By Deborah Lockhart
Originally published in: LexisNexis | Australian Alternative Dispute Resolution Law Bulletin

The India – Australia Relationship

Recent years have seen remarkable growth in the trading relationship between India and Australia. Two-way trade in goods and services has grown in value from $6.8 billion in FY2003-04 to $14.8 billion in FY2013-14.[1] The Australian Government has marked the Comprehensive Economic Cooperation Agreement (CECA) as one of its key priorities, with its Trade and Investment Minister Andrew Robb visiting India four times in 2015 to bring negotiations to an early conclusion.[2]

The focus for the Australian Commonwealth Attorney-General within the CECA negotiations is promoting access to the Indian legal market for Australian lawyers and law firms. Senator the Hon George Brandis QC noted recently that:

The Australian Government wants Australian lawyers and law firms to be able to provide commercial legal advisory services to corporate clients and financial institutions in India… Australian lawyers do not seek to practice in domestic and consumer areas of law already well serviced by India’s legal profession, nor do they want a right of appearance before the courts.[3]

There is significant recognition within India that its court system is failing to provide timely access to justice for its people in any area of the law. While India’s government and the judiciary grapple with the herculean challenges presented by the volume of cases before the courts, one key strategic response is to advance the understanding and uptake of Alternative Dispute Resolution processes across the country.

For Australian lawyers providing services in India and businesses investing in cross-border trade, effective dispute resolution clauses in their contracts are essential.

In the first of a series on ADR in the Indian sub-continent, this article focuses on:

  • the need for timely and cost-effective access to justice;
  • (ii) India’s unique system of Lok Adalat; and
  • (ii) the framework adopted to promote arbitration and mediation nationally.

Scope for timely and cost-effective access to justice 

India’s 1.29 billion people represent over 17% of the world’s population. With over 65% below the age of 35, India is set to overtake China as the world’s most populous nation by 2030. India’s increasingly large high net worth and middle classes represent those benefitting from better educational opportunities and India’s strong commercial development, yet India still suffers from low rates of literacy (62.8%)[4] and poverty remains the experience of 60-70% of the population.

How does one design and structure a legal system that provides access to justice for these billion people?

The impost on the judicial system remains significant. As at June 2014, there were some 4.5 million cases pending in the country’s 24 High Courts; approximately three quarters being civil matters. Across the subcontinent there are approximately 26 million litigation matters pending.[5]

Court lists are further compounded by a significant shortfall in judges, with some 400 vacancies in the High Court alone. Tensions between the government and the judiciary have arguably contributed to the lack of new appointments in recent years but while that relationship may improve with the appointment of the new Chief Justice of India, the Honourable Chief Justice Tirath Singh Thakur, with effect from 3 December 2015, it is unlikely that the significant court delays will resolve soon. An appeal to the Delhi High Court currently takes on average 5-7 years and in the Rajasthan High Court a civil appeal takes on average 28 years. Other state courts are in similar or worse positions.[6]

While court delays are seemingly overwhelming, surveys suggest that only 10% of Indian disputants in fact choose either litigation or arbitration to settle their disputes. The Bangalore International Mediation, Arbitration and Conciliation Centre highlights another disquieting statistic: “that about 9% of the disputants take the help of anti-social elements to resolve disputes.”[7]

In February 2015, the Honourable Minster of Justice, D. V. Sadananda Gowda, addressing the UNCITRAL India Workshop on Dispute Resolution in the Construction Industry highlighted the importance of access to justice to India’s nation building:

development of physical infrastructure in the nation is our prime priority… 

Positive development could only happen with a robust and healthy work and business environment and one major ingredient to ensure this is speedy, equitable and fair dispute resolution.

With an annual investment of over INR 4.3 trillion in building the assets in the nation and generating employment of over 42 million, construction industry plays a vital role in achieving stated objectives. Ironically, it is this activity, which suffers most by unresolved business disputes. According to recent estimates, over 18% of the annual output remains stuck in a variety of disputes. This, I am aware, inhibits the growth, creates an environment of uncertainty and results in poor business confidence, and the situation needs immediate reversal.” [8]

In promoting ADR across the sub-continent, the Minister of Justice addressed the Bar Council in Chennai in July 2015, and was forthright in encouraging counsel to promote ADR processes to facilitate access to justice:

“Though the formal systems of justice like courts, tribunals etc. are available to a person when he is in need of fair resolution to a dispute or an issue, equally important are the traditional but fair systems of adjudication, which can either be peer groups, settlement of disputes by village elders, resolving the disputes at the village panchayats or any other form of alternative dispute resolution, including mediation, conciliation and arbitration etc.

I am very clear in my mind that the formal systems of justice dispensation consisting of courts, judges and lawyers will never be able to meet growing demands of justice dispensation in this vast country populated by twelve hundred million of people… Hence I would only request all of you that if as a responsible citizen of this country you want to ensure the access to justice to all our fellow citizens, you all need to think about this cost factor and how to do something about it.

