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INTRODUCTION TO ADR

[ALTERNATIVE DISPUTE RESOLUTION]

DEFINITION OF ALTERNATIVE DISPUTE RESOLUTION: -

 One of the Definitions’ of ADR is “the procedure for settling disputes without
litigation, such as arbitration, mediation, or negotiation”

 It is also seen as “an umbrella” term that refers generally to alternatives to the court
adjudication [Litigation] of disputes. “Alternate Dispute Resolution” may also be
understood as “Amicable Dispute Resolution”.

DESCRIPTION OF ADR: -

 ADR is a product of the legal institution to offer the best possible service to its clients.
In fact, lawyers are sometimes urged to use ADR.

 Even though ADR is a private way of resolving dispute, it must work within the broad
legal framework in which it operates. This means, the use of ADR to settle disputes
must be done within the confines of law.

 ADR aims at Resolving Conflicts or disputes which are everyday life experience both
in private and public life. Whenever there is a dispute, which is “an expressed struggle
between at least two interdependent parties who perceive incompatible goals, scarce
resources, and interference from others in achieving their goal”, there is a need for
resolution. There are various ways in which disputants try to resolve their differences.
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 The word “alternative” is used as an option to litigation. ADR is a recognised and a

time-tested alternative to litigation across the globe.

 ADR was recognised and in operation in India since 1940 and never has been an
unknown term/way of resolving the disputes.

 Disputants decide voluntarily to use ADR to resolve their differences. ADR thrives
under the principle of self-determination of the disputants to use legally accepted
procedure to resolve a conflict other than litigation. No one is coerced to enter into
ADR. It is a voluntary process unlike litigation.

 Arbitration as ADR process is mandatory if there is arbitration clause in a contract.

The arbitration clause stipulates that, in case of a dispute among the parties, ADR
process will be used to settle the dispute. Pre-dispute arbitration clause is an
expression of the will of the two parties to use ADR. This does not mean the parties
are forced into it, but they are simply called to respect a prior voluntary agreement to
use arbitration as an alternative dispute resolution. After Arbitration process, the
outcome can be challenged in a competent court of law.

 Often there is much public interest when a case is under litigation and with the media
sometimes giving details of court proceedings. However, ADR is private and
confidential. Its practitioners are bound by their code of ethics to preserve the privacy
of their clients.

 ADR process is legally binding in two way: -

1. The disputants have the obligation to honour their pre-dispute agreement to use ADR
to settle their dispute.
2. They have to abide by the adjudication of the arbitrator, which is enforceable in a
public government court of competent jurisdiction.
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 The basic aim of ADR mechanism was to provide a low-cost & time consuming
litigation alternative to the disputants. However in the current scenario, the first aim
of providing a low-cost alternative to litigation has lost its substance and is merely
referred to as an ink on the paper, but as far as the second aim is concerned, the ADR
mechanisms have shown considerably phenomenal outcome in-respect of the time-
bound resolution of the disputes as compared to the litigation.

ESSENTIAL ELEMENTS [PROCESS/MECHANISM] OF ADR: -

 ADR CAN BE GENERALLY CLASSIFIED INTO FOUR TYPES OF METHODS

VIZ;

 NEGOTIATION
 MEDIATION
 ARBITRATION
 CONCILIATION

 NEGOTIATION: -

 Bilateral or multilateral process in which parties who differ over a particular

issue attempt to reach agreement or compromise over that issue through
communication.

 Negotiation is about communication, which entails dialogue, deliberation and

round table conference with the aim of reaching an agreement or settlement
over a determined subject or object.

 Negotiation is a voluntary ADR process. There is no third party to facilitate the

resolution process or impose a sentence.

 Negotiation demands a lot of listening. It works when the parties are ready to
listen to each other and come to an agreement or compromise. Negotiation has
also a legal dimension. The settlement agreement has certain legal requirement
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to fulfill for example; it cannot evade tax and in some cases a court approval of
the settlement34 is needed.

 Sometimes the Parties/Disputants may seek the assistance of ADR Professionals

which may help them to reach an understanding/settlement.

