The Article is written by Shreya Pandey from Banasthali University, Jaipur. The article analyzes the development of the Alternate Dispute Redressal system.
Table of Contents
In cases of disputes, the only way to resolve it was to bring it before the court. The judge hears both the parties and gives a decision accordingly. Earlier, it was the only solution, but later, it was felt necessary to resolve the disputes which were minor in a better, convenient, and cost-effective way. Mostly, the companies which do not want to drag cases in court and make their disputes public which would defame them were supporting alternative ways to resolve the disputes privately with secrecy. Another reason for its cause is that since all kinds of disputes were addressed towards the courts, they were having huge backlogs and burdens upon them. So, it was felt necessary to find alternatives for commercial and civil disputes.
What is ADR
Alternative Dispute Resolution is a way to resolve disputes without dragging it into the court. It is cost-effective, time-saving, and also decreases the burden of the court. The MNCs and other companies frequently use this method to resolve the disputes between them, as it maintains their secrecy so that the disputes don’t affect their reputation. ADR is mainly of two types: mediation and arbitration. These methods of ADR provide settlement between the parties so that no party has to bear all the loss and both of them come to a mutual settlement through which both get benefited. These processes are used by private entities and are mainly helpful in solving disputes which arise between family members, neighbors, partners, businesses, etc.
Family disputes are that which arise between family members like child custody, divorce, property division disputes, etc. Neighbor disputes arise due to conflict between the neighbors on topics like noise, water passage, blockage of road, etc. There are many workplace disputes which are mostly resolved through ADR. These disputes include workplace harassment cases, wage and hours disputes, etc. Contractual disputes and business debt disputes are also solved through this process. Disputes between customer and producer, malpractice cases, and other pollution-related cases are also dealt with mostly through these processes.
Forms of ADR
The disputes outside the court are resolved through Alternative Dispute Resolution methods. These methods are used to resolve private individuals conflicts in a shorter period of time in a cost-effective manner. Some of the methods have a binding effect on the disputing parties while some of the methods do not have a binding effect on the parties and parties are free to choose whether they want to follow the decision of the resolution or not. This resolution method was inserted by the Parliament due to the recommendations made by the Malimath Committee and Law Commission of India through an amendment in the Civil Procedure Code, by adding Section 89 and Order 10 Rule 1A-C. The Section gives the alternative of resolving disputes in Court by the settlement of disputes outside the court through various ways including arbitration, conciliation, judicial settlement through Lok Adalats, and mediation.
Arbitration is a form of Alternative Dispute Resolution for settlement outside the court by referring the dispute to arbitrator(s). Arbitrators are persons appointed by the parties who agree to resolve their disputes by themselves without dragging the case inside the court. The award given by the arbitrator(s) is binding upon the disputed parties. The parties have limited rights to go for appeal or review of the arbitration awards. Arbitration is almost similar to mediation but the arbitrator has certain binding powers upon the parties. This is governed through The Arbitration and Conciliation Act, 1996. The most important essential for arbitration is that an arbitration agreement must be signed by the parties where it must clearly state that in case any dispute arises both the parties would appoint arbitrators for resolving it. The decision given by the arbitrators is final and binding to both the disputed parties. The advantages of arbitration are:
- It is quick and provides resolution faster than the courts.
- It is cost-effective.
- It gives limited power to review and appeal.
- It maintains privacy.
- The arbitrator is chosen by the parties according to the technical expertise they hold. It is not possible in the courts to choose the judge according to the wish.
Conciliation is a method through which a conciliator resolves the dispute between the parties by meeting them separately and discussing the issues of conflict. The conciliators meet both the parties separately so that they could listen and understand their point of view and then provide solutions to them. They lower the tension of the parties, communicate properly with them, discuss the issues, provide solutions so that they could reach an amicable settlement. The conciliator is a neutral third party whose duty is to discuss the issues with both the parties and make settlement between the parties. The conciliator does not provide any decision to the parties, it just gives certain solutions through which both the parties can reach a settlement. The solutions given by the conciliator are not binding upon the parties. Disputes such as financial, commercial, family, partnerships are settled through this method. The conciliation proceedings commence when one party invites the other party to resolve their disputes through conciliation. If the other party accepts the invitation, it is said that the conciliation proceedings have been started. If the other party rejects it then the conciliation proceedings are not initiated. The advantages of conciliation are:
- Parties have the right to choose the conciliator.
- Parties are free to accept or reject the suggestions given by the conciliator.
- The process thrives to reach an amicable settlement.
- It maintains confidentiality.
- The conciliator chosen is an expert on the technical issues that have arisen.
Mediation is a process through which a mediator appointed by both parties helps them to reach a negotiation and resolve their disputes. The mediator is a third party which is to be unbiased while dealing with the case. He does not have any decision making power. He only suggests ways to resolve the dispute and it is completely upon the parties whether they accept the mediator’s suggestion or not.
