1908 or the Evidence Act, 1872, but shall be guided by principles of
fairness and justice, have regard to the rights and obligations of the parties, usages of trade, if
any, and the nature of the dispute. There are some standard places set out in the rules where
mediation can be conducted. Apart from this the parties can agree upon any place subject the
approval of the court.

The mediator shall fix, in consultation with the parties, a time schedule, the dates and the time of
each mediation session, where all parties have to be present. He may conduct joint or separate
meetings with the parties. Each party shall, ten days before a session, provide to the mediator a
brief memorandum setting forth the issues, which according to it, need to be resolved and its
position in respect to those issues and all information reasonably required for the mediator to
understand the issue. Such memoranda shall also be mutually exchanged between the parties. If
the mediator is of the opinion that he should look into any original document the court may
permit him to do so before such officer of the court and on such date or time as the court may fix.
Each party shall furnish to the mediator such other information as may be required by him in
connection with the issues to be resolved.

Where there is more than one mediator, the mediator nominated by each party shall first confer
with the party that nominated him and shall thereafter interact with the other mediators, with a
view to resolving the disputes.23 The parties shall be present personally or through their counsel

20Civil Procedure Mediation Rules, 2003, Rule 8.

21Id, Rule 9.

22Id, Rule 11(b).

23Id, Rule 6.
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or power of attorney holders at the meetings or sessions notified by the mediator. If any party
fails to attend a session or a meeting notified by the mediator, other parties or the mediator can
apply to the Court in which the suit is filed, to issue appropriate directions to that party to attend
before the mediator and if the Court finds that a party is absenting himself before the mediator
without sufficient reason, the Court may take action against the said party by imposition of costs
or by taking action for contempt. The non-resident parties may be represented by their counsel or
power of attorney holders at the sessions or meetings.24

Rule 14 provides for the administrative assistance for the mediators. In order to facilitate the
conduct of mediation proceedings, the parties or the mediator with the consent of the parties,
may arrange for administrative assistance by a suitable institution or person.

Rule 18 provides that the mediation shall stand terminated on the expiry of sixty days from the
date fixed for the first appearance of the parties before the mediator. Unless the Court, which
referred the matter, either suo motu, or upon request by any of the parties and upon hearing all
the parties, is of the view that extension of time is necessary or may be useful; but such extension
shall not be beyond a further period of thirty days.

When a mediator receives confidential information concerning the dispute from any party, he
shall disclose the substance of that information to the other party, if permitted in writing by the
first party. When a party gives information to the mediator subject to a specific condition, that it
be kept confidential, the mediator shall not disclose that information to the other party, nor shall
the mediator voluntarily divulge any information regarding the documents or what is conveyed
to him orally as to what transpired during the mediation.25

Receipt or perusal, or preparation of records, reports or other documents by the mediator, or

receipt of information orally while serving in that capacity shall be confidential and the mediator
shall not be compelled to divulge information regarding those documents nor as to what
transpired during the mediation.26

Parties shall maintain confidentiality in respect of events that transpired during mediation and
shall not rely on or introduce the said information in any other proceedings as to the views
expressed by a party in the course of the mediation proceedings; documents obtained during the
mediation which were expressly required to be treated as confidential; proposals made or views
expressed by the mediator; admission made by a party in the course of mediation proceedings;
the fact that a party had or had not indicated willingness to accept a proposal and there shall be

24Id, Rule 13.

25Id, Rules 20(1) and 20(2).

26Id, Rules 20(3).

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no stenographic or audio or video recording of the mediation proceedings 27. This provision is for
the purpose of maintaining confidentiality of the procedure. As per Rule 21 mediation sessions
and meetings are private, only the concerned parties or their counsel or power of attorney holders
can attend. Other persons may attend only with the permission of the parties and with the consent
of the mediator.

Rule 22 provides immunity to the mediator during the time of proceedings.

In order to preserve the confidence of parties in the Court and the neutrality of the mediator,
there should be no communication between the mediator and the Court, except where it is
necessary it shall be in writing and copies of the same shall be given to the parties or their
counsel or power of attorney. It shall be limited to the communication about the failure of party
to attend; regarding his assessment that the case is not suited for settlement through mediation; or
that the parties have settled the dispute or disputes. This communication will be with the consent
of the parties. Mediator uses appropriate techniques and skills to open and develop dialogue
between disputants, aiming to help the parties reach an agreement on the disputed matter. As a
facilitator, the mediator has to understand the underlying issues between the parties. In order to
do so, the mediator has to open up communication between the parties and between the parties
and himself. The mediator has to enable the parties to understand their own interests and to
understand the interests of the disputing party. The mediator must enable parties to distinguish
between their positions and interests. In the process of dialogue before him the mediator enables
parties to appreciate and evaluate their own interests and those of each other. At the same time,
as he facilitates communication between the parties, the mediator must take care that he is not
the judge of the case. The effort of the mediator is to ensure that through the mediation discourse
parties arrive at a solution which is in their best interest. Mediators are skilled to discover the
interests underlying each partys position and the process itself is helpful to that exploration,
mediation is an ideal forum to use the negotiation philosophy.

