India’s ADR Future: From “Appropriate” To “Alternative” Dispute Resolution

Published On: 8th April, 2024

Authored By: Manya Sethi
University of Petroleum and Energy Studies (UPES)

ABSTRACT

This article primarily discusses the problems with the established legal system while also emphasizing the value of alternative dispute resolution (ADR) techniques for future dispute resolution. The idea of ADR is not particularly new; it has long been in our society. ADR, or alternative dispute resolution, is a flexible process that allows disputes to be settled without the involvement of legal actions. It is a system that works in tandem with the official legal system to attempt to resolve disputes between parties amicably and with their permission. This paper also examines the historical context of the ADR mechanism in India. The world system as a whole is unable to provide justice promptly because of the overwhelming strain placed on the official court system, and as we all know, justice postponed is justice denied. So, we might view the ADR mechanism as appropriate rather than an alternative in parallel to the official court system.

Shortly, this paper will address some potential solutions. As per the CJI, India is recognized as a hub for alternative dispute resolution (ADR). The ADR mechanism has gained traction in India and is a valuable tool in mitigating the backlog of cases in the legal system. However, some adjustments are necessary to ensure its seamless integration into our culture.

INTRODUCTION

Through the flexible process of alternative dispute resolution (ADR), disputes can be settled without the need for court processes to become involved. The main objective of the ADR is to establish less costly, easy, speedy, and reachable justice.[1] ADR procedures are mostly non-judicial and are used to resolve most disputes that can be resolved by the application of the law and agreement between the parties. This approach is based on the widely accepted belief that justice postponed is justice denied.[2] ADR is particularly important to the business community and the underprivileged, who require a quick and transparent means to get justice and look for flexible ways to handle their problems. For this reason, it is an alternative to litigation and needs to be regarded as a crucial component of the business’s policy. It has been demonstrated that arbitration and mediation are far more controllable than litigation, that they make sound business decisions, and that including a clause requiring arbitration and mediation in a contract would help to guarantee that disputes will be settled amicably and quickly.

MEANING OF ALTERNATE DISPUTE RESOLUTION (ADR)

The term “alternative dispute resolution” refers to a type of conflict settlement that is becoming increasingly popular as a quicker and less expensive option to the traditional courts. Arbitration and dispute resolution (ADR) is the umbrella term for everything that encourages settlement negotiations between parties that are mutually committed to discussing. This approach was developed to address the majority of difficulties, attempt to address potential social development concerns within the purview of ADR, and lessen the load on our legal system.[3] It’s an alternate that demonstrates acknowledgment that the parties are free to select this course of action and acknowledge it as a substitute for litigation. The dispute should be resolved within the time frame of finances, making it easier for the government to allocate more resources toward the advancement of society. Any society that has disagreements can resolve them through the legal system, and anyone who has been harmed can seek justice through it.

Every legal system in existence makes every effort to implement the law whenever something goes wrong in that society since there needs to be a solution for nearly every problem to prevent anyone from enforcing the law on their own. The court is overworked due to the volume of cases that are pending, which eventually causes dissatisfaction in society with the justice delivery system and calls into doubt its ability to administer justice[4]. It is critical that this unhappiness be resolved, and that a substitute system be approved that is equally adaptable, rational, and binding on those who accept it, without sacrificing any of its complexity.

REASONS FOR CONSIDERING ADR AS AN HOURLY REQUIREMENT

There is a growing tendency that alternative dispute resolution (ADR) is gaining popularity due to its less time-consuming, more effective, and efficient mechanism compared to traditional or formal redressal mechanisms. There are several reasons why individuals are choosing alternative dispute resolution (ADR) over traditional court proceedings. Firstly, mediation is typically more affordable, according to mediators. Compared to suing someone, it can be a lot less expensive. However, this isn’t always the case. For example, if mediation results in a settlement, people may believe that it is less expensive than a full court hearing; however, if mediation fails, people may believe that it is a complete waste of money[5]. The best part is that, unlike traditional courts, most mediators won’t lower their fees, which could make alternative dispute resolution (ADR) an inappropriate means of resolving disputes. However, there may be specific legal provisions that allow for fee reductions or, in certain cases, full fee waivers for those who cannot afford the court fees.[6]