The better course of action would be to adopt three pronged strategy to reduce the high level of litigation: (i) avoid litigation; (ii) adopt alternate dispute resolution mechanism; and (iii) adjudicate quickly. Litigation can be avoided if all of you advise the clients to avoid litigation. [9]

While enthusiasm for the litigated case remains strong amongst many of its local lawyers, India is advancing the use of alternative dispute resolution mechanisms.

India’s unique system of Lok Adalat

Tackling its mounting court lists of commercial and non-commercial claims, in 1982 India introduced a system of ADR that built on a traditional village approach to dispute resolution.

Lok Adalat (“LA”) is India’s unique method of resolving disputes between parties without resorting to litigation. The literal translation of Lok Adalat is “People’s Court”,[10] earning itself a name and reputation as the “dispensation of justice” for the common people.[11] LA deals with a wide range of matters including motor accidents, family law disputes, labour disputes, public utilities and banking.

The underlying principles of LA are conciliation and compromise between parties.[12] While some describe LA as a hybrid of either conciliation/negotiation or mediation/arbitration, LA is best viewed as a distinct category of ADR in itself.[13]

One of its most prominent ‘access to justice’ features is its zero-cost. LA is free to all who use the system and court fees paid prior are refunded when settlement is reached.[14] LA is not strictly bound by procedural laws and the Evidence Act[15] and the informality of proceedings assists non-legal parties to understand their dispute more fully.

LA comprises a sitting or retired judicial officer and another “persons of repute”, who may be prescribed by the State Government after consultation with the Chief Justice of High Court.[16] The decision reached in LA is a final and binding ‘award’. No general appeal mechanism exists for LA and the award is legally recognised as a decree given by the court.[17]

While LA remains a cornerstone of India’s access to justice framework, arbitration and mediation are increasingly being promoted as central to it functioning effectively.

Framework for ADR

Since the official recognition in the 1996 Arbitration and Conciliation Act and the 1999 amendment of the Civil Procedure Code, both arbitration and mediation have shown steady growth in India.[18]

In his speech on Dispute Resolution in the Construction Industry, the Minister of Justice made it clear that “one of the very important objectives of our Government led by the Honorable Prime Minister is to make India an international hub for arbitration.[19] The Minister went on to foreshadow future amendments to the Arbitration and Conciliation Act to ensure that “certain basic systems are put in place, like reducing the time taken for deciding a dispute, certain modifications in the process adopted and the finality of those awards and the legal sanctity attached to the legal process”.

In May 2005 the Mediation and Conciliation Project Committee was constituted in order to encourage the use of mediation. The work of the MCP [the Committee] has included standardising and regulating mediation training in India through a model training manual and curriculum, running ADR awareness programs, providing specialist training for referral judges and running a train the trainers program.

As detailed in the MCP’s Mediation Training Manual, to qualify as a panel member mediators must have standing as:

(a)  (i)            Retired Judges of the Supreme Court of India;

(ii)           Retired Judges of the High Court;

  • Retired District and Sessions Judges or retired Judges of the City Civil Court or Courts of equivalent status;

(b) Legal practitioners with at least fifteen years standing at the Bar at the level of the Supreme Court or the High Court or the District Courts of equivalent status;

(c) Experts or other professionals with at least fifteen years standing; or retired senior bureaucrats or retired senior executives;

(d) Institutions which are themselves experts in mediation and have been recognized as such by the High Court, provided the names of its members are approved by the High Court initially or whenever there is change in membership.[20]

India’s MCP guidelines are similar to Australia in that mediator training involves a minimum of 40 hours tuition that combines both theory and role-plays. In India mediator accreditation also includes practical experience under the guidance of a trainer or a trained mediator.[21]

Mediation has gained further force in India with the establishment of court-annexed mediation centres across the country.[22] The first Indian court annexed centres were opened in New Delhi.[23] The Samadhan Mediation and Conciliation Centre was set up by the Delhi High Court in 2006 and continues to make a significant contribution to the development of mediation practice in the region.

Samadan has grown from two small mediation rooms in 2006 to a major ADR complex spanning several floors in the New Delhi High Court building. The Mediation Centre includes not only standard mediation rooms and break-out areas but also a play room for children and the provision of onsite psychology services in the counseling suite.

In 2012, Samadhan’s Panel of Judicial Mediators numbered 98 and in 2013, its panel of Advocate Mediators totalled 156. Data from 2012 indicates that Samadhan and centers at other Delhi courts have been successful:

A wide reaching study, spanning 2005-2012 has concluded that 60% of disputes heard in the mediation centres affiliated to the four Delhi courts (Tis Hazari, Karkardooma, Rohini and Dwarka) were resolved.  The statistics for Tis Hazari show that of the 26,608 cases lodged within the period, 26,096 were settled.[24]

In October 2015, Samadhan celebrated the settlement of over one hundred thousand cases through mediation in all the six district courts in New Delhi[25].