Role of the Mediator

The mediator has many roles to play. He helps the parties to think in new and innovative ways,
to avoid the drawbacks of adopting unbending positions instead of looking after their interests, to
smooth discussions when there is bitterness between the parties that renders the discussions
unsuccessful and in general to guide the process away from negative outcomes and possible
breakdown towards joint gains. Mediation means the process by which a mediator appointed by
parties or by the Court, as the case may be, attempts to facilitate voluntary resolution of the
dispute by the parties by the application of the provisions of the Civil Procedure Mediation Rules
2003 and in particular, facilitates discussion between parties directly or by communicating with
each other through the mediator, by assists parties in identifying issues, reducing
misunderstandings, clarifying priorities, exploring areas of compromise, generating options in an
attempt to solve the dispute and emphasizing that it is the parties own responsibility for making
27Id, Rules 20(4) and 20(5).
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decisions which affect them.28

The spirit of mediation lies in the role of the mediator as a facilitator. The mediator is not an
adjudicator. Mediation is negotiation carried out with the assistance of a third party. The
mediator, in contrast to the arbitrator or judge, has no power to impose an outcome on disputing
parties.29 The role of the mediator is to create an environment in which parties before him are
facilitated towards resolving the dispute in a purely voluntary settlement or agreement. The
mediator is a neutral. The neutrality of the mediator is similar to the neutrality of a judge but the
role of the mediator is completely different from that of a judge. The mediator does not either
deliver judgment or dictate to the parties the terms of the agreement. As a neutral, the function of
the mediator is to enable the parties to arrive at a mutual and voluntary agreement. This, the
mediator can achieve if he understands and perceives the nature of his function correctly. The
involvement of a mediator modifies the dynamics of negotiations. The mediator attempts to
encourage exchange of information, provide new information, and help the parties to understand
each others views. Each single dispute may require a different arrangement of beginning steps.

The mediator does not merely host the parties and encourage them to continue negotiating in a
neutral, welcoming environment; the mediator plays a more active role. The mediator not only
facilitates but also designs the process, and assists and helps the parties to get to the root of their
conflict, to understand their interests, and reach a resolution agreed by all concerned. 30 Mediators
should not use coercive, authoritative and threatening techniques that are used by untrained
mediators. Some judges use authoritative influence in judicial settlements, but they need to fully
understand the process. Mediation is an extremely flexible process. It can work in disputes
before they are taken to Court, to disputes pending in Courts and even after a Court verdict has
been given. The mediator can be a retired judge or a lawyer or a person who is respected in the
community.

Settlement Agreement

While no one can be compelled to commit to settle his case in advance of mediation, all parties
shall commit to participate in the proceedings in good faith with the intention to settle the
disputes, if possible. The parties must understand that the mediator only facilitates in arriving at a
decision to resolve disputes and that he will not and cannot impose any settlement nor does the
mediator give any warranty that the mediation will result in a settlement. The mediator shall not
impose any decision on the parties. Any party to the suit may, without prejudice, offer a
settlement to the other party at any stage of the proceedings, with notice to the mediator. Any

28Alternative Dispute Resolution and Mediation Rules, 2003.

29Stephen B. Goldberg, and Nancy H. Rogers, Negotiation, Mediation and other processes.

30Yona Shamir, Alternative Dispute Resolution Approaches and their Application,

http://waterwiki.net/images/8/8f/Alternative_Dispute_Resolution_Approaches_and_their_Application.pd f site
visited on 11.10.2017.
10 | P a g e
party to the suit may make a, with prejudice offer, to the other party at any stage of the
proceedings, with notice to the mediator.

A settlement reached at a pre-litigation stage is a contract, which is binding and enforceable

between the parties under the provisions of the Code of Civil Procedure, 1908. Where an
agreement is reached between the parties in regard to all the issues in the suit or some of the
issues, the same shall be reduced to writing and signed by the parties or their power of attorney
holder. If any counsels have represented the parties, they shall attest the signature of their
respective clients. The agreement of the parties so signed and attested shall be submitted to the
mediator who shall, with a covering letter signed by him, forward the same to the Court in which
the suit is pending. Where no agreement is arrived at between the parties, before the time limit
stated in Rule 18 where, the mediator is of the view that no settlement is possible, he shall report
the same to the said Court in writing.

Within seven days of the receipt of any settlement, the Court shall issue notice to the parties
fixing a day for recording the settlement, such date not being beyond a further period of fourteen
days from the date of receipt of settlement and the Court shall record the settlement, if it is not
collusive. The Court shall then pass a decree in accordance with the settlement so recorded, if the
settlement disposes of all the issues in the suit. If the settlement disposes of only certain issues
arising in the suit, the Court shall record the settlement on the date fixed for recording the
settlement and if issues are severable from the other issues and a decree could be passed to the
extent of the settlement covered by those issues, the court may pass a decree straightaway in
accordance with the settlement on those issues without waiting for a decision of the court on the
other issues which are not settled. If the issues are not severable, the court shall wait for a
decision of the court on the issues which are not settled.31

Ethics to be followed by Mediator

Rule 27 speaks about the ethics to be followed by the mediator. The mediator shall:

i) follow and observe these Rules strictly and with due diligence;

ii) not carry on any activity or conduct which could reasonably be considered as conduct
unbecoming of a mediator;

iii) uphold the integrity and fairness of the mediation process;

iv) ensure that the parties involved in the mediation are fairly informed and have an adequate
understanding of the procedural aspects of the process;

v) satisfy himself/herself that he/she is qualified to undertake and complete the assignment in a
professional manner;

31Civil Procedure Mediation Rules, 2003, Rule 25.