The mediation process involves certain steps: firstly, both the parties submit a written statement, then a hearing day is fixed where both the parties present their views in front of the mediator, lastly, the mediator individually meets both the parties separately and discusses the problems and then, the mediator shares his views and suggestions through which a settlement can be possible. This is one of the most likely used methods which is used by many companies and firms. This process provides a win-win situation to both parties so that the parties have to suffer minimum loss. The advantages of mediation are:
- The parties make an agreement to resolve their dispute through mediation.
- The process is quick in resolving the disputes.
- It is cost-effective.
- It maintains the confidentiality of the parties.
- The relation between the parties is not affected.
The rise of ADR
The methods for resolution outside courts were initiated at early ages. The early Aryans were of the opinion to resolve the disputes through wisdom, reason, and prudence. This was the pillar for mediation which is used till now. During the 1960s in the US, community mediation was initiated to solve racial and integration issues. Later, it became applicable to family, neighbor issues that were personal. It was then noted that through mediation a high rate of settlement can be obtained if it gets separated from the legal bureaucracy.
From the 1980s, private entities initiated resolving their conflicts through mediation after observing its cost-effective and time-saving methods. During the Pre-British rule in India, Mahajans, an impartial, respectful businessman were resolving the disputes by mediation between the merchants. Mediation was legally recognized in India in the Industrial Disputes Act, 1947. Arbitration was recognized in 1879. It also got a place in Civil Code Procedure under Section 89. Later, Legal Services Authorities Act, 1987 was legislated to constitute a National Legal Service Authority which was given a duty to encourage the settlement through arbitration, conciliation, mediations, etc. In 1996, the Arbitration and Conciliation Act was enacted. The major cause for the rise of ADR is the pending cases in the courts. The courts have to deal with lots of cases, therefore, there are plenty of pending cases before the court. Due to this pendency, the hearing of the cases is delayed and justice is not delivered in a short span of time. Now, ADR is legally accepted which also has binding nature sometimes. In the early period, the parties communicated and met in almost all the sessions but now, after a joint session the parties are separated.
This technique improved the success rate of mediation. Also, in the earlier times, the mediator was supposed to be someone who has dominance over the disputed parties but now, the mediator is someone who is neutral and has no such relation with the parties. Mediation training has also been initiated within the country and many workshops have been conducted throughout the country.
The positive or negative effects of ADR on our society
The Indian Legal System has a huge number of pending cases due to an increase in offenses and the long procedures used by the court to solve a case. It is very important to lower the burden of cases by not dragging petty issues before the court and handling such cases outside the court. ADR plays a very important and effective role in Indian society. It has undoubtedly a positive effect on Indian society as it helps to resolve disputes quickly and at less cost. There are certain cases that individuals can solve through settlements. This is important as it saves time and money and also the relation between the parties. In courts, one party wins and the other loses due to which all the consequences are faced by the losing party which builds the enmity between the parties but through ADR methods, both the parties understand each other’s conditions and come to a mutual settlement.
Thus, it creates a win-win situation for both parties. The other main effect of ADR is that it maintains the privacy of both parties. If the case is brought before the court then it becomes public as all the proceedings are noted and published. Thus the dispute between the parties becomes public while resolving through ADR, privacy is maintained and the details of the dispute are kept secret.
Thus, ADR is a very important method to resolve the disputes that are not that serious to be dragged before the court. Also, in Indian society, it has a positive effect as it saves time, money, and relation.
Impact of ADR around the globe
ADR is a method that is used worldwide to resolve the disputes that arise between the private entities. Usually, the MNCs and other big companies solve their disputes through mediation, conciliation, etc. so that their disputes remain confidential and it does not affect their reputation. ADR is used worldwide due to its time-saving and cost-effective techniques. In the USA, Judge Weinstein declared to launch an NGO named Weinstein International Foundation that would make mediation available globally.
ADR was developed to reduce the burden of courts and lower the cost and save time but now, it is seen that the suits have been increasing in the US and also arbitration technique is observed to increase the cost and delay in providing solutions. It is observed that the ADR is now being used as a private judicial system which now takes a similar cost and time like courts. Some companies have learned to use ADR effectively but still, there are some places and companies which aren’t able to adopt the principle of ADR completely due to which the main aim of ADR doesn’t get fulfilled.
ADR is an alternative to court proceedings to lower the burden of courts and provide the parties with a quick and cost-effective solution. However, it still doesn’t have that authenticity and even some methods are not binding on the parties thus it is necessary that there must be control, supervision, and guidance of the court. ADR should be complementary to the court. Judges should accept mediators as a part of the system and the judges must refer cases for mediation due to which mediation would become more expeditious. This would help courts in lowering their burden and making mediation as its tool would make the court a central institution for providing justice. Working together with court and mediations would help justice to be delivered faster and the decisions or suggestions of mediators would also have an effective role.
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