Learn Law: The Concept of Alternative Dispute Resolution

ADR is an abbreviation that stands for ‘Alternative Dispute Resolution’. ADR refers to all those methods of solving disputes which are alternatives for litigation in the courts. ADR processes are decision making process through which litigants or potential litigants may resolve their disputes. These procedures are usually less costly and more expeditious. This method can be used in commercial and labour disputes, divorce actions, in resolving tax-claims and in other disputes that would likely otherwise involve court litigation.

ADR (alternative dispute resolution) usually describes dispute resolution where an independent person (an ADR practitioner, such as a mediator) helps people in dispute to try to sort out the issues between them. ADR can help people to resolve a dispute before it becomes so big that a court or tribunal becomes involved. ADR can be very flexible and can be used for almost any kind of dispute.

Using ADR can:

  • Help you to resolve all or some of the issues in your dispute
  • Provide a fair process
  • Help you to achieve outcomes that work for everyone involved in the dispute.

Resolving your dispute through ADR is different from asking a court or tribunal to resolve your dispute. Using ADR to resolve your dispute can benefit everyone. It means that courts and tribunals can spend their time considering disputes that need a court or tribunal decision.

ADR processes can be less expensive than other ways of resolving your dispute. Going to a court can be very expensive. Tribunals can be less expensive but can still involve hearings and legal costs if you are represented.

ADR processes and outcomes focus on what is important to you and the other people involved. Courts and tribunals focus on legal rights. ADR processes may help you and other people to maintain relationship.

  • Development of ADR since Ages

Dispute resolution outside of courts is not new; societies world-over have long used non-judicial, indigenous methods to resolve conflicts. What is new is the extensive promotion and proliferation of ADR models, wider use of court-connected ADR, and the increasing use of ADR as a tool to realize goals broader than the settlement of specific disputes.

  • ADR in Ancient India

Alternate Dispute Resolution system is not a new experience for the people of this country also. It has been prevalent in India since time immemorial. Legal history indicates that down the ages man has been experimenting with procedure for making it easy, cheap, unfailing and convenient to obtain justice.[1]

It is generally presumed that the commonly prevalent system of Government in Ancient India was monarchy and instances of republic were either exceptions or aberrations. The view is based on the apparent perception that since there were kings in ancient India, the system was that of monarchy.

In earlier times, disputes were peacefully decided by intervention of kulas (family or clan assemblies), srenis (guilds of men following the same occupation), parishads (assemblies of learned men who knew law) before the king came to adjudicate on disputes.  The political system of the Aryans in their initial days here was amazingly complex, though quite ingenious. They hung around together in small village settlements (which later grew to kingdoms) and the basis of their political and social organization was, not surprisingly, the clan or kula. Being of somewhat militant nature, this was very much a patriarchal society, with the man in the house expected to keep his flock in control. Groups of kulas together formed a Grama or village, which was headed by a Gramina. Many villages formed another political unit called a Visya, headed by a Visyapati. The Visyas in turn collected under a Jana, which was ruled by a Rajana or king. However, the precise relationship between the grama, the visya and the Jana has not been clearly defined anywhere.

In ancient India there were several grades of arbitration, for example the Puga or a board of persons who belonged to different sects and tribes but lived in the same locality; the Sreni or assemblies of tradesmen and artisans belonging to different tribes but connected in some way with each other, the Kula or groups of persons bound by family ties. From early times, the decisions of Panchayats were accepted as binding. According to Colebrooke (an English scholar and commentator on ancient Hindu law), Panchayats were different systems of arbitration subordinate to the regular courts of law. The decision of a Kula or kin group was subject to revision by the Sreni which, in turn, could be revised by the Puga. From the decision of the Puga, appeal was maintainable to Pradvivaca and finally to the sovereign and the prince.

It is important to note that in ancient India joint families were the order of the day and they were usually very large. When therefore, a disagreement or dispute used to take place between two members of a family, it was usually settled by its elders. If they failed to bring about any compromise, the sreni or the guild courts used to intervene. Srenis or guilds became a prominent feature of commercial life in ancient India from 500 B.C. They were well organized and had their own executive committees of four or five members.

