This Article is written by Anushka Sharma, a Fifth-Year Law Student of University of Lucknow, Lucknow, Uttar Pradesh

Introduction

The Indian Judiciary has been saddled with an enormous arrears of cases, which causes delays in the administration of justice. There are millions of pending cases lying with different courts for the year 2023. There has, therefore, been a need to develop and consider Alternative Dispute Resolution methods as effective tools of dispute resolution outside the conventional system of judiciary. ADR encompasses arbitration, mediation, conciliation, and Lok Adalat amongst other methods for quick, cheap, and amicable disposal of disputes. ADR in India has gained momentum through legislation, judicial verdicts, and growing public for the establishment of an efficient system of delivery of justice.
It provides insight into the concept of ADR, the legal framework of ADR in India, and the actual usage of these mechanisms in different spheres of dispute resolution.
This places enormous arrears of cases in the Indian Judiciary, leading to delays in the administration of justice. There lie pending cases numbering in millions for all different courts in 2023. There has, therefore, been a need to develop and consider Alternative Dispute Resolution methods as effective tools of dispute resolution outside the conventional system of judiciary. ADR has within its ambit Arbitration, Mediation, Conciliation, and Lok Adalat’s, among other techniques for speedy, inexpensive, and amicable disposal of disputes. Development of ADR in India: Increasing through legislation, court judgments, and slowly increasing public demand for the setting up of an effective system of delivery of justice.
This insight provides an overview of ADR, the legal framework of ADR in India, and the usage of these mechanisms in practice in various spheres of dispute resolution.

Historical development of ADR in India

ADR mechanisms have been so enshrined in the history of India. One system, known as the Panchayat system, traditionally existing for many years in the villages, was a very informal yet effective system for dispute resolution. Disputes were normally settled by negotiation and through the consensus of village elders, thus maintaining harmony within communities. However, indeed, in modern times, the formalization of ADR commenced with legislative enactments in the late 20th century.

The first comprehensive law to regulate arbitration in India was the Arbitration Act, 1940 even though very replete with operational inefficiencies, which itself paved the way for the Arbitration and Conciliation Act, 1996. The 1996 Act, inspired by the UNCITRAL Model Law on International Commercial Arbitration, marked the landmark in the developing legal framework [1]Governing arbitration and conciliation in India. Statutory amendments aside, judicial interventions have, for decades, been fuelling the ADR mechanism for propagating the ADR culture.

Types of ADR Mechanisms in India

1. Arbitration: Arbitration is one of the most popular forms of ADR in use in India, mainly in business and contractual disputes. An independent arbitrator or a panel of arbitrators would hear the arguments advanced by both sides and render an arbitral award which would be binding and enforceable. The law of arbitration, in India, is provided by the Arbitration and Conciliation Act, of 1996. Under this Act, the parties are free to determine that there would be one or more arbitrators and define the attributes of the arbitrator according to the needs and requirements. Likewise, the parties may choose the rules of procedure, how proceedings may be conducted, and anything related to the arbitration process. This flexibility is one of the greatest benefits of arbitration. It often goes for commercial disputes-mostly contract-related, property-related, or corporate affairs.

Key Provisions of Arbitration and Conciliation Act, 1996:

a) The parties can elect between institutional arbitration and ad-hoc arbitration.

b) The Act ensures that the least judicial intervention occurs during the arbitral process.

c) Arbitral awards are made enforceable like a judicial decree.

d) The 2015 and 2019 Amendments were towards the end of ensuring the processes of arbitration were smooth; time limits were set for the completion of proceedings to make it less vulnerable to undue interference by courts.

Such provisions notwithstanding, there are issues with the delay in the enforcement of awards, as well as institutional arbitration centers in general in India.

2. Mediation- This is one type of process where the two parties involved in a conflict of their own volition appear before a mediator who allows them to agree upon a settlement that is satisfactory to both. A mediator does not force his will onto the parties but instead facilitates communication and negotiation among the parties. Mediation is informal and confidential and is designed to preserve relationships so it works in cases of family disputes, labour disputes, and interpersonal conflicts.

