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ADR mechanism in ipr conflicts - an emerging trend abstract-

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  • 1. 1 AN EMERGING TREND - ADR MECHANISM IN IPR CONFLICTS ” to be submitted to MEWAR UNIVERSITY, NH-76, GANGRAR, CHITTORGARH, RAJASTHAN) INDIA in partial fulfillment of the requirements for the degree of LL.M. (Master of Laws) Compiled by: Sanjeev Kumar Chaswal LL.M 2nd year, Roll No. Enrollement No…………………
  • 2. 2 Declaration I, Sanjeev Kumar Chaswal a student of LL.M final year of Mewar University of with roll no ………………….. and enrollment no. ………………………… do hereby declare that this dissertation paper is an original work of mine and is result of my own intellectual efforts. I have quoted titles of all original sources i.e. original documents as this is a LLM resrach research and name of the authors whose work has helped me in writing this research paper have been placed at appropriate places and I have not infringed copy rights of any other author. Date ------------- ( ………………………… ) Place -
  • 3. 3 CERTIFICATE This is to certify that the dissertation entitled “ADR MECHANISM IN IPR CONFLICTS - AN EMERGING TREND” which is being submitted by Mr. Sanjeev Kumar Chaswal for the award of the degree of Master of Laws is independent and original research work carried out by him. The dissertation is worthy of consideration for the award of LL.M. Degree of MEWAR UNIVERSITY, NH-76, GANGRAR, CHITTORGARH, RAJASTHAN INDIA. Mr. Sanjeev Kumar Chaswal has worked under my guidance and supervision to fulfill all requirements for the submission of this dissertation. The conduct of research scholar remained excellent during the period of research. Signature
  • 4. 4 ACKNOWLEDGEMENT I feel proud to acknowledge the able guidance of our esteemed.. I acknowledge with pleasure unparallel infrastructural support that I have received from Law Department, Mewar University. In fact this work is the outcome of outstanding support that I have received from the faculty members of the college, in particular Vice Principle Mr. Karun kaushik who has guided me to finish my research. I find this opportunity to thank the library staff of the Law Department, Mewar University. This research work bears testimony to the active encouragement and guidance of a host of friends and well- wishers. In particular mention must be made of Hon’ble Mr. Bharat Bhushan It would never have been possible to complete this study without an untiring support from my family. I am greatly indebted to the various writers, jurists and all others from whose writings and work I have taken help to complete this dissertation “ADR MECHANISM IN IPR CONFLICTS - AN EMERGING TREND” Date…………. …………………………………. Place: (Sanjeev Kumar Chaswal)
  • 5. 5 PREFACE Thus, like any other emerging field of law, IP conflict resolution also has a plenty of debatable issues before it. In this research paper, It will be my endeavor to delve deep into these issues like ADR: arbitration and mediation can be real alternative to IP disputes litigation, and further IP right disputes like any other commercial disputes can be brought under ADR procedure and alternative dispute resolution procedures can play effective role in resolving IP conflicts. The subject research work has been divided in six major chapters and further divided into various sub topics and sub to sub topics. The first topic which is named as Introduction and this dissertation further consists of eight chapters. The first and second chapter of this work attempts to defined Alternative Dispute Resolution and history of ADR- in Indian perspective. The third chapter and Four Chapter deals with overview of ADR mechanisms and after independence The fifths and Sixth chapter of this research work is an endeavour to put more stress on Intellectual Property Enforcement and scope of ADR in IPR disputes Chapter seventh and eighth Chapter deals in respect to IP disputes for ADR mechanisms attempts to international disputes. The Ninth chapter of this dissertation gives final view on The WIPO Arbitration and Mediation Center and lastly conclusion of the research work and certain valuable suggestions to manage disputes under ADR mechanism. Date…………. …………………………………. Place: (Sanjeev Kumar Chaswal)
  • 6. 6 ABBREVIATIONS AIR All India Reports AGICOA Association of International Collective Management of Audiovisual Works ADR alternative dispute Resolution Cr LJ Criminal Law Journal C.P.C Civil Procedure Code CILAS Committee for Implementing Legal Aid Schemes GATT General Agreement on Tariffs and Trade ICA International Centre for Arbitration ICADR International Centre for Alternative Dispute Resolution. ICANN Internet Corporation for Assigned Names And Numbers IPR Intellectual Property Rights LL.M. Master of Laws NALSA National Legal Services Authority PWC Price Water house Coopers SCC Supreme Court Cases TRIPS Trade Related Aspects of Intellectual Property Rights UNCITRAL The United Nation Commission on International trade laws UDRP Uniform Domain Name Dispute Resolution Policy and Rules Vs. Versus WLR Weekly Law Reports WIPO The World Intellectual Propoerty Organistion WIPO Arbitration and Mediation Center:
  • 7. 7 TABLE OF CONTENTS Chapter Page no. Declaration i Certificate ii Acknowledgement iii Preface iv Abbreviations v THE ABSTRACT 1 - 3 CHAPTER – 1. INTRODUCTION 4 - 8 1.1. What is Alternative Dispute Resolution 4 CHAPTER – 2 HISTORY OF ADR- IN INDIAN PERSPECTIVE 9 - 15 2.1 Prevalance of justice in ancient india 9 - 13 2.2 The system of ADR under British Company Raj 13-15 CHAPTER – 3 OVERVIEW OF ADR MECHANISMS 16 - 36 3.1. What is ADR Mechanism 16-17 3.2. ADR Mechanisms and IP Disputes. 17-20 3.2.1. Arbitration 20-21 3.2.2. Mediation 21-22 3.2.3. Conciliation 22 3.2.4. Negotiation 23 3.2.5. Mini-trial 23- 24 3.3. Early Neutral Evaluation (ENE) 24- 27 3.3.1. What an ENE Covers 27- 28 3.3.2. The Timing and Scope of an ENE 28 -29 3.3.3. The Distinctive Benefits of an ENE 29- 30 3.4. Lok Adalat 30- 32 3.5. How to make ADR system more viable 32- 33 3.6. How to make Arbitration Mechanism truly effective: 33- 36 CHAPTER – 4 ADR SYSTEM AFTER INDEPENDENCE 37 - 71 4.1. The Emergence of ADR system in independent India 42- 46 4.2. Court approach towards ADR mechanism 46- 55 4.3. Legislative efforts in India 55- 57
  • 8. 8 4.4. Court approach towards legal reform 57- 60 4.5. Need and the purpose of ADR in india 60 -63 4.6. Implementation of ADR in India 63 -71 CHAPTER – 5 OVERVIEW OF IPR AND LITIGATION IN INDIA 72 – 90 5.0. Introduction 72- 74 5.1. Intellectual Property Enforcement 75 -76 CHAPTER – 6 SCOPE OF ADR IN IPR DISPUTES 77 -110 6.1. Mechanism in the intellectual Property regime 77 6.1.1. Commercial Copyright and Software Disputes 77-78 6.1.2. Commercial Patent Disputes 79 -80 6.1.3. Commercial Trade mark and Trade Dress Disputes. 80- 82 6.1.4. Commercial Trade Secret and Unfair Competition Disputes 82-83 6.1.5. Commercial Intellectual Property Licensing Disputes 83-85 6.1.6. A copyright infringement 85 6.1.7. Economic rights 85-86 6.1.8. Moral rights 86 6.1.9. Copyright dispute resolution 87 6.1.10. Copyright litigation 87-88 6.1.11. The current approach: patent litigation 88-90 6.1.12. Domain Name 90-94 6.1.13. International Intellectual Property Disputes 94 6.1.14. Fundamental Problems of International IP Disputes 94-95 CHAPTER – 7 IP DISPUTES FOR ADR MECHANISMS 96 - 118 7.0. The IPR disputes and ADR: 96-101 7.1. Reasons to Consider ADR for IPR Disputes 101-102 7. Certainty as to Forum. 102 7.3. The Relative Speed of ADR. 103 7.4. Arbitration and mediation of IP disputes as alternatives to litigation. 103 -104 7.5. Initial considerations in selecting Litigation Alternatives: 104-106 7.6. What form of ADR should be pursued 106-107 7.7. The advantages of ADR have been recognized 107-108 7.8. Mediation and Arbitration are different forms of ADR 108 7.9. Other approaches to ADR 108-109 7.10. The value of IPR disputes in ADR mechanisms 109-110 7.10.1. Professional 110-111 7.10.2 Low cost 111-112 7.10.5. Flexibility 112-113
  • 9. 9 7.11. Confidentiality 113-114 7.12. To maintain beneficial relationships 114-115 7.13. The adequacy of the results 115-116 7.10.6 The specific modalities of intellectual property disputes ADR 117 7.10.7. The specific modalities of IPR comparison of ADR 117 7.10.8. That size and importance of the dispute 117-118 CHAPTER 8 INTERNATIONAL DISPUTES 119-125 8.1. Dispute Scenarios 121 8.2. Research collaboration: ownership dispute 121-122 8.3. Patenting of research outputs from genetic material 122 8.4. Claims based on traditional rights 122-123 8.5. Agricultural products and patents 123 8.6. Rat v. elephant 124 8.7. The Arbitration Option 124 8.8. Arbitration procedure 124- 125 CHAPTER 9 THE WIPO ARBITRATION AND MEDIATION CENTER 126-134 9.1. History of WIPO 126 9.2. Strategic Direction and Activities 126-127 9.3. WIPO Arbitration and Mediation Center (WIPO Center). 127-128 9.4. Tailored ADR services 128-129 9.5. Services of the wipo arbitration and mediation center 129-130 9.6. Trends in WIPO mediation and arbitration 130-131 9.7. A wipo expedited arbitration relating to a banking 131-132 software dispute 9.8. Settlement trends 132-134 10. CONCLUSION 135-136 11. Table of Cases 137 12. Bibliography 138 13. Appendixes 139
  • 10. 10 TABLE OF CASES Sitanna Vs Viranna, the Privy Council Rajasthan State Road Transport Corporation v. Krishna Kant , 54 The Privy Council Sitanna v. Viranna, AIR 1934 SC 105, 58 Sundaram Finance Ltd. v. NEPC India Ltd. (reported in AIR 1999 SC 565) Salem Advocate Bar Association v. U.O.I AIR 2003 SC 189, 2002 E.Venkatakrishna Vs Indian Oil Corporation Ltd AIR 1989 Kant 35 In PT Thomas vs. Thomas Job 2005 AIR 3575, 2005(2) In Oil and Natural Gas Commission vs. CCE 104 CTR (SC) Bhasheer vs. Kerala State Housing Board AIR 2005 Ker 64, 2005 In Deco Mica Ltd Vs UOI 2000 (68) ECC 554 Atari Games Corp. v. Nintendo of Am., Inc., 975 F.2d 832, 837 (Fed. Cir. 1992); see also Jessica Litman, Copyright As Myth, 53 U. Pitt. L. Rev. 235 (1991). Atari Games, 975 F.2d at 837-38; See, e.g., Ty, Inc. v. GMA Accessories, Inc., 132 F.3d 1167, 1169 (7th Cir. 1997); Repp and K & R Music, Inc. v. Webber, 132 F.3d 882, 891 (2d Cir. 1997); Grubb v. KMS Patriots, L.P., 88 F.3d 1, 6 (1st Cir. 1996). Atari Games, 975 F.2d at 844. Shaw v. Lindheim, 919 F.2d 1353, 1361 (9th Cir. 1990). Hupp v. Siroflex of Am., Inc., 122 F.3d 1456, 1464 (Fed. Cir. 1997). Jay E. Grenig, Alternative Dispute Resolution § 1.2 (2d ed. 1997 & Supp. 1998).
  • 11. 11 BIBLIOGRAPHY 125-140 Books John R. Kahn, Negotiation, Mediation and Arbitration in the Computer Program Industry: Why play hardball with software, pt. III.B (1989).128 Resolving Intellectual Property Disputes Outside of Court: Using ADR to Take Control of Your Case By Alan W. Kowalchyk 128 Reports The Indian Judicial System A Historical Survey By Mr. Justice S. S. Dhavan High Court, Allahabad 98 News Week, Dec. 19. 1959, Challenge of Communism 55 Articles, Papers and Transcripts The justice dispensation system in India1 ICADR88 58 Mr. H. D. Shourie, Founder Director of COMMON CAUSE, continued his exertions to this end till his last breath. In his letter to Mr. Justice S. M. Raza, Lokayukta, Uttaranchal, dated June 22, 2005, 58 News papers Supreme Court chides itself, govt for judicial backlog Dhananjay Mahapatra, TNN Jan 12, 2012, 05.57AM
  • 12. 12 APPENDIXES The regulation of 1781 22 Regulation of Act 1787 22 Regulation of Act 1793 23 The Madras Presidency Regulation VII of 1816 23 Bombay Presidency Regulation VII of 1827 23 Under the Charter Act of 1833 23 Act IX of 1840. 23 The Act VIII of 1857 24 The Act XIV of 1882 24 The Indian Arbitration Act IX of 1899: 25, 53, Information Technology Act, 2000 27 Arbitration and Conciliation Act, 1996 15,16,46 The Arbitration Act of 1940 61, 63 Industrial Disputes Act, 1947 53, Section 23(2) of the Hindu Marriage Act, 1955 53 The Family Court Act, 1984 54 The Legal Services Authority Act,1987 The Code of Civil Procedure, 1908 47 The Geneva Protocol on Arbitration Clauses, 1923, 75 The Geneva Convention on the Execution of Foreign Award, 1927 75 Legal Services Authorities (Amendment) Act, 2002
  • 13. 13 ABSTRACT India is country habitants having many religion and cultures, since centuries habitants of India has evolved with several forms of dispute resolution mechanisms and over period of time, they have customized, varied according to needs. Even though Britisher’s rulers had left Indian shores almost half a century ago, still several of these laws exist till date without any major changes. Wide Internet usage has rendered boundaries of the states meaningless. The people across the globe have realized its potentiality as an effective tool for communication, dissemination of information and e-commerce and enjoying to unrestricted access to multifarious interactions, transactions inevitably thereby raising many new issues in the nature of e-disputes to virtual sale / purchase of products through e-auctions or otherwise, domain disputes, trademark infringement, patents, software infringement, copyright, defamatory writings, fraud, privacy, etc In this scenario the Intellectual Property Rights are becoming fundamentally exigent to get in to research collaborations and thereby making Intellectual property rights tool as valuable business assets for technological entities. The people across world over frequently involve in cross-border transactions having different backgrounds and different national laws or within different states of India. Some time disputable transactions create multi-jurisdictional disputes between the nationalities of different countries having different social backgrounds, mindsets. Usually those business
  • 14. 14 entities having familiarity with alternative dispute resolution (ADR) are able to resolve such conflicts efficiently. As the determination of commercial or non commercial disputes before different national courts can result in to high legal and other costs as well as conflicting awards. Therefore, the ADR has a potential to provide business entities belonging to distinct nationalities a single unified forum of arbitration thereby having a final and enforceable award binding across multiple jurisdictions. Hence, increasingly, IP owners and users are approaching to many of known alternative dispute resolution (ADR) procedures like arbitration and mediation to resolve their IP disputes In this scenario the World Intellectual Property Organization (WIPO) has been playing pivotal role since its inception in strengthening ADR procedures for IP conflicts and forefront in resolving IP conflicts through their specialized ADR procedures. The Intellectual Property conflicts are not that conflicts which cannot be adjudicated or resolved through ADR. As Intellectual Property conflicts being a specialised in its nature and it require specialised services of ADR experts in resolving IP conflicts, mainly due to non availability of IP experts in India is the main obstacle in resolving IP conflict through arbitration or through ADR. Thus, like any other emerging field of law, IP conflict resolution also has a plenty of debatable issues before it. In this research paper, It will be my endeavor to delve deep into these issues like amongst mainly i) Whether ADR: arbitration and mediation can be real alternative to IP disputes litigation, ii) whether IP right disputes like
  • 15. 15 any other commercial disputes can be brought under ADR procedure or not If so, to what extent?. Iii) When is ADR to be preferred, when is it to be avoided; and, if ADR is preferred, what form of ADR should be pursued? iv) Whether, an alternative dispute resolution procedure can play effective role in resolving IP conflicts if so to what extent? v) Whether the parties to IP conflicts can reap overall benefits by invoking ADR procedures in comparison to traditional litigation, if so, to what extent? vi) Whether the use of a private consensual mechanism like arbitration or mediation procedures pose any threat to the resolution of such specialised disputes, if so, to what extent?
  • 16. 16 CHAPTER – 1 INTRODUCTION A large part of my time during the twenty years of my practice as a lawyer was occupied in bringing about private compromises of hundreds of cases. I lost nothing thereby not even money, certainly not my soul - MAHATMA GANDHI It is an attorney’s responsibility to “persuade his neighbors to compromise whenever he can. Point out to them how the nominal winner is often, a real loser -- in fees, expenses and waste of time.” - ABRAHAM LINCOLN 1.1 What is Alternative Dispute Resolution: Every society, every community, every culture has some or the other form/s of resolving the disputes faced by their constituents. Often, the longer and more prosperous the lineage, the more refined and varied the mechanisms. India is a country of many cultures and hence several dispute resolution mechanisms had evolved and been customized over time. One of the several benefits of the British rule over India was that we got some very robust laws. Several of these exist till date (after over 60 years of Independence) without any major amendments. However, the flip side was that at the altar of ‘Uniformity’ were sacrificed all the then existing dispute resolution mechanisms, which were by and large enabling satisfactory outcomes. What was worse was that the system
  • 17. 17 that replaced them soon started showing its colors - the formal procedures of the Courts of Law not only took their own time but also provided umpteen loop-holes to the ingenious lawyers to stretch that time even further if that suited their clients’ interests. This had a telling effect on the backlogs in court registries across the nation. To give an extreme example, the Bombay High Court is currently taking up Final Hearing of Plaints filed in the ‘80s and 90’s. An Appeal from an Order/Judgment in these cases will take roughly another 5 to 7 years from date of filing and a further Appeal to the Supreme Court could take an additional 2 years. Arbitration too has seen its name sullied thanks to the Ad Hoc version adopted by the lawyers drafting their clients’ contracts. With no institution to keep a check on their schedule, the Arbitrators become masters unto themselves. Arbitral hearings, when held, are often as prolix as the court hearings and one can’t blame the Arbitrators for that, as they are usually retired judges and that’s the only way they know how to conduct hearings. By and large, in the initial period, the scheduled hearings are held only to give fresh dates of hearings on some or the other ground ranging from non-completion of records to the ill-health of someone connected to the proceedings or related to that someone – and this continues till the parties’ patience is found to be wearing thin. Thereafter, substantive work is done at the arbitral hearings, but they go on for only half a day i.e. 2 to 3 hours, with considerable time going in recaps and agenda
  • 18. 18 settings for future hearings. There are of course exceptions to this trend; especially amongst arbitrators who are either newly retired judges, practicing lawyers or those coming from a non- legal back-ground. The parties and their lawyers, due to fear of antagonizing their Arbitrators, refrain from attempting to rein them in. Some lawyers see this as a ‘win-win’ situation between themselves and the Arbitrators as they get to charge for the whole day (plus for the earlier days’ preparation) for the hour or so of arbitral hearing on a given day. And if the hearing is at an out- of-town location, it’s a paid holiday. Going further down the line, when an Award is published, one must expect it to be challenged in Court and it could take years for it to pass through that channel. Introduction of the new Arbitration and Conciliation Act, 1996 has not helped much as the Supreme Court has rolled back the benefit of limited grounds of Appeal by suggesting a broader interpretation of the term ‘Public Policy’, which is one of the few grounds on which an Award can be sought to be challenged under this new Act. Alternative dispute resolution has greatly expanded over the last several years to include many areas in addition to the traditional commercial dispute in the form of arbitration; mediation has become an important first step in the dispute resolution process. Arbitrators and mediators have an important role in resolving disputes. Mediators act as neutrals
  • 19. 19 to reconcile the parties’ differences before proceeding to arbitration or litigation. Arbitrators act as neutral third parties to hear the evidence and decide the case. Arbitration can be binding or non-binding. What is ADR? In simple terms it is Alternate Dispute Resolution the conventional Courts use formal system of redressal applying various rules of law, as we have erstwhile mentioned that our system is adversial. The concept of Conflict Management through Alternative Dispute Resolution (ADR) has introduced a new mechanism of dispute resolution that is non adversarial. A dispute is basically ‘lis inter parties’ and the justice dispensation system in India has found an alternative to Adversarial litigation in the form of ADR Mechanism in which two parties contest their case and one party wins and the other party looses, but in case of alternate dispute resolution (Section 89 – Code of Civil Procedure), which can be categorized in four broad heads which are- 1. Arbitration; 2. Mediation; 3. Conciliation; 4. Lok Adalat. It is win – win situation and no party wins no party looses, today the need of time is that we resort to non conventional systems as well, we should not forget that its not something new to us, we had for ages, like panchayats etc, it was self sufficient, every village has panchayat and it was a powerful authority for redressing the disputes. The best part of ADR is that since both parties come face to face and they work out
  • 20. 20 the modalities and reach to an amicable solution, there is no likelihood of winning or losing the case, i.e. it’s a win – win situation and thereafter no appeal, and thus it reduces the burden of appellant courts as well, the arbitration and conciliation Act, 1996 provides for Arbitration and the award given by the arbitrator is deemed to be a decree. It was step towards the ADR. The purpose of this special provision seems to help the litigant to settle his dispute outside the Court instead of going through elaborate process in the court trial. This is a special procedure for settling the dispute outside the courts by a simpler and quicker method. The litigants on the institution of the suit or proceedings may request the Court to refer the disputes and if the court feels that there exist any element of settlement which may be acceptable to the parties; it may refer them to any of the forums abovementioned at any stage of the proceedings. In fact new rules in Order X were inserted in consequence to the insertion of the sub section (1) of section 89. These new rules namely 1A, 1B and 1C have been inserted by the Amending Act. The settlement can be made by adopting any of the modes specified in the section 89 of the CPC inserted by the Amendment Act. As per the Rule 1A the parties to the suit are given an option for settlement of the dispute outside court. When the parties have exercised their option it shall fix the date of appearance before such person as may be opted by the parties. As per the Rule 1-B the parties are required to
  • 21. 21 appear before such forum opted by them. Rule 1c provides for the Presiding Officer of the Forum to refer the matter again to the Court in case he feels that in the interest of justice he should not proceed with the matter.
