First of all, cost benefit analysis is a method of evaluating the relative merits of alternative courses of action in order to achieve efficient allocation of resources. It is a way of identifying, portraying and assessing the factors which need to be considered in making rational economic choices. It is not a new technique. In principle, it entails little more than adjusting conventional business profit-and-loss calculations in evaluating alternative courses of action by objective criteria, benefits and constraints.
There are currently nearly 25 million cases pending in Indian courts, some of which have been appealed and argued for more than 20 years. Meanwhile, India spends only .2 percent of its GNP on the judiciary, which is admittedly an artificial benchmark and should be put in the context of the size of India’s economy and the range of judicial functions that the Indian legal system performs. India, though, is not alone in dealing with a hugely cumbersome and overburdened legal system. Backlog and delay plague stemming from myriad factors including misaligned incentive structure among the key players exist in a wide array of legal systems around the world. Nowhere, though, have these problems become more accentuated than in modern-day India. As a result, this has created broad political and economic implications for Indian society that have only increased with the economic boom of the past decade.
‘It depends’ are the two favourite words of each and every lawyer. So the answer to the question whether arbitration is cheaper than litigation can also be given as “it depends”. Generally speaking, efficiency involves issues of both the cost and time and effort. It tends to hold down the amount of time and effort expended on various forms of discovery and motion practice. On the other hand, judges sometimes exercise tight control over the timing and amount of proceedings before them. Where one is confronted with a very litigious opponent, it may be more beneficial to have a judge who will put firm limits on that party than arbitrators who may allow the party to get away with more obstreperous activities.
The subcommittee identified the following major sources of cost (1) complex and unclear pleading practice that often confuses the real substance of the dispute; (2) lawyers' and parties' failure to assess their case thoroughly and dispassionately at an early stage;( 3) clients' and attorneys' unrealistic expectations of success; (4) clients' feelings of alienation from the legal process;( 5) poor and indirect communication between the litigation parties; and (6) attorneys' reluctance to raise the possibility of settlement out of fear of being perceived as weak.
Judicial delay can have tragic effects, underscoring the urgent need for targeted reform. In 2001, a senior citizen who had invested his life’s savings in a non-banking financial company attempted self-immolation after a Delhi court granted yet another postponement of the proceedings for recovery of his savings from the defaulting company. An unofficial survey found that in Chennai alone there are roughly 30,000 cases being resolved through arbitration annually. The rate of litigation is thus being reduced considerably.
Now again, when it comes to question of costs, it is a moot point which is a greater burden—litigation in courts or arbitration. If arbitration is possible by following a procedure which either eliminates or restricts oral hearings, and again if it is possible (as happens in many of the institutes) that it is held not as a part time evening sitting but held continuously for several hours a day until the matter is concluded, then certainly arbitration has great advantages money-wise compared to litigation.
The one question that always arises is that in which matters one should arbitrate and in which one should not. One advantage of arbitration is choosing an expert of ones own choice. At least the client will have the satisfaction that his money is being wisely spent.
One possible group of candidates for ADR is cases with no real disputes. When courts must process cases like uncontested divorces, judges and resources are diverted from contested cases, and the parties must bear the expense of a court proceeding. Perhaps dignitary or symbolic values may properly be satisfied only if a judge officially certifies the termination of a marriage, but these values, it is argued, must be weighed against the equally compelling need to conserve court resources and minimize expenses and inconvenience to litigants.
Because the arbitration process is generally more streamlined than formal litigation, the cost savings compared to a lawsuit can be quite substantial. This does not mean that arbitration cannot become complicated. Some arbitrations get quite complex. Objectives of the parties may change dramatically as disputes are processed. New information becomes available, each party's needs change, and costs are incurred. Delays, frustration, and disappointment raise or lower the stakes. For example, victims of job discrimination frequently start by wanting the job or promotion they were unjustifiably denied but later, stymied by the difficulties in proving discrimination or more aware of the work environment from which they have been excluded, are much more willing to accept a monetary settlement. The substantive scope of a dispute is also not fixed. Some types of dispute pro-cessing narrow the disputes they encounter in order to produce a construction of events that appears manageable. Others expand context and circumstance; they encourage a full rendering of events and exploration of interactions. The identity and number of parties are not fixed when the dispute processing begins. As information about the disputed issues is clarified, a bipolar dispute may become multiple, and parties may change their view about appropriate adversaries or desirable allies.
