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Implementation of ADR in India

Gagan Deep Kaur
CJM/SPL Judge, Environmental Court

Date : 11/05/2015 - Location : New Delhi

I. Introduction:

The implementation of Alternative Dispute Resolution mechanisms a means to achieve speedy disposal of justice is a crucial issue. The sea-change from using litigation as a tool to resolve disputes by using Alternative Dispute Resolution mechanisms such as conciliation and mediation to provide speedy justice is a change that cannot be easily achieved. The first step had been taken in India way back in 1940 when the first Arbitration Act was passed. However, due to lot of loop-holes and problems in the legislation, the provisions could not be fully implemented. However, many years later in 1996, The Arbitration and Conciliation Act was passed which was based on the UNCITRAL model. The amendments to this Act were also made taking into account the various opinions of the leading corporates and businessmen who utilised this Act the most. Sufficient provisions have been created and amended in the area of Lok Adalats in order to help the rural and commoner segments to make most use of this unique Alternative Dispute Resolution mechanism in India. Therefore, today the provisions in India sufficiently provide for Alternative Dispute Resolution. However, its implementation has been restricted to just large corporates or big business firms. Lok Adalats, though a very old concept in Indian Society, has not been implemented to its utmost level. People still opt for litigation in many spheres due to a lot of drawbacks. Provisions made by the legislators need to be utilised. This utilisation can take place only when a definite procedure to increase the implementation of ADR is followed. In order to have such an implementation programme, it is necessary to analyse what the problems are and how to rectify them.

II. Problems in implementation of ADR System :

Any implementation is usually confronted with problems. ADR is no exception to this rule. Some of the problems faced during implementation are enumerated as under:

(1) Attitudes: Although Indian law favours dispute resolution by arbitration, Indian sentiment has always abhorred the finality attaching to arbitral awards. A substantial volume of Indian case law bears testimony to the long and ardous struggle to be freed from binding arbitral decisions. Aided and abetted by the legal fraternity, the aim of every party to arbitration (domestic or foreign) is: "try to win if you can, if you cannot do your best to see that the other side cannot enforce the award for as long as possible." In that sense, arbitration as a means of settling disputes is a failure-though it is being increasingly regarded as a useful mechanism for resolving disputes. The trouble is that neither the private sector nor the public sectors in India are as yet sufficiently infused with the "spirit of arbitration." An arbitration award should only be permitted to be set aside for reasons extraneous to its contents-such as, lack of jurisdiction of the arbitrator, fraud or corruption of the arbitrator or of the other party, or a fundamental miscarriage of justice in the conduct of arbitral proceedings. Jurisdiction to correct patent legal errors on the face of the award was a peculiarly English innovation. To have imported this questionable jurisdiction into litigous India (as we did under the Arbitration Act, 1940) was a great mistake. Then, thin dividing line between the merits of an award and errors of law apparent on its face are often blurred- few questions of fact continue to remain so after being churned up in the mind of a skilled lawyer! These basic infirmities in the law of arbitration, and the approach of users, left their mark on domestic arbitration under the Arbitration Act, 1940.[1]

First and foremost, there is a need to change our traditional approach to resolving disputes, even a need to change our basic attitudes. Perhaps the legendary basketball coach of Temple University, John Chaney, said it best when he said that "winning is an attitude." He might well have been speaking about dispute resolution and ADR. We need to redefine the very meaning of what it is to "win." Consistent with what our clients want and deserve, the ultimate "win" requires our understanding of the clients' interests and goals and our ability to solve their problems. The spirit of ADR mechanisms is to create a WIN-WIN situation, but the attitude to people is changing it into a WIN-LOSE situation, which is not very different from a litigation. In so many large international arbitrations the defendant will do everything to postpone the moment of the award; at and before the hearing, the parties will deploy all concievable, and some inconcievable, procedural devices to gain an advantage; the element, of mutual respect is lacking; and the loser rather than paying up with fortitude, will try either to have the award upset, or to atleast have its enforcement long postponed. It is in this background that the new Indian law (of arbitration and conciliation) was conceived and enacted. But it is not enough to have a new law-it is necessary for judges and lawyers to realise that the era of court-structured and court controlled arbitration is effectively at an end. Our attitudes require readjustment; we need to re- adjust to the spirit of ADR, and adhere to its underlying philosophy, which is that of utmost good faith of the parties.

