All about Alternative Dispute Resolution

Introduction:

Everyone wants justice delivered quickly and affordably. Early conflict settlement in the modern day not only saves the parties to the dispute considerable time and money, but also fosters the climate for contract enforcement and ease of doing business.

The traditional method of resolving disputes, litigation, is a drawn-out procedure that impedes the administration of justice and overburdens the judicial system. Alternative Dispute Resolution (ADR) processes like arbitration, conciliation, mediation, etc. provide a better and more expedient way to resolve a conflict in such a situation. Compared to traditional methods of dispute resolution, these ADR processes are less adversarial and more likely to result in a negotiated settlement.

History of ADR:

The Indian Arbitration Act, 1899, which only applied to the Presidency towns of Madras, Bombay, and Calcutta, was the country's first official act addressing the topic of arbitration.

The Second Schedule of the Code of Civil Procedure, 1908 then allowed for the use of arbitration after the code's entry into force. The Arbitration Act, 1940, which is the comprehensive arbitration law, was afterwards established by the aforementioned statutes.

The aforementioned Act of 1940, which was in effect for the next more than fifty years, was largely based on the English Arbitration Act of 1934.

The Arbitration (Protocol and Convention) Act, 1937 for awards made under the Geneva Convention, and the Foreign Awards (Recognition and Enforcement) Act, 1961 for awards made under the New York Convention dealt with the enforcement of foreign awards, whereas the Act of 1940 only addressed domestic arbitrations.

On a global scale, the Model Law on International Commercial Arbitration, 1985 of the United Nations Commission on International Trade Law (UNCITRAL), with its 36 Articles, was adopted on June 21st, 1985. The goal of the model law was to bring consistency to the Member Countries' adopted arbitration-related statutes.

The UNCITRAL model legislation allowed the participating countries to take it into account when passing domestic arbitration laws, ensuring uniformity in arbitration laws across different jurisdictions.

 Several significant ADR-related provisions

People have this chance thanks to Section 89 of the Civil Process Code of 1908, which allows the court to formulate the parameters of a potential settlement and refer it to Lok Adalat, Arbitration, Conciliation, or Mediation if it appears that there are elements of settlement outside the court.

The Legal Services Authority Act of 1987 and the Arbitration and Conciliation Act of 1996 are the statutes that address alternative dispute resolution.

Benefits of Alternative dispute resolution 

• Less time-consuming: People settle their disputes faster than courts do.
• Cost-effective strategy: pursuing litigation results in significant financial savings.
• Since there are no court-related formalities involved, disputes are settled informally here.
• Individuals can express themselves without worrying about facing legal repercussions. Without disclosing it to any court, they might disclose the actual facts.
• Effective way: As parties confront their problems together on the same platform, there is always a chance of mending fences.
• It stops new disputes from arising and keeps the parties' relationships positive.

Modes of ADR

Arbitration

Different forms of ADR Arbitration In this method of dispute resolution, the parties refer their disagreement to one or more people called arbitrators, whose decisions are binding on the parties and referred to as "Awards." The goal of arbitration is to obtain a fair settlement of disagreement outside of court without the need for unnecessary delay or expense.

Each party to a contract that has an arbitration clause may invoke it either personally or through their authorized agent, who will then submit the dispute for arbitration in accordance with the terms of the arbitration clause.

Here, the term "arbitration clause" refers to a clause that specifies the process, language, number of arbitrators, and location where the arbitration will be held if a dispute arises between the parties.

A statement of claim outlining the pertinent facts and available remedies is initially submitted by the applicant to start arbitration. The arbitration agreement's certified copy must be included with the application.

The claimant describes the facts supporting his case and the remedies he seeks from the defendant in a written statement of claim that is submitted to the court or tribunal for judicial determination and sent in duplicate to the defendant.

The responder responded to the arbitration by submitting an answer that outlined the pertinent details and viable defenses to the claimant's arbitration claim.

The procedure of selecting the panel of arbitrators to hear a dispute involves the parties receiving lists of prospective arbitrators.

The exchange of papers and information in advance of the hearing known as "Discovery" is the next step.

