ALTERNATIVE DISPUTE RESOLUTION PROJECT
ROLE OF THE JUDICIARY IN PROMOTING ADR
SUBMITTED BY:SHIVANSHU PUHAN 3
ID NO. 1927
RD
YEAR, B.A. LLB (HONS.)
DATE OF SUBMISSION:th
8 May, 2014
NATIONAL LAW SCHOOL OF INDIA UNIVERSITY
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TABLE OF CONTENTS
Contents INDEX OF AUTHORITIES...................................................................................................... 3 Cases ......................................................................................................................................3 Statutes ................................................................................................................................... 3 INTRODUCTION ..................................................................................................................... 4 NEED FOR ADR....................................................................................................................... 5 POLICY CONSIDERATIONS FACTORED INTO JUDICIAL DECISION MAKING | A PRO ADR TREND .................................................................................................................... 5 INFORMATION DISSEMINATION THROUGH JUDGES | CREATING AWARENESS & INSTILLING CONFIDENCE ...................................................................................................8 CASE MANAGEMENT & REFERENCE TO ADR.............................................................. 10 CONCLUSION........................................................................................................................ 12 BIBILIOGRAPHY .................................................................................................................. 13 References ............................................................................................................................ 13
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INDEX OF AUTHORITIES Cases 1. Afcons Infrastructure Limited v. Cherian Varkey Construction Company, Civil Appeal No.
6000 of 2010. 2. BALCO v. Kaiser Aluminium, Civil Appeal No. 7019 of 2005. 3. Bhatia International v. Bulk Trading SA, (2002) 4 SCC 105. 4. Chhotelal v. Kamala Devi, AIR 1967 Pat 269. 5. Sakri v. Chhanwarlal , AIR 1975 Raj 134. 6. Sangeetha v. Suresh Kumar , JT 2000(8) SC 521. 7. TDM Infrastructure Private Limited v. UE Development India Private Limited , (2008) 14 SCC 271 .
Statutes 1. The Arbitration and Conciliation Act, 1996. 2. Code of Civil Procedure, 1908.
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INTRODUCTION Alternative Dispute Resolution (ADR) refers to a set of mechanisms which enable effective, efficient dispute resolution outside of courtroom litigation. ADR is aimed at reducing backlog, delay, conserving judicial resource and providing effective, accessible justice for litigants. There are a considerable set of advantages of adopting ADR methods, as against a negligible set of disadvantages, and the subsisting circumstances reveal that ADR methods are the need of the hour in the Indian context. The reasons behind the need for the adoption and proliferation of ADR methods in the Indian context are briefly explored in the beginning sections of this paper. This paper aims to analyse and examine the role of the judiciary in promoting these ADR methods. The exercise will attempt to look at the various methods which the judiciary espouses to further the cause of ADR mechanisms. The judiciary’s support towards the promotion of ADR methods extends to beyond the mere referring of cases and disputes of a certain character to these channels for resolution. The researcher has attempted to briefly outline in addition to this primary method, the other methods adopted by the judiciary to lend support to the cause. Whether such promotion is normatively desirable is an issue and a question that is beyond the scope of this paper, and concomitantly therefore debate and analyses over the nature of such promotion is also beyond the scope of this paper. Some have argued that excessive and mechanical promotion of such methods in matters of jurisprudential importance must be avoided as it may adversely impact the interests of the nation and often causes undesirable ramifications on the social and democratic fabric.1 The plurality of methods adopted by the judiciary towards promoting ADR is only reflective and indicative of the favourable judicial temperament in this regard. Often the judiciary, in addition to legislative wisdom, evaluates several policy considerations while grappling with issues pertaining to ADR. Supplanting legislative prescriptions on occasion, the judiciary has played a key role in the development of ADR in the Indian context.
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See, M. Shridhar, The Initiative of the Supreme Court of India in Alternative Dispute Resolution: A Study of Two Cases, 3(2), T HE ICFAI JOURNAL OF ALTERNATIVE DISPUTE R ESOLUTION, (2004).