(2) Lawyer and Client Interests: Lawyers and clients often have divergent attitudes and interests concerning settlement. This may be a matter of personality (one may be a fighter, the other a problem solver) or of money. In some circumstances, a settlement is not in the client's interest. For example, the client may want a binding precedent or may want to impress other potential litigants with its firmness and the consequent costs of asserting claims against it. Alternatively, the client may be in a situation in which there are no relational concerns; the only issue is whether it must pay out money; there is no pre judgement interest; and the cost of contesting the claim is less than the interest on the money. In these, and a small number of situations, settlement will not be in the client's interest.[1]

Still, a satisfactory settlement typically is in the client's interest. It is the inability to obtain such a settlement, in fact, that impels the client to seek the advice of counsel in the first place. The lawyer must consider not only what the client wants but also why the parties have been unable to settle their dispute and then must find a dispute resolution procedure that in likely to overcome the impediments to settlement. Note, however, that, even though it may initially appear that the parties seek a settlement, sometimes, an examination of the impediments to settlements reveals that atleast one party wants something that settlement cannot provide (eg. Public vindication or a ruling that establishes an enforceable precedent.)

An attorney who is paid on an hourly basis stands to profit handsomely from a trial, and maybe less interested in settlement than the client. On the other hand, an attorney paid on a contingent fee basis is interested in a prompt recovery without the expense of preparing for or conducting a trial, and maybe more interested in settlement than is the client. It is in part because of this potential conflict of interest that most processes that seek to promote settlement provide for the clients direct involvement. For lawyers, this means new approaches that initially seem almost counterintuitive. For example, the recovery of large sums of money is usually regarded as the ultimate "win" for plaintiffs in commercial cases. Yet, Wall Street values long-term streams of revenue even more highly than large sums of cash. Perhaps the restructuring of a long-term relationship would offer a better result.

Once in mediation, lawyers usually try to exert a high degree of control over the process, not unlike in a deposition or at trial. However, direct involvement of the client in the mediation process is often the best way to succeed. Lawyers also frequently engage in a "we-they" approach to negotiations that rarely results in a zero-sum gain. Lawyers need to have a better understanding of the importance of integrative bargaining, where lawyers can sit on the same side of the table and try to "expand the pie."

Lawyers also need to reflect upon the meaning of Ethical Consideration, which imposes a duty to represent a client zealously. Effective mediation advocates need to abandon any desire for revenge in favour of a more goal-oriented approach if they are to secure the "win" that best serves their client's interests. In many instances, it is not the lawyer but the angry client who wants revenge. For these clients, every new case becomes a matter of principle until the client receives the lawyer's third or fourth bill then the client wants to spell the word "principle" differently. Here, even more so, the lawyer has a responsibility to make an early and realistic assessment of the dispute and to serve as an anchor for the client. These differences in interest need to be sorted out.[1]

(3) Legal Education : Law schools train their students more for conflict than for the arts of reconciliation and accommodation and therefore serve the profession poorly. Already, lawyers devote more time to negotiating conflicts than they spend in the library or courtroom and studies have shown that their efforts to negotiate were more productive for the clients. Over the next generation, society's greatest opportunities will in tapping human inclinations towards collaboration and compromise rather than stirring our proclivities for competition and rivalry. If lawyers are not leaders in marshalling co-operation and designing mechanisms which allow it to flourish, they will not be at the centre of the most creative social experiments of our time.[1]