  • ADR in Mughal Period

The administrative system of the Mughal Empire was largely the work of Akbar, for the early two Mughal kings (Babur and Humayun) did not really get the chance to implement much of a system. Nothing like modern legislation, or a written code of laws, existed in the Mughal period. The only notable exceptions to this were the twelve ordinances of Jahagir and the Fatawa-i-A Xat^ a digest of Muslim law prepared under supervision. The judges chiefly followed the Quranic injunctions or precepts, the Fatawas or previous interpretations of the Holy Law by eminent jurists, and the qanunus or ordinances of the Emperors. They did not ordinarily disregard customary laws and sometimes followed principles of equity.

The Mughals had three separate judicial agencies, all working at the same time and independent of each other. Those were the courts of religious law, court of secular law, and political courts. As regards the courts of religious law, those were presided over by the Qazis who decided cases according to Islamic law. As regards the courts of secular law, they were presided over by Governors, Faujdars and Kotwals. In the time of Akbar, Brahmans were appointed to decide the cases of Hindus. The Panchayats also fell under this category. The courts of secular law were not under the thumb of the Qazi. Political courts tried political cases like rebellion, rioting, theft, robbery, murders, etc. They were presided over by Subahdars, Faujdars Kotwals, etc.

Mughal emperors had keen interest to deliver speedy justice to its citizens. The justice system placed even senior officers within the law, and perhaps the only person really above the law was the emperor himself. Most villagers however resolved their cases in the village courts itself and appeal to the caste courts or panchyats, the arbitration of an impartial umpire (salis), or by a resort to force”. The punishments were fairly severe, ranging from imprisonment to amputation, mutation and whipping. The approval of the emperor was however mandatory for capital punishment. In the Mughal judicial system, the emperor was the final court of appeal.

  • ADR during British regime

Judicial administration was changed during British period. The current judicial system of India is very close to the judicial administration as prevailed during British period. The traditional institutions worked as recognised system of administration of justice and not merely alternatives to the formal justice system established by the British. The two systems continued to operate parallel to each other.[2]

The system of alternate dispute redressal was found not only as a convenient procedure but was also seen as a politically safe and significant in the days of British Raj. However, with the advent of the British Raj these traditional institutions of dispute resolution somehow started withering and the formal legal system introduced by the British began to rule.

Alternate Dispute Resolution in the present form picked up pace in the country, with the coming of the East India Company. Modern arbitration law in India was created by the Bengal Regulations. The Bengal Regulations of 1772, 1780 and 1781 were designed to encourage arbitration.[3] Bengal Resolution Act, 1772 and Bengal Regulation Act, 1781 provided parties to submit the dispute to the arbitrator, appointed after mutual agreement and whose verdict shall be binding on both the parties. Hence, there were several Regulations and legislation that were brought in resulting considerable changes from 1772. After several Regulations containing provisions relating to arbitration Act VIII of 1857 codified the procedure of Civil Courts except those established by the Royal Charter, which contained Sections 312 to 325 dealing with arbitration in suits. Sections 326 and 327 provided for arbitration without the intervention of the court.

After some other provisions from time to time Indian Arbitration Act,1899 was passed, based on the English Arbitration Act of 1889. It was the first substantive law on the subject of arbitration but its application was limited to the Presidency – towns of Calcutta, Bombay and Madras. Act, however suffered from many defects and was subjected to severe judicial criticisms.

The Arbitration Act of 1940 was enacted replacing the Indian Arbitration Act of 1899 and section 89 and clauses (a) to (f) of section 104(1) and the Second Schedule of the Code of Civil procedure 1908. It amended and consolidated the law relating to arbitration in British India and remained a comprehensive law on Arbitration even in the Republican India until 1996.

  • ADR in Independent India

Bodies such as the panchayat, a group of elders and influential persons in a village deciding the dispute between villagers are not uncommon even today. In 1982 settlement of disputes out of courts started through Lok Adalats. The first Lok Adalat was held on March 14, 1982 at Junagarh in Gujarat and now it has been extended through out the country. Initially, Lok Adalats functioned as a voluntary and conciliatory agency without any statutory backing for its decisions. By the enactment of the Legal Services Authorities Act, 1987, which came into force from November 9, 1995, the institution of Lok Adalats received statutory status. To keep pace with the globalization of commerce the old Arbitration Act of 1940 is replaced by the new Arbitration and Conciliation Act, 1996. Settlement of matters concerning the family has been provided under Order XXXIIA of the Code of Civil Procedure, 1908 by amendment in 1976. Provisions for making efforts for reconciliation under Sections 23 (2) and 23 (3) of the Hindu Marriage

Act, 1955 as also under Section 34 (3) of the Special Marriage Act, 1954 are made. Family Courts Act was enacted in 1984. Under Family Courts Act, 1984 it is the duty of family court to make efforts for settlement between the parties.

