Introduction:
The impending era of our world would be into celerity and augmentation in every sphere and in every way. The progress can be distinctively observed in the field of data analysis and machine learning. Introducing technology into the legal system is quite an innovative thought. Alternative mechanisms are one such mode where the legal system can incorporate technology. The obvious starting point is embracing the best technology and adapting it such that it brings Alternative Dispute Resolution (‘ADR’) to its laudable goals of being a real substitute to the courtrooms by being quicker as well as inexpensive, and are conducted by the experts.
Covid-19 is a seismic event in history that has undoubtedly led to disruptions at all levels across the world with no exception to the legal system. The ‘New Normal’ has brought about a rational realization that things are not going to be the same for some time in the future. The pandemic can be the catalyst for exploring and executing better approaches to point out the issues in dispute resolution, where the “matter that is to be resolved” is managed in much lesser time compared to law courts. At this hour, people are switching from the courtrooms to the ADR methods to resolve the conflicts expeditiously which has proved to be a solid substitute if not an improvement in many situations.
Alternative mechanisms are becoming more preferable and are gradually replacing the litigation process not only in India but throughout the globe. One of the main reasons behind it is the privacy and confidentiality which is maintained during the entire procedure. The provisions of confidentiality rest at the intersection between security and self‐determination and the protection of vulnerable parties in family law conflicts. It allows the parties to achieve the highest possible settlement through informal discussions. Such advantages sound greater and give a positive nod for the business enterprises to opt for either arbitration or mediation. Delay in the justice system in most of the world has made these processes a developing mode of speedy justice remedial approach.
Reckoning the current pandemic situations, it seems like its impact is not going to decrease for an extended period of time. Recently, the legal system also came up with the idea of video conferencing as a medium for hearings and litigating.
What is Alternative Dispute Resolution?
There is a notion amongst the masses that if they have to approach any legal body for dispute settlement, the development will be time consuming and expensive. Currently, everyone around us is searching for an alternative procedure that is more efficient and provides justice without any delay. So, to ease the workload of the courts an alternative mechanism was set up to serve justice instantly.
Recalling what was claimed by the experts and executives back in the 1980s, Alternative Dispute Resolution is a reasonable, less expensive, less formal way to avoid courtrooms and litigation that devastates winners almost as much as losers. As we know, it is a common affair to hear about people’s experiences about how they had to wait in long lines, the case getting delayed by weeks, and the high costs involved in the process of finding a solution to a dispute, so considering these factors, both the corporations and the normal public accepted the method of ADR in recent years.
What is Mediation?
Litigation, which is known to be a long, expensive process can be substituted by Mediation which is done by neutral people who are professionals in communication. The parties in conflict are brought together in this process and are given a solution that can either be accepted or rejected by the parties. A mediator has no right to make decisions on any party’s behalf. All he can do is provide a mutual ground where the parties meet and find a stable solution.
The parties should willingly resolve all the folds in their relationship by a little external assistance as the focus in mediation is on the forthcoming. The most ideal case is when the parties focus on improving their relationship rather than blaming each other for the dispute. It allows for a sense of trust to settle in and provides grounds for future cooperation as well. The process of mediation is said to be successful not on the basis of the decision been taken but on the basis of a mutual acceptance. Mediation is not primarily based on Dispute resolution by finding a solution, but it focuses more on the empathetic part of it regarding relationship building and problem-solving by one party hearing out the other and vice versa and then laying out their strengths and weaknesses in order to allow each of them to come to a mutual agreement.
The mediator basically comes up with a few of the standard rules and plans for the session. Mediation is more fruitful on the grounds that parties are brought together in an unbiased situation where disputes are freely estimated. Mediation is used mainly for the purpose of bypassing the time consuming and troubling steps involved in litigation. It can happen either in a joint session, or it can move in separate sessions and shuttling back.
What is Arbitration?
