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Updated: Nov 26, 2022

This blog is written by Deepti Pathak, student of S.S.Khanna Girls Degree College, Prayagraj.

Alternate Dispute Resolution ("ADR") refers to any method of resolving disputes without going to court. It allows the parties to resolve their disputes without depending on rigorous court proceedings.

All the modes of ADR have common characteristics, i.e., they enable the parties to find amicable solutions to their conflicts outside of traditional legal or court proceedings, but they are governed by different rules. Therefore, ADR does not substitute for the traditional judicial system; rather, it is a supplement to the traditional courts for the speedy and amicable delivery of justice.

The Indian judiciary is one of the oldest judicial systems, a world-renowned fact, but nowadays it is also a well-known fact that the Indian judiciary is becoming inefficient in dealing with pending cases; Indian courts are clogged with long, unsettled cases. The scenario is that even after setting up more than a thousand fast-track courts that have already settled millions of cases, the problem is far from being solved as pending cases are still piling up. To deal with such a situation, Alternative Dispute Resolution (ADR) can be a helpful mechanism because it resolves conflict in a peaceful manner where the outcome is accepted by both parties.

The concept of the Alternative Dispute Resolution (ADR) mechanism is capable of providing a substitute for the conventional methods of resolving disputes. ADR offers to resolve all types of matters, including civil, commercial, industrial, family, etc., where people are not able to start any type of negotiation and reach a settlement. Generally, ADR uses a neutral third party who helps the parties communicate, discuss the differences, and resolve disputes. It is a method that enables individuals and groups to maintain cooperation and social order and provides opportunities to reduce hostility.

The Alternative Dispute Resolution method of resolution

  • It ensures complete justice

  • Justice delayed is justice denied, as the ADR method maintains.

Traditional courts are full of pending cases. In a recent study, it was shown that for every 21 judges, there are around 10 lakh pending cases in our courts. In comparison to this ADR, there is a much more efficient semi-judicial system in which cases are to be disposed of within 12 months.

It is called a "semi-judicial proceeding" because it doesn't fully incorporate all of the Indian Evidence Act of 1882 and the Code of Criminal Procedure provisions. But it is to be noted that in practice, some of the provisions of the same are being accomplished.

ADR is a supplement to the traditional judicial system, not a substitute, as it is an addition to the judicial body of law, and it also, to some extent, follows the same procedure and proceedings. Both the traditional legal system and the ADR method incorporate provisions for appeal, repeal, etc., so in a sense, they are the same. The courts, because of a long list of pending cases, don’t have time to cater to the specific person-to-person case, so in such a situation, the Alternative Method of Resolution acts as a helping hand to our judiciary to cater to the specific person-to-person case as well as ensure speedy and fair disposal of cases, which is one of the fundamental principles of natural justice Abraham Lincoln, beginning as a trial lawyer, recognised that trial work should be approached to make peace rather than create new conflicts. Lincoln figured out how to achieve that goal within the justice system. Then, most significantly, he carried these insights onto a global stage, showing how peace-making skills can be developed and expanded to resolve our most difficult problems.

"Discourage litigation. Persuade your neighbours to compromise whenever you can. Point out to them how the nominal winner is often a real loser—in fees, expenses, and wasted time."

Most of my cases, no matter how they are approached, are going to end in a negotiated agreement, and many of the things we do in litigation take us further away from that goal. It seems paradoxical to suggest that in an adversarial system of justice, our goals can be better achieved by avoiding fighting, but it should be considered even more paradoxical to resolve conflict by fighting.

For the resolution of disputes through ADR, parties may stipulate in their contracts that in the event of a dispute, they will first submit to an attempt at amicable settlement (conciliation or mediation), and only in the event of failure will they resort to a judicial method of settlement, which may be arbitration or recourse to the state justice system. ADRs, therefore, come into play at different levels and have a complementary character. The main advantages of ADR are rapidity, confidentiality, and flexibility. Public courts may be asked to review the validity of ADR methods, but they will rarely overturn ADR decisions and awards if the disputing parties formed a valid contract to abide by them.

The most famous modes of ADR are mediation, arbitration, conciliation, and negotiation.