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vi) disclose any interest or relationship likely to affect impartiality or which might seek an
appearance of partiality or bias; avoid, while communicating with the parties, any impropriety or
appearance of impropriety;

vii) be faithful to the relationship of trust and confidentiality imposed in the office of mediator;

viii) conduct all proceedings related to the resolutions of a dispute, in accordance with the
applicable law;

ix) recognize that mediation is based on principles of self-determination by the parties and that
mediation process relies upon the ability of parties to reach a voluntary, undisclosed agreement;

x) maintain the reasonable expectations of the parties as to confidentiality;

xi) refrain from promises or guarantees of results.

Suitability of Mediation
Mediation is a dispute resolution technique particularly appropriate for circumstances where the
parties to the dispute have had or expect to have, a continuing relationship. It is also, however,
well suited to disputes that do not involve such relationships. Rule 4(a)(iii) of the Alternative
Dispute Resolution Rules, 2003 also directs the courts to draw the attention of the parties to the
relevant factors which will have to be taken into account before they exercise their option as to
the particular mode of settlement that where there is a relationship between the parties which
requires to be preserved, it will be in the interests of parties to seek reference of the matter to
conciliation or mediation, as envisaged in clauses (b) or (d) of sub-section (1) of sec. 89 of the
Code of Civil Procedure, 1908. Disputes arising in matrimonial, maintenance and child custody
matters shall, among others, be treated as cases where a relationship between the parties has to be
preserved. Mediation is not to be used in the cases where a principle of law needs to be
established, where there is imbalance of power between the parties, where deliberate bad faith is
involved. Where the case relates to public safety matters, civil rights matters or public interest
mediation is not the suitable mode.

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 2. Arbitration

Introduction
Arbitration is a legal process, which takes place outside the courts, but still results in a final and
legally binding decision similar to a court judgment. It is the procedure by which parties agree to
submit their disputes to an independent neutral third party, known as an arbitrator, who considers
arguments and evidence from both sides, then hands down a final and binding decision.

Ancient India had long and many traditions of arbitration/conciliation up to medieval period.
Affairs of the community were generally managed in cases of disputes between members by a
single headman whose office was either hereditary or elective. In some parts, this authority
vested not in a single individual but in a village council. Whatever, the strength of that council, it
had a name "Panchayat" with the standard constitution of five persons. Traces of these
institutions can be found in India even today though in the primitive communities. An assembly
for administration of justice was of various types and composition. It was either stationary being
held in the village under a tree or movable being held in fields. It references to these features.
The learned former C J of Orissa points out that the ancient Hindu jurist such as, "Yagnavalkya"
and "Narad" have referred to various grades of arbitrators in ancient India, such as the "Puga" or
Board of persons belonging to different sects and tribes, but residents of the same locality, the
"Sreni", belonging to different sects and tribes or assemblies and meeting of tradesman and
artisans belonging to different tribes, but having some kind of connection with one 5 Refer
Wehringer Arbitration: Precepts and Principles 1960 at Page 5 91 another through the profession
practiced by them and the "Kula" or meetings of kinsmen or assemblages of relations. There was
hierarchy of appeals also. From the decision rendered by "Kula" appeal lay to "Sreni" and from
the decision rendered by "Sreni" to "Puga" and from the decision of "Puga" to the King's judge
and also to the King himself.

Scene changed with the arrival of the East India Company in Bengal and Banaras. As the
Company established its roots in the soil of India, these institutions started vanishing and their

13 | P a g e
place was taken by the foreign modes of dealings with such matters. The Bengal Regulations of
1772 provided that the parties to a dispute relating to accounts shall submit the dispute to the
arbitration. It is interesting to notice the relevant clauses which read thus: "In all cases of
disputed accounts etc. it shall be recommended to the parties to submit the decision of their cause
to the arbitration, the award of which shall become a decree of the court"

Experience showed the inadequacies in the Acts and this led to the passing of a full-fledged law
pertaining to arbitration for the first time in India, viz. The Indian Arbitration Act, 1899. It
provided for agreement to refer future dispute to arbitration and also for reference for arbitration
without the intervention of the Court. This Act was more or less on the lines of English Laws on
the subject. Though the Act extended to the whole of India, it applied directly only to the
Presidency - towns and to Rangoon with power in the local Government to extend the same to
other areas. It is significant to note that this power was never used. Then followed the Code of
Civil Procedure, 1908 which replaced the Code of Civil Procedure of 1882. The new Code
contained elaborate provisions relating to the arbitration under sections 89 and 104 of the Second
Schedule. The new Code put the sections dealing with the arbitration in the Second Schedule of
the Act in view of contemplated codification of the subject in a separate enactment. The
Government of India did not take any steps till the Report of Mackinnon Committee on the Law
of Arbitration in 1927 in England had been examined and the English Arbitration Act of 1934
was brought into force. In 1938, the Government of India took up the matter and this gave birth
to the Arbitration Act, 1940, which was basically on the lines of the English Arbitration Act,
1934.

