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Alternative Dispute Resolution (ADR) refers to all those methods of resolving a dispute which are alternatives for litigation in the courts. ADR includes arbitration, mediation, conciliation, negotiation, expert determination, early neutral evaluation by a third person, dispute resolution boards .etc. The United Nations Commission on International Trade Law (UNCITRAL) was established by the United Nations General Assembly by resolution 2205 (XXI) of 17 December 1966. It plays an important role in developing the framework in pursuance of its mandate to further the progressive harmonization and modernization of the law of international trade by preparing and promoting the use and adoption of legislative and non-legislative instruments in a number of key areas of commercial law. The Model Law is designed to assist States in reforming and modernizing their laws on arbitral procedure so as to take into account the particular features and needs of international commercial arbitration. It covers all stages of the arbitral process from the arbitration agreement, the composition and jurisdiction of the arbitral tribunal and the extent of court intervention through to the recognition and enforcement of the arbitral award. It reflects worldwide consensus on key aspects of international arbitration practice having been accepted by States of all regions and the different legal or economic systems of the world.^1 The Indian Arbitration Act and Conciliation Act 1996 is consistent with the UNCITRAL model rules of arbitration and was enacted as a result of India signing the UNCITRAL treaty on arbitration and the subsequent recommendation of the UNCITRAL that all countries signing it must give due consideration to the arbitration rules framed under the model law. It was thereby framed for the purpose of gaining uniformity in the rules while referring to disputes which arise in the context of international commercial relations and where the parties wish to settle the dispute amicably. The Preamble to the Indian Arbitration Act shows that the object of the Act is to consolidate and amend the law relating to arbitration in India. The law in India is thus based largely on the UNCITRAL model law of arbitration. However, the law must follow not only the principles laid down by the United Nations on arbitration but also all the principles of Indian law including the general principles of Constitutional and Administrative law. The Model Law is designed to meet concerns relating to the current state of national laws on arbitration. ROLE OF UNCITRAL ON LEGAL FRAMEWORK An important concern of many countries is that traditional legal frameworks may prove to be a barrier to increased global electronic trade. As early as 1985, UNCITRAL and the United Nations General Assembly called upon all Governments to review legal requirements for a handwritten signature or other paper-based requirements for trade-related documents in order to permit, where appropriate, the use of electronic technologies. States were slow to respond, and UNCITRAL ultimately concluded that paper-based requirements combined with the lack of harmonization in the rules applicable to electronic commerce constituted a substantial barrier to international trade, and that uniform rules for electronic commerce were necessary. In 1992, UNCITRAL embarked upon the preparation of legal rules on the subject and gave its final approval to the resulting Model Law on Electronic Commerce, which was eventually adopted by the General Assembly in December 1996 to the resulting Model Law on Electronic Commerce, which was eventually adopted by the General Assembly in December 1996. The Model Law has proved a great success, as a basis for national law reform initiatives, as well as for encouraging similar initiatives in other intergovernmental forums. In November 2002, for (^1) https://uncitral.un.org/en/texts/arbitration/modellaw/commercial_arbitration
example, a meeting of the Commonwealth law ministers, representing developed and developing countries, approved a Model Law on Electronic Transactions and a Model Law on Electronic Evidence. The main objective of the UNCITRAL Model Law was to offer national legislators a set of internationally acceptable rules allowing a number of legal obstacles to be removed and a more secure legal environment to be created for electronic commerce. The UNCITRAL Model Law is not an international treaty and does not therefore constitute positive law. Instead, it was drafted to provide a guide for individual countries in preparing their own national legislative response. National legislators and policymakers are not required to adopt in its entirety (or reject in its entirety) the UNCITRAL Model Law. Instead, national legislatures may modify it to meet concrete needs or concerns of their jurisdiction. This flexibility fosters the adoption of the core provisions of the UNCITRAL Model Law, which promotes the development of an international system of national electronic contracting legislation that, although not identical, is similar in structure and content. UNCITRAL has also published a Guide to Enactment of the UNCITRAL Model Law on Electronic Commerce, which provides national policymakers with background and explanatory information to assist them in using the Model Law.