Alternate Dispute Resolution in corporate disputes
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This document discusses arbitration, mediation, and their roles in resolving corporate disputes in India. It provides an overview of the Arbitration and Conciliation Act of 1996, which is based on the UNICITRAL Model Law and succeeded the 1940 Arbitration Act. It outlines what types of disputes can be arbitrated in India, such as contractual, tort, and winding up claims. The document also discusses the role of courts in domestic arbitrations and the grounds for setting aside arbitral awards. Additionally, it compares the factors and procedures of litigation, arbitration, and mediation, noting mediation is usually fastest, least costly, and allows parties the most control and possibility of a win-win outcome.
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Alternate Dispute Resolution in corporate disputes
- 1. ARBITRATION & MEDIATION Tools to Resolve Corporate Disputes Anuroop Omkar & Kritika Krishnamurthy
- 3. ARBITRATION IN INDIA Litigation with an expert adjudicator
- 4. Scheme of Arbitration & Conciliation Act, 1996 Based on UNICITRAL Model Law Succeeded Arbitration Act, 1940 Not bound by court procedure
- 5. Arbitrability of a Dispute in India Tort Contractual Claim for Winding up Voidable Contract Void Contract
- 6. Arbitrability of a Dispute in India FRAUD Domestic Arbitrations International Commercial Arbitrations Part I: Section 8 Part II: Section 45 Before: Allegations of fraud and serious malpractices can only be settled by Court (N. Radhakrishnan v. M/S Maestro Engineers.2010 (1) SCC 72) ICA with seat in India: Not arbitrable (Based on N. Radhakrishnan which is now overruled) ICA with seat outside India: Arbitrable (World Sport Group (Mauritius) Ltd. V. MSM Satellite (Singapore) Pte. Ltd. AIR 2014 SC 968) Now: Arbitration & criminal proceedings may continue simultaneously Contention of substantive contract being void/ voidable not bar to arbitration & court to follow the policy of least interference (Swiss Timing Ltd. v. Commonwealth Games 2010 Organising Committee, (2014) 6 SCC 677) Only bar under Section 45- Arbitration agreement is either (i) null and void; or (ii) inoperative; or (iii) incapable of being performed.
- 7. Domestic Arbitration- Role of Courts Party fails to appoint an arbitrator Two appointed arbitrators fail to agree upon third arbitrator No provision for appointment in contract Independence or impartiality doubtful Lacks agreed qualifications Incapable to perform functions or acts with undue delay Withdraws from office Mandate terminated by parties Before commencement by Court- Valid arbitration agreement & intention to commence arbitration or notice to other party After commencement by Tribunal- Considered ineffective Grounds under Section 34 HC for domestic arbitration SC for international commercial arbitration in India
- 8. Setting aside Arbitral Award
- 10. Mediation in India Across the Ages
- 12. Factors Litigation Arbitration Mediation Time Slowest Fast Fastest Cost High Highest Lowest Control Parties are passive observers Parties are passive observers Parties are active participants who find their own solution and have control over final outcome Possibility Win-Lose Win-Lose Win-Win Confidentiality Lowest High Highest Procedure & Formality Highest Higher Lowest Distinguished
- 14. Scope in Commercial Disputes
- 15. • Judicial Outlook Judicial Outlook • Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd. (2010) 8 SCC 24 • Supreme Court on post litigation reference to mediation under Section 89 of Code of Civil Procedure, 1908 • Refer after the pleadings are complete, and before framing the issues. No reference once evidence is commenced • Mr. Vikram Bakshi and Ors. v. Ms. Sonia Khosla [2014] 184 Comp Cas 392 (SC) • Oppression and Mismanagement • “legal norms often diverge quite dramatically from our notion of fairness and the notion of fairness of many disputants and the process of mediation entails the lesson that when people are put together in the same room and made to understand each other’s goals, they will together reach a fair resolution” •
- 16. Generate awareness Remove prejudices Encourage international best practices Disputes as opportunity of growth not threat Avoidant mentality Save goodwill Confidentiality Highest success rate Outlook for Future
- 17. Questions
Editor's Notes
- The Arbitration and Conciliation Act, 1996 is based on the UNCITRAL Model Law on International Commercial Arbitration, 1985 and the UNCITRAL Conciliation Rules, 1980
- It involves the simple question of what type of issues can and cannot be submitted to arbitration in India The Act states that the relationship between the parties need not be contractual. Hence, a dispute in tort can also be referred. The Supreme Court in the case of Renu Sagar Power Co v General Electric Co1 stated this as follows: The question is not whether the claim lies in tort but the question is whether even though it has lain in tort it ‘arises out of’ or is ‘related to’ the contract, that is to say, whether it arises out of the terms of the contract or is consequential upon any breach thereof. Even though a claim may not directly arise under the contract which contains an arbitration clause, if there was sufficient close connection between that claim and the transaction under the contract, it will be covered by the arbitration clause. Hence, whether an action lies in tort or contract, it would lie before an arbitral forum, unless it can be demonstrated that the cause of action is de hors the contract which contains the arbitration clause. Void Contracts- Minor contracting party, mistake as to a matter of fact essential to the agreement, wagering contract, forbidden by law
- It involves the simple question of what type of issues can and cannot be submitted to arbitration in India The Act states that the relationship between the parties need not be contractual. Hence, a dispute in tort can also be referred. The Supreme Court in the case of Renu Sagar Power Co v General Electric Co1 stated this as follows: The question is not whether the claim lies in tort but the question is whether even though it has lain in tort it ‘arises out of’ or is ‘related to’ the contract, that is to say, whether it arises out of the terms of the contract or is consequential upon any breach thereof. Even though a claim may not directly arise under the contract which contains an arbitration clause, if there was sufficient close connection between that claim and the transaction under the contract, it will be covered by the arbitration clause. Hence, whether an action lies in tort or contract, it would lie before an arbitral forum, unless it can be demonstrated that the cause of action is de hors the contract which contains the arbitration clause. Void Contracts- Minor contracting party, mistake as to a matter of fact essential to the agreement, wagering contract, forbidden by law
- Appointment of arbitrator- Section 11 In relation to arbitration proceedings, parties can approach the Court only for two purposes:(a) for any interim measure of protection or injunction or for any appointment of receiver etc.; or (b) for the appointment of an arbitrator in the event a party fails to appoint an arbitrator or if two appointed arbitrators fail to agree upon the third arbitrator. In such an event, in the case of domestic arbitration, the Chief Justice of a High Court may appoint an arbitrator, and in the case of international commercial arbitration, the Chief Justice of the Supreme Court of India may carry out the appointment. Challenge to Arbitrator- Sections 12 to 14 A court of law can also be approached if there is any controversy as to whether an arbitrator has been unable to perform his functions or has failed to act without undue delay or there is a dispute on the same. In such an event, the court may decide to terminate the mandate of the arbitrator and appoint a substitute arbitrator.