Introduction and Background of
ADR
Chapter 01
By Ayaz Noor
Alternative Dispute Resolution
Mechanisms – An Overview
Types of ADR Mechanisms
Arbitration
• Arbitration is a process in which a neutral third party or parties render a decision based
on the merits of the case.
• Parties in dispute refer the matter to one or more arbitrators, by whose decision they
agree to be bound.
• A valid arbitration agreement must exist between the parties prior to the emergence of
dispute.
• The dispute is submitted to an arbitral tribunal which makes a decision (an “award”) on
the dispute that is mostly binding on the parties.
• It is less formal than a trial, and the rules of evidence are often relaxed.
• Generally, there is no right to appeal an arbitrator’s decision.
• Except for some interim measures, there is very little scope for judicial intervention in
the arbitration process.
Permanent Court of Arbitration (PCA)
The First International Peace Conference, held in The Hague, the Netherlands, in 1899,
established the Permanent Court of Arbitration. The objective is “to facilitate the arbitration
of international disputes”.
Advantage:
Fast, flexible, confidential, choice of arbitrator with expertise, Limited rights of review and
appeal of arbitration awards.
Disadvantage:
Parties waive rights to access courts if arbitration in contracts is mandatory, pressure from
powerful parties, high fees charged by arbitrators, Limited avenues of appeal to overturn
erroneous decision.
Conciliation
• A non-binding procedure in which the parties to a disagreement are assisted by an
impartial third party, the Conciliator, in finding a mutually satisfactory agreed settlement
of the dispute.
• The Conciliator is an active participant in the conciliation process, participating in
discussions, negotiations, and reaching an acceptable settlement.
• The parties have the option of accepting or rejecting the conciliator's recommendations.
• However, if both parties accept the conciliator's settlement agreement, it will be final and
binding on both parties.
Mediation
• A neutral person known as a "mediator" assists the parties in attempting to obtain a
mutually acceptable resolution of the disagreement through mediation.
• The third-party does not make any decisions for the parties; instead, it serves as a
facilitator who helps them improve their interaction.
• The parties retain control of the outcome in mediation.
Negotiations
• It is the most frequently utilized alternative dispute resolution method.
• A non-binding procedure in which the parties commence negotiations without the
involvement of a third party with the objective of obtaining a negotiated settlement of
the issue.
• Negotiation occurs in a variety of settings, including business, non-profit organizations,
government branches, legal proceedings, international relations, and personal
circumstances such as marriage, divorce, parenting, and everyday life.
Mini-Trials
In a mini-trial, a panel of experts or decision-makers from both sides of the dispute listens to
a condensed presentation of the case. This informal presentation helps the parties
understand the strengths and weaknesses of their positions, encouraging settlement
negotiations.
Ombudsman
Some organizations appoint ombudsmen who serve as intermediaries between employees
or members and the organization itself. They help address grievances and facilitate
resolution without going to court.
Online Dispute Resolution (ODR)
With advancements in technology, ADR has extended to online platforms, where disputes
can be resolved through video conferencing, email, or web-based platforms.
Early Neutral Evaluation
Early neutral evaluation is a process that takes place soon after a case has been filed in court.
The case is referred to an expert who is asked to provide a balanced and neutral evaluation
of the dispute.
The evaluation of the expert can assist the parties in assessing their case and may influence
them towards a settlement.
Lok Adalat
This is an interesting feature of India's legal system coming from the Legal Services
Authorities Act, 1987 to encourage out-of-court settlements.
Lok Adalat (people's court) is an informal setting that facilitates negotiations in the presence-
Qf-ajudicial officer where there are no undue legal technicalities.
The order of a Lok Adalat is final and is deemed as a decree of a civil court.
The order is not appealable in a court of law.
Introduction and Background of
ADR
Chapter 01
By Ayaz Noor
Comparison
ADR vs. Adversarial System
Comparison Between ADR vs. Adversarial System
ADR (Alternative Dispute Resolution) and the adversarial system are two different
approaches to resolving legal disputes.
What is adversarial system?
