Alternative Dispute Resolution (ADR) Mechanisms | 26 Nov 2018

Last Updated: October 2022

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 fulfill 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 Adalats: 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.

Way Forward

• ADR has proven successful in clearing the backlog of cases in various levels of the judiciary – Lok Adalats alone have disposed more than 50 lakh cases every year on average in the last three years.
  • But there seems to be a lack of awareness about the availability of these mechanisms.
• The National and State Legal Services Authorities should disseminate more information regarding these, so they become the first option explored by potential litigants.

• The future of dispute resolution revolves around ICT innovations and new ideas to make dispute resolution efficient and accessible for every section of the society.

  • ODR has the potential to decentralise dispute resolution in India and empower innovators across communities to create targeted ODR processes to resolve disputes efficiently.