Table of Contents

 Introduction
 What is alternative dispute resolution?
 How did the concept of ADR arise?
 Pros and cons of ADR
o Pros of ADR
o Cons of ADR
 Types of ADR methods
o Arbitration
 Main Types of arbitral proceedings
 Ad Hoc Arbitration
 Institutional Arbitration
o Mediation
o Negotiation
o Conciliation
 Difference between mediation and conciliation
o Lok Adalats
 Conclusion
 References

Introduction
Today’s world has become globalised and commercial with the advent of
technology. People can now contact each other and settle business deals and
disputes when they are sitting at the opposite ends of the world. Most people no
longer have the time to go and file papers at the courts and then wait long
periods for a hearing. We are rapidly approaching a stage where litigation is
being replaced with alternative dispute resolution (ADR), due to the
inefficiencies and drawbacks of litigation. India hasn’t quite reached a stage
where litigation has been completely displaced by ADR methods, but the legal
system is beginning to see the benefits of ADR. This article shall be helpful to
give you an overview of the ADR methods and how it is beneficial.

What is alternative dispute resolution?

Alternative dispute resolution (ADR) refers to a range of dispute settlement
methods which help the parties in the dispute to come to a settlement without
going to court, or without litigating on the said matter. These methods usually
involve a third party, who helps them in settling the disputes. In many cases,
ADR methods are used alongside the litigation process as well through court
authorisation.
How did the concept of ADR arise?
As stated in the 222nd Report of the Law Commission of India, the Constitution
has guaranteed access to justice for all, primarily through Article 39A, which
states that everyone must have an equal opportunity of getting justice and this
must not be denied to any citizen by reason of economic or other sort of
disabilities.
The report further states that ‘access to justice’ for the common masses in India
means access to the courts of law. But even that has been hindered, due to
factors like poverty, illiteracy, ignorance, social and political backwardness etc.
In a developing country like India, many people still live in poverty. When their
rights get violated, they often do not have the money to fight long battles in the
Court. They do not have the money to afford a lawyer. They do not know the
legal system and procedures. Therefore, they often think that the court system
is an inconvenience.
These kinds of inefficiencies are shared reasons among many countries, which is
why ADR is being explored. The courts also have too many pending cases and
these cases keep going on for many years which is a tremendous burden to the
courts.
These reasons prompted the Indian Government to enact Section 89 of the
Code of Civil Procedure, 1908 and replace the earlier Arbitration
Act,1940 with The Arbitration and Conciliation Act 1996, in accordance with the
mandates of the United Nations Commission on International Trade Law
(UNCITRAL).
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Pros and cons of ADR

Pros of ADR
 It is less expensive.
 It is less time consuming.
 It is free from the technicalities that are present in the court system.
 The parties are free to differ in their opinion and can discuss their
opinions with each other, without any fear of disclosure of this fact
before the courts.
 There is no feeling of enmity between the parties as there is no
winning and losing side. They also get their grievances redressed and
their relationship remains as it was before, therefore, they can conduct
future business deals with each other.
 ADR is more suitable for multi party disputes, as all the parties can put
forward their opinions at the same place and in one go, rather than
going to court again and again. Also, it provides for a wider perspective
of the dispute.
 The parties often have the choice of the ADR method to be used. They
sometimes also have the choice to select the individuals or bodies who
will settle the dispute.
 The process is also very flexible, according to what suits the parties.
 The parties also have the option of being confidential. The ADR system
also enables the parties to put focus on practical solutions.
 A wider range of issues are considered and shared future interests of
the parties are protected.
 ADR system also allows for risk management.
Cons of ADR
 ADR is not helpful where a dispute is to be decided on the basis of a
precedent.
 When there is a need for court and interim orders, ADR would not be
useful.
 ADR is less suitable when there is a need for enforcement.
 When there is a need for live and expert evidence and analysis in a
case, then ADR would not be useful.
 When there is an imbalance of power, between the parties in the
dispute, then ADR would not work.
 If the case is of a complex nature, then the adjudicating body must
look into minor details and may need expert advice and suggestions.
Here, ADR would probably not work.

Types of ADR methods

There are various ADR methods, but they differ from country to country. This
article shall look at the main ADR methods used, with special focus on India.

