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This book provides an in-depth understanding of Alternative Dispute Resolution (ADR), focusing on its principles, processes, and applications. Covering Negotiation, Mediation, Conciliation, and Arbitration, this guide integrates theoretical knowledge with practical insights, case laws, and latest legal developments, including the Arbitration and Conciliation Act, 1996, the Mediation Act, 2023, and relevant amendments. Specially designed for law students, practitioners, and academicians, this book bridges the gap between academic study and practical application of ADR mechanisms in India and internationally. @prolegalminds ALTERNATE DISPUTE RESOLUTION Osmania University | Faculty of Law LL.B 3YDC V SEMESTER 2024
NEGOTIATION | MEDIATION | CONCILIATION | ARBITRATION
“Justice delayed is justice denied – ADR paves the way for efficient and amicable resolution of disputes.”
Our comprehensive guide is a must-have for every law student gearing up for the exams. It covers all five subjects with precision, drawing upon a wealth of previous years' questions to provide you with the most relevant content. Divided into three parts, each section is tailored to meet your specific needs:
- Part A: Dive into short questions, each valued at 6 marks, designed to test your foundational knowledge and understanding.
- Part B: Delve deeper with long answers, worth 16 marks each, allowing you to showcase your analytical skills and expertise. But that's not all! Our guide goes above and beyond by including a compilation of top landmark cases for quick reference, ensuring you have all the tools you need at your fingertips. Don't leave your success to chance. Invest in your future today with our indispensable guide and embark on your journey towards academic excellence!
LL.B 3YDC - V SEMESTER
2024 OSMANIA UNIVERSITY
@prolegalminds
www.prolegalminds.com
1. CIVIL PROCEDURE CODE AND LAW OF LIMITATION
BHARATIYA NAGARIK SURAKSHA SANHITHA, LAW OF JUVENILE
JUSTICE AND PROBATION OF OFFENDERS ACT.
3. LAW OF BANKING AND NEGOTIABLE INSTRUMENTS
4. ALTERNATE DISPUTE RESOLUTION
5. PROFESSIONAL ETHICS AND PROFESSIONAL ACCOUNTING SYSTEM
ProLegal Minds & Co
L A W F I R M F O R N A T U R A L J U S T I C E
www.prolegalminds.com
ProLegal Minds & Co
L A W F I R M F O R N A T U R A L J U S T I C E
PART A - SHORT ANSWERS - 6 MARKS EACH
PART B - LONG ANSWERS - 16 MARKS EACH
PRACTICALS - 50 MARKS
LAND MARK CASES
LL.B. V SEMESTER
PAPER-IV
ALTERNATE DISPUTE
RESOLUTION
SUGGESTED READINGS:
- O.P. Tiwari: The Arbitration and Conciliation Act, Allahabad Law Agency.
- Johar's : Commentary on Arbitration andConciliationAct,1996,KamalLawHouse. 3.TripathiS.C.:Arbitration,ConciliationandADR,CentralLawAgency, Allahabad.
- AvatarSingh:ArbitrationandConciliation,EasternLawBookHouse,Lucknow.
- P.C.Rao:AlternateDisputeResolution,2001Edition,UniversalBookTraders, NewDelhi.
- S.D.Singh:AlternateDisputeResolution,UniversalBookTraders,NewDelhi.
- Sriram Panchu:Mediation-PracticeAndLaw(ThePathToSuccessfulDispute Resolution), 2015, Lexis Nexis.
- Anirban Chakraborty: Law & Practice Of Alternative DisputeResolution In India-ADetailed Analysis, 2015,Lexis Nexis.