  • 22. 22 CHAPTER – 2 HISTORY OF ADR - IN INDIAN PERSPECTIVE 2.1 Prevalence of justice in ancient India: Though the term of ‘ADR’ Alternate Dispute Resolution system is basically originated and derived from developed countries and is a recent phenomena but has gained impetus in its workability, solely in the recent years that to specifically said to be the resultant of globalisation and liberalisation, though oldest form of the ADR was very much present and well organized in the Ancient Indian Legal System more particularly the Hindu society. The conflict / disputes as well as its settlement have been going around for many thousands of years rather since the evolution of humans being on earth adding its new workability solution in accordance to development of the society. The techniques of negotiation best option in resolving the conflict / disputes and the negotiation have been a basic technique being around for many centuries. It is a fact of life whether the dispute / conflict between individuals or in entities is right or wrong but it is most important and relevant how we are able to manage or handle it with in parameters of aspirations of both litigant parties. India is known for having one of the oldest legal systems in the world and the present modern legal system prevalent in India can be traced back to the centuries, the roots of the present day human institutions lie deeply buried in its past as Indus civilization flourished around 2500 BC known as
  • 23. 23 Harappan culture in the Indus river valley in Indian sub continent and remained in existence for 1000 years. Another thousands of years, India’s social and religious society structures withstood and countered many invasions, famines, religious persecutions and many other political upheavals, despite of tyranny of many invasions of other countries our ancient society have able to maintained respective regional identities with such a long, vibrant history. The definition of law in ancient India was meant in broader term “Dharma”. The ancient society regarded vedas as source of divine light and was the ultimate source of authority for all codes, which contained dharma as law, the law and Justice was administered according to the rules provided in the Manusmriti. Its law and jurisprudence stretches back to many centuries, forming a living tradition, which has grown and evolved with the lives of its diverse people, in the later years, the Justice was use to be administered by Kings courts and also through grass root system called Panchayats and which is still continuing, prevalent even today in our villages, where village elders of the village or community sit together and resolve disputes involving of villagers and issue diktats on many social issues to their community. However, as far as the legal system in ancient India is concerned, a liberal outlook is evident in the Indian Puranas and Manu Smiriti.
  • 24. 24 1 According to Brihaspati Smiriti, there was a hierarchy of courts in Ancient India beginning with the family Courts and ending with the King. The lowest was the family arbitrator. The next higher court was that of the judge; the next of the Chief Justice who was called Praadivivaka, or adhyaksha; and at the top was the King’s court. The jurisdiction of each was determined by the importance of the dispute, the minor disputes being decided by the lowest court and the most important by the king. The decision of each higher Court superseded that of the court below. According to Vachaspati Misra, "The binding effect of the decisions of these tribunals, ending with that of the king, is in the ascending order, and each following decision shall prevail against the preceding one because of the higher degree of learning and knowledge". It is noteworthy that the Indian judiciary today also consists of a hierarchy of courts organized on a similar principle-the village courts, the Munsif, the Civil Judge, the District Judge, the High Court, and finally the Supreme Court which takes the place of the King’s Court. We are following an ancient tradition without being conscious of it. The institution of family judges is noteworthy. The unit of society was the joint family which might consist of four generations. Consequently, the number of the member of a joint family at any given time could be very large and it was necessary to settle their disputes with firmness combined with sympathy and tact. It was also desirable that disputes should 1 The Indian Judicial System A Historical Survey By Mr. Justice S. S. Dhavan High Court, Allahabad 98 News Week, Dec. 19. 1959, Challenge of Communism
  • 25. 25 be decided in the first instance by an arbitrator within the family. Modern Japan has a somewhat similar system of family Courts. The significance of the family courts is that the judicial system had its roots in the social system which explains its success. The ancient concept of settlement of dispute through mediation, negotiation or through arbitral process known as "Peoples' Court verdict" or decision of "Nyaya-Panch" philosophy is conceptualized and institutionalized in the present form of Lok Adalat. Some people equate Lok Adalat to conciliation or mediation; some treat it with negotiations and arbitration. Those who find it different from all these, call it "Peoples' Court". It involves people who are directly or indirectly affected by dispute resolution. In ancient times the village elders, other influential individuals used to sit together and use to hold panchayat calling interested or disputing parties of that particular village to come in to conclusion of settling their disputes or with the help of village elders, other influential individuals, hence it is ADR in its early form was very much prevalent, well-known tool to settle disputes to ancient Indian societies. In Ancient India the disputes were peacefully decided by the intervention of Kulas (family assemblies), Srenis (guild so men of similar occupation), Parishad, etc., the primary object of ADR movement is avoidance of vexation, expense and delay and promotion of the ideal of “access of justice” for all.
  • 26. 26 That particularly during the British rule, actual formation of certain rules for arbitration were incorporated and brought in the form of the Regulation of Act 1787, empowering the court to refer suits to arbitration with the consent of parties and further more the Regulation Act of 1793 authorised the court to promote references of cases not exceeding Rs. 200 in value to arbitration and disputes relating to partnership account, debts, disputed bargain and breach of contract. The procedure for conducting the arbitration proceedings was also stipulated. So the law and jurisprudence represents the cumulative effect of generations. It cannot be said that Arbitration as a concept or Alternate Dispute Resolution is a foreign import on the Indian legal system. 2.2 The system of ADR under British Company Raj The system of Alternate dispute redressal was found not only as a convenient procedure but was also seen as a politically safe and significant in the days of British Company Raj. Hence, there were several regulations and legislations that were brought by British Company in resulting considerable changes from 1772. Few among them are: The regulation of 1781: the year 1781 regulation had contained a provision that “the judge do recommend, and so far as he can without compulsion, prevail upon the parties to submit to the arbitration of one person to be mutually agreed upon by the parties.” And that “no award of any arbitrator of arbitrators, can be set aside, except upon full proof made by oath of the credible witness that arbitrators have been guilty of
  • 27. 27 gross corruption or partiality to the cause in which they had made their awards.” The Regulation of 1787: It empowered the court to refer suits to arbitration with the consent of parties. The Regulation of 1793 : It authorised the court to promote references of cases not exceeding Rs. 200 in value to arbitration and disputes relating to partnership account, debts, disputed bargain and breach of contract. The procedure for conducting the arbitration proceedings was also stipulated. In the year 1795: the regulation of 1793 was extended to Benaras and the regulation of 1802, 1814, 1822 and 1883 extended the limits and jurisdiction of arbitration proceedings in various manner. The Madras Presidency Regulation VII of 1816 : It authorised the Districts Munsiffs to convene districts panchayats for the determination of Civil Suits relating to real and personal property. The Regulation was repealed by Act VII of 1870. Bombay Presidency Regulation VII of 1827: It provided for arbitration of civil disputes. The arbitration had to be in writing to a named arbitrator, wherein the time for making the award had to be mentioned. Under the Charter Act of 1833: The Legislative Council for India was established in 1834. Act IX of 1840. But the aforesaid Regulations of Bengal, Madras and Bombay continued to operate till 1859. The Act VIII of 1857: It codified the procedure of Civil Courts except those established by the Royal Charter. The sections
  • 28. 28 312 to 325 dealt with arbitration in suits. The sections 326 and 327 provided for arbitration without the intervention of the court. The Act VIII of 1857 was replaced by Act X of 1877. The Act XIV of 1882: the Code of Civil Procedure was revised in the year 1882 by the Act XIV of 1882 the provisions relating to arbitration were reproduced verbatim in sections 506 to 526. No change in the law of arbitration was effected by the said acts of 1877 and 1882. The Indian Arbitration Act IX of 1899: It was based on the English Arbitration Act of 1889. Act IX of 1899. It was the first substantive law on the subject of arbitration but its application was limited to the Presidency – towns of Calcutta, Bombay and Madras. Act, however suffered from many defects and was subjected to severe judicial criticisms.
  • 29. 29 CHAPTER – 3 OVERVIEW OF ADR MECHANISMS 3.1. What is ADR Mechanism A dispute is basically ‘lis inter parties’ and the justice dispensation system in India has found an alternative to Adversarial litigation in the form of ADR Mechanism in which two parties contest their case and one party wins and the other party looses, but in case of alternate dispute resolution (Section 89 – Code of Civil Procedure), which can be categorized in four broad heads which are 1. Arbitration; 2. Mediation; 3. Conciliation; 4. Negotiation 5. Lok Adalat. 6. Early Neutral Evaluation (ENE) That through ADR means the entering party is win – win situation and no party wins no party looses, today the need of time is that we resort to non conventional systems as well, we should not forget that its not something new to us, we had for ages, like panchayats etc, it was self sufficient, every village has panchayat and it was a powerful authority for redressing the disputes. The best part of ADR is that since both parties come face to face and they work out the modalities and reach to an amicable solution, there is no likelihood of winning or losing the case, i.e. it’s a win – win situation and thereafter no appeal, and thus it reduces the burden of appellant courts as well, the arbitration and conciliation Act, 1996 provides for
  • 30. 30 Arbitration and the award given by the arbitrator is deemed to be a decree. It was step towards the ADR. The labor legislation has already incorporated conciliation and mediation system in their enactments, to have an amicable solution in case of tussle between the labor and the management. 3.2. ADR Mechanisms and IP Disputes. As part of the process of specialization, since it is difficult to get judges experienced in Intellectual Property (IP) rights or matters relating thereto, arbitration has to be a preferred course for dispute resolution because the parties can choose an arbitrator knowledgeable and experienced in the field. However, development in this direction is at an early stage, which does not provide adequate data for any realistic assessment of arbitration in intellectual property related matters. It must be borne in mind that several intellectual property related matters arise between parties who do not have an agreement inter se. In all such matters, only Courts can push the matters to Arbitration. Management of integrated securitization of IP assets on ADR /ODR While on the subject of use of information & technology in arbitration and other ADR methods, it would be worthwhile to note that arbitration and ADR can play a meaningful role in several new avenues, including integrated securitization of all types of assets (including but not restricted to intellectual property assets) and the management of such integrated securitization. However, this being a specialized subject, it
  • 31. 31 could be well dealt with independently.ADR in the new millennium –Indian Context The most effective initiatives for implementing ADR have probably been found to be in the State of California, USA. There, several modes of ADR have been implemented, some of which are nonbinding and some being of binding nature, judicial arbitration, private arbitration, settlement conference (before the Judge assigned to the case), early neutral evaluation, mediation and conciliation. Though some of these concepts are today alien in the Indian context, one will very soon find several of them being implemented in varying forms and degrees in the courts in India. Those who have implemented them in several other countries have already realized the benefits of these available alternatives and India too shall realize their potentials and benefit from making these available to the litigating masses. Along with popularization of ADR, which has gained statutory recognition by the introduction of the new Section 89 of the CPC and the introduction of the new Information Technology Act, 2000,the passage for implementation of ODR too has been smoothened. The latter statute extends recognition to generation and storage of electronic data as also gives recognition to electronic communication. This is a real shot in the arm for implementation of ODR. In the days of “time being money”, even in games like cricket, we have drifted towards one day, limited overs matches instead of the five days, two inning matches. India’s business community is becoming more and
  • 32. 32 more conscious of minimizing use of time, money and energy in dispute resolution processes and therefore, while arbitration is being preferred to court litigation, there is also a growing realization that in the long run it is advisable to perhaps suffer an adverse award rather than render the entire system of arbitration and ADR un remunerative. Law Colleges and several other Institutions have, recognizing the importance of arbitration and other ADR methods, introduced courses and training programmes and one can clearly see the writing on the wall that in the near future in India ADR methods will bring about amicable settlement between the disputants thereby saving a lot of time, money and energy for the business community as also for the professionals from legal, accounting and other disciplines so that they can concentrate more on constructive work. In this background, conciliation and mediation has a very bright prospect in India and it will be advisable for all professionals, including members of professions like law and accountancy, to get formal training as conciliators/mediators. firstly, necessary to re-position the provisions contained in Order X, Rules 1A, 1B and 1C in a manner that the courts are empowered to refer the matters to mediation as soon as the same are filed; Another aspect that requires attention is that although the ADR provisions have been introduced in Section 89 of CPC, one finds practical difficulty in implementing these provisions. One should understanding to keep in mind the dynamics of potent modes of ADR like mediation and conciliation. Although there is subtle difference between the
  • 33. 33 two, there is no difference in the process undertaken/deployed for implementation. There is a growing awareness among the masses as well regarding ADR and people are increasingly using the same for getting their disputes settled outside the court. This will also reduce the “backlog problem’ that India is facing. It is now universally accredited that ‘Justice delayed is Justice denied’. The existing justice system is not able to cope up with the ever-increasing burden of civil and criminal litigation. There is growing awareness that in the majority of cases court action is not an appropriate remedy for seeking justice. We have to formulate effective ADR Mechanisms to ease the burden of judicial functioning. The backlog of cases is incre8asing day by day but criticizing judiciary for the same is a wrong practice. It must be noted that the backlog is a product of “inadequate judge population ratio” and the lack of basic infrastructure. The government has to play a pro-active role in this direction. 3.2.1. Arbitration: This is a procedure in which the dispute is submitted to an arbitral tribunal which makes a decision (an award) on the dispute that is binding upon the parties. Arbitration generally grows when the parties through the contract agrees to resort to arbitration process, in case of disputes that may arise in future regarding contract terms and conditions. The process of arbitration can start only if there exist a valid Arbitration Agreement between the parties prior to the emergence of the dispute. As per Section 7, such an agreement must be in
  • 34. 34 writing. The contract, regarding which the dispute exists, must either contain an arbitration clause or must refer to a separate document signed by the parties containing the arbitration agreement. The existence of an arbitration agreement can also be inferred by written correspondence such as letters, telex, or telegrams which provide a record of the agreement. Any party to the dispute can start the process of appointing arbitrator and if the other party does not cooperate, the party can approach the office of Chief Justice for appointment of an arbitrator. A sole arbitrator or panels of arbitrators so appointed constitute the Arbitration Tribunal. The arbitration tribunal has jurisdiction over its own jurisdiction. Thus, if a party wants to challenge the jurisdiction of the arbitration tribunal, it can do so only before the tribunal itself. If the tribunal rejects the request, there is little the party can do accept to approach a court after the tribunal makes an award. Section 34 provides certain grounds upon which a party can appeal to the principal civil court of original jurisdiction for setting aside the award. Once the period for filing an appeal for setting aside an award is over, or if such an appeal is rejected, the award is binding on the parties and is considered as a decree of the court. 3.2.2. Mediation: Mediation, aims to assist two (or more) disputants in reaching an agreement. The parties themselves determine the conditions of any settlements reached— rather than accepting something imposed by a third party. The disputes may involve (as parties) states, organizations, communities, individuals or
  • 35. 35 other representatives with a vested interest in the outcome. Mediators use appropriate techniques and/or skills to open and / or improve dialogue between disputants, aiming to help the parties reach an agreement (with concrete effects) on the disputed matter. Normally, all parties must view the mediator as impartial. Disputants may use mediation in a variety of disputes, such as commercial, legal, diplomatic, workplace, community and family matters. A third-party representative may contract and mediate between (say) unions and corporations. When a workers’ union goes on strike, a dispute takes place, and the corporation hires a third party to intervene in attempt to settle a contract or agreement between the union and the corporation. 3.2.3. Conciliation: A non-binding procedure, in which an impartial third party i.e. the conciliator or the mediator, assists the parties to a dispute in reaching a mutually satisfactory and agreed settlement of disputes. Conciliation is a less formal form of arbitration. This process does not require an existence of any prior agreement. Any party can request the other party to appoint a conciliator. One conciliator is preferred but two or three are also allowed. Parties may submit statements to the conciliator describing the general nature of the dispute and the points at issue. Each party sends a copy of the statement to the other. The conciliator may request further details, may ask to meet the parties, or communicate with the parties orally or in writing. Parties may even submit suggestions for the settlement of the dispute to the conciliator.
  • 36. 36 When it appears to the conciliator that elements of settlement exist, he may draw up the terms of settlement and send it to the parties for their acceptance. If both the parties sign the settlement document, it shall be final and binding on both. 3.2.4. Negotiation: Negotiation is a dialogue intended to resolve disputes, to produce an agreement upon courses of action, to bargain for individual or collective advantage, or to craft outcomes to satisfy various interests. It is the primary method of alternative dispute resolution. Negotiation occurs in business, non-profit organizations, and government branches, legal proceedings, among nations and in personal situations such as marriage, divorce, parenting, and everyday life. Those who work in negotiation professionally are called negotiators. Professional negotiators are often specialized, such as union negotiators, leverage buyout negotiators, peace negotiators, hostage negotiators, or may work under other titles, such as diplomats, legislators or brokers. 3.2.5. Mini-trial The mini-trial, a development in ADR, is finding its greatest use in resolving large-scale disputes involving complex questions of mixed law and fact, such as Product Liability, massive construction, and antitrust cases. In a mini-trial, each party presents its case as in a regular trial, but with the notable difference that the case is "tried" by the parties themselves, and the presentations are dramatically abbreviated. In a mini-trial, lawyers and experts present a condensed
  • 37. 37 version of the case to top management of both parties. Often, a neutral adviser sometimes an expert in the subject area sits with management and conducts the hearing. After these presentations, top management representatives by now more aware of the strengths and weaknesses of each side, try to negotiate a resolution of the problem. If they are unable to do so, they often ask for the neutral adviser's best guess as to the probable outcome of the case. They then resume negotiations. The key to the success of this approach is the presence of both sides' top officials and the exchange of information that takes place during the mini-trial. Too often, pre-litigation work has insulated top management from the true strengths and weaknesses of their cases. Mini-trial presentations allow them to see the dispute as it would appear to an outsider and set the stage for a cooperative settlement. 3.3. EARLY NEUTRAL EVALUATION: An early neutral evaluation (ENE) is used when one or both parties to a dispute seek the advice of an experienced individual, usually an attorney, concerning the strength of their cases. An objective evaluation by a knowledgeable outsider can sometimes move parties away from unrealistic positions, or at least provide them with more insight into their cases' strengths and weaknesses. Of course, the success of this technique depends upon the parties' faith in the fairness and objectivity of the neutral third-party, and their willingness to compromise.
