ADR Mechanism in India

Introduction:

It is often observed that whenever a dispute arises, the parties take the issue to the courts, which will adjudicate it based on the facts and applicable laws. In this process long time-consuming process, one party faces loss while the judgment or decree or order favors the other. To satisfy both the parties and to dispose of the issue in a shorter time, an alternate mechanism, called Alternate Dispute Resolution (ADR) is encouraged by the legal fraternity because delaying the finality of a case will erode the essence and will cause the parties to lose hope in seeking justice. The ADR method promotes a legal “out of the court dealing” thereby, preventing illegal shortcuts such as forgery, corruption, etc., solely to get the judgment favoring them.

Need for ADR Laws in India

India, with a population of millions, faces major crises such as unemployment, poverty, etc., which is one of the major causes of the existence of class conflict in the country. This leads to an increase in disputes amongst its people. Such disputes may be civil, criminal, or commercial. As every such dispute is litigated in the courts, there is a huge backlog of cases and the judicial wing finds it difficult to dispose of them. Also, the cases lay pending in the courts for a very long time. So, to bring about an efficient case disposal and less time-consuming mechanism, ADR laws are the need of the hour. The backlog of cases can also be traced to the disequilibrium in the ratio of judges to the number of cases filed in a day. The former is way lesser than the latter and even if judges worked more hours a day, the pending cases cannot be disposed of easily.

With the emergence of various companies, commercial ventures, the commercial relations too evolved to a larger extent. This in turn contributed to the increase in disputes such as issues arising out of the partnership, contractual performance, Intellectual Property Rights (IPR), Trademark, securities, etc. Instead of spending large amounts on these disputes, which might add on to the financial burden of that company, ADR will be handy in dealing with them.

To put in points, the needs for ADR laws in India are as follows:

1.  To provide an alternate method to litigation: The ADR is an alternative to the traditional litigation process in courts. It offers a set of procedures to deal with disputes outside the courts. It has to be noted that ADR is only an alternative and does not replace the judicial machinery.
2. To provide a forum for the process of easy, less expensive, simple, and result-oriented process for disposing of the cases.
3. To dispose of cases expeditiously: Due to lesser judges and infrastructure, so many cases are piled up in various courts for even more than decades. By legally bypassing cases to the ADR mechanism, the pending cases will be disposed of quickly. Also, as far as new cases are concerned, when they are submitted to ADR, due to the simple procedures involved, they need not be pending before any court and justice will be served at right time.
4. To prevent the filing of suits for trivial matters: Litigating for trivial matters is one of the causes for piling up of cases. So, to prevent this and to resolve such disputes, ADR will be very useful.
5. To come up with amicable solutions for the disputes: ADR aims at bringing about cooperation between the parties to settle the dispute. It is not adversarial and helps better understanding of the differences between the parties.
6. To cut unnecessary expenditures: Right from filing a suit till the final judgment, the litigants have to bear huge expenses. ADR will facilitate bypassing this hurdle as it is less expensive than an ordinary suit.
7. To maintain the relationship between the parties (eg. Husband and Wife in matrimonial disputes).
8. To remove bias amongst the parties.
9. To prevent the parties from experiencing mental agony throughout the pendency of the case for years.
10. To benefit both parties without making one party win at the cost of others which is the prevailing situation in litigation.

Development of ADR in India

The concept of ADR is not new in India. The very ancient and significant dispute resolution forum in the panchayat system more precisely Nyaya[1] panchayat in villages. It consists of five elderly persons to whom the dispute is submitted. The direction of those persons is binding on the parties who have to strictly adhere to it. After the advent of the British, the modern arbitration law was introduced through the Bengal Regulation Act, 1772 and it was introduced in Bombay and Madras presidencies through the Bombay Regulation Act, 1799 and the Madras Regulation Act, 1802 respectively. In 1899, the Arbitration Act was enacted, which was in line with the provisions of the British Arbitration Act, and applied only to the presidency towns. Later on, after certain provisions facilitating arbitration was incorporated in the Code of Civil Procedure, 1908 thereby extending its force to other parts of British India.

