Student notes: An introduction to alternate dispute resolution

INTRODUCTION

Alternative Dispute Resolution (ADR) is a term used to demonstrate various different modes of resolving legal disputes. It is experienced both by the business world & common men because it is almost impracticable for all individuals to file law suits and get justice on time. The Courts are backlogged with schedules resulting in delay of year or more for the applicants to have their cases heard and decided. To solve this problem of backlogged cases and delayed decisions ADR Mechanism has been developed in response. ADR methods are being increasingly accepted in field of law and commercial sectors both at National and International levels. The diverse methods of ADR can help the parties to resolve their issues at their own terms cheaply and rapidly.

In developing nations where almost, everyone opts for litigation to resolve their disputes, there is excessive burdening of cases on courts, which has ultimately led to disappointment among people regarding the existing scenario of judicial system and its ability to dispense justice. This opinion is based on the popular belief of, “Justice delayed is justice denied”. However, the blame for the backlogged cases in these developing countries cannot be attributed to the Courts & rigid judicial system alone. The main reason behind the delayed justice is the non-implementation of negotiation processes before litigation. It is against this flaw that the mechanisms of alternative dispute resolution are being introduced in these countries which is very essential for the smooth functioning of the judicial system. These ADR mechanisms, which have been working effectively in providing a cordial and speedy solution for issues in developed economies, are being suitably amended accordingly and applied in order to strengthen the judicial system of the developing countries.

The term “Alternative Disputes Resolution” includes various modes of settlement which are, Lok Adalats, Arbitration, Conciliation and Mediation. This technique of ADR has been used by many developed countries for effective disputes resolution. The most commonly practiced among other types of Alternative Disputes Resolution is Mediation. Mediation as a tool for alternate dispute resolution is not a new concept. To put it in simpler terms, mediation is a peaceful settlement of disputes with the engagement of an unbiased third party who acts as a facilitator and is called a ‘Mediator”.

The different methods of ADR can help the parties to settle their disputes at their own terms & conditions cheaply and expeditiously. ADR techniques are in addition to the Courts in character. These techniques could be useful in almost all contentious matters, which are capable of being settled, legally, by agreement between the parties. ADR techniques can be engaged in several categories of disputes, especially civil, commercial, industrial and family disputes. From the study of the different ADR techniques it is found that, alternative dispute resolution methods offer quick solution with respect to commercial disputes where the economic growth of the Country rests.

Alternative Dispute Resolutions is an alternative solution to the formal & rigid legal system. It is an alternative to litigation. It is because of the fact that the Courts are overburdened with millions of cases. ADR only offers a substitute option to litigation. It is intended only to complement and not supersede the legal system. It can be engaged in civil, commercial, industrial and family disputes. It is very essential in all types of commercial disputes and is considered to offer the quickest solution in respect of business disputes of international character. Even if the ADR proceeding fails, it is never a waste of money and time involved since it helps the parties to see each others position on the case and understand the case better. It is important to distinguish between which form of Alternative Dispute Resolution is binding and which are non-binding. Among all the available methods, negotiation, mediation and conciliation are non-binding forms, and depend on the consent of both the parties to reach a mutual agreement. Binding ADR techniques produce a third-party decision that both the parties must follow even if they disagree with the result just like a judicial decision. Non-binding Arbitration produces a third-party decision that the parties may reject and can even appeal in the court of law.

Advantages of Alternate Dispute Resolution are

• The ADR methods usually involve a third party referred to as ‘neutral’, a skilled and unbiased helper who either facilitate the parties in a disagreement or conflict to reach at a decision by agreement or assists them in arriving at a solution to the problem between the party to the dispute.

• Essential information is a crucial tool for an adjudicator. Rigid judicial proceedings make slow progress because of unwillingness of parties to part with unnecessary information. ADR provides for solution regarding this drawback in the judicial system. It could be difficult to find truth by making a person stand in the witness-box and in the public domain. Necessary information can be gathered more efficiently by an informal method sitting across the table. Therefore, ADR is a step towards success where judicial system has failed in pulling out facts efficiently.