The adversarial system is a method of resolving legal disputes and administering justice
that relies on the opposing parties presenting their cases to an impartial judge or jury.
It is a formal legal process that involves filing a lawsuit in a court of law and then
proceeding through various stages of legal proceedings to reach a resolution.
The adversarial system aims to get the truth through the open competition between the
prosecution and the defence.
Nature of Proceedings
ADR
ADR methods, such as mediation, arbitration, negotiation, and conciliation, focus on
resolving disputes outside of the courtroom. These processes encourage parties to reach a
mutually acceptable solution with the help of a neutral third party.
Adversarial System
The adversarial system is the traditional legal system used in many common law countries,
including the United States. In this system, legal disputes are resolved through courtroom
litigation, where each party presents its case to an impartial judge or jury.
Role of Parties
ADR
In ADR, the parties involved play a more active role in shaping the outcome of their dispute.
They have greater control over the process and can participate in crafting a resolution that
meets their needs.
Adversarial System
In the adversarial system, parties are often represented by lawyers who present evidence
and arguments on their behalf. The judge or jury ultimately decides the outcome based on
the presentations made by the opposing sides.
Decision-Maker
ADR
A neutral third party, such as a mediator or arbitrator, facilitates the resolution process in
ADR. However, the decision-making power often remains with the parties, and the third
party's role is advisory.
Adversarial System
The judge or jury is responsible for making a binding decision in the adversarial system. They
evaluate the evidence, apply the law, and render a verdict.
Formality
ADR
ADR processes are typically less formal than courtroom proceedings. They encourage open
communication and flexibility in finding solutions.
Adversarial System
Courtroom proceedings in the adversarial system follow formal legal rules, procedures, and
protocols. There are strict rules of evidence and courtroom decorum.
Time and Cost
ADR
ADR methods are often faster and less expensive than litigation. They can be particularly
useful for resolving disputes efficiently.
Adversarial System
Courtroom litigation can be time-consuming and costly due to legal fees, court costs, and
lengthy processes.
Confidentiality
ADR
Many ADR processes, such as mediation, offer confidentiality to the parties involved. This can
encourage open and honest discussions.
Adversarial System
Court proceedings are typically public, and records are often accessible to the public,
potentially making sensitive information a matter of public record.
Outcome
ADR
The outcome in ADR is often a mutually agreed-upon settlement. It aims to find a solution
that satisfies both parties' interests.
Adversarial System
The outcome in the adversarial system is a judgment or verdict handed down by the judge or
jury, which may or may not satisfy both parties.
Disadvantages of Adversarial System
Lack of familiarity with local court procedures and language
In the event that the disputants established in different countries, they usually do not
prefer to defend or submit their case to the local court which is unfamiliar with respect to
the law governing, procedures and language.
Lack of confidentiality surrounding proceedings
Although each jurisdiction stipulates distinctive rules as to the confidentiality of court
proceedings, these proceedings are usually open to public and also media.
Long lasting trials and appeal processes
There is no doubt that court proceedings last longer than that of ADR mechanism due to the existence of
wide range of appellate proceedings and high volume docket numbers.
Excessive cost of pursuing litigation overseas
Following a case in overseas may engender considerable amount of expenditures and also cause considerable
wearing upon the foreign party.
Lack of independent or impartial judiciary and corrupted system
There is no doubt that local courts usually remained close to the local party and such unfair attitudes
jeopardize their credibility before foreign parties.
Difficulties with regard to the foreign judgments
Each country has its own sovereignty right and may cause significant problems while enforcing and/or
recognizing foreign court judgments.
Introduction and Background of
ADR
Chapter 01
By Ayaz Noor
Concept & Background of
Alternative Dispute Resolution
Definition of Alternative Dispute Resolution
• The process by which disputes between the parties are settled or brought to an amicable
result without the intervention of Judicial Institution and without any trail is known as
Alternative Dispute Resolution (ADR).
• ADR is a non-adversarial conflict resolution technique, which means that everyone works
together to find the best solution for everyone.
• It is the procedure for settling disputes without litigation, such as arbitration, mediation, or
negotiation.