Second, compared to the conventional court system, many ADR forms are faster. A person may benefit more from the mediation process if he has a minor claim; yet, if there is a pressing issue—such as an injunction—he may benefit more from going through the regular court system. Third, because it pits one party against the other and determines a winner and a loser at the end of the day, it is not adversarial in the sense that a court hearing may make a bad situation worse. However, by employing the alternative dispute resolution (ADR) process, which entails both sides speaking with one another and reaching a consensus, it enables both parties to express their points of view and ultimately come to an understanding.[7]

Fourth, as opposed to courts, alternative dispute resolution (ADR) offers more avenues for pursuing justice. If all that is being sought is an apology, a change in the organization’s policies, a modification in the regulations, or any kind of explanation that indicates the person is getting what he wants—which might not be evident in a traditional court settlement—then arbitration or mediation are a good fit. Fifth, compared to going to court, alternative dispute resolution (ADR) offers greater flexibility. ADR is the greatest method for a person who prefers to resolve disputes over the phone, in writing, by mail, or in person. The government has developed numerous ombudsmen systems, as of right now, to look into complaints through letters and documentation rather of holding a formal hearing. To reach a mutually agreeable resolution, arbitrators typically bring the disputing parties together for a one-on-one conversation.[8] Sixth, Alternative Dispute Resolution (ADR) offers a mutually agreeable solution since arbitrators or mediators always urge parties to a dispute to have a dialogue and allow them plenty of opportunities to resolve their disagreements. Rather of settling the conflict with an unworkable compromise, they will attempt to reach a mutually agreeable solution that will last for a long time.

THE HISTORICAL OVERVIEW OF ADR THEORY IN INDIAN PERSPECTIVE

The idea of ADR is not a recent one; rather, it is a movement that dates back thousands of years. We can observe how ADR has evolved in India over time.

ADR in Ancient India:

The concept of monarchy was evident in ancient times when laws and regulations were created and implemented within communities. Traditionally, Kulas, who included Parishads, Nyaya Panchayats, and Srenis, acted as a middleman between the king and the government to arbitrate conflicts.[9] A chain of appeal ran from Kula to the King. The authority, represented by the Kula, an assembly of elders, is seen at the bottom. Its primary function was to investigate civil cases, including minor criminal ones. Sreni was the head of a group of individuals in the same profession, and they were tasked with resolving conflicts at the request of either party. The Parishad was a group of educated individuals with legal understanding. Laws were mostly based on religion at the time, which is why the idea of just justice with a moral conscience dates back to ancient times. Even after independence, Nyaya Panchayats continue to be very important. It is a constitutional body that villages employ to settle certain disputes. In conclusion, the King possessed the highest authority to settle conflicts and ensured that other officials were held accountable.

ADR after Independence:

Although these ADR techniques are not particularly new, they were already in use in various capacities before the British rulers introduced the current justice delivery system. India’s renowned panhayati raj (people’s rule) system was the result of a variety of arbitration authorities, particularly in rural areas. The court of people, or LokAdalalat, established under the panchayatiraj was therefore thought to be quite effective and utilized to carry out its duties in a highly flexible manner. Mr. P.N. Bhagwati, a former Chief Justice of the Supreme Court of India, led a committee that the government established in 1980. The Legislative Assembly passed the Legal Services Authorities Act, 1987 in compliance with Article 39A of the Indian Constitution following the Committee’s recommendations. The genuine essence of Lok Adalats’ utility for the prompt resolution of disputes was flexibly implemented by the Legal Services Authorities Act 1987. One benefit of this system is that it guarantees prompt justice, which was previously viewed as unfair. As a result, prompt justice is now recognized as a fundamental right.[10] Even though this conventional method of conflict resolution received attention from international authorities. The idea of ADR is also evident outside of India, in China, England, the United States of America, etc.

