Introduction to Difference between Arbitration and Mediation
Alternate Dispute resolution Arbitration, mediation, conciliation, Lok Adalat, judicial settlement, and any other process that includes settling conflicts through negotiation rather than the traditional form of litigation are all included in this method.
One of the oldest judicial systems in the entire globe is that of India. It should come as no surprise that the judicial system of a nation with a population of more than one billion and a half people must deal with an extremely high volume of cases.
During the monsoon session of 2022, the Union Minister of Law and Justice told the Rajya Sabha that 4.7 crore cases are still being heard in courts across the country. Of these 4.7 crore cases, 71,000 are pending in the Supreme Court, 42 lakhs are pending in various High Courts, and 2.7 crores are pending in the subordinate courts. In total, there are 4.7 crore cases that are pending across the country’s various courts. ‘
The inefficiencies that exist within the judicial system are what cause cases to drag on longer than they should, which in turn causes the judiciary to become overworked. An alternative process for the resolution of disputes has been implemented in an effort to lessen the load placed on the judicial system.
Two such processes are arbitration and mediation. Although at first glance they would appear to be the same, there are actually quite a few key distinctions between the two. The ideas of mediation and arbitration, as well as the distinctions that set them apart from one another, are going to be broken down and simplified in this article.
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Alternate dispute resolution process with respect to arbitration and mediation
Mechanisms for alternative conflict resolution are an alternative approach to the resolution of disagreements. Arbitration, mediation, conciliation, Lok Adalat, judicial settlement, and any other process that includes settling conflicts through negotiation rather than the traditional form of litigation are all included in this method.
Even while similar processes were common in India in the shape of panchayats for a significant amount of time, it wasn’t until the arrival of the British that they were given the authority to function as legal institutions.
The Arbitration Act, which was passed in 1889, was the first law in India to deal with the idea of different ways to settle disagreements. The Arbitration and Conciliation Act, which was passed in 1996 and is still in effect today, has been revised three times, most recently in 2015 and again in 2019 and 2021.
The Alternate Dispute Resolution Mechanism system was established in the first place to encourage out-of-court settlements, but it also has a few other goals that it works toward accomplishing along the road, specifically the following ones:
A trial that is both affordable and quick, with fewer procedures involved.
Resolution of disagreements by means such as compromise, negotiation, or the making of reasonable offers.
Makes it possible for the parties to have a greater knowledge of each other’s points of view, which increases the likelihood of them reaching a settlement that is amicable.
Utilizes the concept of diplomacy to create a situation in which both parties come out ahead.
Establishes pre-dispute standards, with the goal of preventing future problems and providing a methodical foundation.
Arbitration
“I am unable to conceptualise any community that does not incorporate some form of dispute resolution,” — Herbert Read
According to the Oxford Dictionary, “arbitration” refers to the process of resolving a dispute through the use of a third party to whom the parties have agreed to refer their claims in order to get a result that is equitable.
The Arbitration and Conciliation Act of 1996 was passed in India with the intention of simplifying the process of both domestic and international arbitration there. The UNCITRAL Model Law on International Commercial Arbitration, which was enacted in 1985, serves as the foundation for this Act. There are two distinct types of arbitration, namely domestic arbitration and international arbitration, and both can be distinguished from one another.
The Arbitration and Conciliation Act, 1996 includes a definition for the practise of international business arbitration in its section 2(1)(f).
In the context of international arbitration, the UNCITRAL Model Law was developed. The major commentary on the topic of international arbitration that was written by Redfern and Hunter has presented three different ways to approach the meaning of the word “international” when it is used in the context of arbitration.
The nature of the dispute, the nationality of the parties, and a blend of the first two procedures in addition to a specified location for the arbitration are the three approaches that can be taken. The concept of international arbitration is defined by Indian law as having the subject matter of nationality as its focus.
The term “domestic” is not used anywhere in the Act; however, this indicates that both parties are Indian nationals.
Act of 2021 Relating to Amendments to the Arbitration and Conciliation Act
The most recent amendment to this Act took place in the year 2021. The following modifications were made possible by the amendment:
Indefinite and unconditional stay on the execution of the arbitral award issued by an arbitration tribunal with its seat in India until the merits of the challenge to the award have been established.
The Eighth Schedule of the Arbitration Act, 1996’s qualifications and accreditation guidelines for arbitrators were eliminated.
A retrospective application has been made available for the execution of an award in an arbitration that was brought about by fraud or corruption.
How does the process of arbitration work?
Although the facts of each case that is brought before an arbitrator are one-of-a-kind, the arbitration process is generally adhered to in each and every instance.The parties are informed by the arbitration center that the case has been registered at this step, which is known as the initiation stage.
Before the process starts, the parties are given information about how arbitration works, such as when their responses are due, what documents they need to bring, and if there are any fees that need to be paid.
