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Concept of ADR

As the global population is rising, so are the number of cases in courts of law.

Pendency of cases cannot be dealt with unless there are some radical changes in

the common law system.

Resolving the disputes, through Courts, though somethings unavoidable, does not

provide the most satisfactory solution in all cases. Arbitration, Conciliation,

Judicial Settlement, including settlement through Lok Adalat and Mediation, are

accepted modes of Alternative Dispute Resolution (ADR).

What is ADR?

Any method of resolving disputes without litigation (outside the courtroom) is

known as Alternate Dispute Resolution system. Dispute arises when the parties

are unable to agree on some issue or matter. The parties can resolve the dispute

either through litigation or through Alternative Dispute Resolution (ADR). ADR

is an umbrella term which includes all legally permitted processes of dispute

resolution other than litigation1. Although the settlement of a dispute is certainly

not the first thing that parties have in mind, yet when entering into a contract they

should be aware that differences, grievances or dispute can arise at any time.

1
Bryan A. Garner, Black’s Law Dictionary (9th edn.).

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For the purpose of settling a dispute, the first step to be taken in this regard is the

identification of the potential areas of dispute and formulation of a productive

method for its prevention2.

ADR is favoured because it enables the parties to deal with the cardinal issues in

a cost and time saving manner. It gives the parties a leverage to reduce opposition,

restore alliance, earn acceptance pf result, retrieve control, resolve dispute in an

amicable manner, and aims to accomplish justice in each individual case.

The dispute is resolved in a confidential manner making it more practical,

economical and effective. The primary objective of ADR system is to minimise

the supervisory role of the courts in the arbitration process. It is not possible to

completely exclude the court from the ADR proceedings.

The judicial process is meant to provide an effective and impartial mechanism for

redressal of grievances. Moreover, intervention by courts becomes necessary in

the cases of bias by arbitrators, misconduct of proceedings, etc. ADR is not

intended to replace altogether the traditional means of resolving disputes by

means of litigations3.

2
G.K. Kwatra, Arbitration and Alternative Dispute Resolution (2008).
3
P. Rao & William Sheffield, Alternative Dispute Resolution, 25 (1st edn.).

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There are various avenues where ADR systems have been in use since time

immemorial:

 Panchayats:

Panchayats hear the matter of two parties and tries to settle them. Mostly,

panchayats are used in rural areas.

 Gathering or family council:

If there any dispute in family then the older members of the family hear the

matter of the family and come to a conclusion.

 Adhikrita & Nripa (courts appointed by kings):

Kings of states used to select the courts and in that court the matters were

heard to fix the problems.

 Muslim period:

Judge, known as Kazee, used to follow Hedaya (meaning guidance) to try

to guide the two parties to resolve the matter.

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Formal definitions of ADR

There are many definitions of ADR. Some of the accepted ones are as follows:

 ADR typically denotes a wide range of dispute resolution processes and

techniques that act as a means for disagreeing parties to come to an

agreement short of litigation: a collective term for the ways that parties can

settle disputes, with the help of a third party.4

 It’s a method that usually involves a neutral third party, that is, a skilled

helper who either assists the parties of a dispute to reach at a decision by

agreement or facilitates in arriving at a solution to the problem between the

party to the dispute.5

 Just like the diversity in causes of disputes, the settlement models are also

varied. Alternative Dispute Resolution encompasses a wide array of

practices, which are directed towards cost effective and quick resolution of

disputes.6

 Arbitration is a process for settlement of disputes fairly and equitably

through a person or persons or an institutional body without recourse to

litigation by the disputing parties pursuant to an agreement.7

4
Australian Securities and Investment Commission – Complaints Resolution Schemes (6th January 2009) at the
wayback machine.
5
Tania Sourdin, Alternative Dispute Resolution. P.4.
6
See Maneesh Chhibber, ‘Do we need more judges? CJI Thakur’s plea to the govt raises key question’.
7
H. K. Saharay, Law of Arbitration and Conciliation, (Kolkata: Eastern Law House, 2001) P. 3.