- Madhusudan Saharay:TextbookonArbitration&ConciliationwithAlternative DisputeResolution [ADR],Universal LawPublishing
- MargaretL.Moses:ThePrinciplesandPracticeofInternationalCommercial Arbitration, 2012, Cambridge University Press
- Harsh Sethi and ArpanKr Gupta: International CommercialArbitration&it'sIndianPerspective,2011UniversalLawPublishing
Content
LL.B. V SEMESTER PART A- QUESTION
PAPER-1V
ALTERNATE DISPUTE RESOLUTION
- Conciliation
- Lok Adalat
- Lok Pal
- Tribunals
- Family Courts
- Negotiation
- Foreign Award
- Arbitration Agreement
- Principals of Natural Justice
- Adhoc Arbitration 11.Fast Track Arbitration
- Drafting of settlement Agreement
- Lokayukta
- Arbitration Clause 15.Arbitral award. 16.Family Courts. 17.Section 89. 18.Advantages of ADR. 19.ODR. 20.Terminationof proceeding. 21.ArbitralTribunal. 22.Termination of Arbitrator. 23.Powers of Conciliator 24.lnterim Award.
- Reference Case Laws
- Haresh Dayaram Thakur v. State of Maharashtra (2000): The Court emphasized the voluntary nature of conciliation, underscoring that conciliation is based on mutual consent and the conciliator’s role is to guide parties towards an amicable solution.
- Salem Advocate Bar Association v. Union of India (2005): The Supreme Court stressed the importance of ADR mechanisms, including conciliation, for reducing the judicial backlog, recognizing the benefits of conciliation agreements in promoting speedy resolution of disputes. Conciliation offers a practical and amicable path for dispute resolution, with a conciliator facilitating discussions and assisting in creating a binding settlement agreement, ultimately reducing the burden on the court system.
2. Lok Adalat
- Definition Lok Adalat, or “People’s Court,” is a statutory mechanism in India designed to resolve disputes amicably through compromise and conciliation. It provides an accessible and cost-effective forum for settling disputes outside traditional courts, following principles of social justice and fairness. Lok Adalats operate under the Legal Services Authorities Act, 1987.
- Constitution of Lok Adalat The constitution and structure of Lok Adalats are determined by the respective Legal Services Authorities (National, State, District, or Taluka levels). According to Section 19 of the Legal Services Authorities Act, 1987, Lok Adalats can be organized at various levels by:
- National Legal Services Authority (NALSA) at the national level.
- State Legal Services Authorities at the state level.
- District Legal Services Authorities at the district level.
- Taluk Legal Services Committees at the taluka level. Each Lok Adalat consists of a presiding officer, who is usually a retired judge, along with other members who could include legal experts, social workers, or advocates with relevant experience. In some cases, Lok Adalats also consist of judicial officers and public-spirited individuals as conciliators to provide an unbiased view.
- Functions of Lok Adalat Lok Adalats aim to resolve disputes quickly, fairly, and at minimal or no cost to the parties. Their primary functions include:
- Facilitating Settlements : Lok Adalats encourage parties to reach mutually agreeable settlements through compromise and negotiation, reducing the need for prolonged litigation.
- Resolving Disputes on Various Matters : They can address a wide array of issues, including civil cases, matrimonial disputes, minor criminal matters, and pending litigation.
- Reducing Court Burden : By handling cases that can be resolved through compromise, Lok Adalats help ease the workload on the traditional court system.
- Granting Decree or Award : Any decision made by a Lok Adalat, known as an “award,” is deemed to be a decree of a civil court, making it enforceable and binding on the parties under Section 21 of the Act. No appeal lies against a Lok Adalat award, emphasizing its finality.
- Process of Lok Adalat The Lok Adalat process is simple, informal, and follows a structured yet flexible approach:
- Case Selection : Cases may be referred to Lok Adalats by courts, or they can be pre-litigation cases where the dispute is brought directly to the Lok Adalat before reaching the court. Section 20 of the Legal Services Authorities Act, 1987, provides the basis for cases being taken up in Lok Adalats with the consent of the parties involved.
- Settlement Proceedings : Lok Adalats conduct hearings where parties present their viewpoints. A conciliator or presiding officer encourages compromise by exploring possible solutions and ensuring fair discussion.