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NEED FOR ADR Justice R. C. Lahoti believed that the Indian judicial machinery suffered from certain inherent weaknesses and drawbacks and that these deficiencies led to circumstances in which a need was felt for the incorporation of effective methods to strengthen the institutional processes. While making this claim, the former Chief Justice emphasized the significance of ADR mechanisms; as such mechanisms help significantly in settling and resolving disputes while simultaneously saving time, energy, and resource for numerous litigants. 2 A prominent symptom of the failure of the Indian judicial machinery is the inability of the machinery to deliver justice in a timely manner. The enormous pendency of cases and the concurrent inordinate delay make it imperative to have effective ADR mechanisms in place. 3 ADR methods are not only quicker but are also significantly more informal, and therefore more user friendly than courts. 4 Furthermore, the adoption of ADR methods leads to a decrease in the workload experienced by the overburdened and understaffed courts of the country, while simultaneously affording parties to a dispute the opportunity of accessing more economical and effective justice delivery mechanisms.5
POLICY CONSIDERATIONS FACTORED INTO JUDICIAL DECISION MAKING | A PRO ADR TREND The judiciary, on various occasions has helped bolster the ADR cause through indirect methods. An example of these methods is the policy considerations which the judiciary uses as a guiding tool in decision making. On certain crucial issues, it can be reasonably inferred, that the judiciary renders decisions which encourage and promote ADR methods at a policy level itself. Certain examples would help illustrate and substantiate the claim.
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Y. F. Jayakumar, Conciliation and Family Dispute Resolution in Indian Legal System , 4(1), T HE ICFAI JOURNAL OF ALTERNATIVE DISPUTE R ESOLUTION, (2005). See, R. C. Lahoti, Strengthening of the Judicial System My Priority, THE HINDU, 25, (Hyderabad edn., May 29, 2004). 3 G. Singh, Mediation as a Dispute Settlement Mechanism in India , 5(1), T HE ICFAI JOURNAL OF ALTERNATIVE DISPUTE R ESOLUTION, (2006). See also, Jayakumar, supra note 2. 4 S. B. Sinha, ADR and Access to Justice: Issues and Perspectives, TAMIL NADU STATE JUDICIAL ACADEMY, available at http://www.hcmadras.tn.nic.in/jacademy/article/ADR-%20SBSinha.pdf, (Last visited on May 5, 2014). 5 Id.
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In Bhatia International v. Bulk Trading SA (“Bhatia International”),6 among other things, the Supreme Court laid down that the Indian judiciary was empowered to order interim measures even in arbitrations which were seated in foreign countries. Quite obviously, the decision was met with substantial criticism, primarily because it vehemently went against the freedom of international arbitration from domestic Indian judicial involvement. In response to this set of circumstances, with a view to rectify the reputation of being an “arbitration -unfriendly” jurisdiction, the Supreme Court later adopted a pro-arbitration policy and overruled Bhatia International7 by the landmark decision rendered in BALCO v. Kaiser Aluminium (“BALCO”).8 By overruling Bhatia International 9 in BALCO10 the Supreme Court clarified and explained that territoriality was the primary premise underlying the operation of the Arbitration and Conciliation Act11 and that therefore Indian courts would be precluded from asserting jurisdiction, even in the form of interim relief orders, in offshore and international arbitrations. Further, the Supreme Court held the Indian courts would not possess jurisdiction to intervene in or modify, or set aside awards of arbitration tribunals in respect of arbitrations seated outside India.12 By doing so the Supreme Court has unequivocally indicated the proarbitration approach that is going to characterise judicial temperament in this regard.13 It is amply evident that the decision in BALCO14 was aimed at remedying the inconveniences that were caused by preceding decisions like Bhatia International .15 A decision guided by policy considerations, the Supreme Court’s verdict in BALCO16 was aimed at promoting ADR methods and simultaneously alleviating the concerns of the international business and legal communities alike in respect of Indian judicial interference in international arbitration
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Bhatia International v. Bulk Trading SA, (2002) 4 SCC 105. Bhatia International v. Bulk Trading SA, (2002) 4 SCC 105. 8 BALCO v. Kaiser Aluminium, Civil Appeal No. 7019 of 2005. See, P. Nair, On the road to becoming arbitration friendly: The decision of the Indian Supreme Court in BALCO v. Kaiser Aluminium , 1(1), LCIA I NDIA NEWS, (2012). 9 Bhatia International v. Bulk Trading SA, (2002) 4 SCC 105. 10 BALCO v. Kaiser Aluminium, Civil Appeal No. 7019 of 2005. 11 The Arbitration and Conciliation Act, 1996. 12 BALCO v. Kaiser Aluminium, Civil Appeal No. 7019 of 2005. 13 Nair, supra note 8. 14 BALCO v. Kaiser Aluminium, Civil Appeal No. 7019 of 2005. 15 Bhatia International v. Bulk Trading SA, (2002) 4 SCC 105. 16 BALCO v. Kaiser Aluminium, Civil Appeal No. 7019 of 2005. 7