A serious effort to provide cheaper methods of resolving disputes will require skilled mediators and judges, who are trained to play a much more active part in guiding proceedings towards a fair solution. In short, a just and effective legal system will not merely call for a revised curriculum; it will entail the education of entire new categories of people. For law schools, there is a need to recognize that the demands of the marketplace have forever changed the dynamics of dispute resolution. Obviously, an understanding of the adversarial system, stare decisis, and the process of litigation remain critical. At the same time, students need to enhance their skills as negotiators and to appreciate, for example, the value of listening or the advantage of making the "first credible offer." Law students also need to understand the suitability and advocacy issues in ADR at more sophisticated levels and to understand the important keys to problem solving. It is time that our law schools began to take the lead in helping to devise such training.[1]

(4) Impediments to settlement [1] : Just as there may be problems in the implementation techniques, there are impediments even after that stage, i.e. during the time of settlement. Some of them are :

(i) Poor communication : The relationship between the parties and/or their lawyers may be so poor that they cannot effectively communicate. Neither party believes the other. Inability to communicate clearly and effectively, which impedes successful negotiations, is often, but not always, the result of a poor relationship. If, for example, the parties come from different cultural backgrounds, they may have difficulty in understanding and appreciating each other's concerns. Or, if there had been a long history of antagonism between the key players, all efforts to communicate are likely to be hampered by antagonism.

(ii) The need to express emotions : At times, no settlement can be achieved until the parties have had the opportunity to express their views to each other about the dispute and each other's conduct. Such venting, combined with the feeling that one has been heard by the other party, has long been recognized as a necessary step in resolving family and neighbourhood disputes. Business disputes are no different. After all, they do not take place between disembodied corporations but between people who manage those corporations, and who may have as much need to vent as anyone else involved in a dispute.

(iii) Different views of facts : Usually in a dispute, there are two or more parties, each believing that they are the hurt party in some way or the other. Each believes that the other is the wrong-doer. To this belief, they have their own justifications. Just as each one of them has a different perspective on what the result of the dispute should be, they also have their own view regarding the facts of the case. Both parties have their own version as to what the facts are and reconciling these different views is itself a major problem.

(iv) Different views of legal outcome if settlement is not reached: Disputants often agree on facts but disagree on their legal implications. One party asserts that, on the basis of the agreed upon facts, he has a 90 percent likelihood of success in court; the other party, with equal fervour, asserts that she has a 90 percent chance of success. While there may be a legitimate dispute over the likely outcome, both these estimates cannot be right.

(v) Issues of principle : If each of the disputing parties is deeply attached to some fundamental principle that must be abandoned or compromised in order to resolve the dispute, then resolution is likely to be difficult. Two examples: a suit challenging the right of neo-Nazis to march into a town where many Holocaust survivors live; and a suit by a religious group objecting to the withdrawal of life-support systems from a comatose patient. In view of the intensity of feelings in cases such as these, it is unlikely that evaluative techniques will be helpful in reaching a settlement.

(vi) Constituency pressures: If one or more of the negotiators represents an institution or group, constituency pressures may impede agreement in two ways: different elements within the institution or group may have different interests in the dispute, or the negotiator may have staked her political or job future on attaining a certain result.

(vii) Linkage to other disputes: The resolution of one dispute may have an effect on other disputes involving one or both parties. If so, this linkage will enter into their calculations, and may so complicate negotiations as to lead to an impasse. For example, an automobile manufacturer in a dispute with one of its dealers concerning the dealer's right to sell autos made by the other companies may ultimately be willing for reasons specific to that dealer-to allow it do so. But the manufacturer may so fear the effect of such an agreement on similar disputes with other dealers that the parties arrive at an impasse. It is possible that the manufacturer did not make this concern explicit in its negotiations with the dealer because it did not want the dealer to know it was engaged in similar disputes elsewhere.

(viii) Multiple Parties: Where there are multiple parties, with diverse interests, the problems are similar to those raised by diverse constituencies and issue linkages.