- Mutual Agreement : The conciliators guide the parties towards a mutual agreement, which is then documented as an award. Lok Adalats rely on the voluntary cooperation of the parties, making the process more harmonious and cooperative.
- Award Issuance : Once a compromise is reached, an award is issued. This award has the status of a civil court decree under Section 21 and is binding on the parties without the right to appeal.
- Types of Cases Handled by Lok Adalats Lok Adalats typically handle cases that are non-compoundable by law. They cover disputes in:
- Civil cases such as property, debt recovery, and contract disputes.
- Matrimonial and family matters.
- Criminal cases involving minor offenses.
- Traffic violations, public utility bills, and revenue disputes.
- Cases related to the Motor Vehicles Act, accidents, and insurance claims.
- Examples Lok Adalats are often utilized for quick resolution of motor vehicle accident compensation cases, where victims or their families seek compensation from insurance companies. For instance, instead of waiting for a prolonged trial, parties can approach a Lok Adalat, where a mediator helps them reach an agreement on compensation. In bank recovery cases, banks frequently approach Lok Adalats to settle loan disputes with borrowers, especially when dealing with small loans or overdue amounts. The Lok Adalat helps determine a fair settlement, which the borrower repays without facing court action.
- Reference Case Laws
- State of Punjab v. Jalour Singh (2008): The Supreme Court of India held that the award of Lok Adalat is final and cannot be appealed, highlighting the finality and enforceability of Lok Adalat awards under the Legal Services Authorities Act, 1987.
- B.P. Moideen Sevamandir v. A.M. Kutty Hassan (2009): The Court emphasized that Lok Adalat decisions are binding and equivalent to a civil court decree, provided both parties voluntarily reach a compromise.
- Prosecution and Court Proceedings : If the investigation finds credible evidence of corruption, Lokpal may authorize the agency to prosecute the public official in a special court. Lokpal’s investigative and prosecutorial authority ensures that corruption cases are handled transparently and efficiently.
- Attachment and Confiscation of Assets : Lokpal has the power to attach or confiscate assets obtained through corrupt means, as outlined in Section 24 of the Lokpal and Lokayuktas Act, 2013.
- Examples If there is a complaint of corruption against a high-ranking bureaucrat in a government ministry regarding the misuse of public funds, Lokpal can investigate the allegations. After a preliminary inquiry, if the complaint holds merit, Lokpal may direct the CBI to conduct a full investigation. Similarly, in cases involving government officials misusing authority for personal gain, Lokpal can prosecute those found guilty and confiscate the assets acquired through corrupt practices.
- Reference Case Laws
- Pramod Kumar Sharma v. Union of India (2017): The Supreme Court reinforced the powers and jurisdiction of Lokpal in holding public officials accountable, emphasizing the role of Lokpal in ensuring clean and transparent governance.
- Anjali Bhardwaj & Ors. v. Union of India (2019): The Supreme Court addressed delays in the appointment of Lokpal and other members, underlining the importance of having a functional anti- corruption body to combat corruption effectively. The Lokpal institution exemplifies India’s commitment to upholding integrity in public services, ensuring transparency, and deterring corruption through comprehensive and impartial investigations.
4. Tribunals
- Definition Tribunals are specialized quasi-judicial bodies established to adjudicate disputes and claims related to specific areas of law. They serve as an alternative to regular courts, providing quicker and specialized justice in areas like tax, labor, and administrative disputes. Tribunals often operate under statutory authority and are designed to offer expertise, efficiency, and affordability in resolving disputes.
- Constitution of Tribunals The Constitution of India, through the 42nd Amendment Act, 1976 , added Articles 323A and 323B , which authorize the establishment of tribunals. These articles enable the formation of tribunals for specific matters:
- Article 323A : Deals with tribunals for resolving disputes related to public service, such as administrative tribunals.
- Article 323B : Allows for the formation of tribunals in various other fields, including tax, industrial, and land reforms disputes. Tribunals are constituted by legislation that specifies their jurisdiction, powers, and procedures. For instance, the Income Tax Appellate Tribunal and the National Green Tribunal are constituted under their respective Acts to handle disputes in income tax and environmental matters, respectively.
