ADR

Meaning and Evolution

 MEANING- ADR
 Alternative Dispute Resolution (ADR) refers to a set of methods and
processes used to resolve disputes and conflicts outside the
traditional court system.
 ADR provides alternative avenues for individuals and entities to
settle their disagreements with the assistance of neutral third
parties or through structured procedures.
 Arbitration is the process of bringing a business dispute before a
disinterested third party for resolution.
 ADR is often characterized by its informality, cost-effectiveness,
and the opportunity for the disputing parties to actively participate
in crafting solutions that are mutually acceptable. It plays a crucial
role in addressing the limitations of the court system, providing a
more flexible and efficient means of dispute resolution that aligns
with the evolving needs of the legal landscape.
 DEFINATIONS
 United Nations Commission on International Trade Law
(UNCITRAL): According to UNCITRAL, ADR is "a process, whether
contractual or otherwise, in which parties to a dispute agree to
utilize a third party, the conciliator, to help them reach a
mutually acceptable and negotiated settlement of their dispute.“
 American Bar Association (ABA): The ABA defines ADR as "an
array of processes, other than judicial determination, in which an
impartial person assists those in a dispute in resolving the issues
between them.“
 International Mediation Institute (IMI): IMI defines ADR as "a
collective term for processes, other than judicial proceedings, in
which a neutral third party assists in resolving disputes between
parties."
CONTI…

 World Intellectual Property Organization (WIPO):

WIPO defines ADR as "techniques for resolving disputes by
means other than litigation. ADR procedures are usually less
formal, less expensive, and less time-consuming than court
litigation.“
 National Alternative Dispute Resolution Advisory
Council (NADRAC) - Australia: NADRAC defines ADR as
"processes and techniques for the resolution of disputes
otherwise than through judicial decisions; processes that
are consensual and in which the outcome is determined by
the decision of the parties."
EVOLUTION OF ADR IN INDIA

