All You Need To Know About Alternate Dispute Resolution (ADR) and Its Components

This article is written by Shreyasi Pal.

Introduction:

The term ‘alternate’ in Alternate Dispute Resolution denotes the mechanisms that are complementary in addressing the duties of the judicial system along with litigation.

Scenario 1: A severely high pendency rate compared to disposal of cases in the courts- the institutes of justice to the general public. Delay in procuring justice leads to a dearth of hope and lack of trust in the afflicted.

Scenario 2: Disputes are day-to-day affairs in the realm of business and transactions. It often starts as a clash over contract terms and eventually leads to a full-blown conflict regarding shares and rights which ends up resulting in prolonged legal battles, loss of time and tons of revenue.

Scenario 3: Thriving businesses connected in two different parts of the world undergo disagreements of terms. Both parties require their interests to be protected on the ground of neutrality and highlight their cultural notions.

Each of the above-mentioned scenarios presents how all the stakeholders from various walks of life are impacted. The all-around solution could be a set of streamlined procedures customized for each situation understood as ‘Alternative Dispute Resolution ‘.
The term ADR can be defined as a comprehensive set of processes other than litigation empowering the involved parties to solve their disputes with the aid of a third party who is neutral.

Need of Alternate Dispute Resolution (ADR) in India:

1. Rising backlogs of cases making the judicial process tedious, delivery of justice delayed and the tendency to avoid the expensive and time-consuming process.

2. A zeal to achieve the ideal state of affairs to dispense ‘complete justice’- accessibility, economical and quick approach in every possible kind of dispute.

The basis of ADR is rooted in the Directive Principle of State Policy (Article 39-A) advocating for equal justice and free legal aid, and the Fundamental Rights, particularly Article 14 (Equality before Law) and Article 21 (Right to Life and Personal Liberty).

Global Adoption of ADR:

• The UN Charter highlights the importance of ADR techniques in resolving conflicts between states.
• The United States Supreme Court upholds the clause of ADR mechanism in contracts of a wide range of fields. Apart from the commercial and trade disputes being resolved by ADR, it is increasingly being prioritized to address domestic and even intellectual property.
• In Japan, the use of med-arb in domestic disputes has existed for a long time to find common ground amid political and ideological differences. ADR is believed to accentuate the areas of conflict to make sure every party is listened to and represented and a common ground is established without harming delicate interests. The recent amendments promote the use of ADR to solve international commercial disputes.
• China is historically inclined towards ADR methods. The mechanisms underline compromising to retain relationships and maintain social harmony.
• A significant number of international arbitration centers are increasingly opening up to address disputes over a wide range of domains.

Features of The Arbitration and Conciliation Act,1996:
1. Based on UNCITRAL Model Law on International Commercial Arbitration.
2. Addressed the ADR demand post-globalization era after 1991- reduced interference of courts, and increased cooperation between the judicial and arbitral process for faster disposal of disputes. Made arbitral award enforceable.
3. However, Section 9 of the act empowered the Court to pass interim orders.
Case Study: Bharat Aluminum & Company v. Kaiser Aluminum Technical Service– The court stated “Part I of the A&C Act would have no application to International Commercial Arbitration held outside India.” the Indian courts could not entertain interim applications in foreign seat arbitration.
Amendment in 2015:
1. Several changes were brought in to facilitate ADR in India.
2. Section 9 introduced an arbitral tribunal to pass interim orders.
3. Section 11 empowered the SC and HC to appoint the arbitrator.
4. Section 29A defined 12 months as the timeline for completing procedures.

Amendment of 2019:
1. Based on the recommendations of B.N. Saikrishna Committee
2. Section 43B– Arbitration Council of India (ACI) was established
3. Section 34– Dismisses arbitral award on the grounds of fraud, one has to provide evidence.
Mediation Bill,2021:
Introduced to address the lack of legal and formal procedures in this field, the bill has been introduced and is under scrutiny of consideration by the government. Currently, mediation is being greatly used in family and voluntary matters.
Related Cases:  
Gujarat Composite Limited v. A Infrastructure Limited & Ors.: The Supreme Court has clarified that applications seeking to refer disputes to arbitration cannot be entertained if the cause of action falls outside the scope of the arbitration agreement.
M Siddiq (D) Thr Lrs v. Mahant Suresh Das & Ors.- The Ayodhya dispute case
Supreme Court of India (SC) on 8th March 2019  instructed for a court-supervised mediation in the hope of addressing understanding issues and finding a resolution based on their interests.

Litigation vs ADR:

Litigation refers to a formal process of addressing disputes in the court of law where one is presented by an advocate and the verdict is passed by a judge or a group of judges. An outcome of a litigation process is legally enforceable to a higher degree. A separate presentation of both parties ensures the upholding of rights of the both parties with legal clarity. ADR offers the presence of a third party who listens to both parties, ensures the presentation of all interests and neutrally crafts a solution in a time-bound manner, maintaining privacy and a flexible manner.

ADR over litigation: Evolving landscape:

The recent amendments in legislation, pro-arbitration rulings by the Supreme Court and increased involvement with international arbitration centres are hinting towards the shift in dynamics of traditional dispute resolution, especially by commercial and corporate affairs.The Victorian Parliament Law Reform Committee Discussion Paper on Alternative Dispute Resolution stated that ―” ADR and the formal justice systems are not homogenous, separate and opposed entities. Their relationship is complex and evolving.” The notions of every kind of dispute resolution are evolving and are increasingly becoming human-centric and are helping in increasing accessibility.