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proceedings. No doubt BALCO17 does not address all the challenges seen with reference to arbitration - for example, BALCO18 does not address the rule laid down that in the Indian context that Indian parties cannot contract out of Indian substantive law even if the contract provides for a foreign arbitration seat.19 But that notwithstanding, BALCO20 certainly has been a great start in the pro-arbitration direction.21 The landmark decision in Afcons Infrastructure v. Cherian Varkey Construction Company22 (“Afcons”) serves as yet another example of the judiciary rendering decisions aimed at promoting the ADR movement. The 2010 Supreme Court decision considered certain rigorously contested issues revolving around the requirement of consent among parties as a pre-requisite for reference to arbitration under Section 89 of the Code of Civil Procedure.23 While addressing this issue and ruling that prior consent is necessary in the context of reference to arbitration but not in cases of reference to other ADR mechanisms, the Supreme Court simultaneously observed that Section 89 of the Code, 24 a significant provision in the context of ADR, was inconveniently drafted. The drafting of the provision, in the opinion of the apex court required substantial correction. 25 Section 89,26 clumsily drafted, mixes up definitions of various ADR mechanisms, and expressly imposes an obligation upon the courts that not only tremendously overburdens the courts, but also defeats the very purpose of the provision in question. 27 Section 8928 requires judges of trial courts, in cases wherein the judge believes that there may be a chance that the parties could arrive at a settlement, to formulate terms of such settlement and forward these terms to the parties for consideration and observation. After such consideration and making of observations, the parties are to return the formulated settlement terms to the judge for
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BALCO v. Kaiser Aluminium, Civil Appeal No. 7019 of 2005. BALCO v. Kaiser Aluminium, Civil Appeal No. 7019 of 2005. 19 TDM Infrastructure Private Limited v. UE Development India Private Limited, (2008) 14 SCC 271. 20 BALCO v. Kaiser Aluminium, Civil Appeal No. 7019 of 2005. 21 A. Chugh, The Bharat Aluminium Case: The Indian Supreme Court Ushers in New Era , K LUWER ARBITRATION BLOG, available at http://kluwerarbitrationblog.com/blog/2012/09/26/the-bharat-aluminium-casethe-indian-supreme-court-ushers-in-a-new-era/, (Last visited on May 5, 2014). See also, Nair, supra note 8. 22 Afcons Infrastructure Limited v. Cherian Varkey Construction Company, Civil Appeal No. 6000 of 2010. 23 Sec. 89, Code of Civil Procedure, 1908. 24 Sec. 89, Code of Civil Procedure, 1908. 25 Afcons Infrastructure Limited v. Cherian Varkey Construction Company, Civil Appeal No. 6000 of 2010. 26 Sec. 89, Code of Civil Procedure, 1908. 27 Afcons Infrastructure Limited v. Cherian Varkey Construction Company, Civil Appeal No. 6000 of 2010. 28 Sec. 89, Code of Civil Procedure, 1908. 18
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further reconsideration, and then the judge is to reframe these settlement terms before referring the dispute to ADR methods mentioned in the provision. 29 Clearly, the provision imposes an unnecessary, redundant and cyclic obligation on the courts which defeats the very purpose of the provision. Invoking doctrines of purposive interpretation and other canons of statutory interpretation, the Supreme Court observed that the only practicable way to correct the deficiencies and absurdities of Section 89 30 was to comprehensively reformulate the provision. The Court did away with the inconvenient and redundant requirement of framing and reframing possible terms of settlement. The Supreme Court redefined the various ADR methods, outlined the procedure to be adopted in cases which fell under Section 89 31 and provided numerous exhaustive guidelines in this regard. 32 As was the case in the BALCO33 judgement, the Afcons34 decision is another such decision which paves the way for a more ADR friendly legal environment and statutory framework. The judiciary has systematically, with policy based objectives in mind, rendered decisions which clear several hurdles and statutory impediments which have and may come in the way of the growth of the ADR movement, and as such thereby has been bolstering and promoting the cause through rendering such decisions and creating a favourable legal climate.