Introduction of section 89 and Order X Rule 1A, 1B and 1C by way of the 1999 Amendment in the Code of Civil Procedure, 1908 is a radical advancement made by the Indian Legislature in embracing the system of “Court Referred Alternative Disputes Resolution”.

  • Law Commission Report and Need for ADR

Reasons of finding alternatives:

  1. Weight of Pendency

The need for finding alternatives arises due to the working of the present system of administration of justice, which is crumbling under the weight of the pending cases.

  1. State fighting the citizens

Interestingly, the government is the biggest litigant in the country. According to a rough estimate, around 70 per cent of all cases are either agitated by the State, or appealed by it. The State fight cases against the citizens at the costs of citizens. Thus, directly or indirectly the State is also responsible for increasing the weight of pending cases.

  1. Other reasons

Jurists have suggested that the reduction in number of holidays of courts, and an increase in the working of days. At present the court are working for 210-230 days per year, with a fairly long summer vacation. If courts work for longer hours and days, litigation can be brought under control.

  1. Adjournments

Unnecessary adjournments also extend the life of litigation. The process of adjournment, on frivolous grounds, is one of the major reasons for increase in delay. There is a need to evolve a set of guidelines for granting adjournments, and a framework for the settlement of dispute should be designed.

To overcome, such problems, the law commission of India set up to reform the ‘justice delivery system in India’, time in time came up with the solutions and suggestions, and these are:

The Law Commission of India, 117th Report in the year 1986, talks on the ‘training of judicial officers’ so that the huge backlog of cases can be managed. The law officers should be trained as per modern methods of dispute resolution, so as to re-establish the credibility on justice delivery system in India and to restructure judiciary on all level in India.

The 221st Law Commission of India, in the year 2009 came up with their report on ‘Need for Speedy Justice – Some Suggestions’ since there was Mounting of arrears of cases in courts, particularly in High Courts and District Courts, has been a cause of great concern for litigants as well as for the State. It is a fundamental right of every citizen to get speedy justice and speedy trial which also is the fundamental requirement of good judicial administration. In this Report, they have made few proposals which when given effect to, will be helpful not only in providing speedy justice but also in controlling frivolous, vexatious and luxurious litigations.

Several amendment has been suggested, In order to shorten delay in disposal of cases, it is necessary that provisions parallel to section 80 CPC be introduced for all kinds of civil suits and cases proposed to be filed by a litigant.

The 222nd Report of the Law Commission of India on the subject- Need for Justice-dispensation through ADR etc came up in 2009 “To keep under review the system of judicial administration to ensure that it is responsive to the reasonable demands of the time and in particular to secure:-

(i) Elimination of delays, speedy clearance of arrears and reduction in costs so as to secure quick and economical disposal of cases without affecting the cardinal principle that decision should be just and fair.

(ii) Simplification of procedure to reduce and eliminate technicalities and devices for delay so that it operates not as an end in itself but as a means of achieving justice.

(iii) Improvement of standards of all concerned with the administration of justice.”

This report was in the continuum of the Law Commission’s various earlier reports on the subject of judicial administration. Hence, it is the execution of the saying that Justice must be effective, speedy, less costly and non-cumbersome.

The recommendations of law commission were adopted and incorporated in Rules 1-A, 1-B and 1-C of Order X of the CPC.