- Functions of Tribunals Tribunals function as specialized bodies with expertise in the specific area they cover. Their key functions include:
- Resolving Disputes Efficiently : Tribunals aim to provide speedy justice by resolving cases with specialized knowledge in the respective field.
- Reducing Court Burden : By handling specialized cases, tribunals alleviate the burden on traditional courts, helping reduce backlog.
- Offering Expertise : Tribunals are staffed with experts in relevant fields, ensuring that decisions are informed by technical and legal knowledge.
- Providing Flexibility in Procedure : Tribunals generally follow simpler, more flexible procedures than traditional courts, allowing for quicker resolution of disputes.
- Process of Tribunal Proceedings Tribunal proceedings, while generally less formal than traditional courts, follow a structured process:
- Filing and Admittance of Case : The petitioner files a case in the tribunal, often directly or through an appeal from a lower authority.
- Hearings and Evidence Collection : The tribunal conducts hearings where both parties present their evidence and arguments. Tribunals may call experts, inspect documents, and hear witnesses to ensure all relevant information is considered.
- Decision Making : After reviewing evidence and hearing arguments, the tribunal renders a decision based on its technical and legal expertise. This decision can be appealed to a higher tribunal or court, depending on the statutory provisions.
- Enforcement of Orders : Tribunal orders are binding and enforceable. In many cases, non- compliance with tribunal orders can result in penalties, making their decisions authoritative.
- Types of Tribunals India has a range of tribunals covering various domains:
- Administrative Tribunals (e.g., Central Administrative Tribunal) for disputes related to public services.
- Tax Tribunals (e.g., Income Tax Appellate Tribunal) for tax-related disputes.
- Environmental Tribunals (e.g., National Green Tribunal) for environmental and ecological matters.
- Industrial Tribunals for labor and industrial disputes.
- Consumer Tribunals for consumer rights cases (e.g., National Consumer Disputes Redressal Commission).
- Examples A taxpayer disputing an income tax assessment can appeal to the Income Tax Appellate Tribunal (ITAT), where a specialized bench reviews the case based on tax laws. Similarly, an industrial dispute involving worker layoffs may be resolved in an Industrial Tribunal, where labor laws are considered in resolving disputes between employers and employees.
- Hearing : If reconciliation is not possible, the case proceeds to a hearing where both parties present their evidence and arguments in a non-adversarial setting.
- Judgment and Orders : The Family Court issues orders based on the merits of the case, with a focus on protecting the welfare of any children involved. The Court may pass orders regarding custody, maintenance, and visitation rights.
- Types of Cases Handled by Family Courts Family Courts address various family-related matters, including:
- Marriage and Divorce : Cases related to annulment, divorce, and judicial separation.
- Custody and Guardianship : Determining the custody of children, guardianship, and visitation rights.
- Maintenance and Alimony : Deciding on spousal support, child maintenance, and other financial support matters.
- Property Disputes : Family-related property disputes, particularly in cases of divorce or inheritance.
- Adoption : Cases involving legal adoption and parental rights.
- Examples Family Courts are commonly used for child custody disputes during divorce proceedings. For instance, if parents are in disagreement over the custody of their child, the Family Court assesses the best interests of the child, considering factors like the child’s education, emotional stability, and parental abilities. In cases of spousal support, a Family Court can determine an appropriate maintenance amount based on the financial circumstances of both parties.
- Reference Case Laws
- K.A. Abdul Jaleel v. T.A. Shahida (2003): The Supreme Court upheld that Family Courts have the jurisdiction to handle cases related to maintenance under Section 125 of the Criminal Procedure Code, 1973, recognizing their role in providing support to family members.
- D. Velusamy v. D. Patchaiammal (2010): The Court emphasized that Family Courts should interpret family laws to promote justice within families, particularly when addressing maintenance and financial support issues. Family Courts promote a sensitive, supportive, and efficient process for resolving family disputes, aiming to reduce adversarial confrontations and focus on family well-being, with particular attention to children’s welfare.