INFORMATION DISSEMINATION THROUGH JUDGES | CREATING AWARENESS & INSTILLING CONFIDENCE Judges have used alternate channels to promote the cause of ADR methods. While emphasizing the issues plaguing the judiciary in the form of enormous backlog and pendency, judges have, through formal and informal channels promoted ADR mechanisms. Justice Sinha of the Supreme Court in his paper on ADR methods encouraged the use of such methods citing the various advantages that such methods offer, including that of delivering speedy and effective justice to litigants and simultaneously reducing court case burden. In his paper, the Judge also explained that ADR methods can be best implemented if there was an
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Sec. 89, Code of Civil Procedure, 1908. Sec. 89, Code of Civil Procedure, 1908. 31 Sec. 89, Code of Civil Procedure, 1908. 32 Afcons Infrastructure Limited v. Cherian Varkey Construction Company, Civil Appeal No. 6000 of 2010. 33 BALCO v. Kaiser Aluminium, Civil Appeal No. 7019 of 2005. 34 Afcons Infrastructure Limited v. Cherian Varkey Construction Company, Civil Appeal No. 6000 of 2010. 30
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active and mandatory reference of cases to such methods by the judiciary, and effective case management by judges. 35 Justice Khanwilkar of the Bombay High Court in his paper on ADR methods outlines the importance and benefits of ADR methods and proposes that in order to further the benefits provided by such methods of dispute resolution it is imperative that in addition to providing speedy justice through these channels, efforts are taken to ensure that the quality of justice is also remains uncompromised. Further, to promote ADR methods, the Bombay High Court has effected a unique form of case management. So not only does the High Court insist and promote ADR methods by referencing cases to such mechanisms, but it also assures the parties that in the event settlement by these ADR methods fails for any reason the case will immediately be taken up for hearing by the court. 36 Justice Chandrachud of the Bombay High Court has formulated certain strategies aimed and developing the efficacy of mediation as an ADR tool and presented these strategies publicly at conferences37 with a view to have such information percolate through various channels and consequently enhance the quality, efficacy, and efficiency of mediation practice. Other informal channels have also been utilised by senior members of the judiciary to promote the cause of ADR. The consequence of such information dissemination is that ADR mechanisms now enjoy the endorsement of the judiciary and the judiciary regularly refers matters for resolution to such channels. It is imperative that such ADR methods enjoy judicial backing in order to promote confidence in such a system.38 Further, courts must take efforts to see to it that recourse is taken to these ADR methods before litigation is invoked, specifically, negotiation and conciliation before arbitration.39 A strenuous challenge that ADR methods face is the lack of awareness and confidence in such systems. This lack of awareness and confidence can be remedied by the judiciary’s consistent endorsement and encouragement. 40
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Sinha, supra note 4. A. M. Khanwilkar, Need to Revitalise ADR Mechanism, 4(3), NYAYADEEP , (2005). 37 D. Y. Chandrachud, Mediation – Realizing the Potential and Designing Implementation Strategies , presented at, Law Commission of India International Conference on ADR and Case Management, (New Delhi, May 3 to May 4, 2003). 38 Singh, supra note 3. 39 Singh, supra note 3. See also, F. S. Nariman, Arbitration and ADR in India, in P. C. Rao and W. Sheffield, ALTERNATIVE DISPUTE R ESOLUTION: WHAT IT IS AND HOW IT WORKS, (1st edn., 1997). 40 Id. 36