Mediation in Indian Law:

The addition to the Code of Civil Procedure, 1908 in the year 2002 is section 89, which requires the courts to consider mediation before adjudication. The courts also can order the parties into mediation at any point during the pendency of a legal action. Mediation is not binding unless the parties reach an agreement with the terms of the settlement. Yes, there are many court-annexed mediation centers in Delhi Mediation Centre and whatnot which have been able to settle a hell lot of disputes. Besides that, mediation steps are multiple, particularly with the rise of the Commercial Courts Act, 2015, where in commercial dispute cases, they have to cross a process of pre-institution mediation first.

3. Conciliation- This is virtually synonymous with mediation but in conciliation, the conciliator can take a more active role in advancing settlement solutions and terms. As with mediation, conciliation is purely voluntary; any proposals or recommendations made by a conciliator are non-compulsive unless the parties agree to be bound by them.

Conciliation under Indian Law:

a) Statutory Frame of Conciliation The Arbitration and Conciliation Act, 1996 has created a statutory framework for conciliation. It lays down the procedure, appointment of conciliators, and conduct of conciliation proceedings.

b) The conciliation method also covers disputes between government agencies, public sector enterprises, and labour management disputes.

c) It is considered an effective mechanism, especially in the public or political sphere. It does indeed provide an expeditious way of resolving non-confrontational disputes.

4. Lok Adalat’s- Lok Adalat’s or People's Courts are one of the many peculiarities of India. They had been established to provide expeditious and inexpensive justice, particularly to the marginal sections of society. Lok Adalat is an informal forum where disputes are settled amicably through negotiation and the decision taken in the Lok Adalat is a binding decision on the parties.

Legal Frame for Lok Adalat’s:

a) Lok Adalat has statutory recognition conferred under the Legal Services Authorities Act, 1987.
b) Lok Adalats are presided over by retired judges or senior advocates and function based on equity, justice, and good conscience.
c) The decision of Lok Adalat, like a decree of a court renders the same status to the award without option for appeal and becomes final.

d) Lok Adalat’s specifically come in handy for minor disputes relating to issues of a matrimonial nature, land disputes, motor accident claims, and public utility matters.

e) The biggest plus point that Lok Adalat has is the facility for easy access and speedy resolution of disputes without any elaborate legal procedures.

5. Online Dispute Resolution- ODR Of late, technology has given an added dimension to ADR: Online Dispute Resolution. ODR allows the parties to resolve disputes online without the necessity for physical presence, and the solution could be given speedily as well as cost-effectively.

ODR in India:

a) The growth of ODR has been pretty great in areas such as e-commerce, consumer disputes, and financial services.

b) The ODR services are operated by various private platforms along with the adoption of online tools by certain sectors, like NCDRC.

c) COVID-19 seriously gave a fillip to ODR when the courts and tribunals began to adapt themselves for remote hearings.

Legal Mechanism of ADR in India

The legal mechanism of ADR in India is vibrant as well as changing day by day. Some key legislative enactments have cleared the path to promote and implement the mechanisms of ADR.

1. The Arbitration and Conciliation Act, 1996

It is the backbone of arbitration and conciliation in India. The said Act provides not only for domestic but also for international arbitration. It also prescribes the law relating to conciliation and contains detailed provisions on such matters as appointment, jurisdiction, and enforcement of arbitral awards.

Further, the Amendment of said Act of 1996, added a time bar for the termination of arbitration proceedings and to reduce court intervention in 2015. Further, with an aim to incentivize institutional arbitration, amendments have been made with effect from 2019 and have established the Arbitration Council of India to lay down standards to accredit or recognize arbitral institutions in India, and promote arbitration services in India.

2. The Legal Services Authorities Act, 1987

This introduced Lok Adalat’s concept as a statutory agency for having mechanisms for the informal disposal of disputes. It gave the Lok Adalat the power to settle public utility services, family matters, and other minor civil and criminal cases.

3. The Code of Civil Procedure (Amendment) Act, 2002

This amendment added Section 89 to the CPC, thereby vesting the courts with the authority to refer pending cases to the ADR mechanisms such as arbitration, mediation, and conciliation. This provision ushered in a serious attempt at institution-building of ADR in the formal legal system.