Background
"We should make the law of arbitration simple, less technical and more responsible to the actual
realities of the situations but must be responsive to the canons of justice and fair play and make
the arbitrator adhere to such process and norms which will create confidence, not only by doing
justice between the parties, but by creating sense that justice appears to have been done." In one
Special Leave Petition the Supreme Court had remarked that Arbitration is dreaded more than a
suit by honest man.

Several public institutions of trade, commerce and industry and eminent lawyers and scholars
also proposed drastic changes. In the meanwhile, Thirteenth Law Commission also undertook a
further examination of its recommendations. Unusually, a large number of cases were pending in
the Courts and the legal system was proving to be too inadequate to deal with the problem. Even
the system itself started having anxious moments which led to the formation of Arrears
Committee, popularly known as the Malimath Committee, constituted by the Government of
India on the recommendation of the Chief Justices' Conference. The Malimath Committee
submitted the report in 1990. The Malimath Committee as well as the Law Commission
recommended a number of alternative modes such as arbitration, conciliation, mediation etc. On
4th December, 1993, there was a historic conference of Chief Ministers and Chief Justices under
14 | P a g e
the Chairmanship of the Prime Minister of India to deal with the menace of ever increasing
number of dockets. The Government of India had also before it some Model Laws including
UNCITRAL Model Law on International Commercial Arbitration, I.C.C. Rules on Conciliation
and Arbitration. Horizons of Indian trade and commerce were expanding. It was considered
proper that instead of bringing piecemeal amendments to the 1940 Act, an entirely new law
should be made and it should be based on UNCITRAL Model Law which had the provisions
meant for universal application taking into consideration the international commercial angles.
The United Nations Commission on International Trade Law (UNCITRAL) was established by
the General Assembly resolution on 17th December, 1966, with promotion of the progressive
harmonization and unification of the law of international trade as its objectives. The Commission
consists of as many as 36 States from various 101 geographic regions and different economic and
legal system of the world. India has been the member of the Commission since its inception. The
Commission adopted after deliberations the Model Law on 21st June, 1985. Since the Model
Law is not a treaty, it does not compel the State adopting it to enact a national law on that basis.
But there were obvious advantages in following its terms. The General Assembly by its
resolution dated 11th December, 1985 made recommendations as follows: "All States give due
consideration to the Model Law on International Commercial Arbitration, in view of the
desirability of uniformity of law of arbitral procedure and the specific needs of international
commercial practice." Several countries have enacted law to give legal force to the Model Law
within their jurisdiction. India followed them after extensive deliberations and consultations at
all possible levels.

The Salient features of the Arbitration and Conciliation Act 1996

The act contains 86 Sections, a Preamble and three Schedules in toto. The Act has been divided
in to three Parts and the each and every part has been subdivided in to various Chapters. For
example Part one of the acts has been divided in to 10 Chapters, Part Two of the act has been
divided in to 2 Chapters. 4.2

The objects sought to be achieved by The Act:

The act embodies the following objects: They are,

1. To consolidate and amend the law relating to domestic arbitration and the international
commercial arbitration and the enforcement of the foreign award.32

2. To define the law relating the conciliation.33

3. The enforcement of the UNCITRAL Modal Law on International Law of International

Commercial Arbitration and the conciliation and the and the relevant Rules made by the

32Refer the long title of the Act.

33Ibid.
15 | P a g e
UNCITRAL.

4. The creation of the uniform legal relating to arbitration and the conciliation in India.

5. The establishment of unified legal frame works for the purpose fair and efficient settlement of
the disputes arising out of the international commercial relationship21 and the matter connected
or, incidental there to.

Self-contained code
Only a few legislations can be called as self-contained code. For example the Consumer
Protection Act 1986 and the CAT Act. The Arbitration and the Conciliation Act 1996, is also one
among them. The following aspects of the act make the act as the self-contained code.

Firstly the act deals with the substantial as well as the procedural aspects of the arbitration in
India.

Secondly the act specifically excludes the application of the CPC 1908 and the Indian Evidence
Act 1872.

Thirdly the act empowers the arbitral tribunal to follow its own procedures in determining the
issues brought before it.

Fourthly the lays down the provisions relating to the commencement, conduct and termination of
the arbitration proceedings.

Fifthly the act regulates the jurisdiction, composition, evidence to be followed, producers
relating to filing the claims the defiance and the appeal. Thus the aforestated aspects of the act
makes the act as the self-contained code.34

Salient Features of the Arbitral Agreement

1. The arbitration agreement is the foundation for the arbitration proceedings without which,
nothing can be done in the process relating to the arbitration proceedings.35

2. The arbitration clause or, the arbitration agreement should clearly prescribe the subject matter
of the dispute, or the disputes to be referred to the arbitration.

34Refer SS. 16and 17.

