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Alternate Dispute Resolution

 Category:Home \ Company Law
 Article:

Perspective of Alternate Dispute Resolution

Globalization has been a great stimulation in the process of integration of economies and societies of different countries across the globe. It has been a great tool for breaking economic barrier and envisioning world as a market for trade.

When economies and societies integrate it indubitably leads to the rise in various types of disputes such as:-
a) Industrial disputes,
b) Commercial disputes,
c) International disputes etc.

The remedy is not in avoidance of these disputes but rather in building mechanisms to resolve these disputes amicably. It is a sine qua non for growth and for maintaining peace and harmony in every society.

ubi jus ibi remedium – This legal maxim rightly laid down the foundation of legal system in every human society. It means whenever any wrong is done to a person, he has a right to approach the court of law. This legal pattern of resolving dispute has resulted in abundance of pending cases, which rightly justifies the cliché “justice delayed is justice denied”. The legal proceedings in a court of law get stretched down the years consuming oodles of money and which ultimately leads to disruption in business and career.

These interminable and complex court procedures have propelled jurists and legal personalities to search for an alternate to conventional court system. The search was a great success with the discovery of alternate forum known as Alternate Dispute Resolution, which is commonly called by its generic acronym “ADR”.

ADR is being increasingly acknowledged in the field of law and commercial sectors both at national and international levels. Its diverse methods have helped parties to resolve their disputes at their own terms cheaply and expeditiously.

At National Level
Benjamin Franklin once said; “when will mankind be convinced and settle their difficulties by arbitration”. I think Indian community can aptly answer him by providing the example of Panchayat System, which in reality is not very different from modern ADR system. Infact, panchayat system is vogue in India from centuries. It is a process by which a neutral third party usually a person of higher stature and reputation deemed to be unbiased during adjudication will be rendering legally binding decision. Unfortunately, this system has lost its credibility due to intervention of politics and communal hatred among people.

Litigation in India is generally longitudinal and expensive. Hence, there has been considerable amount of efforts by legislature and judiciary to make ADR more prevalent among societies.

Legislative efforts towards ADR in India:
In India credit for springing up ADR goes to East India Company. It gave the statutory recognition to the said forum under various acts such as:
· Bengal Regulation Act of 1772 and Bengal regulation act of 1781 which provided parties to submit the dispute to the arbitrator, appointed after mutual agreement and whose verdict shall be binding on both the parties.

Alternate dispute redressal received legislative recognition in India, after the enactment of Civil Procedure Code, 1859 which provided –
# Sec 312 - reference to Arbitration in pending suit.
# Sec 312 – 325 – laid down the procedure for arbitration.
# Sec 326 – 327 – provided for arbitration without courts intervention.
#Arbitration is also recognized under Indian Contract Act, 1872 as the first exception to Section 28, which envisages that any agreement restraining legal proceedings is void.
# The Legal Service Authorities Act, 1987 brought another mechanism under ADR with the establishment of Lok Adalat system.
# The Industrial Dispute Act, 1947 statutorily recognized conciliation as an effective method of dispute resolution.
# Indian Electricity Act, 1910 and A.P Co-operative Societies Act, 1964 are few more examples in this regard.

The Arbitration Act of 1899 was the first exclusive legislation on arbitration. Subsequently the said act was repealed and was replaced by Arbitration Act 1940. Arbitration Act of 1940 also failed to give desired result and in realizing its objective of enactment. Then various recommendations of successive Law Commissions and policy of liberalization in the field of commerce acted as a catalyst in the growth of ADR mechanism. After the liberalization of Indian economy which opened the gates for inflow of foreign investment; Government of India on the UNCITRAL model enacted the Arbitration and Conciliation Act 1996 which repealed the 1940 Act.

The main objectives of the Act are:-
A) To cover international and domestic arbitration comprehensively.
B) To minimize the role of courts and treat arbitral award as a decree of court.
C) To introduce concept of conciliation.
D) Lastly, to provide speedy and alternative solution to the dispute.

Code of Civil Procedure 1908 carries section 89 which formulates four methods to settle disputes outside the court. These are:-

a) Arbitration (b) Conciliation (c) Lok adalat (d) Mediation.
At the same time the Constitution of India puts arbitration as a Directive Principle of State Policy. Article 52(d) provides that the state should encourage settlement of international disputes by arbitration.

Judicial effort towards ADR in India:
Indian judiciary has also played a substantial role in upgradation of ADR mechanism. The apex court has recognized the alternate forum in its various decisions.

In In Guru Nanak Foundation V/S Rattan & Sons court observed that “Interminable, time consuming, complex and expensive court procedures impelled jurists to search for an alternative forum, less formal, more effective and speedy for resolution of disputes avoiding procedure claptrap…”

The realization of concepts like speedy trial and free legal aid by apex court in various cases has also helped in the upgradation of alternate dispute redressal mechanism. One of the biggest step in the lines of development of the said machinery was maintaining the validity of “fastrack courts” scheme as laid down in Brijmohan v/s UOI.

Fastrack court scheme has done wonders in disposing number of pending cases. These courts have disposed of 7.94 lakh cases out of 15.28 lakh cases transferred at the rate of 52.09% and recent statistics show that the number of pending cases has reduced to 6 lakhs.

Another major step in the growth of ADR services in India is the establishment of institutions such as:
· IIAM - Indian Institute of Arbitration and Mediation
· ICA - Indian Council for Arbitration
· ICADR – International Centre for Alternate Dispute Resolution.

These institutions provide services of negotiation, mediation, conciliation, arbitration, settlement conferences etc. They also help in finding lacunae in existing ADR laws and recommended reforms to overcome them.

