Alternate Dispute Resolution System
Position in India

Mohit Malhotra

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

What is Alternative Dispute Resolution System?

Alternative Dispute Resolution (ADR) is a term generally used to refer to informal dispute resolution processes in which the parties meet with a professional, third party, who helps the parties to resolve their dispute in a way that is less formal and often more consensual than is done in the courts. While the most common forms of ADA are mediation and arbitration, there are many other forms: judicial settlement conferences, fact-finding, ombudsmen, special masters. Though often voluntary, ADA is sometimes mandated by the courts, which require that disputants try mediation before they take their case to court.

ADR in India is not new and it was in existence even under the previous Arbitration Act, 1940. The Arbitration and Conciliation Act, 1996 (ACA) has been enacted to accommodate the harmonization mandates of United Nations Commission on International Trade Law (UNCITRAL) Model. To streamline the Indian legal system, the traditional civil law known as the Code of Civil Procedure, (CPC) 1908 has also been amended and Section 89 has been introduced. Section 89 (1) of CPC provides an option for the settlement of disputes outside the court. It provides that where it appears to the court that there exist elements, which may be acceptable to the parties, the court may formulate the terms of a possible settlement and refer the same for arbitration, conciliation, mediation or judicial settlement.

Due to extremely slow judicial process, there has been a big thrust on ADA mechanisms in India. While ACA is a fairly standard western approach towards ADA, the Lok Adalat system constituted under the National Legal Services Authority Act, 1987 is a uniquely Indian approach.

The main objectives of the Act are:

a) To cover international and domestic arbitration comprehensively.

b) To minimize the role of courts and treat arbitral award as a decree of court.

c) To introduce the concept of conciliation.

d) To provide speedy and alternative solution to the dispute.

Alternative Dispute Resolution Mechanism

Arbitration - It is one of the cardinal mechanisms in alternative dispute machinery, whereby the dispute is submitted to one or more arbitrators, who are duly appointed by both the parties. 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, telex, or telegrams which provide a record of the agreement. An exchange of statement of claim and defence in which existence of an arbitration agreement is alleged by one party and not denied by the other is also considered as 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 the Chief Justice for 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 lack of proper qualification of the arbitrator as required by the arbitration agreement. A sole arbitrator or a panel of arbitrators so appointed constitutes 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.

The tribunal can give its verdict in the form of "arbitral award", which is legally binding on disputed parties. Arbitration is very common in business transactions, but unknown to many that it is the oldest method of resolving disputes, which had been enshrined since ancient history.

Mediation - Is a non-binding process in which a third party called "mediator" helps the disputed parties to reach a settlement.

Mediation is the technical term in international law which signifies the interposition by a neutral and friendly state between two states at war or on the eve of war with each other, of its good offices to restore or to preserve peace. The mediation is a process, facilitation, an empowerment. The core value of mediation is that the process provides the parties with an opportunity to negotiate, converse and explore options aided by a neutral third party, the mediator, to exhaustively determine if a settlement is possible. It is a process of empowerment of the parties to control their destiny in their dispute.

Thus, mediation is necessarily a process of negotiation by which the participant together with the assistance of a neutral person attempts to resolve the dispute. The third party mediator makes effort by negotiations with the participants to systematically identify and isolate disputed issues in order to develop options consider alternatives and to reach a congenital agreement that will accommodate their needs and rights. The third party mediator lacks authority to decide but only facilitate to create congenial environment to enable the party to resolve their dispute amicably themselves.

Mediation provides a forum for principled negotiations. These negotiations may at times become frustrating and troubling, but with the mediators help the parties keep moving forward. Principled negotiations stimulate exploration of settlement alternatives and an opportunity to evaluate those alternatives, weighing them against the likely outcome of going to trial and viewing proposals through the lenses of reality. Mediation compared to litigation, trial and appeal is a veritable bullet train to certainty and finality. If the dispute settles at the mediation, it settles on a basis acceptable to the parties; the spectre of trial is removed; and the threat of being tied up on appeal is eliminated.

I would conclude by saying that mediation is extremely relevant to the justice delivery in India since it not only brings an end to the litigation pending before the Courts but it also has cascading effects of bringing an end to bad-blood between the parties and making them useful members of the Society.

Conciliation - This mechanism is also non-binding on the parties. It is a process by which a third party called "conciliator" meets disputed parties separately in order to resolve their differences. He neither gives verdict nor makes any award. Conciliation is a less formal form of arbitration. This process does not require 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 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 it to the parties for their acceptance. If both the parties sign the settlement document, it shall be final and binding on both.

