ALTERNATIVE DISPUTE RESOLUTION
Introduction
Indian judiciary is one of the oldest judicial systems, a world-renowned fact but nowadays it is also well-known fact that Indian judiciary is becoming inefficient to deal 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 helpful mechanism, it resolves conflict in a peaceful manner where the outcome is accepted by both the parties.In general terms, dispute is referred to as a disagreement or argument between the parties. The dispute generally takes place between two parties which can be a person or a group of person composing a single entity. Parties comprise of plaintiff and defendant. In this case, plaintiff is the person who brings charges and files a suit and defendant is the person accused with charges. Dispute can be resolved in both using legal jurisdiction and also compromising settlement without reaching the court. This dispute can be between individuals and corporations and even between public officials.
Perhaps, different parties try to resolve the dispute which they considered to result with the best outcome. Thus there is necessity of Alternative Dispute Resolution (ADR) in order to ensure justified resolution without the involvement of legal jurisdiction and court. The aspects of ADR are perhaps extended since there are different methods and implications of resolving disputes. The resolution of ADR is not only for commercial conflicts but also in many cases found in the dispute resolution of public officials.
Dispute resolution refers to the settlement of conflicts or arguments between various parties. The conflict is resolved by considering satisfying at least some of each side’s needs and addressing the interest.
Dispute resolution processes fall into two major types:
- Adjudicative processes, such as litigation or arbitration, in which a judge, jury or arbitrator determines the outcome.
- Consensual processes, such as collaborative law, mediation, conciliation, or negotiation, in which the parties attempt to reach agreement. These processes are not influenced by the court judgment and settlement is rather privately decided. Thus it is in simple form called alternative dispute resolution (ADR).
Alternative Dispute Resolution
The concept of Alternative Dispute Resolution (ADR) mechanism is capable of providing a substitute to the conventional methods of resolving disputes. ADR offers to resolve all type of matters including civil, commercial, industrial and family etc., where people are not being able to start any type of negotiation and reach the settlement. Generally, ADR uses neutral third party who helps the parties to communicate, discuss the differences and resolve the dispute. It is a method which enables individuals and group to maintain co-operation, social order and provides opportunity to reduce hostility.Alternative Dispute Resolution (ADR) includes dispute resolution mechanisms and techniques that perform as a means for disagreeing parties to attain an agreement short of lawsuit. It is basically a substitute of formal court hearing. It is a cooperative term for the ways that parties can settle disputes, with (or without) the help of a third party. ADR are conducts and methods of resolving conflicts outside the judicial practice. Despite the resistance of many renowned parties and advocates, ADR has gained prevalent reception both among the general public and legal profession. Even now in many situations, court requires the parties to execute of some type of ADR before the permission of case trial. The rising popularity of ADR can be explained by the increasing caseload of traditional courts, the perception that ADR imposes fewer costs than litigation, a preference for confidentiality, and the desire of some parties to have greater control over the selection of the individual or individuals who will decide their dispute.[1]Many of the sovereign countries refer ADR as an extra judicial procedure (i.e. Australia). Some of the senior judiciary in certain jurisdictions (of which England and Wales is one) are strongly in favor of the use of mediation to settle disputes.
The adoption of ADR depends on three major factors:
The degree to which disputants and their advisors are responsive of ADR
The sufficiency of the supply of ADR services for those that would wish to take-up ADR services
The perceived advantages and disadvantages of ADR
Therefore, by satisfying the three crucial factors, ADR can be successfully implanted for resolving critical dispute issues. The third critical factor indicates the perception of parties regarding the pros and cons of ADR, since legal hearing is perhaps avoided. Thus, both the parties require being fully conscious of the advantages and disadvantages prior to the successful implication of ADR.
Importance 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 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-counseling 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 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 strive to achieve equal justice and free legal aid provided under article 39-A relating to Directive Principle of State Policy(DPSP).
Few 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
Advantages of Alternative Dispute Resolution
1. Less time consuming: people resolve their dispute in short period as compared to courts.
2. Cost effective method: it saves lot of money if one undergoes in litigation process.
3. It is free from technicalities of courts, here informal ways are applied in resolving dispute.
4. People are free to express themselves without any fear of court of law. They can reveal the true facts without disclosing it to any court.
