International Dispute Resolution

By Drishti Mehra

Editor Yashika Malik





Dispute resolution is the process of deciding a dispute or a conflict that has arisen between the transacting parties. The decision can be arrived at either in an amicable manner or adversarial manner, either by the parties themselves or a neutral third party. The differences between the parties are addressed by dealing with their transaction-related interests.

Broadly, there are three methods of dispute resolution:

1. Traditional Dispute Resolution

2. Alternate Dispute Resolution

3. Hybrid Methods of Dispute Resolution

While the traditional dispute resolution method or litigation refers to the proceedings before an appropriate court of law according to the procedure established by law, the alternative methods are more flexible and party-centric and include negotiation, mediation, conciliation and arbitration. Hybrid-methods, as the name implies are a cross-over between two alternative methods of dispute resolution.

Need for ADR

The need to evolve alternative mechanisms is to reduce the burden of the Courts. ADR facilitates parties to deal the issue or the concerned disputes between the parties in a more cost effective manner by engaging the a third party to act as an arbitrator. It also provides opportunity to reduce hostility and resolve conflict in a peaceful manner and provides with speedy access to justice along with the revival and strengthening of traditional systems of dispute resolution prompted the introduction of ‘Section 89’ in the Code of Civil Procedure, 1908 and ultimately, the Arbitration and Conciliation Act, 1996. The former opened the passage of statutory reference to ADR, either by the Courts or the parties themselves.

Under the provisions of Section 89, CPC, 1908 reference for the resolution of disputes could be had to any one of the following:

1. Arbitration or Conciliation- Proceedings under the provisions of the Arbitration and Conciliation Act, 1996.

2. Lok Adalat- Reference to Lok Adalat under Section 20 (1) of the Legal Services Authorities Act 1987, all provisions of which shall then apply.

3. Judicial Settlement- Reference by Court to a suitable institution or person who/ which shall be deemed to be a Lok Adalat and all other provisions of the 1987 Act shall apply Mediation-Court/third person effects a compromise between the parties.

In order to provide a better understanding of ADR, the two most popular forms, Arbitration and mediation are being elaborated herein:

1. Arbitration

It is an adjudicatory process in the nature of adversarial proceedings wherein parties submit their disputes to a neutral third party (arbitrator) for a decision. The proceedings, similar to litigation are however, faster, cheaper, confidential and more flexible in procedure and application of rules of evidence. The parties have the independence to chalk out the same in the agreement to arbitration. The said agreement which must necessarily precede arbitration, should be a valid one as per the Indian Contract Act, 1872. The parties to an arbitration agreement must have the capacity to enter into a contract in terms of Sections 11 and 12 of the said Act.

Arbitral decisions are final and binding on the parties with very limited scope of objecting to them.

2. Mediation

It is a voluntary, disputant-centered, non-binding method of dispute resolution wherein a neutral and credible third party facilitates a settlement between the parties. It is a confidential and structured process where the mediator uses special communication, negotiation and social skills to assist the disputants in arriving at a mutually acceptable solution themselves. The parties thereto must be willing to iron out the creases in their relation by a little outside help as the focus in mediation is on the future. It is ideal where the emphasis of the parties is on building relationships, rather than ascertaining the party at fault for what has already transpired. The outcome of a successful mediation is a settlement agreement, and not a decision. The objective of mediation is not to evaluate guilt or innocence but to promote understanding, focus the parties on their interests, and encourage them to reach their own agreement.

International Dispute Resolution

When we talk about international dispute resolution one organization that comes to the mind, is UN, the Charter of which foremost states resolution of disputes between the States peacefully, to maintain and develop friendly relations among the nations by recognizing ADR mechanisms for the same.

International Arbitration has been in place from the last several centuries. A dispute of two nations is referred to an arbitrating tribunal by their mutual consent, the decision given is called the Award, which is binding on the parties. According to John Parris, arbitration is “A settlement of a dispute by an arbitrator who has an absolute control and who is chosen by the parties to decide their disputes.”

Article of Hague Convention of 1899 lays “International arbitration has for its object the settlement of differences between the States by judges of their own choice and on the basis of respect for law.” The permanent court of arbitration was established at the Hague as per the first Hague Conference of 1899.

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