(ix) The "Jackpot" syndrome: An enormous barrier to settlement often exists in those cases where the plaintiff is confident of obtaining in a Court a financial recovery far exceeding its damages, and the defendant thinks it is unlikely. For example, the case may be one in which the controlling statute provides for the discretionary award of punitive damages to the successful plaintiff. If the underlying damage claim is for Rs. 10 lakh, and the plaintiff thinks that Rs. 50 lakh in punitive damages is a real possibility while the defendant does not, the vast disparity in case valuation may make settlement close to impossible.

(5) Ignorance: One of the major reasons for the failure in implementation is the ignorance of the existing provisions of law. Legislators have made the necessary laws, but have never thought of implementing them at the grass- root level. They do not help in building up the awareness of those laws, so that people will utilise them. ADR provisions are well known only in the big business circles. Most of the educated elite are also unaware of the availability and possibility of such mechanisms in India, let alone the rural sector. Most of the rural segment, after all these years of independence, is now understanding the formal legal system and is making use of it at a time when the country and the world at large is reverting back to the old community-based problem solving and other ADR techniques so well known in rural India. Ignorance of laws is not an excuse in our country. However, when no awareness is present, how would people know about it and utilise it?

(6) Corruption: Corruption is not a new issue in our country. It has always been a parasite to the nation and is sucking out the very purpose of independence. Today, not a single work gets done without having to bribe the way through. People have stopped challenging it as without being a part of it, life becomes difficult. ADR mechanisms have a very great risk of being ridden by corruption. For instance, in cases of negotiation between a rich educated person and poor illiterate man over a land dispute, chances of the negotiator being bribed by the rich person is very high. Thus, corruption can become a raging problem in ADR.

(7) Though recourse to ADR as soon as the dispute arises may confer maximum advantages on the parties; it can be used to reduce the number of contentious issues between the parties; and it can be terminated at any stage by any one of the disputing parties. However, there is no guarantee that a final decision may be reached.[1]

(8) ADR procedures are said to be helpful in reaching a decision in an amicable manner. However, the decisions arrived at after a non-litigative procedure are not binding as they are voluntary. This makes the entire exercise futile as parties do not stick to their decision resulting in a waste of time and money.

(9) ADR procedure permits parties to choose neutrals who are specialists in the subject matter of the disputes. This does not mean that there will be a diminished role for lawyers. They will continue to play a central role in ADR processes; however, they will have to adapt their role ADR requirements. Neutrals and trained ADR experts are very few to cater to the vast population.

(10) Since the ADR proceedings do not require a very high degree of evidence, most of the facts regarding the dispute which would have been proved otherwise continue to be a bane in the discussion which may lead to dissatisfaction.

(11) In ADR, the parties can choose their own rules or procedures for dispute settlement. Arriving at them is the major hurdle.

(12) ADR programmes are flexible and not afflicted with rigourous rules of procedure. There is, therefore, a possibility of the parties going back on the agreed rules and programmes. This creates a delay and slows the process of dispute resolution.

(13) Flexibility and unconfirmed procedures make it extremely difficult to quote and use precedents as directives.

(14) ADR procedures were introduced to lessen the burden of the courts. However, since there is an option to appeal against the finality of the arbitral award to the courts, there is no difference in the burden.

(15) There are also some situations under which an amicable settlement through ADR is not favoured. They are:

- One party may be owed money and simply be looking for the final and enforceable decision which can be obtained by resorting directly to litigation. Any ADR procedure only compromises his situation.

- A party may owe money and seek to use amicable settlement as a delay and discovery mechanism-the other party may, therefore, be concerned about the delay, incurring extra costs and being disadvantaged in the subsequent litigation

- Adjudicative methods may be most appropriate for resolving some situations, such as frivolous claims, claims which compromise a particular principle, cases which involve bodily injury or alleged criminality.