The concept of Alternative Dispute Resolution (ADR) mechanism is capable of providing a
substitute to the conventional methods of resolving disputes.
• 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.
• Generally, ADR uses neutral third party who helps the parties to communicate, discuss the
differences and resolve the dispute.
• It is a method which enables individuals and group to maintain co-operation, social order
and provides opportunity to reduce hostility.
ADR as a Term and Phrase
• The dispute resolution phenomena are as ancient as the history of mankind itself, nevertheless, the
term ADR is hardly half century old.
• ADR stands for Alternative Dispute Resolution. Some experts hold that ‘A’ stands for ‘appropriate’.
• According to them it is the parties to choose that what technique of dispute resolution would be
more appropriate for their needs and interests.
• In some other jurisdictions of the world like Australia and Switzerland, the process is known as EDR
(External Dispute Resolution) and DRT (Dispute Resolution Tools) respectively.
• It is, sometimes also called CDR (Consensual Dispute Resolution). In India, Pakistan and Afghanistan,
it is named as ‘PanchÉyat’ and ‘Jargha’. Again there are some others who prefers CR (Conflict
Resolution) and CPR (Collaborative Problem Solving).
What is involved in Alternative Dispute
Resolution?
In order to understand the process of alternative dispute resolution, it is important to
understand what happens during the various stages of formal dispute resolution.
Formal Dispute Resolution Process / Litigation
Formal dispute resolution or Litigation refers to the process of resolving disputes or legal
conflicts between parties through the court system. It is a formal legal process that involves
filing a lawsuit in a court of law and then proceeding through various stages of legal
proceedings to reach a resolution.
At the outset of a dispute, the parties involved must take the following steps:
Stages of Civil Cases
Institution Phase
• Institution of suit
• Issue and service of summons
• Appearance of defendant
• Written statement by defendant
• Replication/Rejoinder (Counter-claim) by Plaintiff
• Framing of Issues
Trial Phase
• Plaintiff Evidence
• Cross-Examination of Plaintiff Evidence
• Defendant Evidence
• Cross-Examination of Defendant Evidence
• Final Argument
Judgment Phase
• Judgment/Decree
• Execution of Decree
• Review of Decree
• Appeal
Execution of Decree
Stages of a Criminal Cases
Registration of FIR (First Information Report)/Compliant
• Formal complaint lodged at the police station.
• Entitles the complainant to a free copy of the FIR.
Investigation
• Police conduct an investigation, collect evidence, and record statements of witnesses.
• Investigation leads to either a charge sheet (challan) or a closure report.
Arrest & Bail
• Accused arrested may be produced before a magistrate within 24 hours.
• The court can remand to police custody, judicial custody, or release on bail.
Police Report (Challan)
• Police submit a report under Section 173 CrPC.
• Contains the police's opinion on whether to charge the accused or cancel the case.
Framing of Charge
• The court examines the evidence and decides the charges against the accused.
• Accused pleads "Guilty" or "Not Guilty."
Recording of Prosecution Evidence
• Prosecution presents evidence collected by the police, including witnesses.
• Witnesses can be cross-examined by the defense.
Statement of the Accused
• The court can ask the accused to explain the facts and circumstances.
• This statement is not on oath.
Evidence of Defense
• Defense presents its evidence and witnesses.
• Witnesses can be cross-examined by the prosecution.
Final Arguments
• Prosecution and defense present their final arguments summarizing their cases.
Delivery of Judgment
• The judge delivers a final judgment, either finding the accused guilty or acquitting
them.
• If convicted, the judge announces the sentence.
Stages of a Criminal Cases
Registration of FIR (First Information Report) /Compliant
Investigation
Arrest & Bail
Police Report (Challan)
Framing of Charge
Recording of Prosecution Evidence
Statement of the Accused
Evidence of Defense
Final Arguments
Delivery of Judgment
“Litigation is a scenario in which you go in like a
bull but leave as a sausage,”
Justice Mansoor Ali Shah
Supreme Court of Pakistan
Background of Alternative Dispute Resolution
The origin of Alternative Dispute Resolution (ADR) can be traced back to various ancient
and traditional methods of resolving conflicts and disputes outside of formal court systems.