  • 38. 38 Early neutral evaluation is a process, both in court and out of court, in which an experienced lawyer gives an indication, as strong and as detailed as the disclosure and representation at that stage allows, of what would be the outcome if the matter were to be finally adjudicated in court. Early neutral evaluation in court includes the FDR hearing at which the judge is required by the rules to predict what would happen if the matter were to go to a final hearing. It has its limitations for example because of time. Nevertheless there is a very high success rate. It is acknowledged as one of the primary achievements of the ancillary relief procedure. To a lesser extent, the process at the First Appointment is an early neutral evaluation as the judge is required to consider the points in dispute with a view to narrowing the issues. Early neutral evaluation out of court is much less frequent and prevalent. Indeed, there is almost only apocryphal knowledge of what is going on. In this regard, it is also, perhaps confusingly, described sometimes as private judging. The working party felt that it was now time to encourage early neutral evaluation yet to have better definition, boundaries and safeguards including within the professional context. Moreover the working party found a delightful coincidence of the collaborative law group of the ADR committee independently considering the same issue at the same time. Our recommendations do not conflict with any recommendations they make but it is hoped that the use of
  • 39. 39 early neutral evaluation can build together, solicitors both as client representatives and as collaborative lawyers. The anecdotal evidence is that over the past 15 years or more, from time to time opposing solicitors in a case have jointly consulted senior members of the profession, often senior barristers but also senior solicitors in other firms, on a complex issue causing a stumbling block towards a settlement. Sometimes this has been the whole of the case, for instance on quantum. Sometimes it has been discreet, perhaps interlocutory, issues or one single issue separating the parties. It is believed that often the opinion has been given in conference but sometimes in writing. It is believed that on occasions it has been given on a privileged basis so that issues do not arise about the status of the evaluation, the weight to be given in the court process and similar. It is not believed that any of these early neutral evaluations or private judgings have come before the courts for consideration of their status. Specifically it is believed that when there was an incredible backlog of work due to the wardships being terminated under the Children Act by a specific date and many financial cases were taken out of the list and relisted for at least six months later, many cases in fact settled including a number through the assistance of early neutral evaluation.Private judging is sometimes used as an informal expression of early neutral evaluation. In some instances, it is identical. However early neutral evaluation is technically evaluation at an early stage in the case. Private judging has often occurred on a joint
  • 40. 40 instruction to a senior professional towards the later stages of the case and as an alternative to a court adjudication. In this document we are referring to early neutral evaluation although private judging could also be incorporated in our recommendations. 3.3.2. What an ENE Covers Favorable and unfavorable facts Favorable and unfavorable law, as well as important but unsettled legal issues Strengths and weaknesses of each party’s case Likely successful or meritless claims and defenses Considerations of the client’s business needs, and the impact of an outcome on that Possible litigation strategies (such as the feasibility of dispositive motions) Possible end-game strategies, including mediation, settlement, and attendant demands or offers Possible legal costs and expenses, including which costs or initiatives are most worthwhile. It is quite possible that an ENE will show that the dispute is best resolved through full litigation or arbitration. The ENE may then be used as a road map for case strategy. The client can emphasize the most effective claims or defenses, thereby avoiding expenditures of valuable resources on less justified positions. The ENE thus leads to a more sharply focused case one that will have maximum impact on the judge, jury, or arbitrator. To perform the ENE, the neutral could review relevant contracts; review internal and party communications; interview the client’s personnel involved in the transaction; discuss with
  • 41. 41 management the transaction’s place in the client’s overall business operations and strategies (both long-term and short- term); review applicable legal authority; talk with in-house or outside legal counsel about the dispute; and research or investigate the opponent’s business. The quality of the ENE will be proportional to the value and volume of the information received and analyzed by the neutral. An ENE can be done for virtually any type of case, and especially for commercial disputes. For most contractual and business disputes, a neutral with general but broad decision- making experience is fine. After all, the actual judge will likely be a generalist too. Where the subject matter of the dispute is technical – such as patents – the neutral should have experience in that area. 3.3.2. The Timing and Scope of an ENE An ENE is, by definition, done “early” in the case, before all of the facts are known. But, even then, it is widely believed (by this author too) that the parties already know or can readily access 80 percent of all of the information that exists for the case or will be offered at the hearing. Because the cost to obtain increments of evidence sometimes outweighs the value of those increments, there is good reason to perform an ENE at the outset, even if the information is incomplete. Indeed, judges frequently make very important interim decisions – such as injunctive relief – at the case’s beginning based on less than full information.
  • 42. 42 “Early” can be even before the complaint or arbitration is filed. Once a party knows of a potential dispute, such as by receipt of a demand letter from the opponent, ENE is fairly triggered. Indeed, it is often best to assess a dispute before the parties are entrenched in pleadings. Also, as a private process, ENE can be done even while the client, with the aid of counsel, engages in pre-litigation or early-litigation posturing with the other side. Nonetheless, if the client prefers, the neutral evaluation can instead be done later, and it can also be done more than once during the case. A neutral reassessment can also be used to prepare submissions for mediation and even pre-trial briefs. ENE therefore can be, but need not be, one and done. The scope and breadth of the ENE can be determined together by the client and neutral. Obviously, a small-budget ENE may be less helpful than a more expansive one. The chosen scope can be based upon the complexity of the dispute, the volume of evidence, and the timing for the project. Given the purpose of ENE – an important guide for making critical risk analyses early in a dispute – clients should be willing to give the neutral wide latitude in order to make the best evaluation. A more truncated ENE can, however, contain a list of unexplored or undeveloped issues or points that the client can later authorize for analysis. 3.2.3 The Distinctive Benefits of an ENE For very important reasons, this “neutral” assessment is qualitatively different from the analysis of the dispute by the
  • 43. 43 client’s lawyer. First, the neutral has no ongoing representation in that dispute (e.g., continuing fees). Rather, the neutral completes the discrete task quickly without any prospects for long-term work. That absence of any economic conflict ensures complete candor in the analysis. Second, the neutral also will not likely have any ongoing relationship with the client generally, and therefore the neutral is not concerned about rendering “bad news” about the case and possible outcomes. In this way also, candor is ensured. Thus, the neutral is able to provide a totally independent and unbiased evaluation – exactly the approach that should be taken by the actual judge. An ENE can also complement or supplement an independent expert’s financial analysis. Thus, the client can learn even more when the ENE is coupled with a financial consultant’s damage analysis that separately gauges risk. This combined evaluation provides case projections with even more rigor. The ENE adds the factual and legal assessments, too, thereby making the overall analysis much more complete. An ENE can be treated as an attorney/client communication or attorney work product. Thus, the ENE can remain confidential, even though the neutral may not be the client’s counsel in the dispute 3.3.4. Lok-Adalat : The Lok-Adalat system contributed under National Legal Service Authority Act, 1987 is a uniquely Indian approach. The Constitutional duty of the State to provide legal aid, prompted
  • 44. 44 by the decisions of the apex court, led to the formation of a Committee for Implementing Legal Aid Schemes (CILAS). The legal legitimacy of Lok Adalat flows from the Legal Services Authorities Act, 1987. It roughly means “People’s court”. This is a non-adversarial system, where by mock courts (called Lok Adalats) are held by the State Authority, District Authority, Supreme Court Legal Services Committee, High Court Legal Services Committee, or Taluk Legal Services Committee, periodically for exercising such jurisdiction as they thinks fit. These are usually presided by retired judge, social activists, or members of legal profession. It does not have jurisdiction on matters related to non-compoundable offences. There is no court fee and no rigid procedural requirement (i.e. no need to follow process given by Civil Procedure Code or Evi22dence Act), which makes the process very fast. Parties can directly interact with the judge, which is not possible in regular courts. A case can be transferred to a Lok Adalat if one party applies to the court and the court sees some chance of settlement after giving an opportunity of being heard to the other party. The focus in Lok Adalats is on compromise. When no compromise is reached, the matter goes back to the court. However, if a compromise is reached, an award is made and is binding on the parties. It is enforced as a decree of a civil court. An important aspect is that the award is final and cannot be appealed, not even under Article 226 because it is a judgment by consent. All proceedings of a Lok Adalat are deemed to be judicial proceedings and every Lok Adalat is deemed to be a Civil Court. Main condition of the Lok Adalat is that both parties in dispute should agree for settlement. The
  • 45. 45 decision of the Lok Adalat is binding on the parties to the dispute and its order is capable of execution through legal process. Lok Adalat is very effective in settlement of money claims. Disputes like partition suits, damages and matrimonial cases can also be easily settled before Lok Adalat. Lok Adalat is a boon to the litigant public, where they can get their disputes settled fast and free of cost. 3.4. How to make ADR system more viable We cannot stop the inflow of cases because the doors of justice cannot be closed, but we can increase the outflow of cases either by strengthening (both qualitatively and quantitatively) the capacity of the existing system or by way of finding some additional outlets. In this situation ADR mechanism implementation can be such a drastic step for which three things are required most: • Mandatory reference to ADRs • Case management by Judges • Committed teams of Judges and Lawyers Equal justice for all is a cardinal principle on which entire system of administration of justice is based. We cannot conceive justice which is not fair and equal. We should aim to achieve earlier and more proportionate resolution of legal problems and disputes by increasing advice and assistance to help people resolve their disputes earlier and more effectively; increasing the opportunities for people involved in court cases to settle their disputes out of court; and reducing delays in resolving those disputes that need to be decided by the courts.
  • 46. 46 To implement the noble ideas and to ensure the benefits of ADR to common people, the four essential players (government, bench, bar litigants) are required to coordinate and work as a whole system. Case management includes identifying the issues in the case; summarily disposing of some issues and deciding in which order other issues to be resolved; fixing time tables for the parties to take particular steps in the case; and limiting disclosure and expert evidence. 3.5. How to make Arbitration Mechanism truly effective: With a very laudable objective of speedy disposal of cases, Alternative Dispute Resolution Mechanism (ADR) is mooted. Among the modes of Alternative Dispute Resolution Mechanism, Arbitration is most discussed issue always as many agreements or contracts contain an Arbitration Clause now-a-days. The difference between Arbitration Mechanism and the adjudication through Civil Court etc. issues can be summed up as follows: There is no need of paying court fee when a dispute is adjudicated by an Arbitrator. Arbitrator is less burdened compared to Civil Court and the parties have the liberty of choosing their own judge. Arbitrator need not follow the procedure prescribed under Civil Procedure Code, 1908 though he will follow the principles of natural justice. The procedure, the fees, the place of Arbitration etc. can be mutually agreed by the Parties and in the absence of any consensus, the Court or the Arbitrator will take a decision on the issues. Despite so much relaxation in the established civil procedure, the adjudication before the Arbitrator or the issue
  • 47. 47 of getting an Arbitrator appointed is delayed very often. The general issues or challenges to the adjudication through Arbitrator are as follows: Even when there is no real lis between the parties, one party to an agreement containing Arbitration clause, may initiate Arbitration proceedings with untenable claim. The issue is settled to some extent now in view of the recent development that the Court entertaining an application under section 11 of Arbitration and Conciliation Act, 1996 discharges judicial function and can look into the issues as to whether there is any existing agreement prima facie, whether there is any lis between the parties and whether the subject matter is capable of being arbitrated. When there exist a special mechanism dealing with certain issues, the adjudication before the Arbitrator may not appear to be effective. For example, Rent Control Laws provide many reliefs to the tenants and also the landlords. There is a provision for deposit of rent by the tenant when the landlord refuses to receive the rent under the Rent Control Laws. When it comes to depositing rent, the Arbitrator may not be effectively deal with the issue. When there is no specific provision under the Arbitration and Conciliation Act, 1996, litigants who wants to drag the case may file many interim applications. When an interim application is filed, the same can be rejected by the Arbitrator when it is found that the interim application is unnecessary and motivated to drag the case. But, in many cases, the Arbitrator entertains the interim applications and disposes the
  • 48. 48 same in accordance with law and it consumes time as is the case before the Civil Court. Against the order in the Interim Application, an aggrieved party tends to approach the High Court under section 34 as we see practically. When hearing fees is fixed or agreed to the Arbitrator, then, at times, the Arbitrator may feel it convenient to grant so many adjournments and it is happening as we wee. Even, when a fixed fee is ordered to pay to the Arbitrator or agreed upon, the parties usually not pay the entire fee in the beginning. Till the fee is paid the Arbitration proceedings will go on at times, though the Arbitrator can exercise his right of lien over the award until his agreed remuneration or fee is paid. Looking at the pendency of cases before various courts in India, if we think about the time to be taken for disposing all the pending cases, it is recently reported that it will take some 320 years to dispose of the pending cases or to clear the backlog. Arbitration mechanism is always Alternative, but, still we depend on the Civil Courts and the procedure lay down under the Code of Civil Procedure, 1908 for getting the civil disputes adjudicated. We need many reforms in our judicial system in India to ensure speedy disposal of cases and it will certainly take years to bring the proper reforms. Simultaneous to bringing the proper reforms or initiating measures to bring the reforms in our Indian Judiciary aiming at speedy and effective disposal of cases, we also need to
  • 49. 49 concentrate as to how make the Arbitration Mechanism truly effective. The measures to make the Arbitration Mechanism truly effective, as I think, are as follows: Rather practicing to appoint retired judges as Arbitrators, it is better to have panel of Arbitrators who are talented and with very good legal knowledge. There is nothing wrong if a practicing legal advocate is appointed as an Arbitrator when he is willing to act as such. When it comes to the fee or the remuneration to be paid to the Arbitrator, it is better to fix lump sum remuneration for deciding an issue and having mechanism that the entire fee is paid to the Arbitrator at once. It is better to avoid the practice of paying sitting fees to the Arbitrators if one needs to make the adjudication through arbitration really speedy. Applications under section 34 of Arbitration and Conciliation Act, 1996 to be carefully gone into and the implications of entertaining an application under section 34 on the main Arbitration claim before the Arbitrator to be carefully considered. Present legal position with regard to appointment of Arbitrators to be continued and the process of appointment of arbitrators to be judicial always. I am of the strong opinion that with few reforms, Arbitration Mechanism can be made truly effective and I don’t think that the mechanism is truly effective as of now for the few among many reasons referred to above.
  • 50. 50 CHAPTER – 4 ADR- AN INDIAN PERSPECTIVE Alternative Dispute Resolution was conceived of as a dispute resolution mechanism outside the courts of law established by the Sovereign or the State. In this sense, it included arbitration, as also conciliation, mediation and all other forms of dispute resolution outside the courts of law, which would all fall within the ambit of ADR. However, with passage of time, the phrase “Arbitration and ADR” came in vogue, which implied that arbitration was distinct from other ADR forms. In arbitration, there is a final and binding award, whether the parties consent to it or not, but in other forms of ADR (which came to be more commonly associated with phrase “ADR”) there would be no finality except with the consent of the parties. The protagonists of ADR in this sense claimed that, whereas in arbitration one party may win and the other(s) may lose – may be both may lose-as in a court case, in ADR it is a “win-win” situation because the parties would agree to a disposal of the matter on terms comfortable to each of them; In ADR, in this sense, it is not the “dispute” or “difference” between the parties that is addressed, but the mindset of the parties, so that with gradual change in the mindset eventually both sides come to a meeting point. The most practiced forms of ADR, in this sense, are “conciliation” and “mediation”. In western countries, neutral evaluation is also frequently resorted to but in India this or other forms of ADR have not yet come in vogue. Conciliation and mediation are often used as interchangeable terms although there is a subtle difference between the two. In
  • 51. 51 both the forms, the conciliator or mediator (often known as “neutral”) endeavors to bring both sides closer to each other, but in one he plays a more proactive role whereas in the other his role is only to enable the parties to come closer to each other and for that purpose, at times, the word “facilitator” is used instead of the word “neutral”; In India, ADR has an important place because of historical reasons. If one bears in mind our heritage, tradition and culture, one fails to understand as to why arbitration and other ADR methods should not succeed admirably in India. To think of challenging the Panchas’ decision was considered a sacrilege and to suspect or to even think of the Panchas being partial was like blasphemy. With this background, it should not be difficult to identify the areas, which are obstacles in our goal to once again reach the ideals of ADR. ADR in global perspective The international business community realized that court cases were not only time consuming but also very expensive businessmen always want to make best use of their time, money and energy, with the result that arbitration was preferred to court litigation. Besides, in arbitration, the parties to the dispute usually got a person of their choice to decide the matter and thereby the parties avoided decision-making at the hands of a judge, who may not be conversant with the subject matter of the dispute. However, in course of time, even arbitration proceedings became protracted, with the result that the man of commerce internationally resorted to other forms of ADR, viz. conciliation, mediation or neutral evaluation. Throughout the
  • 52. 52 world, efforts are being made to bring about dispute resolution in as informal a manner as possible speedily and with least expense. In certain areas even such ADR was avoided. For example, in insurance, a good part of the risk is passed on to the reinsurer. In some cases, whether the insurer of one insured had to bear the loss or the insurer of the other insured made little difference because both risks were largely covered the same reinsurer. This brought about the concept of knock- for-knock, which one finds in vogue even in India – at least in car insurance where it is not the insurer of the insured whose driver is negligent who bears the loss but the loss is borne where it falls. Emerging trends in preventing court litigation at the beginning of the British regime, when the courts were established, there were few cases and the concepts like “courts delays” were unknown but by the time the British left us there were arrears in courts which resulted in elongation of the lifespan of any matter in court. Further, with our achieving independence, our legislators kept on passing laws, at times, in a language that was neither simple nor clear, which brought about a spate of litigation contributing to congestion of courts. In 2-3 decades, a stage was reached when everyone started apprehending that our judicial system would collapse because of the arrears and unduly long time taken for disposal of any matter. With high rates of interest, the non-claimant always had a vested interest in delaying the disposal of court cases because the rate of interest to be awarded by the courts in normal circumstances was only 6% simple interest per annum
  • 53. 53 whereas trade and industry had to borrow at two to three times that rate of interest and that too on quarterly compounded basis. Recent amendments in the Code of Civil Procedure, 1908 (“CPC” for short) and provisions for pushing commercial matters to arbitration or other forms of ADR coupled with formation of tribunals for handling specific types of cases has resulted in arresting further elongation of time for disposal of court cases but it will take a few years before the full impact of these changes is known. As of date, trends in online, ADR/ODR there have been several Internet service providers who have provided platforms for Online resolution of disputes by parties, which they can pursue irrespective of their geographical locations. Quite a few of these have closed down, may be due to their’s being a bad business model or probably due to their system/platform not living up to the expectations of the end user. But this certainly does not reflect on the popularity or utility of the concept of ODR (On line Dispute Resolution), in some places also referred to as “e ADR”(electronic Alternative Dispute Resolution). This is evident from the fact that the number of service providers has increased this year to over a hundred. The benefits of ODR are manifold. Being accessible online, the dispute resolution platform can be availed of sitting in one’s own office or residence or even while being on the move. In addition, the process, being conducted online, affords the parties an opportunity to appoint neutrals from anywhere in the world. This widens their CHOICE rather than restricts it;
  • 54. 54 Though not widely heard today, even in most metropolitan cities in India, ODR is an idea whose time has come. But we must understand that it cannot be implemented unless we first popularize the different modes of ADR, as also remove the stigmas that arbitration (especially ‘ad hoc’ arbitration) is gathering. But the night is not too long. Already the Bombay High Court has taken initiatives in that direction. It has not only initiated training programmes for lawyers and judges It is too early to assess Courts behavioral pattern on this count because amendments in the CPC are recent. in several parts of Maharashtra and has even started an ADR course jointly with the Mumbai University(the first batch of which is nearing completion but it is also chalking out plans for implementing mediation, conciliation and arbitration at several courts in Maharashtra. The Bombay High Court itself has separate Panels of Arbitrators and Mediators whose fees are stipulated at very nominal rates; With India having its own unique place in information & technology and the younger generation being computer-savvy, ODR has already started. Several Arbitration Institutions have framed Rules in this behalf and video-conferencing has been accepted as a workable solution for minimizing the cost. Here again, it is somewhat premature to make any realistic assessment. One can only say with confidence that the use of technology in arbitration and ADR has already made a good start and the trend is that in the near future, it would be utilized to expedite arbitration and other ADR methods as also to minimize the cost.
