April 19, 2024
Home » AN OVERVIEW OF ALTERNATIVE DISPUTE RESOLUTION IN INDIA
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This article has been written by Gopika Kalidas Naduvilath, a fifth-year law student pursuing BBA LLB (Hons) at Alliance University, Bangalore. 

Introduction

The Indian judiciary is one of the world’s oldest legal systems; nonetheless, it is commonly acknowledged that the Indian judiciary is becoming increasingly ineffectual in dealing with outstanding issues, with Indian courts overburdened with long-pending cases. Even after creating over a thousand fast-track courts that have already processed millions of cases, the problem remains far from resolved, with pending cases piling up. Alternative Dispute Resolution (ADR) may be a beneficial strategy for resolving disputes peacefully with an outcome that is acceptable to all parties. Now it has emerged as a crucial mechanism for resolving disputes outside the traditional court litigation process.

What is Alternative Dispute Resolution?

ADR is a mechanism for settling conflicts and disagreements between parties via conversations and discussions. It is an attempt to give an alternative to the current traditional litigation system along with resolving disputes and disagreements between parties by reaching an amicable resolution via talks and discussions. It is an attempt to provide an alternate mechanism to the established ways of conflict settlement and other matters where starting a negotiation process or reaching a mutually acceptable solution has proven difficult. ADR refers to several approaches used to resolve disputes outside of the formal judicial system. These techniques emphasize collaboration, adaptability, and the parties’ engagement in developing their dispute-resolution process. The primary concept of ADR is the notion that, rather than formal legal proceedings, problems may often be resolved more effectively, efficiently, and peacefully via conversation, negotiation, and mediation. ADR is intended to settle disputes outside of the courts with the aid of a neutral third party. This technique is frequently available when efforts by both the consumer and the insurer to resolve any issues fail and reach an impasse.

Evolution of ADR in India

In ancient India, people lived in joint families with their clans and followed a caste system. Disputes among kulas were resolved by the head of the family, clan, or Kula. Similarly, if the individuals had a similar trade, firm, or Shrenis, they would appoint someone to resolve internal issues[1]. Furthermore, research into ancient legal history demonstrates the involvement of private persons (arbitrators) in Panchayats, Puga, Shreni, and Kula in disputes affecting family, business, or social organizations. ADR has its main roots in ancient India when communities settled conflicts through a council of elders or village panchayats. The Panchayat system is the most significant of the several that exist in India. Pancha means five, and Panchayats were comprised of five elderly members of the community, led by the local headman. The Panchayat system was an early form of self-government in India, with the primary function of conflict resolution. As time passed, the King began to appoint the village headman and seek his advice on administrative issues. A procedure of appeal was subsequently developed, allowing parties to file appeals to the King against Panchayat decisions. Today, the Panchayat system has been granted constitutional authority to resolve disagreements over specific topics.

However, the Arbitration and Conciliation Act (1996) has given ADR a boost which gained momentum in contemporary India and made a significant shift towards promoting arbitration along with other ADR mechanisms.

Legal Framework of ADR in India

Many laws were created in India during British rule, and the country’s administration underwent considerable changes. In 1772, the courts were given the ability to refer disputes to arbitration, either at the request of the parties or at their discretion. After a decade, the Code of Civil Procedure was enacted in 1859, with sections 312 to 327 addressing arbitration, however, the parts dealing with arbitration were deleted in 1882. Further in 1899 The Indian Arbitration Act, 1899 was enacted to give effect to alternative dispute mechanisms in India based on English legislation. Later, in 1908, the Code of Civil Procedure of 1908 was amended, and section 89 was replaced by the second schedule, which gave courts extensive jurisdiction to refer issues to the ADR procedure. The Indian Arbitration Act of 1899 and Section 89, read in conjunction with the second schedule of the CPC 1908, were two effective pieces of arbitration legislation.

Following that, in 1937, India accepted and adopted the Geneva Convention, and the Arbitration (Protocol and Convention) Act was enacted to reflect this. The Arbitration Act of 1940 superseded both the Indian Arbitration Act of 1899 and section 89 of the CPC’s second schedule. In India, the Arbitration (Protocol and Convention) Act of 1937, which enforces international verdicts, and the Arbitration Act of 1940, which refers disputes to ADR proceedings, are still in effect. In 1961, India signed the New York Convention and enacted the New York Foreign Award (Recognition and Convention) Act.

