“Litigation has not kept up with modern, fast-moving society… there have been revolutionary changes in the business practices since the basic court structure was adopted from English Common Law… Compared to modern business, Civil Courts have changed very little… Alternative dispute resolution(ADR) allows the lawyers to use new processes, encourages problem-solving attitude and an openness to compromise” – Robert Coulson
Table of Contents
The Alternate Dispute Resolution (ADR) Mechanism facilitates the settlement of dispute outside the court. It helps the parties to resolve their disputes without the intervention of any judicial institution. It is a process of resolving disputes amicably between two parties with the help of a third person. Under this mechanism, the third person helps the parties to resolve their dispute by communicating their issues to each other and discusses the differences between them.
It is a process of dispute resolution by working together with cooperation to reach the best resolution for everyone. This mechanism helps to resolve all types of matter like matrimonial, commercial, civil or industrial etc.
Importance of ADR
As the volume of litigation increased dramatically, the over-burdening of cases are the motivating factors behind the development of ADR Mechanism. This is an alternative remedy for dispute resolution which is opposite to the conventional judicial system. It provides help to the judicial institutions in reducing the burden of cases. It also provides various other forms like mediation, negotiation, lok adalats, conciliation. Its motive is to provide socio-economic justice and strive to provide justice to the parties.
Objectives of ADR
The main aim of the ADR Mechanism is the speedy administration of justice. This system provides cheap and efficient techniques for resolution of disputes. The Supreme Court of India in M/s Guru Nanak Foundation vs M/s Rattan Singh & Sonshas emphasized the need for ADR system and observed that –
“Interminable, time consuming, complex and expensive Court procedures impelled jurists to search for an alternative forum, less formal, more effective and speedy for resolution of disputes avoiding procedural claptrap and this led them to Arbitration Act, 1940 (Act for short). However, the way in which the proceedings under the Act are conducted and without an exception challenged in Courts has made lawyers laugh and legal philosophers weep. Experience shows and law reports bear ample testimony that the proceedings under the Act have become highly technical accompanied by unending prolixity, at every stage providing a legal trap to the unwary. Informal forum chosen by the parties for expeditious disposal of their disputes has by the decisions of the Courts been clothed with ‘legalese’ of unforeseeable complexity”
Types of ADR
It is a procedure in which parties enter into a contract to resolve their issue or dispute with the help of an arbitrator who makes a binding decision. The Arbitration and Conciliation Act, 1996 is the Central Act governing arbitration in India. This Act is divided into 4 parts –
Part-1 – Sections 2 to 43 – This part tells out types of arbitration ( Domestic and International and Commercial arbitration ).
Part -2- Sections 44 to 60 – This part provides provision related to enforcement of Foreign Awards.
Part -3 Sections 61 to 81 – This part provides provisions related to Conciliation.
Part -4 Sections 82 to 86 – This part sets out some supplementary provisions.
Advantages or Pros of arbitration
- Flexibility– Arbitration proceedings are flexible in nature and involve less cost as compared to litigation expenses.
- Time-Consuming-Arbitration proceedings save the time of both parties as compared to litigation.
- Confidentiality– The disputes under the scheme of arbitration are resolved privately.
- Arbitrator– The parties have the freedom to choose an arbitrator to handle their dispute or to resolve their dispute.
- Enforceability of awards – The enforceability of Arbitration awards are generally easier.
Disadvantages of arbitration
- If arbitration is obligatory as per the contract between the parties, then their right to approach the court is automatically waived.
- There is very limited scope for appeals.
- Arbitration does not allow for the grant of interlocutory applications.
- Arbitration awards are not directly enforceable, they are subjected to judicial sanction.
It is a process in which a mediator is appointed to assist the parties to reach a mutually satisfactory solution and settlement of the dispute. A mediator does not act as a judge but acts as a neutral party between the parties. Mediator tries to settle the dispute and communicate the same to the parties.
Advantages or pros of mediation
- Parties have complete control over the settlement.
- The amount of stress is less as compared to litigation and arbitration.
- The relationship between the parties isn’t overly damaged.