Since the Trade Dispute Act of 1929 went into effect, alternative dispute resolution has been progressively more popular in India. This Act of 1929 was designed to establish a conciliation mechanism to resolve disputes in the industrial sector using the Inquiry courts and the Board of Conciliation. But, to lessen the frequency of strikes and lockouts, some restrictions have been put in place. Rule 81A of the Defence of India Rules changed this. It now allows the central government to resolve disputes through voluntary mediation or mandatory adjudication, enforce decrees, and grant awards. This regulation was introduced with the Industrial Disputes Act of 1947.

The Arbitration & Conciliation Act of 1996 was enacted by the Parliament to make arbitration more appealing and flexible. It stipulates that an award may only be opposed on specific grounds and in a reasonable manner as may be prescribed. Ultimately, the Act created a statutory framework for the prompt resolution of disputes. However, this statute only addresses civil matters; no other relevant laws cover ADR in its entirety in India. As a result, it is necessary to rectify the current situation, as ADR is now becoming a movement in that country.

IN INDIA, THERE EXIST LEGAL PROVISIONS ABOUT ADR:

  1. In Civil Procedure Code (CPC), 1908

Section 89 and Order 10 Rules 1-A, 1-C, which specify:

The Code of Civil Procedure (Amendment) Act of 1999 introduced procedures for the settlement of disputes.

This code’s Section 89 addresses resolving conflicts out of court. It is based on suggestions by the Malimath Committee, in particular, and the Indian Law Commission. The Law Commission of India suggested that the court could order any party involved in the action or procedure to appear in person to mediate a peaceful resolution of their disagreement and try to find a flexible solution. The Malimath Committee states that the court must send problems for settlement through alternative dispute resolution (ADR) if issues have been raised.

  1. The Indian Arbitration Act, 1899

On July 1st, 1899, the first India Arbitration Act was passed which, at the time, was limited to the presidency towns of Calcutta, Bombay, and Madras and was primarily based on the British Arbitration Act of 1899.[11] The Act’s requirement that the arbitrators’ names appear in the contract and that they may also serve as setting judges, as established in Nusserwanjee and Ors. v. Meermynooden Khan Wuleed Meer Sudrooden Khan Bahador[12], was an unmatched feature. It was decided in the Gojendra Singh v. Burg case that the arbitration award is only a kind of agreement between the parties. The honorable high court stated in Binkurrai Lakshami Prasad v. Gaswant Rai Prasad that the Act of 1899 was extremely intricate, and heavy, and demanded certain urgent reforms.

  1. The Arbitration Act, 1940

During the colonial era, on March 14, 1940, a more precise and rational Arbitration Act was passed; it became effective on July 1, 1940, and was dubbed the Arbitration Act of 1940. The entire country of India, including Pakistan, was covered by this one act. While the Act contemplates that an application for an award may be made under section 30 and that an application for the award is nullity under section 33, it also suggests that it is not lawfully set aside. Furthermore, it was noted that the act itself failed to acknowledge that arbitration would not succeed if an arbitration agreement was weak or non-existent. The Act of 1940 did not apply to falling contained in a private or individual contract and the guidelines for rewards differed throughout High Courts.[13] The failure of the clause prohibiting an arbitrator from leaving the process at any point because it caused the parties to suffer significant losses, particularly in cases where the arbitrator acted dishonestly. Another significant issue with the Act of 1940 was that, in the event that an arbitrator chosen by the court passed away during the arbitration process, there were no alternative provisions in the act for the appointment of a replacement arbitrator.

  1. Arbitration and Conciliation Act, 1996

The UNCITRAL Conciliation Rules of 1980 and the UNCITRAL Model Law on International Commercial Arbitration of 1985 served as the foundation for the Act of 1996.[14] In light of the irregularities in arbitration law, national procedures, and particularly the necessity of international business practices, the UN General Assembly has advised all states to give careful consideration to that Model Law. In cases where a dispute emerges in the context of international commercial relations and the parties attempt to settle it amicably by using conciliation and arbitration, it is also recommended that the aforementioned rules and regulations be followed. The creation of a comprehensive legal framework that enables the prompt, flexible, equitable, and successful resolution of disputes arising in international business contacts is made possible in large part by these regulations.

