If one visits the Delhi High Court on any working day after 4:30 p.m. a part of the High Court building after Court hours is buzzing with activity. This is the Delhi High Court Mediation Centre. It works upto 9 p.m. Last Year number of cases referred for Mediation to the Mediation Centre were 4435 and the number of cases which got resolved were 4220. In the same complex there now exists the Delhi High Court Arbitration Centre. These are very recent developments, which have been created to expedite the Justice Delivery System. Not only in Delhi but a similar situation exists in other parts of the Country as well. Every District in a State and the High Court has a mediation Centre.

Indian Constitution in its preamble has resolved to secure to all its citizens Justice, Economic and political- amongst liberty, equality and fraternity. Further, in Article 39-A of the Constitution of India the aforementioned resolve regarding justice has been spelt out as follows:-

” Article 39A: Equal justice and free legal aid:-

The State shall secure that the operation of the legal system promotes justice, on a basis of equal opportunity, and shall, in particular, provide free legal aid, by suitable legislation or schemes or in any other way, to ensure that opportunities for securing justice are not denied to any citizen by reason of economic or other disabilities.”

The constitution of the Islamic republic of Pakistan in Article 4, declares the right of individuals to be dealt with in accordance with law etc.-(1) to enjoy the protection of law and to be treated in accordance with law is the inalienable right of every citizen, wherever, he may be, and of every other person for the time being within Pakistan.

The aforementioned objectives have been secured by the State to its citizens by establishment of a judicial system of Courts.

Past experience of many years after independence has shown that the Courts right from the trial Courts upto the Supreme Court have become overloaded with pendency and as a result delivery of justice to citizens has suffered no ends.

As Litigation was increasing in the country manifold. The Law Commission of India headed by Shri M. C. Setalvad in its very comprehensive Fourteenth Report, dealt with several areas where reforms were required. Thereafter in the year 1989, Government of India under the Chairmanship of Chief Justice of India constituted a Committee headed by the then Chief Justice of the Kerala High Court Justice Maliamath, alongwith Dr. Justice A.S. Anand then chief justice of Madras High court, (now retired as Chief Justice of India) and Mr. Justice P.D. Desai, the then Chief Justice of Calcutta High Court. The terms of reference inter alia were to suggest ways and means to reduce arrears in High Courts and Subordinate Courts.

One of the suggestions put forth by this committee was adopting conciliation procedure for quick dispensation of justice. A joint conference of chief ministers of all states and chief justices held on 4th of December, 1993 at New Delhi under the Chairmanship of the then Prime Minister of India presided over by the Chief Justice of India, adopted the following Resolution:

“The Chief Ministers and Chief Justices were of the opinion that Courts were not in a position to bear the entire burden of justice system and that a number of disputes lent themselves to resolution by alternative modes such as arbitration, mediation and negotiation. They emphasised the desirability of disputants taking advantage of alternative dispute resolution which provided procedural flexibility, saved valuable time and money and avoided the stress of a conventional trial”.

The process to modernize the judicial infrastructure in the country had began, judicial academies were to be set up to train judicial officers latest modern equipment was to be installed computerization as available in other parts of the world was to be adopted.

It had now become imperative that resort should be had to alternative dispute resolution mechanism, with a view to bring to an end litigation between the parties at an early date.

In many countries in the world ADR has been very successful. The law in these countries requires the parties to indicate the form of ADR, which they would like to adhere to during the pendency of the Trial. In India for a longtime, efforts had been going on to adopt the ADR legally. In 1996 the Arbitration Act 1940, was amended and replaced by Arbitration and Conciliation Act, 1996.

This resulted in an amendment in the civil procedure code 1908 (CPC). Section 89 of the CPC came into force on 1st of July 2002. This section now provides for settlement of disputes outside the courts. Section 89 of the CPC reads as follows:-

“89. Settlement of disputes outside the court.

(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 observations of the parties, the court may reformulate the terms of a possible settlement and refer the same for-

(a) arbitration;

(b) conciliation;

(c) judicial settlement including settlement through Lok Adalat; or

(d) mediation.