35Refer S. 7 of the Arbitration and Conciliation Act, 1996.

16 | P a g e
3. It should specify the timing of the disputes that is, past, present and the future that why the act
uses the words disputes which have arisen or, arise, or likely to arise.

4. The agreement should clearly state the number of the arbitrators to be appointed and prescribe
the qualifications subject to the conditions laid down in the act.36

5. The jurisdiction and the composition of the arbitral tribunal can be stipulated in the arbitration
agreement by the parties.

6. The rules relating to the conduct of the arbitration proceedings provision relating to the
speaking order should be included in the arbitration agreement by the parties.

7. The parties to the arbitration agreement can also choose the place of the arbitration that is, the
seat of the arbitral tribunal and the venue of the arbitration proceedings to be conducted by the
arbitral tribunal.

8. The parties to the arbitration agreement should clearly specify or, indicate the substantive law
to be applied by the arbitration tribunal in the agreement subject to certain conditions as,
prescribed in the act.

9. The arbitration agreement should also contain the provisions relating the mandate of the
arbitration and the termination of the mandate.

10. The parties can also extend the mandate of the arbitration through the agreement.37

The powers and functions of Arbitral Tribunal

1. The act empowers the arbitrational tribunal to rule on its own the competency and the
jurisdiction of the tribunal.

2. The Arbitral Tribunal can provide the interim direction to the parties to the arbitration
proceedings; for example to preserve the evidence and to furnish security and the inspection of
the documents.

3. The Tribunal can appoint the experts and consultants for the purpose of determining the issues
between the parties.38

The act empowers the arbitral tribunal to decide the place of tribunal, procedure relating to the
conduct of the proceedings. It can also decide the substantive law to be applied in to resolve the
dispute subject to the condition as, embodied in the act.

36Ss. 11(8) and 12(8).

37Id at Ss. 14 & 15.

38Id at S. 26.
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The act permits the tribunal to approach the court of the law for enforcement of the interim
orders and can also arrange the institutional facilities for the purpose of the conduct of the
proceedings.

The tribunal can award the cost including the interest during the three stages of the suit. The
tribunal can provide the award, the interim award, the additional award, and the final award.39

This empowers the tribunal to make the corrections in the award on suo-motto basis. The act
empowers the arbitral tribunal to decide whether to hold oral hearing or not or to conduct the
proceedings on the basis of the documents and other materials available to it. Subject to certain
conditions laid down in the act the tribunal can conduct the proceedings on the ex-parte basis.

The important rights of the parties recognised under the Act

Party autonomy is the back bone of the Arbitration and the Conciliation Act 1996. This concept
has been given due recognition in the act through various provisions of the act. For example, the
act provides the complete freedom in framing the arbitration agreement or, the arbitration clause
in the contract in the matters relating the appointment of the arbitrators and prescribing the
qualifications, extending the mandate of the arbitration and others. The concept of party
autonomy is highly reflected in the act in all most in all the stages of the arbitration proceedings
under this act. That is why, the act uses the words such as, unless otherwise agreed by the
parties, as agreed by the parties and failing of the agreement by the parties and others. The
following valuable rights have been recognized and guaranteed by the Arbitration and the
Conciliation Act 1996

1. The right to frame the rules relating to the procedural aspects the arbitration proceedings to be
conducted by the arbitral tribunal by the parties themselves.

2. The right to determine the number of the arbitrators to be appointed as, the arbitrators for
purpose of the conducting the proceedings. This right can be exercised by the parties subject to
the condition laid down in the act.

3. The parties are entitle to prescribe the qualification for the arbitrators to be appointed by
them.49 In addition to this the act also empowers the parties to remove the arbitrators through
challenge procedure as prescribed by the act. The act makes it very clear that, the parties free to
extend the mandate of the arbitration unless, it is extended with the clear cut consent of the
parties through the subsequent agreement mandate cannot be extended automatically but, the
mandate the arbitration gets terminated legally.40

39Id at s. 30.

40Refer SS. 14 and 15.

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The Supreme Court of India has rightly absorbed in the case of that, the right has been
exclusively vested up on the parties by the 1996 act. It also ruled that the High Court cannot
extend the mandate of the arbitration without the consent of the parties under the present act.

The Right to Equality

The act mandates the arbitral tribunal to provide the equal treatment to all the parties in the
matter of hearing and adducing the evidence and all other matter connected to the proceedings
before the tribunal.41 The act guarantees the parties to have an independent tribunal and the
impartial hearings by the tribunal. In addition to this the act empowers the parties removes the
arbitrators who, act with bias or, who does not act independently or, impartially through
challenge procedure as, laid down in the act.