At International Level
The history of Alternate dispute resolution forum at international level can be traced back from the period of Renaissance, when Catholic Popes acted as arbitrators in conflicts between European countries. One of the successful examples of the said mechanism is the international mediation conducted by former U.S President Jimmy Carter in Bosnia. ADR has given fruitful results not only in international political arena but also in international business world in settling commercial disputes among many corporate houses for e.g. Settlement of a longstanding commercial dispute between General Motors Co. and Johnson Matthey Inc., which was pending in US District Court since past few years.

The biggest stepping stone in the field of International ADR is the adoption of UNCITRAL [United Nation Commission on International Trade Law] model on international commercial arbitration. An important feature of the said model is that it has harmonized the concept of arbitration and conciliation in order to designate it for universal application. General Assembly of UN also recommended its member countries to adopt this model in view to have uniform laws for ADR mechanism. Other important international conventions on arbitration are:-
· The Geneva Protocol on Arbitration clauses of 1923.
· The Geneva Convention on the execution of foreign award,1927
· The New York Convention of 1958 on the recognition and enforcement of foreign arbitral award.
In India Part III of Arbitration and Conciliation Act, 1996 provides for International Commercial Arbitration

Another step in strengthening the international commercial arbitration is the establishment of various institutions such as:-
A) ICC – International Court of Arbitration of the International Chamber of Commerce.
B) Arbitration and mediation centre of World Intellectual Property Organization.
C) AAA – International centre for dispute resolution of the American Arbitration Association and others have explored new avenues in the ADR field.

Alternate Dispute Resolution Mechanism
Ø Arbitration – It is one of the cardinal mechanism in alternate dispute machinery. Whereby the dispute is submitted to one or more arbitrators, who is duly appointed by both the parties.

They give their verdict in the form of “Arbitral Award”, which is legally binding on disputed parties. Arbitration is very common in business transactions, but unknown to many that it is the oldest method of resolving disputes, which had been enshrined since ancient history.

Ø Mediation – It is a non binding process in which a third party called “Mediator” helps the disputed parties to reach a settlement.

“Mediation is the technical term in international law which signifies the interposition by a neutral and friendly state between two states at war or on the eve of war with each other, of its good offices to restore or to preserve peace”<!--[if !supportFootnotes]-->[1]<!--[endif]-->

Ø Conciliation – This mechanism is also non binding on the parties. It is a process by which a third party called “Conciliator” meets disputed parties separately in order to resolve their differences. He neither gives verdict nor makes any award.

It is also called “Shuttle diplomacy”. Most mediators consider it as a specific type of mediation practice. Part III of Arbitration and Conciliation act, 1996 provides for this mechanism.

Ø Lok Adalat – Lok Adalat is also called “people’s court”. It was established by the Government under Legal Services Authorities act, 1987 to facilitate inexpensive and prompt settlement of pending suits by conciliation and compromise. This forum is very effective in settlement of money claims, partition suits, matrimonial cases etc.

Ø Ombudsman – It is an external agency appointed by government to probe into administrative mishaps. It is a mechanism by which an aggrieved party can claim relief against abuse of discretionary power by government authority. Sweden was the first country to adopt this institution in 1809 A.D followed by Finland, Denmark, Norway, New Zealand, Australia and Scandinavian countries.

Ø Negotiation – It is a non binding process of resolving disputes, by which parties to dispute interact with one another and try to work out a settlement without the intervention of third party. Importance of Negotiation in concise can be aptly put in words of former US President John F. Kennedy – “Let us negotiate with fear but let us not fear to negotiate”.

Ø Collaborative Law – It is a voluntary dispute resolution process by which parties to dispute are represented by their own lawyers, to facilitate the discussion in accordance with an agreement. It has been an effective mechanism in the context of divorce and family law. Collaborative law is practiced internationally in countries like USA, UK and the list goes on with the inclusion of countries such as France, Germany, Austria, Australia, Scotland, Switzerland, Hong Kong etc.

Conclusion
Alternate Dispute Resolution is rapidly developing at national and international level, offering simpler methods of resolving disputes. Increasing trend of ADR services can easily be inferred from the growth of “Arbitration clause” in majority of contracts. There has been a significant growth in number of law school courses, diplomas, seminars, etc. focusing on alternate dispute resolution and rationalizing its effectualness in processing wide range of dispute in society.

Lastly, the importance of ADR mechanism can be aptly put in the words of former US President Abraham Lincoln –
“Discourage litigation persuade your neighbours to compromise whenever you can point out to them how the nominal winner is often a real loser, in fees,expenses, waste of time…”

Bibliography
Websites:

www.wikipedia.com
www.ica.com

Books
Encyclopedia of laws of England
R.D. Ranjan, Preview on Arbitration Dispute Resolution (ADR)
P.K. Mujumdar, Law of Arbitration and Conciliation, 9th Edition
Madabhushi Sridhar, Arbitration Dispute Resolution
P.C.Rao & William Sheffield, Arbitration Dispute Resolution
Stephen Cromie, International Commercial Arbitration, 2nd Edition
Andrew Tweddle & Keren Tweddle, Arbitration of Commercial Dispute
P.Ramanathan Aiyar law lexicon (1997 edition) Encyclopedia of law of England

Law Articles
Authors contact info - articles The  author can be reached at: bs.ajatshatru@legalserviceindia.com

 Added Date:6 Feb 2008
 Lenght:2056 words
 Views:2402
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About the Author: B.S. Ajatshatru Meena
Author is a law student in Symbiosis Law College, Pune. Presently in IVth year of an integrated five years law course

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