Rise in ADR, Draft Copy

8/6/2019 Rise in ADR, Draft Copy

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There is an unprecedented rise globally in the

number of out of court settlements and

choices are being made by parties to opt for

various methods of ADR as opposed to thetraditional and time tested adversarial

mechanism of dispute resolution. The trend

towards these alternative dispute resolution

methods is apparent with parties choosing

them in the growing number of instances

related to copyright and piracy, patent and

trademark infringement, corporate

reorganizations (mergers, acquisitions,

takeovers), outsourcing (data protection),

unfair competition and various other areas.

Elucidate with examples (instances) from India,

UK and USA and discuss by firstly examining

the validity of the initial statement in the lightof the aforesaid areas and then comparing the

scenarios and legal incidents prevalent

currently in India, UK and USA in out of

court settlements.

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INTRODUCTION

Justice Delayed Is Justice Denied

This saying apparently describes todays Judicial System. The legal system though fair

and powerful is awfully overcrowded and is therefore slow. The justice dispensation

system is facing challenges of delays in the disposal of cases in court. The disputes in law

courts linger on for decades. The delay in decision of cases undermines the faith in the

system as well as motivates the affected parties to get redressal of their grievances by

resorting to unlawful means.

In Indian context there is a clear violation of Right to Speedy Trial as conferred by

Article 21 of The Constitution of India.

Courts as well as legislature are trying to identify the causes of delays and to remedythem by bringing about changes in the substantive and procedural laws. Alternative

Forums for redressal of grievances are being identified and set up.

In this context a conference was convened on 4th December 1993, under the chairmanship

of the Prime Minister of India and presided over by the Chief Justice of India. In this

conference the Chief Justice came to the conclusion that the court were not in a position

to bear the entire burden of justice system and that a number of disputes lent themselves

to resolution by Alternative modes such as Arbitration, Mediation and Negotiation.

It was emphasized that advantage should be taken of the Alternative Dispute Resolution

(ADR) Mechanisms which will provide to cut down the procedural delays resulting in

saving of the valuable time and money of the litigant public.

The Philosophy of ADR system is well stated by Abraham Lincoln-

Discourage litigation; persuade your neighbours to compromise whenever you can.

Point out to them how the normal winner is often a loser in fees, expenses, cost and

time.

Litigation does not always lead to a satisfactory result. It is expensive in terms of time

and money. ADR system enables the change in mental approach of the parties.

ADR refers to all those methods of resolving disputes which are Alternative for litigation

in the court. It is a decision making process to resolve disputes that does not involve

litigation or violence. ADR includes

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Arbitration,

Mediation,

Conciliation,

Negotiation, Judicial settlement including settlement through Lok-Adalat etc.

Emphasis throughout the world is changing towards the adoption of ADR instead of court

litigation .It provides for quicker, less-costly, confidential and consensual resolution of

civil disputes.

There are certain Institutional Arbitrational Centres, which provides services and

facilitates alternative methods to the parties-

Indian Council of Arbitration. (ICA)

Federation of Indian Chambers of Commerce and Industry.(FICCI)

International centre for Alternative Dispute Resolution.(ICADR)

Perry4Law

Some International Institution are:

International Chamber of Commerce (ICC) Paris

London Court of International Arbitration.

American Arbitration Association.(AAA)

World Intellectual Property Organization.(WIPO)

National Arbitration Forum.(NAF)

Each and every country has adopted a version of Uniform Arbitration Act. In India the

Alternative Dispute Resolution is governed by The Arbitration and Conciliation Act

1996. In England there is The England Arbitration Act 1996 and in U.S The United

States Federal Arbitration Act

ADR continues to grow as a preferred method of dispute resolution to commercial and

employment law groups, insurance, it is expanding in the areas of constructions, health

care, telecommunication, intellectual property, cyber intellectual property, entertainment

and technology based industry.

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ADR IN INTELLECTUAL PROPERTY

Intellectual properties are intangible incorporate property. It consists of Copyright,

Trademark, Patent, Industrial Design, etc. Where as Cyber IPR consists of Copyright and

Trademark in Cyber space, Software Patents, Domain Name Disputes etc.

ADR methods apparently suits IP disputes.

A survey of Patent Attorneys conducted in 1981 and again in 1991, showed their

increased willingness to arbitrate and reported an increase number of Attorney with

Mediation experience. [1]

In most situations IP disputes does not require an either/or result in which one partywalks away with all the rights at issue. Instead parties often consider some form of shared

rights to be an acceptable or even preferred result. Apart from all the advantages of using

ADR over Litigation it is pertinent to note that the parties are free to choose at least one

arbitrator whose background and knowledge will allow him to understand fully the

technology involved. At the same time the arbitration proceedings are confidential and

therefore the risk of revealing trade secret and the reputation does not arise.