6. Negotiation
- Definition Negotiation is an informal, voluntary process where parties involved in a dispute communicate directly with each other to reach a mutually acceptable solution. It is the most basic form of alternative dispute resolution (ADR), where parties retain control over the outcome and work collaboratively without involving a third party.
- Explanation of the Topic In negotiation, the parties aim to understand each other’s needs, explore possible solutions, and create an agreement that satisfies both sides. Negotiation is highly flexible, as it has no formal procedural requirements, making it suitable for a wide range of issues, from business contracts to family disputes. It is often the first step in dispute resolution and can be used alongside or before other ADR methods like mediation or arbitration if needed.
- Detailed Explanation The process of negotiation typically includes:
- Preparation : Both parties prepare by identifying their goals, understanding the interests of the other party, and evaluating potential solutions. Preparation is key to effective negotiation.
- Communication : Open and honest communication is essential. Parties should discuss their positions, identify areas of agreement and disagreement, and share relevant information.
- Bargaining : The core of negotiation involves bargaining, where parties make concessions and counter-offers. This phase often requires creative problem-solving and compromise.
- Agreement : If the parties can reach a common ground, they draft an agreement that reflects the negotiated terms. This agreement may be formalized as a contract if necessary, particularly in commercial negotiations.
- Types of Negotiation
- Distributive Negotiation : Also known as “win-lose” or “zero-sum” negotiation, where each party seeks to maximize their gain, often at the expense of the other party.
- Integrative Negotiation : Known as “win-win” negotiation, this approach focuses on finding solutions that satisfy the interests of both parties, fostering a more cooperative atmosphere.
- Multi-Party Negotiation : Involves more than two parties and often requires additional planning and facilitation to manage competing interests and reach a collective agreement.
- Examples In a business setting, two companies may negotiate the terms of a partnership agreement, discussing profit sharing, responsibilities, and timelines. Negotiation can also occur in labor disputes, where employees negotiate with management for improved working conditions, salaries, or benefits without involving external arbitration or courts.
- Reference Case Laws
- Salem Advocate Bar Association v. Union of India (2005): The Supreme Court underscored the significance of negotiation and other ADR methods, encouraging their use in India’s judicial system to reduce case backlog and foster amicable resolutions.
- Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd. (2010): The Court recognized negotiation as an effective ADR method, particularly in civil and commercial disputes, urging parties to explore negotiated settlements before resorting to litigation.
7. Foreign Award
- Definition A “Foreign Award” refers to an arbitral award made in a country outside India and recognized as enforceable under the New York Convention (1958) or the Geneva Convention (1927). A foreign award typically arises from international commercial arbitration and is enforceable in India under the provisions of the Arbitration and Conciliation Act, 1996, provided it meets specific legal criteria.
- Explanation of the Topic Foreign awards are essential in international trade and commerce as they allow parties from different jurisdictions to resolve disputes through arbitration and have the resultant award enforced globally. In India, foreign awards are governed by Part II of the Arbitration and Conciliation Act, 1996 ,
8. Arbitration Agreement
- Definition An arbitration agreement is a contract in which parties agree to resolve their disputes through arbitration rather than through litigation in courts. This agreement can be a clause within a larger contract or a standalone agreement that specifies that any disputes arising from the contract will be submitted to arbitration.
- Explanation of the Topic An arbitration agreement is fundamental to the arbitration process, as it establishes the parties’ consent to resolve disputes outside of court and defines the terms of arbitration. The agreement typically includes essential details such as the seat of arbitration, the number of arbitrators, the rules governing the arbitration process, and whether the arbitration will be institutional or ad hoc. Once a valid arbitration agreement exists, parties are generally bound by it, and courts will typically refuse to entertain litigation on the issues covered by the agreement, as specified in Section 8 of the Arbitration and Conciliation Act, 1996.
