Alternative Dispute Resolution

Chhattisgarh established Lok Adalats in jails all around the State, a first for India. Is Lok Adalat a type of Alternative Dispute Resolution? Which are the other modes of Alternative dispute resolution? What benefits do they possess? Scroll down the page to learn about Alternative Dispute Resolution.

Alternative Dispute Resolution

The process of resolving conflicts without going to courts, such as through arbitration, conciliation, mediation, or negotiation, is known as alternative dispute resolution (ADR). Through negotiation between the parties, ADR aims to resolve the conflict.

Modes of Alternative Dispute Resolution

Arbitration

• Arbitration is a process in which the parties dispute is presented to an arbitral tribunal, which renders a binding ruling (an “award”) on it.
• It can only begin if the parties have a valid arbitration agreement in place before the dispute arises.
• After analysing the parties’ disagreement, the arbitrator resolves it.
• The Arbitration and Conciliation Act, of 1996, governs it in India.

Mediation

• In mediation, a third party who is impartial to both sides of the conflict works with the parties to arrive at a agreeable resolution.
• It is a voluntary informal, out-of-court settlement, and the outcome is not always legally binding.

Conciliation

• Conciliation is a way of settling disputes where the parties work with a conciliator to reach an agreement.
• The conciliator’s job is to get the parties to agree to put their differences aside and come to a mutually agreeable settlement on the terms.

The judicial settlement, including settlement through Lok Adalat

•  For judicial settlement, the Court must refer the matter to an appropriate institution or person, and that institution or person shall be regarded as a Lok Adalat.
• This settlement must be subject to the entirety of the Legal Services Authority Act of 1987.

Also read: Permanent Court of Arbitration

Benefits of Alternative Dispute Resolution

• Flexibility: ADR processes frequently foster collaboration and help the parties comprehend one another’s points of view. ADR also enables the parties to devise more innovative solutions that a court might not be able to enforce under the law.
• Economical: When compared to litigation, ADR is more cost-effective. ADR procedures also offer parties the chance to lessen hostility and settle disputes amicably, which makes it easier for them to continue working together in the future.
• Saving time: The ADR process settles disagreements more quickly than litigation does. The best time to discuss and resolve the matter can be chosen by the parties.
• Confidentiality: The conflicts that are the topic of arbitration and mediation are handled in confidence and kept private. To safeguard their trade secrets and copyrights, corporate entities and industrial businesses need to do this especially.
• Enforcement: The parties are still in charge of the issue, and any solution they reach is their own decision rather than a directive from a third party. As a result, these awards are typically simpler to enforce than court judgments.
• Expertise: The arbitrator frequently has a background in the area of dispute. Therefore, he or she can propose a more reasonable and logical solution to the problems.
• Better participation: ADR promotes public involvement in the conflict settlement process. As a result, it fosters respect and awareness of the law, promoting self-reliant development.

Why India needs ADR?

• As of May 2022, there were approximately 4.7 crore cases still pending in courts at all levels of the legal system. 87.4% of them are still pending in lower courts. This pendency can be decreased by strengthening ADR.
• Justice is being delayed as a result of the lack of judges, resource-dwindling litigation, case adjudication, and difficulties in reaching an agreement in about a third of the cases that are still pending.
•  It reduces the number of undertrials. According to Prison Statistics-2020, published by the National Crime Records Bureau (NCRB), 76% of all detainees in the nation’s 1,300 jails were undertrials. Alternatives to the current situation include Lok adalats and legal options like plea bargaining.
•  According to the World Bank’s ease of doing business report, protracted litigation and lax contract enforcement are two key obstacles to conducting business in India. Therefore, robust dispute resolution procedures are crucial if India is to reach its goal of a USD 5 trillion economy.
• A high price for justice. According to a DAKSH study from 2016, the average cost for a litigant (other than legal expenses) is Rs 1,039 per case per day, and the average cost for lost income or business is Rs 1,746 per case per day.

Also read:All-India Judicial Services (AIJS): Should it be formed? – Clear IAS

Current ADR dispositions in India

Section 89 of the Civil Procedure Code, 1908

According to Section 89 of the Civil Procedure Code of 1908, if the court determines that a settlement contains elements that the parties might find acceptable, it may formulate the terms of the potential settlement and refer it for arbitration, conciliation, mediation, or judicial settlement, including settlement through Lok Adalat.

