Alternate Dispute Resolution (ADR) Mechanism

With the steep growth in the number of laws and the number of cases, the Court system is under great pressure. In order to reduce the heavy demand on Court time, efforts need to be made to resolve the disputes by resorting to Alternative Dispute Resolution Methods before they enter the portals of the court.

Alternate Dispute Resolution (ADR)

Alternate Dispute Resolution (ADR) is a mechanism of dispute resolution that is non adversarial, i.e. working together co-operatively to reach the best resolution for everyone.

• ADR can be instrumental in reducing the burden of litigation on courts, while delivering a well-rounded and satisfying experience for the parties involved.
• It provides the opportunity to “expand the pie” through creative, collaborative bargaining, and fulfill the interests driving their demands.

Need for ADR: 

• The system of dispensing justice in India has come under great stress mainly because of the huge pendency of cases in courts.
• In India, the number of cases filed in the courts has shown a tremendous increase in recent years resulting in pendency and delays underlining the need for Alternate Dispute Resolution (ADR) methods.

Types of ADR Mechanisms

The Arbitration, Mediation, Negotiation and Conciliation are tools of Alternative Dispute Redressal System.

Arbitration

• Arbitration is a process in which a neutral third party or parties render a decision based on the merits of the case. In the Indian context the scope of the rules for the arbitration process are set out broadly by the provisions of the Arbitration and Conciliation Act 1998 and in the areas uncovered by the Statute the parties are free to design an arbitration process appropriate and relevant to their disputes. In short:
  • Parties in dispute refer the matter to one or more arbitrators, by whose decision they agree to be bound.
  • A valid arbitration agreement must exist between the parties prior to the emergence of dispute.
• The dispute is submitted to an arbitral tribunal which makes a decision (an “award”) on the dispute that is mostly binding on the parties.
• It is less formal than a trial, and the rules of evidence are often relaxed.
• Generally, there is no right to appeal an arbitrator’s decision.
• Except for some interim measures, there is very little scope for judicial intervention in the arbitration process.

Advantage:

• Fast, flexible, confidential, choice of arbitrator with expertise, Limited rights of review and appeal of arbitration awards.

Disadvantage:

• Parties waive rights to access courts if arbitration in contracts is mandatory, pressure from powerful parties, high fees charged by arbitrators, Limited avenues of appeal to overturn erroneous decision.

Mediation

• The Process of mediation aims to facilitate the development of a consensual solution by the disputing parties.
• The Mediation process is overseen by a non-partisan third party – the Mediator.
• The mediator does not decide the dispute but helps the parties communicate so they can try to settle the dispute themselves.
  • Any person who undergoes the required 40 hours training stipulated by the Mediation and Conciliation Project Committee of the Supreme Court (SC) can be a mediator.
  • He also needs to have at least ten mediations resulting in a settlement and at least 20 mediations in all to be eligible to be accredited as a qualified mediator.
• The authority of the mediator vests on the consent of the parties that he should facilitate their negotiations. In short:
  • Voluntary, informal, party-centered, structured negotiation process;
  • Mediator is only a facilitator and cannot propose solution;
  • Parties control the outcome;
  • Cases are conducive for mediation if:
    • There exists communication problem, emotional barriers between parties;
    • Resolution is important than vindicating legal principles;
    • Parties have incentive to save time, cost, drain on productivity due to litigation.

Conciliation

• This is a process by which resolution of disputes is achieved by compromise or voluntary agreement. In contrast to arbitration, the conciliator does not render a binding award. The parties are free to accept or reject the recommendations of the conciliator.
• However, if both parties accept the settlement document drawn by the conciliator, it shall be final and binding on both.
• The conciliator is in the Indian context, often a Government official whose report contains recommendations. So far as Department of Legal Affairs is concerned, this Department provides annual recurring Grants-in-aid to National Legal Services Authority (NALSA) which is a statutory body. In short:
  • Conciliators resolve disputes by providing technical assistance, improving communication between parties and proposing possible solutions taking into account parties’ position and interests.
  • Resolution is non-binding till both disputing parties agree to sign.
  • Disputes conducive for conciliation: Commercial, financial, family, insurance, labor , consumer protection.
  • Conciliator is not bound by rules of procedure and evidence:
    • ACA, 1996 Sec 67(1): Proposal for settlement need not be accompanied by statement of reasons.
    • ACA, 1996 Sec 30, 64(1), 73(1): Pro-active, interventionist role of conciliator in formulating terms of settlement.
  • Cannot produce as evidence in arbitral proceedings views expressed, admissions or proposals made in conciliatory proceedings. Conciliator cannot be produced as witness in judicial proceedings.