Later, in 1996, the Arbitration and Conciliation Act was enforced in India based on the 1985 United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration and reflects India’s commitment to international standards, which repealed and consolidated the Arbitration (Protocol and Convention) Act, 1937, and The New York Convention and enacted the New York Foreign Award (Recognition and Convention) Act, 1961, along with which section 89 was reintroduced with Order X in CPC in 2002 to make the act more effective and efficient. This bill gives the parties the freedom to choose the dispute resolution process and minimizes the impact of arbitration. It provides general guidelines for the conduct of judicial proceedings the recognition and enforcement of judicial acts. Additionally, the law encourages the resolution of disputes through mediation and conciliation. The most recent law introduced in ADR was The Mediation Act of 2023 which promotes and facilitates mediation.

The Types of ADR Mechanism

In India, the main types of ADR mechanisms are as follows: –

Arbitration

Arbitration is the most popular and established method of conflict resolution among the several possibilities, which include mediation, conciliation, and expert determination. Parties may also consider one or more techniques to sequentially settle disputes. Arbitration is a process in which the parties agree to submit their disagreement to one or more arbitrators, who then provide a binding decision on the case. As a private dispute resolution system, the parties choose arbitration rather than court. The parties in dispute choose a neutral third party, known as an Arbitrator, to determine the issue between them. The procedure is rather flexible, and the parties may forego technical aspects of court proceedings at their discretion. Arbitration provisions typically included in business agreements in which the parties agree to use an arbitration procedure in the case of future disagreements over the agreement’s terms and conditions. The Arbitral Tribunal’s decision is referred to as an “Award” and has the same legal standing as a court finding. [2]Arbitration in India is governed under the 1996 Arbitration and Conciliation Act.

Mediation

The main strategy of mediation is to provide assistance to the party involved in the dispute. This technique also incorporates a neutral third party, known as a mediator, who facilitates discussions between the parties.  The mediator does not make a decision, but instead helps the disputing parties achieve an agreement or resolve their disagreements. The mediation process usually concludes in the establishment of a legally binding contract between the parties. This shows how the mediator is a facilitator who assist parties in finding common ground. An efficient dispute resolution system not only improves the country’s economy and business practices, but it also promotes citizens’ well-being, access to justice, and the rule of law. This, together with India’s status as one of the first notable signatories to the Singapore Convention on Mediation (“SCM”), culminated in the publishing of the draft Mediation Bill of 2021, which highlighted the significance of further encouraging ADR, notably through institutional mediation which shaped the Mediation Act of 2023 and implemented the same for smooth mediation procedures. [3]

Conciliation

Conciliation is something between mediation and arbitration and less formal process than arbitration. A conciliator is a neutral third party chosen by the parties to assist them in resolving disputes in conciliation proceedings. Unlike in mediation, the conciliator serves as a facilitator, assisting the parties in identifying and exploring the issues at hand, understanding each other’s points of view, and reaching an agreement. A conciliator cannot give an award, but he or she can offer suggestions for settling the conflict. These recommendations are not binding on the parties, and they may choose to disregard them. The parties’ resolution is then codified as a settlement agreement. Like arbitration, conciliation in India is also governed by the Arbitration and Conciliation Act of 1996. In conciliation, the parties are free to accept or reject the conciliator’s suggestions; nevertheless, if both parties accept the settlement document written by the conciliator, it is final and binding on both. [4]

Negotiation

The most informal technique of dispute resolution, in which the participants discuss the matter among themselves. There is no third party involved, and the participants are free to resolve any problems by discussion. Negotiation enables the parties to meet and settle a disagreement. The main advantage of this dispute-resolution approach is that it gives the parties authority over the process and the outcome. Negotiation is far less formal than other types of ADRs and provides a great lot of flexibility. It is a method in which parties and their legal advisors try to reach an agreement to resolve a dispute. Negotiations can be conducted by written communication or a meeting of all parties concerned.[5]

Judicial Settlements inclusive of Lok Adalat’s

Lok Adalat is an ADR mechanism that allows for peaceful settlement of pre-litigation or court-related conflicts. The foundation of this approach is Gandhian principles. The installation of Lok Adalats effectively provided the victims with an extra venue for resolving their difficulties and marked a new chapter in the nation’s judicial system. Lok Adalats have legislative authority under the Legal Services Authorities Act of 1987. Under the Act, the Lok Adalats’ award (decision) is treated as a civil court judgment and is final and binding on all parties, with no right of appeal to any court of law. If the parties disagree with the Lok Adalat’s judgment, there is no mechanism for an appeal; instead, they can use their right to litigate by coming to court and filing a case following the proper procedures. [6]