In India the judiciary has encouraged out of court settlement to alleviate the increasing

backlog of cases pending in the courts.

The three recent judgements-

Autodesk Inc. & anr V Mr. Anish Singhal,

IA No.14988/2007 in CS (OS) 2403/2007; Judgement delivered on 7.01.08

Asia Pacific Breweries Ltd. V SKOL breweries Ltd.

IA No. 172/2008 in CS (OS) 1984/2006; In the Delhi High Court, Judgement delivered

on 7.01.08

Intex Technologies (India) Ltd & Anr v Pervez Ambani;

IA No. 21/2008 & CS (OS) 458/2007; In the Delhi High Court, Judgement delivered on

14.01.08.

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Amply reveal the trend adopted in resolving of disputes. In all three cases, the plaintiff

and the defendant decided to settle the matter amicably according to the terms of

settlement.

An article by Peter.S.Vogel states that U.S can save Millions by arbitrating Patent

Infringement. Defending Patent Infringement claims in Federal Court can cost between 1

Million US Dollar to 3.5 Million US Dollar. By simply including arbitration provision in

Patent License parties can control and reduce the cost of resolving alleged infringement.

Accordingly there are growing numbers of Patent Infringement Claims being made

through the arbitration process and courts are enforcing the arbitration provision.

Infringements in Cyber IPR are increasing as Internet Business and E-Commerce are

acquiring more importance relying on computers and the World Wide Web to

communicate and transact. The growing phenomenon, that we call the virtual world or

information superhighway has transformed cyber property into significant Corporate

Assets.

Cyber crimes like Cyber squatting, Domain Name Dispute, Music Piracy, Software

Piracy are in rise.

Institutions like WIPO, NAF, ADNDRC are approved dispute resolution services

providers by ICANN, since 1999.

The first ever cyber squatting case was adjudicated by WIPO in 1999.

World Wrestling Federation Enterainment,Inc.V Michael Bosman.[2]

Indias first case on cyber squatting:

Benneth Coleman & Co.Ltd V Steven S.Lalwani.[3]

Benneth Coleman & Co.Ltd V Long Distance Co.

was decided by WIPO Panel.

Other famous International Domain Name Disputes adjudicated by WIPO are

Madonna Ciccone, P/k/a Modonna V Dan Parisi.[4]

Stoneygate 48 Ltd. & Wayne Mark Rooney V Huw Marshall[5]

Some famous Indian Domain Name Disputes adjudicated by Wipo are:

Cox & King Indian Pvt.Ltd. V Rakesh[6]

Mahindra & Mahindra Ltd. V Neoplanet Solution[7]

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The reason why the UDRP and its dispute resolution have gained popularity is that

parties prefer economic and speedy out of court proceedings that can be conveniently

applied on an International basis.

Yet the policy under which WIPO and other recognized dispute resolution centres work

is criticized to a large extend because of lack of appeals process under the policy.There

are very limited grounds for reconsideration of cases under WIPO. In the Maruti.com

case the complainant Maruti Udyog was denied the domain name registered by Mr.Tella

Roa.Later the complaintant approved the panel on the ground of perjury claining that

evidence produced in support of the domain name was forged .The relevant panel

directed the respondent to transfer the domain name Maruti.com to the complainant.[8]

Statistic on the total number of domain name case adjudicated by WIPO per year.

Recent statistics shows that NAF has administered a total of 1805 domain name disputes

in 2007 up from 1658 disputes in 2006.

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NAF arbitrators have ruled in favour of Google regarding several internet domain

names that were similar to Google.com.

On March 2005 NAF panellist ordered disputed domain name Hillary Clinton.com to

be transferred to Clinton. It was found that more than 1000 domain names related to

Clinton names have been registered.

MUSIC PIRACY

The battle 2003 the U.S recording industry initiated lawsuits against its own consumers in

effort to change the culture of piracy.

RIAA had initiated close to 2000 lawsuits in December 2003.The Los Angles Times

reported that out of court settlement with the RIAA was ranging from $3000 to

$7000over online music is increasing day by day.

ADR IN BUSINESS ORGANIZATION

As use of ADR in private and court-annexed settings has burgeoned over the last 10

years, creative new programs and uses have been tried in many settings. Commercial,

consumer, community and even criminal ADR programs have emerged and proved their

effectiveness in reducing some of the delay, expense, inefficiency and hostility associated

with traditional dispute-resolution processes.