Law Commission of India (report no. 230) on ‘Reforms in the judiciary – some suggestions’ The recommendations in this Report are the suggestions made by the Hon’ble Shri Justice Ashok Kumar Ganguly, former Judge of the Supreme Court, these recommendations are:

  • There must be full utilization of the court working hours. The judges must be punctual and lawyers must not be asking for adjournments, unless it is absolutely necessary. Grant of adjournment must be guided strictly by the provisions of Order 17 of the Civil Procedure Code.
  • Judges must deliver judgments within a reasonable time and in that matter, the guidelines given by the apex court in the case of Anil Rai v. State of Bihar,[4] must be scrupulously observed both in civil and criminal cases.
  • Considering the staggering arrears, vacations in the higher judiciary must be curtailed by at least 10 to 15 days and the court working hours should be extended by atleast half an hour.

Law commission of India in its 240th report in the year 2012 on ‘Costs in Civil Litigation’ also suggested some measures. The Law Commission has taken an in-depth study and had interaction with the judicial officers and lawyers at the conference held in some of the States.   The Rules of various High Courts governing taxation of costs and advocate’s fee have been pursued.  Keeping in view the triple goals of (i) ensuring realistic and reasonable costs to the successful party, (ii) curbing false and frivolous litigation and (iii) discouraging unnecessary adjournments, the recommendations have been made.  To felicitate expeditious realization of costs pending appeals, amendments to law has been suggested.   As per the recommendations, certain legislative changes in CPC have been proposed.  Amendments to Section 35A (compensatory costs for false and frivolous litigation), S. 95 (compensation for obtaining arrests, attachment, etc., on insufficient grounds), Order XXV (security for costs), Order LXI (appeals from original decrees), Order XX, Rule 6A (preparation of decree), have been suggested.

Impact of Sec 89 of the CPC in the Alternative Dispute Forum:

The object of Section 89 of the Code of Civil Procedure is that settlement should be attempted by adopting an appropriate Alternative Dispute Redressal process. Neither section 89 nor Order X, rule 1A of the CPC is intended to supersede or modify the provision of the Arbitration and Conciliation Act or the Legal Services Authorities Act, 1987.

Section 89 of the CPC makes it clear that two of the ADR processes (i.e. Arbitration and Conciliation) will be governed by the Act of 1996. And two others i.e. Lok Adalat and mediation is governed by the Legal Services Authorities Act, 1987.  Section 89 of the CPC cannot be take recourse unless all parties concerned give consent.

  • Insight into Indian Judicial System: Backlog of Cases and Crisis of Judges

Today when about more than two and half crores (As per the Ministry of Law and Justice press release 48,838 cases are pending in Supreme Court, 38,82,074 cases pending in high Court and 2,52,40,185 are pending in subordinate courts as on 31.1.2008) of case pending in our courts, that means at least five crore people are directly involved in litigation that about 4 percent of our population, and we have only 12,500 judges at lower court level and about 647 judges at various High Court and 26 judges in Supreme Court of India.

Our Justice Administration system is “adversarial” in nature in which there are two parties and they are on face to face with each other in the Court, and we have seen that it’s not the legal issues which are involved in most of the cases put before us rather its ego which come in between and it ultimately ends in blood amongst the litigants, and hatretism.

            It is also observed that our courts have very limited time for example 10:00 AM to 5:00 PM we are in Court but during that time we have to manage out time for various things like signing of files, and day to day orders, meetings, compliances of directions of higher courts, and other miscellaneous work, which a judge has to see.

The time-consumption is the structural property of our legal system. Hence, this results in large number of case backlog. The ‘delay’ is caused by 1) State, 2) Courts, 3) litigants.

The ‘state’ contributes to the crisis by its own lack of priority for matter relating to the administration of justice. The judicial appointments are held up for no valid reasons; this was made clear by Shah Committee Report. Another related aspect of judicial appointments concerns the quality of judges appointed to the higher judiciary. The state failed in its duty by not providing realistic assessment of the judicial manpower needed for maintaining an efficient and a just justice administration.

The ‘Court’ contributes to the crisis, the lack of court management procedures do contribute to the growing arrears. The failure to maintain a proper notice of ready cases, failure to provide priority for old cases, failure to bunch together cases involving substantially similar points of law contributed to delay and arrears in the High Courts.

The ‘Litigants’ also contributes to the crisis, senior lawyers, in whose hands the work is heavily concentrated, contribute to delay and arrears by their non-availability and unpreparedness. They attitude is a big concern, which resolve around the generation of money by delaying the matter and getting the future dates.

Hence, the legal system or atleast the practitioners and academicians tries to shift to another way of settlement of dispute.