Negotiation

• A non-binding procedure in which discussions between the parties are initiated without the intervention of any third party with the object of arriving at a negotiated settlement to the dispute.
• It is the most common method of alternative dispute resolution.
• Negotiation occurs in business, non-profit organizations, government branches, legal proceedings, among nations and in personal situations such as marriage, divorce, parenting, and everyday life.

Advantages of Alternate Dispute Resolutions (ADRs)

• The resolution of disputes takes place usually in private – helping maintain confidentiality.
• It is more viable, economic, and efficient.
• Procedural flexibility saves valuable time and money and absence of stress of a conventional trial.
• This often results in creative solutions, sustainable outcomes, greater satisfaction, and improved relationships.
• The possibility of ensuring that specialized expertise is available on the tribunal in the person of the arbitrator, mediator, conciliator or neutral adviser.
• Further, it offers greater direct control over the outcome.

What is the Status of ADR in India?

• Statutory Backing: The Legal Services Authorities Act was passed in 1987 to encourage out-of-court settlements, and the new Arbitration and Conciliation Act was enacted in 1996.
• Inclusion of Plea Bargaining: Procedure for plea-bargaining was included in the Code of Criminal Procedure in 2005.
  • Plea-bargaining is best described as a “pre-trial negotiation between the accused and the prosecution during which the accused agrees to plead guilty in exchange for certain concessions by the prosecution.”
• Lok Adalats: Lok Adalat or “people’s court” comprises an informal setting which facilitates negotiations in the presence of a judicial officer wherein cases are dispensed without undue emphasis on legal technicalities.
  • The order of the Lok-Adalat is final and binding on the parties, and is not appealable in a court of law.
• Other Legal Provisions:
  • In 2021, the Lok Sabha passed the Arbitration and Conciliation (Amendment) Bill, 2021 to check misuse by “fly-by-night operators” who take advantage of the law to get favourable awards by fraud.
    • The Bill intends to replace the Arbitration and Conciliation (Amendment) ordinance issued in November, 2020.
  • More recently in July 2022, the Parliamentary Standing Committee on Law and Justice recommended substantial changes to the Mediation Bill, 2021.
• Online Dispute Resolution (ODR): The NITI Aayog in its recently released report – The Future of Dispute Resolution discusses the concept of Online Dispute Resolution (ODR) – its evolution, significance and present status in India.
  • ODR refers to the usage of ICT tools to enable parties to resolve their disputes.
  • In its first phase, ODR shares its fundamentals with ADR Mechanisms of negotiation, mediation and arbitration.

Limitations of Alternate Dispute Resolution (ADR) Methods

• Compatibility in blistering era of disputes
• The possibility of bias
• Lack of power to establish legal precedents
• Limited Judicial Review
• Unfamiliarity with the procedure and Lack of Awareness
• Wastage of time/money if case is not resolved

Way Forward

• ADR has proven successful in clearing the backlog of cases in various levels of the judiciary – Lok Adalats alone have disposed more than 50 lakh cases every year on average in the last three years.
  • But there seems to be a lack of awareness about the availability of these mechanisms.
• The National and State Legal Services Authorities should disseminate more information regarding these, so they become the first option explored by potential litigants.
• The future of dispute resolution revolves around ICT innovations and new ideas to make dispute resolution efficient and accessible for every section of the society.
  • ODR has the potential to decentralise dispute resolution in India and empower innovators across communities to create targeted ODR processes to resolve disputes efficiently.