(2) Where a dispute has been referred-

(a) for arbitration or conciliation, the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) shall apply as if the proceedings for arbitration or conciliation were referred for settlement under the provisions of that Act;

(b) to Lok Adalat, the court shall refer the same to the Lok Adalat in accordance with the provisions of sub-section (1) of Section 20 of the Legal Services Authorities Act, 1987 (39 of 1987) and all other provisions of that Act shall apply in respect of the dispute so referred to the Lok Adalat;

(c) for judicial settlement, the court shall refer the same to a suitable institution or person and such institution or person shall be deemed to be a Lok Adalat and all the provisions of the Legal Services Authorities Act, 1987 (39 of 1987) shall apply as if the dispute were referred to a Lok Adalat under the provisions of that Act;

(d) for mediation, the court shall effect a compromise between the parties and shall follow such procedure as may be prescribed.”

“Order 10 Rule 1-A of CPC:–

“1-A. Direction of the court to opt for any one mode of alternative dispute resolution.-After recording the admissions and denials, the court shall direct the parties to the suit to opt either mode of the settlement outside the court as specified in sub-section (1) of Section 89. On the option of the parties, the court shall fix the date of appearance before such forum or authority as may be opted by the parties.”

Order 10 Rule 1-B

“1-B. Appearance before the conciliatory forum or authority.-Where a suit is referred under Rule 1-A, the parties shall appear before such forum or authority for conciliation of the suit.”

Order 10 Rule 1-C

“1-C. Appearance before the court consequent to the failure of efforts of conciliation.-Where a suit is referred under Rule 1-A and the presiding officer of conciliation forum or authority is satisfied that it would not be proper in the interest of justice to proceed with the matter further, then, it shall refer the matter again to the court and direct the parties to appear before the court on the date fixed by it.””

Section 89 is a new provision. Although Arbitration and Conciliation has been in place for a long time. Once again in the year 2004 the problem of delay in administration of justice came up for consideration in the conference of chief ministers of all states and chief justices held on 18th September, 2004 in New Delhi. The then Hon’ble Chief Justice of India Mr. Justice R. C. Lahoti, during the course of his address observed as follows:-

‘The philosophy of Alternate Dispute Resolution systems is well-stated by Abraham Lincoln: “discourage litigation, persuade your neighbours to compromise whenever you can. Point out to them how the normal winner is often a loser in fees, expense, cost and time.” Litigation does not always lead to a satisfactory result. It is expensive in terms of time and money. A case won or lost in court of law does not change the mindset of the litigants who continue to be adversaries and go on fighting in appeals after appeals. Alternate Dispute Resolution systems enable the change in mental approach of the parties”.

In the case of Salem Advocate Bar Association Vs. Union of India(I)1 Supreme Court of India upheld the constitutional validity of this section, while doing so it noted that the introduction of this section has not really reduced the burden of courts. Therefore, the Court set-up a Committee of Counsels to ensure that the amendments made are made more effective and result in quicker dispensation of justice.

In another judgment delivered by the supreme court in the case of Afcons Infrastructure Ltd. Vs. Cherian Varkey construction company & Ors.2, the Supreme Court noted with concern that a civil court cannot refer a suit to Arbitration unless all parties agree to such a reference.

Supreme Court thereafter laid down the correct method by which Section 89 should be interpreted. It also in para 26 and 28 of its judgment clarified whether reference to ADR process is mandatory and also categorized cases which could or could not be considered for reference to ADR. Therefore, one can safely say, that alternate dispute resolution has made great inroads in the administration of justice system of India.

The Law Commission of India in its Report No. 222 submitted in April 2009 has further stressed the need for adopting ADR in India for quick dispensation of Justice. In para 1.32 of its Report the Law Commission has listed the following advantages of the ADR:-

1. It is less expensive.
2. It is less time-consuming.
3. It is free from technicalities as in the case of conducting cases in law Courts.
4. Parties are free to discuss their differences of opinion without any fear of disclosure of this fact before any law courts.
5. Parties have the feeling that there is no losing or winning side between them but at the same time their grievance is redressed and their relationship is restored.