 Alternative dispute resolution has been present in the

judicial fabric of India since ancient times. Its earliest
mentions can be found in the Bhradarnyaka
Upanishad which mentions Puga, Shreni, and Kula.
 Earlier also, many disputes in the villages,
municipalities were solved by the method of
panchayats. This was and still is a form of ADR. They
used to deal with a myriad of disputes, commercial,
matrimonial, contractual, civil, and criminal and
everything else you can think of.
 A. Post-Independence Era (1947-
1970s):
 Adversarial Litigation Dominance:
• In the immediate aftermath of gaining independence in 1947,
India's legal system predominantly relied on the adversarial
litigation process. Disputes were resolved through the
traditional court system, which involved two opposing parties
presenting their cases before a judge for adjudication.
 Arbitration Act of 1940:
• During this period, the primary legislative framework for
arbitration was provided by the Arbitration Act of 1940. This
Act outlined the procedures for arbitration, but it was often
criticized for being outdated and not aligned with
contemporary needs.
 Limited Use of ADR Mechanisms:
• Alternative Dispute Resolution (ADR) mechanisms, such as
mediation and conciliation, were not widely adopted during this
time. The legal culture and mindset were more inclined towards
the conventional court-based resolution of disputes.
 Role of Panchayats and Local Elders:
• At the grassroots level, especially in rural areas, traditional
dispute resolution mechanisms like Panchayats (village councils)
and community elders continued to play a significant role. These
informal methods were deeply rooted in local customs and
traditions.
 Slow Recognition of ADR Values:
• The concept of ADR, with its emphasis on consensual resolution,
efficiency, and flexibility, was not fully recognized or integrated
into the mainstream legal system. The prevailing belief was that
justice could only be served through the adversarial process in
formal courtrooms.
 Legal Education Focus:
• Legal education during this period was primarily geared towards
preparing lawyers for courtroom litigation. The curriculum and
training programs were more centered around the skills required for
traditional legal practice.
 Changing Dynamics in the 1970s:
• Towards the end of the 1970s, there began a gradual shift in legal
thinking globally, and India started to witness a reevaluation of the
existing legal processes. This period laid the groundwork for a more
open approach to exploring alternative methods of dispute resolution.
 Preparation for ADR Expansion:
• Though ADR had not yet gained widespread acceptance, legal
scholars and practitioners were laying the groundwork for its future
expansion. The shortcomings of the existing system, including delays
in court proceedings, paved the way for the reevaluation of dispute
resolution mechanisms.
 B. 1976: Formation of the
Committee on Court
 In response to growingManagement:
concerns about the inefficiencies and delays
within the traditional court system, the Government of India established
the Committee on Court Management in 1976. The committee was
tasked with examining the existing judicial processes and suggesting
reforms to enhance the efficiency of the legal system.
 The committee was chaired by Justice P.N. Bhagwati, a prominent jurist
and former Chief Justice of India. Its composition included legal experts,
practitioners, and scholars, providing a diverse perspective on the
challenges faced by the Indian judicial system.
 The committee's recommendations were wide-ranging and included
proposals for case management, court automation, and the
establishment of alternative mechanisms for dispute resolution. One of
the notable recommendations was the introduction and promotion of Lok
Adalats.
 Lok Adalats, meaning "People's Courts," were conceived as a
forum for conciliation and compromise. These were intended to
be informal dispute resolution forums where disputes could be
settled amicably, and the decisions were often based on
principles of justice, equity, and fair play.
 Legal Services Authorities Act (1987):
The recommendations of the Committee on Court Management
laid the groundwork for the enactment of the Legal Services
Authorities Act in 1987. This legislation formalized and
institutionalized the concept of Lok Adalats and legal aid
services, providing a statutory framework for the promotion of
ADR in India.
 The Legal Services Authorities Act of 1987 was a landmark
piece of legislation that aimed to provide cost-free legal services
to the weaker sections of society and promote ADR
mechanisms. It established legal services authorities at the
national, state, and district levels.
 Formation of Legal Services Authorities:
The Act led to the formation of National Legal Services Authority
(NALSA) at the national level, State Legal Services Authorities (SLSAs)
at the state level, and District Legal Services Authorities (DLSAs) at the
district level. These bodies were entrusted with the responsibility of
implementing legal aid programs and promoting ADR.
 Mandate for ADR:
The Legal Services Authorities Act explicitly recognized and incorporated
