INTRODUCTION

Indian judiciary is one of the oldest judicial system, a world-renowned fact but nowadays it is also well-
known fact that Indian judiciary is becoming inefficient to deal with pending cases, Indian courts are clogged
with long unsettled cases. The scenario is that even after setting up more than a thousand fast track Courts
that already settled millions of cases the problem is far from being solved as pending cases are still piling up.

Today’s world has become globalised and commercial with the advent of technology. People can now
contact each other and settle business deals and disputes when they are sitting at the opposite ends of the
world. Most people no longer have the time to go and file papers at the courts and then wait long periods
for a hearing. We are rapidly approaching a stage where litigation is being replaced with alternative dispute
resolution (ADR), due to the inefficiencies and drawbacks of litigation. India hasn’t quite reached a stage
where litigation has been completely displaced by ADR methods, but the legal system is beginning to see the
benefits of ADR. This assignment shall be helpful to give you an overview of the ADR methods and how it is
beneficial.

WHAT IS ADR

Alternative dispute resolution (ADR) refers to a range of dispute settlement methods which help the parties
in the dispute to come to a settlement without going to court, or without litigating on the said matter. These
methods usually involve a third party, who helps them in settling the disputes. In many cases, ADR methods
are used alongside the litigation process as well through court authorisation. ADR offers to resolve all type
of matters including civil, commercial, industrial and family etc., where people are not being able to start
any type of negotiation and reach the settlement. It is a method which enables individuals and group to
maintain co-operation, social order and provides opportunity to reduce hostility.

HOW THE CONCEPT AROSE

As stated in the 222nd Report of the Law Commission of India, the Constitution has guaranteed access to
justice for all, primarily through Article 39A, which states that everyone must have an equal opportunity of
getting justice and this must not be denied to any citizen by reason of economic or other sort of disabilities.

The report further states that ‘access to justice’ for the common masses in India means access to the courts
of law. But even that has been hindered, due to factors like poverty, illiteracy, ignorance, social and political
backwardness etc.

In a developing country like India, many people still live in poverty. When their rights get violated, they often
do not have the money to fight long battles in the Court. They do not have the money to afford a lawyer.
They do not know the legal system and procedures. Therefore, they often think that the court system is an
inconvenience.
These kinds of inefficiencies are shared reasons among many countries, which is why ADR is being explored.
The courts also have too many pending cases and these cases keep going on for many years which is a
tremendous burden to the courts.

These reasons prompted the Indian Government to enact Section 89 of the Code of Civil Procedure,
1908 and replace the earlier Arbitration Act,1940 with The Arbitration and Conciliation Act 1996, in
accordance with the mandates of the United Nations Commission on International Trade Law (UNCITRAL).

Benefits of Alternative Dispute Resolution

 Flexibility: ADR processes frequently foster collaboration and help the parties comprehend one
another’s points of view. ADR also enables the parties to devise more innovative solutions that a
court might not be able to enforce under the law.

 Economical: When compared to litigation, ADR is more cost-effective. ADR procedures also offer
parties the chance to lessen hostility and settle disputes amicably, which makes it easier for them to
continue working together in the future.

 Saving time: The ADR process settles disagreements more quickly than litigation does. The best time
to discuss and resolve the matter can be chosen by the parties.

 Confidentiality: The conflicts that are the topic of arbitration and mediation are handled in
confidence and kept private. To safeguard their trade secrets and copyrights, corporate entities and
industrial businesses need to do this especially.

 Enforcement: The parties are still in charge of the issue, and any solution they reach is their own
decision rather than a directive from a third party. As a result, these awards are typically simpler to
enforce than court judgments.

 Expertise: The arbitrator frequently has a background in the area of dispute. Therefore, he or she
can propose a more reasonable and logical solution to the problems.

 Better participation: ADR promotes public involvement in the conflict settlement process. As a
result, it fosters respect and awareness of the law, promoting self-reliant development.

MODES OF ARBITRATION

When the courts are understaffed and overburdened with cases, ADR serves the purpose of providing faster
and simpler means of dispute resolution. All ADR methods are mostly private in nature. The typical methods
of ADR are briefly discussed as follows:

 Arbitration

Arbitration in India is governed by The Arbitration and Conciliation Act, 1996. It is a form of dispute
resolution where one or more parties are appointed to adjudicate the dispute. They act as third parties.
This third party should be neutral and this party is referred to as an ’arbitrator’ while the decision of the
arbitrator, which is essentially a determination of merits in the case, is known as ‘arbitration award’.

The arbitration process is informal and this process allows the dispute to be resolved amicably and
efficiently as it takes less time and involves lesser costs for the parties. Therefore, parties frequently choose
to arbitrate when disputes arise, especially in the business world. Big corporations would rather settle
disputes quickly, rather than fighting long cases in the courts.