^2 UNCITRAL legislative texts, such as conventions, model laws, and legislative guides, may be adopted by States through the enactment of domestic legislation. UNCITRAL non-legislative texts, such as the UNCITRAL Arbitration Rules, can be used by parties to international trade contracts. Legislative texts include the following: United Nations Convention on Contracts for the International Sale of Goods Convention on the Limitation Period in the International Sale of Goods UNCITRAL Model Law on International Commercial Arbitration UNCITRAL Model Law on Procurement of Goods, Construction and Services United Nations Convention on Independent Guarantees and Stand-by Letters of Credit UNCITRAL Model Law on International Credit Transfers United Nations Convention on International Bills of Exchange and International Promissory Notes United Nations Convention on the Carriage of Goods by Sea, 1978 (Hamburg) United Nations Convention on the Liability of Operators of Transport Terminals in International Trade UNCITRAL Model Law on Electronic Commerce UNCITRAL Legislative Guide on Privately Financed Infrastructure Projects UNCITRAL Model Law on Electronic Signatures UNCITRAL Model Law on International Commercial Conciliation United Nations Convention on the Assignment of Receivables in International Trade UNCITRAL Legislative Guide on Insolvency Law and the United Nations Convention on the Use of Electronic Communications in International Contracts. Non-legislative texts include the following: UNCITRAL Arbitration Rules; UNCITRAL Conciliation Rules; UNCITRAL Notes on Organizing Arbitral Proceedings; UNCITRAL Legal Guide on Drawing Up International Contracts for the Construction of Industrial Works; and UNCITRAL Legal Guide on International Countertrade Transactions.^3 (^2) https://unctad.org/en/Docs/sdteecb20061ch8_en.pdf (^3) https://uncitral.un.org/en/about/faq/texts
in respect of non international cases and could be met by enacting modem legislation based on the Model Law for both categories of cases, a. Substantive and territorial scope of application : The Model Law defines an arbitration as international if "the parties to an arbitration agreement have, at the time of the conclusion of that agreement, their places of business in different States" (article 1(3)). The vast majority of situations commonly regarded as international will fall under this criterion. In addition, an arbitration is international if the place of arbitration, the place of contract performance, or the place of the subject- matter of the dispute is situated in a State other than where the parties have their place of business, or if the parties have expressly agreed that the subject-matter of the arbitration agreement relates to more than one country. Article 1 contains a note calling for "a wide interpretation so as to cover matters arising from all relationships of a commercial nature, whether contractual or not". The footnote to article 1 then provides an illustrative list of relationships that are to be considered commercial, thus emphasizing the width of the suggested interpretation and indicating that the determinative test is not based on what the national law may regard as "commercial". Another aspect of applicability is what one may call the territorial scope of application. According to article 1(2), the Model Law as enacted in a given State would apply only if the place of arbitration is in the territory of that State. However, there is an important and reasonable exception. Articles 8(1) and 9 which deal with recognition of arbitration agreements, including their compatibility with interim measures of protection, and articles 35 and 36 on recognition and enforcement of arbitral awards are given a global scope, i.e. they apply irrespective of whether the place of arbitration is in that State or in another State and, as regards articles 8 and 9, even if the place of arbitration is not yet determined. The strict territorial criterion, governing the bulk of the provisions of the Model Law, was adopted for the sake of certainty and in view of the following facts. The place of arbitration is used as the exclusive criterion by the great majority of national laws and, where national laws allow parties to choose the procedural law of a State other than that where the arbitration takes place, experience shows that parties in practice rarely make use of that facility. The Model Law, by