Alternative Dispute Resolution (popularly known as "ADR") is a series of mechanisms that are used to settle disputes between parties outside the forum of courts. The traditional method of dispute settlement i.e. through the medium of courts with their tedious and lengthy processes has proved to be cumbersome for many as a consequence of which the mechanism of delivery of justice has failed tremendously. More ever, courts have been overburdened with many cases pending for years and even decades.
It is in response to this state of affairs, ADR mechanisms grew as a substitute to the existing method of dispute resolution.
In India, the adoption of methods like arbitration and mediation have been in practice since ancient times as is evident from the functioning of Panchayats in villages that deal with various form of disputes: contractual, matrimonial and even of a criminal nature. It was with the advent of the East India Company in the seventeenth century that ADR was given a legislative form. The British had formulated resolutions for the three presidency towns of Bombay, Calcutta and Madras that provided for parties to submit their disputes to arbitrators appointed through mutual agreement.
ADR essentially foresees a participative and collaborative effort of the parties facilitated by a neutral third party (except in case of negotiation) to arrive at an acceptable solution. The primary function of a democratic welfare state is to ensure that justice is delivered to its citizens and it is on this account ADR mechanisms were brought about.
Causes for the growth of ADR
ADR include alternative forms of dispute settlement aside from the traditional court adjudication and includes negotiation, mediation, conciliation, med-arb, mini trial, lok adalats etc.
They have seen tremendous growth and recognition because of factors like cost and time. ADR methods do not involve high costs, are faster, less formal, less technical and do not have the stress associated in a conventional trial. The adversarial system is protracted and this discourages parties to approach the courts as they are well acquainted of the fact that there would be delay in the dispensation of justice. ADR mechanisms ensure the maintenance of good relations between the disputants. Especially companies who wish to maintain amicable terms with their rivals prefer to go for these methods to be in good terms in the future as well.
In a country like India, with a huge population and lack of adequate resources, justice has failed to permeate to the nook and corner of this big country. The judge to population ratio is also poor and as a result of this, lakhs of cases stand pending in the Indian courts. This essentially compelled the search for suitable alternatives and the result was ADR.
The need for ADR was highlighted in a conference in Delhi in 1993 of the Chief Ministers and Chief Justices of States who had adopted a Resolution under the chairmanship of the then Prime Minister P.V Narasimha Rao which was presided over by the Chief Justice of India, wherein they it was stated that "Courts 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."
The use of these alternative mechanisms has proved that they render greater satisfaction to parties as the involvement of parties in these methods is more and this ensures their mutual benefit.
Today, many business contracts or other contracts of a commercial nature have an ADR clause that provides for the resort to ADR should disputes arise.
ADR in India
Legislative consciousness arose with the passage of time as can be reflected from the various Acts/Statutes made to incorporate ADR mechanisms in the legal framework of India. It can be said that the movement of ADR happened as a result of the prior success of the same in countries like US, UK, China, Singapore, Japan, France, Canada, South Africa and Australia.
As a matter of fact, the roots of ADR can be traced to the Preamble of the Indian Constitution that states "to secure to all the citizens of India, justice-social, economic and political-liberty, equality and fraternity".
Before independence, India had a slew of legislations that incorporated ADR namely Indian Arbitration Act, 1899, Code of Civil Procedure, 1908 (hereafter "CPC"), Arbitration (Convention and Protocol) Act, 1937 and the Arbitration Act, 1940. Of all these, only the CPC remains today. Section 89 of the CPC provides for the settlement of disputes outside the court if the court thinks that there exist elements of dispute settlement which may be acceptable to the parties. They can then go for arbitration, conciliation, mediation, lok adalat or judicial settlement as the court deems fit, after considering the observations of the parties.
To modernize the 1940 Act that was not meeting the requirements of international standards of ADR, the legislature enacted the Arbitration and Conciliation Act, 1996 (hereafter "the 1996 Act"). The United Nations Commission on International Trade Law (hereafter "UNCTRAL"), the core body of United Nations system in the field of international trade law, had drafted a model law of arbitration and member States were required to draft their arbitration law based on this model law for the uniformity in arbitral procedures and this resulted in the enactment of the 1996 Act. The 1996 Act covers the model law in its entirety and has provisions for both domestic as well as international arbitration.
The Act has provisions for conciliation as well. For Lok Adalats and Permanent Lok Adalats, the statute is the National Legal Services Authority Act, 1987.
As for negotiation and mediation, there are no specific legislations and the requirements of the same are decided by the parties in dispute.
Main forms of ADR
Following are the main forms of ADR:
Arbitration: Arbitration is a form of dispute settlement mechanism wherein parties upon their consent appoint a third party to settle their matter and come up with a decision that is known as an "award" which is binding upon them.
Arbitration is more of a judicial nature. It involves parties appointing their own arbitrators (one each) who in turn appoint the third one. Arbitral Tribunal is required to have an odd number of arbitrators to establish majority.