• When it comes to mediation or conciliation, both the parties are themselves required to take a decision, since both of them are decision-makers and they are very well aware of the truth of their position.

• The formality and complexity which involved in the rigid & traditional judicial system is more than alternative dispute resolution and costs incurred are very low in alternative dispute resolution.

• Most essential advantages of alternative dispute redressal methods over rigid judicial court proceedings are its procedural flexibility. It can be conducted at any time, there is no requirement to wait for the listing of case, and in any manner to which the parties agree. It may be as normal as a meeting around a conference table or as formal as a private Court trial. Also, unlike the traditional court system, the parties have the freedom to choose the law which will apply, a neutral party to act as Arbitrator in their conflict, on particular days and places convenient to them and decide the fees payable to the Arbitrator.

Along with advantages, there are a few disadvantages which comes along with the processes of Alternate Dispute Resolution as well.

Following are the disadvantages of Alternate Dispute Resolution

• There is no guaranteed resolution. Taking arbitration as an exception, ADR processes do not always lead to a resolution. That means there is a possibility that you could invest time and money in trying to get the dispute resolve out-of-court and still end up having to proceed with litigation before a court.

• The decisions of Arbitration are final. The decision of a neutral arbitrator cannot be appealed taking into consideration different exceptions involved, with fraud being an obvious exception. Moreover, some states will not accept decisions given by arbitrators that are patently unfair, a higher standard is expected to meet. Another ground for setting aside a decision is if the arbitrator’s decision supersede the scope of the arbitration clause or agreement. Some arbitration clauses include all the sections and are broad, others are narrowly limited to certain disputes. Decisions of an arbitrator, on the other hand, usually can be appealed to an appellate court for a variety of legal grounds and for numerous alleged procedural errors.

• There are certain limits on Arbitration Awards. Arbitrators can only conclude issues that involve money. They cannot issue judgments which would compel one party to do something, or refrain them from doing another (also known as injunctions).

• The parties may have no choice left. Often there exists some contract in dispute which contains a broad clause, the ‘compulsory’ arbitration clause.

ALTERNATIVE MODES OF DISPUTE SETTLEMENT AND LEGAL SCENARIO OF ADR IN INDIA

India has over four crore pending court cases spanning the apex courts, high courts of the state and the district courts with new ones coming in on a daily basis. Implementation of fast track courts has been of little help and closure of courts in lockdown has worsened the already towering statistics. To deal with this seemingly hopeless situation, especially in the context of India, Alternative Dispute Resolution is an option worth exploring.

Going to a third party to resolve a dispute is not new in India. Elders in a panchyat, have been presiding over disagreements since time immemorial. However, the entire process of dispute-resolution has undergone a metamorphosis to emerge as a progressive piece of legislation which stems from the Model law and the UNCITRAL Arbitration Rules.

a. Modes of ADR practiced in India

ADR is broadly classified into two categories – court annexed options and community based dispute resolution mechanism. Some examples of former include – mediation and conciliation while an example for the latter could be Lok Adaalats.

Let’s take a closer look at the modes of ADR practiced in India.

1. Arbitration

A private, generally informal and non-judicial trial procedure for resolving disputes – arbitration is a procedure in which an arbitration tribunal makes a decision on a dispute that is binding on the parties.
Four requirements for the concept of arbitration – an arbitration agreement, a dispute, a reference to third party for resolution and an award by it.

The different types of arbitration are – Ad Hoc Arbitration, Institutional Arbitration, Statutory Arbitration, Fast track Arbitration

2. Mediation

Simply, Mediation is a negotiation carried out with the help of a third party. It is a process in which the third person, neutral to the dispute, provides the parties a chance to negotiate, converse and exhaustively explore whether a settlement can be reached.
The novel concept of mediation is not new to the Indian Legal System – the village panchayats and the nyay panchayats are case in point.

Though not uncommon, the process of mediation is not very popular in India.

