CJI stresses prominence of mediation for commercial dispute resolution

The Chief Justice of India, N.V. Ramana, said on Saturday that mediation is increasingly gaining prominence in the international commercial sphere as a dispute resolution mechanism.

Quoting famous author R.L. Stevenson, the CJI said, "Compromise is the best and cheapest lawyer."

Ramana, who was attending the fourth edition of the international conference on 'Arbitration in the era of globalisation' in Dubai, said, "Private mediations, which take place at the pre-litigation stage, are also becoming more prevalent in the country. Most arbitration clauses in commercial contracts have a multi-tiered approach, where the first attempt to resolve the dispute between parties is through mediation or negotiation.

"Wherever I travel, I am often asked how investor-friendly the Indian judicial system is. My answer is always the same: You can trust the Indian judiciary for its absolute independence and its inherent constitutional strength to treat all parties equally and equitably."

A pre-requisite for achieving globalisation in its true sense is ensuring universal respect for the rule of law. Trust in the globalised world can only be built by creating institutions with a strong emphasis on the rule of law.

The CJI further said that rule of law and arbitration are not in conflict with one another.

"Both arbitration and judicial adjudication aim to serve the same goal -- the pursuit of justice. The Indian courts are known for their pro-arbitration stance. The courts assist and support arbitration, and leave the substantive part of adjudication to the Arbitral Tribunal itself.

"Modern arbitration law in India can be traced back to 18th and 19th century, laws such as the Bengal Regulation Act and Madras Regulation Act, where parties to the dispute could submit themselves before an arbitrator. For the first time in 1940, we had a pan-India arbitration act," he said.

Meanwhile, in 1985, keeping in view the increasing cross-border transactions and disputes arising thereof, UNCITRAL came out with a Model Law on International Commercial Arbitration, he said.

"In India, with economic liberalisation, a need was felt to provide a viable alternative to the parties, both national and international, to resolve their commercial disputes. The Arbitration and Conciliation Act, 1996 was enacted in line with the model law with the hope to provide an effective alternative to court-based resolution.

"Then Prime Minister of India, P.V. Narasimha Rao, had said during the inauguration of the International Conference on Alternate Dispute Resolution in New Delhi 26 years ago, and I quote, 'Any democracy worth the name must provide for adequate and effective means of dispute resolution at a reasonable cost; otherwise, the rule of law becomes a platitude and people may take law into their own hands, disrupting peace, order and good governance. Effective dispute-resolution is also necessary to secure the smooth functioning of trade and commerce'."

To make the arbitral process more effective and to bring it at par with the international law on arbitration, the Arbitration and Conciliation Act of 1996 was amended in 2015, in 2019, and in 2021, he said.