Role of Company Secretary in Negotiation, Conciliation, and Arbitration: A Comprehensive Guide

1. Negotiation, Conciliation and Arbitration Aspects: Role of Company Secretary in thesaid process Ms. KavitaJha, Principal Associate, VaishAssociates Advocates Ms. Kavita Jha, Advocate, VaishAssociates Advocates https://www.nclt.in/

2. Mediation andConciliation and Companies Act,2013

3. COMPANIES ACT,2013: Section442 • 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 newlaw. • The Panel shall dispose of the matter referred to it within a period of 3 months from the date ofreference.

4. I.ALTERNATIVE DISPUTE RESOLUTION

5. 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 courthearing. • The main types of ADR’sare: • Arbitration • Negotiations • Mediation • Conciliation

6. Salem Bar Association v. Union ofIndia (AIR 2005 SC3353) • If the Court for one reason or the other cannot itself effecta • compromise, the only option it would have is to refer the parties to conciliationetc. • 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 CivilProcedure”.

7. 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 happyagreement. • Once agreement has been reached, the parties will create a written statement to reflect the terms of the negotiatedassets.

8. CONCILIATION • ‘ Conciliation’ is limited to encouraging the parties to discuss their differences and to help them develop their own proposedsolutions. • 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.

9. CONCILIATION • Section related toconciliation: • Commencement of conciliation proceeding u/s 62 of theAct. • After proceeding’s S.71 cooperation of parties withconciliator. • S.76 termination of conciliationproceeding. • What cannot be referred toconciliation: • Matters of Criminalnature • Illegaltransactions • Matrimonial matters like divorce suitetc. • What can be referred toconciliation? • Matters of CivilNature • Breach ofContract • Dispute of Movable or ImmovableProperty

10. 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” negotiationlacks. • 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.

11. TYPES OF DISPUTE SUITABLE FOR MEDIATION • Mediation is suitable for resolving a wide rangeof • disputesincluding: • Business andCommercial • Partnership • Family • Workplace • Personalinjury • Industrial andConstruction

12. COMPANIES ACT, 2013: Need forMediation andConciliation • 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 bindingagreement. • The process is time bound and costeffective. • 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 alsolow.

13. ROLE OF MEDIATOR/ CONCILIATOR UNDER SECTION442 • The mediator/conciliator shall attempt to facilitatethe • following: • voluntary resolution of the dispute(s) by theparties, • communicate the view of each party to theother, • assist them in identifyingissues, • reducingmisunderstandings, • clarifyingpriorities, • exploring areas of compromise and generating optionsin • an attempt to resolve the dispute(s), emphasizing that itis • the responsibility of the parties to take decisionwhich • affectthem. • He shall not impose any terms of settlement on theparties. • However, if both the parties consent, he may imposesuch • terms and conditions on the parties for early settlementof • thedispute.

14. “An ounce of mediation is worth a pound of arbitration and a ton of litigation!” — Joseph Grynbaum

15. II.ARBITRATION

16. Introduction • Arbitration: As per Halsbury ‘s Laws ofEngland • 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 ofArbitration • Settlement of dispute in an expeditious, convenient, inexpensive and private manner to prevent it fro, becoming a subject of future litigation.

17. Types of Arbitration Practice -Institutional Arbitration and Ad HocArbitration ADHOC ARBITRATION INSTITUTIONALARBITRATION A. The procedures have to be agreed upon by the parties and the arbitrator. This requires co- operation between the parties and involves a lot oftime A. In institutional arbitration, the procedural rules are already established by the institution. The fees are also fixed and regulated under rules of theinstitution. 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 libraryfacilities. C. No such panel per se is availablehere. 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 arbitrationmechanisms.

18. Evolution of ArbitrationAct • The Pre-1996 Position (1940 Act): This Act was largely premised on mistrust of the arbitral process and afforded multipleopportunities • to litigants to approach the court for intervention. Coupled with a sluggish judicial system, this led to delays rendering arbitrations inefficient andunattractive. • 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 wasenacted. • 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 tocontemporaryrequirements’. Amongstthe 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 theCourt.

19. Arbitration and Conciliation Act,1996 • Part I – DomesticArbitration • Part II – Enforcement of foreign awards • Part III – ConciliationProcedures • Part IV –Supplementary • Provisions

20. 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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