Negotiation Conciliation and Arbitration Aspects Role of Company
Negotiation, Conciliation and Arbitration Aspects: Role of Company Secretary in the said process Kavita Ms. Kavita Jha, Principal Associate, Vaish Associates Advocate, Associates Advocates https: //www. nclt. in/ Advocates
Mediation and Conciliation and Companies Act, 2013
COMPANIES ACT, 2013: Section 442 • The Central Gov. shall maintain a panel of experts to be called as “Mediation and Conciliation Panel” for mediation between parties during the pendency of any proceedings before the Central Govt. or the Tribunal or the Appellate Tribunal under the new law. • The Panel shall dispose of the matter referred to it within a period of 3 months from the date of reference.
I. ALTERNATIVE DISPUTE RESOLUTION
Introduction ADR refers to the other ways that the parties can use to settle civil disputes with the help of an independent third party and without the need for a formal court hearing. The main types of ADR’s are: a. Arbitration b. Negotiations b. Mediation c. Conciliation
Salem Bar Association v. Union of India (AIR 2005 SC 3353) • If the Court for one reason or the other cannot itself effect a compromise, the only option it would have is to refer the parties to conciliation etc. • In the historic judgement in Salem Bar Association v. Union of India, the Supreme Court has directed the constitution of a committee to frame draft rules for mediation under S. 89(2)(d) of the CPC. Consequently, the Committee presided over by Mr Justice M. Jagannadha Rao, Chairman of the Law Commission of India has prepared a comprehensive code for the regulation of ADR process initiated under S 89 of CPC. which consists of two parts---Part I: ADR Rules 2003 consisting of “the procedure to be followed by the parties and the Court in the matter of choosing the particular method of ADR” and Part II: Mediation Rules, 2003 consisting of “draft rules of mediation under section 89(2)(d) of the Code of Civil Procedure”.
NEGOTIATION • ‘Negotiations’ occur when two parties set forth the type of remedy each desires, and try to reach some sort of an agreement that satisfies everyone involved. In the best-case scenario, negotiations are done between the parties and both come to a happy agreement. • Once agreement has been reached, the parties will create a written statement to reflect the terms of the negotiated assets.
CONCILIATION • ‘ Conciliation’ is limited to encouraging the parties to discuss their differences and to help them develop their own proposed solutions. • It is voluntary, flexible, confidential and interest based process. the parties seek to reach an amicable dispute settlement with the assistance of the conciliator, who acts as a neutral third party.
CONCILIATION • Section related to conciliation: i. Commencement of conciliation proceeding u/s 62 of the Act. ii. After proceeding’s S. 71 cooperation of parties with conciliator. iii. S. 76 termination of conciliation proceeding. • What cannot be referred to conciliation: i. Matters of Criminal nature ii. Illegal transactions iii. Matrimonial matters like divorce suit etc. • What can be referred to conciliation? i. Matters of Civil Nature ii. Breach of Contract iii. Dispute of Movable or Immovable Property
Mediation • The term “mediation” broadly refers to any instance in which a third party helps others reach agreement. more specifically, mediation has a structure, timetable and dynamics that “ordinary” negotiation lacks. • The process is private and confidential, possibly enforced by law. participation is typically voluntary. the mediator acts as a neutral third party and facilitates rather than directs the process.
TYPES OF DISPUTE SUITABLE FOR MEDIATION Mediation is suitable for resolving a wide range of disputes including: • • • Business and Commercial Partnership Family Workplace Personal injury Industrial and Construction
COMPANIES ACT, 2013: Need for Mediation and Conciliation • Mediation is assisted negotiation. It is a flexible process conducted confidentially in which a neutral party i. e. the mediator, manages the interaction between disputing parties to help them come to a negotiated settlement of the dispute. The disputants and not the mediator have ultimate control over the decision to settle and terms of resolution. The final terms of settlement are recorded in the form of a binding agreement. • The process is time bound and cost effective. • Confidentiality of the entire process and all concessions made by parties during negotiation is maintained. Since the parties mutually agree to the settlement terms, probability of litigation over settlement is also low.
ROLE OF MEDIATOR/ CONCILIATOR UNDER SECTION 442 • The mediator/conciliator shall attempt to facilitate the following: • voluntary resolution of the dispute(s) by the parties, • communicate the view of each party to the other, • assist them in identifying issues, • reducing misunderstandings, • clarifying priorities, • exploring areas of compromise and generating options in an attempt to resolve the dispute(s), emphasizing that it is the responsibility of the parties to take decision which affect them. • He shall not impose any terms of settlement on the parties. • However, if both the parties consent, he may impose such terms and conditions on the parties for early settlement of the dispute.
“An ounce of mediation is worth a pound of arbitration and a ton of litigation!” — Joseph Grynbaum
II. ARBITRATION
Introduction Arbitration: As per Halsbury ‘s Laws of England • It means reference of a dispute between not less than two parties, for determination, after hearing both sides in a judicial manner, by a person or persons other than a court of competent jurisdiction. Object of Arbitration • Settlement of dispute in an expeditious, convenient, inexpensive and private manner to prevent it fro, becoming a subject of future litigation.
Types of Arbitration Practice - Institutional Arbitration and Ad Hoc Arbitration AD HOC ARBITRATION INSTITUTIONAL ARBITRATION A. The procedures have to be agreed upon by the parties and the arbitrator. This requires cooperation between the parties and involves a lot of time A. In institutional arbitration, the procedural rules are already established by the institution. The fees are also fixed and regulated under rules of the institution. B. Infrastructure facilities for conducting arbitration pose a problem and parties are often compelled to resort to hiring facilities of expensive hotels, which increase the cost of arbitration. Other problems include getting trained staff and library facilities for ready reference. B. In contrast, the institution will have ready facilities to conduct arbitration, trained secretarial/administrative staff, as well as library facilities. C. No such panel per se is available here. C. The arbitral institutions maintain a panel of arbitrators along with their profile. The parties can choose the arbitrators from the panel. Such arbitral institutions also provide for specialized arbitrators. Inspite of the numerous advantages of institutional arbitration over ad hoc arbitration, there is currently an overwhelming tendency in India to resort to ad hoc arbitration mechanisms.
Evolution of Arbitration Act • The Pre-1996 Position (1940 Act): This Act was largely premised on mistrust of the arbitral process and afforded multiple opportunities to litigants to approach the court for intervention. Coupled with a sluggish judicial system, this led to delays rendering arbitrations inefficient and unattractive. • The 1996 Act: The 1996 Arbitration Act based on the UNCITRAL on International Commercial Arbitration and the Arbitration Rules of the United Nations Commission on International Trade Law 1976 was enacted. • The Statement of Objects and Reasons to the Act said that the old Act had ‘become outdated’ and there was need to have an Act ‘more responsive to contemporary requirements’. Amongst the main objectives of the 1996 Act were ‘to minimize the supervisory role of courts in the arbitral process’ and ‘to provide that every final arbitral award is enforced in the same manner as if it were a decree of the Court.
Arbitration and Conciliation Act, 1996 • Part I – Domestic Arbitration • Part II – Enforcement of foreign awards • Part III – Conciliation Procedures • Part IV – Supplementary Provisions
In spite of Arbitration being an effective tool of dispute resolution, there were various shortcomings which were required to be resolved.
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