  • 55. 55 4.1 The emergence of ADR system in independent India: That are bound to happen in group of people and human are adaptable to such situations in finding out and devising novel ways and means for amicable resolution of conflicts. The human have been embodied with rationality to solve adverse situations with ease and the human nature has been constantly evolving in establishment of a congenial atmosphere as such the dispute resolution is one of the major tool, which is being always used by a stable society. In India, intricacies of the formal legal system has continuously emanated dissatisfaction for citizens of India, wherein the disputes were got involved in the legal wrangling resulting to dissatisfaction and criticism of the Courts firstly, due to the unsavory conduct of legal professionals , secondly, sometimes due to inordinate delay of delivery of justice by the courts has lead to a sense of alienation of litigants from the whole judicial system, thus a need was felt for initiation of ADR system to resolve many trivial pending disputes, some of trivial disputes or on the pending cases, which can be resolved through intervention of ADR techniques, thereby lessening the crumbling judicial system as well as over burdened Courts with cases. That the Arbitration Act of 1940 was enacted replacing the Indian Arbitration Act of 1899 and section 89 and clauses (a) to (f) of section 104(1) and the Second Schedule of the Code of Civil procedure 1908. It amended and consolidated the law relating to arbitration in British India and remained a
  • 56. 56 comprehensive law on Arbitration even in the Republican India until 1996. Though, in early years the industrial Disputes Act, 1947 provided the provision both for conciliation and arbitration for the purpose of settlement of disputes. That in Rajasthan State Road Transport Corporation v. Krishna Kant, the Supreme Court had observed: “The policy of law emerging from Industrial Disputes Act and its sister enactments is to provide an alternative dispute-resolution mechanism to the workmen, a mechanism which is speedy, inexpensive, informal and unencumbered by the plethora of procedural laws and appeals upon appeals and revisions applicable to civil courts. Indeed, the powers of the courts and tribunals under the Industrial Disputes Act are far more extensive in the sense that they can grant such relief as they think appropriate in the circumstances for putting an end to an industrial dispute.” The section 23(2) of the Hindu Marriage Act, 1955 also mandated or casted the duty on the courts that the Court shall in the first instance must make an endeavor to bring about reconciliation between the parties of the case, where it is possible according to nature and circumstances before granting relief under this Act. For the purpose of reconciliation the Court may adjourn the proceeding for a reasonable period and refer the matter to person nominated by court or parties with the direction to report to the court as to the result of the reconciliation, section 23(3) of the Act. The Family Court Act, 1984 was also enacted to provide avenues for the establishment of family Courts with a view to
  • 57. 57 promote conciliation and secure speedy settlement of disputes relating to marriage, family affairs and for matter connected therewith by adopting an approach radically different from the ordinary civil proceedings. The section 9 of the Family Courts Act, 1984 has further lays down the duty of the family Court to assist and persuade the parties, at first instance, in arriving at a settlement in respect of a dispute. The family Court has also been conferred with the power to adjourn the proceedings for any reasonable period to enable attempts to be made to effect settlement if there is any reasonable possibility of settlement. Shri M.C.Setalvad, former Attorney General of India has observed: “….equality is the basis of all modern systems of jurisprudence and administration of justice… in so far as a person is unable to obtain access to a court of law for having his wrongs redressed or for defending himself against a criminal charge, justice becomes unequal …Unless some provision is made for assisting the poor men for the payment of Court fees and lawyer’s fees and other incidental costs of litigation, he is denied equality in the opportunity to seek justice.” To check and to cope up with its enormous load of growing cases, the Constitutional duty of the State to provide legal aid, prompted by the decisions of the apex court, led to the formation of a Committee for Implementing Legal Aid Schemes (CILAS) and the National Legal Service Authority Act, 1987 was adopted as a uniquely Indian approach for creation of Lok-Adalat system. The legal legitimacy of Lok Adalat flows from the Legal Services Authorities Act, 1987. It roughly
  • 58. 58 means “People’s court”. This is a non-adversarial system, where by mock courts (called Lok Adalats) are held by the State Authority, District Authority, Supreme Court Legal88 Services Committee, High Court Legal Services Committee, or Taluk Legal Services Committee, periodically for exercising such jurisdiction as they thinks fit. These are usually presided by retired judge, social activists, or members of legal profession. It does not have jurisdiction on matters related to non-compoundable offences. There is no court fee and no rigid procedural requirement (i.e. no need to follow process given by Civil Procedure Code or Evidence Act), which makes the process very fast. Parties can directly interact with the judge, which is not possible in regular courts. A case can be transferred to a Lok Adalat if one party applies to the court and the court sees some chance of settlement after giving an opportunity of being heard to the other party. The focus in Lok Adalats is on compromise. Usually when no compromise is reached, the matter goes back to the court. However, if a compromise is reached, an award is made and is binding on the parties. It is enforced as a decree of a civil court. An important aspect is that the award is final and cannot be appealed, not even under Article 226 because it is a judgment by consent. All proceedings of a Lok Adalat are deemed to be judicial proceedings and every Lok Adalat is deemed to be a Civil Court. Main condition of the Lok Adalat is that both parties in dispute should agree for settlement. The decision of the Lok Adalat is binding on the parties to the dispute and its order is capable of execution through legal
  • 59. 59 process. Lok Adalat is very effective in settlement of money claims. Disputes like partition suits, damages and matrimonial cases can also be easily settled before Lok Adalat. Lok Adalat is a boon to the litigant public, where they can get their disputes settled fast and free of cost. 4.2. The court approach towards ADR mechanism: That for last two decades not only in India but remote in other corner of the world rather everywhere rapid development in the societies as whole is creating an multiplying human urges as well as expectations, as a result this, the conflict of interests bound to increase day by day all over the world over, no exception to India, in India due to slackness of judicial discipline in courts and litigating parties having litigation in Indian courts has over burdened the judicial mechanism and the said judicial mechanism finding extremely difficult to manage to cope up with its enormous load of pending cases, which has further compounded and eroded judicial creditability. In current scenario the Alternative Dispute Resolution (ADR) refers to a variety of streamlined resolution techniques designed specifically to resolve issues in controversy more efficiently and in better manner, wherein the normal bilateral negotiation process fails. In view of the fact, presently, the third party alternative dispute resolution (ADR) is being touted and being thought as effective alternative for the contesting parties to the litigation, who are hotly involved to the formal legal intricacies.
  • 60. 60 With wide spread implementation of ADR techniques in the developed and developing world. The usage and penetration of ADR systems techniques are proving to much viable option in reducing cost factor in Litigation and delays. The success of ADR systems in bringing resolution of their conflicts in amicable manner, thus due to success of it, The ADR system has entered in to many untouched subjects or issues of laws, as of now, ADR penetration is being increases in legal battle and many new cases are added day by day under ADR system for its resolution. Hence due to successful resolution of legal conflicts / disputes through ADR systems, due to successful resolution of legal conflicts / disputes through ADR systems has improved the lives of as such individuals and their business entities thus ADR systems have been able to achieve broad social / societal goals to the large extent. That the Privy Council2 affirmed the decision of the Panchayat and Sir John Wallis observed that the reference to a village panchayat is the time-honoured method of deciding disputes. It avoids protracted litigation and is based on the ground realities verified in person by the adjudicators and the award is fair and honest settlement of doubtful claims based on legal and moral grounds. 3 The justice dispensation system in India has come under great stress for several reasons; chief reason of them being the huge pendency of cases in Courts. The denial of justice through delay is the biggest mockery of law, but in India it is 2 The Privy Council Sitanna v. Viranna, AIR 1934 SC 105, 3 ICADR88
  • 61. 61 not limited to mere mockery; the delay in fact kills the entire justice dispensation system of the country. In India, the number of cases filed in Courts has shown tremendous increase in recent years for a variety of reasons resulting in pendency and delays underlining the need for alternative dispute resolution methods. The justice dispensation system in India has hit rock bottom. The system crawls in its rotten rut of ineptitude and corruption. This has led to people settling scores on their own, resulting in a growing number of criminal syndicates in the country and reflecting the loss of people's confidence in the rule of law. That Late H.D Shourie wrote in Letter Mr. Justice S. M. Raza4 , he wrote, "We believe that there is need of bringing about the judicial reforms which would deal with huge pendency of cases in the courts of the country. The figures presently being mentioned are that there are 2.27 crore ca2ses in the District and Subordinate Courts; 35 lakhs in High Cou5rts and 25000 in the Supreme Court. There are about 2 crores cases pending in the courts of India. If there are 4/5 members of the family on one side and 4/5 members on the other side, almost about 12 to 15 crores persons are involved in pending cases. At the last count the backlog of cases in the courts of India had gone up t88o nearly 3 crore cases, including more than 37 lakh cases pending in the High Courts and over 46,000 cases awaiting disposal by the Supreme Court. 4 Mr. H. D. Shourie, Founder Director of COMMON CAUSE, continued his exertions to this end till his last breath. In his letter to Mr. Justice S. M. Raza, Lokayukta, Uttaranchal, dated June 22, 2005,
  • 62. 62 Drawbacks and suggested amendments in Arbitration and Conciliation Act, 1996 (i) Arbitration, as practiced in India, instead of shortening the lifespan of the dispute resolution, became one more “inning” in the game. Not only that, the arbitrator and the parties’ lawyers treated arbitration as “extra time” or overtime work to be done after attending to court matters. The result was that the normal session of an arbitration hearing was always for a short duration and a part of the time, at the beginning, was taken for recapitulating what had happened till that point of time and at the end for fixing the next date of hearing. Absence of a full-fledged Arbitration Bar effectively prevented arbitrations being heard continuously on day-to-day basis over the normal working hours, mviz. 4-5 hours every day. This resulted in elongation of the period for disposal. Besides, most of the arbitrations were ad hoc as there were no Arbitration Institutions. With the establishment of such Institutions (for example the Indian Council of Arbitration which was established in 1965), institutional arbitrations made a beginning but it was difficult to bring about any effective change in the culture and mindset of the arbitrators or the lawyers appearing before them. Besides, with long delays in court matters, and consequent vested interest in the non-claimant to delay matters for as long as possible, pending the arbitration, the matter was often taken to the court for taking arbitration off the track on technical grounds. In many cases, the court gave an interim injunction restraining the arbitrators from continuing with the arbitration and took a
  • 63. 63 long time to dispose of the matter finally. Even when applications objecting to the continuation of arbitration on the ground of there being no jurisdiction were dismissed, appeals from such orders of dismissal resulted in further delay. Several technical objections were being taken by the lawyers, which eventually led the Supreme Court of India to observe in Guru Nanak’s case on 29th September, 1981, as under (ii) With the apprehension of courts collapsing under pressure of work, and India’s decision to liberalise, it became absolutely necessary to amend or replace its Arbitration Law so as to qualify India to sit in the global village. This led to a meeting of the Prime Minister of India and the Chief Ministers of all the States, on 8th December, 1993, where a Working Group was constituted to suggest a new Arbitration Law for India. The result of that Working Group’s efforts was the Bill which eventually became The Arbitration and Conciliation Act, 1996, which was on the UNCITRAL (United Nations Commission on International Trade Law) Model and was widely acclaimed the world over as being an ideal piece of legislation. However, due to absence of Arbitral Institutions and the bulk of arbitrations being ad hoc, even the provisions of the new Act did not show any immediate results because the mindset of the arbitrators and lawyers continued as before; (iii) In the Indian Arbitration Act, 1940, there was a provision for time period, viz. four months, for giving the award. Experience showed that this period of four months was illusory because in almost every case extension was given and the very act of getting such extension became time-consuming and expensive. The Working Group therefore suggested the deletion of time-frame
  • 64. 64 for giving award but considered it to be a matter of culture and suggested effective steps to be taken in that direction. However, since most of the arbitration matters were ad hoc there was little possibility of any substantial change in handling arbitrations, particularly because the arbitrators, many of whom were retired judges, continued to oblige the parties and their lawyers by giving adjournments under an erroneous apprehension that if they did not do so they would not get new arbitration cases. For this purpose, it is suggested that institutional arbitrations should be encouraged and a full- fledged Arbitration Bar should come into existence so that arbitration proceedings can be heard on day-to-day basis with at least 4-5 hours working on every day. (iv) Apart from this, the judiciary’s approach to the 1996 Act is not consistent. To illustrate, in Sundaram Finance Ltd. v. NEPC India Ltd. (reported in AIR 1999 SC 565) the Supreme Court said: “The 1996 Act is very different from the Arbitration Act, 1940. The provisions of this Act have, therefore, to be interpreted and construed independently and in fact reference to 1940 Act may actually lead to misconstruction. In other words the provisions of 1996 Act have to be interpreted being uninfluenced by the principles underlying the 1940 Act. In order to get help in construing these provisions it is more relevant to refer to the UNCITRAL Model Law rather than the 1940 Act.” Unfortunately, later on, even the Apex Court forgot this replacement of statute and its avowed objects, with the result that the judicial mindset continued to remain as it was under
  • 65. 65 the Arbitration Act, 1940; (v) It is trite to say that once the parties have removed the lis (dispute) from the courts of law and agreed that the same would be decided by arbitration and that such decision would be final and binding, it was for the courts to compel the parties to adhere to their agreement and to interfere with the award not to “do justice” between the parties but only for the purpose of ensuring that such private administration of justice did not contravene the basic ethos of the society, viz. “public policy” so that transactions like money laundering, drug trafficking, flesh trading and the like are not able to get the support of such private disposal of justice. Instead, the courts (or at least some of them in some cases) forgot this aspect of the matter and, obsessed by the mindset which was prevalent under the Arbitration Act, 1940, looked at the matter as if it was the courts’ bounden duty to ensure that “justice is done” according to the courts assessment and inclination. This is an entirely erroneous approach. The matter would be clear if one looks at it as a game of cricket. Earlier, we were playing five days’ cricket match with two innings but then we evolved a single day, limited (normally 50) over match. Supposing in such a match, on a given occasion, a batsman is wrongly given out by the umpire, then neither the batsman nor, for that matter, the entire cricket community can bring about a reversal of the decision on the ground that injustice was done to the batsman and that he will not get another chance to bat because it is only a single day, single inning match.
  • 66. 66 Consider what would be the chaotic effect if reversal on such a ground were permitted. The only course is that while even a wrong decision is acquiesced into, such umpire is not again appointed as an umpire. Applying the same analogy, an arbitrator’s (apparently) wrong decision should be accepted and the injustice between the parties should be tolerated and acquiesced into but such person may not be appointed as an arbitrator thereafter and since this is the function of the parties, the parties would obviously, in their own interest, follow the course of avoiding such an arbitrator. This approach is not only logically concomitant with accepting arbitration as an effective justice delivery system as an alternative to the judicial process by the courts but is the very essence of arbitration and if this essential principle is overlooked, arbitration, as also the other ADR methods, can never be successful. Even modern international commercial trend not only recognizes this but also practices it in the long-term interest of the international business community. The choice is between having protracted delays and heavy expenses for resolving each and every dispute and difference on the one hand or some members of the commercial community having (perhaps) to suffer wrong decisions on the other. It is in the long term interest of the business community as a whole that in such individual cases the decisions appearing to be wrong are suffered instead of making the entire system of effective alternative dispute resolution method lose its very purpose and reaching a level requiring its rejection. Prudence demands that
  • 67. 67 one should not throw away the baby with the bath water; (vi) It is in the interest of the society, community and business that counter-productive dispute resolution process, or for that matter, any process, which does not ensure “value for money” in terms of time, money and energy, is to be avoided, even at the possible cost of suffering some wrong decisions in individual cases. Once this aspect is clearly perceived and understood, it will not be difficult to put arbitration and other ADR methods on the ideal pedestal to which they belong; (vii) The Supreme Court, despite having recognized this sea change in the law, in ONGC v. Saw Pipes (reported in (2003) 5 SCC 705) read the phrase “public policy of India” in a manner which upset the apple cart. There has been serious criticism of this judgment as it is putting the clock back. However, the Supreme Court itself is reconsidering this view and in the meantime an amendment has been proposed whereby the rigorous impact of this judgment would stand largely undone. Commercial arbitration in India Before the advent of the British, while at the village level “Panchas” would dispose of a matter as soon as any difference or dispute arose, at the level of towns and cities, the trade bodies effectively dealt with the disputes and differences arising between men of commerce. However, with the growth of trade and commerce, and there being many occasions when all the parties were not from the same locality, disposal of differences and disputes in an informal way became impossible and formal commercial arbitration came into vogue in India. Even today, in Commodity
  • 68. 68 Exchanges, disputes are resolved almost within hours an22d in some Exchanges, like for example the Cotton Exchange of Mumbai, even appeals are disposed of in 2-3 days. This is so because the matters are decided by men of commerce having rich experience in the trade and its different aspects and enjoying a reputation for their long standing in the business. It is often said that arbitration is as successful as the arbitrator. Since the arbitrators in Commodity Exchanges are men having a quick grip on the subject, the disposal of arbitrations in such exchanges is quick and inexpensive - with almost no likelihood of challenge in court. In matters not so simple as disputes and differences between the members of a Commodity Exchange, well-experienced arbitrators, even today, bring about a quick result in an inexpensive manner but it is the need of the day to have trained arbitrators because with the court matters being pushed to arbitration there is bound to be a greater demand for good arbitrators available at reasonable fees. 4.3 Legislative efforts in India Article 215 of the Constitution of India declares in a mandatory tone that ‘no person shall be deprived of his life or his personal liberty except according to procedure established by law.’ The words “life and liberty” are not to be read narrowly in the sense drearily dictated by dictionaries; they are organic terms to be construed meaningfully. Further, the procedure mentioned in the Article is not some semblance of a procedure but it should be “reasonable, fair and just”. Thus, the Right to 5 Constitution of India88
  • 69. 69 Speedy Trial has been rightly held to be a part of Right to Life or Personal Liberty by the Supreme Court of India. The Supreme Court has allowed Article 21 to stretch its arms as wide as it legitimately can. The reason is very simple. This liberal interpretation of Article 21 is to redress that mental agony, expense and strain which a person proceeded against in criminal law has to undergo and which, coupled with delay, may result in impairing the capability or ability of the accused to defend himself effectively. Thus, the Supreme Court has held the Right to Speedy Trial a manifestation of fair, just a8nd reasonable procedure enshrined in Article 21. This is obviously a matter which needs a very serious consideration for determining as to what judicial reforms can be made effective for meeting the requirements of reducing pendency of cases in the court of India.6 Anguished over the state of affairs of the justice delivery system, the Supreme Court has said people's faith in judiciary was dwindling at an alarming rate, posing a grave threat to constitutional and democratic governance of the country. The Constitutional philosophy propounded as Right to Speedy Trial has though grown in age by almost two and a half decades; the goal sought to be achieved is yet a far-off peak. The failures of prosecuting agencies and executive to act and to secure expeditious and speedy trial have persuaded the Supreme Court in devising solutions which go to the extent of almost enacting by judicial verdict bars of limitation beyond which the trial shall not proceed and the arm of law shall lose 6 Supreme Court chides itself, govt for judicial backlog Dhananjay Mahapatra, TNN Jan 12, 2012, 05.57AM IST
  • 70. 70 its hold. The validity or justness of those decisions is not the matter to be decided88 but the seriousness of delay in the conclusion of criminal and civil matters must be appreciated at the earliest. This seriousness was appreciated and accepted by many , including the Constitutional Courts , long before. The same has got recognition from the “legislature” as well in the form of introduction of “Alternative Dispute Resolution” (ADR) Mechanism (ADRM) through various statutes. There is a growing awareness among the masses as well regarding ADR and people are increasingly using the same for getting their disputes settled outside the court. This will also reduce the “backlog problem’ that India is facing. It is now universally accredited that ‘Justice delayed is Justice denied’. The existing justice system is not able to cope up with the ever-increasing8 burden of civil and criminal litigation. There is growing awareness that in the majority of cases court action is not an appropriate remedy for seeking justice. We have to formulate effective ADR Mechanisms to ease the burden of judicial functioning. The backlog of cases is increasing day by day but criticizing judiciary for the same is a wrong practice. It must be noted that the backlog is a product of “inadequate judge population ratio” and the lack of basic infrastructure. The government has to play a pro-active role in this direction. 4.4. Court approach towards legal reform through ADR mechanism Further, the recent amendments of the CPC will give a boost to ADR. The section 89 (1) of CPC deals with the s88ettlement of disputes outside the court. It provides that where it appears to the court that there exist elements, which may be
  • 71. 71 acceptable to the parties, the court may formulate the terms of a possible settlement and refer the same for arbitration, conciliation, mediation or judicial settlement. While upholding the validity of the CPC amendments in Salem Advocate Bar Association v. U.O.I 7 , the Supreme Court had directed the constitution of an expert committee to formulate the manner in which section 89 and other provisions introduced in CPC have to be brought into operation. The Court also directed to devise a model case management formula as well as rules and regulations, which should be followed while taking recourse to alternative dispute redress referred to in Section 89 of CPC. All these efforts are aimed at securing the valuable right to speedy trial to the litigants. The Supreme Court of India has also suggested making ADR as ‘a part of a package system designed to meet the needs of the consumers of justice’. The pressure on the judiciary due to large number of pending cases has always been a matter of concern as that being an obvious cause of delay. The culture of establishment of special courts and tribunals has been pointed out by the SC of India in number of cases. The rationale for such an establishment ostensibly was speedy and efficacious disposal of certain types of offences. In E.Venkatakrishna Vs Indian Oil Corporation Ltd8 It was held that, when ever there is an arbitration clause in a contract, aggrieved parties must have recourse to the provisions of the 7 Salem Advocate Bar Association v. U.O.I AIR 2003 SC 189, 2002 8 E.Venkatakrishna Vs Indian Oil Corporation Ltd AIR 1989 Kant 35
  • 72. 72 arbitration act and that being a complete code in itself, parties cannot approach High Court, with a petition under Art-226. The Stage for ADR was set up in the early 1930’s, the Privy Council decision in Sitana vs. Viranna, highlights the beginning of the germination of the idea of ADR; In Sitanna Vs Viranna, the Privy Council affirmed the decision of panchayat, and Sir John Wallis observed that the reference to a village panchayat is the time honored method of deciding disputes. It avoids protracted litigation and is based on the ground realities verified in person by the adjudicators and the award is fair and honest settlement of doubtful claims based on legal and moral grounds. In PT Thomas vs. Thomas Job 9 It was held, that the experiment of Lok-Adalat as an alternate mode of dispute settlement has come to be accepted in India as a viable, economic, efficient and informal one. In Oil and Natural Gas Commission vs. CCE 10 In one of the orders passed in this judgment it was recorded that the cabinet secretary has issued instructions to all departments of Government of India as well as PSU’s that all disputes “regardless of type, should be resolved amicably by mutual consultation or through good offices of empowered agencies of the government or through arbitration and recourse to litigation should be eliminated. 9 In PT Thomas vs. Thomas Job 2005 AIR 3575, 2005(2) 10 In Oil and Natural Gas Commission vs. CCE 104 CTR (SC)
  • 73. 73 In Bhasheer vs. Kerala State Housing Board 11 The Hon’ble Justice K.Padmanabhan Nair.J opined that, it must be ensured that in developing countries most of the cases are resolved by ADR mechanism of Arbitration, Conciliation and Mediation. In Salem Advocate Bar Association Tamil Nadu vs. UOI 12 It was held that, keeping in mind the law delays and the limited number of judges ,which are available ,it has now become imperative that resort should be had to ADR, with a view to bring an end to litigation at an early date .In this very case it was highlighted ,that ADR mechanism contemplated by Section 85 of CPC is arbitration ,conciliation ,judicial settlement including settlement through lok adalat and mediation. In Deco Mica Ltd Vs UOI13 it was held that ADR is inevitable in one form or the another , in view of global unquestionable phenomenon because court of law some times becomes suit for life ,litigation in the present set up and mechanism has become expensive and time consuming and dispensation of justice has become slow. It is reported that out of 192 Countries, which are members of UN, 133 Countries have successfully implemented ADR in one form or the other, with encouraging and rewarding success. 4.5. Need and the purpose of ADR in India The growth of A.D.R in the last few decades on the one hand reflects disenchantment with the formal justice system characterized by delays and on the other an effort to promote 11 Bhasheer vs. Kerala State Housing Board AIR 2005 Ker 64, 2005 12 ibid 4.5. 13 In Deco Mica Ltd Vs UOI 2000 (68) ECC 554,
  • 74. 74 a less formal dispute resolution mechanism. This development is not the outcome of any juristic philosophy. Rather it was necessitated by the growth of commercial litigation needing speedy resolution, by the ever increasing volume of court work, by court dockets becoming heavier and by the judge/case ratio becoming imbalanced on account of limited resources. In a developing country like India with major economic reforms under way within the framework of the rule of law, strategies for swifter resolution of disputes for lessening the burden on the courts and to provide means for expeditious resolution of disputes, there is no better option but to strive to develop alternative modes of dispute resolution (ADR) by establishing facilities for providing settlement of disputes through arbitration, conciliation, mediation and negotiation. In this context the legendaries of various fields i.e., commercial, administrative and legal unanimously constituted an institution to be called “International Centre for Alternative Dispute Resolution-ICADR. This institution was established in Delhi on 31st May, 1995 and registered under the Society Registration Act, 1960. It is an autonomous non-beneficial institution. The chief object of this institution is to inculcate and expand the culture of alternative dispute resolution. In essence the system of ADR emphasizes upon: • Mediation rather than winner take all. • Increasing Accessibility to justice. • Improving efficiency and reducing court delays.
