This Article is Written by Vaibhav Singh ( law student from USLLS, Guru Gobind Singh Indraprastha University)
INTRODUCTION
The Indian judiciary is one of the oldest judicial systems, this is 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 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, it resolves conflict in a peaceful manner where the outcome is accepted by both parties.
ADR is a technique to resolve disputes and disagreements between two parties by arriving at an amendable settlement through negotiations and discussions. ADR is capable of providing other means and methods for solving disputes of all types including civil, commercial, family, etc. The general principle of ADR is that it uses a third party to settle the disputes between the transacting parties. One of the primary reasons parties may prefer ADR proceedings is that, unlike adversarial litigation, ADR procedures are often collaborative and allow the parties to understand each other’s position. It aims to maintain peace and cooperation between the transacting parties and prevents hostility among them. The purpose of solving disputes through ADR is to lower the burden upon the courts and provide early access and speedy trial to those cases which are more serious. In India, ADR is established based on Article 14 and Article 21 of the Constitution of India.
LAWS RELATED TO ADR IN INDIA:
Code of Civil Procedure
The Code of Civil Procedure, 1859 in its sections 312 to 325 deals with the arbitration in suits while sections 326 and 327 provided for arbitration without court intervention. The Code of Civil Procedure (Act 5 of 1908) repealed the Act of 1882. The Code of Civil Procedure, 1908 has laid down that cases must be encouraged to go in for ADR under section 89(1). Under the First Schedule, Order XXXII A, Rule 3 a duty is cast upon the courts that it shall make an endeavour to assist the parties in the first instance, in arriving at a settlement in respect of the subject matter of the suit. The second schedule related to arbitration in suits while briefly providing arbitration without the intervention of a court. Order I, Rule 1 of the schedule says that wherein any suit, all the parties agree that any matter in difference between them shall be referred to arbitration, they may, at any time before judgment is pronounced; apply to the court for an order of reference. This schedule, in a way, supplemented the provisions of the Arbitration Act of 1899.
Indian Arbitration Act, 1899:
This Act was substantially based on the British Arbitration Act of 1889. It expanded the area of arbitration by defining the expression ‘submission’ to mean “a written agreement to submit present and future differences to arbitration whether an arbitrator is named therein or not”.
Arbitration (Protocol and Convention) Act 1937:
The Geneva Protocol on Arbitration Clauses 1923 and the Geneva Convention on the Execution of Foreign Arbitral Awards 1927 was implemented in India by the Arbitration (Protocol and Convention) Act, 1937. This Act was enacted with the object of giving effect to the Protocol and enabling the Convention to become operative in India.
The Arbitration Act of 1940:
The Arbitration Act, 1940, dealt with only domestic arbitration. Under the 1940 Act, the intervention of the court was required in all the three stages of arbitration in the tribunal, i.e. prior to the reference of the dispute, in the duration of the proceedings, and after the award was passed. This Act made provision for-
- arbitration without court intervention;
- arbitration in suits i.e. arbitration with court intervention in pending suits and
- arbitration with court intervention, in cases where no suit was pending before the court.
Before an arbitral tribunal took cognizance of a dispute, court intervention was required to set the arbitration proceedings in motion. The existence of an agreement and of a dispute was required to be proved. During the course of the proceedings, the intervention of the court was necessary for the extension of time for making an award.
Finally, before the award could be enforced, it was required to be made the rule of the court. This Act did not fulfil the essential functions of ADR. The extent of Judicial Interference under the Act defeated its very purpose. It did not provide a speedy, effective and transparent mechanism to address disputes arising out of foreign trade and investment transactions.
Arbitration and Conciliation Act, 1996:
The government enacted the Arbitration and Conciliation Act, 1996 in an effort to modernize the 1940 Act. In 1978, the UNCITRAL Secretariat, the Asian African Legal Consultative Committee (AALCC), the International Council for Commercial Arbitration (ICCA) and the International Chamber of Commerce (ICC) met for a consultative meeting, where the participants were of the unanimous view that it would be in the interest of International Commercial Arbitration if UNCITRAL would initiate steps leading to the establishment of uniform standards of arbitral procedure.
The preparation of a Model Law on arbitration was considered the most appropriate way to achieve the desired uniformity. The full text of this Model Law was adopted on 21st June 1985 by UNCITRAL. This is a remarkable legacy given by the United Nations to International Commercial Arbitration, which has influenced Indian Law. In India, the Model Law has been adopted almost in its entirety in the 1996 Act.