Lok Adalat - It is also called "peoples court". It was established by the Government under the Legal Services Authorities Act, 1987 to facilitate inexpensive and prompt settlement of pending suits by conciliation and compromise. This forum is very effective in settlement of money claims, partition suits and matrimonial cases. India has had a long history of resolving disputes through the mediation of village elders. These are usually presided over by a retired judge, social activists, or members of the legal profession. It does not have jurisdiction on matters related to non-compoundable offences.

There is no court fee and no rigid procedural requirement (i.e. no need to follow process given by the Civil Procedure Code or the Evidence Act), which makes the process very fast. Parties can directly interact with the judge, which is not possible in regular courts.

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 against, not even under Article 226 of the Constitution, because it is a judgement by consent. All proceedings of a Lok Adalat are deemed to be judicial proceedings and every Lok Adalat is deemed to be a civil court.

Ombudsman - it is an external agency appointed by the government to probe into administrative lapses. It is a mechanism by which an aggrieved party can claim relief against abuse of discretionary power by government authority. Sweden was the first country to adopt this institution in 1809 followed by Finland, Denmark, Norway, New Zealand, Australia and the Scandinavian countries. The Government of India has designated several ombudsmen (sometimes called Chief Vigilance Officer or CVO) for redressal of grievances and complaints from individuals in banking, insurance and other sectors being serviced by both private and public bodies and corporations. The CVC (Central Vigilance Commission) was set-up on the recommendations of Santhanam Committee (196264).

In India, Ombudsman is called Lokpal or Lokayukta. An Administrative Reforms Commission (ARC) was set up on 5 January, 1966 under the chairmanship of Morarji Desai. It recommended two-tier machinery: Lokpal at the Centre (Parliamentary commissioner as in New Zealand) and one Lokayukta each at the State level for redressal of peoples grievances. However, the jurisdiction of the Lokpal is not extended to judiciary like in New Zealand. The Central Government introduced the first Lokpal Bill and Lokpal and Lokayuktas Bill in 1968. The new Bill is under discussion.

The Lokayukta institution has come into existence in different years, in different States in India. Orissa is the first state to present a Bill on establishment of Lokayukta in 1970. However, Maharashtra is the first state to have established the institution in 1972. Thereafter, this institution was established in different States in different years. The structure of the Lokayukta is not uniform across all the states. Some states have Upa-Lokayukta under Lokayukta and in some states the Lokayukta does not have suo motu powers of starting an enquiry.

Negotiation - It is a non-binding process of resolving disputes, by which parties to a dispute interact with one another and try to work out a settlement without the intervention of a third party. The importance of negotiation in concise can be aptly put in the words of former US President John F. Kennedy "Let us negotiate with fear but let us not fear to negotiate". It is the process whereby interested parties resolve disputes, agree upon courses of action, bargain for individual or collective advantage, and/or attempt to craft outcomes which serve their mutual interests. It is usually regarded as a form of ADA. Given this definition, one can see negotiation occurring in almost all walks of life, from parenting to the courtroom.

Practitioners and researchers began to develop win-win approaches to negotiation. This approach, referred to as principled negotiation, is also sometimes called mutual gains bargaining.

Collaborative Law - It is a voluntary dispute resolution process by which parties to a dispute are represented by their own lawyers, to facilitate discussion in accordance with an agreement. It has been an effective mechanism in the context of divorce and family law. Collaborative law is practised internationally in countries like the USA, UK and the list goes on with the inclusion of countries such as France, Germany, Austria, Australia, Scotland, Switzerland and Hong Kong. In collaborative law or collaborative divorce, each party has an attorney who facilitates the resolution process within specifically contracted terms. The parties reach an agreement with the support of the attorneys (who are trained in the process) and mutually-agreed experts. No one imposes resolution on the parties. However, the process is a formalized process that is part of the litigation and the court system. Rather than being an alternative resolution methodology it is a litigation variant that happens to rely on ADA like attitudes and processes.

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."

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. 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."

Bibliography:

• Bawa, Siddhartha. 2006. Law of Arbitration and Conciliation. Delhi: New Era law Publications.

• Singh, Avtar. 2007, Law of Arbitration and Conciliation, Lucknow: Eastern Book Company.

• Tripathi, S.C. 2005. The Arbitration and Conciliation Act, 1996 with Alternative Means of Settlement of Disputes. Delhi: Central Law Publication.


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