The Right to Waiver

In the Constitutional parlance the doctrine of waiver is not at all applicable in India. On the other
hand, the act is an exception to that, the act specifically incorporates the doctrine of waiver in the
following language. The relevant part of the act reads as follows: Waiver of right to object A
party who knows that- (a) any provision of this Part from which the parties may derogate, or (b)
any requirement under the arbitration agreement has not been complied with and yet proceeds
with the arbitration without stating his objection to such noncompliance without undue delay or,
if a time limit is provided for stating that objection, within that period of time, shall be deemed to
have waived his right to so object. The aforestated part of the act makes very clear that, the act
permits the concept of waiver only to a limited extend that is a party cannot waive the
fundamental right or, any other constitutional right legal right but, he can waive the rights
embodied in the part 1, of the act and any of the right embodied in the arbitration agreement. The
researcher would like to strongly recommend that the aforestated concept of waiver should be
limited only to commercial arbitration. The same shall not be extended or, applied to the non-
commercial arbitration. The researcher would like to suggest that the Arbitration and the
Conciliation Act should be suitably amended for the purpose of incorporating the limitation/
condition relating to the concept of the waiver. The act specifically empowers the parties to
waive the following rights. They are firstly the right to waive the oral hearing and the right to
waive the reasoning the award of the arbitral tribunal. 42 The researcher would like to point out
that the provisions relating to waiver of oral hearing and speaking order should be restricted only
to the commercial arbitration. The same shall not be extended to the non-commercial domestic
arbitration.

The Powers and Functions of the judicial authority under this Act

41Id at s. 18.

42Id at s. 4.
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The act generally prohibits the intervention of the court or, the judicial authority in the arbitration
proceedings. The relevant part of the act reads as follows. Notwithstanding anything contained
in any other law for the time being in force, in matters governed by this part, no judicial authority
shall intervene except where so provided in this Part. At the same time, the act also specifically
mandates the court to carry out certain powers and the functions that is why, the act uses the
words such as, except where so provided in this part, The words this part, clearly indicates
that the prohibition as well as the permit on to intervene in the arbitration proceedings
exclusively refers the domestic arbitration under this act. Power of the court to refer the matter
for the arbitration the Act empowers the court to refer the matter for the arbitration in the
following conditions. They are:

Firstly there should be an arbitration agreement between the parties.43

Secondly at least one of the parties should have approached the court in accordance with the
provisions of the act.

Thirdly the applicant should have complied all the conditions prescribed under this act. For
example, the act mandates the applicant to furnish the original copy of the arbitration agreement
to the court. The relevant part of the act reads as follows.44

Refer parties to arbitration where there is an arbitration agreement

A judicial authority before which an action is brought in a matter which is the subject of an
arbitration agreement shall, if a party so applies not later than when submitting his first statement
on the substance of the dispute, refer the parties to arbitration.

The application referred to in sub-section (1) shall not be entertained unless it is accompanied by
the original arbitration agreement or duly certified copy thereof.

Notwithstanding that an application has been made under sub-section (1) and that the issue is
pending before the judicial authority, arbitration may be a commenced or continued and an
arbitral award made. Power of the court to grant the interim measures the act specifically permits
the court to provide the following interim measures.

Firstly to appoint the guardian to minor;

Secondly to secure the amount involved in the arbitration.

Thirdly to preserve the goods and the evidence;

Fourthly, the appointment of the receiver and the granting of the interim injunction.

43Id at Ss. 7 & 8(1).

44Id at s. 8(2).
20 | P a g e
Measures by Court

A party may, before or during arbitral proceedings or at any time after the making of the arbitral
award but before it is enforced in accordance with section 36, apply to a Court-

(1) for the appointment of a guarding for a minor or a person of unsound mind for the purposes
of arbitral proceedings; or (2) for an interim measure of protection in respect of any of the
following matters, namely:-

(a) The preservation, interim custody or sale of any goods which are the subject-matter of the
arbitration agreement;

(b) Securing the amount in dispute in the arbitration;

(c) the detention, preservation or inspection of any property or thing which is the subject-matter
of the dispute in arbitration, or as to which any question may arise therein and authorizing for
any of the aforesaid purposes any person to enter upon any land or building in the possession of
any party, or authorizing any samples to be taken or any observation to be made, or experiment
to be tried, which may be necessary or expedient for the purpose of obtaining full information or
evidence;

(d) Interim injunction or the appointment of a receiver;

(e) such other interim measure of protection as may appear to the court to be just and convenient,
and the court shall have the same power for making orders as it has for the purpose of, and in
relation to, any proceedings before it.

The statute confers the wider power up on the court to provide the interim measures for the
purpose of doing the complete justice between the parties as, a case brought before it.

This view can be clearly explained with the help of the language used in the relevant part of the
reads as follows. such other interim measure of protection as may appear to the court to be just
and convenient, and the court shall have the same power for making orders as it has for the
purpose of, and in relation to, any proceedings before it.

The words such other interim measures of protection used in the statute is very wider one
which can cover many interim measures, which are specifically mentioned in the act.45

Power of the court to provide assistance in taking the evidence to the arbitral tribunal

The act empowers the parties and the arbitral tribunal to approach the competent court for the
purpose of taking the evidence relating the arbitral proceedings before the arbitral tribunal. The
act also empowers the competent court to provide the necessary assistance to the arbitral tribunal
in the process relating to the matter of the taking the evidence. In addition to this, the act vests
45Ibid.
21 | P a g e
the powers what it calls, same powers of the court to execute the request of the arbitral tribunal
as in a case originally brought before the court. The relevant part of the act reads as follows:

(1) The arbitral tribunal, or a party with the approval of the arbitral tribunal, may apply to the
court for assistance in taking evidence.