This Act repealed all the three previous statutes. Its primary purpose was to encourage arbitration as a cost-effective and quick mechanism for the settlement of commercial disputes. It covers both domestic arbitration and international commercial arbitration. It marked an epoch in the struggle to find an alternative to the traditional adversarial system of litigation in India.
The changes brought about by the 1996 Act were so drastic that the entire case law built up over the previous fifty-six years on arbitration was rendered superfluous. Unfortunately, there was no widespread debate and understanding of the changes before such an important legislative change was enacted. The Government of India enacted the 1996 Act by an ordinance, and then extended its life by another ordinance before Parliament eventually passed it without reference to Parliamentary Committee.
Arbitration, as practised in India, instead of shortening the lifespan of the dispute resolution, became one more “inning” in the game. Not only that, the arbitrator and the parties’ lawyers treated arbitration as “extra time” or overtime work to be done after attending to court matters. The result was that the normal session of an arbitration hearing was always for a short duration. The absence of a full-fledged Arbitration Bar effectively prevented arbitrations from being heard continuously on a day-to-day basis over the normal working hours, viz. 4-5 hours every day. This resulted in elongation of the period for disposal. The Law Commission of India prepared a report on the experience of the 1996 Act and suggested a number of amendments. Based on the recommendations of the Commission, the Government of India introduced the Arbitration and Conciliation (Amendment) Bill, 2003, in Parliament. The standing committee of the law ministry felt that provisions of the Bill gave room for excessive intervention by the courts in arbitration proceedings.
MODES AND PRACTICES OF ADR IN INDIA:
ADR can be broadly classified into two categories: court-annexed options (Mediation, Conciliation) and community-based dispute resolution mechanisms (Lok-Adalat).
The following are the modes of ADR practised in India:
- Arbitration
- Mediation
- Conciliation
- Negotiation
- Lok-Adalat
Arbitration:
The process of arbitration can start only if there exists a valid Arbitration Agreement between the parties prior to the emergence of the dispute. As per Section 7, such an agreement must be in writing. The contract, regarding which the dispute exists, must either contain an arbitration clause or must refer to a separate document signed by the parties containing the arbitration agreement. The existence of an arbitration agreement can also be inferred by written correspondence such as letters, telexes, or telegrams which provide a record of the agreement. An exchange of statement of claim and defence in which the existence of an arbitration agreement is alleged by one party and not denied by the other is also considered a valid written arbitration agreement.
Any party to the dispute can start the process of appointing an arbitrator and if the other party does not cooperate, the party can approach the office of Chief Justice for the appointment of an arbitrator. There are only two grounds upon which a party can challenge the appointment of an arbitrator – reasonable doubt in the impartiality of the arbitrator and the lack of proper qualification of the arbitrator as required by the arbitration agreement. A sole arbitrator or panels of arbitrators so appointed constitute the Arbitration Tribunal.
Except for some interim measures, there is very little scope for judicial intervention in the arbitration process. The arbitration tribunal has jurisdiction over its own jurisdiction. Thus, if a party wants to challenge the jurisdiction of the arbitration tribunal, it can do so only before the tribunal itself. If the tribunal rejects the request, there is little the party can do except to approach a court after the tribunal makes an award. Section 34 provides certain grounds upon which a party can appeal to the principal civil court of original jurisdiction for setting aside the award.
Once the period for filing an appeal for setting aside an award is over, or if such an appeal is rejected, the award is binding on the parties and is considered as a decree of the court.
Mediation:
Mediation, a form of alternative dispute resolution (ADR) or “appropriate dispute resolution”, aims to assist two (or more) disputants in reaching an agreement. The parties themselves determine the conditions of any settlements reached— rather than accepting something imposed by a third party. The disputes may involve (as parties) states, organizations, communities, individuals or other representatives with a vested interest in the outcome.
Mediators use appropriate techniques and/or skills to open and/or improve dialogue between disputants, aiming to help the parties reach an agreement (with concrete effects) on the disputed matter. Normally, all parties must view the mediator as impartial.
Disputants may use mediation in a variety of disputes, such as commercial, legal, diplomatic, workplace, community and family matters.
A third-party representative may contract and mediate between (say) unions and corporations. When a workers’ union goes on strike, a dispute takes place, and the corporation hires a third party to intervene in an attempt to settle a contract or agreement between the union and the corporation.