- Detailed Explanation with Section References The Arbitration and Conciliation Act, 1996 provides specific provisions governing arbitration agreements:
- Section 7 : Defines an arbitration agreement as an agreement by the parties to submit to arbitration all or certain disputes arising out of a defined legal relationship, contractual or otherwise. The agreement may be in the form of an arbitration clause in a contract or a separate agreement.
- Section 8 : Mandates that if a legal action involving a matter that is subject to an arbitration agreement is brought before a judicial authority, the court shall refer the parties to arbitration, provided a party applies for this before submitting their first statement on the substance of the dispute.
- Section 9 : Allows parties to seek interim relief from a court before or during arbitration proceedings, ensuring that urgent matters are addressed, such as preserving assets or maintaining the status quo.
- Section 11 : Governs the appointment of arbitrators, allowing courts to appoint an arbitrator when parties fail to agree or if there is a dispute regarding the appointment process.
- Key Elements of an Arbitration Agreement For an arbitration agreement to be effective, it should contain certain essential elements:
- Clear Intent to Arbitrate : The language should unequivocally show that the parties intend to resolve disputes through arbitration.
- Scope of Disputes : The agreement should specify the scope of disputes to be arbitrated, covering all or specific issues related to the legal relationship.
- Arbitration Rules and Seat : It is advisable to specify the procedural rules (such as UNCITRAL or institutional rules like those of the ICC) and the seat of arbitration.
- Number of Arbitrators : The agreement should state the number of arbitrators (usually one or three), as it impacts the arbitration process’s efficiency and cost.
5. Examples In a commercial contract between an Indian software company and an American tech firm, the parties may include an arbitration clause stating that any disputes arising from the contract will be arbitrated under ICC rules, with the seat of arbitration in Singapore. This agreement ensures that any disagreements are resolved through arbitration, preventing either party from filing a lawsuit in court.
- Reference Case Laws
- K.K. Modi v. K.N. Modi (1998): The Supreme Court elaborated on the essential attributes of an arbitration agreement, emphasizing that it should indicate the parties’ clear intention to refer disputes to arbitration.
- Bharat Aluminum Co. v. Kaiser Aluminum Technical Services Inc. (2012): Known as the BALCO judgment, the Court held that if parties choose a foreign seat of arbitration, Indian courts do not have jurisdiction to interfere in the arbitration proceedings, establishing the importance of the seat in arbitration agreements.
- Shin-Etsu Chemical Co. Ltd. v. Aksh Optifibre Ltd. (2005): The Court upheld that if there is a valid arbitration agreement, the court’s role is to refer the matter to arbitration without delving into the merits, ensuring the binding nature of the agreement. An arbitration agreement empowers parties to control the dispute resolution process, promoting efficiency and autonomy in commercial relationships and ensuring that disputes are settled outside the traditional court system.
9. Principles of Natural Justice
Principles of Natural Justice
- Definition The principles of natural justice are fundamental rules that ensure fairness, transparency, and impartiality in judicial and administrative proceedings. These principles serve as the foundation for ensuring that justice is administered fairly, upholding the rule of law, and protecting individuals from arbitrary decision-making.
- Explanation of the Topic The principles of natural justice are rooted in common law and are applied across judicial, quasi- judicial, and administrative bodies. In India, these principles are inherent to the concept of fair play in any decision-making process that affects the rights and obligations of individuals. Natural justice does not have rigid rules; instead, it is based on fundamental principles that protect against unfair or biased proceedings. The two primary principles are:
- Nemo Judex in Causa Sua (No one should be a judge in their own cause): This principle prevents bias by ensuring that the decision-maker has no personal interest in the case, thus safeguarding impartiality.
- Audi Alteram Partem (Hear the other side): This principle mandates that each party in a dispute has the right to be heard before a decision is made. It includes the right to notice of proceedings and an opportunity to present one’s case.