  • 75. 75 The Constitution of India through Article 14 guarantees equality before the law and the equal protection of the laws. Article 39A of the Constitution mandates the State to secure that the operation of the legal system promotes justice on a basis of equal opportunity, and ensure that the same is not denied to any citizen by reason of economic or other disabilities. Equal opportunity must be afforded for access to justice. Law should not only treat all persons equally, but also the law must function in such a way that all the people have access to justice in spite of economic disparities. The expression “access to justice” focuses on the following two basic purposes of the legal system. • The system must be equally accessible to all. • It must lead to results that are individually and socially just. It is one of the most important duties of a welfare state to provide judicial and non-judicial dispute-resolution mechanisms to which all citizens have equal access for resolution of their legal disputes and enforcement of their fundamental and legal rights. Poverty, ignorance or social inequalities should not become barriers to it. The workload of Indian Judiciary increased by leaps and bounds and has now reached a stage of unwieldy magnitude, which has in fact led to a large backlog of cases. Due to this ADR has become the need of the hour for Indian Judiciary. Considering the delay in resolving the dispute Abraham Lincon has once said: “Discourage litigation. Persuade your neighbors to compromise whenever you can point out to them how the nominal winner is often a real loser, in fees, expenses, and waste of time”. “In
  • 76. 76 the same vein Judge Learned Hand commented, “I must say that as a litigant, I should dread a law suit beyond almost anything else short of sickness and of death”. 4.6. Implementation of ADR in India The concept of Conciliation was introduced in the statute of Industrial Disputes Act, 1947. The Conciliation is generally conducted by an officer appointed by Government under Industrial Disputes Act, 1947. Industrial Disputes Act, 1947 provides provisions for the parties to settle disputes through Negotiation, Mediation and Conciliation, for example Section 12 Section 18 etc. Alternate Dispute Resolution plays a major role in the family disputes settlement. Section 5 of the Family Court Act, 1984 provides provisions for the association of social welfare organizations to hold Family Courts under control of government. Section 6 of the Act provide for appointment of permanent counselors to enforce settlement decisions in the family matters. Further Section 9 of the Act imposes an obligation on the court to make effort for the settlement before taking evidence in the case. In addition to all provisions referred above, Indian Contract Act, 1872 most importantly gives a mention about Arbitration Agreement as an exception to Section 28 that renders an agreement void if it restrains a legal proceeding. Alternate Dispute Resolution whether sorted for or not can be easily inferred from presence or absence of the ‘Arbitration clause’. Alternate Dispute Resolution in India gained importance under Arbitration Act, 1940, while sometime later Arbitration and
  • 77. 77 Conciliation Act, 1996 was passed in consonance with UNCITRAL Model Law of Arbitration, which brought the nation, on an international platform. The need arose as there was no provision in the Indian Arbitration Act, 1940 to resolve a dispute between an Indian and a non Indian; it caused difficulties to refer such matter for arbitration For the sake of convenience and uniformity, most of the countries have based their legislation on UNCITRAL Model Law, as this law gives the binding force to arbitral award and lays down various rights and duties for commercial parties handling disputes. Some important International Conventions on Arbitration are: The Geneva Protocol on Arbitration Clauses, 1923, the Geneva Convention on the Execution of Foreign Award, 1927, the New York Convention of 1958 on the recognition and Enforcement of Foreign Arbitral Award. Alternate Dispute Resolution procedures are mostly divided into two segments: Adjudicatory and Non Adjudicatory. In case of adjudicatory process case reaches a stage where decision gets a binding effect, for example in case of arbitration. And the other is non-adjudicatory; it contributes to resolution without adjudication, such as process of Negotiation, Mediation etc. As in case of Salem court Bar Association v. UOI, The Supreme Court had directed the setting up of committee that would look into the implementation of various provisions, including Section 89. Section 89 (1) of Civil Procedure Code in relation to provision of ADR, which will provide avenue for settlement of disputes outside court. In view of the Judgment
  • 78. 78 pronounced by the apex court and subsequent law commission report on bringing changes, the Government brought and introduced adequate changes in section 89 of Civil Procedure Code 1908 Settlement of disputes outside the Court giving ample jurisdiction to the court to see under section 89 (1) where it appears to the court that there exist elements of a settlement which may be acceptable to the parties, the court shall formulate the terms of settlement and give them to the parties for their observations and after receiving the observation of the parties, the court may reformulate the terms of a possible settlement and refer the same for- there by formulating and incorporating any of four methods to settle disputes outside the court namely, Arbitration, Conciliation, Mediation and Lok Adalats. .. Though there are certain deficiencies in reference to status of settlement of disputes outside the court and in regard to procedural implementation of the ADR, in my view the section 89 was not made as elaborative as it should have been, still non-insertion of many of relevant sections by enlarge has gone unnoticed that the discretion of referring to ADR has been left to the court to decide is discretionary in nature, secondly, few details are incorporated in relation to status of opinion of expert rendered as mediators, conciliators incentives, compensation, though still Alternate Dispute Resolution received recognition from experts as a milestone in the matter of settlement of dispute outside of the court and in view of enactment of Civil Procedure Code, 1859 it provides section 312-325 for laying down the procedure of Arbitration
  • 79. 79 and Section 326-327 provides for Arbitration without courts intervention . It can be mentioned that various methods and processes have been incorporated in Indian legal system to achieve speedy disposal of cases, the concept of Alternative Dispute Resolution is a western approach where as Lok Adalat one of its specie is purely a national concept. Alternate Dispute Resolution is more of corporate friendly, commercial parties enter into contract with Arbitration Clause. Most of the companies resort to Alternate Dispute Resolution, as it is less complicated, least expensive and most importantly confidential. Litigation takes year’s long time with bundled up procedures which affects the working processes of the companies, causing uncertainties in financial sphere of their commercial sectors. Due to development of trade at an International level it has become difficult for the corporate sector to maintain pace with traditional ways of litigation. Companies are desperate to get the dispute resolved outside court, as it is beneficial to them in all ways. Resolution can be of great advantage to common man yet the idea doesn’t acclimatize in all the developing countries of the world, as it contradicts with the domestic laws of that country, special care must be taken that the resolution reached, must depend upon honesty, trust, so as not to loosen ties of subsisting relationship and moreover, courts lack command to submit disputes to Alternate Dispute Resolution Methods. Various steps have been taken to make the process of Alternate Justice warren Burger, the former CJI of American Supreme Court had observed:
  • 80. 80 “The harsh truth is that we may be on our way to a society overrun by hordes of lawyers, hungry as locusts, and bridges of Judges in numbers never before contemplated. The notion- that ordinary people want black robed judges well-dressed lawyers, fine paneled court rooms as the setting to resolve their disputes, is not correct. People with legal problems like people with pain, want relief and they want it as quickly and inexpensively as possible”. The directive Principals enumerated under Art-39(A), of Indian Constitution promise to secure socio, economic, political justice and equality of status and opportunity to all citizens., the Indian judicial system ,has not on once but several occasions fallen short of fulfilling such promises. “ The Malimath Committee also known as the arrears committee undertook a comprehensive review of the working of the court system ,particularly all aspects of arrear and law’s delay in addressing such concerns. In its recommendations the Malimath committee underlined the need for adopting an alternate dispute resolution mechanism, for encouraging Arbitration, Mediation, Conciliation and Lok Adalats, as a viable alternative for reducing backlog of cases pending in various courts, In its view such alternate dispute resolution mechanism were capable of going a long way in restoring confidence of people and establishing rule of law , which is in fact a key objective of our constitution. That in a developing country like India with major economic reforms under way within the frame-work of rule of law, strategies for swifter resolution of disputes for lessening the
  • 81. 81 burden on the Courts and to provide means for expeditious resolution of disputes, there is no better option but to strive to develop alternative modes of dispute resolution by establishing facilities for providing settlement of disputes through arbitration, conciliation, mediation, negotiation, etc. That the Government faced with these realities, coupled with the usual issue of inadequate infrastructure but due to legislative sensitivity towards providing a speedy and efficacious justice in India is mainly reflected in two enactments. The first one is the Arbitration and Conciliation Act, 1996 and the second one is the incorporation of section 89 in the traditional Civil Procedure Code (CPC). That the Parliament drastically amended the Code of Civil Procedure 1908 (CPC) in the year 1999. One of the amendments was by way of introduction of a new provision, Section 89, which gave the Courts the power to refer matters to one of the ADR tracks listed therein: Arbitration, Conciliation, Judicial Settlement, Lok Adalat and Mediation. A Lok Adalat (literally meaning People’s Court) usually comprises of 3 eminent personalities, like retired judges, and senior members of the Bar, Administration or society generally, who are appointed for a particular term and they attempt conciliation and Judicial Settlement for dealing with disputes referred to them. As the first major step taken in this direction was the enactment of Arbitration and Conciliation Act, 1996 and was brought into force with effect from August 22, 1996. This Act, based on the UNCITRAL Model Law on International
  • 82. 82 Commercial Arbitration and the UNCITRAL Conciliation Rules, provides the basis for the growth of the ALTERNATIVE DISPUTE RESOLUTION (ADR) movement in India on scientific lines. The term “Alternative Dispute Resolution” or “ADR” is often used to describe a wide variety of dispute resolution mechanisms the term can refer to everything from facilitated settlement negotiations in which disputants are encouraged to negotiate directly with each other prior to some other legal process, to arbitration systems. It included arbitration, as also conciliation, mediation and all other forms of dispute resolution outside the courts of law, which would all fall within the ambit of ADR. ADR facilitate parties to deal with the underlying issues in dispute in a more cost-effective manner and with increased efficacy. In addition, ADR’s provide the parties with the opportunity to reduce hostility, regain a sense of control, gain acceptance of the outcome, resolve conflict in a peaceful manner, and achieve a greater sense of justice in each individual case. The resolution of disputes takes place usually in private and is more viable, economic, and efficient. ADR was at one point of time considered to be a voluntary act on the apart of the parties which has obtained statutory recognition in terms of CPC Amendment Act, 1999, Arbitration and Conciliation Act, 1996, Legal Services Authorities Act, 1997 and Legal Services Authorities (Amendment) Act, 2002. The access to justice is a human right and fair trial is also a human right. In India, it is a Constitutional obligation in terms
  • 83. 83 of Art.14 and 21. Recourse to ADR as a means to have access to justice may, therefore, have to be considered as a human right problem. Considered in that context the judiciary will have an important role to play. The special provision Section 89, coupled with Order X Rules 1A, 1B, 1C of the CPC and allied laws, affords the judiciary the opportunity to offer the parties an array of avenues to resolve their issues in a timely and amicable manner and, in the process, reduce its backlog. The purpose of this special provision seems to help the litigant to settle his dispute outside the Court instead of going through elaborate process in the court trial. This is a special procedure for settling the dispute outside the courts by a simpler and quicker method. The litigants on the institution of the suit or proceedings may request the Court to refer the disputes and if the court feels that there exist any element of settlement which may be acceptable to the parties; it may refer them to any of the forums abovementioned at any stage of the proceedings. In fact new rules in Order X were inserted in consequence to the insertion of the sub section (1) of section 89. These new rules namely 1A, 1B and 1C have been inserted by the amending Act. The settlement can be made by adopting any of the modes specified in the section 89 of the CPC inserted by the Amendment Act. As per the Rule 1A the parties to the suit are given an option for settlement of the dispute outside court. When the parties have exercised their option it shall fix the date of appearance before such person as may be opted by the parties. As per the Rule 1-B the parties are required to
  • 84. 84 appear before such forum opted by them. Rule 1C provides for the Presiding Officer of the Forum to refer the matter again to the Court in case he feels that in the interest of justice he should not proceed with the matter.
  • 85. 85 CHAPTER – 5 OVERVIEW OF IPR AND LITIGATION IN INDIA 5.1. Introduction For nearly last many centuries economics had recognized only factor related to labour and capital, as of now in this is new changing world scenario, where in the technology is now playing a important role in shaping scenario of the world. In the world over the information and knowledge has replace the factor related to g capital and energy as the initial wealth- creating assets in the world scenario, just as the many years later, the two had replaced land and labour 200 years ago. The technology development driven majority of society of 20th century has transformed its physical wealth-creating work to "knowledge-based work. In current scenario the technology and knowledge are now the key factors of production and overall generation of wealth with increased mobility of information world around as well as increased the mobility to the global work force, now the knowledge and expertise can be transferred instantantly anywhere in the world, and through exchange of information any advantage gained by one company can be eliminated by competitive improvements overnight. That due to wide spread access to information, the innovative company enjoys a sole comparative edge on its process of innovation--combining market and technology know-how with the creative talents of knowledge workers to solve a constant stream of competitive problems and further its ability to derive timely value from extracted information.
  • 86. 86 In view of wider reach of the information and technology access to every one, the major challenge before companies, organizations will be in the coming years is to create a system for IPRs regime, so that innovative work and creative innovations gets duly protected from praying eyes, to save precarious cost already spent on creating innovation can be stored thus more and more companies may have to take or utilize the services of IP Management Consulting Firm for drafting / prosecution of the intellectual Property (IP) application(s) and also provide adequate funds for making payments for accessing the relevant IP databases for this purpose. Thus, to make Economics of Knowledge as the greatest strength of Indian economy, there would also required for creating an ecosystem for promotion of particularly knowledge driven entrepreneurship with major emphasis on creating an environment and a system to provide due protection to the intellectual properties. This can be achieved by creating a stringent IPR regime. The Intellectual Property Rights (IPR) are rights granted to creators and owners of innovative works which are results of a human intellectual creativity. These intellectual creativity works can be related to nay of industrial, scientific, literary and artistic domains, which can be in the form of any invention or in the shape of a manuscript, a suite of software, or a business name. For last few years the importance of intellectual property has attained tremendously in India is well established at all levels whether it is a statutory or administrative and or judicial. That
  • 87. 87 India has also ratified its statutory laws in accordance to the agreement establishing the World Trade Organisation (WTO). This Agreement, inter-alia, contains an Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) which came into force from 1st January 1995. It lays down minimum standards for protection and enforcement of intellectual property rights in member countries, which are required to promote effective and adequate protection of intellectual property rights with a view to reducing distortions of and impediments to international trade. The obligations under the TRIPS Agreement relate to provision of minimum standard of protection within the member countries legal systems and practices. The IPR is a general term covering patents, copyright, trademark, industrial designs, geographical indications, protection of layout design of integrated circuits and protection of undisclosed information (trade secrets). The Agreement provides for norms and standards in respect of following areas of intellectual property: · Trade Marks · Patents, · Copyrights and related rights · Geographical Indications · Industrial Designs · Layout Designs of Integrated Circuits · Protection of Undisclosed Information (Trade Secrets) · Plant varieties
  • 88. 88 5.2. Intellectual Property Enforcement The general laws in relation to Intellectual Property Enforcement in India are mainly the following:- • The Code of Civil Procedure • The Indian Penal Code • The Civil and Criminal Rules of Practice. While Civil Procedure Code provides for the civil remedies and enforcement through civil courts, the Indian Penal Code provides for penal remedies. The rules of practice of the trial courts, High Courts and the Supreme Court of India set the finalities of the enforcement procedure. India follows common law tradition and judicial precedents do have binding force. Hence the decisions of the Supreme Court bind the lower judiciary of the country. The Intellectual Property Laws do provide for statutory enforcement mechanisms. The most important of the Indian Intellectual Property Laws are:- The Patents Act, 1970 The Trade Marks Act, 1999 The Copyright Act, 1957 & The Designs Act, 2001 The above legislations are supported by the relevant Rules there under and these rules are:- The Patents Rules, 1972 as amended by the Patents (Amendment) Act of 1999 The Trade Rules, 2002 The Copyright Rules, 1958 & The Designs Rules, 2000
  • 89. 89 The main post WTO Intellectual Property legislations are:- · The Geographical Indications Act, 1999 · The Semi Conductors Integrated Circuits Layout · Design Act, 2000 The Geographical Indications Rules provide for the administrative mechanisms for registration and enforcement of Geographical Indications. The Semi Conductor Integrated Circuits Layout Design Act is yet to have its rules to support the administrative mechanism there under. The Information Technology Act, 2000 also plays an important role in relation to areas of inter-phase between Information Technology and Intellectual Property Rights. All the above- mentioned legislations provide for in-built enforcement mechanisms and detailed procedures there of.
  • 90. 90 6. SCOPE OF ADR IN IPR DISPUTES 6.1. MECHANISM IN THE INTELLECTUAL PROPERTY REGIME The following is a study as to how ADR mechanisms can be used to resolve various copyright, patents, trade mark and licensing disputes. The following is an in-depth study on how ADR can be imbibed into resolving IP-related disputes. 6.1.1. Commercial Copyright and Software Disputes A copyright dispute typically involves the issue of whether or not an infringing party has infringed a copyright.14 A key issue in such a dispute is usually the question of whether the infringer has unlawfully "copied" or derived his own work from a work protected by copyright15 The dispute typically involves weighing the evidence of the infringing party's access to the original work and the degree of substantial similarity between the particular expressions of the original work and the infringing party's work16 Usually, the case arises in a less-than-exact setting, for example, consider the situation where the author of a book sues a movie company alleging that a movie infringed his copyright in the book, or a writer of an old song sues the writer of a new song alleging that the other writer copied his song. Normally, of course, the name of the infringer's work and any 14 . Atari Games Corp. v. Nintendo of Am., Inc., 975 F.2d 832, 837 (Fed. Cir. 1992); see also Jessica Litman, Copyright As Myth, 53 U. Pitt. L. Rev. 235 (1991). 15 Atari Games, 975 F.2d at 837-38; See, e.g., Ty, Inc. v. GMA Accessories, Inc., 132 F.3d 1167, 1169 (7th Cir. 1997); Repp and K & R Music, Inc. v. Webber, 132 F.3d 882, 891 (2d Cir. 1997); Grubb v. KMS Patriots, L.P., 88 F.3d 1, 6 (1st Cir. 1996). 16 Atari Games, 975 F.2d at 844.
