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Historical evolution of ADR in India and Emerging Trends in ADR in Today's Corporate World

Since time immemorial, humans have had disputes and fights. The only difference is earlier wars were fought to establish who is right or wrong or people had to go to the king's darbaar to get it solved. With time, jurisprudence and judicial system evolved and then came litigation. In this method, parties resolve conflicts by contending on the basis of their rights, there is an impartial and impartisan judge who would hear those contentions from both the sides and then deliver a reasoned decision. With time, people realized that not every dispute has to go to the traditional courts and that's when ADR (Alternative Dispute Resolution) came into the picture.

Meaning of Alternative Dispute Resolution & Key differences in Mediation, Arbitration and Conciliation

ADR or Alternative Dispute Resolution includes the methods of mediation, conciliation, arbitration, settlement by judiciary and any other process of resolving disputes. It does not involve courts; and is governed by certain rules. With the advent of technology and passing of time, ADR has become a viable career option for many judicial practitioners and law students.

There is an involvement of a third party which helps in solving the disputes amicably. The judgement or the decision delivered is enforceable by law. The third party involved is called mediator or arbitrator. The third party is called a Mediator in case of mediation and Arbitrator in case of arbitration. In mediation, the award is not binding whereas in arbitration the award is binding on the parties.

Moreover, in arbitration there can be more than one arbitrators whereas in mediation there can be only a single mediator. Arbitration is somewhat similar to a court procedure whereas mediation has a more informal procedure and the central focus is on resolving the dispute between parties amicably. Conciliation is also a completely different process wherein there is an expert that is appointed and that expert is shouldered with the responsibility of maintaining the confidentiality of both the parties.

It is regulated by Civil Procedure Code, 1908. The expert is known as the conciliator and he has an active role to play in the process. This article will delve into the intricacies of ADR and its evolution in today's corporate world where corporate firms are in fashion. Recently, the Mediation Bill, 2023 was also passed by the Lok Sabha which seeks to modernize the process of mediation in India.

Evolution of ADR methods: Ancient Times

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.

In Muslim law, similar provisions find a mention in the Hedayas which are one of the principal sources of their laws. Fast forwarding the timeline, then came the British Rule in India which brought with itself specific laws and provisions dedicated to ADR mechanisms. Such mechanisms were brought into effect in Calcutta, Bombay and Madras. Let's understand these provisions with the help of pointers.

Timeline of evolution of Provisions for ADR in India

As discussed above, ADR has developed hugely before and after independence of India from the British Rule. Let us understand such evolution with the help of pointers. The first such legislation which opened the doors for ADR in India was the Bengal Regulation Act 1781 and Bengal Resolution Act 1771. These acts contained specific and \  However, even though both of these acts remained in force and then came the Civil Procedure Code, 1908 which is still in force. No article on ADR is complete without the mention of Section 89 (1) which shouldered the courts to enact specific provisions for ADR mechanisms. The constitutionality of Section 89 was challenged in the case of Salem Advocate Bar Assn. v. Union of India. The honorable Supreme Court however upheld the constitutionality of Section 89. The court also observed that the provisions relating to Alternative Dispute Resolution were very successful in foreign countries and henceforth India should also keep such provisions in the judicial books of the country so as to prosper in the judicial world. The court said that such purpose can only be met by keeping the Section 89 intact. The court also ordered to constitute a committee to review the difficulties and hurdles that were there in amendment and enforceability of such provisions. The committee subsequently submitted its report and the court ordered all the High courts to enact special provisions dedicated to ADR methods.

After this, the Indian Arbitration Act 1899 came which was inspired and derived from its British Counterparts. This act gave a beautiful explanation of 'submission' which basically meant a written agreement that you will refer the matter of disputes of past and future to a third person called arbitrator even if it is not specified who will be the arbitrator.

Subsequently, the Arbitration Act of 1937 which basically helped in implementing the Geneva Protocol on Arbitration Clauses 1923.

Cutting to the present, the act that governs the ADR mechanisms in present and times is Arbitration and Conciliation Act, 1996 which is the modern legislation related to ADR in India.