5. Efficient way: there are always chances of restoring relationship back as parties discuss their issues together on the same platform.
6. It prevents further conflict and maintains good relationship between the parties.
7. It preserves the best interest of the parties.
Various modes of Alternative Dispute Resolution
Arbitration
The process of Arbitration cannot exist without valid arbitration agreement prior to the emergence of dispute. In this technique of resolution parties refer their dispute to one or more persons called arbitrators. Decision of arbitrator is bound on parties and their decision is called ‘Award’. The object of Arbitration is to obtain fair settlement of dispute outside of court without necessary delay and expense.
Any party to a contract where arbitration clause is there, can invoke arbitration clause either himself or through their authorized agent which refer the dispute directly to the arbitration as per the Arbitration clause. Here, arbitration clause means a clause that mention the course of actions, language, number of arbitrators, seat or legal place of the arbitration to be taken place in the event of dispute arising out between the parties.
Initially, applicant initiates an arbitration by filing a statement of claim that specifies the relevant facts and remedies. The application must include the certified copy of arbitration agreement.Statement of claim is a written document filed in the court or tribunal for judicial determination and a copy also send to the defendant in which claimant described the facts in support of his case and the relief he seeks from the defendant.
The respondent reply to the arbitration by filing an answer against the arbitration claim of claimant that specifies the relevant facts and available defenses to the statement of claim.Arbitrators selection is the process in which the parties receive lists of potential arbitrators and select the panel to hear their case.Then there is the exchange of documents and information in preparation for the hearing called ‘Discovery’.
The parties meet in persons to conduct the hearing in which the parties present the arguments and evidences in support of their respective cases.After the witnesses examined and evidences are presented, then there in conclusion arbitrator gives an ‘Award’ which is binding on the parties.Now the intricacies of the proceedings vary with the arbitration agreement. For example, there could be a timeline which must be followed. This timeline would be stipulated in the agreement.
Section 8 of Arbitration and Conciliation Act, 1996 provides if any party disrespects the arbitral agreement and instead of moving to arbitration, moves that suit to civil court, other party can apply the court for referring the matter to arbitration tribunal as per the agreement but not later the submission of the first statement. The application must include a certified copy of arbitration agreement and if courts satisfy with it, the matter will be referred to arbitration.
Mediation
Mediation is an Alternative Dispute resolution where a third neutral party aims to assist two or more disputants in reaching agreement. It is an easy and uncomplicated party centered negotiation process where third party acts as a mediator to resolve dispute amicably by using appropriate communication and negotiation techniques. This process is totally controlled by the parties. Mediator’s work is just to facilitate the parties to reach settlement of their dispute. Mediator doesn’t impose his views and make no decision about what a fair settlement should be.Opening statement
Joint session
Separate session and,
Closing
At the commencement of mediation process, the mediator shall ensure the parties and their counsels should be present.Initially in the opening statement he furnishes all the information about his appointment and declares he does not have any connection with either of parties and has no interest in the dispute.
In the joint session, he gathers all the information, understand the fact and issues about the dispute by inviting both the parties to present their case and put forward their perspective without any interruption. In this session, mediator tries to encourage and promote communication and manage interruption and outbursts by the parties.Next is separate session, where he tries to understand the dispute at a deeper level, gathers specific information by taking both the parties in confidence separately.
Mediator asks frequent questions on facts and discusses strengths and weaknesses to the parties of their respective cases.After hearing both the sides, mediator starts formulating issues for resolution and creating options for settlement.In the case of failure to reach any agreement through negotiation in mediation, mediator uses different Reality check technique like:Best Alternative to Negotiated Agreement (BATNA)It is the best possible outcome both the party come up with or has in mind. Its suitable situation as each party thinks about their most favorable scenario looks like.
Most Likely Alternative to Negotiated Agreement (MLATNA)For a successful negotiation the result always lies in the middle, mediator after considering both the parties comes up with most likely outcome. Here result is not always in the middle but little left or right of the center depending on negotiation situation.Worst Alternative to Negotiated Agreement (WATNA)It the worst possible outcome a party has in their mind for what could happen during negotiation.
