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ADR Mechanism in India , NDIAC Bill , 2019

  Jan 12, 2021

ADR Mechanism in India , NDIAC Bill , 2019

Q. What is this bill? 

  • The New Delhi International Arbitration Centre Bill, 2019 seeks to provide for an autonomous and independent institution for better management of arbitration in country.

Arbitration is basically a settlement of dispute between two parties to a contract by a neutral third party i.e. the arbitrator without resorting to court or judicial action.  

Arbitrators can be chosen for their expertise. It is confidential and can be speedier and cheaper than court. There are limited grounds of appeal. Arbitral awards are binding and enforceable through courts.

Q. What are the provisions of NDIAC Bill? 

  1. New Delhi International Arbitration Centre (NDIAC): It seeks to provide for the establishment of the NDIAC to conduct arbitration, conciliation and mediation  proceedings declaring NDIAC as an institution of national importance. 
  2. International Centre for Alternative Dispute Resolution (ICADR): The ICADR which is a registered society basically to promote the resolution of disputes through alternative dispute resolution methods. 

It seeks to transfer the existing ICADR to the central government as all the rights, title, and interest in the ICADR will be transferred to this autonomous body NDIAC.   

Composition of NDIAC

NDIAC is proposed to be an independent institutions consist of seven members including: 

  1. a Chairperson who may be a Judge of the Supreme Court or a High Court, or any eminent person with having special knowledge & experience in conduct / administration of arbitration; 
  2. two eminent persons having substantial knowledge & experience in institutional arbitration;
  3. three ex-officio members, that include a nominee from the Ministry of Finance and a Chief Executive Officer (responsible for the day-to-day administration of the NDIAC); & 
  4. a representative from a recognised body of commerce and industry, appointed as a part-time member, on a rotational basis. 

Term of Office : 

The members of NDIAC will hold office for three years and will be eligible for re-appointment.  

The retirement age for the Chairperson is 70 years and other members is 67 years. 

Major objectives of the NDIAC include :

  1. To promote research, providing training and organising conferences and seminars in alternative dispute resolution matters; 
  2. For basically providing facilities and administrative assistance for the conduct of arbitration, mediation and conciliation proceedings; 
  3. To maintain a panel of accredited professionals to conduct arbitration, mediation and conciliation proceedings.  
  4. To conduct international and domestic arbitrations and conciliation in the most professional manner;
  5. To provide cost-effective and timely services for the conduct of arbitrations and conciliations at Domestic and International level;
The New Delhi International Arbitration Centre Bill- Examrace

Essential functions of NDIAC will be :

  1. Facilitating conduct of arbitration and conciliation in a professional, timely and in a cost effective manner. 
  2. Promoting studies in the field of alternative dispute resolution.  

Finance and audit: 

The NDIAC will be required to maintain a fund which will be credited with grants received from the central government, fees collected for its activities, and other sources.  The accounts of the NDIAC will be audited and certified by the Comptroller and Auditor-General of India. 

  1. Institutional support: 

The Bill specifies that the NDIAC will establish a Chamber of Arbitration which will maintain a permanent panel of arbitrators.  Further, the NDIAC may also establish an Arbitration Academy for training arbitrators and conducting research in the area of alternative dispute resolution.  The NDIAC may also constitute other committees to administer its functions. 

Q. What is mechanism for Alternative Dispute Resolution (ADR) In India?

Alternative Dispute Resolution is a method to resolve disputes and disagreements between the parties by arriving at an amenable settlement through negotiations and discussions. 

It is in general an attempt to establish an alternative mechanism other than the traditional methods of dispute resolutions. 

It facilitate the resolution of matters of business issues and the others where it has not been possible to initiate any process of negotiation or arrive at a mutually agreeable solution.

Q. What are Types of ADRs?

  • Arbitration:
  • In it the dispute is submitted to an arbitral tribunal which makes a decision on the dispute that is mostly binding on the parties.
  • It is generally less formal than a trial, and the rules of evidence are often relaxed.
  • There lies no right to appeal an arbitrator's decision.
  • Further, except for some interim measures, there is very little scope for judicial intervention in the arbitration process.
  • Conciliation:
  • It is a non-binding procedure in which an impartial third party, the conciliator, assists the parties to a dispute in reaching a mutually satisfactory agreed settlement of the dispute.
  • Conciliation is a less formal form of arbitration.
  • The parties are free to accept or reject the recommendations of the conciliator.
  • However, if both parties accept the settlement document drawn by the conciliator, it shall be final and binding on both.
  • Mediation:
  • Under mediation process an impartial person called a "mediator" helps the parties try to reach a mutually acceptable resolution of the dispute.
  • The mediator does not decide the dispute but helps the parties communicate so they can try to settle the dispute themselves.
  • Mediation leaves control of the outcome with the parties.
  • Negotiation:
  • Negotiation is a  non-binding procedure in which discussions between the parties are initiated without the intervention of any third party with the object of arriving at a negotiated settlement to the dispute
  • It is the most common method of alternative dispute resolution.
  • Negotiation occurs in business, non-profit organizations, government branches, legal proceedings, among nations and in personal situations such as marriage, divorce, parenting, and everyday life.

Q. What are the Advantages of ADRs?

  • The resolution of disputes takes place usually in private – helping maintain confidentiality.
  • It is more viable, economic, and efficient.
  • Procedural flexibility saves valuable time and money and absence of stress of a conventional trial.
  • This often results in creative solutions, sustainable outcomes, greater satisfaction, and improved relationships.
  • The possibility of ensuring that specialized expertise is available on the tribunal in the person of the arbitrator, mediator, conciliator or neutral adviser.
  • Further, it offers greater direct control over the outcome. Personal relationships may also suffer less.

Q. What is the Way Forward?

  • In the backdrop of humongous cases pending in Indian courts where India now has almost 4 crore pending cases spanning the Supreme Court, various high courts and the numerous district and subordinate courts, these kind of bill and constitution of independent body like NDIAC will lessen the burden of the judiciary, and It will facilitate India becoming a hub for institutional arbitration.