This article is written by Gunjan Madaan, KR Mangalam University, BALLB (H) during her internship at Le Droit India
Abstract-
Alternate dispute resolution refers to a mechanism or legal processes which is used to solve the dispute outside the traditional courts litigation. It helps to solve the case by amicable settlement. Alternate Dispute Resolution methods provide cost-effective, time efficient, and flexible solutions for resolving conflicts while maintaining confidentiality and fostering corporative relationships. Alternate Dispute Resolution is an out-of-court settlement mechanism. Alternate dispute resolution helps to reduce the backlogs of the courts, ensures speedy dispensation of justice, and speedy justice, and maintained harmony in society. Over the time, these mechanisms have gained popularity and recognition in the wake of India’s robust push towards efficient and alternative methods of dispute settlement that supplement the formal judicial system. It is widely acknowledged that the current legal system is prohibitively expensive and time-consuming. The parties to dispute have to wait for many years for justice. This lengthy and expensive process of litigation had reduced the faith of common people in the judicial system. These weaknesses of the judicial system have given rise to alternate remedies for the disposition of disputes i.e., Alternate Dispute Resolution.
Keywords-
- Alternate Dispute Resolution
- Dispute Settlement
- Out of court settlement
- Speedy justice
- Cost-effective
Introduction-
The desire for timely and affordable justice is universal. Early dispute resolution saves time and money for parties involved, promotes contracts enforcement, and eases business operations. The collective term used to describe methods of settling disputes other than litigation is known as Alternate dispute resolution. Alternate Dispute Resolution provides the forum where disputes are resolved much more amicably than the traditional court litigation. They are more collaborative, faster, cheaper and under great control by the parties involved. ADR techniques have been developed to reduce court workload, systematize the process of litigation, and assist disputing parties in resolving their cases in the most productive, practical, and tailored manner for themselves. The principle behind ADR is party independence, which means that the parties have the right to choose the manner and processes for resolving their conflict. The traditional mode of dispute resolution i.e., litigation is a lengthy process leading to unnecessary delays in the dispensation of justice as well as over- burdening the judiciary.
History-
ADR’s origins in India can be traced back to ancient times, when village councils, also known as Panchayats, resolved disputes among community members. In India, the most popular modes of Alternate Dispute Resolution is arbitration which is conducted as per the provisions of the “ARBITRATION AND CONCILIATION ACT, 1996”.
The first formal statute relating to the subject of arbitration in India was the Indian Arbitration Act, 1899, applicable only to the presidency towns i.e., MADRAS, CALCUTTA, AND BOMBAY. Subsequently, after the Code of Civil Procedure, 1908, came into force and the second Schedule of the said code provided for the recourse to arbitration. Subsequently above laws laid down the comprehensive legislation relating to arbitration i.e., Arbitration Act,1940. The formal process of Alternate Dispute Resolution started with the Arbitration Act,1940, which regulated arbitration proceedings in India before the Arbitration and Conciliation Act of 1996.
On June 21, 1985, the United Nations Commission on International Trade Law (UNCITRAL) adopted the Model Law on International Commercial Arbitration, which included 36 articles. The model law aims to provide uniformity in arbitration-related statues implemented by participating countries. The UNCITRAL model legislation encourages countries to use it when establishing domestic arbitration laws to ensure consistency across jurisdictions.
Enactment of the Arbitration and Conciliation Act,1960-
After 1991, India’s economy underwent globalization and liberalization, creating an environment for foreign investment. Domestic regulations needed to be updated in accordance with international standards. The Arbitration and Conciliation Act of 1996 was adopted by the Indian Parliament to align with the UNCITRAL Model Law on International Commercial Arbitration from 1985.
The Arbitration and Conciliation Act took effect from August 22, 1996.
The Key objectives of Arbitration and Conciliation Act,1996 were-
- Reducing court intervention
- Reduce the burden of courts
- Amicable, swift and cost- effective settlements of disputes
- Providing for the speedy disposal of disputes
- Facilitating the arbitrator to resort to mediation, conciliation, etc.
Arbitration and Conciliation Act was divided into four parts. That were-
Part I- Arbitration
Part II- Enforcement of certain foreign Awards
Part III- Conciliation
Part IV- Supplementary Provisions
Methods of Alternate Dispute Resolution-
The term ‘Alternate Dispute Resolution’ encompasses a variety of negotiation processes, including:
- Arbitration
- Conciliation
- Mediation
- Lok Adalat
- Judicial Settlement
Alternate Dispute Resolution is usually less formal, less expensive, and takes less time than traditional trials. Alternate Dispute Resolution allows participants to choose when and how to resolve their issue.
Section 89 of the Civil Procedure Code of 1908 allows for the resolution of disputes outside of court. It is based on ideas from the Law Commission of India and the Malimath Committee. The Malimath committee proposed that the court be required to refer the subject to arbitration via arbitration, conciliation, mediation, judicial settlement, or Lok Adalat.