  • ADR v. Litigation
  • In arbitration, the parties can settle their dispute outside the traditional courtroom, while a litigation process is done inside the court of law.
  • In arbitration, the lawyers may or may not be involved while in litigation the actions before judge is brought by lawyers only.
  • Arbitration is a private method of dispute resolution in which the parties select the individual or individuals who will finally decide the matters in issue following a process agreed upon by the parties, with no or a minimum of court intervention, while this is the case in litigation.
  • In litigation, judges do not always have technical competence, while in arbitration the parties can select an expert in a field to be appointed as an arbitrator.
  • Arbitrators are generally expected to spend more time on a case than judges usually can. This is valuable in complex matters and may result in better decisions.
  • Arbitrators often, and in principle have more flexible schedules than judges and can make themselves available in the evenings or during holidays.
  • In arbitration proceedings, rules can be tailored to fit the case.
  • May diminish bias in favour of small litigants in big litigant vs. small litigant dispute. An arbitrator may have more independence than many judges may have
  • Choice of law is given to parties in arbitration, which is not in case of litigation.
  • Arbitration is a less formal type of dispute resolution, while litigation is traditional, and formal, form of dispute resolution.
  • ADR and its Types
    • Arbitration

When two or more persons agree that a dispute or potential dispute between them shall be decided in a legally binding way by one or more impartial persons in a judicial manner, the agreement arrived after such settlement is called ‘arbitration agreement. The process is called the ‘arbitration’ and the decision when made is called the ‘award’[5].

  • Conciliation

Conciliation is a process in which a third party assists the parties to resolve their disputes by agreement. A conciliator may do this by expressing an opinion about the merits of the dispute to help the parties to reach a settlement. Hence, conciliation is a compromise settlement with the assistance of a conciliator.

  • Mediation

Mediation is a process for resolving disputes with the aid of an independent third person that assists the parties in dispute to reach a negotiated resolution. Mediation is the acceptable intervention into a dispute of a third party that has no authority to make a decision.

  • Negotiation

Negotiation is a process by which parties resolve their disputes. They agree upon course of action and bargain for advantage. Sometimes, they try to adopt such a creative option that serves their mutual interests. Because of its mutual advantages, people negotiate in almost all walks of life, from home to courtroom.

  • Lok Adalat

Lok Adalat generally means the people’s court. It is not a court in strict sense of term, nut it is a forum where voluntary efforts are made for settlement of disputes between the parties. In other words, Lok Adalat is a forum of Alternative Dispute Resolution (ADR). This system based on gandhian principles. It provides alternative resolution or devise for expedious and inexpensive justice.

  • Gram Nyayalayas

Gram Nyayalayas is an Alternative form of dispute resolution. The Gram Nyayalayas is the latest in the reforms in the structure of the Indian judiciary. This system provides speedy justice. The Gram Nyayalayas as a different court was proposed by the 114th Law Commission (lawcommissionofindia.nic.in) way back in 1986. This model of adjudication will be best suited for rural litigation. The Law Commission observed that such a court would be ideally suited for the villages as the nature of disputes coming before such a court would be ‘simple, uncomplicated and easy of solution’ and that such disputes should not be enmeshed in procedural claptrap.

  • Online ADR Mechanism

In the context of the Internet, where parties located in different corners of the world can contract with each other at the click of a mouse, litigation of online disputes is often inconvenient, impractical, time-consuming and prohibitive. Providing an alternative approach to resolve online disputes might assist in redressing grievances and gaining consumer confidence in e-commerce. Alternative Dispute Resolution (ADR) is an appurtenant candidate for such an approach.

The Virtual Magistrate Project, launched in 1996, initiated the idea of using ADR to resolve Internet-related disputes. The joint statement promoting the use of ADR in cyberspace, made by the European Union and the United States at a summit in Washington D.C. on December 18, 2000, set the ball rolling. Since then, various entities, including governments, consumer groups, lawyers, academia, and international organizations have been catapulted into arriving at an effective means to implement ADR globally on the Internet.