However, most significantly, arbitration necessitates an arbitration agreement. Section 7 of the 1996 Act provides for the same and mentions that it must be in the written form. Arbitration gives the parties to decide on the tribunal, its composition, venue etc.
Arbitration is essentially of two types: Institutional and Ad-Hoc. As named, the former implies that a specialized institution takes part in the arbitral process resorted to by parties as per its own rules. For example: International Chamber of Commerce (ICC).
In Ad-Hoc, the parties are to determine the modalities of the entire arbitral process right from the number of arbitrators to their manner of appointment etc. They are relatively cheaper and flexible as unlike the rules of the institution that governs in cases of institutional arbitration, parties determine their own rules.
A new form of arbitration has emerged on the scene with the amendment of the 1996 Act in 2015, namely, fast-track arbitration and as the name suggests, it involves carrying out the arbitral process in a time-bound manner as even arbitration started to incorporate elements of the traditional system and became more technical. To remove these technicalities and prevent arbitration from taking forms of the traditional system, this new method was introduced under Section 29 (B) of the amended Act of 2015.
Mediation: Herein too, a third party, called the mediator assists the parties in the settlement of their disputes. The mediator is a neutral third person whose function is to come up with fresh proposals taking into account the consideration of both the parties. It is the prerogative of the parties whether or not to accept the proposals. Here, the parties are engaged more actively than in arbitration and strict confidentiality is maintained. The mediator is essentially a channel of communication for the parties.
Mediation is appropriate when the disputed parties want to preserve their good relations. Thus, they are useful in family and business disputes.
Negotiation: Negotiation is the simplest and most basic of all forms of ADR. Negotiation has no third party and the idea is to bring the parties together to identify the issues in dispute. Negotiation is mainly discussions to bring about a mutual settlement satisfactory to both the parties. It is often a precursor to the other forms of ADR.
Conciliation: The 1996 Act has given statutory recognition to conciliation as a mode of ADR. Conciliation does not require the existence of a prior agreement as in case of arbitration. One of the parties can request the other to appoint a conciliator, a trained and qualified neutral.
If the conciliator thinks that elements of settlement exist, he can draw up the terms of settlement and put forth to the parties. The conciliator before doing so is required to meet the parties separately and the parties in turn are required to give him a brief written statement describing the general nature of the dispute. The conciliator basically facilitates the settlement process by getting involved in the negotiations between the parties to come to a mutually acceptable solution. In conciliation, the engagement of the parties is lesser than that of mediation. The decision is not rendered by the conciliator; it is for the parties to find a solution with the assistance of the conciliator. Unless the parties arrive at and sign the agreement, the solution is not binding upon them.
They are a suitable method in disputes of commercial, financial, family nature etc.
Lok Adalats: They are basically people's courts and are established by the Government to solve social disputes through negotiations and compromises. Lok Adalats impose no court fees and are thus helpful for the economically disadvantaged. They do not have strict rules of procedure. Consent is essential for parties to go to Lok Adalats. It is to be noted that the decision of the Lok Adalat is binding upon the parties and is non-appealable. They are useful in deciding money claims, suits of partition and even matrimonial cases.
The various ADR methods highlight the fact that they are much cheaper, expeditious, and bereft of technical formalities. In today's age of huge pendency of cases, ADR methods are attractive. They are peaceful and preserve the relations between parties. With thousands of cases adding up each day, the sooner they get adjudicated, the better.
Thus, parties to a dispute must prefer to settle the same through the mechanism of ADR and it is the Government and the Judiciary's responsibility to encourage the use of ADR as much as possible.
This article is on one of the issues and complaints often heard in our country i.e. the backlog of cases in courts.
A court case filed at a lower court can take even half a decade to be finally disposed of it travels all the way in normal sequence upto the apex court.
The judiciary as well as legislatures are well aware of this.
That is why there are many alternative Dispute Resolution(ADR) mechanism . Judicial and legislative bodies are taking steps and actions to see that cases are disposed of as fast as possible. However due to many reasons the expected results are not happening.
There are two areas where a dispute can be resolved in alternative mechanism. The first and best is to resolve before bringing it to courts.
The next is to use ADR mechanism when they are still in courts using the permitted routes.
That is why the family courts use counselling, mediation, conciliation etc. before the case is taken for legal trial and resolution.
Lok Adalats are for cases in courts, but subject to certain eligibility norms, allowed to be settled by use of to the mutual satisfaction of the dispute parties. Lok Adalats have the informality of negotiated settlement but with a legal sanction and can cut short time and cost.
Though it is highly desirable to settle any dispute amicably between the concerned parties, ADR is the next best alternative, than prolonging with legal cases.
The article is to be read by anyone having any unresolved dispute with some one and is also worth a general reading for the awareness needed in the matter.