its liberal contents, further reduces the need for such choice of a "foreign" law in lieu of the (Model) Law of the place of arbitration, not the least because it grants parties wide freedom in shaping the rules of the arbitral proceedings. This includes the possibility of incorporating into the arbitration agreement procedural provisions of a "foreign" law, provided there is no conflict 1IU with the few mandatory provisions of the Model Law. Furthermore, the strict territorial criterion is of considerable practical benefit in respect of articles 11, 13, 14, 16; 27 and 34, which entrust the courts of the respective State with functions of arbitration assistance and supervision, b. Delimitation of court assistance and supervision : As evidenced by recent amendments to arbitration laws, there exists a trend in favour of limiting court involvement in international commercial arbitration. This seems justified in view of the fact that the parties to an arbitration agreement make a conscious decision to exclude court jurisdiction and, in particular in commercial cases, prefer expediency and finality to protracted battles in court. In this spirit, the Model Law envisages court involvement in the following instances. A first group comprises appointment, challenge and termination of the mandate of an arbitrator (articles 11, 13 and 14), jurisdiction of the arbitral tribunal (article 16) and setting aside of the arbitral award (article 34). These instances are listed in article 6 as functions which should be entrusted, for the sake of centralization, specialization and acceleration, to a specially designated court or, as regards articles 11, 13 and 14, possibly to another authority (e.g. arbitral institution, chamber of commerce). A second group comprises court assistance in taking evidence (article 27), recognition of the
arbitration agreement, including its compatibility with court-ordered interim measures of protection (articles 8 and 9), and recognition and enforcement of arbitral awards (articles 35 and 36). Beyond the instances in these two groups, "no court shall intervene, in matters governed by this Law". This is stated in the innovative article 5, which by itself does not take a stand on what is the appropriate role of the courts but guarantees the reader and user that he will find all instances of possible court intervention in this Law, except for matters not regulated by it (e.g., consolidation of arbitral proceedings, contractual relationship between arbitrators and parties or arbitral institutions, or fixing of costs and fees, including deposits). Especially foreign readers and users, who constitute the majority of potential users and may be viewed as the primary addressees of any special law on international commercial arbitration, will appreciate that they do not have to search outside this Law Mediation is a flexible and consensual technique in which a neutral facility helps the parties reach a negotiated settlement of their dispute. The parties have control over the decision to settle and the terms of any agreement. Settlements are contractually binding and widely enforceable. The mediation process is designed to give parties a better understanding of each other’s business needs. As such, each can look for a win-win solution that upholds their respective interests. The result always remains in the parties’ hands, which reduces potential risks that are so often associated with other forms of dispute resolution. Mediation is a useful approach when parties in dispute have an ongoing relationship that they wish to preserve, such as a joint venture or long-term supply contract. With mediation, this is possible whereas there is unlikely to be any legal basis for seeking such relief in arbitration or litigation.^6 The literature on international mediation reflects a great diversity of approaches. Zartman concludes that knowledge that we have about what works and what does not work in conflict resolution is based primarily on studies of what practitioners do (the only other source of data being experiments).^7 Bercovitch identifies four main traditions in the study of international mediation: ● The first group of studies is essentially prescriptive and is devoted to offering advice on what constitutes good conflict management in real world situations. ● Other studies of mediation in a variety of contexts are based on theoretical notions and the participation of academic practitioners in a variety of actual conflicts, with the aim of testing ideas and developing a generic theory for resolution of social conflicts. (^6) https://iccwbo.org/dispute-resolution-services/mediation/ (^7) Zartman, William I., Toward the Resolution of International Conflicts, in William I. Zartman and Lewis J. Rasmussen (eds.), “Peacemaking in International Conflict: Methods and Techniques,” United States Institute of Peace, 1999.
