ALTERNATIVE DISPUTE RESOLUTION

INTRODUCTION
 Rapidly developing society and human needs are increasing by manifolds.
 Increasing needs lead to conflict of interest.
 Citizenry is more aware about their individual rights.
 Litigation is resorted to by many such people who fall in conflict of interest
with other in order to settle the disputes.
 However, litigation has become expensive, time consuming and as a result
thereof the Courts are overburdened.
 Therefore, when litigation fails to meet the needs of the society, the
alternative dispute resolution methods are resorted as a mode of setting the
dispute and difference amongst the parties.

TWO TYPES OF METHODS FOR CONFLICT RESOLUTION

 There are the following two types of methods for conflict resolution:
 Classic System;
 Alternative Methods (ADR)
 Classical System – It is represented by the Courts and seeks, in most cases
punishing those who violated the norm. It includes Courts, prosecutors,
police etc. Parties go into this system when they fail to solve the problem
themselves.
 Alternative Methods (ADR) – Alternative dispute resolution methods
include a category of means and procedures for preventing and resolving the
conflict assistance outside the Courts, the methods includes arbitration,
conciliation, mediation, negotiation etc.

MEANING OF ADR
 Alternative Dispute Resolution (ADR) is a term used to describe several
different modes of resolving legal disputes.
 It is experienced by the business world as well as common men that it is
impracticable for many individuals to file law suits and get timely justice.
 The Courts are backlogged with dockets resulting in delay of year or more for
the parties to have their cases heard and decided.
 To solve this problem of delayed justice ADR Mechanism has been developed
in response thereof.

RECOGNITION UNDER CIVIL PROCEDURE CODE

 Section 89
 Order X, Rule 1A – 1C
 It provides for the following four modes of ADR:
i. Arbitration;
ii. Lok Adalat;
iii. Conciliation;
iv. Mediation.

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 MERITS OF ADR

IMPORTANT POINTS – MERITS OF ADR

 Saves a lot of time.
 Saves a lot of money.
 Puts the parties in control by giving them opportunities to discuss their case
by giving them a forum to put forth their own views.
 Access to justice is much more easier and much faster.
 Focuses on issues which are important to the parties rather than merely
stressing upon the legal rights of the parties.
 More flexible remedies than the Court.
 It maintains the confidentiality of the disputes.
 Reduces stress among parties and produces good results.
 ADR provides finality.

More flexibility.
 In the case of arbitration, the parties have far more flexibility to select what
procedural and discovery rules will apply to their dispute.
 They can choose to apply relevant industry standards, domestic law, the law
of a foreign country, etc.

Select your own Arbitrator or Mediator.

 The parties can often select the arbitrator or mediator that will hear their
case, typically selecting someone with expertise in the substantive field
involved in the dispute.
 The arbitrator (or panel members) need not even be an attorney.
 In this way the focus can be on the substantive issues involved rather than
on technical procedural rules.
 In normal litigation, the parties cannot select the judge, and the judge and/or
jury may often need expert witnesses to explain extremely complex issues.
 The greater the expertise of the arbitrator, the less time that needs to be
spent bringing him up to speed.

A jury is not involved.

 Juries are unpredictable and often damage awards are based solely on
whether they like the parties or are upset at one party because of some
piece of evidence such as a photo that inflames the passion of the jury.
 Juries have awarded claimants damages that are well above what they would
have received through alternative dispute resolution; and they have also
done the opposite.

Expenses are reduced.

 Attorneys and expert witnesses are very expensive.
 Litigating a case can easily run into the tens of thousands of dollars.
 Alternative dispute resolution offers the benefit of getting the issue resolved
quicker than would occur at trial – and that means less fees incurred by all
parties.

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ADR is speedy.
 Trials are lengthy, and in many states and counties it could take years to
have a case heard by a judge or jury. Appeals can then last months or years
after that.
 In a matter of hours, an arbitrator often can often hear a case that otherwise
may take a week in court to try with live witnesses.
 With arbitration, the evidence can be submitted by documents rather than
by testimony presented through witnesses.
 ADR can be scheduled by the parties and the panellist as soon as they are all
able to meet together.

The results can be kept confidential.

 The parties can agree that information disclosed during negotiations or
arbitration hearings cannot be used later even if litigation ensues.
 The final outcome can also be made private if the parties so stipulate and
agree.
 On the other hand, most trials and related proceedings are open to the
public and the press.
 Section 73 of the Arbitration and Conciliation Act, 1996 provides that as a
general rule in conciliation proceedings the record is to be kept confidential
unless the same required due to some underlying necessity.