 Arbitration
Arbitration in India is governed by The Arbitration and Conciliation Act, 1996. It
is a form of dispute resolution where one or more parties are appointed to
adjudicate the dispute. They act as third parties. This third party should be
neutral and this party is referred to as an ’arbitrator’ while the decision of the
arbitrator, which is essentially a determination of merits in the case, is known
as ‘arbitration award’.
The arbitration process is informal and this process allows the dispute to be
resolved amicably and efficiently as it takes less time and involves lesser costs
for the parties. Therefore, parties frequently choose to arbitrate when disputes
arise, especially in the business world. Big corporations would rather settle
disputes quickly, rather than fighting long cases in the courts.
Before the arbitration process begins, an arbitration agreement is required to be
formed. This agreement lays down the terms and conditions on which the
arbitration process is carried out. It is determined through this agreement as to
how the process will be made cheaper, efficient and how the rules of evidence
would be applied etc. This agreement should be valid as per The Indian Contract
Act 1972 and the parties must have the capacity to contract under Sections
11 and 12 of the same Act.
Arbitral decisions are final and binding on the parties, who have limited scope of
objecting to the decisions. Non-binding arbitrations also exist wherein the party
can request a trial if it is not satisfied with the arbitrator’s decision.
Main Types of arbitral proceedings
Ad Hoc Arbitration
Under ad hoc arbitration, the parties involved in the dispute determine the
conduct of the arbitration proceedings themselves, without going to an arbitral
institution. In case if the parties are not able to settle on one arbitrator, or one
of the parties is reluctant to appoint that particular arbitrator, then Section
11 of The Arbitration and Conciliation Act 1996 will be invoked by the other
party. Under Section 11 of the Act, the arbitrator for that dispute will be
appointed by either the Chief Justice of the Supreme Court or his designate or
the Chief Justice of the High Court or his designate.
 If it is a domestic arbitration, then the Chief Justice of the High Court
or his designate will appoint the arbitrator.
 If it is international commercial arbitration, then the Chief Justice of
India or his designate will appoint the arbitrator. In ad hoc arbitration,
the fee of the arbitrator is decided mutually by the parties and the
arbitrator.
Institutional Arbitration
In this kind of arbitration, the parties decide in the agreement itself, that an
arbitration institution will administer the arbitration. The Indian institutions are
International Centre for Alternative Dispute Resolution and the Indian Council of
Arbitration. These institutions formulate the rules for arbitration owing to their
experience in observing arbitral procedures and situations, therefore they are
prepared for all possible situations that may arise in future arbitration cases.

 Mediation
In mediation, a third neutral party aims to assist two or more disputants in
reaching a settlement. This third party is referred to as the mediator. The
mediator needs to properly communicate with both the parties and use proper
negotiation techniques, in order to make one party fully aware of the other
party’s perspective, through empathy and dialogue. This process is controlled
by the parties.
One of the characteristics of this type of dispute resolution is that the mediator
is not allowed to give an outcome of the dispute. The solution is given mutually,
and the agreements are generally non-binding. Parties are in significant control
of the mediation process and it is strictly confidential. The parties can even go
for litigation if they are not satisfied with the mediation process.
It must be observed that the main aim of the mediation process is to build
relationships, and not to make a decision. It is more of an amicable resolution
of differences with potential form future business between the parties.

 Negotiation
Negotiation is also a form of dispute resolution, but there is no third party to
adjudicate the matter, therefore the parties work together to find a mutually
acceptable solution or a compromise. The parties may choose to be represented
by their attorneys during their negotiations. Negotiation is not statutorily
recognized in India. There are no set rules for conducting a negotiation.
Essentials of negotiation-
  It is a process of communication which helps to resolve conflicts.
 It can be entered into voluntarily and its outcome is non-binding.
 The parties are benefitted here as they have control over the outcome
and procedure and the process is carried out keeping their interests in
mind.

 Conciliation
In conciliation, the third party, who is called the conciliator, talks to the parties
involved separately so that the parties can arrive at a mutually acceptable
solution through facilitating talks between the parties. Conciliation is also
governed in India under The Arbitration and Conciliation Act, 1996.
Under Section 61, conciliation is provided for disputes arising out of legal
relationships, whether they are contractual or not.
Difference between mediation and conciliation
In mediation, the mediator plays a more active role in the the process by
proposing compromise solutions after hearing all parties while in the case of
conciliation, the conciliator has to bring the parties into such a state of mind as
to facilitate the parties to come to an acceptable compromise.

 Lok Adalats
In a country like India where there are many illiterate people, the concept of
Lok Adalats is a necessity. This was first introduced in 1982 in Gujarat. This
concept mainly focused on reducing the burden of pending cases on the Courts
and has incorporated the concept keeping in mind various factors like social
justice.
Lok Adalats are governed under The Legal Services Authorities
Act,1987. Sections 19, 20, 21 and 22 specifically deal with Lok Adalats. They
have been organised by the State Legal Aid and Advice Boards with the aid of
District Legal Aid and Advice Committees. These have helped poor people to
avoid the inefficiencies of litigation. The aim of The Legal Services Authorities
Act was to provide access to justice for all, whether he be poor or rich. Since
the poor masses of the society were not being delivered on this promise, this
Act was formed. This access has been further strengthened by judgements of
various courts, such as the Delhi High Court, in the case of Abul Hasan and
National Legal Service Authority v. Delhi Vidyut Board & Ors. AIR 1999 Del 88,
where it gave an order for setting up permanent Lok Adalats. Further, the
decision given by the Lok Adalat is binding and shall be treated akin to the
order of a civil court., thereby increasing poor people’s access to justice.

Conclusion
There are many other dispute resolution methods, like med-arb, mini trial,
summary jury trial etc. But arbitration, mediation and Lok Adalats etc are the
most commonly used techniques of ADR in India. Throughout the world, ADR
has been slowly becoming the favored choice for parties, but India still relies a
lot on litigation. However, with the development of these ADR methods, and in
an effort to improve access to justice, ADR is being seen as a necessity. Legal
recognition should be given to all ADR methods including negotiation as they
are viable and convenient., and it would help to ease the burden of the courts.