The term "alternative dispute resolution" arose from Frank Sander's paper, "Varieties of
Dispute Processing”.
Ancient Roots
ADR has deep historical roots in human societies. Many ancient civilizations, including
those in Mesopotamia, Greece, and Rome, practiced informal methods of dispute
resolution. Elders, tribal leaders, or respected community members often served as
mediators or arbitrators to help resolve disputes within their communities.
Medieval Europe
In medieval Europe, the Church played a significant role in resolving disputes through
ecclesiastical courts and the practice of canon law. These early forms of ADR helped
maintain social order and resolve conflicts among the clergy and laypeople.
Arbitration
The concept of arbitration, where disputing parties agree to submit their case to a neutral
third party for a binding decision, has ancient roots. In medieval Europe, merchants and
traders commonly used arbitration to resolve commercial disputes. The concept of
arbitration has evolved into a key component of modern ADR.
Common Law Systems
In the common law systems that developed in England and later influenced legal systems
around the world, the courts became the primary means of resolving disputes. However,
informal resolution methods, such as "peaceful settlement" and "conciliation," were used
alongside formal litigation.
Resurgence in the 20th Century
The 20th century saw a resurgence of interest in ADR for several reasons:
• Court systems in many countries faced increasing caseloads, leading to delays in resolving disputes.
• Litigation became expensive, making it inaccessible to many individuals and businesses.
• Some disputes required a more private and confidential resolution process.
• ADR processes allowed parties to have more control over the resolution process and tailor solutions
to their specific needs.
• Over time, ADR gained legal recognition and support. Many legal systems incorporated ADR
mechanisms, and courts began referring cases to ADR processes before allowing them to proceed to
trial.
• ADR also found application in international disputes, with the development of international
arbitration institutions and conventions that facilitate the resolution of cross-border disputes.
ADR and Pakistan
ADR practices in Pakistan have deep roots in traditional dispute resolution methods such
as "Jirgas" and "Panchayats." These are community-based dispute resolution mechanisms
where local elders or leaders mediate and resolve disputes.
These traditional methods have been used for centuries and continue to play a role in
resolving various types of disputes, particularly in rural areas.
Types of ADR Mechanisms
Arbitration
• Arbitration is a process in which a neutral third party or parties render a decision based
on the merits of the case. In short:
• Parties in dispute refer the matter to one or more arbitrators, by whose decision they
agree to be bound.
• A valid arbitration agreement must exist between the parties prior to the emergence of
dispute.
• The dispute is submitted to an arbitral tribunal which makes a decision (an “award”) on
the dispute that is mostly binding on the parties.
• It is less formal than a trial, and the rules of evidence are often relaxed.
• Generally, there is no right to appeal an arbitrator’s decision.
• Except for some interim measures, there is very little scope for judicial intervention in
the arbitration process.
Permanent Court of Arbitration (PCA)
The First International Peace Conference, held in The Hague, the Netherlands, in 1899, established
the Permanent Court of Arbitration. The objective is “to facilitate the arbitration of international
disputes”.
Advantage:
Fast, flexible, confidential, choice of arbitrator with expertise, Limited rights of review and appeal of
arbitration awards.
Disadvantage:
Parties waive rights to access courts if arbitration in contracts is mandatory, pressure from powerful
parties, high fees charged by arbitrators, Limited avenues of appeal to overturn erroneous decision.
Conciliation
• A non-binding procedure in which the parties to a disagreement are assisted by an
impartial third party, the Conciliator, in finding a mutually satisfactory agreed settlement
of the dispute.
• The Conciliator is an active participant in the conciliation process, participating in
discussions, negotiations, and reaching an acceptable settlement.
• The parties have the option of accepting or rejecting the conciliator's recommendations.
• However, if both parties accept the conciliator's settlement agreement, it will be final and
binding on both parties.
Mediation
• A neutral person known as a "mediator" assists the parties in attempting to obtain a
mutually acceptable resolution of the disagreement through mediation.