  • 91. 91 characters, as well as the setting, plot and words, are not identical to their purported counterparts in the earlier work. If such were the case, the dispute would in all likelihood be settled quickly. Accordingly, the arbiter of the dispute must decide whether the accused party copied the expression fixed in the earlier work. This is accomplished by examining (1) the accused author's access to the earlier work; and (2) the degree of similarity between his work and the earlier work. A strong determination on the first element will mitigate the need to find a strong showing on the second.17 Copyright cases are not technical and are usually fairly constrained in scope and complexity. Rarely do these cases require extensive discovery or documentation. Because similarity is viewed from the perspective of the "ordinary observer", no particular expertise is required or appropriate for deciding these types of cases.18 Accordingly, these cases often are amenable to resolution through ADR, but no more or less so than most of the relatively straightforward commercial disputes. Although involving more complicated subject matter, disputes involving duplication or derivation of computer software and other highly technical issues can also be appropriate candidates for ADR.19 As parties recognize the benefit of utilizing an arbiter with a particular technical background and ability to understand the subject matter at hand, ADR becomes a more 17 Shaw v. Lindheim, 919 F.2d 1353, 1361 (9th Cir. 1990). 18 Hupp v. Siroflex of Am., Inc., 122 F.3d 1456, 1464 (Fed. Cir. 1997). 19 John R. Kahn, Negotiation, Mediation and Arbitration in the Computer Program Industry: Why play hardball with software?, pt. III.B (1989).
  • 92. 92 attractive means of resolution. ADR also provides the parties with the opportunity for far greater protection of trade secrets and other proprietary or sensitive information during the proceeding itself. Unlike a trial, ADR allows the parties to determine for themselves the degree to which such information will or will not be made publicly available.2320 This would likely be considered a substantial advantage in disputes regarding computer software, for example, where continued confidentiality is often a primary concern. 6.1.2. Commercial Patent Disputes Patent disputes, especially those involving complex technological issues, are often particularly well suited for resolution through ADR. For instance, an arbitrator selected by the parties may be better situated to address the technical aspects of an invention. Resolving a patent dispute involves addressing the patent's validity and subsequent infringement. To address these issues, the decision maker must examine the technical aspects of the patent, including the claims and specification from the perspective of a person "skilled in the art" of the patent's subject matter.26 Because many of the patents issued and involved in litigation today deal with biotechnology, pharmaceuticals, computer hardware and software (often referred to as "high technology") the ability to select a neutral arbitrator, with training sufficient to understand the subject matter at issue, can prove a considerable advantage. 20 Jay E. Grenig, Alternative Dispute Resolution § 1.2 (2d ed. 1997 & Supp. 1998).
  • 93. 93 In cases presenting a more "level playing field" between disputants, many of the typical advantages of ADR over litigation simply become more prominent. Both sides may appreciate the ability to control substantially the amount of time, effort, intrusion and expense of the litigation. For example, average patent dispute arbitration rarely exceeds 12 to 15 months, and often concludes within six months. Also, since many such patent cases do not require that only one party may be deemed the victor, both parties may appreciate the opportunity to use ADR instead of litigation as a way to find the appropriate middle ground. For example, a mutually agreeable license arrangement benefits both parties and may be preferable to an all or nothing outcome. Lastly, patent litigation has a well-deserved reputation for being costly. In patent cases, attorney fees easily can 'go through the roof'. ADR allows parties to resolve their disputes in a more efficient manner, without significantly depleting their budgets. One expert said that arbitration, conducted with skill and experience, should cost less than 50 per cent of a patent infringement suit. As ADR is becoming more popular in patent disputes, specific materials are now available to assist the practitioner, ensuring a more successful process.. 6.1.3. Commercial Trade mark and Trade Dress Disputes. Trade mark and trade dress disputes typically involve a question of "likelihood of confusion." Trade mark Plaintiffs are often involved in claims that allege that the Defendant's mark is confusingly similar to the Plaintiff's mark. The trade dress complainant often argues that the Defendant's packaging
  • 94. 94 presents his product in a manner that misleads the public to believe it is the Plaintiff's product. In both instances, a key issue is the likelihood that consumers will be confused about the source of the involved products. Issues often requiring resolution in both types of cases can include: the degree of distinctiveness obtained by the Plaintiff's mark or trade dress; actual or likely confusion by consumers; similarity of the opponents' products or product categories; similarity of the marks or trade dress; sophistication of the relevant potential buyers and of the marketing channels used by the parties and the Defendant's intent in choosing his mark or trade dress. Many such cases, however, arise where the parties have an ongoing business relationship. The parties in the dispute may, for example, have a license or franchise relationship existing prior to or unrelated to the dispute. Often, a reasonable resolution may involve modification of the existing license from one party to the other, or the creation of an additional agreement. In such situations, there is a substantial benefit to avoid outright litigation not only in terms of time and expense saved, but also in being able to formulate the solution that best meets the needs of the parties and the situation. This also helps prevent the parties from escalating the dispute into a purely aggressive "seek and destroy" approach, which easily could destroy any potential for future collaboration. Although trade mark and trade dress disputes do not present complicated scientific or technical issues to a Court of law, they do require an understanding of equally complicated legal
  • 95. 95 rules, consumer perception and surveys, and market data. Thus, disputing parties may prefer to resort instead to ADR for handling their conflict. ADR presents clear advantages that warrant consideration before most such disputes are pursued in Court. 6.1.4. Commercial Trade Secret and Unfair Competition Disputes: Misappropriation of a trade secret involves the acquisition of trade-secret information through a breach of an obligation of confidentiality or through illegal or otherwise improper means.36 The accused party must have actual or constructive notice that the information qualifies as a trade secret. Trade secret protection covers business information that provides a competitive advantage and that is kept secret and protected to a degree reasonable under the circumstances. Often, a former employee currently working for a competitor may be involved in such a dispute between the old and new employers. Claims of unfair competition may include unlawful, unfair or fraudulent business activity and unfair, deceptive, false or misleading advertising. Such claims are often intertwined with related trade secret, breach of contract or trade mark issues. By the very nature of the issues involved, usually at least one party in a trade secret dispute is very concerned about maintaining the secrecy of the trade secret or other confidential or proprietary information. Unfair competition disputes may also present such concerns, depending on the exact nature of the claim. To the extent that confidentiality and the secrecy of the procedure are important, ADR may be a particularly appropriate alternative to litigation.
  • 96. 96 Trade secret and unfair competition issues also tend to involve parties that prefer a rapid resolution of their dispute, which often involves time-critical issues. For example, a trade secret, once disclosed without a requirement of confidentiality, loses its trade secret protection; an advertisement, by its nature, usually has a limited life span. In either situation, the parties often prefer a resolution as soon as possible. Again, ADR presents alternatives that can address this concern, as ADR methods generally proceed faster than litigation. Trade secret and unfair competition cases often involve technical subject-matter issues that may be difficult for a lay Judge or jury to understand fully. For example, an unfair competition claim could be based on a competitor's comparative advertisement that is allegedly false and misleading. A key issue could be whether, in fact, the competitor's product is reasonably better, faster, more complete, safer, long-lasting or in any other manner, significantly superior to the Plaintiff's product. Just as with the patent cases discussed above, parties to these cases may also prefer to select a neutral arbitrator with the background and training best able to understand the underlying subject matter, facts, and claims. Use of such an expert relieves the parties of the need to educate the fact finder, and helps to streamline the dispute resolution process by affording the parties greater control over expenditures of time, effort and money. 6.1.5. Commercial Intellectual Property Licensing Disputes
  • 97. 97 Companies increasingly try to capitalize and maximize the value of their intellectual property by entering into licensing agreements.41 Often, such licenses include a provision for resort to ADR for resolution of any disputes that may develop regarding the intellectual property and the licensing relationship.42 Such licenses, however, may also give rise to issues implicating the underlying subject matter.43 For example, one issue could be whether and to what extent a license covers the source code and/or object code of a particular computer program and, therefore, subjects the software product to royalties, if, in fact, the product is permitted at all. Because the licensing agreement typically focuses in part on adequately describing the scope and substance of what is being licensed, such issues may also benefit from an arbiter's understanding of the technical subject matter, as discussed above with regard to the underlying and complex matters often involved in patent disputes. Accordingly, when entering into an intellectual property licensing agreement, both parties must carefully consider the identity and potential complexity of issues that could arise when deciding whether or not to include an ADR clause in the contract. If the parties decide to include an ADR clause, it may be advantageous to consider issues such as the type of ADR available or the scope of discovery permitted at the time the contract is entered into, rather than belatedly when a dispute arises. One advantage of agreeing on the use and format of ADR at this early stage is that attorneys and business executives can establish fair rules
  • 98. 98 of conduct, which will prove advantageous if a dispute does arise. Parties must take extra care, however, when determining the procedure used to resolve future conflicts at a time when the nature and exact subject matter of a possible dispute is not yet known. Thus, if the drafters of the ADR clause appropriately consider possible ADR situations, and draft their agreement accordingly, the parties to an intellectual property licensing agreement may be able to set the stage for economical, efficient and reasonable resolution of any conflict that may arise later. Additionally, agreeing in advance to ADR can relieve the parties from later concern that the other side will perceive the suggestion of ADR as sign of a weak case. 6.1.6. A copyright infringement A copyright infringement, breach or violation can arise in two ways: a person (or even an employee), without your authority, reproduces or takes a substantial portion of a work that is the subject of your copyright, an author considers that you have reproduced or taken a substantial portion of their work. While there are many rights that comprise the Copyright Act 1968, these are essentially divided into ‘economic rights’ and ‘moral rights’. 6.1.7. Economic rights Economic rights can be bought, sold and licensed by the original owners of the copyright. This means that, under the Copyright Act, copyright owners have the exclusive right to do, or authorise the reproduction, adaptation, translation,
  • 99. 99 performance, broadcast, publication or public communicating, or importation of the protected work. Most copyright infringements concern these economic rights. For example, copying a substantial part of the source or object code from one computer software program into another is a breach of the copyright owner’s exclusive right to sell and reproduce features of their computer program that derive from that code. An ex-employee reproducing and publishing a substantial part of their ex-employer’s training manual without permission is a breach of copyright on their literary work. 6.1.8. Moral rights Authors and creators of copyright work also have moral rights; these belong to the original creator and cannot be transferred to others. Moral rights include the right to: attribution as the work’s author whenever the work is published or reproduced, preventing any other person from falsely claiming that they are the author of the copyright work; and preventing their work from being subjected to derogatory treatment. These rights can be infringed where authorship is not recognised on a work or the work has been modified or displayed in such a way so as to be considered derogatory. Most moral rights last for the duration of the copyright, although the author's right of integrity (i.e. the right to prevent derogatory treatment of a copyright work) lasts only for the author's lifetime.
  • 100. 100 There are two options for resolving an infringement of your copyright, or a claim of infringement against you by another party. 6.1.9. Copyright dispute resolution While an aggressive copyright litigation strategy might be the best approach in some circumstances, often the preferable commercial outcome (particularly when defending a copyright infringement claim) is to use alternative dispute resolution (ADR) methods such as negotiation, mediation or conciliation to facilitate communication between the parties so a settlement to the dispute can be reached. ADR can be court- ordered or privately organised. In all copyright infringement disputes, we consider whether ADR is a viable option, as dispute resolution will minimise costs and legal liability by avoiding a potential lawsuit. Copyright disputes and litigation can sometimes be an unwanted distraction from your day-to-day business. 6.1.10. Copyright litigation While we will always facilitate settlement where appropriate, sometimes the adoption of an aggressive copyright litigation strategy is either unavoidable or a necessary business strategy. At the start of any litigation we provide you with a clear roadmap showing how a matter might unfold, with timeframes and costs associated with each of those stages. We keep you informed through regular updates as to the progress and costs of litigation.
  • 101. 101 Our copyright lawyers have litigated in various jurisdictions including the Federal Court. Our team of copyright lawyers has a wealth of intellectual property experience and will devise a strategy, tailored to your needs and the needs of your business. 6.1.12. The current approach: patent litigation A patent can be generally defined as a proprietary right over the invention of a product or process that provides an inventor with a monopoly right for a certain period of time, typically 20 years during which the product or process cannot be exploited by others. The Patent disputes typically arise where a third party allegedly infringes the monopoly right of a patent holder, although other disputes such as those involving licensing agreements can also eventuate. In most federal states intellectual property is a matter of national jurisdiction and so proceedings are initiated in the federal level court. Most patent disputes involve courts having to decide on technical questions of fact and law with respect to claims of alleged patent infringement. This requires consideration of an appropriate means to interpret the claims of a patent, which can be defined as the precise technical descriptions of the invention on which is based an evaluation of the protection sought. Its interpretation is a question of law and on appeal the court may discard the claim’s interpretation, forcing the parties in dispute to re-argue their case on correct interpretations. This is a complex procedure that ultimately contributes to the often lengthy and expensive litigation process.
  • 102. 102 The cases become further complicated when a party alleged to have infringed a patent responds with a counterclaim of patent invalidity. This is the most typical defence to infringement. Cross claiming requires the court to reconsider the validity of the original patent and whether it meets the statutory requirements of novelty, inventiveness and non- obviousness.9During re-examination the court must consider newly uncovered references or evidence potentially material to the patentability of the invention that had not been considered by the relevant patent office.10 If a defendant successfully pleads the defence of a patent the patent owner will lose not only the case but also the patent itself. Conversely, a patent owner who successfully wins an infringement claim may be awarded damages, and an injunction against further infringement will typically be ordered. Evidently, patent litigation involves many complexities. That growth in international transactions has multiplied the potential for cross-border intellectual property (IP) disputes. Global challenges – such as the digital environment, climate change issues, access to health care, the protection of traditional knowledge and traditional cultural expressions and the preservation of biodiversity – may create new types of IP disputes. Meanwhile, the economic downturn is providing an incentive for stakeholders to seek more efficient and affordable means of resolving such disputes than through court litigation – making alternative dispute resolution (ADR) an increasingly attractive option.
  • 103. 103 ADR refers to neutral mechanisms allowing parties to solve their disputes outside of court in a private forum, with the assistance of a qualified neutral intermediary of their choice. ADR can only be applied if all parties agree to submit their dispute to the procedure or if it is mandated by a competent court. The benefits include time and cost efficiency, flexibility, party control, neutrality, a single procedure, confidentiality and expertise. 6.1.15. Domain Name There is a distinction between a trademark and a domain name, which is not relevant to the nature of the right of an owner in connection with the domain name, but is material to the “scope of the protection” available to the right. The distinction lies in the manner in which the two operate. A trademark is protected by the laws of a country where such trademark may be registered. Consequently, a trademark may have multiple registrations in many countries throughout the world. On the other hand, since the internet allows for access without any geographical limitation, a domain name is potentially accessible irrespective of the geographical location of the consumers. The outcome of this potential for universal connectivity is not only that a domain name would require world wide exclusivity but also that national laws might be inadequate to effectively protect a domain name. The lacuna necessitated international regulation of the domain name system (DNS).
  • 104. 104 This international regulation was effected through WIPO21 and ICANN 22 . The outcome of consultation between ICANN and WIPO has resulted in the setting up not only of a system of registration of domain names with accredited Registrars but also the evolution of the Uniform Domain Name Disputes Resolution Policy (UDNDR Policy)23 by ICANN on 24th October 1999. As far as registration is concerned, it is provided on a first come first serve basis. Besides the UDNDR Policy is instructive as to the kind of rights which a domain name owner may have upon registration with ICANN accredited Registrars. The Dispute resolution under the Uniform Domain Name Disputes Resolution Policy (UDNDR Policy) by ICANN A person may complain before administration-dispute- resolution service providers listed by ICANN under Rule 4(a) that: i) A domain name is “identical or confusingly similar to a trademark or service mark” in which the complainant has rights; and ii) The domain name owner/registrant has no right or legitimate interest in respect of the domain name; and iii) A domain name has been registered and is being used in bad faith. 21 World intellecetula property organistion 22 Internet Corporation for assigned names and numbers 23 Uniform Domain Name Disputes Resolution Policy
  • 105. 105 Rule 4(b) has listed by way of illustration the following four circumstances as evidence of registration and use of a domain name in bad faith: (i) Circumstances indicating that the domain name owner / registrant has registered or the domain name owner / registrant has acquired the domain name primarily for the purpose of selling, renting or otherwise transferring the domain name registration to the complainant who is the owner of the trademark or service mark or to a competitor of that complainant, for valuable consideration in excess of its documented out-of-pocket costs directly related to the domain name; or (ii) The domain name owner / registrant has registered the domain name in order to prevent the owner of the trademark or service mark from reflecting the mark in a corresponding domain name, provided that it has engaged in a pattern of such conduct; or (iii) The domain name owner / registrant has registered the domain name primarily for the purpose of disrupting the business of a competitor; or (iv) By using the domain name, the domain name owner/ registrant has intentionally attempted to attract, for commercial gain internet users, to its web site or other on-line location, by creating a likelihood of confusion with the complainants mark as to the source, sponsorship, affiliation, or endorsement of the domain name owner/registrant web site
  • 106. 106 or location or of a product or service on its web site or location. The defences available to such a complaint have been particularised " but without limitation", in Rule 4 (c) as follows: (i) Before any notice to the domain name owner/registrant, the use of, or demonstrable preparations to use, the domain name or a name corresponding to the domain name in connection with bona fide offering of goods or services; or (ii) (ii) The domain name owner/registrant (as an individual, business, or other organization) has been commonly known by the domain name, even if it has acquired no trademark or service mark rights; or (iii) (iii) The domain name owner/registrant is making a legitimate non-commercial or fair use of the domain name, without intent for commercial gain to misleadingly divert consumers or to tarnish the trademark or service mark at issue. These rules indicate that the disputes may be broadly categorised as: (a) disputes between trademark owners and domain name owners and (b) between domain name owners inter se. A prior registrant can protect its domain name against subsequent registrants. Confusing similarity in domain names may be a ground for complaint and similarity is to be decided on the possibility of deception amongst potential
  • 107. 107 customers. The defences available to a complaint are also substantially similar to those available to an action for passing off under trademark law. As far as India is concerned, there is no legislation, which explicitly refers to dispute resolution in connection with domain names. But although the operation of the Trade Marks Act, 1999 itself is not extra territorial and may not allow for adequate protection of domain names, this does not mean that domain names are not to be legally protected to the extent possible under the laws relating to passing off. 6.1.16. International Intellectual Property Disputes The nature of international disputes lends itself to conflicts as a result of diverse legal systems and tribunal procedures. Also, international intellectual property disputes often involve nations that may have very different ideas regarding intellectual property and the level of protection that it should be afforded; so therefore, the dispute mechanisms provided by General Agreement on Tariffs and Trade (GATT) and WIPO stand as the benchmark for the method and procedures to be followed when resolving international disputes. 6.1.17. Fundamental Problems of International IP Disputes One of the fundamental problems in international intellectual property law disputes is the myriad conceptual differences in the way in which different nations view intellectual property rights. For instance, until the recent ratification of the GATT, which resulted in dramatic changes in domestic patent law in the United States, the domestic law
  • 108. 108 required that patent applications be maintained in secret, and disclosure not be made until the granting of the patent. The secrecy of pending applications distinguished domestic law from foreign patent registration procedures, where disclosure occurs at the time of filing. Mechanisms employed under international agreements, that include ADR provisions, may provide better means for protecting intellectual property in less developed nations, and industrialized nations may then decide to enter the markets in these nations. Complex issues, such as choice of law or jurisdiction, will no longer be problematic when dispute settlement procedures are outlined in multilateral agreements. For instance, when mediation is used in international intellectual property disputes, it is more problem solving than being right determinative. The fact that mediation focuses on solving the problem and not on the rights of the individuals is the key to its effectiveness in dispute settlement. One of the fundamental problems with intellectual property disputes is the existence of different views that developed and under-developed countries have with respect to intellectual property rights. By focusing on problem solving and not exclusively on the rights of each party, settlement may be reached through compromise.