It may be helpful to the parties and mediator to examine the alternative outside the mediation(specifically litigation) and discusses the consequences of failing to reach agreement like: effect on the relationship of the parties or effect on the business of the parties. It is always important to consider and discuss the worst and most probable outcomes, it’s not always people get the best outcome.Mediator discusses the perspective of the parties about the possible outcome at litigation. It is also helpful for the mediator to work with parties and their advocates to come to a proper understanding of the best, worst and most probable outcome to the dispute through litigation as that would help the parties to acknowledge the reality and prepare realistic, logical and workable proposals.
Conciliation
Conciliation is a form of arbitration but it is less formal in nature. It is the process of facilitating an amicable resolution between the parties, whereby the parties to the dispute use conciliator who meets with the parties separately to settle their dispute. Conciliator meet separately to lower the tension between parties, improving communication, interpreting issue to bring about a negotiated settlement There is no need of prior agreement and cannot be forced on party who is not intending for conciliation. It is different from arbitration in that way.Actually, it is not possible for the parties to enter into conciliation agreement before the dispute has arisen. It is clear in Section 62 of The Arbitration and Conciliation Act, 1996 which provides,The party initiating conciliation shall send to the other party a written invitation to conciliate under this part, briefly identifying the subject of the dispute.Conciliation proceedings shall commence when the other party accepts in writing the invitation to conciliate.If the other rejects the invitation, there will be no conciliation proceedings.
Above provision clearly states conciliation agreement should be an extemporary agreement entered into after the dispute has but not before. Parties are also permitted to engage in conciliation process even while the arbitral proceedings are on(section 30).Lok Adalat
Lok Adalat is called ‘People’s Court’ presided over by a sitting or retired judicial officer, social activists or members of Legal profession as the chairman. National Legal Service Authority (NALSA) along with other Legal Services Institutions conducts Lok Adalats on regular intervals for exercising such jurisdiction. Any case pending in regular court or any dispute which has not been brought before any court of law can be referred to Lok Adalat. There is no court fees and rigid procedure followed, which makes the process fast. If any matter pending in court of referred to the Lok Adalat and is settled subsequently, the court fee originally paid in the court when the petition filed is also refunded back to the parties.
Parties are in direct interaction with the judge, which is not possible in regular courts. It depends on the parties if both the parties agree on case long pending in regular court can be transferred to Lok Adalat. The persons deciding the cases have the role of statutory conciliators only, they can only persuade the parties to come to a conclusion for settling the dispute outside the regular court in the Lok Adalat. Legal Services Authorities (State or District) as the case may be on receipt of an application from one of the parties at a pre-litigation stage may refer such matter to the Lok Adalat for which notice would then be issued to the other party. Lok Adalats do not have any jurisdiction to deal with cases of non-compoundable offenses.
Advantages of alternative dispute resolution
ADR is beneficial for resolving any critical dispute. The result varies from situation to situation but outcomes are more effective than of legal procedure. There are few key benefits of ADR:
(a) Cost Saving: One of the largest reasons parties choose to resolve their disputes outside of the courts is cost. Judicial process for resolving any disputes involves court fees, documentation fees, advocate’s fees and many other extra costs. Moreover, if there is corruption present, the cost may rise even higher.ADR does not involve expert fees or courts costs. Alternative dispute resolution usually costs much less than litigation, allowing smaller financial disputes a financially viable way to be settled. ADR also saves the money of government.
(b) Speed: Adjudicative process for resolving conflicts are very lengthy since there are court decisions upon which the hearing is dependent. Litigation can take over a year to resolve because of different timing and dates involved. Matters that are being solved using the ADR method may take months or even just weeks to be resolved. ADR can be arranged by the parties and the panelist as soon as they are able to meet. Compared to the court process, where waits of 2-3 years are normal, dispute resolution is as fast as the parties want it to be.[9]
(c) Control:The parties have control over some of the processes in ADR. Usually selecting the method of ADR, selecting the panelist for the dispute resolution; the length of the process; and, in a mediations case, even the outcome are controlled and maintained by the parties. In case of lawsuit process the control is totally possessed by the court and supreme authority. Opposed to the court system, where the legal system and the judge control every aspect, ADR is much more flexible. Furthermore, in the case of arbitration the parties have far more flexibility in choosing the application of relevant industry standards, domestic law, the law of a foreign country, a unique set of rules used by the arbitration service, or even religious law, in some cases.
