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Alternative Dispute Resolution (ADR) and its Nature, Lecture notes of Law

Guru Gobind Singh Indraprastha UniversityLaw

The meaning and nature of Alternative Dispute Resolution (ADR) and its advantages over litigation. It defines the terms 'Alternative', 'Dispute', and 'Resolution' and describes the non-adversarial nature of ADR. It also provides a brief history of ADR in India and the Arbitration and Conciliation Act, 1996. The document also explains the history of conciliation and its legal recognition under the Trade Disputes Act 1920.

Typology: Lecture notes

2022/2023

Available from 11/26/2023

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MEANING AND NATURE OF ADR
• We are rapidly approaching a stage where litigation is being replaced with alternative dispute
resolution (ADR), due to the inefficiencies and drawbacks of litigation.
• India hasn’t quite reached a stage where litigation has been completely displaced by ADR
methods, but the legal system is beginning to see the benefits of ADR.
• ADR is a general term, which has been used to describe the processes of dispute resolution
amicably through various alternative techniques.
• The Mechanism of Alternative Dispute Resolution System is consisting of three important words
namely Alternative – Dispute- Resolution.
• The word 'Alternative' according to Oxford Learner’s Dictionary (2010 Edn) means “a thing that
you can choose to do or have out of two or more possibilities”.
• Hence in the legal context it refers to the options that are available to resolve dispute if one
doesn’t want to approach the traditional adjudication system.
• For example, you may resolve your dispute through the various ADR techniques available
namely, Arbitration, Negotiation, Conciliation, Mediation.
• The word 'Dispute' in ordinary parlance means conflict or quarrel.
• The 'Dispute' may be between two or more Countries, States or persons. The dispute may be in
individual capacity or collectively but two parties are necessary. There can not be a dispute or
conflict without opposite side.
• It is very important to nib the dispute in its initial stages before it aggravates and disturbs peaceful
co-existence in society.
• The word 'Resolution' means something that is resolved or to be resolved between the contesting
parties. The 'Resolution' according to Oxford Learners Dictionary (2010 Edn) means formal
statement of opinion agreed on by a Committee or a Council.
• The act of resolving or settling disagreement between the parties is called 'Resolution'. The
'Resolution' may mean to 'Resolve' and the 'Resolve' means an acceptable solution to a problem or
difficulty in question.
• Alternative dispute resolution (ADR) refers to a range of dispute settlement methods which help
the parties in the dispute to come to a settlement without going to court, or without litigating on
the said matter. These methods usually involve a third party, who helps them in settling the
disputes.
• In many cases, ADR methods are used alongside the litigation process as well through court
authorisation.
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M E A N I N G A N D N A T U R E O F A D R

  • We are rapidly approaching a stage where litigation is being replaced with alternative dispute resolution (ADR), due to the inefficiencies and drawbacks of litigation.
  • India hasn’t quite reached a stage where litigation has been completely displaced by ADR methods, but the legal system is beginning to see the benefits of ADR.
  • ADR is a general term, which has been used to describe the processes of dispute resolution amicably through various alternative techniques.
  • The Mechanism of Alternative Dispute Resolution System is consisting of three important words namely Alternative – Dispute- Resolution.
  • The word 'Alternative' according to Oxford Learner’s Dictionary (2010 Edn) means “a thing that you can choose to do or have out of two or more possibilities”.
  • Hence in the legal context it refers to the options that are available to resolve dispute if one doesn’t want to approach the traditional adjudication system.
  • For example, you may resolve your dispute through the various ADR techniques available namely, Arbitration, Negotiation, Conciliation, Mediation.
  • The word 'Dispute' in ordinary parlance means conflict or quarrel.
  • The 'Dispute' may be between two or more Countries, States or persons. The dispute may be in individual capacity or collectively but two parties are necessary. There can not be a dispute or conflict without opposite side.
  • It is very important to nib the dispute in its initial stages before it aggravates and disturbs peaceful co-existence in society.
  • The word 'Resolution' means something that is resolved or to be resolved between the contesting parties. The 'Resolution' according to Oxford Learners Dictionary (2010 Edn) means formal statement of opinion agreed on by a Committee or a Council.
  • The act of resolving or settling disagreement between the parties is called 'Resolution'. The 'Resolution' may mean to 'Resolve' and the 'Resolve' means an acceptable solution to a problem or difficulty in question.
  • Alternative dispute resolution (ADR) refers to a range of dispute settlement methods which help the parties in the dispute to come to a settlement without going to court, or without litigating on the said matter. These methods usually involve a third party, who helps them in settling the disputes.
  • In many cases, ADR methods are used alongside the litigation process as well through court authorisation.