Institutions

Various Indian institutes contribute significantly to the development and implementation of ADR processes along with international institutions. Arbitration and mediation hearings are conducted in an orderly way using the norms and facilities provided by these organizations. Some of these institutes are the Indian Council of Arbitration (ICA), Delhi International Arbitration Centre (DIAC), Indian Dispute Resolution Centre (ISRC), Mumbai Centre for International Arbitration (MCIA), International Chamber of Commerce (ICC), etc.

Advantages

ADR has several advantages over traditional litigation, including flexibility, cost savings, and efficiency. ADR procedures such as arbitration and mediation usually have shorter timelines, reducing the financial burden on the parties. The informality of ADR encourages a collaborative environment, which frequently protects relationships by allowing for more innovative and personalized solutions. ADR also provides secrecy, allowing parties to resolve disagreements privately. ADR is gaining popularity among individuals and companies as a faster and more practical way to dispute resolution, owing to its emphasis on party autonomy and the opportunity to select an impartial third party.

Challenges and Developments

Although ADR has been accepted in India, there are still several difficulties. One major issue is that businesses, legal professionals, and the general public are not well-versed in ADR. Traditional litigation is popular because many individuals and organizations are still unaware of the benefits and procedures of mediation, arbitration, and other ADR alternatives. Educating professionals, corporations, and the general public about ADR methods is an obstacle. There is also information on how certification and training may improve the skills of ADR practitioners. There have also been changes to the legal system. The most recent amendments to the Arbitration and Cooperation Law seek to modernize and align administrative processes with global norms. Several pieces of law demonstrate the Indian government’s commitment to fostering an atmosphere conducive to ADR. [7]

The formation and growth of specialist ADR institutions is critical to the progress of ADR in India. Organizations such as the Delhi International Arbitration Centre (DIAC) and the Mumbai Centre for International Arbitration (MCIA), which provide cutting-edge facilities and experienced panels, help to strengthen the arbitration process’s legitimacy and efficacy. As part of its main mediation promotion programs, the Mediation and Conciliation Project Committee (MCPC) produced mediation standards and enhanced mediation awareness. India’s accession to the United Nations Convention on worldwide Settlement Agreements Resulting from Mediation, often known as the Singapore Convention, is a noteworthy achievement in terms of worldwide recognition. With the help of this convention, mediated settlement agreements may be more easily enforced internationally, bringing India closer to the finest ADR standards around the globe. The Indian Supreme Court has strongly advocated for mediation as the preferable means of settling disputes, highlighting its ability to produce speedy and peaceful solutions. These institutions contribute to India’s status as a popular location for both local and international arbitration. In particular, when it comes to international arbitration, India’s commitment to ADR transcends national boundaries. The nation’s dedication to improving the administration of international arbitration verdicts is evidenced by its ratification of the New York Convention on the Recognition and Enforcement of international Arbitral verdicts. This global association advocates for India as the ideal venue for international arbitration.

Conclusion

The fundamental motivator for the development of ADR procedures has been the need to settle conflicts swiftly and economically. ADR’s history in India has been influenced by several variables, including previous practices, legal changes, and public awareness of the importance of efficient and transparent conflict settlement methods. India has made significant progress in ADR, from past norms to the contemporary legal structure. As the legal environment evolves, ADR will become increasingly important in delivering prompt and efficient settlements to a wide range of conflicts.


[1] https://viamediationcentre.org/readnews/MzEx/Evolution-and-Codification-of-ADR-mechanism-in-India

[2] A structured guide to arbitration in India, https://www.lexology.com/library/detail.aspx?g=72bcbbe3-c139-46f2-b9ce-086394161f41

[3] https://viamediationcentre.org/readnews/NDUy/OVERVIEW-OF-MEDIATION-IN-INDIA

[4] https://theidrc.com/content/conciliation/conciliation-in-india

[5] https://siac.org.sg/

[6] https://www.civilsdaily.com/lok-adalats-origin-evolution-jurisdiction-powers/

[7] https://timesofindia.indiatimes.com/readersblog/lawpedia/what-is-alternative-dispute-order-50952/


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