Based on the Arbitration Act of 1996, the Law Commission of India prepared a report that recommended several changes. The 2003 Arbitration and Conciliation (Amendment) Bill was introduced in the Parliament based on the commission’s recommendations. However, the Standing Committee on Law Ministry believes that several of the Bill’s provisions allow for significant court intervention. The primary objective of the 1996 Arbitration and Conciliation Act is domestic arbitration. The Act was revised in 2015, and in 2019 it underwent additional changes.

The Government of India introduced the Arbitration and Conciliation (Amendment) Bill, 2015 in the Parliament to amend the Act of 1996, making India a focal point for international commercial arbitration and involving arbitration as a suitable mode of dispute settlement for disputes on commerce.[15] The primary aim of the amendment is to establish a distinct distinction between local and international business arbitration within the framework of the court’s definition. Concerning domestic arbitration, the notion of “court” is essentially the same as it was in the 1996 Act. However, the term “court” only refers to the High Court of a particular competent state in relation to international commercial arbitration.[16]

The parties can therefore demand an efficient and prompt resolution of any disagreement directly from the High Court, which is better equipped to handle circumstances and conflicts in the context of business disputes, as the District Courts would no longer have any legal authority.

ACCEPTANCE OF ADR AS AN ADAPTIVE MECHANISM:

The Indian system has to make greater use of alternative dispute resolution (ADR) since it helps to pinpoint the real problems in a dispute without escalating it and because it can resolve some or all of the issues that are found. Through the ADR process, the parties can agree on the contentious points. Through peaceful dispute resolution, all needs and interests of both parties are satisfied.[17] Parties may occasionally be unable to determine the underlying reason of a dispute during a court hearing, but the arbitration or conciliation process gives both parties plenty of chances to comprehend one another’s needs and interests.[18] The relationship between the parties may always suffer during a court proceeding, but the alternative dispute resolution (ADR) system offers the chance to maintain the relationship and, by resolving both parties’ concerns, may even improve it.[19]

Even our Indian judicial system recognizes mediation as a productive technique to resolve disputes, and the Ayodhya Temple-Masjid dispute is one of the most well-known examples of how the ADR mechanism has been employed on several occasions in India as well. A three-member panel made up of Sri Sri Ravishankar, Sri Ram Panchu, and Kullijudullah was initially tasked with resolving the protracted Ram Janambhoomi-Babri Masjid issue. This case has been pending in the Supreme Court for a very long time. It is impossible to change history, but at the time, this issue touched the hearts of nearly every citizen of the nation, piquing the general public’s curiosity.

The esteemed Apex Court acknowledged the necessity of resolving the matter through nonviolent means initially, as a final attempt at mediation ought to be made to settle this disagreement. Because mediation allows both parties to concentrate on their needs and interests, it allows them to reach a decision that benefits them both. Any public concern issue can be resolved through mediation, which gives all parties the chance to learn about one another’s concerns, reach a win-win solution, and allow both sides to leave the disagreement with their heads held high.

The mediation process is a professional alternative to litigation, and by selecting it, the Supreme Court has ideally offered the parties an opportunity to reach a mutually acceptable agreement without continuing to argue over the issue. The Supreme Court has offered optimism that the processes of mediation and arbitration can be used in serious matters as well by choosing alternative dispute resolution in such a grave situation. The court feels that ADR can now be practical as a suitable conflict redressal tool.

So, the use of ADR allows both parties to create their process, and the arbitrator or the mediator can be selected based on substantive knowledge. The parties can maintain confidentiality in the proceedings which may compel proper behaviour from both the parties and it will also minimize the bad faith against each other.[20]

CONCLUSION

Therefore, the government must emphasize mechanisms like arbitration, mediation, and conciliation to effectively implement alternative dispute resolution. Even though it has been utilized by individuals on several occasions in the past, it must be used to its full potential. This approach was developed to attempt and address the majority of difficulties, including potential challenges related to societal evolution within the purview of alternative dispute resolution (ADR), and lessen the load on our legal system. It serves as a substitute that demonstrates the parties’ autonomy in selecting this course of action and accepting it in place of litigation at their discretion. For this mechanism to be successful, the government must create laws that support it in a way that is both cost-effective and beneficial. Even now, a lot of people struggle with the high expense of hiring an arbitrator or mediator because, while pro bono mediation is highly elusive, free litigation is available. This unhappiness must be resolved, and concurrently, an alternative mechanism that is equally flexible, acceptable, and binding on those who adopt it while possessing no fewer complexities must be accepted.