In no setting, however, has alternative dispute resolution demonstrated such potential,

success and acceptance as in the commercial arena: A number of the most successful

corporate ADR efforts were described in a 1997 Center for Public Resources (CPR) book

written by Cathy Cronin-Harris, Building ADR into the Corporate Law Department.

ADR-related cost savings have been demonstrated time and time again. A recent CPR

survey covering a five-year period demonstrated that 652 reporting companies that used

CPR-sponsored programs saved more than $200 million with an average savings of more

than $300,000 per company.

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However, benefits have by no means been limited to dollar savings. A survey of business

executives and lawyers for example, has indicated that 80 percent of respondents

believed that mediation helped preserve business relationships.

During the past few years, a number of studies have indicated a substantial increase in

corporate ADR use. These include: Deloitte & Touches 1993 and 1995 studies; a 1996

Price Waterhouse, LLP study; a 1996 ABA Journal Poll; a 1998 survey by the

Cornell/PERC Institute of Conflict. Each of these polls and surveys has indicated

substantial increases in ADR use.

Other developments have confirmed the rise in the use of corporate ADR:

The fact that more than 800 corporations with 3,200 subsidiaries have signed the

CPR ADR "pledge" to consider ADR in any dispute with another signatory to the

pledge.

The development of specific industry-wide protocols for use of ADR within an

industry. Examples include programs developed by the National Association of

Securities Dealers, National Healthcare Lawyers Association, World Intellectual

Property Organization, Wireless Industry, Construction Industry Partnering

Programs and numerous insurance industry programs. Also, the Center for Public

Resources has developed programs for franchise, banking, chemical and food-

industry disputes.

Incorporation of ADR not only into law school curricula but also into business

school curricula.

A 1998 week-long online seminar involving business managers and ADR.

Increasingly, corporations have turned to ADR for the resolution of specific and complex

matters that just a decade ago would have been thought to defy alternative methods of

dispute resolution. Included in this group are class-action insurance matters,

telecommunication disputes and patent-law matters.

Probably the most striking trend in the corporate use of ADR is the dramatic movement

toward mediation. The Deloitte & Touche survey clearly indicates this, as a number of

other studies involving specific industries, such as the construction industry.

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As both anecdotal and systematic reports of corporate ADR success stories circulate,

companies that have not yet systematically sought to regularly use ADR express

increasing interest in developing programs.

During the past few years, a substantial body of statistical data has emerged

demonstrating the growing patterns of ADR use within the corporate community as well

as preferences for certain types of procedures, such as mediation. With increasing use,

corporations are being asked to consider ADR with greater frequency and are initiating

ADR efforts at an unprecedented pace. The experience developed in the public and

private sectors indicates certain "best practices" to optimize the chances that a

corporations dispute-resolution system will be effective and efficient.

India has a comprehensive, contemporary and progressive legal framework to support

International arbitration that is on a par with that of the worlds leading arbitration

institution.

Facts and Figures on International Court of Arbitration dispute resolution service

International Chamber of Commerce (ICC) Arbitration2007 Statistical Report shows:

599 Requests for Arbitration were filed with the ICC Court;

those Requests concerned 1,611 parties from 126 countries and independent

territories;

in 11.4% of cases at least one of the parties was a State or parastatal entity;

the place of arbitration was located in 42 countries throughout the world;

arbitrators of 66 nationalities were appointed or confirmed under the ICC Rules;

the amount in dispute exceeded one million US dollars in 57.4% of new cases;

349 awards were rendered.

The biggest example of corporate reorganization is the merger of JET Airways and AIR

SAHARA. The matter was arbitrated and JET AIRWAYS purchased AIR SAHARA.

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EMPIRICAL STUDIES AND SURVEYS

MECHANISM OF ADR IN CONSUMER AND BUSINESS

Arbitration of consumer claims is a topic that has recently been subjected to considerable

political scrutiny and public debate.

With respect to consumer benefits, several studies using empirical data from employment

and securities arbitration have shown that individuals may do as well or better in

arbitration relative to litigation.

Ernst & Young LLP (E&Y) was engaged by Wilmer Cutler Pickering Hale and Dorr LLP

to examine the outcomes of contractual arbitration in lending-related, consumer-initiated

cases. This study is based on consumer arbitration data spanning four years from the

National Arbitration Forum, one of the countrys three leading alternative dispute

resolution organizations. Financial support was provided by the American Bankers

Association.

THE OBSERVATIONS FROM THIS STUDY ARE:

Consumers prevailed more often than businesses in cases that went to an

arbitration hearing. A review of the consumer-lending cases that faced an

arbitration decision shows that consumers are more likely to prevail than the

businesses involved in the dispute; 55 percentof the arbitrations were resolved in

the consumers favor.