United Nations Convention on Contracts for the International Sale of Goods Convention on the Limitation Period in the International Sale of Goods UNCITRAL Model Law on International Commercial Arbitration UNCITRAL Model Law on Procurement of Goods, Construction and Services United Nations Convention on Independent Guarantees and Stand-by Letters of Credit UNCITRAL Model Law on International Credit Transfers United Nations Convention on International Bills of Exchange and International Promissory Notes United Nations Convention on the Carriage of Goods by Sea, 1978 (Hamburg) United Nations Convention on the Liability of Operators of Transport Terminals in International Trade UNCITRAL Model Law on Electronic Commerce UNCITRAL Legislative Guide on Privately Financed Infrastructure Projects UNCITRAL Model Law on Electronic Signatures UNCITRAL Model Law on International Commercial Conciliation United Nations Convention on the Assignment of Receivables in International Trade UNCITRAL Legislative Guide on Insolvency Law and the United Nations Convention on the Use of Electronic Communications in International Contracts. Non-legislative texts include the following: UNCITRAL Arbitration Rules; UNCITRAL Conciliation Rules; UNCITRAL Notes on Organizing Arbitral Proceedings; UNCITRAL Legal Guide on Drawing Up International Contracts for the Construction of Industrial Works; and UNCITRAL Legal Guide on International Countertrade Transactions.^9 Legislation based on the Model Law has been adopted in 83 States in a total of 116 jurisdictions including Australia, Canada, Germany, China, India etc. 10 As originally drafted, the place of conciliation was one of the main elements triggering the application of the Model Law. In drafting the Model Law, however, the Commission agreed that this approach might be inconsistent with current practice. Since parties often did not formally designate a place of conciliation and since, as a practical matter, the conciliation could occur in several places, it was believed to be problematic to use the somewhat artificial idea of the place of conciliation as the primary basis for triggering the application of the Model Law. For these reasons, the Model Law does not provide an objective rule for determining the place of conciliation (A/CN.9/506, para. 21). The issue is thus left to the agreement of the parties and, failing such an agreement, to the rules of private international law. Intent of the parties to conciliate 31. Paragraph 3 of article 1 sets out the elements for the definition of conciliation. The definition takes into account the existence of a dispute, the intention of the parties to reach an amicable settlement and the participation of an impartial and independent third person or persons that assists the parties in an attempt to reach an amicable settlement. The intent is to distinguish conciliation, on the one hand, from binding arbitration and, on the other hand, from mere negotiations between the parties or their 20 UNCITRAL Model Law on International Commercial Conciliations with Guide to Enactment representatives. The words “and does not have the authority to impose upon the parties a solution to the dispute” are intended to further clarify and emphasize the main distinction between conciliation and a process such as arbitration (^9) https://uncitral.un.org/en/about/faq/texts (^10) https://uncitral.un.org/en/texts/arbitration/modellaw/commercial_arbitration/status
(see A/CN.9/487, para. 101 and A/CN.9/WG.II/WP.115, remark 8). In verifying whether, in a given factual situation, the elements set forth in paragraph 3 of article 1 for the definition of conciliation are met, courts are invited to consider any evidence of conduct of the parties showing that they were conscious (and had an understanding) of being involved in a process of conciliation.11 There may be situations where the parties in dispute seek the intervention of a third person in an “ad hoc” setting without designating such intervention as conciliation, mediation or otherwise and without being aware that they are acting under the aegis of the Model Law. In such a situation, the question would arise whether the parties are bound by provisions on admissibility of certain evidence and by the duty of confidentiality in articles 9 and 10. The Model Law does not give a hard and fast rule on this question. It leaves it to the interpreter of the Law to decide, on the basis of the circumstances of the case, what the understanding and expectations of the parties were as to the process that they engaged in and whether, on that basis, the Model Law is applicable. Broad notion of conciliation 32. Inclusion of the words “whether referred to by the expression conciliation, mediation, or an expression of similar import” in paragraph 3 is intended to indicate that the Model Law applies irrespective of the name given to the process. The broad nature of the definition indicates that there is no intention to distinguish among procedural styles or approaches to mediation. The Commission intends that the word “conciliation” would express a broad notion of a voluntary process controlled by the parties and conducted with the assistance of a neutral third person or persons. Different procedural styles and techniques might be used in practice to achieve settlement of a dispute, and different expressions might be used to refer to those styles and techniques. In drafting the Model Law, the Commission intended to encompass all the styles and techniques that might fall within the scope of article 1. The Governments negotiating the Model Law intended to include in the new regime created by the Model Law all those methods of dispute settlement where the parties in dispute request a neutral third person to help them settle the dispute. These methods may differ as regards the technique, the degree to which the third person is involved in Part Two: Guide to Enactment and Use of the UNCITRAL Model Law, 2002 21 11Official Records of the General Assembly, Fifty-seventh Session, Supplement No. 17 (A/57/17), para. 151. the process and the kind of