  • 109. 109 CHAPTER – 7 IP DISPUTES FOR ADR MECHANISMS 7.2. The IPR disputes and ADR: The people across world over frequently involve in cross- border commercial transactions having different backgrounds and different national laws or sometimes within different states of India. Some time due to inherent flaws these disputable transactions create multi-jurisdictional disputes between the nationalities of different countries having different social backgrounds, mindsets. Usually those business entities having familiarity with alternative dispute resolution (ADR) are able to resolve such conflicts efficiently. In other words, a court can enforce a decision reached in an ADR proceeding solely against the parties in that proceeding. Though use of alternative dispute resolution ADR to resolve bilateral conflicts has been recognized and being carried out successfully but use of ADR in Intellectual property right conflicts is a not yet utilised to its full potential rather the intervention of ADR in Intellectual property rights conflicts is being carried out in slowly as being seen as a novel intervention. The ADR has not been fully used much in India in respect of IPR matters. Though Intellectual property comprises of exclusive rights acquired over property created with intellectual / innovational effort of an individual principally over novel ideas, symbols, names, images, creative works: inventions, literary, artistic, scientific works and designs including performances of performing artists, phonograms, and broadcasts, inventions in
  • 110. 110 all fields of human endeavor, scientific discoveries, industrial designs, trademarks, service marks, and commercial names and designations basically deriving the results or out come from simulative and cognitive efforts put by such an individual to protect its intellectual / innovational against unfair competition. Intellectual property right acquired over property created with intellectual / innovational effort of an individual principally over creative works give the creator the right to prevent others from making un-authorised use of their property for a certain period but wide Internet usage has rendered boundaries of the states meaningless. In this scenario the Intellectual Property Rights are becoming fundamentally exigent to get in to research collaborations and thereby making Intellectual property rights tool as valuable business assets for technological entities. As the determination of commercial or non commercial disputes before different national courts can result in to high legal and other costs as well as conflicting awards. Therefore, the ADR has a potential to provide business entities belonging to distinct nationalities a single unified forum of arbitration thereby having a final and enforceable award binding across multiple jurisdictions. Hence, increasingly, IP owners and users are approaching to many of known alternative dispute resolution (ADR) procedures like arbitration and mediation to resolve their IP disputes
  • 111. 111 Though in today's consumer oriented world, intellectual property is emerging as one of the most valuable legal rights in the global economy, invariably technology has become increasingly dependent Intellectual Property laws for its protection, hence, we can not ignore the the importance of Intellectual Property laws for providing protection to intellectual / innovational efforts of an individual. Resultantly, various nations around the globe have entered into multilateral agreements having unified rules to increase the protection of intellectual property rights in their respective constituents. The vast majority of intellectual property litigation, especially cases involving copyright, patent and trademark infringement claims takes place in the our courts. Like most cases that set out upon the litigation path, intellectual property cases are most often settled before trial; the number of cases actually tried in court is small. Regardless of when intellectual property lawsuits are settled, the cost of litigating is extremely high and is incurred up to the completion of trial. The Trademark, Copyright and Patent cases but even these cases can run into the high six figures or more when potential damages are large (i.e., exceeding 20 lacs), there are complex legal issues and/or a lengthy trial is anticipated. Not only is litigation expensive, it is a liability on the balance sheet for as long as the lawsuit exists, which can be a decade or more in patent cases that are appealed and then retried A
  • 112. 112 more practical problem is that litigation continually drains a company’s cash flow. And litigation is so very public. So, when your client is faced with enforcing—or acquiescing to—an intellectual property right, the question “Should one advise the company to step into the ring?” should be asked because there are alternative, less public and less costly ways of resolving many intellectual property disputes. The most common are arbitration and mediation, which are distinctly different alternative dispute resolution (ADR) processes. How do parties enter into arbitration? It is prudent to use a pre-dispute ADR clause providing for arbitration in the transaction documents, such as a patent royalty license. The ADR clause usually states that the parties agree to arbitrate “any and all disputes arising out of or related to this agreement.” Having this clause can lower the temperature of the parties’ potentially heated reactions, which can distract them from objective decision making after a dispute arises. If there is no ADR clause in the relevant documents, the parties can agree to arbitrate post dispute. However, by that time the parties usually are so at odds with each other that they are less likely to agree on anything. The cost of not having a pre-dispute clause is that if litigation is commenced, the court might require the case to be arbitrated or mediated before a court-appointed neutral under a court-referred ADR program. This obviously takes the decision making about the process of resolving their intellectual property dispute out of the parties’ hands.
  • 113. 113 Private commercial arbitration allows the parties to have that control. Significantly, it allows them to decide on the rules and procedures that will apply to their arbitration. In most cases, parties agree to have their arbitration proceedings administered by an established, neutral arbitration provider, such as the Indian Council of Arbitration (ICA), which has well-tested arbitration rules—but does not includes specialized rules for patent disputes— and acts as an intermediary with respect to neutral compensation issues. The Arbitration rules tend to be flexible and give great discretion to the arbitrator to manage the proceedings. Even when agreeing to arbitration under ICA rules, parties can adjust the rules to meet their needs. Because the arbitration agreement governs the arbitral process, parties need to pay considerable attention to the terms of that agreement to increase the likelihood that the dispute will be resolved without the need for litigation In this scenario the World Intellectual Property Organization (WIPO) has been playing pivotal role since its inception in strengthening ADR procedures for IP conflicts and forefront in resolving IP conflicts through their specialized ADR procedures. The Intellectual Property conflicts are not that conflicts which cannot be adjudicated or resolved through ADR. As Intellectual Property conflicts being a specialised in its nature and it require specialsed services of ADR experts in resolving IP conflicts, mainly due to non availability of IP experts in India is the main obstacle in resolving IP conflict through arbitration or through ADR.
  • 114. 114 Thus under the aegis WIPO developed inherent mechanisms of resolution the Arbitration and Mediation between various nations around the globe trough their multilateral agreements, These many of multilateral agreements entered between various nations around the globe recognising that traditional legal litigation is no longer the most viable as mean of settling international intellectual property disputes. It is against this backdrop, till date it is not yet utilised fully in India by Indian courts as well as Individuals and or business entities in resolving the Intellectual property rights conflicts. In India at Present the provisions of ADR solely being invoked in disputes of general civil nature litigation, matrimonial and other business litigations where arbitration clauses are being part of the agreements only in relation to ADR and conciliation Act. Hence Through this research paper I will try to discuss various remedies available in ADR in respect of IPR conflicts which can considerable reduce the IP litigation in our courts too. 7.3. Reasons to Consider ADR for IPR Disputes As a general principle, intellectual property rights are territorial in scope. The Patent Act, for example, provides that the grant of a patent confers a “right to exclude others from making, using, offering for sale, or selling the invention throughout the India.” That normally copyright law also does not apply beyond particular states territorial boundaries, even though the Copyright Act is not explicit on the point. The same principle is generally true of trademarks (although infringing activity in the case of trademarks sometimes is
  • 115. 115 found to occur outside of territorial boundaries). At the same time, contracts and licenses concerning IP rights and transactions frequently create and extend related legal rights and obligations beyond a single nation’s territorial boundaries and, because of international treaties and the harmonization of national laws concerning intellectual property, the same IP rights increasingly are recognized and protected simultaneously in many different nations. 7.3. Certainty as to Forum. As with any commercial transaction implicating the laws and judicial power of several different jurisdictions, one of the primary reasons in an IP transaction for including a contractual clause mandating the ADR rather public court adjudication of any disputes is simply to provide the parties with the certainty that, in the event of a dispute, they will be submitting their dispute to a simple forum for resolution rather than potentially to several different forums in several different jurisdictions simultaneously. Without such an arbitration clause, one party or the other might file a lawsuit in each of several different jurisdictions having power to apply its law or its judicial power to the parties or transaction. Courts of the United States, as in most other nations, will refuse to hear a lawsuit that is within the scope of a valid contractual arbitration clause, and will instead refer the parties to arbitration. Thus, such clauses generally are viewed as indispensable by commercial parties whose transactions are subject to the laws or judicial power of more than one nation or jurisdiction.
  • 116. 116 7.3. The Relative Speed of ADR. The Properly managed, arbitration and other ADR mechanisms tend to provide speedier resolutions of disputes than public court adjudications. This typically occurs either because the arbitration / ADR proceedings, unlike public court adjudications, are able to commence immediately (i.e., there is not an entire docket of cases competing for the attention of the adjudicator), or because the procedural flexibility of arbitration / ADR results in the proceeding taking less time. The speed of dispute resolution principal multinational treaty governing international arbitration. 7.4. Arbitration and mediation of IP disputes as alternatives to litigation. When the company has been accused of trademark infringement and the suit has been filed and the complaint served. The court offers mediation of the dispute. The company operates under a licence in connection with its sale of a particular product line. A new line is introduced, and the licensor claims the new product line is subject to the licence. This licence agreement requires arbitration of all disputes arising under the licence. In myriad situations, companies have at least an initial option to mediate a dispute, or arbitrate, in advance or instead of litigation. The common wisdom is that arbitration is less expensive and more expeditious than litigation. In some circumstances, this may even be true. In some circumstances, arbitration or some other form of alternative dispute resolution (ADR) may provide an economical, efficient alternative to the race for the
  • 117. 117 courthouse and all that transpires there. Certainly, as it has been said, all disputes are settled eventually: they are settled by the parties themselves or by a judge or jury. 7.5. Initial considerations in selecting Litigation Alternatives: The knowledgeable use of litigation alternatives cannot occur unless both parties to the IP dispute understand their business goals. Do they know why they are fighting and what each wants to accomplish? Is the goal a public victory in court or to crush the competition? Maybe what they really want is to put the litigation behind them and get back to business; maybe they want to control their litigation costs. For example, before choosing a process to resolve a patent dispute, a plaintiff should consider the potential returns from litigation, including the available damages and how much product exclusivity will be available under the scope of claim coverage provided by the patent. A defendant should consider the likelihood that it will have to pay damages, the amount of such damages and whether product changes can be made to minimize or eliminate the dispute. Given the costs, time and uncertainty of IP litigation, many issues may be better addressed using ADR approaches such as arbitration or mediation. The competition in high-value technology areas like pharmaceuticals and medical devices is so fierce that in many cases traditional civil litigation is heavily relied on to achieve business goals. It is not rare for these cases to involve 10 or
  • 118. 118 more patents, which inevitably entangles the parties in a long and costly process with uncertain results. Attorneys should question whether it is necessary for their clients to take this path in every IP dispute. As recently the our Civil Procedure code has understood the potentiality for settlements through other means in which courts to consider the potential for settlement in each case after filing a lawsuit, counsel should raise with the client whether mediation or arbitration—or both sequentially— would be a more productive way to achieve the client’s commercial goals. Clients should also be asked to research earlier trademark and patent licenses and litigation settlement agreements with the adversary to determine whether any of them require the use of ADR to resolve future disputes arising out of new or related technology. Some IP cases clearly should go the litigation route: the cases which present novel legal issues, where a legal precedent is desired for future enforcement efforts and where court- supervised discovery may be necessary because of the level of detail needed to obtain critical facts regarding the development of an invention. Full discovery and court involvement may be required in some cases when dealing with issues like multiple contributions to an invention, propriety of conduct or the timing of a competing inventor’s efforts. But many of IP cases do not raise novel issues or are not potentially fit for judicial precedents. Thus, it is important to
  • 119. 119 make a determination in almost every case as to whether mediation and/or arbitration would be preferable to litigation. Making this determination depends on a number of factors. In some cases, one factor may be so dominant that it determines which form of dispute resolution is best. In other cases, several factors taken together may weigh in favor of one process over another. The factors to be considered are addressed below. 7.6. What form of ADR should be pursued? After setting out the framework for the discussion – regarding what forms of ADR are commonly used and how they differ – we can look at some of those circumstances in the context of IP disputes, where the answers may be somewhat clearer than it depends. We can also look at some of those circumstances where the determination to employ a particular form of ADR may depend on the jurisdiction; the basis for the parties’ past relationship; the desire of the parties to maintain a relationship going forward; and the nature of the relief sought. We can start with a presumption that the legislature and the judiciary favour arbitration, and other forms of ADR, as private dispute resolution shifts the costs to the parties and relieves congestion in the courts. ADR encompasses a variety of processes used to resolve disputes in lieu of trial. ADR includes not only arbitration which is adjudicative, but also mediation and early neutral evaluation, which are non- adjudicative.
  • 120. 120 Whether one opts for arbitration or mediation, or for any other form of ADR (eg, early neutral evaluation), to resolve disputes over intellectual property depends on a number of factors. ADR has both advantages and disadvantages over litigation. 7.7. The advantages of ADR have been recognised: Normally speed of resolution (the caveat is that some IP disputes may be resolved more expeditiously by filing a motion for interlocutory injunctive relief, whether an application for a temporary restraining order or a preliminary injunction); • generally less expensive (this is in part because fewer formal requirements allow for compromise in resolution rather than zero-sum flexibility in fashioning remedies); • less combative and so preserves business relationships; • preserves confidentiality, which may be a major consideration in matters involving trade secrets, patent matters and even trademark disputes where product attribute and customer information may be relevant to the determination; and • the decision maker has accepted expertise, and presumably, real interest in the subject matter of the dispute. · The disadvantages of ADR have to be weighed for IP disputes in particular: • no binding precedent; • may not serve as a deterrent to other infringers; • Generally no appellate review; third parties cannot be compelled to participate; and Costs may not be much
  • 121. 121 lower than in litigation, particularly if the parties engage in discovery and there is extensive briefing. 7.9. Mediation and Arbitration are different forms of ADR. Mediation is a non-adjudicative, facilitated settlement negotiation process. In some jurisdictions, a statute or court order may impose mandatory supervised mediation on the parties. The parties can themselves agree to mediate, either before a dispute arises or after. The parties may employ an ad hoc mediation process or submit the dispute to mediation through a private organisation. 7.10. Other approaches to ADR Other approaches to ADR are as varied as submitting matters in dispute to a mock jury or using a rented judge in a summary trial for evaluation or disposition, and can be as simple as early neutral evaluation. When considering whether to resort to ADR, and what sort of ADR, it is important to consider the nature of the relief sought: is the process employed one that can provide the desired relief; and, even if so, is there a means enforcement; and will the arbitration resolve all of the issues in the proceeding, or only some of the issues, so that there will be litigation in any event? In the IP area, certain types of disputes are simply not as well suited as others to ADR: for example, counterfeiting cases and cases where the Patent Office, and not the parties or an
  • 122. 122 arbitrator, may grant a reissue or determine who prevails in interference. The point of all of this is the caution that boilerplate arbitration clauses need to be reviewed carefully and that consideration should be given to other forms of ADR, with the understanding that there are situations in which arbitration, and other forms of ADR, may not, in the context of IP disputes, provide the best resolution or a better resolution than either litigation or no action at all. 7.10. The value of IPR disputes in ADR mechanisms That in the various mechanisms for settling disputes, litigation is a legitimate, open the most efficient process for resolving disputes, which is characterized by the public, mandatory program, etc., but these procedures to resolve disputes with natural features of the resolution of intellectual property disputes, but there are many limitations. Although the ADR and litigation in the settlement can not be completely overcome the drawbacks of intellectual property disputes, but the ADR itself has many advantages that are not litigation, but tend to become parties to the dispute select ADR to settle disputes on grounds of intellectual property, but also highlights the existence of ADR on the value of the dispute. As compared to other common property rights, rights of intellectual property with the object hidden features, regional, perishable, legal and others. Thus, to resolve disputes over intellectual property as a result, there are special
  • 123. 123 requirements, such as professionalism, timeliness, confidentiality, diversity and so on. 7.10.1. professional That Intellectual property disputes in the literature, art, science and other fields, disputes the fact that a wider scope, and resolve the dispute to resolve professional issues and techniques is greater. For example, the litigation in counterfeiting. Is copyright, the judge is accused of having violated if the works are original works of the same or similar to the original artworks alleged offense is plagiarism, copy, deform and manipulate the rights on works, and if in the proceedings in counterfeiting? is patent, the question of the alleged infringement of patent specifications and requirements related to the corresponding technical characteristics, is essentially the same way perform the same function, making it the same effects. and there is no external manifestations of intellectual property rights, the right to rely entirely on the right to define the scope and content, and intelligence to create products which these laws are often associated with a considerable degree technical content, as often as those with technical knowledge and appropriate legal professionals to understand and grasp. in the proceedings, the arbitrator of the dispute are the professional judges, and judges generally consider that a legal expert in the field, they have only the law enforcement, the fa? we correctly determine the correct development of the evidence presented at trial and the expertise and capacity, and therefore generally not a good deal of intellectual property rights in cases of professional
  • 124. 124 issues related to technology. and different action, ADR is able to better meet the IP needs to resolve disputes. As part of ADR to resolve IP disputes, the parties may agree to select the relevant field of technology experts, legal experts and has extensive experience as an ADR neutral section three people involved in the regulation dispute, vocational training and experience to play the role? the conflict resolution are more reasonable behavior, and standardized as a third party experts to provide professional or technical problems related to cognition and evaluation to assist the parties to form on the facts, evidence of technical and legal issues related to a clearer understanding, which is conducive to maximizing the protection of clients to the right decision based on judgments of a settlement of disputes rationally. 7.10.2 Low cost Litigation is a national law binding dispute settlement process applies, with a strict system of technical standards, complete each step of the procedure or measures related to spend some time, usually a long period to resolve the dispute. Cycle and intellectual property litigation is generally higher than ordinary civil cases, even more. First, because the legal issues of intellectual property litigation and technology intersect the complexity of the issues mentioned, the finish is time consuming, on the other hand, in intellectual property disputes, and more supplement the general procedures necessary civil engineering, often related to situations such action is interrupted, which has exacerbated the cycle delay of
  • 125. 125 litigation. intellectual property litigation in the world have long trial periods and characteristics of high cost, and the widespread problem of the backlog of cases following the procedure for settling the dispute has led to high cost in litigation, because the parties have full control in ADR and at the right speed and efficiency of dispute resolution depends on the intention of the parties, the parties to the dispute resolution sought cost of time and money invested in the control it from a certain range, if the ADR has the advantage of saving time and money no doubt. In addition, ADR is not only savings cost for the parties, including parties to the dispute settlement process to pay the cost directly, including disputes arising in the process of cost indirectly, such as business interruption, destruction of the relationship between the parties and the loss of future business opportunities, etc.. 'Facts have proved that more use of dispute resolution in intellectual property litigation in resolving disputes outside of litigation, the parties can save the cost of dispute settlement more and has thus more viability. 7.10.5. Flexibility The dispute is a national exercise of judicial power and the right to obtain from large, so that the operation of process and technology is very accurate, reasonable, and specialized, with a separate set of procedures and standards. But the complex relationship of intellectual property rights disputes, heterogeneous interests of the parties, the demand for variety,
  • 126. 126 it is difficult to solve with standard types of disputes. and? ADR is a consensual basis, and for different parts of the program center, which makes the resolution of disputes in order to avoid the stark choice of anything, so that the ADR with a high degree of flexibility and physical variability, and the parts (a) total compensation. '... in ADR, the parties concerned the right to choose and decide the dispute settlement of personal interest, the parties may combine the understanding of the nature of intellectual property disputes and address the concerns of the design process in form parties under the principles of autonomy and self-selection laws applicable intellectual property rights and regulations, industry standards, business practices, etc., or simply based on some principles or rules of law agreement negotiated settlement of disputes. 7.10.5. Confidentiality Intellectual property rights, in addition to public intellectual achievements, but there are many undocumented trade secrets and other confidential internal information such as product formulation, production processes, technologies and data customers, business plans, operational methods, co? ts, profits, etc. This information may be parties to the competition between companies to win a key factor, the parties do not want to open and aware of competitors in the process settlement of disputes to the extent possible, protect the confidentiality of proprietary information. The natural action of the public with the evidence, procedure and results are open to the parties and the public, so that the privacy and trade
  • 127. 127 secrets is a large risk exposure and this difference is, ADR is often the procedure is confidential. In many countries legislation ADR (mainly arbitration and conciliation law) and a variety of ADR in rules of the organization of the procedure are clear to the confidentiality provisions. For those who want to protect privacy, trade secrets, commercial information not to disclose the terms of the parties, the ADR confidentiality of the process benefits the party more than the parties or by the exchange of evidence dispute benefits obtained through discovery. 7.10.5. To maintain beneficial relationships In many intellectual property disputes, parties often have a long business relationship, service providers and customer relationship, business relationship between the joint ventures, the establishment of these relations is not the success of overnight, and in the fierce market competition, possibilities of cooperation is not often achieved, and therefore the parties are generally the value of these relationships and attention. in case of dispute, the parties shall consider the interests of resolving disputes are often not only stay in one time gains and losses level, maintain long-term interests of the commercial relationship is becoming more of a compromise decisive factor, litigation is adversarial mechanisms for resolving disputes, the judge's task is to clarify and protect the authority of those who are enrolled in the legal text of the value and protect the legal rights of the parties and to achieve social justice, result of the decision is? Either all-or-nothing (all or nothing) ',' black and white, 'if the parties after the trial
  • 128. 128 there may be in a state of perpetual conflict and confrontation. and mechanism of action is different, ADR can provide an effective, but not resolve the conflict, given the relationship between trade between the parties over a long period to avoid the rights and obligations established under the law simply to make a relation of determination, the result is not a simple mechanism for resolution of the result, relatively little harm to the feelings between the parties. 7.10.5. The adequacy of the results For the administration of justice in the proceedings before the dispute took place, the parties to the dispute settlement procedure is the subject of rights and obligations between the parties an absolute distinction. However, a considerable amount of litigation and intellectual property rights and obligations can not be simply attributed to relationship may be of interest for more balance. ADR to resolve the dispute does not dwell on the past, in the settlement of disputes more concerned about future earnings. According to the principle that the interests of compromise and concessions, as opposed to the struggle for human benefit without more appropriate, For example, in disputes counterfeiting? Is patent counterfeiting? One patent once the composition, most have now an established fact that counterfeit goods have a certain market, some companies have even violated certain scale. with respect to litigation to obtain damages for the termination of the infringement, or the results of such a measure, if both parties through licensing,
  • 129. 129 joint ventures or other forms of mutually beneficial cooperation in the exchange for ending the controversy, not only conducive to achieving a win-win, and can create a more substantial benefits socially and economically. 7.10.6 The specific modalities of intellectual property disputes ADR ADR, including all intellectual property disputes in a court outside the mechanism of formal dispute resolution process to resolve intellectual property rights, at present, the main mode of IP ADR administrative processing, arbitration, mediation, negotiation. Administrative processing is regulated by the law of intellectual property rights administrative organs of civil disputes between equal entities, including administrative decisions and administrative of the two forms of mediation, arbitration is that parties to the conflict took place before or after the dispute agree to submit the dispute to the Joint recognized third-party proceedings, and subject to widely advertise the results of the model dispute resolution, similar to the privatization of the trial, civil mediation refers primarily to the intervention of a neutral third party, to the parties in reaching activities of the agreement dispute resolution, including social groups, organizations, autonomous mediation associations and industry, lawyers, mediation, negotiation is Referring to the dispute or the parties through their own private forces of compromise and compromise to resolve the dispute. In addition, there are still overseas, may be used for
  • 130. 130 various forms of ADR to resolve IP disputes, including orientation assessment, mini-trials, mediation - arbitration and arbitration - mediation and various forms of repetition of the ADR base, multi-application, or local changes in the resolution of disputes. 7.11.7. The specific modalities of IPR comparison of ADR Different types of model intellectual property ADR has its own characteristics, advantages and disadvantages, Table 1 of voluntary, mandatory, third, a formal, procedural in nature, results, and open to reveal several aspects of the main similarities and differences. 7.10.8. That size and importance of the dispute: Many litigators believe that IP disputes involving large amounts of damages, complex legal issues and extensive expert testimony are not suited for mediation or arbitration. This is too simplistic. There is no reason to allow the amount of money at stake to rule out arbitration or mediation. If the financial resources of the aggrieved party are limited, litigation is likely to quickly eat up those resources, leaving this party without a resolution and without funds. In these circumstances, mediation is a sensible alternative and should be considered first. Many litigators and business executives believe that when a company’s survival is at stake, the dispute should be litigated. However, both arbitration and mediation allow for confidential treatment of the parties’ financial data, business-planning
  • 131. 131 information and development work—protection not available in litigation, at least once the trial begins. Protective orders typically are effective only during the discovery phase of litigation, an important factor to consider when trade secrets or highly competitive businesses are involved in a dispute. Parties may not want to discuss their proprietary information in court in front of competitors who frequently monitor IP trials precisely in order to learn about a competitor’s business. Mediation and arbitration do not take place in public. Thus, ADR should not be ignored just because an IP case is monetarily large, complex and important.