(d) Confidentiality: Privacy is fully securitized when it comes to Alternative Dispute Resolution. ADR is conducted in private, therefore avoiding publicity from the media. The public are also unable to attend. On the other hand disputes resolved in court are public and the judgments awarded are also in public. ADR provides certain resolution processes such as, Mediation, arbitration, and mini trials that are conducted in private maintain strict confidentiality.
(e) Experienced Neutral Panelists: The panelists are professional mediators and arbitrators with training and expertise in dispute resolution. Disputing parties are able to select their panelist from a list of qualified individuals who are specialized in specific aspects of environments. In the court system, binding decisions are made by judges who may lack expertise in different practices.
(f) Cooperative Approach: All ADR services take place in a more informal, less confrontational atmosphere. This is more conducive to maintain a positive business relationship between the two parties. With mediation, specifically, the result is collaboration between the two parties. Therefore ADR is a process that looks into the best interest of both parties in order to conclude a compromised mutual decision.
(g) Flexibility: Legal and non-legal disputes can be addressed during this process proving it to be more flexible. Some may think this is a suitable package in the sense that it takes into account fundamental concerns of the parties and offers remedies not available when at court.
(h) Parties into Good Terms: The aim of ADR is to find a compromise solution which is satisfactory to both parties. Court proceedings create a winner and a loser. Using ADR to settle a dispute means businesses can remain on good terms and continue to trade with each other once their dispute is resolved.The benefits or advantages of ADR is realized when the dispute or conflict is successfully resolved and all the participant parties respect and value the outcomes provided by such procedure. The failure to compromised decision pinpoints the weakness of ADR which to be adjusted for attaining fruitful outcome.
Disadvantages of Alternative dispute resolution
There are several disadvantages blocking the way of successful dispute resolution and often affecting both parties sentiment to settle for a compromised decision. Some the disadvantages are:
(a) Unequal Bargaining Power: In certain situations one side is able to control the other. Therefore a significant imbalance of power exists. For example, employment and divorce cases, making the courts a better option for a weak party.
(b) Lack of Legal Proficiency– Where a dispute involves difficult legal points a mediator or arbitrator is unlikely to have the same legal expertise and knowledge as a judge. Dispute can be of various situations such as, commercial conflicts, social conflicts, legal conflicts and many others which require specialized mediator. Most of the cases the mediator does not possess a judge’s point of view.
(c) No System of Specific Model– It isn’t easy to predict the outcome of a dispute decided through ADR as there is no system of precedent. Therefore, it is easier to obtain evidence from the other party in a lawsuit. Lack of system results in restricted prediction of outcomes.(d) Enforceability – Most forms of ADR are not legally binding, making any award difficult to enforce. Legal arbitration has some kind of process for internal appeals, which enables the decision as binding and only subject to the review of court.
(e) Required Court Action: The arbitrator’s decision can require a court action if one of the parties refuse to accept the arbitrator’s decision. This would not only create chaos but also a mandatory review by the court. Thus, ADR sometimes raises the question of biasness of arbitrator’s decision. Also, there is very limited opportunity for judicial review of an arbitrator’s decision. A court might also overturn an arbitrator’s decision if it decided issues that were not within the scope of the arbitration agreement.
(f) Might not be A Good Fit: Alternative dispute resolutions generally resolve only issues of money or civil disputes. Alternative dispute resolution proceedings will not result in injunctive orders. They cannot result in an order requiring one of the parties to do or cease doing a particular affirmative act.
(g) Limits Discovery Process: ADR generally proceeding without the protections offered parties in litigation, such as those rules governed through discovery. Courts generally allow a great deal of latitude in the discovery process, which is not active in alternative dispute resolution.
Conclusion
Essentially the advantages and disadvantages of Alternative Dispute Resolution (ADR) are important to consider before agreeing to any sort of ADR techniques. It reduces the chances of unknowingly agreeing in any arbitration. The perception of advantages over the cons of ADR fully depends on situation to situation where the parties are in severe need of perusing such techniques to attain mutual interest. After satisfying certain standards, many lease agreements and employee contracts have mandatory arbitration provisions which will usually be enforced. ADR can be a good alternative to the courts as long as it is used in the exact way and for the exact type of disputes. Though there are few minor deficiencies, ADR can save both time and cost and legal fees.