How To Resolve Disputes Outside of Court? ( Conciliation &Arbitration )

Lawyers at VakilSearch show you the way If you ask any Indian to list ten problems plaguing the common man, delay in getting justice is likely to rank quite high on the list.

Although it has lagged behind in ensuring speedy justice for citizens, the Indian government machinery has taken some steps in terms of creating the National Legal Services Authority and the enactment of The Arbitration and Conciliation Act, 1996.

We will here be focusing more on the latter (the Arbitration and Conciliation Act, 1996) and will throw light on some of the alternative means available to you, as the common man, to resolve your disputes.

How does mediation / conciliation work?

Mediation / Conciliation, very simply is a process where one party proposes a peaceful solution to the other party, and if the solution is accepted, the parties agree on a settlement.

Now this is much easier said than done. Very often, for a variety of reasons, one of the parties may not want to settle their dispute. Someone (sometimes even their lawyer) may not want a quick and painless resolution either.

If that is not the case, it is strongly recommended that you try out mediation / conciliation to resolve your dispute.

Informality is the key difference between mediation and a traditional court case. The mediator (person helping the parties reach a conclusion) is not bound by either Code of Civil Procedure, 1908 or the Evidence Act. He is only guided by the principles of fairness and justice. He does not judge the dispute, but only guides the parties in reaching a solution. The communication between the mediator and the parties can be both oral and written.

Although the process is friendly and informal, the settlement is binding after both the parties have consented to it and signed it. It can be enforced just like a court verdict.

And what about arbitration?

An arbitration for the sake of understanding can be described as a private court. In the place of judges, parties appoint arbitrators to hear their disputes and parties have the freedom to appoint as many arbitrators they want as long as both the parties consent to the choice of arbitrators. To avoid a hung verdict, parties must appoint an odd number of arbitrators, i.e. 1, 3, 5, 7 and so on.

So how do I choose?

At the outset, it must be stated that comparing arbitration with mediation is like comparing chalk with cheese. The two are completely different in every respect. Having said that, mediation is much more affordable than arbitration, and usually much faster too.

The best case scenario is to have a successful mediation and have the dispute resolved then and there. This way you will save significantly on the cost.

In addition to cost, the other benefit of a mediation is that there is less animosity and acrimony. Parties approach a mediation with a view to settle, while they approach arbitration with a view to win. At the end of the mediation, the parties can actually restore ties and restore their relationship. Have you ever heard of that happening at the end of a long courtroom battle?

If you are drafting a contract, incorporate a clause which first makes mediation compulsory between the parties. If the mediation does not yield any fruit, then you can go in for an arbitration (this has to also be mentioned in the contract) and only after the failure of both the mediation and the arbitration should the parties go to Court.

Having this clause included in the contract alone can save you lakhs of rupees, should things go awry.

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