Alternative Dispute Resolution
The concept of Alternative Dispute Resolution (ADR) mechanism is capable of providing a
substitute to the conventional methods of resolving disputes. ADR offers to resolve all type
of matters including civil, commercial, industrial and family etc., where people are not being
able to start any type of negotiation and reach the settlement. Generally, ADR uses neutral
third party who helps the parties to communicate, discuss the differences and resolve the
dispute. It is a method which enables individuals and group to maintain co-operation, social
order and provides opportunity to reduce hostility 1 .
Various modes of Alternative Dispute Resolution
Arbitration
The process of Arbitration cannot exist without valid arbitration agreement prior to the
emergence of dispute. In this technique of resolution parties refer their dispute to one or more
persons called arbitrators. Decision of arbitrator is bound on parties and their decision is
called ‘Award’. The object of Arbitration is to obtain fair settlement of dispute outside of
court without necessary delay and expense.
Any party to a contract where arbitration clause is there, can invoke arbitration clause either
himself or through their authorized agent which refer the dispute directly to the arbitration as
per the Arbitration clause. Here, arbitration clause means a clause that mention the course of
actions, language, number of arbitrators, seat or legal place of the arbitration to be taken
place in the event of dispute arising out between the parties.
Procedure
Initially, applicant initiates an arbitration by filing a statement of claim that
specifies the relevant facts and remedies. The application must include the
certified copy of arbitration agreement.
1 https://blog.ipleaders.in/adr-alternative-dispute-resolution/
Statement of claim is a written document filed in the court or tribunal for judicial
determination and a copy also send to the defendant in which claimant described
the facts in support of his case and the relief he seeks from the defendant.
The respondent reply to the arbitration by filing an answer against the arbitration
claim of claimant that specifies the relevant facts and available defences to the
statement of claim.
Arbitrators selection is the process in which the parties receive lists of potential
arbitrators and select the panel to hear their case.
Then there is the exchange of documents and information in preparation for the
hearing called ‘Discovery’.
The parties meet in persons to conduct the hearing in which the parties present the
arguments and evidences in support of their respective cases.
After the witnesses examined and evidences are presented, then there in
conclusion arbitrator gives an ‘Award’ which is binding on the parties. 2
Mediation
Mediation is an Alternative Dispute resolution where a third neutral party aims to assist two
or more disputants in reaching agreement. It is an easy and uncomplicated party centered
negotiation process where third party acts as a mediator to resolve dispute amicably by using
appropriate communication and negotiation techniques. This process is totally controlled by
the parties. Mediator’s work is just to facilitate the parties to reach settlement of their dispute.
Mediator doesn’t impose his views and make no decision about what a fair settlement should
be.
Conciliation
Conciliation is a form of arbitration but it is less formal in nature. It is the process of
facilitating an amicable resolution between the parties, whereby the parties to the dispute use
conciliator who meets with the parties separately to settle their dispute. Conciliator meet
separately to lower the tension between parties, improving communication, interpreting issue
to bring about a negotiated settlement There is no need of prior agreement and cannot be
forced on party who is not intending for conciliation. It is different from arbitration in that
way.
2 http://lexisnexis.in/law-and-practice-of-alternative-dispute-resolution-in-india-a-detailed-analysis.htm
Lok Adalat
Lok Adalat is called ‘People’s Court’ presided over by a sitting or retired judicial officer,
social activists or members of Legal profession as the chairman. National Legal Service
Authority(NALSA) along with other Legal Services Institutions conducts Lok Adalats on
regular intervals for exercising such jurisdiction. Any case pending in regular court or any
dispute which has not been brought before any court of law can be referred to Lok Adalat.
There is no court fees and rigid procedure followed, which makes the process fast. If any
matter pending in court of referred to the Lok Adalat and is settled subsequently, the court fee
originally paid in the court when the petition filed is also refunded back to the parties.
Parties are in direct interaction with the judge, which is not possible in regular courts. It
depends on the parties if both the parties agree on case long pending in regular court can be
transferred to Lok Adalat. The persons deciding the cases have the role of statutory
conciliators only, they can only persuade the parties to come to a conclusion for settling the
dispute outside the regular court in the Lok Adalat. Legal Services Authorities (State or
District) as the case may be on receipt of an application from one of the parties at a pre-
litigation stage may refer such matter to the Lok Adalat for which notice would then be
issued to the other party. Lok Adalats do not have any jurisdiction to deal with cases of non-
compoundable offenses.