Modes of ADR:

Lok Adalats: The courts of compromise and conciliation.
“I realized that the true function of a lawyer was to unite parties riven asunder. The lesson was so indelibly burnt into me that a large part of my life during the 20 years of my practice as a lawyer was occupied with bringing about private compromises of hundreds of cases”, said Gandhi in his memoir as he upheld the principles of ‘ahimsa’ or ‘non-violence’.
Disputes regarding money claims, property and family can be easily resolved by adhering to its principle of settlement through settlement.
The statutory provision of Legal Services Authorities Act 1994 makes it legally recognized which lays down the provisions of accessibility of lok adalats, the institutionalization of cases, and compromise settlement where every award is equivalent to a decree of a civil court under Section 19,20,21,22 of the act. Lok Adalats aim to resolve disputes suiting well with the Indian scenario.

Underpinnings of ethics and practices:
1. Identifying the right ADR method: Ensuring fairness to all parties
2. Choosing qualified ADR practitioner: Ensuring neutrality
3. Establishing a procedure: Attributing transparency
4. Outlining and conducting sessions: Facilitating negotiation through equal opportunity
5. Reaching Resolution and draft agreement: Monitoring and addressing enforcement issues

Advantages:
As industrialisation advanced, conflicts escalated, leading to crowded courtrooms and a significant waste of time, money, and resources. However, the aggrieved parties who sought the way of ADR enjoyed the following advantages:
1. Cost Effectiveness
ADR methods are significantly cheaper as the parties are absolved of court costs and other legal procedure fees associated with lengthy litigation processes.
Business investors can save on litigation costs and redirect them to their startups.
2. Speedy Resolution:
Unlike the court which is backlogged with cases because of litigation suit filing being a lengthy process, a particular tribunal is assigned to decide over a particular case.
Quick resolution is essential for scenarios like real estate, labour and consumer redressal issues.
3. Flexibility
ADR processes are less formal as they tend to resolve the dispute based on dialogue and deliberation to meet the interests of both parties and not enforce what the right or contract has mentioned.
Disputes with disagreement over deliverables and deadlines might end up adjusting the needs of both ends through open communication.
4. Privacy-
For matters that need to be avoided from the public eyes on affairs of the court, the ADR mechanism promises confidentiality in revealing sensitive information.
This can help to prevent negative image formation and publicity for the corporate companies involved.
Even, in mediation, the parties are allowed to deliberate on their own if they are hesitant to reveal any confidential matter.
5. Preservation of Relationships:
As ADR is based on ‘audi-alterem-partem’, decisions are taken after the final assent of both parties; a friendly relationship opens up as parties get to explore new prospects.

Future of ADR: Online Dispute Resolution(ODR)
Significance of Information Technology in Indian Judiciary:
A. Basavaraj R.Patil v State OF Karnataka: The verdict highlighted that the accused don’t need to be physically present in the court.
B. State of Maharastra v Dr. Praful.B.Desai: The supreme court pointed out the provision of admissibility of electronic evidence even including video conferences.
C. Bharatiya Saksha Bill, 2023 emphasizes admissibility of electronic evidence and introduces digitization of chargesheets and judicial proceedings.
As mentioned in scenario 3 of introduction, commercial collaboration has increased multifold in the present era of globalization. What lurks as an aftermath is disputes regarding contracts, sharing profits, intellectual property rights and a plethora of other fields from remote corners of the world. Employing ODR in these disputes fosters confidence among business partners and forms a positive image even to the consumers; apart from overcoming the geographical shortcomings.

ADR in Upcoming Age:
1. Intellectual Property:
Mutually agreeable solutions can be reached regarding licensing, trademark conflicts and validity of patents through mediation.
        Example – WIPO-initiated Domain name Dispute Resolution and WIPO expedited Arbitration rules for AGICOA for audiovisual works.
2. Aviation: Contractual, consumer and compliance matters can be settled as relationships are a crucial part of the industry and delays can cause loss of reputation and business.
3. Environment: Complex cross-border disputes regarding regulation and compliance can be addressed by involving the stakeholders.

Challenges and way ahead:
1. Parties may perceive mediators or arbitrators as biased, especially if they are chosen by one party.
Solution: Implement strict selection criteria and require full disclosure of any potential conflicts of interest. Encourage the use of panels or institutions to appoint neutral third parties.
2. Some ADR outcomes, like mediation agreements, may be challenging to enforce without court intervention.
Solution- Implementation of clauses to make the outcome binding and necessary follow-ups.

3. Lack of awareness among trained specialists and clients too.
Solution- Increasing awareness through seminars and workshops to connect with the right set of clients. Better training for professionals and increasing credibility of arbitral institutes is the need of the hour for a paradigm shift.

References:
1. Law Reform Commission, Report “ALTERNATIVE DISPUTE RESOLUTION: MEDIATION AND CONCILIATION”(2010) https://www.lawreform.ie/_fileupload/reports/r98adr.pdf
2. 2020 IJRAR March 2020, Volume 7, Issue 1,” Alternative Dispute Resolution (ADR) Under International and National Context – An Overview”(2020)
https://www.ijrar.org/papers/IJRAR2001979.pdf
3. Department of Legal Affairs, “ALTERNATIVE DISPUTE RESOLUTION IN INDIA”,
https://legalaffairs.gov.in/sites/default/files/Arbitration_Mediation.pdf
4. 2016 JETIR May 2016, Volume 3, Issue 5, “An Introduction of Alternative Dispute Resolution System”
https://www.jetir.org/papers/JETIR1701A16.pdf
5. Lok Satta, “Alternative Dispute Resolution in India A study on concepts, techniques, provisions, problems in implementation and solutions”
https://www.fdrindia.org -> AlternativeDisputeResolution_PR.pdf
6. Shreya Shree Singh & Ishaan Tyagi, Evolution of Arbitral Law in India: An Overview,https://www.legalbites.in/evolution-of-arbitral-law-in-india, 12^th September,2020