The invitation stage is when the arbitrator or arbitrators from the arbitration center will serve on the case in accordance with the regulations that govern the parties’ participation in the arbitration. The arbitrator will look over the documents, consider the disagreement, and then return a signed document under oath that will include any necessary disclosures.
T
he parties are informed about the appointment of the arbitrator, and they are given the chance to voice any objections they may have regarding the appointment. This is the appointment stage.
In the event that any objection is presented prior to the deadline, the arbitration center will deliberate on whether or not to replace the arbitrator. In the event that the arbitrator is removed from the case, it will be sent back to the invitation stage; however, if the arbitrator remains in place, the case will proceed to the next level.
Stage of preliminary hearing and information exchange After the arbitrator is confirmed, the parties and the arbitrators will plan and attend a preliminary meeting to share information and talk about the case. During this meeting, problems brought up by both parties are discussed, information is shared between the parties, and a date for the hearing is arranged.
In the hearing phase of the process, both sides present their arguments to the arbitrator. This step can take place in person or through any medium that is acceptable to both parties. Both options are available.
The proceedings will be governed by the arbitration agreement as well as the regulations that are controlling the case.
Award stage: Once the arbitrator has listened to all of the arguments that have been made by both parties and is satisfied that neither party has any new evidence to submit, the hearing will be closed, and a date will be established for the announcement of the award. The arbitrator hands a written award to each of the parties involved in the case, at which point the matter is considered resolved and the arbitration center closes the case file.
Mediation
“An ounce of mediation is worth a pound of arbitration and a tonne of litigation,” is a popular saying in the world of conflict resolution. — Joseph Grynbaum
The opposing parties are encouraged to participate voluntarily in the process of mediation, which is then made legally binding, and an impartial and neutral mediator assists them in reaching a settlement. A mediator does not enforce a solution but rather cultivates an atmosphere that is conducive to the parties in conflict reaching a resolution to all of their differences.
In the past, family conflicts that arose between a husband and wife or between brothers were typically resolved through the use of mediation. In more recent times, it has also been used for the purpose of settling disagreements of a business-related kind.
A number of pieces of legislation, including the Consumer Protection Act of 2019, the Companies Mediation Rules of 2016, and the Pre-Institution Mediation Rules under the Commercial Courts, the Commercial Courts, Commercial Division, and Commercial Appellate Division of High Courts (Amendment) Act of 2018, recognize mediation as one of the methods for settling disputes amicably. Mediation isn’t taken as seriously as other ways to solve conflicts because there isn’t a single set of rules that governs it.
How does the process of mediation work?
The process of mediation gives off the impression of being less formal than other methods of conflict resolution processes; nevertheless, this is not the case in practise. The process of arriving at the agreed-upon resolution through mediation typically takes place across several sessions.
The following sequence of events will take place during the mediation process:
When one of the parties brings the disagreement to the mediation center and makes the request for mediation procedures to take place, the process of mediation officially gets underway. This document gives information about the people involved and the details of the dispute.
Appointment of a Mediator: Once the mediation centre has received the request, they will begin the process of assigning a mediator based on the specifics of the conflict. After speaking with all sides, a decision is made regarding who will serve as the mediator.
Communications prior to the mediation: Following the designation of a mediator, that individual will next finalise the timetable for the mediation by speaking with the parties involved via the telephone or any other means of communication that may be available. In addition to this, he notifies the parties that they are required to send him any papers relating to the dispute prior to the first meeting, as well as the deadline for submitting these documents.
Initial get-together: The mediator will begin the process by introducing everyone involved, explaining the purpose of the meeting, and laying out the ground rules that must be adhered to throughout the entire process.
They will then encourage the parties to communicate with one another in an effort to resolve the conflict in an amicable manner. It has been requested of both parties that they explain why they are at odds with one another and what effects the conflict will have on them. The parties are encouraged by the mediator to respond to each other’s queries so that they can more effectively explain their positions.
Private meetings: During the private meeting, both of the disputing parties will have the option to speak privately with the mediator. Each of the parties is led to their own private room. The mediator moves back and forth between the two rooms to discuss the advantages and disadvantages held by each side, as well as to facilitate the trading of offers.
Joint negotiation is when, after a private conference, the mediator invites both sides together to negotiate directly with one another; nevertheless, this only occurs in very unusual circumstances. Only in the event that a compromise has been achieved or the allocated amount of time for the mediation has passed would the mediator reunite the disputing parties.
When the parties have reached a resolution that is acceptable to both of them, the mediator will put it in writing and ask both of them to sign the written contract that outlines the terms of the settlement. When the parties find that they are unable to accept the final decision, the mediator will propose that they either meet once more for additional discussion or look into other methods of conflict resolution.