3. Conciliation

This is a relatively unstructured method of dispute resolution in which a third party helps the disputed parties settle their disagreements by helping facilitate communication between them. Though this sounds eerily similar to Mediation, there is a thin line that separates the two. While in meditation, the third party that is, a mediator plays more active role by giving independent compromise directives after hearing both the parties; in conciliation, the third neutral intermediary’s role, is to bring the parties together in a frame of mind to put behind them their animosities and be prepared for an acceptable compromise on terms midway between those that are suitable to both parties.

1. Negotiations

A pre-eminent mode of dispute resolution, Negotiations is self – counseling between the parties to resolve their disputes. Unlike mediation and conciliation, it allows the parties to control the process and the solution. In India, there is no statute regarding the process of negotiation. Hence the process is one of no fixed rules but follows a predictable pattern

2. Lok Adaalats

Statutorily recognized under Legal Services Authorities Act, 1987 – Lok Adaalat is a formal judicial alternative dispute resolution forum that settles cases pending the verdict of Panchayats or the courts.
A platform that caters to the disadvantaged strata of the society, these are regularly organized by the State Legal Aid and Advice Boards with the help of District Legal Aids and Advice Committees.

b. Enacted Laws and their roles in ADR

1. Code of Civil Procedure (CrPC)

The Code of Civil Procedure,1859 under sections 312 to 325 and sections 326 and 327 dealt with arbitration suits and arbitration without court intervention respectively. The Crpc- 1908 under section 89(1) encourages cases to go for arbitration.

2. Indian Arbitration Act, 1899

Substantially influenced by the British Arbitration Act of 1899, this act expanded the scope of arbitration in India by defining the expression “submission”.

3. Arbitration (Protocol and Convention) Act, 1937

The Geneva protocol on Arbitration Clauses 1923 and the Geneva Convention on the Execution of Foreign Arbitral Awards 1927 were applied in India by this act. Its objective was for the protocol and convention to become operative in India.

4. The Arbitration Act of 1940

While the act dealt with only domestic arbitration, intervention of court was required in the entire process of arbitration. The act made provisions for dealing with arbitration without court intervention and arbitration with court intervention in pending and non-pending suits.

The act is said to have defeated the purpose of ADR since the court intervention was required and it did not guarantee a speedy and effective redressal of disputes.

5. Arbitration and Conciliation Act, 1996

As established above, Arbitration and Conciliation Act, 1996 is a key progressive piece of legislation that stems from the Model law and UNCITRAL Arbitration Rules and was an attempt in modernizing the existing Arbitration Act (1940).

The Act repealed all the three previous statutes. Its main objective was to make arbitration a cost effective and quick mechanism for settlement of disputes. It covers both – domestic arbitration and international commercial arbitration.

c. Online Dispute Resolution

The branch of dispute resolution that facilitates resolution of disputes between parties with the use of technology, is called Online Dispute Resolution. It is often referred to as an online equivalent of ADR in terms that it not only uses the conventional ADR practices of Arbitration, Mediation and Conciliation but can also augments them to cover a wide range of disputes. National Center for Technology and Dispute Resolution is the driving force behind ADR.

d. ADR and Courts

Program Closeness to Court

Court Alternative Dispute Resolutions or Court ADR refers to application of ADR mechanisms to resolve disagreements outside traditional litigation practices. Different court ADR methods are used in settling different kinds of cases. Essentially, judges seek help of ADR experts to resolve a conflict that does not require the rigours of going to trial in a court. The court structures these ADR processes and a case makes its way into and through the court depending upon the decisions it gives.

e. ADR and Cost

Usually, ADR is significantly less expensive than traditional litigation. However, the cost of ADR can quickly and dramatically increase as ADR service providers exact hefty additional fees and hourly charges. Online ADR, better known as ODR or Online Resolution Disputes provides the disputing parties same services at a reduced cost. Given how most these parties are small and medium businesses, they should be eager to explore an alternatively newer option of ODR.

 

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Esheta Lunkad Online
on 15 December 2020
Published in Students
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