All said and done, now we have carved a path for ourselves, to expedite the Justice delivery system in India to fulfill our constitutional resolve, but it is sad that the most important facet of ADR in India i.e. Arbitration both domestic and international, is still to be brought on line.

I do not think my speech will be complete, unless I refer to a very significant, Stage through which India is passing in the field of International Commercial Arbitration. Mr. Fali S. Nariman in his lecture delivered on 12th February, 2011 at the LCIA Annual Arbitration Lecture on the topic ” Ten steps to salvage arbitration in India” in my mind said it all when he observed as follows during the course of his lecture:-

“While noting that there are inherent drawbacks in International Arbitration not only in India but elsewhere around the world as well, Mr. Nariman provided us with a few Suggestions- for Salvaging Arbitration in India and I will simply list them here:-

1. To provide legislation an exclusive forum for enforcing or not enforcing foreign award in India.
2. Arbitrators in International Commercial Arbitration (and in domestic Arbitration as well) should invoke Section 30 (3) of the Arbitration & Conciliation Act, Act 1996 (which is so far unused) to encourage parties to get into mediation.
3. Retired judges of the High Courts and the Supreme Court who are most frequently appointed as Arbitrators by arbitration institutions or by parties themselves do not always appreciate the ethos of arbitration as an ADR mechanism- Arbitration must not be a stepping stone to promote litigation in the courts.
4. The one reason why arbitration has failed in India is because in India especially in commercial cities there is no exclusive Arbitration Bar.
5. It is essential for a successful arbitration that there must be good Arbitrators. The impression that retired judges or any retired judge for that matter- necessarily makes a good arbitrator is simply not true.
6. We must develop a spirit of Arbitration – what the French felicitously call I’espirit d’arbitrage – we must learn to be good losers when we embark on Arbitration.
7. Salvaging Arbitration in India is just not possible until three decisions of the Supreme Court are consigned to the Dustbin of history-

   1) Bhatia International vs. Bulk Trading S.A. 3

   2) ONGC Ltd. Vs. Saw Pipes Ltd.4

   3) Venture Global Engg. Vs. Satyam Computer Services Ltd.5

   (Ladies and gentleman now the good news as regards Bhatia International is that we are in the last lap- A Constitution Bench has recently concluded hearing a reference made to it in this regard and we should expect a judgment soon.)

8. We should adopt a more flexible regime for international arbitration, (like the French have done by having a dual approach) and distinguish between domestic and international arbitration.

Now finally turning specifically to SAARC.

Nepal Council of Arbitration (NEPCA) was founded in 1991 as a non governmental and non-profit organization. Pakistan enacted its own arbitration Act in 1969. Law relating to domestic arbitration in Sri Lanka is contained in Arbitration Ordinance No.15 of 1866 and the chapter 51 of Sri Lanka Civil Procedure Code. In Bangladesh ADR is being adopted in a big way and likewise is the case in Bhutan.

It’s a common phenomenon that courts in most developing countries including SAARC countries are often persuaded to follow the lead of the judicial precedence of the developed countries by enforcing such Arbitral awards. Thus, a third world party faces a discernible handicap in the area of International Commercial Arbitration, as they do not have their own leads in the matter.

I am aware of the fact that SAARC has established an Arbitration Council and an agreement in this regard has been signed, the second meeting of the Governing body of SAARC Arbitration Council was held in Islamabad on the 20-21 December, 2011.

What is important is Mutual Trust in the region between SAARC Countries, and a common platform to discuss and settle disputes would also yield to ease out political pressures. Economic Cooperation as suggested by India is already progressing and I only read in Business Standard dated 22nd March, 2012 that Pakistan has already notified a negative list for trade with India where the number of Products facing a bar on import from India will come down to about 1,209.

1. (2003) 1 SCC 49

2. (2010) 8 SCC 24

3. (2002) 4 SCC 105

4. (2003) 5 SCC 705

5. (2008) 4 SCC 190