The methods of Alternate Dispute resolution can be summarized as follows: –
- Arbitration
- Conciliation
- Mediation
- Negotiation
- Lok Adalat
- ARBITRATION-
Arbitration, an aspect of Alternate Dispute Resolution (ADR), is a mechanism for settling disputes outside of the court system in which the parties to a disagreement provide it to two or more people, known as arbitrators, to whom they expect to be obligated by their decision. It is a dispute resolution procedure in which a third person evaluates the facts in a case and makes a legally binding conclusion for both parties. Arbitration awards have restricted powers of review and appeal. Arbitration might be discretionary or mandated. Mandatory arbitration is derived from a statute or arrangement that is mutually signed by both parties, where the parties agree to assign all present and future problems without necessarily knowing what disputes would occur. In India, if a dispute involves arbitration, the provisions of the Arbitration and Conciliation Act, 1996, would apply.
In accordance with the second subsection (a) of Section 2(1) of the Arbitration and Conciliation Act of 1996 –
Arbitration refers to “any arbitration whether or not administered by permanent arbitral institution.” It consists of a simplified trial, with simplified standards of evidence and without discovery. The Arbitration and Conciliation Act of 1996 was then enacted with the aim of assisting swift dispute settlement.
There is an involvement of a third party in arbitration who regulates the hearing and examines the evidence, and parties produce evidence and arguments in relation to the dispute. The arbitrator’s decisions constitute as an award. The arbitrator’s deciding is enforceable in court of law. In other words, an arbitrator is someone whom the subject matter of dispute is referred by conflicting parties.
There are various types of arbitration-
- Voluntary Arbitration
- Compulsory Arbitration
- Ad-hoc arbitration
- Institutional Arbitration
- Domestic or international arbitration
Functions-
- Resolving Contractual disputes- Arbitration is a typical method for settling conflicts over contracts between firms or workers and their employers.
- Decision-making (Award Issuance)- The arbitrator considers the information and arguments submitted by both parties and makes a decision (award). The award may be binding (legally enforceable) or non-binding, depending on the arbitration agreement.
- Enforcement of Rights and Agreements- Arbitration guarantees that obligations under contracts are met by providing a legally binding dispute settlement procedure. Awards made in arbitration are usually accepted and binding globally under agreements such as the New York Convention.
- Settling Litigated disputes- Arbitration can settle disputes lodged in court using judicial-annexed procedures.
- Binding vs. non-binding– Arbitration processes can be binding or non-binding, with the latter allowing parties to seek judicial settlement if they disagree with the conclusion.
Case Law-
The Calcutta High Court ruled that the policy directive issued by a parent firm considering arbitration did not constitute an arbitration agreement if it needed the contractor’s fresh approval to refer the matter to arbitration. Furthermore, focusing on the fact that under existing contracts, the circular required the contractor’s consent for reference to arbitration, the Court held that it was unable to be read as an agreement to arbitrate because it would necessitate the execution of a new arbitration contract among the parties prior to the dispute being referred to arbitration.
- CONCILIATION-
Conciliation is a process in which a third party assists the parties to resolve the dispute by agreement. The person assisting the parties is known as Conciliator. The conciliator is appointed by both the parties. It is a type of alternative conflict resolution in which the disputing parties employ a conciliator to assist them in resolving their differences individually. They accomplish this by decreasing disputes, enhancing coordination, detecting problems, providing technical support, discussing potential solutions, and bringing about the negotiated settlement.
Conciliation involves reaching a settlement among parties with the help of a Conciliator. The Conciliator makes no ruling on the dispute before him. The Conciliator does not record any evidence and hears no arguments. The Conciliator can help both parties discuss their points of view and reconcile their disagreements. The Conciliator’s procedures are secret and do not affect the Court or Arbitrator’s proceedings addressing the dispute. In contrast to arbitration and court-based litigation, conciliation is a voluntary and non-binding process.Any party to dispute may terminate the conciliation proceedings at any time without assigning any reason.
Section 67 of the Arbitration and Conciliation Act,1996 deals the role of conciliator. It outlines the conciliator roles and responsibilities, powers etc.
Role of Conciliator-
- Assisting Parties to Reach an Amicable Settlement- A conciliator’s principal role, as stated in Section 67, is to help the parties in obtaining a mutually acceptable resolution to their disagreement. This includes promoting communication, stimulating conversation, and investigating potential solutions. The conciliator serves as a neutral and objective third party, fostering a collaborative environment in which parties can openly voice their concerns and interests.
- Conducting the conciliation proceedings appropriately- Section 67 allows conciliators to conduct conciliation processes in any way they see fit. This allows them to adjust their strategy to the case’s individual requirements. Conciliators may consider the circumstances of the dispute, the parties’ indicated wishes, and the necessity for a timely resolution.