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 There may be communication between two or more agents of parties to try

and come to a mutually acceptable solution by way of bargaining. Thus, it

mainly involves communication for the purpose of persuasion.8

Role of ADR in India

In a vast country like India, disputes and conflicts dissipate valuable time, effort

and money of the society. To establish a welfare society, it is of utmost

importance that there should be not be any conflict. It is therefore imperative that

any conflict, which raises its head, is nipped in the bud. There is a lacuna between

the filing of cases and their disposal and till the time final decision comes, there

is a state of uncertainty. However, peace is the sine qua non for development.

To get out of this maze of litigation, alternative methods of dispute resolution are

considered the best. India has a long tradition and history of such methods being

practiced in the society at grass roots level in the form of Panchayats. The other

alternative method being Lok Adalat where justice is dispensed summarily.

Methods like negotiation, mediation and conciliation are being increasingly used

to resolve disputes.

8
Stephen Goldberg, Frank Sander and Nancy Rogers, Dispute Resolution: Negotiation, Mediation and Other
Process, Second edition, (London: Little, Brown and Company, 1992) p. 17.

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Alternative Dispute Resolution has many illustrious examples in various fields

like fraud cases, family matters, money related cases and other civil cases.

Nowadays, IPR cases are also being dealt with through ADR. An example is as

follows:

 Balaji Coke Industry Pvt. Ltd. v. Maa Bhagwati Coke Gujarat Pvt.

Ltd.9

The contract between the parties stated that the arbitration would take

place at Kolkata. Both parties entered into a High Seas Sale Agreement

(HSSA) where it was specified that coal would be supplied to the

Respondent at Gujarat and Clause 14 of the contract provides that the sale

contract would be “subject to Kolkata jurisdiction”. Disputes arose and

application was filled under section 9 of Arbitration Act in Gujarat.

Seeking injunction to restrain the other-side from disposing of the

materials. Then the respondent party approached the Supreme Court with

a petition under Section 25 CPC for transfer of the application filed by

petitioner to Calcutta High Court.

The supreme Court said that the parties knowingly and voluntarily agreed

that the contract arising out of HSSA would be subject to Kolkata

jurisdiction. So, the application under Section 9 of the Arbitration and

9
9 SCC 403 (2009).

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Conciliation Act, 1996 in the Gujarat court was asked to be transferred to

the High Court at Kolkata.

Advantages of ADR

The main advantages of ADR are:

 Speedy relief

An estimated backlog of 25 million cases and reported delays in some

urban areas in excess of twenty years, currently demoralize and undermine

the effective enforcement of the substantive civil and commercial rights10.

Backlog and delay have broad political and economic implications for

Indian society. If India fails to face and meet these challenges, it will not

be able to realize its legal commitment to democratic and liberal economic

policies.

All concur that this crisis calls for the express adaptation of practical ways

out. In cases such as motor accident claims, the victims may want the

compensation to be paid without delay to facilitate medical and other

expenses. In matters such as these, ADR mechanisms like Lok Adalats can

help victims obtain speedy relief.

10
Status of Pending Cases in Subordinate Courts- 2, 27. See: Annual Report of Ministry of Law and Justice
2003-2004.

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 Economical

Alternative Dispute Resolution mechanisms are relatively inexpensive in

comparison with the ordinary legal process. These mechanisms, therefore,

help litigants who are unable to meet the expenses, involved in the

ordinary process of dispute resolution through courts. Furthermore, ADR

mechanisms enhance the involvement of the community in the dispute

resolution process.

 Simple mode of operation

The procedures employed in Alternative Dispute Resolution are flexible

and informal in contrast to the formal and rigid procedures followed in the

ordinary process of dispute resolution in courts of law. These processes

thus facilitate greater access to justice11.

 More co-operative and less competitive

ADR provides for direct participation of the disputants rather than being

run by lawyers and judges. Most ADR practices are based on an integrative

approach. They are more co-operative and less competitive than

adversarial courts-based methods like litigation. For this cause, ADR tends

to produce less malice and animosity between parties.

11
Rubin, J. Z., Pruitt, D. G., & Kim, S. H. (1994).

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