 MEDIATION: -

 Mediation is «an extension of the negotiation process. Mediation takes place,

when parties cannot settle their dispute through negotiation and go to “an
impartial third party” to assist them in reaching a resolution.

 Mediation is therefore, a “facilitated negotiation”. While negotiation involves

only the parties and their agents such us lawyers, mediation adds only the
mediator, who is not agent of either party. The Mediator is and must be neutral
to the Disputants.

 Mediator may by himself/herself facilitate the process by suggesting the

probable reasonable solutions/proposals, which the Parties/Disputants may opt
as a solution but the Mediator cannot impose the same upon the Parties under
any circumstances.

 The principle of mediation is to offer the parties opportunity to create or evolve

their own solutions instead of relying on a third party to pass a judgment as who
is right and who is wrong.

 Mediation as ADR process has gained tremendous popularity in dispute

resolution from local to national and from national to international dispute
resolution. Mediation is used from the private sector to the public sector and
from domestic issues to big business issues.
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 Disputants go into mediation for many reasons but prominent among them are:

1. To resolve a dispute- that is to settle a case

2. To explore a balanced or win-win settlement.
3. To restore a broken relationship due to the dispute.

 The mediation process involves; the disputants and the mediator. In some cases,
their lawyers can represent them. At times, their family members can participate
in the process.

 In the actual mediation process, there are joint sessions whereby the mediator
brings the two together for communication. The mediator can also have separate
meetings with them, which is continuous or constant meeting of the parties to
understand their concerns individually.

 A mediator plays a big role in resolving a dispute but there are three principal
roles, namely: facilitator, evaluator, and transformator.

1. FACILITATOR: - As a facilitator, the mediator “creates an environment in

which parties work together collaboratively as problem-solvers”.

2. EVALUATOR: - The mediator “assists the participants in breaking

impasses by contributing his/her views of the merits of the legal case, the
consequences of failure to settle, and the benefits of particular settlement
proposals.

3. TRANSFORMATOR: - the Mediator is to help participants “to determine

their own direction and supports the party’s own opportunities for
perspective-taking, deliberation and decision-making”.
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 Three Principals make Mediation a foremost resort for a successful settlement,
which are: -
o Self-determination of the Parties.
o Mediator is Impartial and Even-handed.
o The Proceedings are kept Private & Confidential by the Mediator.

 ARBITRATION: -

 Arbitration is a flexible and confidential adjudication process. It is the only

ADR process that has a resemblance of litigation.

 In arbitration process there can be one or more adjudicators or arbitrators. The

decision of the arbitrator is based on the hearing and evidence
gathered/submitted by the Disputants.

 After weighing the presentation and facts of the matter by disputants or their
lawyers and witnesses, the arbitrator decides in favour of one party who
deserves award or compensation.

 The resolution is most often rapid, as compared to litigation, which is a long

process which will be thoroughly explained in the further modules.

 There is a degree of autonomy through the selection of an arbitrator, who is

more likely to have subject matter expertise than a judge in litigation.

 It is very efficient, in fact, arbitration is generally considered a more efficient

process than litigation because it is quicker and less expensive. It also offers
greater flexibility of the process and procedure than litigation.
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 Arbitration covers enormous & enough fields of human endeavoured such as: -

o Commercial Transactions [Domestic & International].

o Environmental Issues.
o Consumer Disputes.
o Disputes pertaining to the Intellectual Property Rights.
o Labour Disputes, Etc.

 Arbitration has a formal procedure and substantive rules to follow. The process
consists of a defined simple procedure whereby disputants argue their case
before an arbitrator or arbitrators. Sometimes there is a representation by
attorney and witnesses. The process ends with a settlement or an offer known as
award. The final decision of the arbitrator i.e. an award can be appealed against.

 Arbitration is either mandatory or voluntary depending on «whether the parties

are required to participate in arbitration or choose to do so.

 Arbitration can be Voluntary/Contractual: -

o CONTRACTUAL ARBITRATION: -
Prior agreement between parties “to resolve their dispute through a final
and binding arbitration”.
Contractual arbitration arises out of the initial voluntary act to use
arbitration to settle dispute.

o VOLUNTARY ARBITRATION: -
Voluntary arbitration is the goodwill of two or more parties to use
arbitration to resolve their dispute. In this case, there is no arbitration
clause that impels them to go into arbitration, but they voluntarily decide
to use arbitration instead of litigation.
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However, this type of Arbitration is rare in sight pertaining to the
circumstances existing today in India.

