ADR

ALTERNATIVE DISPUTE RESOLUTION METHODS

WHAT IS ADR

  • Alternative Dispute Resolution, also known as ADR, is a method to resolve dispute that has arisen between two or more parties, outside the court.

  • A ‘dispute’ arises when two or more people do not agree on the same thing. This is a situation where parties are pointing fingers at each other and blaming the other for a wrong or loss that might have occurred.

  • Parties deal with the dispute without approaching the court. The discussion and settlement of the dispute happens outside the court. The process is much different than a usual court hearing, and it differs based on the type of ADR a party decides to adopt. 

  • Alternative Dispute Resolution Mechanisms today are well-accepted mode of settling commercial disputes both national and international. Alternative Dispute Resolution are the methods adopted by the parties to resolve their disputes in an informal manner by settlement or negotiation with the assistance of a third neutral party thereby reaching a solution. 

Why should you opt for ADR over Courts

Party Autonomy

People can freely choose the type of ADR method that they wish to opt for and resolve their disputes.

Speedier Justice

Unlike court proceedings, ADR method of resolving disputes will result in a speedy delivery of justice. This helps in protecting parties from running after a case for years.

Cost-Effective

ADR is technique that is party-friendly not just in terms of its procedure but also the expenses involved. A party is likely to incur more costs in litigation as court proceedings involve paying lawyers, filing of documents, and various other costs. However, ADR mechanisms are relatively cheaper.

In ADR methods, there is minimal court interference as well as the strict rules of evidence and procedures followed in the court proceedings are not adopted in ADR methods. 

Less Court Interference

The adoption of alternative dispute resolution methods has shown significant growth in the international trade field in recent years. The development and deployment of ADR methods has been catalyzed by various factors such as expansion of international trade and commerce, role of non-state actors in resolving disputes and most importantly failure of traditional justice system to provide summary and effective remedies. Nations across the globe have extended their support and on numerous occasions resorted to ADR methods as effective means of resolving international commercial disputes.

 

Various institutions such as International Academy of Mediators, Centre for Effective Dispute Resolution (CEDR), International Chamber of Commerce (ICC), International Mediation Institute, International Institute for Conflict Prevention and Resolution (CPR Institute), International Center for Dispute Resolution, World Intellectual Property Organization (WIPO) etc. have been set-up that provide professional aid in resolving disputes between the international parties and states.

  • ADR IN INDIA

Aligning with a strong opinion among the experts of the field about the positive impact of ADR on international commerce and vision of leaders of the nation, India, too, felt the necessity of establishing ADR institutions and thus set up International Centre for Alternative Dispute Resolution for the purpose of providing new forum and procedure for resolving international and domestic commercial disputes quickly.

 

The Code of Civil Procedure, 1908 was amended to insert Section 89 which provides for parties to refer and settle the disputes, subject to law providing it, through alternative dispute resolution methods.

 

Lok Adalats, Regional Centers of ICADR, legal professionals, Arbitration and Conciliation Act, 1996 and inclusion of ADR clauses in contracts by the parties are instances of recognition and growth of ADR methods in India. The first Schedule, Order XXXII A, Rule 3 of CPC casts duty upon the courts to assist the parties in the first instance, in arriving at a settlement in respect of the subject matter of the suit.

Recognition of ADR 

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01

ARBITRATION

What is Arbitration?

  • Arbitration is a method of dispute resolution where parties choose an arbitrator to resolve their dispute.

  • An ‘arbitrator’ is a third party who is appointed by the parties to act as a judge during the dispute hearing.

    • There can be more than just one arbitrator. Generally there are one or three arbitrators constituting arbitral tribunal 

    • An arbitrator can be directly chosen by the parties or the parties can approach institutions who will assist them in choosing an arbitrator for their dispute hearing.

  • This process takes place outside the court but it is a semi-formal structure of dispute resolution.

    • Semi-formal means while parties have the right to choose the arbitrator, the award which is passed at the end by the arbitrator is binding. ‘Binding’ here means that decision of the arbitrator which parties cannot deny to adhere to or follow it as per their terms and conditions.

  • An “award”, also called arbitral award, is the final decision of the arbitrator and is similar to a judgement which is passed by a court. The award is delivered after the arbitrator has heard both the sides and then decides in whose favour it must rule.

  • When parties choose an arbitrator and law that will govern the arbitration proceedings, they agree to be bound by it. Arbitration proceedings means the entire process involved in conducting the arbitration, starting from the filing of claims by the parties till the delivery of the award by the arbitrator.

    • Example: If parties have agreed that Arbitration and Conciliation Act, 1996 will apply to the proceedings, and if this Act requires parties to appoint three arbitrators, then the parties will have to appoint three arbitrators for their hearing. Everything that this Act requires will have to be followed by the parties because they have agreed to its application.

Important Elements of Arbitration

  • Arbitration can be either voluntary or mandatory. Mandatory Arbitration can only come from statute or from a contract that is voluntarily entered into, where the parties agree to hold all existing or future disputes to arbitration, without necessarily knowing, specifically, what disputes will ever occur.

  • Arbitral proceedings and an arbitral award are generally non-public, and can be made confidential.

  • A decision is legally binding for both sides and enforceable.

    • {Enforceable means capable of being enforced. A right or obligation is enforceable if a party obligated to an act can be forced or ordered to comply with the legal process. In other words, enforceable is an action which can be made effective.}

  • There are very limited avenues for appeal of an arbitral award.

    • An appeal means a challenge to the award that has been passed by the arbitrator. A challenge will take place by the party who is not satisfied with the decision of the arbitrator and believes that the decision is unfair, unjust, or not free from bias.