Therefore, it can be concluded that the current alternative conflict resolution process is ineffective because it may not always be able to resolve disputes amicably, in which case the government may need to enact relevant legislation.

Reference(s):

[1] Joseph Jasime, “Alternate to Alternatives: A Critical review of claims of ADR” at http://www.nujs.edu/ accessed on 19th Jan 24.

[2] Shaeyup Ahmad, “Evolution of ADR in India- Law and Practices” accessed on 25th Jan 24.

[3] Arvind Agarwal, Knowing Alternate Dispute Resolution available at. https://www.russianlawjournal.org accessed on 22th Jan 24.

[4] Shaeyd Ahmad Shah, “Evolution of ADR in India- Law and Practices” accessed on 22nd Jan 24.

[5] Dispute Resolution Reference Guide, DEP’T OF JUST. OF CAN., http://www.justice.gc.ca/eng/rp-pr/csjsjc/dprssprd/res/drrg-mrrc/03.html accessed on 19th Jan 24.

[6]  See Alternative Dispute Resolution, LEGAL INFO. INST.,

https://www.law.cornell.edu/wex/alternative_dispute_resolution (“Alternative Dispute Resolution (“ADR”) refers to any means of settling disputes outside of the courtroom… [including] early neutral evaluation, negotiation, conciliation, mediation, and arbitration.”) accessed on 25th Jan 24.

[7] See, e.g., Anne Laure Bandle, Alternative Dispute Resolution and Art-Law – A New Research Project of the Geneva Art-Law Centre, 6 J. INT’L COMMERCIAL L. & TECH. 28, 28-41 (2011)

[8] Kimberly Hicks, Parallel Litigation in Foreign and Federal Courts: Is Forum Non Convenience the Answer?, 28

REV. LITIG. 659, 660 (2009)

[9] Jasime Joseph, “Alternate to Alternatives: A Critical review of claims of ADR” available at http://www.nujs.edu/ accessed on 25th Jan 24.

[10] Shaeyup Ahmad Shah, “Evolution of ADR in India- Law and Practices” accessed on  26th Jan 24.

[11] Jasime Joseph, “Alternate to Alternatives: A Critical review of claims of ADR” available at http://www.nujs.edu/ accessed on 26th Jan 24.

[12] https://supremetoday.ai/doc/judgement/00100045440

[13] Jasime Joseph, “Alternate to Alternatives: A Critical review of claims of ADR” available at http://www.nujs.edu/. accessed on 26th Jan 24.

[14] Marc Jonas Block, “The Benefit of ADR for International Commerce and IP Disputes, Rutgers Law Record, Vol. 44, 2016-17 accessed on 26th Jan 24.

[15] Marc Jonas Block, “The Benefit of ADR for International Commerce and IP Disputes, Rutgers Law Record, Vol. 44, 2016-17 accessed on 28th Jan 24.

[16] Marc Jonas Block, “The Benefit of ADR for International Commerce and IP Disputes, Rutgers Law Record, Vol. 44, 2016-17 accessed on 28th Jan 24.

[17] Arbitration Services, PERMANENT COURT OF ARBITRATION, https://pcacpa.org/en/services/arbitration-services/ accessed on 29th Jan 24.

[18] What is ADR? supra, note 7; see also Edna Sussman and John Wilkinson, Benefits Of Arbitration For Commercial Disputes, DISP. RESOL. MAG., accessed on 28th Jan 24.,

[19] SARVESH CHANDRA, ADR: Is Conciliation The Best Choice, in Rao, supra note 6, at 83.

[20] Jethro K. Lieberman & James F. Henry, Lessons from the Alternative Dispute Resolution Movement, 53 U Chi L Rev 424, 425-426 (1986).

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