Existing online ADR services

  • The Virtual Magistrate Project

The Virtual Magistrate Project (VMAG) aims to demonstrate that online technology could be used to resolve online disputes in a quick, cost-effective, and accessible means using arbitration. All proceedings would take place by e-mail, and a decision was to be reached within three business days once the initial complaint was received. However, VMAG was largely unsuccessful because several complaints were not within its jurisdiction and the project was not widely advertised, thereby creating less awareness of this service.

  • The Online Ombuds Office

The Online Ombuds Office (OOO) began in June 1996 as a “mediation service aimed at disagreements that arise from a broad array of online activities. The OOO currently exists as the “dispute resolution arm of the Center, working to employ and develop online dispute resolution resources.

  • World Intellectual Property Organization (WIPO)

WIPO is the leading accredited domain name dispute resolution provider under the Uniform Domain Name Dispute Resolution Policy (UDRP) adopted by the Internet Corporation for Assigned Names and Numbers (ICANN). The domain name case is usually concluded within two months using online procedures. The WIPO arbitration award, however, is not binding, and either party can take the case before a court within ten days of the decision. The WIPO process has been very successful in settling domain name disputes.

  • Square Trade

Founded in 1999, Square Trade is another popular online ADR service provider that offers a forum to mediate e-commerce consumer disputes. Once the buyer or seller files a complaint with the site, Square Trade notifies the other party of the complaint. The parties first attempt to resolve the dispute through direct negotiation, during which they can request the assistance of a mediator. The mediator assists the parties in reaching a fair and mutually agreeable settlement and recommends a solution upon the parties’ request. The parties ultimately reach a settlement agreement based on the direct negotiation or mediation. However, the traditional legal system is always open to the parties who participate in the Square Trade resolution process.

  • com

Cybersettle.com focuses on the settlement of monetary disputes, particularly insurance related and workers compensation disputes. This service uses the process of blind bid negotiations to settle disputes. Parties submit online confidential settlement bids through e-mail to the website. Cybersettle.com usually allows three rounds of bidding. Cybersettle.com e-mails the other party informing him that the initiating party has entered the bids. The other party then provides settlement demands as first, second, and third round offers. The software technology automatically compares the ranked bids to determine if the parties have arrived at a settlement. The attorneys or claims professionals do not have to pay any fee unless there is a settlement. Even where there is no settlement, the bids are kept confidential and the parties can pursue other means of resolution.

Cases best suited for online ADR

Online disputes typically arise in relation to material that is displayed or available online. Some of the types of disputes that could be resolved using online ADR mechanisms are:

  • E-Commerce Disputes
  • Domain Name Disputes
  • Intellectual Property Disputes
  • Monetary Disputes
  • Benefits of ADR

To give a quick, effective relief to the people of India introduction of alternative dispute resolution for disposal of cases expeditiously is the urgent need of the day. The benefits which accrue from ADR are:

  • It will render speedy relief to the parties
  • It can be used at any stage of the proceedings
  • It is a more time-saving process to resolve the dispute compared with traditional court-practice and procedure
  • It will reduce the burden on the court
  • Presence of lawyer is not necessary. The lawyer can assist the court and help the parties to understand the complicated question of law or issues involved in the process
  • It can provide better solution to litigants as expeditiously as possible
  • Parties have every right to approach the court when they fail to arrive at a settlement
  • Statement of the parties cannot be used as an admission in court proceedings if the parties fail to arrive at the conclusion
  • The procedures are flexible
  • Technicalities of law and procedure, rules of evidence have no place in ADR mechanism
  • Parties can take the help of a neutral person specialized in the field of the subject which is the subject-matter of dispute

[1] Dr. Shraddhakara Supakar, Law of Procedure and Justice in Ancient India, Deep & Deep Publication, New Delhi, 1986.

[2] Sarvesh Chandra, ADR: Is Conciliation the Best Choice, in P.C. Rao and William Sheffield (eds.), Alternative Dispute Resolution: What it is and How it Works, Universal Law Publishing Co., New Delhi, (1997) p. 85

[3] Nripendra Nath Sircar, Law of Arbitration in British India (1942), p. 6 cited in 76’th Report of Law Commission of India, 1978, p. 6, para 1.14

[4] Anil Rai v. State of Bihar, (2001) 7 SCC 318.

[5] Ronald Berstein Derek Wood in Handbook of Arbitration Practice, 2nd Edn., P.9.


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