UNIT-I

Concept, Advantages, Need & Development

SUBJECT - Alternative Dispute Resolution

Semester - VII

Mr. NITIN KUMAR (Adv.)

Visiting Faculty
Faculty of Law,
University of Lucknow,
Lucknow

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 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. Therefore ADR are used to resolve
disputes outside the ordinary court system as these methods are an alternative to litigation.

 IMPORTANCE & NEED 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 deal with equality
before law and right to life and personal liberty respectively. ADR’s motive is to provide
Justice - social, economic & political 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).

Primary legislation dealing with Alternate Methods of dispute resolution in India -

1. Section 89 of the Code of Civil Procedure, 1908 provides that opportunity to the people, if
it appears to court there exist elements of settlement outside the court then court formulate

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 the terms of the possible settlement and refer the same for: Arbitration, Conciliation,
Mediation or Lok Adalat.
2. The Arbitration and Conciliation Act, 1996 and,
3. 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. Party autonomy and flexible procedure - Arbitration also gives the parties the choice of
applicable law especially if the arbitration is an international commercial arbitration.
Additionally there is enormous flexibility to choose the type and kind of procedure that
the parties want to adopt for the arbitration. These rules will deal with many things
including what kind of hearing should be there for instance only written statements or oral
arguments, etc.
4. Confidentiality – Ann important feature of arbitration is that whatever that happens in
arbitration remains private. It is only known to the parties and the arbitrators. All of them
are prohibited with sharing with third parties who are not involved in arbitration, any
document or information that is received during the course of arbitration. This is done to
ensure that parties feel free to share all information during arbitration so that a proper
solution can be arrived at.
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. It
preserves the best interest of the parties.
7. Can be used at any time, even when the case is pending before the court.
8. Can be conducted with or without a lawyer.
9. Helps in reduction of workload on the courts.

 VARIOUS MODES OF ALTERNATIVE DISPUTE RESOLUTION

ARBITRATION

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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.

What is the procedure to be followed once the arbitration clause is invoked?

1. Initially, applicant initiates arbitration by filing a statement of claim that specifies the
relevant facts and remedies. The application must include the certified copy of arbitration
agreement.
2. 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.
3. 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.
4. Arbitrator’s selection is the process in which the parties receive lists of potential
arbitrators and select the panel to hear their case.
5. Then there is the exchange of documents and information in preparation for the hearing
called ‘Discovery’.
6. The parties meet in persons to conduct the hearing in which the parties present the
arguments and evidences in support of their respective cases.
7. After the witnesses examined and evidences are presented, then there in conclusion
arbitrator gives an ‘Award’ which is binding on the parties.

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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 method of 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.

Stages of Mediation -

1. Opening statement - 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.
2. Joint Session - 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.
3. Separate Session - Here he tries to understand the dispute at a deeper level, gathers
specific information by taking both the parties in confidence separately. Mediator asks

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 frequent questions on facts and discusses strengths and weaknesses to the parties of their
respective cases.
4. Closing - 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 comes 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 lie 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

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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 meets
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,

1. 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.
2. Conciliation proceedings shall commence when the other party accepts in writing the
invitation to conciliate.
3. 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 of the ACT).

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
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dispute which has not been brought before any court of law can be referred to Lok Adalat.
There is no court fee and rigid procedure followed, which makes the process fast. If any
matter pending in court, 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 offences.