  • 132. 132 CHAPTER – 8 INTERNATIONAL DISPUTES: Intellectual property cases that are international in scope are particularly well suited for arbitration or mediation. Arbitration is a well-established dispute resolution mechanism for international commercial disputes, and mediation is well known in many Asian countries (often known there as conciliation). Mediation is also attracting attention in the European Union, where there is now a push to use mediation before another adversarial process. The reasons for acceptance of ADR in the international business community include, among others, a lack of confidence in national courts; unfamiliarity with foreign laws; concern about long, costly court proceedings; unpredictable and possibly inconsistent outcomes; and difficulties with enforcing judgments obtained in foreign countries. These considerations are especially applicable in international IP disputes, since IP rights are issued on a country-by-country basis. Using international arbitration makes it unnecessary to litigate in multiple affected jurisdictions having unfamiliar procedures, different legal protections for IP rights and different enforcement mechanisms. By arbitrating a multinational IP dispute in a single dispute resolution process, the parties can save money and time and obtain a consistent result.24 The institutions in developing countries are increasingly entering the IP market, and multiparty, multinational IP 24 Resolving Intellectual Property Disputes Outside of Court: Using ADR to Take Control of Your Case By Alan W. Kowalchyk
  • 133. 133 relationships are becoming more common, and even essential to socio-economic development. Through transactions involving these relationships scientific, technical, entrepreneurial, creative, and traditional knowledge is exchanged. Nonetheless, a protected right also tends to increase the likelihood of disputes related to that right.1 While parties seek to reduce the frequency of disputes by rigorously managing their IP rights and obligations, disputes will inevitably arise. When they do, they can negatively affect both sides. Parties involved in IP transactions, therefore, should be aware of dispute-resolution methods and have a specific dispute-prevention and resolution strategy. Dispute-resolution procedures too often are unwittingly selected when a relationship begins, often years before a dispute actually arises. The dispute-resolution clauses will therefore have been inserted into contracts by people no longer involved in the issues. Moreover, clauses frequently are inserted with a limited awareness of their specific implications in a dispute- resolution scenario. Litigation, the formal, public process for resolving disputes before national courts, is the most conventional method of dispute resolution. Particularly for transnational disputes, litigation may be risky, frequently protracted, and may at times require seemingly unlimited legal costs and management time. Moreover, a dispute taking place in multiple jurisdictions may result in different outcomes depending on which court decides the case.
  • 134. 134 The alternative dispute resolution (ADR) procedures for resolving IP disputes, focusing on the interests of developing countries, the ADR encompasses a range of options for resolving disputes outside of formal court procedures. These options differ in terms of formality, party control, and finality. Each option, moreover, offers benefits uniquely appropriate to different circumstances. This chapter concentrates on two representative ADR procedures, arbitration and mediation. 8.1. Dispute Scenarios The following dispute scenarios discuss some specific circumstances that apply to health or agricultural IP disputes. The scenarios may have particular relevance for institutions in developing countries. Parties to the types of disputes in these scenarios will most likely first consider resorting to litigation in national courts. They will, however, often find court action stymied because of the challenges involved: cost, length of procedure, legal uncertainty, decision makers’ lack of expertise, confidentiality/publicity, the difficulty of seeking action in foreign jurisdictions, and the negative impact on existing business relationships. Given these difficulties, parties should consider whether there are practical alternatives to expensive and protracted court proceedings. 8.2. Research collaboration: ownership dispute Researchers in a medical research center in a developing country (Center X) build a research partnership with a leading university in a developed country (University Y). They collaborate on pursuing leads for pharmaceutically active
  • 135. 135 compounds. The partners exchange data and discuss research directions. University Y has a well-established policy of patenting campus research, and an invention disclosure is filed with the technology transfer office (TTO). This becomes a patent application in the name of University Y, citing three of its researchers as inventors. There is no notice to, nor recognition of, the researchers in Center X. The researchers at Center X denounce the behavior of University Y and request that their names be included as inventors. When University Y refuses this request, the researchers contemplate legal action, but are stymied by prohibitive legal costs. 8.3. Patenting of research outputs from genetic material A research institute obtains patent protection for a cell line developed from genetic material obtained from one of the institute’s patients. The patient is from an indigenous group that lived an isolated existence until very recently. The indigenous group seeks redress, claiming ownership of interest in the patent and breach of fiduciary obligations by the research institute. The research institute asserts that it proceeded to commercialize the research result based on the patient’s prior consent to treatment. The controversy, with claims of biopiracy, rapidly escalates into a global public debate. 8.4. Claims based on traditional rights An ethno botanist collects traditional medical herbs and associated knowledge about their therapeutic use from an indigenous community. The community is led to believe that
  • 136. 136 this is the personal research of the ethno botanist; the researcher acquires some of the knowledge after he falls ill on site and is treated by a traditional medicine man. The customary law of the indigenous community constrains both the dissemination and use of this knowledge within the community. The researcher subsequently publishes the knowledge, and details about the plants he collected, in a noncommercial academic publication. This publication is widely distributed and used by several private companies in their medical research. The disclosure of the information leads to patents, not directly on the traditional knowledge, but on further innovations, which are guided by and dependent upon the traditional knowledge. These patents acknowledge the prior publication, but give no direct reference to the traditional community itself. The traditional community attempts to seek relief but quickly finds that the legal remedies at their disposal are unclear and inappropriate for dealing with the cultural and spiritual harm incurred. 8.5. Agricultural products and patents Farmers in a developing country have cultivated for centuries a certain type of grain that gains popularity in global markets. A biotechnological corporation obtains patents on the grain by introducing genetic modifications. Farmers in the developing country denounce their loss of international market share resulting from the actions of the biotechnological corporation. The farmers are concerned, however, that any inherent right they may claim will be overshadowed in court by the economic, technical, and legal prowess of the corporation.
  • 137. 137 8.6. Rat v. elephant? An inventor in a developing country holds patents in a number of countries on components used in consumer goods. The inventor enters into a license agreement regarding these patents with a multinational manufacturer. A dispute arises regarding royalty payments under the license agreement. The inventor wants to enforce his rights, but does not dare to engage in protracted and expensive multijurisdictional litigation. Furthermore, the inventor hopes to maintain his profitable relationship with the manufacturer. 8.7. The Arbitration Option Seeking resolution to the above disputes through litigation promises much pain and little certainty for parties in developing countries. An alternative approach to litigation, however, could offer better results. Arbitration, for example, involves submitting a dispute, by agreement of the parties, to one or more arbitrators who make a binding decision. 8.8. Arbitration procedure To send a dispute to arbitration, the parties must sign an agreement to submit their existing or future disputes to arbitration. Such an agreement is the foundation of an arbitration arrangement.3 It demonstrates the parties’ genuine willingness to settle the dispute through arbitration and limits the parties’ right to take the dispute to court. Arbitration may be conducted in different ways, and it is up to the parties and the arbitrator(s) to decide how the procedure should unfold, subject to any applicable rules and public policy
  • 138. 138 requirements. Parties may agree on the number of arbitrators, type of arbitration (ad hoc or institutional), place of arbitration, language of arbitral proceedings, and the applicable substantive law.
  • 139. 139 CHAPTER – 9 The WIPO Arbitration and Mediation Center 9.1. History of WIPO The World Intellectual Property Organization (WIPO) is one of the 17 specialized agencies of the United Nations. WIPO was created in 1967 "to encourage creative activity, to promote the protection of intellectual property throughout the world." WIPO currently has 185 member states, administers 24 international treaties, and is headquartered in Geneva, Switzerland. The current Director-General of WIPO is Francis Gurry, who took office on October 1, 2008. 184 of the UN Members as well as the Holy See are Members of WIPO. Non- members are the states of Cook Islands, Kiribati,Marshall Islands, Federated States of Micronesia, Nauru, Niue, Palau, Solomon Islands,Timor-Leste, Tuvalu, and the states with limited recognition. Palestine has observer status. 9.2. Strategic Direction and Activities WIPO’s vision is that IP is an important tool for the economic, social and cultural development of all countries. This shapes its mission to promote the effective use and protection of IP worldwide. Strategic goals are set out in a four yearly Medium Term Plan and refined in the biennial Program and Budget document. The five strategic goals defined in the 2006 – 2007 Program and Budget are: · To promote an IP culture; · To integrate IP into national development policies and programs; · To develop international IP laws and standards;
  • 140. 140 · To deliver quality services in global IP protection systems; and · To increase the efficiency of WIPO’s management and support processes. 9.3. WIPO Arbitration and Mediation Center (WIPO Center). The WIPO Arbitration and Mediation Center (WIPO Center) was established in 1994 on a not-for-profit basis to facilitate the time and cost-effective resolution of IP and related disputes through ADR. It is recognized as an international and neutral forum especially appropriate for cross-border and cross-cultural disputes and conducts procedures under the WIPO Mediation, Expedited Arbitration, Arbitration and Expert Determination Rules (WIPO Rules). The WIPO Rules contain specific provisions that are particularly suitable for IP and related disputes, such as those concerning confidentiality and technical evidence. However, their scope is not limited to such disputes and they can be, and have been, successfully applied in other areas. The WIPO Center makes available, in different languages, model clauses and agreements that parties may use as a basis for submitting their disputes to WIPO. As experience has shown, the effectiveness of ADR depends largely on the quality of the mediator, arbitrator or expert. The WIPO Center maintains a database of over 1,500 qualified neutrals from 70 countries with further candidates added
  • 141. 141 according to case needs, and it assists in the appointment of neutrals in each case. The WIPO Center works also as a resource center to raise awareness of the valuable role ADR can play in different sectors. It provides ADR advice to interested private and public entities as well as training in IP-related ADR through workshops and conferences. The WIPO Center recently collaborated with the WIPO Academy in introducing an online course on Arbitration and Mediation under the WIPO Rules. 9.4. Tailored ADR services The WIPO Center recognizes that certain sectors experience specific recurring types of disputes with particular features and needs that can best be addressed by specially tailored ADR services. It works with IP owners and users as well as their representative organizations to facilitate or establish specially adapted ADR schemes. One such scheme is the WIPO-initiated Uniform Domain Name Dispute Resolution Policy (UDRP), under which the WIPO Center has been providing services since 1999. More recently, in 2008, the WIPO Center responded to a request by the Association of International Collective Management of Audiovisual Works (AGICOA) by developing the “WIPO Expedited Arbitration Rules for AGICOA”, tailored to the specific needs of AGICOA right holders. One provision includes the direct implementation of the award by AGICOA, which updates the rights and releases the royalties
  • 142. 142 accordingly. For AGICOA disputes, the WIPO Center has identified a special panel of copyright and entertainment law arbitrators from various jurisdictions. The WIPO Center also collaborates with stakeholders in emerging IP-related areas, including biodiversity, traditional knowledge, traditional cultural expressions and access to health care, in order to develop adapted dispute resolution systems. It has, for instance, been involved in informal explorations of ADR’s potential in the context of the Convention on Biological Diversity and the International Treaty on Plant Genetic Resources for Food and Agriculture. 9.5. Services of the wipo arbitration and mediation center Mediation: a procedure in which one or more independent mediators assist the parties in reaching a settlement of the dispute through facilitating dialogue and helping the parties to identify their interests. The mediator does not render a decision. Arbitration: a procedure in which a dispute is submitted to one or more independent arbitrators who make a binding decision on the dispute. The decision of the arbitrator is internationally enforceable under the 1958 New York Convention for the Recognition and Enforcement of Foreign Arbitral Awards. Expedited Arbitration: Arbitration procedure with shortened timelines and reduced costs, normally providing for a sole
  • 143. 143 arbitrator. The award is enforceable under the New York Convention. Expert Determination: a procedure in which a specific question is submitted to one or more independent experts who make a determination on the referred matter. The determination is binding, unless the parties agree otherwise. 9.6. Trends in WIPO mediation and arbitration The WIPO Center – having administered over 80 mediations and 110 arbitrations, the majority of which were filed in the last four years – has observed various trends and developments in IP dispute resolution: 41 percent of the administered procedures were mediation cases, 49 percent standard arbitration, and 10 percent expedited arbitration. The WIPO clauses and procedures are often found in a combined model. For example, the most frequently used WIPO clause is that providing for “mediation, followed in the absence of a settlement by (expedited) arbitration”. It has the advantage of giving parties the opportunity to settle their case in a more informal forum before moving to arbitration. WIPO standard arbitration tends to be used in more complex cases such as patent disputes, which generally last from 12 to 18 months. WIPO expedited arbitration is primarily used in disputes where a lower amount is at stake, less voluminous and technical evidence is involved and where a quick result is
  • 144. 144 needed, which tends to be the case for trademark and software-related disputes. In general, the expedited arbitration procedure takes up to six months. WIPO mediation and arbitration have been used in disputes covering a variety of fields, including patent infringement and licenses, information technology transactions, telecommunications, distribution agreements for pharmaceutical products, copyright issues, research and development agreements, knowledge transfer, trademark co- existence agreements, art marketing agreements, joint venture agreements, engineering disputes, life sciences, sports, entertainment, domain name disputes and cases arising out of agreements in settlement of prior multi-jurisdictional IP litigation. Parties have also used the Center’s services in non- IP-related disputes, such as general contractual matters, insurance, construction and employment (at an IP law firm). 9.7. A WIPO expedited arbitration relating to a banking software dispute. Another area in which WIPO ADR has recently been used is banking. Banks can be involved in a variety of IP-related disputes, for example, in connection with the use of a bank’s trademark or the development of software systems, as this case demonstrates. A U.S. company providing data processing software and services and an Asian bank concluded an agreement regarding
  • 145. 145 the provision of account processing services. The parties agreed the U.S. Company was to be the exclusive service provider for certain of the bank’s affiliates in North America and Europe. Any dispute arising out of or in connection with the agreement would be resolved under the WIPO Expedited Arbitration Rules. Four years later, the U.S. Company alleged the bank had violated the agreement by using the processing services of third parties in the countries covered by the agreement. When the parties failed to settle the dispute, the U.S. service provider commenced WIPO expedited arbitration proceedings, claiming infringement of the agreement and substantial consequential damages. The parties agreed upon a sole arbitrator who held a two-day hearing in New York. The parties and the arbitrator agreed to use the WIPO Center’s electronic case communication facility, WIPO ECAF. After three months, the arbitrator rendered a final award for partial infringement of the agreement granting damages to the U.S. service provider. 9.8. Settlement trends The Price Water house Coopers (PWC) study on “International arbitration: Corporate attitudes and practices” observed a general trend according to which parties explore settlement at different stages of the dispute resolution process. Twenty-five percent of the study’s participants indicated achieving a settlement before the arbitral award, while 7 percent reported
  • 146. 146 settlements that were implemented in a consent award, suggesting an approximate settlement rate of 32 percent in international arbitration within the perimeters of the survey. The WIPO Center observes an even higher settlement trend in relation to IP-related disputes.1 The flexibility of WIPO ADR procedures allows parties to combine the different procedures and to consider amicable settlement throughout the process.In WIPO mediation, 71 percent of cases settled, 23 percent did not and 6 percent are pending. Most settlements occur during the mediation phase, consistent with the parties’ intent in using this mechanism and with the role of mediator. The mediator assists the parties to explore workable, interest- based solutions that help them to preserve their long-term relationship. But a number of WIPO cases also end in settlement after the termination of the mediation. By enabling the parties to identify their interests and to better understand their dispute, mediation can provide a basis for direct negotiation between the parties after the mediation. For example, in a recent WIPO mediation, a European university holding several pharmaceutical patent applications and a European pharmaceutical company used mediation in order to conclude a license agreement. The mediator, a lawyer with years of experience in the pharmaceutical industry, helped the parties to identify the issues and deepen their understanding of the legal circumstances. After the mediation, the parties resumed direct negotiations and reached an agreement.
  • 147. 147 Interestingly, a significant proportion of WIPO arbitration cases also result in settlement: 50 percent of cases settled (including consent awards), 39 percent did not settle and an award was issued (excluding consent awards) and 11 percent are pending. The WIPO Arbitration Rules provide that the arbitral tribunal can suggest that the parties explore settlement whenever it deems appropriate. If the parties so wish, the arbitral tribunal can give them a preliminary view of the case in order to facilitate settlement discussions. Where the parties conclude a settlement before an award is made, the arbitral tribunal can, upon the parties’ joint request, record that settlement in the form of a consent award, which is enforceable under the New York Convention.
  • 148. 148 CHAPTER – 10 CONCLUSION ADR procedures are flexible mechanisms allowing parties to explore appropriate remedies that may not always be available in court litigation. While monetary relief remains the most common form sought in WIPO cases, parties often also request specific actions as a remedy, such as a declaration of non-performance of contractual obligations, or of infringement of rights. Other forms of remedies sought are, for instance, further safeguards for the preservation of confidentiality of evidence, the provision of a security, the production of specific data, the delivery of a specific good or the conclusion of new contracts. The time has come legal fraternity to have trained panels of mediators and training also being imparted to Judges, Magistrates & other Judicial Officers, concerned court staff and, more importantly, the litigation lawyers, along with the necessary sets of Rules for their respective conduct - in tandem with a robust Case Management system, these provisions hold great promise for the litigants virtually languishing for years in the corridors of Indian courts. The courts may refer IPR disputes to resolve all disputes evn to the extent of controversial nature of the disputes; wherever both parties are wish to resolve their dispute largely by determining common manageable disputes is most appropriate for ADR systems to bring parties on the table.
  • 149. 149 With certainty, it can with be stated that most intellectual Property disputes would derived benefit in some way or otherwise from usage of wide range of ADR mechanisms, which could be either by settlement, narrowing the issues, improved communication, or case-planning assistance. That one of the key benefits of ADR is the ability of the parties to select a process suitable for their case and to tailor the process to their needs. Thus, to obtain the most beneficial result from ADR in usage of IPR cases, lawyers should help their clients make informed decisions in selecting a suitable ADR process and in customizing it for their case, and should thoroughly prepare themselves and their client to participate meaningfully in the ADR proceeding. An epitome for a conclusion would be to resonate the words eloquently stated by Abraham Lincoln, that "part of the role of an attorney is to persuade your neighbours to compromise whenever you can. Point out to them how the nominal litigant winner is often a real loser-in fees, expenses and waste of time". Presently, many Intellectual Property attorneys and their clients do not regularly consider ADR as a means for resolving their disputes. ADR processes are relatively new in India to the Intellectual Property field and should be used more frequently.
  • 150. 150 BIBLIOGRAPHY 125-140 Books Statutes Reports Articles, Papers and Transcripts Websites referred News papers
  • 151. 151 APPENDIXES 41 The Arbitration and Conciliation Act, 1996 42 The Legal Services Authority Act,1987 43 Code of Criminal Procedure,1973 148

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