Lok Adalat

They were established by the Legal Services Authority Act of 1987. They are called “People’s Courts,” and the chairman is typically a sitting or retired judge. The other two members are typically attorneys and social workers. Both court costs and stringent procedural rules are absent. But every Lok Adalat procedure is thought to be court action.

The Lok Adalats’ award (decision), which is final and binding on all parties, is regarded as an order of a civil court. There is no appeal option if the parties are not happy with the award.

The 1996 Arbitration and Conciliation Act

The UNCITRAL Model Law is a major inspiration for the Arbitration Act. The Arbitration Act is divided into two parts: Part I deals with arbitrations held in India, while Part II deals with arbitrations held abroad. In 2019, changes were made. The amendment’s key components are as follows:

• Establishment of the Arbitration Council of India (ACI), a free-standing organisation, for the promotion of arbitration, mediation, conciliation, and other alternative conflict resolution procedures.
• The Supreme Court and High Courts may now name arbitral institutes that parties may approach for the appointment of arbitrators under the new Act.
• Relaxation of deadlines: The Act aims to do away with the 12-month deadline for international business arbitrations.
• Confidentiality of proceedings: According to the Act, all information about an arbitration proceeding must be kept private, with some exceptions made for the arbitral award’s specifics.

ADR and Mediation in Specialized Statues

There are provisions for mediation in several statutes, including the Industrial Disputes Act of 1947, the Companies Act of 2013 and the Real Estate (Regulation and Development) Act of 2016.

New Delhi International Arbitration Centre Act of 2019

The NDIAC will be established under the Act to handle arbitration, mediation, and conciliation cases. The NDIAC is recognised as a nationally significant institution by the statute.

Additional arbitral tribunals

• The Mumbai Centre for International Arbitration, the Indian Council of Arbitration (ICA), and the Nani Palkhivala Arbitration Center are domestic arbitration organisations.
• International organisations like the International Arbitration Center and the International Chamber of Commerce.

Niranjan Bhat Committee

The Supreme Court has established the Niranjan Bhat Committee to develop a draught law that would grant legal credibility to conflicts resolved through mediation. The proposed legislation would then be forwarded to the government as a recommendation from the high court. The panel, which will be led by a legal expert and mediator Niranjan Bhat, will suggest a code of behaviour for mediators.

Challenges

•  The average person or small businessperson is unaware of ADR measures and is therefore excluded from the scope of such procedures.
• The majority of individuals are doubtful of arbitration’s effectiveness. The prevailing trend in India has always been to seek out court apparatus to handle disputes, with the exception of the panchayat system.
• There is no specialised arbitration bar, and some arbitration sessions take place outside of regular court hours. The process was significantly delayed as a result.
• India ranks 163rd out of 193 nations in terms of contract enforcement. Additionally, the current Civil Procedure Code regime is ineffectual and has caused millions of dollars worth of arbitral awards to become bogged down in legal proceedings. Arbitral awards are losing their objectivity due to non-implementation.
• India urgently needs to pass a law that covers all aspects of the arbitration process and proceedings. The Niranjan Bhatt committee was established for this reason.
• Courts have been observed interfering with arbitration processes on a number of occasions. Additionally, as a result of the 2019 modification, courts now play a larger role in the selection of arbitrators. Due to these intrusions, the adaptability of ADR is called into doubt, and individuals who chose arbitration also have a tendency to favour courts.
• The bulk of currently available online dispute resolution systems exclusively uses English, which makes it difficult to provide exact facts and prevent misunderstandings.

Way forward

• People need to be aware of the advantages of mediation, particularly its capacity to produce very amicable settlements.
• A two-pronged approach to raising awareness and enlisting litigants to pursue the mediation option might be used in mediation efforts.
• Court notice boards should prominently feature successful mediation cases so that litigants know alternate dispute resolution options.
• The government can participate by aggressively promoting mediation, hiring qualified mediators, establishing guidelines and definitions for the procedure, and providing the necessary legal protection.
• Additionally, since the federal and state governments are the most frequent litigants in the nation, they can push for mediation in matters in which they are parties, relieving the court system and fostering a mediation culture.
• The role of courts is to assist mediation centres with infrastructure and resources, and to oversee their operations is the highest judicial authority in each jurisdiction.
• To promote the use of mediation, attorneys must actively work to include it in their practices.
• During the pandemic, mediation can benefit from the wave of digitization, with online mediation serving as an alternative to the traditional process.

Article Written By: Atheena Fathima Riyas