An Introduction to Alternative Dispute Resolution

Introduction
Today’s world has become globalised and commercial with the advent of technology. People can now contact each other
and settle business deals and disputes when they are sitting at the opposite ends of the world. Most people no longer have
the time to go and file papers at the courts and then wait long periods for a hearing. We are rapidly approaching a stage
where litigation is being replaced with alternative dispute resolution (ADR), due to the inefficiencies and drawbacks of
litigation. India hasn’t quite reached a stage where litigation has been completely displaced by ADR methods, but the legal
system is beginning to see the benefits of ADR. This article shall be helpful to give you an overview of the ADR methods
and how it is beneficial.

What is alternative dispute resolution?

Alternative dispute resolution (ADR) refers to a range of dispute settlement methods which help the parties in the dispute
to come to a settlement without going to court, or without litigating on the said matter. These methods usually involve a
third party, who helps them in settling the disputes. In many cases, ADR methods are used alongside the litigation process
as well through court authorisation.

How did the concept of ADR arise?

As stated in the 222nd Report of the Law Commission of India, the Constitution has guaranteed access to justice for all,
primarily through Article 39A, which states that everyone must have an equal opportunity of getting justice and this must
not be denied to any citizen by reason of economic or other sort of disabilities.
The report further states that ‘access to justice’ for the common masses in India means access to the courts of law. But
even that has been hindered, due to factors like poverty, illiteracy, ignorance, social and political backwardness etc.
In a developing country like India, many people still live in poverty. When their rights get violated, they often do not have
the money to fight long battles in the Court. They do not have the money to afford a lawyer. They do not know the legal
system and procedures. Therefore, they often think that the court system is an inconvenience.
These kinds of inefficiencies are shared reasons among many countries, which is why ADR is being explored. The courts
also have too many pending cases and these cases keep going on for many years which is a tremendous burden to the
courts.
These reasons prompted the Indian Government to enact Section 89 of the Code of Civil Procedure, 1908 and replace the
earlier Arbitration Act,1940 with The Arbitration and Conciliation Act 1996, in accordance with the mandates of the
United Nations Commission on International Trade Law (UNCITRAL).

Pros of ADR
 It is less expensive.
 It is less time consuming.
 It is free from the technicalities that are present in the court system.
 The parties are free to differ in their opinion and can discuss their opinions with each other, without any fear of
disclosure of this fact before the courts.
  There is no feeling of enmity between the parties as there is no winning and losing side. They also get their
grievances redressed and their relationship remains as it was before, therefore, they can conduct future business
deals with each other.
 ADR is more suitable for multi party disputes, as all the parties can put forward their opinions at the same place
and in one go, rather than going to court again and again. Also, it provides for a wider perspective of the dispute.
 The parties often have the choice of the ADR method to be used. They sometimes also have the choice to select
the individuals or bodies who will settle the dispute.
 The process is also very flexible, according to what suits the parties.
 The parties also have the option of being confidential. The ADR system also enables the parties to put focus on
practical solutions.
 A wider range of issues are considered and shared future interests of the parties are protected.
 ADR system also allows for risk management.

Cons of ADR
 ADR is not helpful where a dispute is to be decided on the basis of a precedent.
 When there is a need for court and interim orders, ADR would not be useful.
 ADR is less suitable when there is a need for enforcement.
 When there is a need for live and expert evidence and analysis in a case, then ADR would not be useful.
 When there is an imbalance of power, between the parties in the dispute, then ADR would not work.
 If the case is of a complex nature, then the adjudicating body must look into minor details and may need expert
advice and suggestions. Here, ADR would probably not work.

Types of ADR methods

There are various ADR methods, but they differ from country to country. This article shall look at the main ADR methods
used, with special focus on India.

 Arbitration
Arbitration in India is governed by The Arbitration and Conciliation Act, 1996. It is a form of dispute resolution where
one or more parties are appointed to adjudicate the dispute. They act as third parties. This third party should be neutral and
this party is referred to as an ’arbitrator’ while the decision of the arbitrator, which is essentially a determination of merits
in the case, is known as ‘arbitration award’.
The arbitration process is informal and this process allows the dispute to be resolved amicably and efficiently as it takes
less time and involves lesser costs for the parties. Therefore, parties frequently choose to arbitrate when disputes arise,
especially in the business world. Big corporations would rather settle disputes quickly, rather than fighting long cases in
the courts.
Before the arbitration process begins, an arbitration agreement is required to be formed. This agreement lays down the
terms and conditions on which the arbitration process is carried out. It is determined through this agreement as to how the
process will be made cheaper, efficient and and how the rules of evidence would be applied etc. This agreement should be
valid as per The Indian Contract Act 1972 and the parties must have the capacity to contract under Sections 11 and 12 of
the same Act.
Arbitral decisions are final and binding on the parties, who have limited scope of objecting to the decisions. Non binding
arbitrations also exist wherein the party can request a trial if it is not satisfied with the arbitrator’s decision.

