Author: Aanchal Gupta, III year of B.B.A.,LL.B from Gitarattan International Business School affiliated to Guru Gobind Singh Indraprastha University.
Co-author:Vaibhav Arora, III Year of B.B.A.,LL.B from Gitarattan International Business School affiliated to Guru Gobind Singh Indraprastha University
Abstract
Alternative Dispute Resolution also known as conflict resolution, Dispute resolution is nothing but resolving a matter of dispute between two or more parties. There are many processes for dispute resolution and Alternative Dispute Resolution (ADR) is one of them.
In order to get a dispute resolved, you need to hire one of the best dispute resolution law firms. However, before that, you need to possess good knowledge and understanding of ADR yourself.
The concept of Alternative Dispute Resolution (ADR) denotes the process in which disputes are addressed and settled outside of the courtroom. In a more detailed language, ADR refers to the ways in which disputes are resolved without litigation. These ways may involve negotiation, arbitration, or mediation. The processes of ADR are generally more expeditious and less pricey. As a matter of fact, ADR is used in disputes, which have the potential of leading to litigation. Such disputes may involve labour disputes, personal injury accusations, and divorce actions.
Unlike traditional litigation, the procedures of ADR are generally collaborative, letting the parties realize each other’s perspectives. ADR even lets the parties analyse and suggest creative solutions, which a typical courtroom does not permit to impose legally.
What is Alternative Dispute Resolution (ADR) Mechanism?
ADR is a mechanism of dispute resolution that is non adversarial, i.e., working together co-operatively to reach the best resolution for everyone.
ADR can be instrumental in reducing the burden of litigation on courts, while delivering a well-rounded and satisfying experience for the parties involved.
It provides the opportunity to "expand the pie" through creative, collaborative bargaining, and fulfil the interests driving their demands.
Need for ADR
The system of dispensing justice in India has come under great stress mainly because of the huge pendency of cases in courts.
In India, the number of cases filed in the courts has shown a tremendous increase in recent years resulting in pendency and delays underlining the need for ADR methods.
Types of ADR Mechanisms
ADR is generally classified into the following types:
Arbitration
The dispute is submitted to an arbitral tribunal which makes a decision (an "award") on the dispute that is mostly binding on the parties.
It is less formal than a trial, and the rules of evidence are often relaxed.
Generally, there is no right to appeal an arbitrator's decision.
Except for some interim measures, there is very little scope for judicial intervention in the arbitration process.
Conciliation
A non-binding procedure in which an impartial third party, the conciliator, assists the parties to a dispute in reaching a mutually satisfactory agreed settlement of the dispute.
Conciliation is a less formal form of arbitration.
The parties are free to accept or reject the recommendations of the conciliator.
However, if both parties accept the settlement document drawn by the conciliator, it shall be final and binding on both.
Mediation
In mediation, an impartial person called a "mediator" helps the parties try to reach a mutually acceptable resolution of the dispute.
The mediator does not decide the dispute but helps the parties communicate so they can try to settle the dispute themselves.
Any person who undergoes the required 40 hours training stipulated by the Mediation and Conciliation Project Committee of the Supreme Court (SC) can be a mediator.
He also needs to have at least ten mediations resulting in a settlement and at least 20 mediations in all to be eligible to be accredited as a qualified mediator.
Mediation leaves control of the outcome with the parties.
Negotiation
A non-binding procedure in which discussions between the parties are initiated without the intervention of any third party with the object of arriving at a negotiated settlement to the dispute.
It is the most common method of alternative dispute resolution.
Negotiation occurs in business, non-profit organizations, government branches, legal proceedings, among nations and in personal situations such as marriage, divorce, parenting, and everyday life.
What are the Advantages of ADRs?
The resolution of disputes takes place usually in private – helping maintain confidentiality.
It is more viable, economic, and efficient.
Procedural flexibility saves valuable time and money and absence of stress of a conventional trial.
This often results in creative solutions, sustainable outcomes, greater satisfaction, and improved relationships.
The possibility of ensuring that specialized expertise is available on the tribunal in the person of the arbitrator, mediator, conciliator or neutral adviser.
Further, it offers greater direct control over the outcome.
What is the Status of ADR in India?
Statutory Backing: The Legal Services Authorities Act was passed in 1987 to encourage out-of-court settlements, and the new Arbitration and Conciliation Act was enacted in 1996.
Inclusion of Plea Bargaining: Procedure for plea-bargaining was included in the Code of Criminal Procedure in 2005.
Plea-bargaining is best described as a "pre-trial negotiation between the accused and the prosecution during which the accused agrees to plead guilty in exchange for certain concessions by the prosecution."