Consumers obtained favorable results in close to 80 percent of the cases that were

reviewed. If we expand the definition of consumers who prevailed to include

cases where the partiesreached a settlement satisfactory to the consumer or the

case was dismissed at the claimantsrequest, consumers prevailed in 79 percent

of the total 226 cases.

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A substantial majority of consumers surveyed were satisfied with the arbitration

process as shown through the 69 percent who indicated that they were satisfied or

very satisfied with the arbitration process.

From January 1, 2003 through March 31, 2004.American Arbitration Association (AAA)

has rendered a decision in 39 percent of the 44 Consumer Banking Cases, while 50

percent of cases were settled per party agreement and 11 percent were withdrawn prior to

resolution.

The Truth About ADR

A survey was conducted on general counsel and other high-ranking in-house

Counsel from both public and private companies in October and November of 2003.

When comparing arbitration to the traditional adjudication process, 59.3% surveyed

indicated arbitration was less expensive, 78% indicated arbitration led to a faster

recovery, and 83% indicated arbitration was either equally fair or fairer than the

traditional adjudication process.

In addition, when comparing ADR processes to traditional adjudication processes interms of suitability for Insurance/Reinsurance, 84.6% of those surveyed indicated ADR

was equally suitable or more suitable than the traditional adjudication process.

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Survey On Arbitration

ABA Section of Litigation Task Force on ADR Effectiveness

The ABA Section of Litigation Task Force was formed in August of 2002 with the

mission of surveying trial lawyers regarding various ADR processes. Several of the

survey questions were aimed at determining the trial lawyers opinions in comparing

ADR to the litigation process. When comparing arbitration to litigation, 78% of those

surveyed said that arbitration was timelier than litigation, and 56% said that arbitration

was more cost effective than litigation.

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Legal Dispute Study

Updating a study conducted in 1999, this study revisits Americans awareness,

knowledge, attitudes and experiences regarding arbitration as an option for resolving

disputes. Most notably, the study found that sixty-four percent of respondents said they

would choose arbitration over a lawsuit in disputes involving monetary relief. This figure

represents an increase of five percent from the 1999 study.

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Also, the number of Americans that believe it is usually worthwhile to initiate a lawsuit

dropped significantly since 1999: fifty percent in 1999 compared with thirty-four percent

in 2003. Furthermore, two-thirds or some sixty-seven percent of respondents feel that

lawsuits take too long, while one-third or some thirty-two percent say that lawsuits cost

too much.

Costs And Value Of Arbitration

Using the rules of procedure from a major North American dispute resolution provider,

this article examines the nature and scope of arbitration costs as well as the overall value

of arbitration in contrast to litigation. In a 1990 survey, 100 percent of respondents found

arbitration to be quicker than litigation. Furthermore, 89 percent found that arbitration

was less expensive than litigation. Also noteworthy in the survey was that only 17

percent of attorneys time was spent on discovery in an arbitral setting, compared to 45

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percent in court, and over half of the respondents believed arbitral awards were more

equitable than the outcomes in litigation.

Individuals fare at least as well in arbitration than in lawsuits, if not better, according to

the reliable evidence on the use of pre-dispute agreements to arbitrate. Moreover, when

surveyed, attorneys view arbitration favorably to the lawsuit system by wide margins in

terms of timeliness and cost. Many independent studies, including those conducted by

sections of the American Bar Association, have confirmed the comparative benefits of

arbitration versus lawsuits. Accordingly, pre-dispute arbitration provides the only real

avenue for parties to gain access to affordable and timely justice outside the court system.

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CONCLUSION

ADRhas gained momentum only in the recent years as a resultant of globalization and

liberalization .Yet the system was very much present and well organized in the ancientIndian Legal System.

The Legal Authority Act, 1987 brought about the establishment of Lok Adalat System for

settlement of disputes cheaply and expeditiously. Lok Adalats have worked very well and

satisfactorily in our country. The first Lok Adalat was held on 14.3.1982 at Junagarh in

Gujarat Ever since 1987 Lok Adalats have been given statutory recognition. Some

statistics may give us a feeling of tremendous satisfaction and encouragement.

Up to 30th June, 2004, 2,23,159 Lok Adalats have been held and therein 1,63,31,357

cases have been settled, half of which were motor accident claim cases.

More than 4,751 crores of rupees were distributed by way of compensation to those who

had suffered accidents. 66,73,240 persons have benefited through Legal Aid and Advice.