Until 1996, the law governing arbitration in India consisted mainly of three statutes: (i) The 1937 Arbitration (Protocol and Convention) Act, (ii) The Indian Arbitration Act 1940, and (iii) The Foreign Awards (Recognition and Enforcement) Act, 1961.[2] After Independence, the need for legal aid without financial burdens was felt and so the Legal Services Authorities Act was passed in 1987 under which Lok Adalat was statutorily recognized. The act also mandated the establishment of authorities at national, state, and other levels to administer justice.

Subsequently, as the 1940 act was outdated, the Government of India enacted Arbitration and Conciliation Act in 1996, which was in line with UNCITRAL (United Nations Commission on International Trade Law) Model Law, repealing the previous enactments. With certain amendments, this enactment is still governing ADR system in India.

ADR Techniques

There are four forms of ADR techniques namely, Arbitration, Mediation, Conciliation, and Negotiation, and as far as India is concerned Lok Adalats are also established to dispense the cases through ADR methods. A brief on these are as follows:

• Arbitration: It is a settlement process, under an agreement between the parties, whereby a third neutral person is chosen by the parties and is appointed as an Arbitrator. An arbitrator can also be appointed by the courts on the request of either of the parties. His main function is to bring about a settlement of the dispute between the parties. Unlike courts, the final order given in these methods is called as an award and is binding only on the parties involved. Arbitration does not get rid of the jurisdiction of the court completely but limited only to granting interim measures, the appointment of arbitrators, setting aside of the award, etc. as provided by the Arbitration and Conciliation Act 1966.
• Conciliation: This is an Informal mode of Arbitration and it does not require any prior agreement. The neutral person here is called the Conciliator who is appointed by the parties. S/he’ll settle the dispute based on the facts stated by the parties and unlike arbitration, the settlement is binding on the parties only if it is accepted by them. This autonomy also extends to rejecting the conciliation process itself.
• Mediation: It is a process where a mediator brings together the parties to amicably settle their disputes. It is an assisted negotiation to help the disputing parties to reach an agreement. Here, unlike the former two modes, the third person does not have a say in the agreement rather it is the parties who work on the terms of the settlement.
• Negotiation: it is similar to mediation but it mostly involves the parties to settle their dispute with/without a third person. It mostly requires communication between the parties to settle. If there is a third person intervention, that person is called as a negotiator and such persons are well-trained, skilled in the art of negotiation.
• Lok Adalats: Also known as “people’s court”, is a forum established to deal with disputes through ADR. It encompasses Mediation, Conciliation, and Negotiation. It has the powers of civil court in certain matters enumerated in Code of Civil Procedure, 1908 and no appeal lies against the order of Lok Adalat.

Laws regarding ADR in India

There are two main enactments relating to ADR in India. They are the Legal Services Authorities Act 1987 and the Arbitration and Conciliation act 1996. The 1987 act statutorily recognized Lok Adalats for dispute resolution. It provided for establishing authorities at national, state, district, and taluks to provide legal aid to all sections of people. It also mandates a separate fund at national, state, and district levels to facilitate the above-said objective.

The Arbitration and Conciliation act is the only live document exclusively dealing with ADR subjects. This act repealed all the previous acts. The act, unlike the previous ones incorporated principles of natural justice, fairness, etc. it established the ADR system as a separate dispute resolving mechanism free from judicial intervention/control. The act does not only cover domestic arbitration or conciliation but also extends to international arbitration and conciliation. The award granted in arbitration has the same status as a civil court’s decree. The act also provides for enforcing the foreign arbitration awards. By an amendment to the principle act in 2015, which makes the arbitrator responsible for the delay in the process, makes the dispute resolution process quick and impartial.

Apart from these two laws, the Code of Civil Procedure 1908 also contains provisions relating to ADR. An amendment act 1999 incorporated Sec. 89 to the code which provides that a court can direct parties to a case to go for alternate dispute mechanisms to settle rather than proceeding with it in the court.

Conclusion

ADR Mechanism is a very useful and helpful mechanism to cope up with the lagging judicial process. Due to lesser judges, infrastructure, rigid procedures, the judicial system is finding it difficult to deal with cases in a short period. So, to reduce the court’s burden, ADR is an effective mechanism that can be a permanent alternative as well. With the growing population and recognition of wide rights, the inflow of cases has to be equally matched with the outflow which can only be possible if ADR is promoted to a greater extent.

References:

[1] Justice.

[2] The latter two acts were enacted to enforce foreign arbitral awards.