In addition to the efforts of government and the judiciary, a number of institutions have been established to promote ADR. These include the Indian Institute of Arbitration and Mediation, Mediators’ Council of India and International Centre for Alternative Dispute Resolution (ICADR). ICADR was established as an autonomous organisation, but works “under the aegis of the Ministry of Law and Justice, Government of India, with its Headquarters at New Delhi and Regional Centres at Hyderabad and Bangalore”.[26]

Conclusion

In February 2015, the Australian Disputes Centre and Australian Centre for International Commercial Arbitration collaborated with ICADR to hold an International Arbitration Conference in New Delhi. Again highlighting the Australian Government’s focus on building trade relationships with India, the Department of Foreign Affairs and Trade sponsored the joint conference.

With their own ADR experience spanning more than three decades, Australia’s lawyers, ADR institutions, mediators and arbitrators are well positioned to bring significant expertise to businesses and government entities in India and to India-Australia trade in an ADR context.

The scale of the opportunities between the two nations, to promote the use of effective ADR processes, is not only good for business it also responds to a critical need across the Indian sub-content for its 1.29 billion people to have access to timely and cost-effective dispute resolution.

[1] Department of Foreign Affairs and Trade, Australia-India Comprehensive Economic Cooperation Agreement, 1 July 2014, http://dfat.gov.au.

[2] Minister for Trade and Investment, Hon Andrew Robb AO MP “CECA Talks and Leadership Dialogue Focus of Robb’s Visit to India” media release (25 October 2015) http://trademinister.gov.au.

[3] Attorney-General for Australia, Senator the Hon George Brandis QC “Changing Roles of Lawyers in the Asia-Pacific Region”

(Speech at the Victorian Bar and Law Institute of Victoria Conference, Melbourne, 9 October 2015).

[4] UNICEF Statistics Total adult literacy rate (%) 2008–2012, 27 December 2013, www.unicef.org.

[5] Shri D V Sadananda Gowda Speech of Hon Minister of Law and Justice at the launch of Legal Services Schemes of NALSA and Workshop on Actualisation, New Delhi, 7 November 2015.

[6] “Delay in hearing appeals as good as justice denied” The Times of India 15 October 2015 timesofindia.indiatimes.com.

[7] Bangalore International Mediation, Arbitration and Conciliation Centre, published informational brochure.

[8] Shri D V Sadananda Gowda Speech of Hon Minister of Law and Justice at the Inaugural function of the 2015 UNCITRAL India Workshop on Dispute Resolution in the Construction Industry, New Delhi, 16 February 2015.

[9] Shri D V Sadananda Gowda Speech by Hon Minister of Law and Justice at the “Lawyers’ Meet 2015” organised by the Bar Council of India on Public Litigation Policy and Access to Justice, Chennai, 25 July 2015.

[10] Karthyaeni V and Vidhi Bhatt, Lok Adalats And Permanen Lok Adalats, 30 August 2003, www.legalserviceindia.com.

[11] Sarfaraz Ahmed Khan Lok Adalat: An Effective Alternative Dispute Resolution Mechanism APH Publishing Corporation, New Delhi 2006, p 1.

[12] Kirti Dashora, Significance of Lok Adalats in present scenario, 10 March 2011, www.legalserviceindia.com.

[13] Above n 12.

[14] Abdul Hasan v Delhi Vidyut Board 1999 IIAD Delhi 105 AIR; AIR 1999 Delhi 88 at [14].

[15] Above n 10.

[16] Legal Services Authorities (Amendment) Act 1994, s 19(2).

[17] Legal Services Authorities (Amendment) Act 1994, s 21(2).

[18] Herbert Smith Freehills Dispute Resolution, India: mediation successful in 60% of Delhi court actions, 3 September 2012 http://hsfnotes.com.

[19] Above n 8.

[20] Mediation and Conciliation Project Committee Supreme Court of India Mediation Training Manual of India (January 2014) at 38, http://supremecourtofindia.nic.

[21] Above n 20, at 42.

[22] Ashish Kumar The Potentials of Mediation in the Settlement of Environmental Disputes (2012) http://worldmediation.org.

[23] Alexander Oddy, Sonya Leydecker, Anthony Monaghan, Mike McClure and Anita Phillips, Court annexed arbitration and mediation in New Delhi, 25 February 2010, www.lexology.com.

[24] Above n 18.

[25] IndiaToday, Delhi mediation centre commemorates settlement of 1 lakh cases, 6 October 2015, http://indiatoday.intoday.in.

[26] International Centre for Alternative Dispute Resolution, About us—Introduction to ICADR, 14 September 2009, http://icadr.nic.in.

DLockhart

Deborah Lockhart
Chief Executive Offıcer, Australian Disputes Centre