A-Z of ADR: Refusal to Participate
-Kashish Gupta (IInd Year, NLSIU Bangalore)
Alternate Dispute Resolution (ADR) denotes a wide range of dispute resolution processes that act as a means for the disagreeing parties to reach an agreement short of litigation. ADR can be further classified into various types, two of which are Mediation and Arbitration. The procedure followed in both arbitration and mediation is quite different. To understand the consequences when a party refuses to participate in any form of ADR, it is essential to know about the two procedures. This article first has a brief introduction to the two procedures. It then proceeds to the differences in the procedures. Finally, it explains the consequences of refusal to participate in the two procedures.
Arbitration and Mediation
Arbitration can be defined as the submission of a dispute to one or more impartial person(s) for a final and binding decision. Through contractual provisions, the parties may control the range of issues to be resolved via arbitration, the scope of the relief to be awarded, and many of the procedural aspects of the process. The decision of the arbitrator and the award granted is usually binding. That is, the parties agree beforehand to be bound by the decision to be made by arbitrator or arbitral tribunal. Arbitration works for the cases where the parties agree to submit their dispute to arbitration and rather than engaging in a lawsuit or court trial. The parties are unable to resolve the issue themselves, and therefore, wish for an impartial arbitrator to impose a decision that will be binding upon them, whether or not they like the decision rendered.[1]
Mediation, like arbitration, is also the process of trying to solve disagreements between people or companies without going to court.[2] It is a form of negotiation that is chaired by a neutral person, called the mediator. The mediator has no personal interest in the outcome of the mediation. The mediator is a trained professional who is trained with the skill of helping people to settle on the disagreement. He needs to listen to both the parties, understand the point of disagreement from both perspectives and then has to help them work out solutions that are tailored to meet both their needs.[3]
Differences between the procedures
In the process of mediation, the mediator helps the parties to settle the dispute by narrowing the differences through discussions. In this process, unlike in arbitration, it is the parties who arrive at a solution by mutual understanding and the dispute is not decided by the mediator. A successful mediation is where the outcome or the solution to the dispute is out of the will of the parties. There is no winning or losing party in the mediation as the decision is not binding on the parties unless they agree to it.[4]
On the other hand, in arbitration, the arbitrator looks into the legal rights and wrongs of a dispute and decides. Once the arbitrator has arrived at a decision, it is binding upon parties whether they agree with it or not. It is very much like the way a court case is decided by a judge, except that the process does not take place in a courtroom. The process is also different from a court trial as it is not open to the public.[5]
Refusal to participate
The consequence of refusing to participate in the process of dispute resolution is largely dependent on the process it follows and its nature.
Rule 49 of the Rules of Arbitration of the Indian Council of Arbitration provides that “if the parties have agreed to submit their case to arbitration under these Rules and any party refuses or fails to take part in the arbitration proceedings, the arbitral tribunal may proceed with the arbitration notwithstanding such refusal or absence”.[6] Rule 54 (iii) provides that “the arbitral tribunal may make an ex parte award if the Defendant neglects or refuses to appear or make his defense or fails to file the papers within the time granted”.[7]
From the above-mentioned provisions, it can be inferred that the parties do not have the option of refusing to participate in the process of arbitration if it is agreed by them beforehand. The decision of the arbitrator is imposing in nature and both the parties have to abide by it, irrespective of they agree to it or not, the process can continue in the absence of one the parties. Further, because the arbitrator decides based on legal rights and wrongs, the decision can be ex-parte.
On the other hand, in mediation, there is no legal sanction for ignoring or refusing a proposal for the mediation. However, if a dispute has reached the stage of litigation, the courts can suggest mediation in the course of proceedings and, invariably, such suggestions are accepted by parties.[8]
Since mediation is a non-binding procedure, parties are not obliged to continue with the mediation process after the first meeting, though they might have agreed to submit a dispute to mediation. The continuation of the process depends on their continuing acceptance of it. The non-binding nature of mediation also means that a decision cannot be imposed on the parties. In order for any settlement to be concluded, the parties must voluntarily agree to accept it.[9] Since it is necessary for the process of mediation that both the parties have to reach a settlement with mutual consent, the process cannot continue in the absence of the parties.
[1] ‘The difference between arbitration and mediation (Legalline.ca)<https://www.legalline.ca/legal-answers/53231-2/> accessed 27th July 2020
[2] Ibid.
[3] Ibid.
[4] Ibid. What is the difference between arbitration and mediation (Singapore international arbitration centre) <https://www.siac.org.sg/71-resources/frequently-asked-questions/174-what-is-the-difference-between-arbitration-and-mediation1> accessed on 28th July 2020
[5] Ibid.
[6]Rules of Arbitration of the Indian Council of Arbitration (International Trade Centre)<https://www.intracen.org/Rules-of-Arbitration-of-the-Indian-Council-of-Arbitration>/accessed on 29th July 2020
[7] Ibid.
[8] Mediation in India (Lexology, September 9. 2019) <https://www.lexology.com/library/detail.aspx?g=d45eed57-db32-40b6-a5e6edad2363de76#:~:text=No%2C%20there%20are%20no%20legal,suggestions%20are%20accepted %20by%20partie>s.> accessed 26 July, 2020
[9]Mediation: Frequently Asked Questions (World Intellectual Property Organisation) <https://www.wipo.int/amc/en/mediation/guide/> accessed 26 July, 2020
-Kashish Gupta (IInd Year, NLSIU Bangalore)
Kashish Gupta is a second-year student from the National Law School of India University (NLSIU), Bangalore.
BIMACC expresses its gratitude towards the author and to the members of the Legal Services Clinic, National Law School of India University (NLSIU) for their support in our collaborative efforts to promote ADR with this series titled “A-Z of ADR”. The purpose of this series is to increase the understanding of certain fundamental concepts of Alternative Dispute Resolution.
The Legal Services Clinic is a student-run committee that provides free legal services to the socially and the economically backward sections of the society who have difficulty accessing the judicial system. It also has a mandate of spreading legal awareness and providing free legal assistance to those who cannot afford it.
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Disclaimer: The views and opinions expressed in this blog are those of the author and do not necessarily reflect the official policy or position of BIMACC, any of the members of the Board, or the empanelled neutrals. This blog is for informative purpose only and does not constitute legal advice in any manner whatsoever.