- Making Proposals for statement- A conciliator has the authority to propose settlements to the parties at any point during the conciliation process. These recommendations, which do not have to be in writing or backed by a statement of reasons, can be used as prospective solutions for the parties to consider.
- MEDIATION-
Mediation is a process for resolving the dispute with the aid of an independent third party that assists the parties in disputes to reach an amicable settlement. Mediation involves a third person with no decision-making authority stepping in to resolve a conflict. The person or the third party conducting the mediation process is known as Mediator. The mediation process just like the Conciliation is a voluntary process and is one more way to resolving a dispute. Both the parties meet with a neutral party i.e., mediator during the mediation process. Mediator does not express his/her opinions on the merits of the dispute.
Functions-
- Confidentiality- All discussions and communications during mediation are kept confidential and cannot be used as evidence in court.
- Empowerment- The parties are actively involved in addressing their concerns, resulting in higher satisfaction with the results.
- Balanced Role- The mediator plays a balanced role by encouraging pleasant discussions, managing disturbances, and assisting the parties in identifying areas of compromise.
CASE LAW-
Heard learned counsel for the appearing parties. This is a quarrel between brothers. They recommend mediating the disagreement between the parties.
- NEGOTIATION-
Negotiation is another kind of ADR for settling issues. The parties decide on a course of action and negotiate for advantages. Usually, individuals attempt to embrace an unique alternative that meets their respective interests. This is the most common method for resolving disputes and effectively resolves most of them. If negotiation doesn’t work, it is essential to seek the assistance of a neutral third party to establish a resolution. Negotiation negotiating is a procedure in which both the entities collaborate and seek a resolution which is favourable to both sides. After successful negotiation, the parties will sign a settlement agreement that includes the agreed-upon terms and conditions.
Functions-
- Conflict Resolution- Negotiation provides a structured process for addressing disagreements and finding mutually acceptable solutions, preventing escalation into conflict.
- Achieving win- win outcomes- Negotiation seeks to reach compromises that are beneficial to all parties that are involved, so encouraging cooperation and long-term relationships.
- Effective Communication- Clear and honest communication is essential during negotiation to comprehend each party’s demands, viewpoints, and interests.
- LOK ADALATS-
Lok Adalat, which literally means as “People’s Court,” is an innovative platform in India’s judicial structure that provides amicable solutions to problems through mutual agreement. This technique falls under the heading of Alternative Dispute Resolution (ADR) and seeks to provide quick and economical justice.
Lok Adalat resolve conflicts that are pending in courts or at the pre-litigation stage, achieving rapid and amicable resolution. Lok Adalat have legislative status under the Legal Services Authorities Act of 1987.
The Lok Adalat awards and decisions are considered as civil court decrees.
Such awards are final and binding on all parties involved, and no legal appeals can be made against them. This binding character guarantees that conflicts are settled effectively, easing the strain on the courts.
Functions-
- No court fees for filing- Lok Adalat give a forum for litigants to seek settlement without incurring court expenses for filing a complaint.
- Resolution of pending cases- One of Lok Adalat’s key functions is to expedite the conclusion of ongoing cases. Lok Adalat attempt to facilitate communication and negotiation to reach an equitable conclusion between the parties.
- Impartial Adjudication- Lok Adalat are distinguished by their adherence to impartiality. The members, who are frequently retired judges, legal professionals, and social activists, are expected to be fair and objective.
- Legal Validity of settlements- Settlements achieved in Lok Adalat have the same legal standing as decrees issued by civil courts. This provides credibility to the process and ensures that the results are binding on all parties involved.
CONCLUSION-
Alternative Dispute Resolution (ADR) is an effective and efficient way to resolve conflicts outside of traditional litigation. Alternate Dispute Resolution, which employs methods such as mediation, arbitration, and negotiation, assists parties in reaching mutually advantageous settlements while saving time, money, and maintaining relations. Alternate Dispute Resolution is particularly useful for encouraging cooperative solutions, providing flexibility, and protecting anonymity. While it may not be appropriate for all issues, particularly those requiring legal precedents or enforcement mechanisms, it is nevertheless the preferred alternative for many individuals, corporations, and organizations looking for a less confrontational resolution procedure.
REFERNCES-
- Dhansar Engineering Company Pvt Ltd v. Eastern Coalfields Ltd, [Judgment dated April 18, 2024, in RVWO No. 38 of 2023]- BAR AND BENCH
- MARKANDEY KATJU and GYAN SUDHA MISRA, JJ. B.S. Krishna Murthy vs. B.S. Nagaraj CIVIL APPELLATE JURISDICTION S.L.P. Civil) No(s).2896 OF 2010 decided on 14 January 2011– JUDICIAL ACADEMY JHARKHAND