It’s important to recognize that some arbitration associations charge large fees as a percentage of the dispute in controversy and prepayment of a portion of such fees to the sponsoring association by the complainant may be a requirement before arbitration may be commenced.
Characteristics of general Litigation:-
General litigation is conducted in very formal stages.
Lawyer's notice
Plaint
Designated court
Summons to the defendant
Proof of service of summons
written statement
examination of parties
discovery and proof of documents
framing of issues
examination of witnesses
adjournments
arguments
judgment and decree
Each stage is beset with technical rules of procedure and rules of evidence.
Characteristics of arbitration:-
Arbitration can be as informal as litigation in the court is formal. Most of the procedure can be tailor- made to fit the needs of the parties. By choice the parties are empowered by the relevant sections of the Arbitration and Conciliation Act 1996 to make it a fast track by
simplifying the process of appointing the arbitrator (Sec 11)
simplifying the challenge procedure (Sec 13)
curtailing hearing if an arbitrator is replaced(Sec 15)
curtailing interim measures (Sec 17)
scheduling the hearing (Sec 19)
choosing a convenient place (Sec 20)
choosing the conversant language (Sec 21)
restricting the content of pleadings (Sec 23)
restricting the length of hearings (Sec 24)
adopting default procedures (Sec 25 )
getting expert assistance (Sec 26)
settlement by conciliation during hearing (Sec 30)
avoiding cost by dispensing with reasons (Sec 31)
reducing the time for correction of mistakes (Sec 33)
But all this is possible only if the parties cooperate and they have chosen a good arbitrator.
Comparison of costs and benefits:-
COURT ARBITRATION
Lawyers notice Lawyer's fees Private letter – less cost –nofees Plaint Preparation fees Claim statement at less cost
Court fees @ 1 % of the value Fees to arbitrator about equal amount
Summons Fees for serving notices Postage
Documents Copying fees Cost of photocopying
Witnesses Cost of travel Cost of travel – may be avoided
Lawyer's fees Stipulated May be reduced by personal arguments
Stamp duty Does not arise Rs. 250 maximum
COURT ARBITRATION
Adjudicator No choice - designated Can choose qualified person
Jurisdiction May be disputed Agreed
Place Choice of claimant Choice of both parties
Time of hearing Decision of court Choice of parties
Procedure Strict – C.P.C. applies Informal
Evidence Strict – Evidence Act Informal
Acceptance Appeal and execution - delay No appeal on merits
There are currently nearly 25 million cases pending in Indian courts, some of which have been appealed and argued for more than 20 years. Meanwhile, India spends only .2 percent of its GNP on the judiciary, which is admittedly an artificial benchmark and should be put in the context of the size of India’s economy and the range of judicial functions that the Indian legal system performs. India, though, is not alone in dealing with a hugely cumbersome and overburdened legal system. Backlog and delay plague stemming from myriad factors including misaligned incentive structure among the key players exist in a wide array of legal systems around the world. Nowhere, though, have these problems become more accentuated than in modern-day India. As a result, this has created broad political and economic implications for Indian society that have only increased with the economic boom of the past decade.
‘It depends’ are the two favourite words of each and every lawyer. So the answer to the question whether arbitration is cheaper than litigation can also be given as “it depends”. Generally speaking, efficiency involves issues of both the cost and time and effort. It tends to hold down the amount of time and effort expended on various forms of discovery and motion practice. On the other hand, judges sometimes exercise tight control over the timing and amount of proceedings before them. Where one is confronted with a very litigious opponent, it may be more beneficial to have a judge who will put firm limits on that party than arbitrators who may allow the party to get away with more obstreperous activities.
The subcommittee identified the following major sources of cost (1) complex and unclear pleading practice that often confuses the real substance of the dispute; (2) lawyers' and parties' failure to assess their case thoroughly and dispassionately at an early stage;( 3) clients' and attorneys' unrealistic expectations of success; (4) clients' feelings of alienation from the legal process;( 5) poor and indirect communication between the litigation parties; and (6) attorneys' reluctance to raise the possibility of settlement out of fear of being perceived as weak.
Judicial delay can have tragic effects, underscoring the urgent need for targeted reform. In 2001, a senior citizen who had invested his life’s savings in a non-banking financial company attempted self-immolation after a Delhi court granted yet another postponement of the proceedings for recovery of his savings from the defaulting company. An unofficial survey found that in Chennai alone there are roughly 30,000 cases being resolved through arbitration annually. The rate of litigation is thus being reduced considerably.