LEGISLATIONS OF ADR IN INDIA
Code of Civil Procedure
The Code of Civil Procedure, 1859 in its sections 312 to 325 dealt with arbitration in suits
while sections 326 and 327 provided for arbitration without court intervention. The Code of
Civil Procedure (Act 5 of 1908) repealed the Act of 1882. The Code of Civil Procedure, 1908
has laid down that cases must be encouraged to go in for ADR under section 89(1). 3 Under
the First Schedule, Order XXXII A, Rule 3 a duty is cast upon the courts that it shall make an
endeavor to assist the parties in the first instance, in arriving at a settlement in respect of the
subject matter of the suit. 4 The second schedule related to arbitration in suits while briefly
providing arbitration without intervention of a court. Order I, Rule 1 of the schedule says that
where in any suit, all the parties agree that any matter in difference between them shall be
referred to arbitration, they may, at any time before judgment is pronounced; apply to the
court for an order of reference. This schedule, in a way supplemented the provisions of the
Arbitration Act of 1899.
Arbitration and Conciliation Act, 1996:
The government enacted the Arbitration and Conciliation Act, 1996 in an effort to modernize
the 1940 Act. In 1978, the UNCITRAL Secretariat, the Asian African Legal Consultative
Committee (AALCC), the International Council for Commercial Arbitration (ICCA) and the
International Chamber of Commerce (ICC) met for a consultative meeting, where the
participants were of the unanimous view that it would be in the interest of International
Commercial Arbitration if UNCITRAL would initiate steps leading to the establishment of
uniform standards of arbitral procedure. The preparation of a Model Law on arbitration was
considered the most appropriate way to achieve the desired uniformity. The full text of this
Model Law was adopted on 21 st June 1985 by UNCITRAL. 5 This is a remarkable legacy
given by the United Nations to International Commercial Arbitration, which has influenced
Indian Law. In India, the Model Law has been adopted almost in its entirety in the 1996
Act. This Act repealed all the three previous statutes. Its primary purpose was to encourage
arbitration as a cost-effective and quick mechanism for the settlement of commercial
disputes. It covers both domestic arbitration and international commercial arbitration.It
marked an epoch in the struggle to find an alternative to the traditional adversarial system of
litigation in India.
The changes brought about by the 1996 Act were so drastic that the entire case law built up
over the previous fifty-six years on arbitration was rendered superfluous. Unfortunately, there
was no widespread debate and understanding of the changes before such an important
legislative change was enacted. The Government of India enacted the 1996 Act by an
3 Civil Procedure Code, 1908 as amended and implemented in 2002.
4 Civil Procedure Code 1908, Order XXXII A Rule 3
5 P.C. Rao & William Sheffield, Universal Law Publishing Co. Pvt. Ltd., Alternative Dispute Resolution: What
is it and how it works, at 26(1997 ed., 2006).
ordinance, and then extended its life by another ordinance, before Parliament eventually
passed it without reference to Parliamentary Committee.
Arbitration, as practiced in India, instead of shortening the lifespan of the dispute resolution,
became one more “inning” in the game. Not only that, the arbitrator and the parties’ lawyers
treated arbitration as “extra time” or overtime work to be done after attending to court
matters. The result was that the normal session of an arbitration hearing was always for a
short duration. Absence of a full-fledged Arbitration Bar effectively prevented arbitrations
being heard continuously on day-to-day basis over the normal working hours, viz. 4-5 hours
every day. This resulted in elongation of the period for disposal.
Veerappa Moily also said in the ADR congress held in the year 2010 that the 1996 Act,
although modeled along international standards, has so far proved to be insufficient in
meeting the needs of the business community, for the speedy and impartial resolution of
disputes in India.The Law Commission of India prepared a report on the experience of the
1996 Act and suggested a number of amendments. Based on the recommendations of the
Commission, the Government of India introduced the Arbitration and Conciliation
(Amendment) Bill, 2003, in the Parliament. The standing committee of law ministry felt that
provisions of the Bill gave room for excessive intervention by the courts in arbitration
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