ADR mechanisms, especially Lok Adalats, into the legal aid framework. It
mandated the authorities to organize Lok Adalats for amicable resolution
of disputes and to encourage settlement through mediation and
conciliation.
 The Committee on Court Management played a pivotal role in initiating a
shift in the legal mindset towards more efficient and accessible forms of
dispute resolution. Its recommendations set in motion a series of
legislative changes and policy initiatives that aimed to make justice
more people-centric.
 C. 1996: Amendment to the Arbitration and
Conciliation Act:
 The Arbitration and Conciliation Act underwent significant
amendments to align with international best practices, encouraging
parties to resolve disputes through arbitration and mediation.
 Shift Towards International Best Practices: The 1996
amendment marked a significant shift towards international best
practices in the field of arbitration. The objective was to create a legal
framework that not only facilitated domestic arbitration but also
positioned India as an arbitration-friendly jurisdiction on the global
stage.
 Adoption of UNCITRAL Model: The amendment incorporated key
provisions from the United Nations Commission on International Trade
Law (UNCITRAL) Model Law on International Commercial Arbitration.
This alignment with international standards aimed to make Indian
arbitration laws more consistent with those recognized globally.
 Shift Towards International Best Practices:
The 1996 amendment marked a significant shift towards
international best practices in the field of arbitration. The
objective was to create a legal framework that not only facilitated
domestic arbitration but also positioned India as an arbitration-
friendly jurisdiction on the global stage.
 Adoption of UNCITRAL Model:
The amendment incorporated key provisions from the United
Nations Commission on International Trade Law (UNCITRAL) Model
Law on International Commercial Arbitration. This alignment with
international standards aimed to make Indian arbitration laws
more consistent with those recognized globally.
 Enforcement of Arbitral Awards: The 1996 amendment
clarified and strengthened provisions related to the enforcement
of arbitral awards. This was crucial in boosting confidence in
arbitration as a dispute resolution mechanism by ensuring that
awards rendered through arbitration were enforceable in a timely
 Appointment of Arbitrators: The amended Act introduced
provisions related to the appointment of arbitrators,
emphasizing impartiality and independence. It provided a
more structured and transparent process for the
appointment of arbitrators, contributing to the credibility of
the arbitration process.
 Facilitation of International Commercial Arbitration:
The amendments were particularly significant for
international commercial arbitration, as they facilitated a
more conducive environment for resolving cross-border
disputes. The adoption of international best practices
attracted foreign businesses and investors to consider India
as a viable seat for arbitration.
 2002: Introduction of Commercial Courts: Commercial Courts were
introduced to handle commercial disputes efficiently, promoting arbitration
and ADR as a preferred mode of resolution for such matters.
 2005: Mediation and Conciliation Project Committee Report: The
Mediation and Conciliation Project Committee, chaired by Justice M.
Jagannadha Rao, submitted a comprehensive report recommending the
promotion of mediation in India.
 2015: Introduction of the Commercial Courts, Commercial Division
and Commercial Appellate Division of High Courts Act: The Act
aimed at expeditious resolution of commercial disputes, emphasizing ADR
methods like arbitration and mediation.
 2018: National Legal Services Authority (NALSA) Initiative: NALSA
continued to promote ADR through various initiatives, including Mediation
and Conciliation Project and organizing awareness programs.
 2021: Amendments to the Arbitration and Conciliation Act: The
Arbitration and Conciliation (Amendment) Act, 2021 aimed at making
arbitration more time-bound and cost-effective, further encouraging the
use of ADR mechanisms.
 Importance of ADR in India
 To deal with the situation of pendency of cases in courts of India, ADR
plays a significant role in India by its diverse techniques. Alternative
Dispute Resolution mechanism provides scientifically developed
techniques to Indian judiciary which helps in reducing the burden on
the courts. ADR provides various modes of settlement
including, arbitration, conciliation, mediation, negotiation and lok
Adalat. Here, negotiation means self-counseling between the parties
to resolve their dispute but it doesn’t have any statutory recognition
in India.
 ADR is also founded on such fundamental rights, article 14 and 21
which deals with equality before law and right to life and personal
liberty respectively.
 ADR’s motive is to provide social-economic and political justice and
maintain integrity in the society enshrined in the preamble. ADR also
strive to achieve equal justice and free legal aid provided under
article 39-A relating to Directive Principle of State Policy(DPSP).
Important provisions related to ADR