- Detailed Explanation with Application in Indian Law In Indian jurisprudence, the principles of natural justice are not explicitly codified but are embedded in various laws and are applied by the judiciary. These principles are enforceable in judicial, quasi-judicial, and administrative proceedings to ensure a fair process.
10. Adhoc Arbitration.
- Definition Ad hoc arbitration is a type of arbitration where the parties themselves determine the procedure for resolving their dispute, rather than relying on an institutional framework. This form of arbitration allows the parties to manage and control the arbitration process without adhering to predefined rules from an arbitration institution.
- Explanation of the Topic In ad hoc arbitration, the parties or their appointed arbitrators organize the proceedings based on mutually agreed terms or by following the applicable arbitration laws, such as the Arbitration and Conciliation Act, 1996 in India. Unlike institutional arbitration, where an arbitral institution (such as the ICC or LCIA) provides administrative support and procedural rules, ad hoc arbitration is conducted independently by the parties and the arbitrators they appoint. This type of arbitration is typically more flexible and cost-effective but requires greater cooperation between parties for smooth functioning, as it lacks institutional support for managing disputes or procedural delays.
- Detailed Explanation with Section References The Arbitration and Conciliation Act, 1996 provides the legal framework for ad hoc arbitration in India:
- Section 10 : Allows the parties to determine the number of arbitrators. If the parties fail to specify, the default is a sole arbitrator.
- Section 11 : Governs the appointment of arbitrators. If parties are unable to agree on an arbitrator, the Act allows either party to request that the court appoint one, ensuring the arbitration process can proceed even in case of disputes about the arbitrator.
- Section 19 : Establishes that parties are free to determine the arbitration procedure. If the parties do not specify the procedure, the arbitral tribunal can conduct proceedings in a manner it deems appropriate.
- Section 28 : Allows the parties to choose the governing law for the arbitration, providing flexibility in resolving cross-border disputes.
- Section 31 : Sets the guidelines for the arbitral award, including its form and content, and the timeframe within which it should be rendered. The absence of institutional rules allows parties greater flexibility in choosing the process, procedures, timelines, and governing law. However, it may also lead to procedural challenges or delays if the parties lack clarity or consensus on procedural matters.
- Advantages and Disadvantages of Ad hoc Arbitration Advantages :
- Cost-Effective : Ad hoc arbitration eliminates institutional fees, potentially making it more economical than institutional arbitration.
- Flexibility : Parties can design procedures that suit their specific needs, selecting arbitrators, rules, and schedules that align with their preferences.
- Control : Parties have complete control over the process, including appointment of arbitrators, timelines, and procedural rules, allowing for a more tailored dispute resolution process.
Disadvantages :
- Lack of Administrative Support : The absence of institutional oversight can lead to procedural inefficiencies or delays, especially if parties disagree on key elements.
- Risk of Delay : Without fixed timelines or oversight, ad hoc arbitration may face delays if parties are not cooperative or if the tribunal does not enforce a strict timetable.
- Potential for Higher Costs : While initial costs may be lower, delays or procedural disputes can increase the overall expense, especially if court intervention is required.
- Examples Two companies from different countries may choose ad hoc arbitration to resolve a contractual dispute without relying on an arbitral institution. They agree on a neutral arbitrator and establish a customized procedure, such as timelines for submitting evidence and conducting hearings. If disagreements arise regarding procedural matters, they may need to rely on the local arbitration laws of the seat of arbitration to resolve the issues.
- Reference Case Laws
- M/S Narain Das R. Israni v. Sindhu Resettlement Corporation Ltd. (2009): The Supreme Court upheld that ad hoc arbitration is a valid arbitration method under the Arbitration and Conciliation Act, 1996, and reiterated the court’s limited role in ad hoc arbitration.
- Centrotrade Minerals & Metal Inc. v. Hindustan Copper Ltd. (2006): This case highlighted the potential complications in ad hoc arbitration when there are procedural disputes. The Supreme Court discussed the enforcement of ad hoc arbitral awards and emphasized the need for clarity in procedural agreements.