NATURE OF ADR

  • ADR techniques of resolving dispute is non-adversarial in nature.
  • The nature of the adversarial process is that it is procedure laden, encourages disputing, is cast in victor-vanquished mode and provides multiple appeals.
  • The adversarial process is characterized by numerous and complex rules of forms and procedure. This is inevitable and necessary, when parties are ranged against each other in legal battles. Unfair behaviour can be controlled only if the contest is tightly controlled by procedural rules.
  • The elaborate structure for legal battle, devised to make litigants behave fairly, produces excessive disputing between the parties and their lawyers. Its design provides plenty of room for technical objections, manoeuvers, diversions, obstructions and delays
  • Parties in litigation take extreme positions and get polarized. They will express their views in the most forceful way, so charges and counter charges will fly thick and fast, heedless of the offence they cause and the effect they have in aggravating the dispute.
  • The results are usually declared in a win-lose context. This is on the basis that in every dispute one side deserves victory, the other defeat.
  • To summarize, adversarial process entails, elongated time, increased legal costs and the worst damaged relationships.
  • Hence it became necessary to devise alternatives which could keep a check on disadvantages that were a by product of resolving disputes through litigation. This led to the establishment of the system of Alternative Disputes Resolution.
  • By non-adversarial nature of ADR we mean that the parties who come together to resolve dispute donot have a contesting approach rather they come with a cooperative mindset.
  • The parties at dispute try to accommodate each others demands and listen to each other with an empathetic approach.
  • The ADR mechanisms offer creative solutions to the dispute in hand which lead to a win-win outcome.

Pros of ADR

  • It is less expensive.
  • It is less time consuming.
  • It is free from the technicalities that are present in the court system.
  • The parties are free to differ in their opinion and can discuss their opinions with each other, without any fear of disclosure of this fact before the courts.
  • There is no feeling of enmity between the parties as there is no winning and losing side. They also get their grievances redressed and their relationship remains as it was before, therefore, they can conduct future business deals with each other.

H I S T O R Y O F A D R

  • Resolution of disputes through ADR has built inherently in Indian culture. From Vedic period onwards, Indian people have used non-adversarial methods for resolving their disputes.
  • Yajnavalkya and Narada (both are law givers of ancient India like Manu) highlighted that Kula, SRENI and Puga tribunals were resolving the disputes in ancient India.
  • Kula was a tribunal that had resolved the disputes between the members of family, community, caste or races and tribes.
  • SRENI was a tribunal consist of trade experts and it helped the traders to resolve their trade related disputes internally.
  • Puga was a tribunal consisting of people belong to various communities but from the same locality. These tribunals are considered as Panchayats and they followed a simple procedure for their decision making.
  • The decision of Kula may be challenged before SRENI and the decision of the SRENI can be challenged before Pradvivaca and the final appeal was permissible before the King. These tribunals had taken decisions on the interest of the party and community.

HISTORY OF ADR

  • Arbitration is considered as an adjudicatory alternate dispute resolution mechanism in which the neutral third party known as the arbitrator will decide the dispute on merits.
  • As stated earlier, India has a vast history of arbitration. It even continued during Islamic Dynasty. The Arabic word for arbitration is Tahkeem, while the word for an arbitrator is Hakam.
  • Islamic law mandated that arbitrator must be neutral and the arbitral award cannot be challenged on merits.*

Britishers had given formal recognition to arbitration through legislation.

  • The Bengal Regulation Act 1772, Bombay Regulation Act 1789 and Madras Regulation Act 1802 had encouraged the parties to resolve their dispute through arbitration and the arbitral award cannot be challenged on the merits of the disputes.
  • In 1857 Civil procedure code (Civil court procedure) got enacted for harmonizing the civil court's procedure across British India except the courts established by Royal Charter. Section 312-325 of this code dealt with the arbitration in suits.
  • Section 326 and 327 of this Act dealt with the arbitration without the intervention of the court. The code of Civil Procedure got revised in 1882. The above-said sections of the 1857 Act placed in sections 506-526 of this Act without any change.
  • Later, in 1899, the British Indian government had passed the Indian Arbitration Act which was based on the British (England) Arbitration Act 1989. This Act was applied to Provincial towns only.
  • The unique feature of this Act was that the parties should specify the name of the arbitrator in their arbitration agreement and the arbitrator may be a sitting judge.
  • In 1908, the Civil procedure code got further revised and the provisions relating to arbitration were contained in section 89 clause (a) to (f) and, section 114(1) along with schedule I. This provision had not made any major change in the existing arbitration Law of that time. However, there was a hope that the British Government might enact comprehensive legislation for arbitration at any time.
  • In 1940 Indian Arbitration Act got enacted and it repealed the CPC section 89 (a)-(f) and schedule II. Still, the 1940 Act had some defects such as no provision for replacement of arbitrator in case of death or another incapacity of the arbitrator, unethical practices of the arbitrator, and difference proceedings for setting aside the arbitral award and nullity of the arbitral award and much intervention of the court.
  • Further, all High Courts were having a different set of rules for arbitration-related cases. As a result, the Arbitration and Conciliation Act got enacted in 1996.