Conciliation:
Conciliation is a less formal form of arbitration. This process does not require the 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 the 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 them to the parties for their acceptance. If both parties sign the settlement document, it shall be final and binding on both.
Note that in the USA, this process is similar to Mediation. However, in India, Mediation is different from Conciliation and is a completely informal type of ADR mechanism.
Negotiation:
Negotiation is a dialogue intended to resolve disputes, to produce an agreement upon courses of action, to bargain for individual or collective advantage, or to craft outcomes to satisfy various interests. It is the primary method of alternative dispute resolution.
Negotiation occurs in business, non-profit organizations, government branches, legal proceedings, among nations and in personal situations such as marriage, divorce, parenting, and everyday life. The study of the subject is called negotiation theory. Those who work in negotiation professionally are called negotiators. Professional negotiators are often specialized, such as union negotiators, leverage buyout negotiators, peace negotiators, hostage negotiators, or may work under other titles, such as diplomats, legislators or brokers
Lok Adalat:
“While Arbitration and Conciliation Act, 1996 is a fairly standard western approach towards ADR, the Lok Adalat system constituted under National Legal Services Authority Act, 1987 is a uniquely Indian approach”.
It roughly means “People’s Court”. India has had a long history of resolving disputes through the mediation of village elders. The system of Lok Adalats is an improvement 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 think fit. These are usually presided by a retired judge, social activists, or members of the legal profession. It does not have jurisdiction over matters related to non-compoundable offences.
There is no court fee and no rigid procedural requirement (i.e. no need to follow the process given by Civil Procedure Code or Evidence Act), which makes the process very fast. Parties can directly interact with the judge, which is not possible in regular courts. Cases that are pending in regular courts can be transferred to a Lok Adalat if both 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 focus in Lok Adalats is on compromise. When no compromise is reached, the matter goes back to the court. However, if a compromise is reached, an award is made and is binding on the parties. It is enforced as a decree of a civil court. An important aspect is that the award is final and cannot be appealed, not even under Article 226 because it is a judgement by consent. Lok Adalat is very effective in the settlement of money claims. Disputes like partition suits, damages and matrimonial cases can also be easily settled before Lok Adalat as the scope for compromise through an approach of giving and take is high in these cases. Lok Adalat is a boon to the litigant public, where they can get their disputes settled fast and free of cost.
Important provisions related to ADR:
- Section 89 of the Civil Procedure Code, 1908 provides that opportunity to the people, if it appears to court there exist elements of settlement outside the court then court formulate the terms of the possible settlement and refer the same for: Arbitration, Conciliation, Mediation or Lok Adalat.
- The Acts which deals with Alternative Dispute Resolution are Arbitration and Conciliation Act, 1996 and,
- The Legal Services Authority Act, 1987
Importance and advantages of ADR in India:
To deal with the situation of pendency of cases in courts of India, ADR plays a significant role in India by its diverse techniques. Alternative Dispute Resolution mechanism provides scientifically developed techniques to the Indian judiciary which helps in reducing the burden on the courts. ADR provides various modes of settlement including, arbitration, conciliation, mediation, negotiation and lok Adalat. Here, negotiation means self-counselling between the parties to resolve their dispute but it doesn’t have any statutory recognition in India.
ADR is also founded on such fundamental rights, article 14 and 21 which deals with equality before law and the right to life and personal liberty respectively. ADR’s motive is to provide social-economic and political justice and maintain integrity in the society enshrined in the preamble. ADR also strives to achieve equal justice and free legal aid provided under article 39-A relating to the Directive Principle of State Policy(DPSP). ADR is less time consuming: people resolve their dispute in a short period as compared to courts, it is also a more cost-effective method: it saves a lot of money if one undergoes the litigation process.
People are free to express themselves without any fear of court of law, they can reveal the true facts without disclosing them to any court. It prevents further conflict and maintains a good relationship between the parties, while also preserving the best interest of the parties.
CONCLUSION
With the advent of alternate dispute resolution, there is a new avenue for people to settle their disputes. The settlement of disputes in Lok Adalat quickly has acquired good popularity among the public and this has really given rise to a new force to ADR and this will no doubt reduce the pendency in law Courts. There is an urgent need for justice dispensation through ADR mechanisms.
The ADR movement needs to be carried forward with greater speed. This will considerably reduce the load on the courts apart from providing instant justice at the doorstep, without the substantial cost being involved. If they are successfully given effect, then it will really achieve the goal of rendering social justice to the parties to the dispute.