This act of 1996 was also amended in 2015 to streamline the methods of arbitration, mediation and conciliation. This amendment enhanced the enforceability of arbitral awards and also dealt with the problem of burgeoning burden on Indian Courts to deal with tons of cases. It also sought to enhance the time taken to resolve the disputes taken to arbitration.

It is also important to mention the UNCITRAL (the United Nations Commission on International Trade Law) Model which is followed in today's times. It is the Meta model that governs the international standards that have to be followed by the countries of the world when framing laws and guidelines relating to alternative dispute resolution. In 1996, India embraced the UNCITRAL Model Law on International Commercial Arbitration, aligning its arbitration laws with international standards and promoting arbitration as a preferred method of dispute resolution for international business transactions.

Emerging Trends of ADR in India

After the Covid-19 pandemic struck the whole world with its proliferation in every nook and corner of countries, the Indian Judicial System recognized the importance and boons that ADR mechanisms brought with it. Due to shut down of in-person court proceedings, there was a huge backlog of cases.

The courts in order to deal with this vice brought many developments in ADR mechanisms in India. The courts have also observed that ADR methods are efficacious and money � saving since the proceedings are not as long as traditional dispute resolution systems (litigation).

Let us understand some recent developments

  • Virtual Alternative Dispute Resolution:
    Virtual ADR is an interesting method. This method is hassle-free and very efficacious. The reason being it doesn't require any party or attorney to travel from one place to another due to jurisdictions. Both parties are free to communicate with each other through video conferencing, which allows them both to hear and see each other.

    However it is important to note that the development of Virtual ADR is still at the bottom of the barrel since there are problems such as troubleshooting. These hurdles must be addressed urgently in order to develop such methods to new heights.

    It is also important to note that there are still some lawyers in India who are practicing for 20-30 years and it might be a little difficult for them to adapt to the changes that technology has brought home with it. Online Virtual ADR might still be a far-fetched dream in India.
  • The 2021 Amendment to the Arbitration and Conciliation Act, 1996:
    The act was amended in 2021 for the third time in 6 years owing to the recent developments that the pandemic brought with itself. The act was omitted by way of this amendment from the 8th Schedule. Another interesting amendment is that the courts have now been empowered to stay an arbitral award if the court has a prima facie evidence that the contract on which the award was based is tainted and tarnished by 'fraud' or 'corruption'.
  • Emergency Arbitration:
    As we know lakhs of people in India were struck with the malaise of Covid -19 Pandemic due to which there was a pressing need for urgent disposal of cases of ADR. Henceforth, a new concept called emergency arbitration emerged which meant basically utilizing arbitrators to deal with cases which called for an urgent resolution. The Court in Future Retails V Amazon held that emergency arbitration is a legitimate method and recognized emergency arbitrators as legitimate arbitrators under Indian law.

Recently, honorable Chief Justice of India, Justice Chandrachud also observed that ADR methods are hassle-free and the Indian judiciary must become malleable enough to adapt with the changes that the onset of technology has brought in the country. The courts have again and again observed that Indian judicial system must become paper-less in order to prevent wastage of papers and make the disposal of cases easier. This end can be met by the means of Alternative Dispute Resolution.

The evolution of ADR in India reflects a dynamic shift in the approach to dispute resolution, embracing alternative dispute resolution methods that are efficient, flexible, and in tune with the needs of a rapidly changing society. From ancient panchayats to the modern arbitration and mediation mechanisms, India's ADR journey exemplifies a rich blend of tradition and progress.

This article showed how the trajectory of ADR mechanisms in India has taken a shift and revolutionized the way cases are dealt. It is a very efficacious method and Indian judicial system can benefit a lot with the overall development of such methods and mechanisms. However there are certain gaps and hurdles that need to be addressed.


Award Winning Article Is Written By: Ms.Diya Saraswat, 2nd Year BA-LLB student at VIPS, Pitampura
Awarded certificate of Excellence
Authentication No: AG360415806999-26-0823

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