In contrast to Mediation, Arbitration is a process where the Arbitrator acts as an unbiased person who resolves disputes between parties. The reasons why this method is preferred over litigation is because of quicker resolution, less cost involved, more confidentiality, and satisfaction to both the parties. The concerned parties have certain freedom and they cannot influence the Arbitrator. The parties must have a valid Arbitration Agreement to initiate a contract according to Sections 11 and 12 of the Indian Contract Act,1872. There is a legality aspect in arbitration, wherein the parties are bound to act according to the decisions made. A resolution in the case of Arbitrator is not wholly one-sided and is not given with the intent of punishment but it is more of a relief offered to the parties. In absence of a jury, there is no mechanism to speed up the resolution of cases, but there is an arbitrator who takes decision based on his past experiences and knowledge about the issues and attempts to work for a resolution regarding a certain issue. One more difference between Mediation and Arbitration is the presence of Legality in the case of arbitration wherein other dispute settling procedures are not legally binding. In a nutshell, the arbitration ends a dispute whereas in the case of mediation or conciliation the disputes are aimed to be settled where the parties are not bound to go by the decision of the mediator or conciliator. Though many congenialities exist in arbitration, when compared to litigation arbitration stands out best. It is well suited for international cases and well established in the streams of insurance, construction, energy, and shipping industry also in financial service.
“At all events, arbitration is more rational, just and humane than the resort to sword.” [1]
Richard Cobden
Confidentiality in Mediation Proceedings
On considering the opinion of the parties, confidentiality is among the most essential incentives to choose mediation over litigation. It plays a vital role in allowing parties to arrive at a settlement. Confidentiality is crucial because it builds-up the trust level and escalates the confidence in the third party’s unbiased decision. It also helps in revealing the entire matter explicitly. To settle, parties need to get down to brass tacks. And this is possible only if non-disclosure of the events taking place while following this method is guaranteed to allow the parties to bring forth the complete issue without any hindrances.
The Mediation Rules of the International Chamber of Commerce (ICC) states that the mediation is kept secret and confidential unless and until the parties or the law unfolds it. This is reinforced by an agreement prepared by the mediator himself and is signed by both the parties as well as the mediator.
Confidentiality even in the procedures conducted by the Delhi mediation centers has been granted due weight. The court focuses on confidentiality in the proceedings of mediation.
“An ounce of mediation is worth a pound of arbitration and a ton of litigation!” [2]
Joseph Grynbaum
Confidentiality in Arbitration Proceedings:
Justice B.N. Srikrishna formed a committee in 2017 to analyze the mechanism of arbitration in India. It suggested several amendments and reforms to the Arbitration Act. Consequently, the Arbitration and Conciliation (Amendment) Act, 2019 came into being, where law related to confidentiality in proceedings of arbitration was introduced under section 42A.
Confidentiality is an important aspect since:
- There are parties unwilling to disclose some allegations publicly like defamation, misrepresentation, bankruptcy, incompetence and the list continues.
- It keeps the private information of the businesses protected from the competitors.
- In cases where parties may altogether want to take a different stand, but it may affect when done publicly.
The parties involved in an Arbitration proceeding have a lot at stake. Having their stakeholders and the media continuously hounding them and approaching courts in case of litigation to find out details about the dispute is not unheard of. Hence, in such cases, all that the parties are wishing for is some level of confidentiality and a spot safe from the eyes of the media and other bodies. This is one of the main reasons these parties choose arbitration as their resolution process wherein the standing of the parties in the market is not affected by the proceedings in case of dealing with patent, intellectual property, or trade strategies.
This confidentiality agreement was not present in the Arbitration Act from the very initiation. It was proposed by the High-Level Committee that in order to attract arbitration cases from all around the globe and make India a hub for the same, it was of utmost importance to make an amendment in the Arbitration Act and provide a clause for Confidentiality. Also, it has to be brought to the attention that Section 42A of the Arbitration and Conciliation Act starts with a non-obstante clause stating that for the time being in force, it has authority over any other law and will prevail over them making it necessary for the parties to follow it which in turn has a trickle-down effect on the freedom of parties in case of arbitrations.
Confidentiality in Mediation as mentioned in Arbitration and Conciliation Act, 1996
All matters concerning the settlement of a dispute should not be disclosed publicly by the mediator and the parties except when it is essential to reveal the reasons for usage and requirement under section 75 of Arbitration and Conciliation Act, 1996.
Confidentiality in Arbitration as mentioned in Arbitration and Conciliation Act, 1996
This act was amended in the year 2019, wherein the provisions related to confidentiality of arbitration proceedings were added under section 42A. This section states that confidentiality shall be sustained regarding the proceedings of the arbitration by the arbitrator, parties and the arbitral institution, provided there exists certain exceptions.