- Mediation proceedings are confidential and held privately.
- The dispute resolution process is quick.
Disadvantages of mediation
- Since the decision is at the discretion of the parties, there is the possibility that a dispute between the parties may not settle.
- It lacks the involvement of any judicial authority in its conduct.
- The mediation process is not regulated by any established procedure. They are informal proceedings held outside the court.
- The truth of an issue may not be revealed by the parties.
It is one of the methods of ADR where the conciliator meets with parties in private sessions and tries to communicate between the parties. Conciliator used to use various techniques like counselling, encouraging to talk and tries to resolve differences between parties.
It is a model of courts. In simple words, it means people’s court. It is a forum where a conciliator or neutral party with voluntary efforts brings the parties to a settlement. The provisions related to lok adalats are provided in the Legal Services Authorities Act, 1986. Here, the parties are presented before a judge who gives an award which is binding upon the parties. Lok Adalat has an active and important role in the administration of justice. It supplements the efforts and work of the courts. Area of contribution chosen for the purpose, especially concerns and helps the common man, the poor, backward and the needy-most sections of the society.
It is a mechanism in which dispute is resolved by appointing a neutral party called as a negotiator who uses different techniques to resolve the dispute of parties. The primary aim of this type of dispute resolution is to bring the parties to an agreement which is fair, just and reasonable.
Advantages of Negotiation
- Flexibility: This form of ADR is flexible in nature because it is an informal process.
- Negotiation provides quick resolutions to the disputes of parties.
- It facilitates maintaining a healthy relationship between the disputing parties.
- It takes place privately between the parties.
Disadvantages of Negotiation
- This process is based on the discretion of Parties so there might be a situation that parties will not enter into a settlement.
- Lack of legal protection.
- Imbalance of power between the parties is possible in negotiation.
Advantages of ADR
- The parties have full freedom to choose their own arbitrator, mediator or conciliator. It means that parties are free to choose the neutral person who can assist the parties to resolve their dispute.
- The ADR process involves less cost because there is no need to hire counsel or witness and the process is faster than litigation and also avoids litigation costs.
- The results of ADR are kept confidential if parties wish to.
- Under the scheme of ADR, parties have a chance of preserving their social relationship.
- Under this mechanism, the parties are more participative because they have the power to come to the settlement and it is flexible.
- Parties can create their own process, or can prepare their own agreement.
- This mechanism allows for risk management.
Disadvantages of ADR
- Sometimes parties may not come to the solution. Which means that sometimes the ADR Mechanism may fail.
- The arbitrators, mediators, conciliators are not allowed to make authoritative injunctive orders.
- An arbitration clause in a contract is usually binding and courts will not waive it unless both parties request litigation.
- It is not a suitable mechanism when a suit is decided on the basis of precedent.
- When there is an imbalance of power between parties then the ADR mechanism will fail.
Difference between Arbitration, Mediation, Conciliation, Negotiation
|Adjudicator is the neutral third party||Facilitator is the neutral third party||Facilitator, Evaluator, Conciliator is the neutral third party||Facilitator is the neutral third party|
|Arbitration proceedings are legally Binding||Mediation proceedings are not legally binding||Conciliation proceedings are not legally binding||Negotiation proceedings are not legally binding|
|Formal System||Informal System||Informal System||Informal System|
|Confidentiality as determined by law||Confidentiality is based on trust||Confidentiality as determined by law||Confidentiality is based on trust|
ADR mechanisms have gained a lot of popularity due to many advantages like efficiency, cost and time-saving. Nowadays, ADR is the choice for the solution for all types of disputes. Most of the parties always opt for ADR Mechanisms due to its advantages. A plethora of cases is pending in courts which reflects the disability of the judicial system. ADR mechanism helps the courts by reducing their burden or workload and involves speedy administration of justice.
Role of Lok Adalats, available at: http://www.allahabadhighcourt.in/event/roleoflokadalats.html (last visited on January 27, 2021)
 AIR 1981 SC 2076.
BY VAISHALI | SHARDA UNIVERSITY