Main Types of arbitral proceedings

Ad Hoc Arbitration
Under ad hoc arbitration , the parties involved in the dispute determine the conduct of the arbitration proceedings
themselves, without going to an arbitral institution. In case if the parties are not able to settle on one arbitrator, or one of
the parties is reluctant to appoint that particular arbitrator, then Section 11 of The Arbitration and Conciliation Act 1996
will be invoked by the other party. Under Section 11 of the Act, the arbitrator for that dispute will be appointed by either
the Chief Justice of the Supreme Court or his designate or the Chief Justice of the High Court or his designate.
 If it is a domestic arbitration, then the Chief Justice of the High Court or his designate will appoint the arbitrator.
 If it is international commercial arbitration, then the Chief Justice of India or his designate will appoint the
arbitrator. In ad hoc arbitration, the fee of the arbitrator is decided mutually by the parties and the arbitrator.
Institutional Arbitration
In this kind of arbitration, the parties decide in the agreement itself, that an arbitration institution will administer the
arbitration. The Indian institutions are International Centre for Alternative Dispute Resolution and the Indian Council of
Arbitration. These institutions formulate the rules for arbitration owing to their experience in observing arbitral procedures
and situations, therefore they are prepared for all possible situations that may arise in future arbitration cases.

 Mediation
In mediation, a third neutral party aims to assist two or more disputants in reaching a settlement. This third party is
referred to as the mediator. The mediator needs to properly communicate with both the parties and use proper negotiation
techniques, in order to make one party fully aware of the other party’s perspective, through empathy and dialogue. This
process is controlled by the parties.
One of the characteristics of this type of dispute resolution is that the mediator is not allowed to give an outcome of the
dispute. The solution is given mutually, and the agreements are generally non binding. Parties are in significant control of
the mediation process and it is strictly confidential. The parties can even go for litigation if they are not satisfied with the
mediation process.
It must be observed that the main aim of the mediation process is to build relationships, and not to make a decision. It is
more of an amicable resolution of differences with potential form future business between the parties.

 Negotiation
Negotiation is also a form of dispute resolution, but there is no third party to adjudicate the matter, therefore the parties
work together to find a mutually acceptable solution or a compromise. The parties may choose to be represented by their
attorneys during their negotiations. Negotiation is not statutorily recognized in India. There are no set rules for conducting
a negotiation.
Essentials of negotiation-
  It is a process of communication which helps to resolve conflicts.
 It can be entered into voluntarily and its outcome is non-binding.
 The parties are benefitted here as they have control over the outcome and procedure and the process is carried out
keeping their interests in mind.

Conciliation
In conciliation, the third party, who is called the conciliator, talks to the parties involved separately so that the parties can
arrive at a mutually acceptable solution through facilitating talks between the parties. Conciliation is also governed in
India under The Arbitration and Conciliation Act, 1996. Under Section 61, conciliation is provided for disputes arising out
of legal relationships, whether they are contractual or not.

Difference between mediation and conciliation

In mediation, the mediator plays a more active role in the the process by proposing compromise solutions after hearing all
parties while in the case of conciliation, the conciliator has to bring the parties into such a state of mind as to facilitate the
parties to come to an acceptable compromise.

 Lok Adalats
In a country like India where there are many illiterate people, the concept of Lok Adalats is a necessity. This was first
introduced in 1982 in Gujarat. This concept mainly focused on reducing the burden of pending cases on the Courts and has
incorporated the concept keeping in mind various factors like social justice.
Lok Adalats are governed under The Legal Services Authorities Act,1987. Sections 19, 20, 21 and 22 specifically deal
with Lok Adalats. They have been organised by the State Legal Aid and Advice Boards with the aid of District Legal Aid
and Advice Committees. These have helped poor people to avoid the inefficiencies of litigation. The aim of The Legal
Services Authorities Act was to provide access to justice for all, whether he be poor or rich. Since the poor masses of the
society were not being delivered on this promise, this Act was formed. This access has been further strengthened by
judgements of various courts, such as the Delhi High Court, in the case of Abul Hasan and National Legal Service
Authority v. Delhi Vidyut Board & Ors. AIR 1999 Del 88, where it gave an order for setting up permanent Lok Adalats.
Further, the decision given by the Lok Adalat is binding and shall be treated akin to the order of a civil court., thereby
increasing poor people’s access to justice.

Conclusion
There are many other dispute resolution methods, like med-arb, mini trial, summary jury trial etc. But arbitration,
mediation and Lok Adalats etc are the most commonly used techniques of ADR in India. Throughout the world, ADR has
been slowly becoming the favored choice for parties, but India still relies a lot on litigation. However, with the
development of these ADR methods, and in an effort to improve access to justice, ADR is being seen as a necessity. Legal
recognition should be given to all ADR methods including negotiation as they are viable and convenient., and it would
help to ease the burden of the courts.