Section 89 of Code of Civil Procedure Code, 1908
This section incorporates the provisions regarding the dispute settlement without involving the court. This section gives the authority to the civil court to refer the issue to the ADR when there is a settlement that might be acceptable by the parties then the court might come up with such settlement and refer the parties to a substitute method of resolving the conflict like arbitration, mediation or conciliation.
The lacuna which exists in the law is filled by this section of CPC. As several developed countries started adopting the ADR method, nearly every case was successfully resolved without approaching courts. This particular section was added to prevent the parties from indulging in litigation and rather prefer a dispute resolution method to avoid delays in the disposal of cases which threaten justice and lack in availability of judges.
Confidentiality in International Scenario
In an International Dispute Settlement, the process of Arbitration is extremely preferable. The United Nations Commission on International Trade Law (“UNCITRAL”) Model Law on International Commercial Arbitration states that confidentiality is not mandatory under this and it has no specific provision dealing with the same rather it permits the parties to include a clause of confidentiality in the arbitration agreement if they think its fit to do so. The autonomy of a party stands high. Moreover, no such provisions with reference to confidentiality subsists other than Article 32(v) which prohibits the publishing of arbitral awards unless the parties consent to it.
Various countries, including India, have formulated their arbitration laws based on the UNICTRAL Model Law because it has no provisions of confidentiality:
- Great Britain has no statutory regulation regarding confidentiality, though the court said it to be an unwritten principle based on some precedents.
- The United States does not include confidentiality and enforcement of the same as an unwritten practice.
- Singapore International Arbitration Centre provides for confidentiality under Rule 34.6.
Case Laws
With respect to the confidentiality aspect in mediation, it has been upheld by various legal bodies and quasi-judicial bodies that confidentiality has an important role in mediation. It has also been promoted by The Supreme Court of India in Moti Ram & Anr. v. Ashok Kumar & Anr.[3], where it had directed the case to be resolved through mediation in a mediation center. To this, the mediator presented various settlements and proposals that the parties had put forward, to the court which focused on the importance of confidentiality involved in Mediation proceedings. Out of the numerous proposals that were made by the parties, one was agreed to by both and the mediator presented this agreed solution signed by both the parties to the Supreme Court with no details about the individual proceedings in the dispute resolution and how the mediator came to this conclusion. In contrast to this, when no resolution is obtained, the mediator just states to the SC that the mediation has been unsuccessful. These steps ensured that the confidentiality of the proceedings was intact and nothing except the news of a successful or an unsuccessful resolution was provided.
In the recent case of Imax Corporation v E-City Entertainment[4], concerning the determination of the limitation period of enforcement of a foreign award was decided to be 12 years starting from the award date.
Conclusion
To conclude, confidentiality plays a crucial role in making these alternative processes popular in today’s era. Although there still remains uncertainty about the maintenance of confidentiality and the importance of transparency. Nevertheless, ambivalence needs to be paid attention to as it is found to be in a state of grey area because of the lack of proper law. So, to resolve the ambiguity in confidentiality it is important to construct national laws in a better way. The possibility of inclusion of the consequences of the breach of such confidentiality might be considered. Second when a party enters into such agreements everything is at par under control and highly confidential. The parties may discuss their financial conditions, complaints, and so on without having any second thought about its exposure to public scrutiny and media.
The pandemic led to effective and time-saving methods for arbitrators, i.e., technology. This would lessen the burden on arbitrators and it does not mandate the presence of the parties. In the International Dispute Resolution community arbitration is going to play a major role. The parties are at greater liberty to pick up everything in an arbitration proceeding and very swiftly they attain merit out of the arbitration.
“A good settlement is better than a good lawsuit.”[5]
References:
[1] Shefali Roy, The Aspect Of Jurisdiction In Indian Arbitration ( November 2014) https://www.arbitrationindia.com/pdf/tia_6_11.pdf
[2] Centre For Mediation And Conciliation, Mediation: how to resolve issues without wasting time and money, (10th September, 2018) http://centre4mediation.com/mediation-how-to-resolve-issues-without-wasting-time-and-money/
[3] Moti Ram & Anr. v. Ashok Kumar & Anr., (2011) 1 SCC 466.
[4] Imax Corporation v E-City Entertainment, (2015) 2 BOM CR 43.
[5] Peter Causton, Sir Rupert Jackson fixed costs proposal includes mediation, (31st July, 2017) https://www.promediate.co.uk/sir-rupert-jackson-fixed-costs-proposal-includes-mediation/
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