All these problems are not permanent in nature. They all have solutions. An attempt to make suggestions for the solutions of the above listed problems has been made below. This list of suggested solutions is merely illustrative and not exhaustive. An in-depth research for this is vital.

It is felt that an attitudinal change towards ADR would result in active implementation of ADR and the burden on the courts will reduce. Yet, whether it is in the urban segment or in the rural segment, there is still a lack of knowledge about ADR. A need for instilling awareness is imperative to bring in a change in the attitudes. The urban sector which has a higher literacy rate could be reached by inserting slides in movie theatres, having advertisements in television channels and newspapers, conducting periodical seminars and having a dedicated helpline. It is the rural segment whose attitude is difficult to change. From the initial gramasabha system, it took many years for them to adopt litigation. To revert back to the old system, which is in fact an ADR concept would require tremendous amount of communication by trained professionals be spelling the strengths of the system. An insight into the advantages of conciliation and negotiation would bring in the desired change-change of attitude. To keep active here is awareness, by interactive communication. A dedicated helpline would exhilarate the process of attitudinal change by giving clarity to communication.

'People are generally ignorant about legal terminology and the opportunities available in dispute resolution. The other gnarling issue is corruption. To combat these two forces, imparting knowledge is a must. Driving ignorance away would infact, help in curtailing corruption too. The NGOs should put in their efforts in providing a knowledge base to the needy. A committed person in each NGO, working in rural areas, should help in reaching the goal quickly.

The major lacuna in ADR is that it is not binding. One could still appeal against the award or delay the implementation of the award. "Justice delayed is justice denied." The very essence of ADR is lost if it is not implemented in the true spirit. The award should be made binding on the parties and no appeal to the court should be allowed unless it is arrived at fraudulently or if it against public policy.

Rules of procedure are being formulated on a case by case basis and the rules made by the parties themselves, with may be, some intervention of legal professionals.

However, a general guideline and a stipulated format would assist in bringing clarity to the formulation of an ADR award. This would also help in cutting down ignorance and assist in better negotiation.

Legal education and law schools should focus on the arts of conciliation and negotiation and not merely on litigation. Lawyer client interests should also be moulded towards a primary focus on ADR failing which the recourse should be towards litigation.

Conclusion

Because justice is not executed speedily men persuade themselves that there is no such thing as justice. Sharing the same sentiments, Chief Justice Bhagwati said in his speech on Law Day, "I am pained to observe that the judicial system in the country is on the verge of collapse. These are strong words I am using but it is with considerable anguish that I say so. Our judicial system is creeking under the weight of errors." Arrears cause delay and delay means negating the accessibility of justice in true terms to the common man. Countless rounds to the Courts and the lawyers' chambers can turn any person insane. Even then loitering and wasting time in the corridors of Courts has become a way of life for a majority of Indians who day by day are becoming litigious. Some of the main reasons for delay in the disposal of cases are abnormal increase in the number of cases going to Courts and Tribunals, mainly due to faulty legislation enacted hurriedly, arbitrary administrative orders, increased consciousness of one's rights and gambler's instinct in a litigant due to multiplicity of appeals and revisions provided in law."

The disputants want a decision and that too as quickly as possible. As the problem of overburdened Courts has been faced all over the world, new solutions were searched. Various Tribunals were the answer to the search. In India, we have a number of Tribunals. However, the fact of the matter is that even after the formation of so many Tribunals, the administration of justice has not become speedy. Thus, it can be safely said that the solution lies somewhere else. All over the globe the recent trend is to shift from litigation towards Alternative Dispute Resolution. It is a very practical suggestion, which if implemented, can reduce the workload of Civil Courts by half. Thus, it becomes the bounden duty of the Bar to take this onerous task of implementing ADR on itself so as to get matters settled without going into the labyrinth of judicial procedures and technicalities. The Bar should be supported by the Bench in this herculean task so that no one is denied justice because of delay. It is important here to mention the statement made by John F. Kennedy in this respect: "Let us never negotiate out of fear but let us never fear to negotiate.


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