The Arbitration and Conciliation Act, 1996

  • The 1996 Arbitration and Conciliation Act has consolidated the law related to domestic arbitration, international commercial arbitration, and enforcement of foreign arbitral awards.
  • It has minimized the judicial intervention and has provided the mechanism for removal and replacement of arbitrator.
  • The 1996 Act got further amended in 2015 for ensuring speedy disposal of disputes by the arbitral tribunals, encouraging institutional arbitration and ensuring fairness in arbitral proceedings it got further amended in 2019.
  • Once, the parties have agreed to resolve their disputes through arbitration then, they cannot approach courts for the resolution of the same disputes.
  • The parties have the freedom to appoint the arbitrator on their choice and they can fix the place and language of the arbitration. The arbitral tribunal hears the dispute on merits and the arbitral award is considered as the decree of the courts.
  • Unless the arbitral award has been made on some defects mentioned under section 34 of Indian Arbitration and Conciliation Act, it is always enforceable by courts.
  • In the same 129th report, the law commission highlighted the concerns of judges on the referral of pending disputes to arbitration especially the 1940 arbitration Act did not contain any provision for the referral of the pending dispute to arbitration and stated that this issue will be taken in another report.
  • Meanwhile, the Indian government had amended the CPC amendment Act and included the Law Commission's recommendations on the conciliation court system under section 89 of CPC.

HISTORY OF MEDIATION

  • Mediation is known as third-party facilitated negotiation in which, the neutral third party will facilitate the disputants to come with settlement. In mediation, the neutral party known as mediator plays a passive role.
  • Unlike Conciliation, the mediation moment got started in the late nineties.
  • In 1995-96, The Indian Supreme Court under the leadership of Justice Mr A. M. Ahmadi along with the Institute for Study and Development of Legal Systems [ISDLS] which is situated at San Francisco had carried out an Indo-U.S. joint study on “delay in Indian justice system” and finding solutions to overcome this problem.
  • Every High Court was asked to appoint a study team to cooperate with the delegates of ISDLS. A centralized study team had gathered all information from High Courts and analyzed it. After the detailed review of situation India, the team had given appropriate suggestions on civil case management with reference to Indian scenario. ISDLS had also suggested for the promotion of mediation in India.*
  • ISDLS had rendered its cooperation for promoting mediation in India. It had sent its American trainers to India for giving mediation training. The first mediation training had conducted in 2000 in Ahmedabad, Gujarat.
  • Two Indian lawyers had created a trust called Institute for Arbitration Mediation Legal Education and Development (AMLEAD) for training the mediators.
  • This institute has conducted a lot of training programs for the mediators since its inception. Ahmedabad Mediation Centre was established on 22 July 2002, Which is the first lawyer managed mediation center in India.
  • On 2002, the Chief Justice of India had called a meeting of all High Court judges for emphasizing the importance of mediation and the requirement of implementation of section 89 of CPC.
  • In January 2003, AMLEAD and Gujarat Law Society have developed 32 hours certificate course on mediation. The U.S. Educational Foundation in India (USEFI) had conducted training workshops at Jodhpur, Hyderabad, and Bombay in June 2003.
  • The first court-annexed mediation center got established at Chennai High Court on April 1, 2005. After this, many courts annexed mediation centers got established in various High Courts. Delhi

District Courts asked ISDLS to trained their judges as mediators and established court-annexed mediation centers in Trial Courts. Karnataka High Court also established a court-annexed meditation center with the help of ISDLS.

  • On 2005 Justice Mr R.C. Lahoti, then Chief Justice of India had constituted The Mediation and Conciliation Project Committee (MCPC) for the promotion of mediation. This committee consists of Supreme Court judges, High Court judges, advocates, government secretaries and members from NALSA.
  • It had proposed a pilot project of judicial mediation in Tis Hazari Courts. Based on the success of this project, the committee had extended the same project in other courts in Delhi and across the country.
  • Now court-annexed mediation centers are functioning in many trial courts across the country including Allahabad, Lucknow, Chandigarh, Ahmedabad, Rajkot, Jamnagar, Surat.

HISTORY OF NEGOTIATION

  • In India, Negotiation doesn’t have any statutory recognition that is, through way of legislation hence there is no traceable history of as to when negotiation formally began. 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.
  • Negotiation is the simplest means for redressal of disputes. In this mode the parties begin their talk without interference of any third person. The aim of negotiation is the settlement of disputes by exchange of views and issues concerning the parties.