Now again, when it comes to question of costs, it is a moot point which is a greater burden—litigation in courts or arbitration. If arbitration is possible by following a procedure which either eliminates or restricts oral hearings, and again if it is possible (as happens in many of the institutes) that it is held not as a part time evening sitting but held continuously for several hours a day until the matter is concluded, then certainly arbitration has great advantages money-wise compared to litigation.
The one question that always arises is that in which matters one should arbitrate and in which one should not. One advantage of arbitration is choosing an expert of ones own choice. At least the client will have the satisfaction that his money is being wisely spent.
One possible group of candidates for ADR is cases with no real disputes. When courts must process cases like uncontested divorces, judges and resources are diverted from contested cases, and the parties must bear the expense of a court proceeding. Perhaps dignitary or symbolic values may properly be satisfied only if a judge officially certifies the termination of a marriage, but these values, it is argued, must be weighed against the equally compelling need to conserve court resources and minimize expenses and inconvenience to litigants.
Because the arbitration process is generally more streamlined than formal litigation, the cost savings compared to a lawsuit can be quite substantial. This does not mean that arbitration cannot become complicated. Some arbitrations get quite complex. Objectives of the parties may change dramatically as disputes are processed. New information becomes available, each party's needs change, and costs are incurred. Delays, frustration, and disappointment raise or lower the stakes. For example, victims of job discrimination frequently start by wanting the job or promotion they were unjustifiably denied but later, stymied by the difficulties in proving discrimination or more aware of the work environment from which they have been excluded, are much more willing to accept a monetary settlement. The substantive scope of a dispute is also not fixed. Some types of dispute pro-cessing narrow the disputes they encounter in order to produce a construction of events that appears manageable. Others expand context and circumstance; they encourage a full rendering of events and exploration of interactions. The identity and number of parties are not fixed when the dispute processing begins. As information about the disputed issues is clarified, a bipolar dispute may become multiple, and parties may change their view about appropriate adversaries or desirable allies.
It’s important to recognize that some arbitration associations charge large fees as a percentage of the dispute in controversy and prepayment of a portion of such fees to the sponsoring association by the complainant may be a requirement before arbitration may be commenced.
Characteristics of general Litigation:-
General litigation is conducted in very formal stages.
Lawyer's notice
Plaint
Designated court
Summons to the defendant
Proof of service of summons
written statement
examination of parties
discovery and proof of documents
framing of issues
examination of witnesses
adjournments
arguments
judgment and decree
Each stage is beset with technical rules of procedure and rules of evidence.
Characteristics of arbitration:-
Arbitration can be as informal as litigation in the court is formal. Most of the procedure can be tailor- made to fit the needs of the parties. By choice the parties are empowered by the relevant sections of the Arbitration and Conciliation Act 1996 to make it a fast track by
simplifying the process of appointing the arbitrator (Sec 11)
simplifying the challenge procedure (Sec 13)
curtailing hearing if an arbitrator is replaced(Sec 15)
curtailing interim measures (Sec 17)
scheduling the hearing (Sec 19)
choosing a convenient place (Sec 20)
choosing the conversant language (Sec 21)
restricting the content of pleadings (Sec 23)
restricting the length of hearings (Sec 24)
adopting default procedures (Sec 25 )
getting expert assistance (Sec 26)
settlement by conciliation during hearing (Sec 30)
avoiding cost by dispensing with reasons (Sec 31)
reducing the time for correction of mistakes (Sec 33)
But all this is possible only if the parties cooperate and they have chosen a good arbitrator.
Comparison of costs and benefits:-
COURT ARBITRATION
Lawyers notice Lawyer's fees Private letter – less cost –nofees Plaint Preparation fees Claim statement at less cost
Court fees @ 1 % of the value Fees to arbitrator about equal amount
Summons Fees for serving notices Postage
Documents Copying fees Cost of photocopying
Witnesses Cost of travel Cost of travel – may be avoided
Lawyer's fees Stipulated May be reduced by personal arguments
Stamp duty Does not arise Rs. 250 maximum
COURT ARBITRATION
Adjudicator No choice - designated Can choose qualified person
Jurisdiction May be disputed Agreed
Place Choice of claimant Choice of both parties
Time of hearing Decision of court Choice of parties
Procedure Strict – C.P.C. applies Informal
Evidence Strict – Evidence Act Informal
Acceptance Appeal and execution - delay No appeal on merits
Posts
0 comments:
Post a Comment