involvement (e.g. whether just by facilitating the dialogue or also by making substantive proposals as to possible settlement). However, the legislative policy reflected in the Model Law should apply equally to all such dispute settlement methods. For example, the Model Law could apply to “ad hoc” as well as “institutional” conciliations, where the process would normally be governed by the rules of a specific institution. International conciliation 33. Article 1 is not intended to interfere with the operation of the rules of private international law. In principle, the Model Law only applies to international conciliation as defined in paragraph 4 of article 1. Paragraph 4 establishes a test for distinguishing international cases from domestic ones. The requirement of internationality will be met if the parties to the conciliation agreement have their places of business in different States at the time that the agreement was concluded or where the State in which either a substantial part of the obligations of the commercial relationship is to be performed or with which the subject matter of the dispute is most closely connected differs from the State in which the parties have their places of business. Paragraph 5 provides a test for determining a party’s place of business where the party either has more than one place of business or has no place of business. In the first case, the place of business is that bearing the closest relationship with the agreement to conciliate. Factors that may indicate that one place of business bears a close relationship with the agreement to conciliate may include that a substantial part of the obligations of the commercial relationship that is the subject of the dispute is to be
paragraph 8 should not be omitted from the piece of legislation enacting the Model Law. In such situations, this provision will be useful to clarify that the Model Law applies when parties commence a conciliation that is governed by the law of that State but is pursuant to a legal obligation arising from a foreign law or from a request by a foreign court. Possible exclusions from the scope of enacting legislation 38. Paragraph 9 allows enacting States to exclude certain situations from the sphere of application of the Model Law. However, in interpreting paragraph 9, it should be noted that the Model Law does not exclude its application in any situation listed under paragraph 9 if the parties agreed under paragraph 6 that the Model Law should apply. Subparagraph (a) excludes from the application of the Model Law any case where either a judge or an arbitrator, in the course of adjudicating a dispute, undertakes a conciliatory process. That process may be undertaken either at the request of the parties that are in dispute or in the exercise of the judge’s prerogatives or discretion. The exclusion expressed in subparagraph (a) was considered necessary to avoid undue interference with existing procedural law. It should be noted, however, that the Model Law is not intended to indicate whether or not a judge or an arbitrator may conduct conciliation in the course of court or arbitration proceedings. In some legal systems an arbitrator could, pursuant to an agreement of the parties, become a conciliator and conduct a conciliation proceeding, although this is not accepted practice in other legal systems.12 In some cases of so-called court-annexed conciliation, it might not be clear whether such conciliation is being carried out “in the course of a court... proceeding”. To avoid uncertainty in this respect, an enacting State may wish to clarify in the piece of legislation enacting the Model Law whether such conciliations are to be governed by that piece of legislation or not. Subparagraph (b) suggests that other areas of exclusion may be considered by the enacting State. For example, the 24 UNCITRAL Model Law on International Commercial Conciliations with Guide to Enactment 12Ibid., paras. 26 and 152. enacting State may consider excluding the application of the Model Law for conciliations relating to collective bargaining relationships between employers and employees, given that a number of countries may have established conciliation systems in the collective bargaining system that may be subject to particular policy considerations that might differ from those underlying the Model Law. Another example of exclusion could relate to a conciliation that is conducted by a judicial officer (A/CN.9/WG.II/ WP.113/Add.1, footnote 5, and A/CN.9/WG.II/WP.115, remark 7). Given that such judicially conducted conciliation mechanisms are governed by court rules and that the Model Law is not intended to deal with the jurisdiction of courts of any State, it may be appropriate to also exclude these from the scope of the Model Law. Use of conciliation in multiparty situations 39. Experience in some jurisdictions suggests that the Model Law would also be useful to foster the non-judicial settlement of disputes in multiparty situations, especially those where interests and issues are complex and multilateral rather than bilateral. The Commission noted that conciliation was being used with success in the case of complex, multiparty disputes. Notable examples of these include disputes arising during insolvency proceedings or disputes whose resolution is essential to avoid the commencement of insolvency proceedings. Such disputes involve issues among creditors or classes of creditors and the debtor or among creditors themselves, a situation often compounded by disputes with debtors or contracting parties of the insolvent debtor. These issues may arise, for example, in connection with the content of a reorganization plan for the insolvent company; claims for avoidance of transactions that result from allegations that a creditor or creditors were treated preferentially;
and issues between the insolvency administrator and a debtor’s contracting party regarding the implementation or termination of a contract and the issue of compensation in such situations.^11 (^11) https://www.uncitral.org/pdf/english/texts/arbitration/ml-conc/03-90953_Ebook.pdf