 CONCILIATION: -

 Conciliation is a less formal form of arbitration. This process does not require
an existence of any prior agreement.

 Any party can request the other party to appoint a conciliator. One conciliator is
preferred but two or three are also allowed. In case of multiple conciliators, all
must act jointly.

 If a party rejects an offer to conciliate, there can be no conciliation.

 Parties may submit statements to the conciliator describing the general nature of
the dispute and the points at issue. Each party sends a copy of the statement to
the other. The conciliator may request further details, may ask to meet the
parties, or communicate with the parties orally or in writing. Parties may even
submit suggestions for the settlement of the dispute to the conciliator.

 When it appears to the conciliator that elements of settlement exist, he may

draw up the terms of settlement and send it to the parties for their acceptance. If
both the parties sign the settlement document, it shall be final and binding on
both.

 LOK – ADALATS: -
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 Apart from the above 4 major elements of the ADR mechanism, Lok-Adalats
[Peoples’ Court] is specifically an Indian approach established under the National
Legal Services Authority Act, 1987, towards the settlement of disputes through ADR
mechanism which also has a legal binding.

 India has had a long history of resolving disputes through the mediation of
village elders. The system of Lok Adalats is an improvement on that and is
based on Gandhian principles. This is a non-adversarial system, whereby mock
courts (called Lok Adalats) are held by the State Authority, District Authority,
Supreme Court Legal Services Committee, High Court Legal Services
Committee, or Taluk Legal Services Committee, periodically for exercising
such jurisdiction as they thinks fit.

 Lok-Adalats’ are usually presided by retired judge, social activists, or members

of legal profession. It does not have jurisdiction on matters related to non-
compoundable offences.

 Cases that are pending in regular courts can be transferred to a Lok Adalat if
both the parties agree. A case can also be transferred to a Lok Adalat if one
party applies to the court and the court sees some chance of settlement after
giving an opportunity of being heard to the other party.

 The First Lok Adalat was held in Chennai in 1986. Lok Adalat accepts the cases
which could be settled by conciliation and compromise and pending in the
regular courts within their jurisdiction.

 There is no court fee. If the case is already filed in the regular court, the fee paid
will be refunded if the dispute is settled at the Lok Adalat. The procedural laws
and the Evidence Act are not strictly followed while assessing the merits of the
claim by the Lok Adalat.
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 Main condition of the Lok Adalat is that both parties in dispute should agree for
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.

 An important aspect is that the award is final and cannot be appealed, not even
under Article 226 of the Constitution of India [which empowers the litigants to
file Writ Petition before High Courts] because it is a judgement by consent

 All proceedings of a Lok Adalat are deemed to be judicial proceedings and

every Lok Adalat is deemed to be a Civil Court.

CONCLUSION: -

 Alternative dispute resolution in India is not new and it was in existence even under
the previous Arbitration Act, 1940.

 The Arbitration and Conciliation Act, 1996 has been enacted to accommodate the
harmonisation mandates of UNCITRAL Model.

 To streamline the Indian legal system the traditional civil law known as Code of Civil
Procedure, (CPC) 1908 has also been amended and section 89 has been introduced.

 Section 89 (1) of CPC provides an option for the settlement of disputes outside the
court. It provides that where it appears to the court that there exist elements, which
may be acceptable to the parties, the court may formulate the terms of a possible
settlement and refer the same for arbitration, conciliation, mediation or judicial
settlement.
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 While Arbitration and Conciliation Act, 1996 is a fairly standard western approach
towards ADR, the Lok Adalat system constituted under the National Legal Services
Authority Act, 1987 is a uniquely Indian approach.

 Dividing lines in ADR processes are often provider-driven rather than consumer-
driven. Educated consumers will often choose to use many different options
depending on the needs and circumstances that they face.

 Finally, it is important to realize that conflict resolution is one major goal of all the
ADR processes. If a process leads to resolution, it is a Dispute Resolution Process.