• The third-party does not make any decisions for the parties; instead, it serves as a
facilitator who helps them improve their interaction.
• The parties retain control of the outcome in mediation.
Negotiations
• It is the most frequently utilized alternative dispute resolution method.
• A non-binding procedure in which the parties commence negotiations without the
involvement of a third party with the objective of obtaining a negotiated settlement of
the issue.
• Negotiation occurs in a variety of settings, including business, non-profit organizations,
government branches, legal proceedings, international relations, and personal
circumstances such as marriage, divorce, parenting, and everyday life.
Mini-Trials
In a mini-trial, a panel of experts or decision-makers from both sides of the dispute listens to
a condensed presentation of the case. This informal presentation helps the parties
understand the strengths and weaknesses of their positions, encouraging settlement
negotiations.
Ombudsman
Some organizations appoint ombudsmen who serve as intermediaries between employees
or members and the organization itself. They help address grievances and facilitate
resolution without going to court.
Online Dispute Resolution (ODR)
With advancements in technology, ADR has extended to online platforms, where disputes
can be resolved through video conferencing, email, or web-based platforms.
Early neutral evaluation
Early neutral evaluation is a process that takes place soon after a case has been filed in court.
The case is referred to an expert who is asked to provide a balanced and neutral evaluation
of the dispute.
The evaluation of the expert can assist the parties in assessing their case and may influence
them towards a settlement.
Lok Adalat
This is an interesting feature of India's legal system coming from the Legal Services
Authorities Act, 1987 to encourage out-of-court settlements.
Lok Adalat (people's court) is an informal setting that facilitates negotiations in the presence-
Qf-ajudicial officer where there are no undue legal technicalities.
The order of a Lok Adalat is final and is deemed as a decree of a civil court.
The order is not appealable in a court of law.
Introduction and Background of
ADR
Chapter 01
By Ayaz Noor
Importance of Alternate Dispute
Resolution
Importance of Alternate Dispute Resolution
Speed
ADR procedures frequently move more quickly than regular legal proceedings. They
enable quicker conflict resolution between the parties, clearing the backlog of cases in
overworked courts.
Cost-Effectiveness
ADR is frequently more affordable than going to court. ADR typically takes fewer formal
procedures and less time from legal professionals than litigation, which typically involves
significant attorney fees, court charges, and related expenses.
Relationship Preservation
ADR can assist in preserving or mending relationships between parties in commercial,
familial, or community issues. ADR techniques encourage open communication and
teamwork, which can be crucial when continual interactions are required, in contrast to
combative court battles.
Confidentiality
ADR discussions are frequently private. Due to the absence of the threat of their words
being used against them in subsequent legal procedures, this can encourage parties to be
more forthright and upfront about their problems.
Customization
Using ADR, parties can modify the dispute resolution procedure to suit their particular
requirements and situation. This adaptability may result in more inventive solutions that
better serve the interests of the parties.
Expertise
Arbitration, a popular ADR technique, frequently enables parties to choose arbitrators with
knowledge in the pertinent area. This makes sure that conflicts are decided by people who
are familiar with the nuances of the situation.
Less Formality
Compared to courtroom procedures, ADR methods are typically less formal. For those who
are unfamiliar with legal issues, in particular, this can make the process less scary and more
approachable.
Lessened Stress
Courtroom conflicts can be emotionally taxing and distressing. The parties involved may
experience less emotional stress thanks to ADR’s more cooperative environment.
Ease of Enforcement
Due to different international conventions, agreements established through ADR, especially
arbitration, are frequently easier to enforce than court judgments, both locally and
internationally.
Efficaciousness of ADR Techniques & Processes
The efficacy of ADR methods depends on various factors, including the nature of the
dispute, the willingness of parties to cooperate, and the competence of the ADR
professionals involved.
Here's an overview of the efficaciousness of ADR techniques and processes:
Mediation
Efficacy
Mediation is often highly efficacious in resolving disputes, particularly when there is a
willingness on both sides to reach a mutually acceptable solution. It allows parties to
maintain control over the outcome and promotes cooperation and communication.