 Section 89 of the Civil Procedure Code, 1908 provides that opportunity

to the people, if it appears to court there exist elements of settlement
outside the court then court formulate the terms of the possible
settlement and refer the same for: Arbitration, Conciliation, Mediation or
Lok Adalat.
 Order 10 Rule 1A of the Civil Procedure Code (CPC) is directly related to
Alternative Dispute Resolution (ADR). After recording the admissions and
denials, the court under Order 10 Rule 1A directs the parties to the suit
to opt for any one mode of settlement outside the court as specified in
sub-section (1) of section 89.
 ARBITRATION
 The process of Arbitration cannot exist without valid arbitration
agreement prior to the emergence of dispute.
 In this technique of resolution parties refer their dispute to one or
more persons called arbitrators. Decision of arbitrator is bound on
parties and their decision is called ‘Award’.
 The object of Arbitration is to obtain fair settlement of dispute
outside of court without necessary delay and expense.
 Any party to a contract where arbitration clause is there, can
invoke arbitration clause either himself or through their
authorized agent which refer the dispute directly to the
arbitration as per the Arbitration clause.
 Here, arbitration clause means a clause that mention the course
of actions, language, number of arbitrators, seat or legal place of
the arbitration to be taken place in the event of dispute arising
out between the parties.
 Initially, applicant initiates an arbitration by filing a statement of
claim that specifies the relevant facts and remedies. The
application must include the certified copy of arbitration
agreement.
 Statement of claim is a written document filed in the court or
tribunal for judicial determination and a copy also send to the
defendant in which claimant described the facts in support of his
case and the relief he seeks from the defendant.
 The respondent reply to the arbitration by filing an answer
against the arbitration claim of claimant that specifies the
relevant facts and available defenses to the statement of claim.
 Arbitrators selection is the process in which the parties receive
lists of potential arbitrators and select the panel to hear their
case.
 Then there is the exchange of documents and information in
preparation for the hearing called ‘Discovery’.
 The parties meet in persons to conduct the hearing in which the
parties present the arguments and evidences in support of their
respective cases
 After the witnesses examined and evidences are presented, then
there in conclusion arbitrator gives an ‘Award’ which is binding on the
parties.
 Now the intricacies of the proceedings vary with the arbitration
agreement. For example, there could be a timeline which must be
followed. This timeline would be stipulated in the agreement.
 Section 8 of Arbitration and Conciliation Act, 1996 provides if any
party disrespects the arbitral agreement and instead of moving to
arbitration, moves that suit to civil court, other party can apply the
court for referring the matter to arbitration tribunal as per the
agreement but not later the submission of the first statement.
 The application must include a certified copy of arbitration agreement
and if courts satisfy with it, the matter will be referred to arbitration.
 MEDIATION
 Mediation is an Alternative Dispute resolution where a third neutral party
aims to assist two or more disputants in reaching agreement.
 It is an easy and uncomplicated party centered negotiation process where
third party acts as a mediator to resolve dispute amicably by using
appropriate communication and negotiation techniques.
 This process is totally controlled by the parties. Mediator’s work is just to
facilitate the parties to reach settlement of their dispute. Mediator doesn’t
impose his views and make no decision about what a fair settlement should
be.
 STAGES MAY INCLUDE:
• Opening statement
• Joint session
• Separate session and,
• Closing
 At the commencement of mediation process, the mediator shall ensure
the parties and their counsels should be present.
 Initially in the opening statement he furnishes all the information
about his appointment and declares he does not have any connection
with either of parties and has no interest in the dispute.
 In the joint session, he gathers all the information, understand the fact
and issues about the dispute by inviting both the parties to present their
case and put forward their perspective without any interruption. In this
session, mediator tries to encourage and promote communication and
manage interruption and outbursts by the parties.
 Next is separate session, where he tries to understand the dispute at
a deeper level, gathers specific information by taking both the parties in
confidence separately.
 Mediator asks frequent questions on facts and discusses strengths and
weaknesses to the parties of their respective cases.
 After hearing both the sides, mediator starts formulating issues for
resolution and creating options for settlement.
 In the case of failure to reach any agreement through
negotiation in mediation, mediator uses different Reality check
technique like:
Best Alternative to Negotiated Agreement (BATNA)
• It is the best possible outcome both the party come up with or
has in mind. Its suitable situation as each party thinks about
their most favorable scenario looks like.
Most Likely Alternative to Negotiated Agreement (MLATNA)
• For a successful negotiation the result always lies in the middle,
mediator after considering both the parties comes up with most
likely outcome. Here result is not always in the middle but little
left or right of the center depending on negotiation situation.
Worst Alternative to Negotiated Agreement (WATNA)
• It the worst possible outcome a party has in their mind for what
could happen during negotiation.
 It may be helpful to the parties and mediator to examine the
alternative outside the mediation(specifically litigation) and
discusses the consequences of failing to reach agreement like:
effect on the relationship of the parties or effect on the
business of the parties.
 It is always important to consider and discuss the worst and
most probable outcomes, it’s not always people get the best
outcome.
 Mediator discusses the perspective of the parties about the
possible outcome at litigation.
 It is also helpful for the mediator to work with parties and their
advocates to come to a proper understanding of the best,
worst and most probable outcome to the dispute through
litigation as that would help the parties to acknowledge the
reality and prepare realistic, logical and workable proposals.
 CONCILIATION
 Conciliation is a form of arbitration but it is less formal in nature. It is the process of
facilitating an amicable resolution between the parties, whereby the parties to the
dispute use conciliator who meets with the parties separately to settle their
dispute.
 Conciliator meet separately to lower the tension between parties, improving
communication, interpreting issue to bring about a negotiated settlement There is
no need of prior agreement and cannot be forced on party who is not intending for
conciliation. It is different from arbitration in that way.
 The party initiating conciliation shall send to the other party a written invitation to
conciliate under this part, briefly identifying the subject of the dispute.
 Conciliation proceedings shall commence when the other party accepts in writing
the invitation to conciliate.
 If the other rejects the invitation, there will be no conciliation proceedings.
 Provision clearly states conciliation agreement should be an extemporary
agreement entered into after the dispute has arisen. Parties are also permitted to
engage in conciliation process even while the arbitral proceedings are on(section
30).
 Lok Adalat
 Lok Adalat is called ‘People’s Court’ presided over by a sitting
or retired judicial officer, social activists or members of Legal
profession as the chairman. National Legal Service
Authority(NALSA) along with other Legal Services Institutions
conducts Lok Adalats on regular intervals for exercising such
jurisdiction.
 Any case pending in regular court or any dispute which has not
been brought before any court of law can be referred to Lok
Adalat. There is no court fees and rigid procedure followed,
which makes the process fast. If any matter pending in court
of referred to the Lok Adalat and is settled subsequently, the
court fee originally paid in the court when the petition filed is
also refunded back to the parties.
 Parties are in direct interaction with the judge, which is not
possible in regular courts. It depends on the parties if both
the parties agree on case long pending in regular court can
be transferred to Lok Adalat.
 The persons deciding the cases have the role of statutory
conciliators only, they can only persuade the parties to
come to a conclusion for settling the dispute outside the
regular court in the Lok Adalat.
 Legal Services Authorities (State or District) as the case
may be on receipt of an application from one of the parties
at a pre-litigation stage may refer such matter to the Lok
Adalat for which notice would then be issued to the other
party. Lok Adalats do not have any jurisdiction to deal with
cases of non-compoundable offense.