An Introduction to Alternate Dispute Resolution in India

This article is written by K.Lasya Charitha pursuing BALLB in Damodaram Sanjivayya National Law University, Visakhapatnam. In this article, the researcher describes the History of ADR in India, types of ADR, the Importance of ADR in India, and few case laws related to ADR.

What is ADR?

Alternate Dispute Resolution (ADR) is the process that helps parties of a suit to resolve their disputes without the intervention of any judicial institution or any trial process. This process is usually confidential, less formal, and also less stressful compared to the traditional court procedures.

The Alternate Dispute Resolution process resolves all types of disputes which include civil, commercial, family, and high profile labor disputes, etc., where the parties will not be able to negotiate and reach a settlement.
ADR process uses third parties to help and communicate between both parties and reach a conclusion. These are often collaborative and help the parties to understand each other easily.
Generally, the ADR process comes out with creative idea solutions that the traditional courts may not be legally allowed to impose.
The ADR process gives the opportunity to the parties to maintain co-operation, social order and helps to reduce hostility.

History of ADR in Ancient India

Dispute resolution through ADR is inherently built into Indian culture. Since the Vedic period, the indigenous peoples have not used opposing methods to resolve their disputes. Yajnavalkya and Narada found that the courts of Kula, SRENI, and Puga had settled disputes in ancient India. Disputes between family members, communities, castes, or races and tribes were settled using these methods. The SRENI was a court composed of trade experts that helped traders resolve their trade disputes internally. Puga was a court made up of people who belonged to several parishes, but from the same place as Panchayat, these courts followed a simple decision-making process. The Kula decision can be challenged before the SRENI and the SRENI decision before Pradvivaca. and the final calling was allowed to the king. These courts had made decisions about the interests of the party and the community.[i]

Functions of ADR

Reduce the workload of the courts, which has indicated that there are currently around 3.4 million cases pending in Indian courts (data from national justice data grid).
Resolving cases swiftly equates to justice by avoiding procedural delays associated with the mandatory judicial system and therefore complying with the primary right of the speedy trial division of Article 21.[ii]
As the cost and time of litigation decrease, the chances of access to justice will increase. Therefore, it fulfills its obligation to provide free legal aid to the poor under 39A.[iii]
Save the common man from the complicated and unpleasant legal process.
The ADR procedure offers discretion. Assistance in important communal matters for litigants, especially in civil matters such as divorce.
In support of authority. For example Administrative Courts, National Company Law Court, National Green Court, and others.

Some Important Provisions related to ADR

Section 89 of the Code of Civil Procedure, 1908 talks about the ” Settlement of disputes outside the court”. The contents of the said section are as follows:

“where it appears to the court that there exist elements of a settlement which may be acceptable to the parties, the court shall formulate the terms of the settlement and give them to the parties for their observations and after receiving the observations of the parties, the court may reformulate the terms of a possible settlement and refer the same for :

Arbitration
Mediation
Conciliation
Lok Adalat”[iv]
Other legislations which deal with Alternate Dispute Resolution are the Indian Arbitration Act of 1899, Arbitration (Protocol And Convention) Act of 1937, The Arbitration Act Of 1940, Arbitration And Conciliation Act of 1996, Legal Services Authorities Act of 1987.

Modes of ADR in India

Arbitration

In arbitration, a neutral person called an “arbitrator” listens to the arguments and evidence of the parties, and then determines the outcome of the dispute. Arbitration is not as formal as the courts, and the rules of evidence are generally relaxed. Arbitration can be “mandatory” or “optional”. Binding arbitration means that the parties waive their right of litigation and agree to accept the arbitrator’s decision as to the final decision. Usually, there is no legal remedy against the arbitrator’s decision. Non-binding arbitration means that if the parties do not accept the arbitrator’s decision, they can file a lawsuit. The types of arbitration are Ad Hoc Arbitration, Institutional Arbitration, Statutory Arbitration, Fast track arbitration.

Mediation

In mediation, an impartial person called a “mediator” helps the parties find a solution acceptable to both parties. The mediator does not resolve the dispute but helps the parties communicate so that they can try to resolve the dispute on their own. Mediation is not binding on the parties like arbitration. The biggest advantage of mediation is that the entire process is strictly confidential. Mediation saves time and financial and emotional cost of resolving a dispute, thereby, leads to the re-establishment of trust and respect among the parties. Emotions and feelings between parties can be preserved causing minimum stress and heartache.

Conciliation

Conciliation is a form of arbitration, but it is not so formal in nature. It is a process of promoting peaceful settlement between the two parties. In this process, the parties to the dispute appoint a conciliator to meet with the two parties separately to resolve the dispute to Reduce the tension between the two parties, improve communication, and explain the problem to reach a negotiated solution. There is no need for an agreement in advance, nor can it be imposed on any party that does not seek a settlement, because this is different from arbitration in that way. However, if both parties accept the settlement document drawn by the conciliator, it shall be final and binding on both.

Negotiation

In India, Negotiation doesn’t have any statutory recognition. Negotiation is self-counseling between the parties to resolve their dispute. Negotiation is a process that has no fixed rules but follows a predictable pattern. It occurs mostly in business, NGOs, among nations, and also in personal matters like marriage, divorce, and everyday life.

Essentials of Negotiation are:

It is a communication process;
It resolves conflicts;
It is a voluntary exercise;
It is a non-binding process;
Parties retain control over outcome and procedure;
There is a possibility of achieving wide-ranging solutions, and of maximizing joint gains.