Applicability
Mediation works well in a wide range of disputes, including family, workplace, commercial,
and community conflicts.
Arbitration
Efficacy
Arbitration can be highly effective, especially when parties require a binding decision. It is
faster and more flexible than litigation, making it suitable for complex commercial disputes.
Applicability
Commonly used in business contracts and international disputes where parties prefer a
private resolution process.
Negotiation
Efficacy
Negotiation is a fundamental ADR technique and can be highly effective when parties are
skilled negotiators and are willing to compromise.
Applicability
It is applicable in almost any type of dispute and is often the first step in ADR processes.
Online Dispute Resolution (ODR)
Efficacy: ODR has shown promise in resolving disputes in an online environment. Its efficacy
depends on the quality of the online platform and the fairness of the process.
Applicability: ODR is well-suited for resolving e-commerce, consumer, and small claims
disputes.
Mini-Trials and Summary Jury Trials
Efficacy: These processes can be effective in complex commercial disputes, allowing parties
to gauge the strengths and weaknesses of their cases before proceeding to a full trial.
Applicability: Often used in business and contractual disputes.
Early Neutral Evaluation (ENE)
Efficacy: ENE is effective in providing parties with an objective assessment of their case's
strengths and weaknesses, facilitating settlement discussions.
Applicability: Commonly used in civil litigation, particularly in federal courts.
Advantages of ADR
Helps limit the hostility between the parties
Generally with alternative dispute resolution, the parties are both committed to finding a
resolution by working together in good faith.
Hear what you need to hear
Clients —including in-house counsel — can get wrapped up tight in their version of the
case. Sometimes, hearing from the other side and hearing the thoughts of a neutral third
party can get both sides to focus on the realities of the dispute versus the dug-in
positioning.
Utilizes a simplified process to resolve issues
ADR generally avoids the formalities and complexity of litigation.
Less expensive
For many reasons, alternative dispute resolution is usually less expensive than traditional
litigation.
Involves experts
Depending on how the parties structure their process, ADR allows for the use of experts to
conduct the process or decide critical issues where a judge or jury may not have the time or
ability to quickly grasp the nuances of the dispute.
Acknowledges the fact that few cases go to trial
On average, 90% of litigation settles before ever going to trial. If so, then ADR is a simpler,
faster, and less expensive way to get the parties to where they are most likely to end up
anyway.
Win-Win Nature
ADR methods are non-adversarial. In order to establish long-lasting business relationship, it
is quite important to resolve dispute in amicable way and produce win-win outcomes.
Flexible
In most instances, the parties can create their own process to help resolve their fight,
that is, there’s total flexibility.
Speedier resolution
ADR almost always leads to a faster resolution of the dispute, meaning both parties
can get back to business quicker.
Confidentiality
Alternative processes are typically confidential, meaning the fight is out of the public
eye and — more importantly — sensitive documents, trade secrets, etc. are protected
from disclosure.
Disadvantages of ADR
Non-binding decisions
In some forms of ADR, such as mediation, the decision is non-binding, meaning that the
parties can choose to disregard the mediator’s recommendations.
Lack of formal procedures
ADR methods may not have the same level of formality and procedural safeguards as
traditional litigation, which can lead to uncertainty and a lack of accountability.
Imbalance of power
In some cases, one party may have greater power or resources than the other, which can
make it difficult to negotiate a fair outcome through ADR.
Limited remedies
ADR methods may not be able to provide the same level of remedies or compensation as
traditional litigation, particularly in cases involving complex legal issues.
Involvement of unqualified or biased individuals
ADR methods may involve the use of individuals who are unqualified or biased, which can
lead to an unfair outcome.
ADR is not for all cases
Alternative dispute resolution is not appropriate where a client needs an injunction,
where there is no dispute to resolve and where the client needs a ruling on a point of law.
There is no guaranteed resolution
The alternative resolution process does not always lead to a resolution. This means that
the parties could invest time and money in trying to resolve the dispute out of court and
still end up having to proceed with litigation and trial before a judge and jury.
Lack of Court Protection
As the name implies, the ADR methods do not provide protections of which should be
granted in litigation.