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CASE MANAGEMENT & REFERENCE TO ADR A long list of statutory provisions incorporated by the legislature direct the courts, and imposes a duty on the courts to take an effort towards resolving a dispute before them by reference to ADR mechanism.41 Notwithstanding such legislative efforts, the judiciary has suo moto gone ahead and laid down several guidelines promoting the use of such ADR methods for dispute resolution. The Supreme Court in the Afcons 42 decision laid down certain guidelines which would help courts determine broad categories of disputes which could be referred to ADR methods for resolution before trial. These include disputes which are related to trade and commerce, money disputes, disputes of specific performance, disputes between builders and customers, bankers and customers, cases pertaining to tortious liability, disputes between partners, disputes relating to family law and so on. 43 The judiciary in consonance with legislative provisions and intent makes a significant and sincere effort to refer matters that come before it to ADR mechanisms for resolution. As has been seen in the Bombay High Court, the court actively promotes these methods by assuring parties that in the event of failure of such ADR methods to resolve the dispute, the matter will immediately be taken up for hearing by the court. 44 Several statutory provisions urge to courts to endeavour to have the dispute before it resolved through ADR mechanisms. 45 In several cases, especially in matters pertaining to family law, the judiciary has actively promoted the ADR mechanisms by referring these matters to be resolved through such channels. In Sangeetha v. Suresh Kumar 46 in a divorce and maintenance dispute between a man and wife, the Supreme Court was of the opinion that
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See, Jayakumar, supra note 2. Afcons Infrastructure Limited v. Cherian Varkey Construction Company, Civil Appeal No. 6000 of 2010. 43 Afcons Infrastructure Limited v. Cherian Varkey Construction Company, Civil Appeal No. 6000 of 2010. 44 Khanwilkar, supra note 36. 45 See, Jayakumar, supra note 2. 46 Sangeetha v. Suresh Kumar, JT 2000(8) SC 521. 42
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there was a possibility that the dispute could be resolved through means of reconciliation, and accordingly referred the matter to conciliation and adjourned the proceedings.47 In Sakri v. Chhanwarlal 48 the Rajasthan High Court remarked that the courts should endeavour to bring about conciliation at the beginning of the proceedings, but in the event that such efforts are not made at the beginning of proceedings, such efforts should be made before granting relief. The efforts must be a reasonable human effort and should be made in every case.49 Similarly, the Patna High Court in Chhotelal v. Kamala Devi 50 observed that before usual proceedings, the courts should endeavour to bring about conciliation and that such effort must be made even if the advocates for the parties submit that such reconciliation is not possible.51 The judiciary’s endorsement of such ADR methods is of tremendous significance and has serious implications on the success of such methods. A significant impetus given to the ADR movement by the judiciary was the 1984 experiment conducted by the Himachal Pradesh High Court. Facing rising arrears in subordinate courts, t he High Court implemented a project which aimed at disposal of pending cases by mandating compulsory pre-trial conciliation in new cases being brought before the courts. The experiment was on the lines of a similar experiment conducted in Canada and was tremendously successful and commended, 52 and it was recommended that other states follow the Himachal Project in their courts as well. 53
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Sangeetha v. Suresh Kumar, JT 2000(8) SC 521. See, Jayakumar, supra note 2. Sakri v. Chhanwarlal, AIR 1975 Raj 134. 49 Sakri v. Chhanwarlal, AIR 1975 Raj 134. See, Jayakumar, supra note 2. 50 Chhotelal v. Kamala Devi, AIR 1967 Pat 269. 51 Chhotelal v. Kamala Devi, AIR 1967 Pat 269. See, Jayakumar, supra note 2. 52 th th Singh, supra note 3. The experiment was commended in the Law Commission of India 77 and 13 Reports; the Conference of Chief Ministers and the Chief Justices in their resolution in December, 1993; and the Calcutta Resolution of the Law Ministers and Law Secretaries Meeting in 1994. 53 Singh, supra note 3. 48