Lok Adalat

Lok Adalat is a unique system developed in India. It is also called the People’s Court and is a forum for voluntary settlement of disputes between parties through mediation and persuasive methods. This includes negotiation, mediation, and reconciliation. According to the Civil Procedure Law, the civil court has approved Lok Adalat, a tool for resolving disputes between the two parties. Any case heard in the ordinary court or any dispute not submitted to the court can be submitted to Lok Adalat. No fees are charged, and strict procedures are followed to simplify the process. If any matter is pending n the court and it is referred to the Lok Adalat and is settled subsequently, then the court fee which is paid before when the petition is filed will also be refunded back to the parties.

Advantages of Alternate Dispute Resolution

ADR has many advantages over the traditional method of litigation and some of the advantages are:

ADR is usually faster than the traditional courts and is budget-friendly.
It is informal in nature.
There is confidentiality in the process of resolution of disputes between the parties.
It is very flexible and responsive to the individual needs of the people involved in it.
It prevents further conflict and maintains a good relationship between the parties.

Few Case laws related to ADR

In P. Anand Gajapathi v. P.V.G. Raju[v], the question was whether an arbitration agreement can be entered into after a lawsuit has been filed. The parties to the case entered into an arbitration agreement during the pendency of the appeal in the court agreed to refer their disputes to an arbitrator. The court ruled that it is possible if both parties give their consent for arbitration. The phrase “subject to an arbitration agreement” does not necessarily require that the agreement must exist before the lawsuit is brought to court.

In M.V. Baltic Confidence v. State Trading Corporation of India Ltd.[vi], the Supreme Court held that the intent of the parties to enter into an arbitration agreement should be considered and the words of the clause can be overlooked if the intent is clear.
In the case of Narayan Prasad Lohia v. Nikunj Kumar Lohia[vii], the question of whether the arbitration agreement is no longer valid was raised, because according to the law, the agreement only stipulates the appointment of two arbitrators, and an odd number is required. Referees. It was pointed out that even if the parties ordered the appointment of two arbitrators, the agreement remained valid. The two judges can agree on the same thing. If there is a possibility of a tie, then in accordance with Article 11(3) Then, the arbitrators must appoint a third arbitrator as the head referee. It is also possible to appoint a third arbitrator as a preventive measure.

If the parties do not specify the number of arbitrators in the agreement, the arbitration tribunal will consist of one arbitrator by default.

In Satish Kumar v. Surinder Kumar[viii], talked about Section 35 that contemplates the finality of arbitral awards. The Supreme Court held that after the award becomes final, the rights and liabilities of the parties in respect of said claims can be determined only on the basis of the said award, thereafter, no action can be started on the original claim which had been the subject matter of the arbitral proceedings. It was held by the Supreme Court, that the award is in fact, a final adjudication of a court of the rights and liabilities of the parties, which on the face of it is conclusive upon the merits of the controversy submitted. It was further held that an award given under the Arbitration Act requires registration under section 17(1) (b) of the Registration Act if the award affects partition of an immovable property exceeding the value of Rs. 100/-.
In Puri Construction Co. v. Union of India[ix], it was held by the SC that when the court is called upon to decide the objections raised by a party against an award, the jurisdiction of the court is limited, as expressly indicated in the act and it has no jurisdiction to sit in appeal and examine the correctness of the award on merits. The Court also held that if there is no legal proposition either in the award or in any document annexed with the award which is erroneous and the alleged mistakes or alleged errors, are only mistakes of fact and if the award is made fairly, after giving adequate opportunity to the parties to place their grievances in the manner provided by the arbitration agreement, the award is not amenable to corrections of the Court.

Conclusion

In Conclusion, ADR has been proved successful in clearing the backlog cases in various levels of the Indian judiciary. Lok Adalats have alone disposed of more than 50 lakh cases every year. But there is a lack of awareness about the availability of these mechanisms. There is an urgent need for justice dispensation through ADR mechanisms. The National and State Legal Services Authorities should create awareness among the citizens of the country regarding these Alternative Dispute Resolutions so that they become the first option explored by the potential litigants. This will considerably reduce the load on the courts apart from providing instant justice to the people, without substantial costs being involved.

[i] Dr. Marisport A, Dr. Ambati Nageswara Rao, and Ms. Heena Goswami, ‘RESOLVING PENDING CASES THROUGH ALTERNATIVE DISPUTE RESOLUTION UNDER SECTION 89 OF CIVIL PROCEDURE CODE: A CASE STUDY’ (Department of Justice, 2019) <https://doj.gov.in/sites/default/files/GNLU.pdf> accessed 6 May 2021.

[ii] Constitution of India 1950, art.21.

[iii] Constitution of India 1950, art.39(A).

[iv] Code of Civil Procedure 1908, s 89.

[v] P. Anand Gajapathi v P.V.G. Raju, (2000) 4 SCC 539.

[vi] M.V. Baltic Confidence v State Trading Corporation of India Ltd, (2001) 7 SCC 473.

[vii] Narayan Prasad Lohia v Nikunj Kumar Lohia, 2002 (1) RAJ 381 (SC).

[viii] Satish Kumar v Surinder Kumar, AIR 1970 SC 833.

[ix] Puri Construction Co. v Union of India, AIR 1986 SC 777.

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