(2) The application shall specify-

(a) the names and addresses of the parties and the arbitrators;

(b) the general nature of the claim and the relief sought;

(c) the evidence to be obtained, in particular,-

(i) The name and address of any person to be heard as witness or expert witness and a
statement of the subject-matter of the testimony required;

(ii) The description of any document to be produced or property to be inspected.

(3) The court may, within its competence and according to its rules on taking evidence, execute
the request by ordering that the evidence be provided directly to the arbitral tribunal.

(4) The court may, while making an order under sub-section (3), issue the same processes to
witnesses as it may issue in suits tried before it.

(5) Persons failing to attend in accordance with such processes, or making any other default, or
refusing to give their evidence, or guilty of any contempt to the arbitral tribunal during the
conduct of arbitral proceedings, shall be subject to the like disadvantages, penalties and
punishments by order of the court on the representation of the arbitral tribunal as they would
incur for the like offences in suits tried before the court.

(6) In this section the expression "processes" includes summonses and commissions for the
examination of witnesses and summonses to produce documents.

The act lays down the procedure relating to the contempt of the arbitral tribunal for the purpose
of enforcing the process relating to the taking of the evidence. What the arbitral tribunal has to
do is that the arbitral tribunal has to make a representation to the competent court against the
persons, who is in default or who refusing to provide the evidence to the tribunal in accordance
with the process issued by the arbitral tribunal to be punished for the offence of committing the
contempt of the arbitral tribunal and the act mandates the court to provide the necessary orders
for the purpose of punishing the persons, who has committed the contempt of the arbitral tribunal
based on the representation made by the arbitral tribunal.

This power of the court is very important one without which it will be impracticable for the
arbitral tribunal to conduct the proceedings in an effective manner.

22 | P a g e
Power of the court to set-aside the arbitral award

The Act confers the necessary powers to set-aside the award made by the arbitral tribunal subject
certain limitations and conditions as prescribed by the act.

(a) The aggrieved party can make application in the prescribed form in accordance with the
prescribed procedure in the prescribed time to the competent court.

(b) The applicant should prove any of the ground or, grounds for the purpose of setting aside the
award as prescribed in the act. For example, the applicant should prove that there are some
incapacity existed during the arbitral proceedings, or, the arbitral tribunal exceeded the terms
submissions to the arbitration by the parties and the others. In addition to this the act empowers
the court to set aside the award on certain grounds as prescribed in the act, provided, if the court
finds the existence of the grounds to set aside the award. For example, the act states the
following grounds that is, the subject matter of the case cannot be settled through arbitration and
the arbitral award is against the public policy of India. The relevant part of the act reads as
follows.

(1) Recourse to a court against an arbitral award may be made only by an application for setting
aside such award in accordance with sub-section (2) and sub - section (3).

(2) An arbitral award may be set aside by the court only if,

(a) The party making the application furnish proof that,

(i) A party was under some incapacity, or

(ii) The arbitration agreement is not valid under the law to which the parties have subjected
it, or failing any indication thereon, under the law for the time being in force; or

(iii) the party making the application was not given proper notice of the appointment of an
arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or 114

(iv) the arbitral award deals with a dispute not contemplated by or not falling within the
terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the
submission to arbitration: PROVIDED that, if the decisions on matters submitted to arbitration
can be separated from those not so submitted, only that part of the arbitral award which contains
decisions on matters not submitted to arbitration may be set aside; or

(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance
with the agreement of the parties, unless such agreement was in conflict with a provision of this
Part from which the parties cannot derogate, or, failing such agreement, was not in accordance
with this Part; or

(b) The court finds that-

23 | P a g e
 (i) The subject-matter of the dispute is not capable of settlement by arbitration under the law
for the time being in force, or

(ii) The arbitral award is in conflict with the public policy of India.46

Explanation:

Without prejudice to the generality of sub-clause (ii) of clause (b), it is hereby declared, for the
avoidance of any doubt, that an award is in conflict with the public policy of India if the making
of the award was induced or affected by fraud or corruption or was in violation of section 75 or
section 81.

(3) An application for setting aside may not be made after three months have elapsed from the
date on which the party making that application had received the arbitral award or, if a request
had been made under section 33, from the date on which that request had been disposed of by the
arbitral tribunal: PROVIDED that, if the court is satisfied that the applicant was prevented by
sufficient cause from making the application within the said period of three months it may
entertain the application within a further period of thirty days, but not thereafter.

(4) On receipt of an application under sub-section (1), the court may, where it is appropriate and
it is so requested by a party, adjourn the proceedings for a period of time determined by it in
order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take
such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside
the arbitral award.47

Power of the Court to entertained the appeals

The act generally did not encourage more appeals but, allows the appeals to be heard by the
courts only in certain grounds as, prescribed in the act. For example, it allows the parties fill the
appeal against the matters falling under Sections 16, 17 and 34 and other provisions of the act.
The Act generally curtails the second appeal, subject to the condition that the said limitation shall
not applicable to the Supreme Court of India. The relevant part of the act reads as follows:

Appealable orders

(1) An appeal shall lie from the following orders (and from no others) to the court authorised by
law to hear appeals from original decrees of the Court passing the order, namely:-

(a) granting or refusing to grant any measure under section 9;

(b) setting aside or refusing to set aside an arbitral award under section 34.