In 2002, the Parliament of India amended the Legal Services Authorities Act, 1987

requiring establishment of permanent Lok Adalats for public utility services. Most of the

State Governments have not cooperated in establishing such permanent Lok Adalat.

With the emergence of technology the medium of dispensing ADR has been modernized.

The use of mechanism for resolving Online is increasing day by day.

ONLINE DISPUTE RESOLUTION (ODR) has emerged as a new method which may

be beneficial in a geographically large country and also where a large number of B2B or

B2C disputes are significantly of low value. Of late, ODR has been successfully used by

The National Internet Exchange of India (NIEI) and judiciary has also shown

perceptible shift towards use of new technology and methods in resolution of disputes.

Perry4 Law is the first and exclusive Techno-Legal Firm in India that is dealing with

legal issues associated with the use of Information and Communication Technology

(ICT) worldwide and is actively advocating and using ICT for legal purpose. They are

devising and encouraging ADR in an online environment like ODR in India. At the same

time they are actively encouraging and making arduous effort for the establishment of

Electronic Courts in India.

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The courts in India are ruling for Early Neutral Evaluation (ENE) for encouraging

ADR in Intellectual Property disputes.

There is definitely unprecedented rise in the trend of ADR in INDIA, U.S and in U.K The

mechanism of ARD are not only in the fields of Intellectual property right, domain name

dispute , corporate reorganization but also in consumer related matters, employer-

employees contract, health care cases.

The Culture of ADR can reduce Health care cost.

A "Culture of ADR" includes resolving all disputespatient billing disputes, medical

malpractice claims, and payor-provider disputesthrough mediationand arbitration. This

means that all levels of staff, decision-makers and patients should be made aware of how

ADR works, the tremendous advantages it brings, and how it can be implemented.

Recent statistics of WIPO arbitration and Mediation Center states that WIPO has received

69 requests for Mediation. Amount in disputes have varied between Euro 20000 to

several 100 million USD.

The center has received 99 requests for arbitration .The amount in dispute has varied

between USD 20000 to several 100 million USD.

The remedies claimed in arbitration proceeding have included damages, infringement

declaration and specific performance.

The subject matter includes Patent disputes, software ITT, copyright issues, trademark

issues, employment issues, consultancy and engineering disputes and domain name

disputes etc.

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Statistics of WIPOs total number of cases per year

In many and various cases ADR is providing an excellent alternative to traditional

methods.

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REFERENCES

[1] Francis Flaherty, ADR: Low Cost for High Technology.

[2]WIPO Case No. D99-000.[3]WIPO Case No. D2000-0014 and D2000-0015

[4]WIPO CASE No.D2000-0847

[5]WIPO CASE No.D2006-0916

[6]WIPO Case No. D 2000-0411

[7]WIPO Case No. D2000-0248

[8]WIPO Case No.D2000-0518 and D2003-0073

BOOKS AND WEBSITES REFFERED

ADR In Commercial IP Disputes.-Scott H. Blackman

www.icadr.com

www.ica.com

www.perry4law.com

www.onlineresolutioninindia.com

www.arbitration-truth.com

www.webhosting.com

www.wipo.com

www.adrforum.com

www.naf.com

www.parliament.uk

www.manupatra.com

www.aaa.com

www.aba.com

www.ficci.com

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http://www.icadr.com/http://www.ica.com/http://www.perry4law.com/http://www.onlineresolutioninindia.com/http://www.arbitration-truth.com/http://www.webhosting.com/http://www.wipo.com/http://www.adrforum.com/http://www.naf.com/http://www.parliament.uk/http://www.manupatra.com/http://www.aaa.com/http://www.aba.com/http://www.ficci.com/http://www.icadr.com/http://www.ica.com/http://www.perry4law.com/http://www.onlineresolutioninindia.com/http://www.arbitration-truth.com/http://www.webhosting.com/http://www.wipo.com/http://www.adrforum.com/http://www.naf.com/http://www.parliament.uk/http://www.manupatra.com/http://www.aaa.com/http://www.aba.com/http://www.ficci.com/


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Articles and journals

ALL Regions, IP, Copyright, Law ,Accountancy

Spicy IP

The Hindu Business Line

News from rediff.com

British music rts.

The globe magazine for IP Owners

The Economics Times

The Columous Business

The Edge Daily The Truth at ADR-Michael.T.Burr(Corporate Legal Times Feb-04)

Survey on Arbitration ABA-AUG03

Legal Dispute Study April 03

Cost and Value of Arbitration-Lis Bnener-World Arbitration and Mediation

Report 111

Objective and survey by Earnest and Youngs-LLP.

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Rise in ADR, Draft Copy

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