Negotiation is a less formal type of ADR, and it allows lots of flexibility for settling disputes as it allows the parties themselves to control the process and find a solution.

In mediation, parties in conflict are brought together, and the mediator attempts to settle the dispute through an agreement that the parties may accept or reject. Mediation is not binding upon the parties.

Arbitration is a semi-judicial process and a growing form of ADR. It is more formal than any other ADR mode and has many similarities with traditional courts.

Importance of ADR in India

To deal with the situation of pendency of cases in the courts of India, ADR plays a significant role in India through its diverse techniques. The alternative Dispute Resolution mechanism provides scientifically developed techniques to the Indian judiciary, which help reduce the burden on the courts. ADR provides various modes of settlement, including arbitration, conciliation, mediation, negotiation, and Lok Adalat.

Here, negotiation means proper counselling between the parties to resolve their dispute, but it has no legal recognition in India.

ADR is also based on these fundamental rights, Articles 14 and 21, which relate to equality before the law and the rights to life and personal liberty. The motive of ADR is to provide socio-economic and political justice and maintain integrity in society, as enshrined in the preamble. ADR also seeks to achieve equal justice and free legal aid provided under Article 39-A relating to the Directive Principles of State Policy (DPSP).

Important provisions related to ADR

  • Section 89 of the Code of Civil Procedure (1908) provides an opportunity to the people; if it appears to the court that there are elements of an out-of-court settlement, then the court formulates the terms of a possible settlement and refers them to arbitration, conciliation, mediation, or Lok Adalat.

  • The laws that deal with ADR are the Arbitration and Conciliation Act of 1996 and the Legal Services Authority Act of 1987.

There are different types of arbitration:

National arbitration: for example, American arbitration, French arbitration, or German arbitration, all of which are governed by different rules adopted by the institutions of each country;

International Commercial Arbitration: usually used for settlement of disputes arising from commercial contractual relations between buyers and sellers located in two different states;

Investor-state arbitration: unilateral referral by private individual investors to arbitration against the host state of their investment.

There are other types of arbitration and areas of specialisation for this ADR, such as construction arbitration, post-M&A arbitration, etc.

Arbitration depends on the consent of the parties; therefore, the arbitration agreement is symbolic because it is the gateway to the specific system of arbitration. Before a dispute arises, the parties usually enter into a binding arbitration agreement or any other form of contract with an arbitration clause that allows them to set the main terms of the arbitration process (number of arbitrators, arbitral forum, arbitration rules, fees, etc.).

If the parties still dispute certain terms before arbitration, they may go to court to resolve the dispute. The arbitration may be held ad hoc or with the administrative support of one of the institutional providers, such as the American Arbitration Association (AAA) or JAMS if the arbitration is domestic.

Arbitration proceedings are managed and decided by an arbitral panel or a single arbitrator, as agreed by the parties. The arbitrators do not have to be lawyers; the parties can choose arbitrators from other fields that they consider more suitable for resolving the dispute, which usually happens when the arbitration deals with a very specialised topic, such as construction or pharmaceutical issues. For example, the parties can choose an arbitrator with an engineering background to adjudicate a construction dispute.

To form a panel, either both parties agree on one arbitrator or each party selects one arbitrator and two arbitrators select a third. Arbitration proceedings usually last several days to a week, and the panel meets for only a few hours a day. A panel or sole arbitrator then deliberates and issues a written, binding decision or award. Opinions are not public records. Arbitration has long been used in labour, construction, and securities regulation but is now gaining popularity in other commercial disputes. For domestic arbitration, Title 9 of the United States Code provides federal law to support arbitration. It is based on the power of the plenary session of Congress over interstate commerce. Where Title 9 applies, its terms take precedence over state law. However, there are many state ADR laws. 49 states have adopted the 1956 version of the Uniform Arbitration Act as state law. The law was revised in 2000 and subsequently adopted by twelve states. The arbitration agreement and award are now enforceable under both state and federal law.

In 1958, the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, or the "New York Convention," was drafted to assist in the enforcement of awards made in foreign countries in domestic courts. The United States joined in 1970, and as of November 2021, 156 countries were participating in the convention.

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