46Id at 27(5).

47Id at s. 34.
24 | P a g e
(2) An appeal shall also lie to a court from order of the arbitral tribunal,-

(a) accepting the plea referred to in sub-section (2) or sub-section (3) or section 16; or

(b) Granting or refusing to grant an interim measure under section 17.

No second appeal shall lie from an order passed in appeal under this section, but noting in this
section shall affect or take away any right to appeal to the Supreme Court. 48 In addition to this
the act confers a number of powers up on the court, which includes, the appoint and remove the
arbitrators, subject to certain condition laid down in the act and the power decide the quantum of
the fees to be paid by the parties to the arbitrators in certain situations.

Making of the award by the arbitral tribunal

This is the last stage in the arbitral proceedings. The decision taken by the majority of the
members of the tribunal will be expressed in the form of the award. The tribunal can render the
interim award provided, if the tribunal deems it necessary, otherwise, the tribunal may render
directly the final award. The act permits the arbitral tribunal to encourage the parties to arrive at
a settlement and if the parties have agreed for a settlement then, the same can be incorporated in
the award by the arbitral tribunal. The act mandates the tribunal to specifically state that, it is an
award made by the tribunal on the basis of the agreed terms of the parties.49

Contents of the award

The arbitral award should contain the following:

They are the place of the award, the date of the award, information relating to the cost to be
borne by the parties, the rate of the interest if any, and it should be signed by the majority of the
members of the tribunal. The same shall be delivered by the tribunal to the parties at free of
cost.50

Finality of the award

The act prescribes two conditions for the award to attained the status of the finality that is, one,
the time for making the application to set aside the award is over or, the application has been
made and the same has been rejected by the court then, the award become a final one.51

48Id at s. 37.

49Id at s. 31.

50Id at 31(3).

51
25 | P a g e
Enforcement of the award

Once the award reaches the finality then, the parties can enforce the award in the same manner of
the decree of the court.

Difference between Mediation and Arbitration

Arbitration and mediation are similar in that they are alternatives to traditional litigation, and
sometimes they are used in conjunction with litigation (opposing parties may first try to
negotiate, and if that fails, move forward to trial). Both arbitration and mediation employ a
neutral third party to oversee the process, and they both can be binding. However, it is common
to employ mediation as a non-binding process and arbitration as a binding process. In simpler
terms, binding arbitration replaces the trial process with the arbitration process.

Arbitration is generally conducted with a panel of multiple arbitrators who take on a role like that
of a judge, make decisions about evidence and give written opinions (which can be binding or
non-binding). Although arbitration is sometimes conducted with one arbitrator, the most common
procedure is for each side to select an arbitrator. Then, those two arbitrators select a third
arbitrator, at which point the dispute is presented to the three chosen arbitrators. Decisions are
made by majority vote.52

Mediation, on the other hand, is generally conducted with a single mediator who does not judge
the case but simply helps to facilitate discussion and eventual resolution of the dispute.

The differences are summarised in a tabular form below:53

MEDIATION ARBITRATION

Can be voluntary or compulsory (court ordered) Can be voluntary or compulsory (court ordere

Trial is stayed (put on pause) pending outcome Trial is replaced by arbitration

Generally involves a single mediator There might be a single arbitrator or a panel of

Mediators need not have any formal legal training Arbitrators need not have any formal legal tra

52Id at Ss. 34, 35 &36.

53See https://lawshelf.com (last visited on 22.10.2017).

26 | P a g e
 Choice of mediator often has an important effect on the Choice of arbitrator can be crucial, and especiall
settlement reached situations can lead to further litigation

Mediators function is to facilitate negotiation Arbitrators function is to render a decision on

Mediation ends when settlement is reached or when parties are Arbitration ends when the decision is handed
deadlocked

Agreements to mediate are generally enforceable, requiring the Agreements to arbitrate are generally enforceabl
parties to make a good faith effort to arrive at a settlement the parties to accept the arbitrators decision as
agreement court decision

Conclusion

Thus to conclude, India has put in place a progressive piece of legislation which is essentially
based on the Model Law and the UNCITRAL Arbitration Rules. Any departure therefrom is
essentially aimed at keeping court intervention at bay. The courts of the land (by and large) are in
tune with the spirit of the law: witness, for instance, a constitution bench of the Supreme Court
holding that the Chief Justice of India or the Chief Justice of the High Court (as the case may be)
would exercise administrative and not judicial functions in the matter of appointment of
arbitrators. The Saw Pipes decision54 is no doubt a retrogressive step. However, it is hoped that
when the opportune moment arrives, the decision will be reviewed.

India has an effective law in place. What it now needs is inculcation of the culture of arbitration
within the bar, the bench and the arbitral community. The baggage of the past needs to be
dropped so that

India, indeed, has an attractive arbitration mechanism on offer.

54ONGC v Saw Pipes Ltd. 2003 (5) SCC 705.

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