    • Possible situations where a challenge can be made is if an arbitrator has applied the law incorrectly, if an arbitrator has unfairly favoured a party due to personal relations, and so on.

  • When the subject matter of the dispute is highly technical, arbitrators with an appropriate degree of expertise can be appointed as one cannot choose to judge in litigation.

Example of Arbitration

Two research companies agree to take their dispute to arbitration. They have agreed to do so because the hearing will include disclosure of sensitive information that they do not wish to be out in the public.

 

02

MEDIATION

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What Is Mediation?

  • Mediation is an informal technique for settlement of disputes between the parties to a dispute.

    • The parties choose a third neutral party called the ‘Mediator’.

  • ​​Mediation is a party driven process, where the mediator only acts as a facilitator in helping the parties to reach a negotiated settlement of their dispute.

    • A party has a right to walk out of the mediation process if they are not satisfied or uncomfortable during the mediation process.

    • The Mediator has no power to dictate his decision over the party.

    • Hence, the decision of the Mediator is not final and binding on the parties.

  • This is a cost effective and fast process.

    • Mediation is thus an informal arrangement where parties with a dispute can come together to come to common consensus on resolving that dispute.

Important Elements of Mediation

  • It is an agreement which is that of the parties themselves.

  • The relationship between the parties is preserved.

  • The confidentiality is maintained.

  • The dispute is quickly resolved without great stress and expenditure.

  • The decision of the Mediator is not final and binding.

Structure

  • Generally, it is the parties who choose a Mediator.

  • If the parties cannot choose one, there are institutions and forums who assist the parties in choosing a Mediator. This has been discussed in another module.

  • The Mediator isn’t always an expert in the subject matter of the dispute.

  • People are usually preferring trained mediators these days who have a license to practice the same.

Example of Mediation

The Village Panchayats and the Nyaya Panchayats are good examples for mediation.

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03

NEGOTIATION

 

What is Negotiation?

  • Negotiation is a different technique of dispute resolution where parties themselves control the process and the solution.

  • Negotiation does not involve a third party for facilitating the conversation between the parties like in a Mediation nor does it require a third party arbitrator to take a binding decision like in an Arbitration.

 

Important Elements of Negotiation

  • It is a communication process.

  • It resolves conflicts.

  • It is a voluntary exercise.

  • It is a non-binding process.

  • Parties retain control over outcome and procedure.

  • There is a possibility of achieving wide ranging solutions, and of maximizing joint gains

 

Structure

  • Negotiation is self counseling between the parties to resolve their dispute.

  • Negotiation is a process that has no fixed rules but follows a predictable pattern.

04

CONCILIATION

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What is Conciliation?

  • Conciliation is a process in which a neutral person meets with the parties to a dispute which might be resolved.

  • This is a relatively unstructured method of dispute resolution in which a third party facilitates communication between parties in an attempt to help them settle their differences.

  • Mediation is the process of resolving issues between parties where a third party assists them in resolving disputes, while in conciliation method in which an expert is appointed to settle disputes between the parties.

 

Important Elements of Conciliation

  • It is an unstructured method of dispute resolution.

  • Role of the Conciliator or the third party is to bring the parties to a common consensus (frame of mind) before the process begins for resolving the dispute.

 

Structure

  • A third party known as ‘Conciliator’ is designated by the litigants (which means either a Court or Tribunal), to reconcile the parties either before they resort to litigation (whether to court or arbitration), or after.

05

LOK ADALAT

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What is Lok Adalat?

  • The concept that is gaining popularity is that of Lok Adalats or people’s courts as established by the government to settle disputes through conciliation and compromise.

  • It is a judicial institution and a dispute settlement agency developed by the people themselves for social justice based on settlement or compromise reached through systematic negotiations.

Important Elements of Lok Adalat

  • The main condition of the Lok Adalat is that both parties in dispute have to be agreeable to a settlement.

  • The decision of the Lok Adalat is binding on the parties to the dispute and its order is capable of execution through legal process.

  • No appeal lies against the order of finality attached to such a determination is sometimes a retarding factor for however be passed by Lok Adalat, only after obtaining the assent of all the parties to dispute.

  • In certain situations, permanent Lok Adalat can pass an award on merits, even without the consent of parties. Such an award is final and binding. From that, no appeal is possible

 

Structure

  • The Lok Adalat is presided over by a sitting or retired judicial officer as the chairman, with two other members, usually a lawyer and a social worker.

  • There is no court fee, thus making it available to those who are the financially vulnerable section of society.

    • In case the fee is already paid, the same is refunded if the dispute is settled at the Lok Adalat.

  • The Lok Adalat are not as strictly bound by rules of procedure like ordinary courts and thus the process is more easily understood even by the uneducated or less educated.

  • The parties to a dispute can interact directly with the presiding officer, which is not possible in the case of normal court proceedings.

06

JUDICIAL SETTLEMENT

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What is Judicial Settlement?

  • In a Judicial Settlement, the concerned Judge tries to settle the dispute between the parties amicably.

Important Elements of Judicial Settlement

  • Judges seek to facilitate settlement in a prompt, efficient, and fair manner.

  • Judges establish ground rules at the onset, either orally or in writing, informing parties and their attorneys of the procedures that will be followed.

  • The rules include ground rules governing issues such as confidentiality, disclosure of facts and positions during and after conferences, and ex parte communications.

 

Structure

  • It is usually provided in the statutes of the place such as the procedure and mechanism of carrying out judicial settlement.