4. The Commercial Courts Act, 2015

This Act makes it imperative that in commercial disputes, mediation before the institution should be held unless interim relief is urgently sought. Contribution by this act was the greatest reason for the rising use of mediation in business-related cases and alleviating the congestion of work in commercial courts.

Judicial Support for ADR in India

The Indian judiciary has always espoused the cause of ADR mechanisms. Various landmark judgments have motivated parties to resort to ADR for faster dispute resolution. The Supreme Court, time and again, stresses upon ADR in order to reduce pendency before courts, especially in commercial and family disputes, and expedite justice.

In Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd., the Supreme Court, in 2010, framed guidelines for referring cases to mediation and other ADR mechanisms under Section 89 of the CPC. The judgment explained that courts play a facilitator role in ADR and not all cases are suitable for litigation.

This was further iterated by the Supreme Court in Booz Allen and Hamilton Inc. v. SBI Home Finance Ltd., 2011, where it underlined that the courts should not unsettle the autonomy of parties in choosing arbitration clauses in the contract.

Issues before ADR in India

Even as ADR gains greater recognition, there are several challenges in its functionality:

1. Lack of Awareness: A sizeable portion of the public, particularly in rural areas, lacks awareness of the mechanism of ADR. Many people still prefer litigation over ADR because of ignorance of the benefits of ADR.

2. Enforcement of Arbitral Awards: While the arbitral award is enforceable as a decree of the court, delay in its execution, seriously erodes the effectiveness of arbitration.

3. Quality of Arbitrators and Mediators: Again, the success of ADR is entirely dependent on the competence and neutrality of arbitrators and mediators. No uniform system of certification has so far been laid down, and the quality of arbitrators remains uneven.

4. Institutional Support: India still lacks a sufficient number of well-established institutional arbitration centers, though recent efforts have been made to promote institutional arbitration. Most arbitrations remain ad-hoc.[2]

5. Court Interference: While the law has laid down the minimum scope of judicial interference, courts always intervene, either at the stage of enforcement or on the ground of procedural fairness. This acts completely counter to the originality of efficiency in the arbitration process.

6. Cultural Barriers: The adversarial litigation culture in India tends to dissuade parties from accepting a non-conflict-oriented settlement method of dispute resolution such as mediation or conciliation.

Recent Developments in ADR

There have been several recent developments that have sought to put in better ADR mechanisms:

1. Institutional Arbitration: Again, the establishment of the Arbitration Council of India by the Arbitration Amendment Act, 2019, may be considered to put a greater emphasis on institutional arbitration within India. In addition to ACI, MCIA and ICA are also the other institutions gaining momentum.

2. Mandatory Pre-Litigation Mediation- Pre-litigation mediation was made mandatory for disputes of a certain type by the Commercial Courts Act, 2015, apart from other legislations. This has resulted in greater usage of mediation as the first point of reference.

3. Online Dispute Resolution (ODR): In this regard, the use of ODR has been gaining great momentum. The COVID-19 pandemic accelerated it. ODR platforms started resolving disputes while sitting at home. Both governmental and private sectors are welcoming Digital ADR platforms.

Conclusion

Alternative dispute resolution in India has manifested itself to be an essential tool for amicable dispute resolution, reducing the pendency burden on the courts, and quicker access to justice. That being in place, ADR has a bright future with a comprehensive legal framework judicial support, and rising public awareness about it. However, there is a requirement to take care of its lacunas, like the enforcement of awards, institutional support, and psychological problems.

This is coupled with continuous legislation and judicial support. As India gears up to become an international commercial hub, the ADR mechanism, especially arbitration and mediation, will have a crucial role to play in terms of the future of dispute resolution in India. With further reforms, greater institutional support, and widespread adoption of technology, the alternative dispute resolution system would continue to evolve as a preferred mode of dispute resolution in India.

References

[1] Law School Tutorials An Introduction To Legal Research, (Document) www.lexisnexis.com accessed 10th September, 2024.

[2] Legal Solutions, (insights), How To Conduct Legal Research and Analysis, Bloomberg Law https://pro.bloomberglaw.com accessed 11th September, 2024