Lok Adalat’s: Lok Adalat or "people's court" comprises an informal setting which facilitates negotiations in the presence of a judicial officer wherein cases are dispensed without undue emphasis on legal technicalities.
The order of the Lok-Adalat is final and binding on the parties, and is not appealable in a court of law.
Other Legal Provisions:
In 2021, the Lok Sabha passed the Arbitration and Conciliation (Amendment) Bill, 2021 to check misuse by “fly-by-night operators” who take advantage of the law to get favourable awards by fraud.
The Bill intends to replace the Arbitration and Conciliation (Amendment) ordinance issued in November, 2020.
More recently in July 2022, the Parliamentary Standing Committee on Law and Justice recommended substantial changes to the Mediation Bill, 2021.
Online Dispute Resolution (ODR): The NITI Aayog in its recently released report - The Future of Dispute Resolution discusses the concept of Online Dispute Resolution (ODR) - its evolution, significance and present status in India.
ODR refers to the usage of ICT tools to enable parties to resolve their disputes.
In its first phase, ODR shares its fundamentals with ADR Mechanisms of negotiation, mediation and arbitration.
UNCITRAL Model law
With the advent of globalization and industrialization, the world has been interacting with each other more than anything and this has led to great and successful partnerships amongst people and businesses from different parts of the globe. The opening of the world market has created the need to adopt an alternate mechanism for dispute resolution among the participating partners. The domestic courts were unable to stabilise the increasing number of conflicts and disputes that had to be resolved on the international platform speedily and effectively as quickly as possible. This led to the formation of arbitration, as a form of Alternative Dispute Resolution (hereinafter referred to as the ADR) to resolve disparity among the states and countries concerning the rules and procedures regulating the process and the standards expected by the disputing parties. Concerning this, the United Nations Commission on International Trade Law (UNCITRAL) adopted the Model Law on International Commercial Arbitration on 21st June, 1985.
What is UNCITRAL Model Law on International Commercial Arbitration
The UNCITRAL is the essential legal body of the United Nations in the area of international trade law. It was established by the United Nations General Assembly after the realization that differences in national laws governing international trade are creating hurdles to the free flow of trade. Hence, this commission was established with the view to play an active role in reducing or removing these hurdles. The UNCITRAL Model law has been designated to assist the states to establish their domestic law and modernize their laws on arbitral procedure with due consideration of the specific features and the needs of international commercial arbitration. It highlights worldwide consensus on the key aspects of international arbitration practices adopted by states, of different parts of the states and different legal or economic systems of the world. The Model Law comprises 8 chapters, 36 Articles and is to be adopted by different nations into their national laws or to adapt their national laws of arbitration based on the principles of this model law.
Salient features
Some features of the Model Law are as follows:
It lays down certain rules and provisions intending to create uniformity in international commercial arbitration.
Article 1 of the Model Law states the substantive part of international commercial arbitration which defines arbitration as international if while concluding the arbitration agreement, the parties’ place of business were in different States or one of the places is located outside the state in which the party of the agreement have their place of business:
Or the place where the commercial relationship has been performed.
Or where the subject matter of the dispute has occurred.
Or the parties to the arbitration agreement have jointly agreed to include more than one place for the subject matter of the agreement.
It reflects the composition of an arbitral tribunal and the enforceability provision of an arbitral award. It would be enacted in a State if the seat of arbitration is within the territory of the particular State and the arbitral award would have global enforcement. However, the principle of ‘party autonomy’ proclaims the parties in a dispute to independently choose laws to conduct the arbitration process.
It limits the interference of the court in the process of arbitration, thereby only allowing judicial intervention for the appointment of arbitrators, challenge and termination of an arbitrator, jurisdiction of an arbitral tribunal, and the setting aside of an arbitral award. Moreover, it allows court assistance in recording evidence, recognition of the arbitration agreements and enforcement of the arbitration awards.
It highlights the essence of the arbitration clause or agreement that must be present if parties to a dispute choose arbitration as a means to solve their dispute. The Model Law also states the matter of the clause and gives recognition to these clauses even through the judiciary.
Concerning the arbitral tribunals, it states the number, appointment, procedure of the arbitration, thereby safeguarding the freedom of the tribunal and the will of the parties.
It sets out the rules to be followed for the pronouncement of the award, the enforcement of the award, and the grounds for challenging the award.
Hence, these essential features are provided in the Model Law to reduce difficulties in the process of international arbitration by providing uniformity in procedural and substantive practices of arbitration.