To conduct the hearing, the parties meet in person and present the arguments and supporting evidence for their respective positions.

When the witnesses have been questioned and the evidence has been given, the arbitrator then renders a "Award" that is legally binding on the parties.

Now that there is an arbitration agreement, the specifics of the proceedings change. For instance, there can be a deadline that needs to be met. The agreement would provide a deadline for this.

According to Section 8 of the Arbitration and Conciliation Act of 1996, if one party disregards the arbitration agreement and files a lawsuit in civil court rather than through arbitration, the other party may request that the court refer the case to the arbitration tribunal in accordance with the agreement, but not after the filing of the first statement. If the courts are satisfied with the application and certified copy of the arbitration agreement, the matter will be sent to arbitration.

Mediation

The goal of mediation, an alternative dispute resolution method, is to help two or more disputants come to a resolution. A third party serves as a mediator in this simple and straightforward party-centered negotiation procedure, which uses effective communication and negotiating techniques to settle disputes amicably. The parties have complete control over this procedure. The sole purpose of the mediator's role is to assist the parties in resolving their conflict. The mediator does not impose his opinions or determine what a just settlement should be.

The mediator explains the parties' perspectives on the potential results of the dispute. The mediator can also help the parties and their attorneys reach an accurate understanding of the best, worst, and most likely outcomes of the dispute through litigation. This will enable the parties to acknowledge reality and to develop reasonable, comprehensible, and feasible alternatives.

Conciliation

Although conciliation is a type of arbitration, it is less formal. By the use of a conciliator who meets with each party separately to resolve the conflict, it is possible to facilitate an amicable resolution between the parties. Conciliator meets separately with each party to ease tension, enhance communication, and interpret the dispute in order to facilitate a negotiation. Prior consent is not required, and parties who are not interested in conciliation cannot be forced to participate. In that regard, it differs from arbitration.

A formal invitation to conciliate under this portion must be sent to the opposing party by the party initiating it, simply stating the issue under dispute.

When the opposite party accepts the invitation to mediate in writing, conciliation processes will start.

There won't be conciliation if the other refuses the invitation.

The aforementioned clause makes it very clear that a conciliation agreement must be a temporary agreement reached only after a disagreement has arisen. Even while the arbitration processes are ongoing, the parties are allowed to participate in conciliation (section 30).

Case Law:

• State of Gujarat v. Amber Construction and Others (2020)

In this instance, the state of Gujarat granted Amber Builder a work contract for the restoration of a portion of a national highway. When there was a disagreement between them over the job, the state of Gujarat threatened to deduct the money from their security deposits and invoices for other unfinished projects. In front of the Gujarat High Court, this was contested. The Court, however, ruled in Favour of Amber Builder, declaring that Gujarat cannot be reimbursed for the recoverable sum. To appeal the ensuing verdict, it was argued that the High Court lacked the authority to consider the case. Therefore, the question is whether the Gujarat Public Works Contract Disputes Arbitration Tribunal, which was established by the Gujarat Public Works Contract Disputes Arbitration Tribunal Act, 1992 (Gujarat Law, 1992), has the authority to grant interim relief in accordance with Section 17 of the Arbitration and Conciliation Act, 1996. The Supreme Court ruled that all work contracts between the State Government and the contractor must be referred to the arbitration tribunal under the Gujarat Public Works Contract Disputes Arbitration Tribunal Act, 1992. As a result, the GPWCD Arbitral Tribunal has the necessary power to issue interim relief under Section 17 of the Arbitration Act, 1996, according to a joint interpretation of the Gujarat Act and the Arbitration Act, 1996.

Conclusion:

Other techniques of resolving disputes include medical arbitration, mini trials, summary jury trials, etc. However, in India, the most widely employed ADR methods include arbitration, mediation, and Lok Adalats, among others. ADR is gradually gaining favour among parties around the globe, yet litigation is still very common in India. ADR is now viewed as essential due to the advancement of various ADR techniques and efforts to increase access to justice. Given their viability and convenience, all ADR techniques, including negotiation, should be legally recognised. This would lessen the strain on the legal system.