This article has been written by Ms. Anchita Niranjan Chavan, a 3rd year BLS LLB student at Oriental College of Law, Navi Mumbai.
INTRODUCTION –
Arbitration:
Arbitration is a form of alternative dispute resolution (ADR) that resolves disputes outside the judiciary courts. The dispute will be decided by one or more persons (the ‘arbitrators’, ‘arbiters’ or ‘arbitral tribunal‘), which renders the ‘arbitration award‘. An arbitration decision or award is legally binding on both sides and enforceable in the courts, unless all parties stipulate that the arbitration process and decision are non-binding. The Legislative Council of India passed the Indian Arbitration Act in 1899. This act was India’s first comprehensive piece of law dealing with arbitration. It was only valid in presidential towns like Calcutta, Bombay, and Madras, though. This legislation expanded the scope of arbitration by defining “submission” as “a written agreement to submit current and future disagreements to arbitration, whether or not an arbitrator is designated therein.” Arbitration is a procedure in which a dispute is submitted, by agreement of the parties, to one or more arbitrators who make a binding decision on the dispute. In choosing arbitration, the parties opt for a private dispute resolution procedure instead of going to court. In the past few decades, arbitration has become a mainstay in resolving legal disputes. The primary advantage is that the parties to arbitration have an almost free reign to determine the structure and procedure applicable to the proceedings. An arbitration is a private method of dispute resolution. The Arbitration Act imposes upon an arbitration tribunal a duty to act fairly and impartially as between the parties, giving each party a reasonable opportunity of putting their case and answering that of their opponent. The arbitration tribunal is permitted to adopt procedures suitable to the circumstances of the particular case, avoiding unnecessary delay or expense and to provide a fair means for the resolution of the dispute.
Negotiation:
Negotiation has been defined as any form of direct or indirect communication whereby parties who have opposing interests discuss the form of any joint action which they might take to manage and ultimately resolve the dispute between them. Negotiations may be used to resolve an already-existing problem or to lay the groundwork for a future relationship between two or more parties. Negotiation has also been characterized as the “preeminent mode of dispute resolution” which is hardly surprising given its presence in virtually all aspects of everyday life, whether at the individual, institutional, national or global levels. Each negotiation is unique, differing from one another in terms of subject matter, the number of participants and the process used. In other words the term ‘Negotiation’ can be defined as a direct or indirect form of communication through which the parties with conflicting interest deliberate a form of Joint Action aiming to resolve the dispute between them. Negotiation can be used either to resolve any existing problem or for a future relationship between two or more parties by setting a ground work. Negotiation is the process which helps people settle their differences and disputes. It is the method by which amicable agreement is reached avoiding arguments. Negotiations is applicable in some of the situations which are martial deadlock, business negotiations, contract based negotiations, international negotiations.
DISTINCTION BETWEEN ARBITRATION & NEGOTIATIONS:
Arbitration and Negotiations are two forms of processes involved in dispute resolutions between two parties. These two forms of dispute resolutions are part of the appropriate dispute resolution also known as ADR measures used as alternatives to court action or litigation. The cases which are pending in the backlog section of the court and a very long time consuming process give rise to these forms of dispute resolution. There are also more two types of processes which are mediation and conciliation.
The advantages of arbitration and negotiations are that they are less costly and time consuming in comparison to court litigation. The process and documentation of the proceedings are private and confidential. The decisions made for both arbitration and negotiation are privy to concerned parties only. No other person is allowed to look into the matters or documentation while the proceedings are on. The parties have a duty to keep everything confidential and do not discuss anything in public.
The formats and nature of arbitration and negotiation are different from each other. In arbitration, the power to appoint a arbitrator are in the hands of both the parties. The number of arbitrators is usually an odd number of one or three. Arbitrator are either appointed by the parties or an external party like a court i.e the court assigns arbitrator for the parties in some cases.
There are several jobs and duties of the arbitrator the first and foremost is to hear both the parties and decide on terms of dispute. He must be impartial and independent. Must be able to determine the rules for the procedure. Arbitrator must fix the time and place for arbitration, which is convenient to both the parties.
The arbitrator’s final decision on the case is called the “award.” This is like a judge’s or jury’s decision in a court case. Once the arbitrator decides that all of the parties evidence and arguments have been presented, the arbitrator will close the hearings. This means no more evidence or arguments will be allowed. The arbitration is under the state and federal law and the award is binding and legal.The costs of arbitrators are usually included in the award. The parties must also negotiate the costs between them.
Arbitration Case Law-
Hindustan Construction Company Ltd. v. Union of India, [2019 SCC SC 1520, decided on 27.11.2019] Section 87 of the Arbitration Act struck down as being manifestly arbitrary.
On the other hand, negotiation also has two parties and a facilitator. The facilitator allows both the sides to talk and negotiate on the terms of the dispute. Facilitator and arbitrator duties are same in some cases as their important aim is to resolve the dispute among the parties. In negotiation it is important that the facilitator records the whole process i.e their discussions, agreements and their positions also.
Negotiation is a strategic discussion that resolves an issue in a way that both parties find acceptable. Compromise is normally the basis of negotiation. One party will put its position forward, while the other will either accept the conditions presented or counter with its own position. The process continues until both parties agree to a resolution.
There are mainly five stages in negotiation i.e planning, discussing, proposal and concessions , finalizing terms of the agreement and the last making it work. The parties involve in the negotiation usually splits the cost.
An outcome is a possible result of negotiation. Unlike arbitration, the resolution in negotiation is not legally binding.
Negotiation Case Law-
The Enron Case- Enron’s collapse in India was caused by the huge debt of the MSEB project, and renegotiation that were forced by strong Indian nationalist reactions.
CONCLUSION:
Both arbitration and negotiation are two forms of appropriate dispute resolutions (ADR) and alternative processes to court litigation. Both are private, speedy, less costly and ensure confidentiality.
Negotiation involves direct talking between two parties at loggerheads while, in arbitration, parties talk through their representatives in front of an arbitrator.
Negotiation involves some give and take whereas there is no lost ground in arbitration. Negotiations may be cheaper, but it is often hard to bring warring parties to a negotiating table.
Both facilitator and arbitrator are usually third party. The arbitrator decide directly the outcome of the dispute while the facilitator let the parties come into their own agreement.
In arbitration the arbitrator decides on the outcome of the dispute after hearing both sides. The resolution is called award. Award is final and legally binding. The result of negotiation is called memorandum of agreement. But this document is not as legally binding as an award.
REFRENCES:
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