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CONCLUSION The role of the judiciary as far as promoting ADR is concerned is multidimensional. Through the course of this paper, the different approaches to promoting ADR that the judiciary has adopted have been examined and analysed. The need for the proliferation of ADR methods is evident given the massive pendency and backlog of cases. In order to help reduce the burden on the court system and to provide speedy, effective and efficient justice it is essential that sustainable and robust ADR mechanisms are put into place. On several occasions certain decisions rendered by the judiciary in the context of ADR seem to be guided by policy considerations and seem to aimed at promoting ADR at a policy level. The judiciary has repeatedly ironed out any impediments that may come in the way of ADR movement. Whether in the international context, or domestic, the judiciary seems to be handing out decisions which overcome legal hurdles, statutory in character or otherwise. Some of these decisions even have larger implications in the context of international commerce and business. Judicial promotion of ADR has also been extended to other channels, somewhat epistemic in nature. Senior members of the judiciary have authored several papers and articles delineating the advantages of such methods of dispute resolution. These papers also often revolve around strategies to help further the usage of these methods of dispute resolution more effectively. Not only does such judicial endorsement create awareness of such methods, but it also simultaneously instils the confidence of people in such methods of dispute resolution. The judiciary has through a number of decisions laid down that cases must be referred to ADR methods on a regular basis and to this end the courts shall endeavour to promote the resolution of disputes that come before them through these methods. In fact, in certain cases the courts have assured litigants that in the event of failure of such mechanisms, the matter will be taken up immediately by the courts. It is amply evident that the judiciary has a predominantly favourable attitude towards ADR methods, and through numerous channels attempts to promote the cause of ADR.
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BIBILIOGRAPHY References 1. A. Chugh, The Bharat Aluminium Case: The Indian Supreme Court Ushers in New Era, K LUWER ARBITRATION BLOG, available at http://kluwerarbitrationblog.com/blog/2012/09/26/the-bharat-aluminium-case-the-indiansupreme-court-ushers-in-a-new-era/, (Last visited on May 5, 2014). 2. A. M. Khanwilkar, Need to Revitalise ADR Mechanism, 4(3), NYAYADEEP, (2005). 3. D. Y. Chandrachud, Mediation – Realizing the Potential and Designing Implementation Strategies, presented at, Law Commission of India International Conference on ADR and Case Management, (New Delhi, May 3 to May 4, 2003). 4. F. S. Nariman, Arbitration and ADR in India, in P. C. Rao and W. Sheffield, A LTERNATIVE DISPUTE R ESOLUTION: WHAT IT IS AND HOW IT WORKS, (1st edn., 1997). 5. G. Singh, Mediation as a Dispute Settlement Mechanism in India, 5(1), THE ICFAI JOURNAL OF ALTERNATIVE DISPUTE R ESOLUTION,
(2006).
6. M. Shridhar, The Initiative of the Supreme Court of India in Alternative Dispute Resolution: A Study of Two Cases, 3(2), THE ICFAI JOURNAL OF ALTERNATIVE DISPUTE R ESOLUTION, (2004). 7. P. Nair, On the road to becoming arbitration friendly: The decision of t he Indian Supreme Court in BALCO v. Kaiser Aluminium, 1(1), LCIA I NDIA NEWS, (2012). 8. R. C. Lahoti, Strengthening of the Judicial System My Priority, THE HINDU, 25, (Hyderabad edn., May 29, 2004). 9. S. B. Sinha, ADR and Access to Justice: Issues and Perspectives, TAMIL NADU STATE JUDICIAL ACADEMY, available at http://www.hcmadras.tn.nic.in/jacademy/article/ADR%20SBSinha.pdf, (Last visited on May 5, 2014). 10. Y. F. Jayakumar, Conciliation and Family Dispute Resolution in Indian Legal System, 4(1), THE ICFAI JOURNAL OF ALTERNATIVE DISPUTE R ESOLUTION, (2005).
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