Before the arbitration process begins, an arbitration agreement is required to be formed. This agreement
lays down the terms and conditions on which the arbitration process is carried out. It is determined through
this agreement as to how the process will be made cheaper, efficient and and how the rules of evidence
would be applied etc. This agreement should be valid as per The Indian Contract Act 1972 and the parties
must have the capacity to contract under Sections 11 and 12 of the same Act.

Arbitral decisions are final and binding on the parties, who have limited scope of objecting to the decisions.
Non binding arbitrations also exist wherein the party can request a trial if it is not satisfied with the
arbitrator’s decision.

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

In mediation, a third neutral party aims to assist two or more disputants in reaching a settlement. This third
party is referred to as the mediator. The mediator needs to properly communicate with both the parties and
use proper negotiation techniques, in order to make one party fully aware of the other party’s perspective,
through empathy and dialogue. This process is controlled by the parties.

One of the characteristics of this type of dispute resolution is that the mediator is not allowed to give an
outcome of the dispute. The solution is given mutually, and the agreements are generally non binding.
Parties are in significant control of the mediation process and it is strictly confidential. The parties can even
go for litigation if they are not satisfied with the mediation process.

The process of mediation works in various stages. These are,

 Opening statement

 Joint session

 Separate session and,

 Closing

It must be observed that the main aim of the mediation process is to build relationships, and not to make a
decision. It is more of an amicable resolution of differences with potential form future business between the
parties.
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. Conciliation is also governed in India under The Arbitration and
Conciliation Act, 1996. Under Section 61, conciliation is provided for disputes arising out of legal
relationships, whether they are contractual or not. 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.

Actually, it is not possible for the parties to enter into conciliation agreement before the dispute has arisen. It
is clear in Section 62 of The Arbitration and Conciliation Act, 1996 which provides,

 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.

Above provision clearly states conciliation agreement should be an extemporary agreement entered into
after the dispute has but not before. Parties are also permitted to engage in conciliation process even while
the arbitral proceedings are on(section 30).

Negotiation

Negotiation is also a form of dispute resolution, but there is no third party to adjudicate the matter,
therefore the parties work together to find a mutually acceptable solution or a compromise. The parties may
choose to be represented by their attorneys during their negotiations. Negotiation is not statutorily
recognized in India. There are no set rules for conducting a negotiation.

Essentials of negotiation-

 It is a process of communication which helps to resolve conflicts.

 It can be entered into voluntarily and its outcome is non-binding.

 The parties are benefitted here as they have control over the outcome and procedure and the
process is carried out keeping their interests in mind.
Challenges

 The average person or small businessperson is unaware of ADR measures and is therefore excluded
from the scope of such procedures.

 The majority of individuals are doubtful of arbitration’s effectiveness. The prevailing trend in India
has always been to seek out court apparatus to handle disputes, with the exception of the
panchayat system.

 There is no specialised arbitration bar, and some arbitration sessions take place outside of regular
court hours. The process was significantly delayed as a result.

 India ranks 163rd out of 193 nations in terms of contract enforcement. Additionally, the current Civil
Procedure Code regime is ineffectual and has caused millions of dollars worth of arbitral awards to
become bogged down in legal proceedings. Arbitral awards are losing their objectivity due to non-
implementation.

 India urgently needs to pass a law that covers all aspects of the arbitration process and proceedings.
The Niranjan Bhatt committee was established for this reason.

 Courts have been observed interfering with arbitration processes on a number of occasions.
Additionally, as a result of the 2019 modification, courts now play a larger role in the selection of
arbitrators. Due to these intrusions, the adaptability of ADR is called into doubt, and individuals who
chose arbitration also have a tendency to favour courts.

 The bulk of currently available online dispute resolution systems exclusively uses English, which
makes it difficult to provide exact facts and prevent misunderstandings.

Conclusion

Alternative Dispute Resolution (ADR) has become an essential aspect of modern legal frameworks, offering
efficient and amicable alternatives to traditional litigation. It encompasses various methods, including
negotiation, mediation, conciliation, and arbitration, each designed to address different types of disputes.

Negotiation allows parties to engage directly, fostering control over the outcome but potentially hampered
by power imbalances. Mediation introduces a neutral facilitator to enhance communication and promote
understanding, making it particularly effective for personal and community disputes. Conciliation takes a
more proactive approach, with the conciliator suggesting solutions, which is beneficial in labor and
commercial contexts. Arbitration provides a formal process with binding outcomes, suitable for complex
disputes, especially in international and commercial settings.

The choice of ADR mode depends on the nature of the dispute, the relationship between parties, and the
desired formality. Each method aims to encourage cooperation and understanding while facilitating
resolutions that satisfy all involved. Overall, the increasing adoption of ADR reflects a societal shift toward
collaborative conflict resolution, enhancing relationships, reducing costs, and fostering a more
harmonious approach to resolving disputes. Embracing these methods not only streamlines the resolution
process but also contributes to a more constructive and respectful legal environment.