Party participation.
 ADR permits more participation by the litigants.
 ADR allows the parties the opportunity to tell their side of the story and have
more control over the outcome than normal trials overseen by a judge.
 Many parties desire the opportunity to speak their piece and tell their side of
the story in their own words rather than just through counsel.

Fosters cooperation.
 ADR allows the parties to work together with the neutral arbitrator or
mediator to resolve the dispute and come to a mutually acceptable remedy.

Less stress.
 ADR is often less stressful than expensive and lengthy litigation. Most people
have reported a high degree of satisfaction with ADR.

Conclusion.
 Because of these advantages, many parties choose ADR (either mediation or
arbitration) to resolve disputes instead of filing or even proceeding with a
lawsuit after it has been filed. It is not uncommon after a lawsuit has been
filed for the court to refer the dispute to a neutral before the lawsuit
becomes too costly.
 ADR has also been used to resolve disputes even after trial, while an appeal
is pending.

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Sample subject matters.
Some examples of disputes that can be settled by ADR include but are not
limited to:
 Business disputes- contracts, partnerships, ownership
 Property / Land use disputes- property transfers, boundaries, easements
 Family disputes- divorce, property, custody, visitation, support issues
 Consumer / Collection disputes- repairs, services, warranties, debts, loans
 Employment disputes- employment contracts, terminations, non-compete
 Landlord/tenant disputes- evictions, rent, repairs, security deposits
 Neighbourhood disputes / Relational disputes or other civil or personal
conflicts
 Personal Injury disputes / Insurance disputes- accidents, coverage, liability
issues.

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 DEMERITS OF ADR

IMPORTANT POINTS – DEMERITS OF ADR

 Not suitable for each and every dispute.
 Wastage of time and money in case the dispute is not resolved.
 Possibility of bias.
 Compromising of confidentiality.
 Limited judicial review.
 Informal, more opportunity of abuse of power.
 Lack of power to establish legal precedents.
 Unfamiliarity with the procedure and lack of awareness.

There is no guaranteed resolution.

 With the exception of arbitration, alternative dispute resolution processes do
not always lead to a resolution.
 That means it is possible that you could invest the 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 or jury.
 However, you will certainly better understand the other side’s position, i.e.,
know their entire case and vice versa, which could have an adverse effect
during the court trial/proceedings.

Arbitration decisions are final, subject to challenge u/s. 34.

 With very few exceptions, the decision of a neutral arbitrator cannot be
appealed, with fraud being an obvious exception.
 Additionally, some states will not enforce decisions of arbitrators that are
patently unfair, a high standard to meet.
 Another ground for setting aside an award is if the arbitrator’s decision
exceeded the scope of the arbitration clause or agreement.
 Some arbitration clauses are broad, others are narrowly limited to specific
disputes. Decisions of a court, on the other hand, usually can be appealed to
an appellate court for a variety of legal grounds and for numerous alleged
procedural errors.

Limits on Arbitration Awards.

 Arbitrators can only resolve disputes that involve money.
 They cannot issue orders compelling one party to do something, or refrain
from doing something (also known as injunctions).
 For example, Arbitrators generally cannot change title to real property. Of
course, this is subject to the specific language of the arbitration clause.
 There are various disputes which are non-arbitral such as criminal cases.

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Discovery limitations on documents and evidence
 It is not as easy to compel a person to produce a document in ADR
proceedings as is during the Court proceedings.
 Some of the procedural safeguards designed to protect parties in court may
not be present in ADR, such as the liberal discovery rules used in U.S. courts,
which make it relatively easy to obtain evidence from the other party in a
lawsuit.

Fees for the Arbitrator/Mediator/Conciliator

 The neutral mediator or arbitrator charges a fee for his or her services.
Depending on the arbitrator or mediator selected, the fees can be substantial
(of course the parties typically agree to divide the fees between themselves).
 Depending on the contract language and state law, a prevailing party can be
awarded fees and costs.
 A judge on the other hand, charges no fees for his services.

May have no choice, other than resorting to ADR

 Often the contract in dispute contains a broadly worded mandatory
arbitration clause.
 Many lease agreements and employment contracts, for example, contain
mandatory arbitration provisions, as do operating agreements and other
types of business contracts.
 Unless both parties waive arbitration, most states will compel arbitration at
the request of any party.

Non-binding nature of the final decision .

 Sometimes the court may order nonbinding or Judicial Arbitration.
 This means that if a party is not satisfied with the decision of the arbitrator,
they can file a request for trial with the court within a specified time period
after the arbitration award.
 Depending on the process ordered, if that party does not receive a more
favourable result at trial, they may have to pay a penalty or fees to the other
side.

Warning.
 The parties pursing ADR must be careful not to let a Statute of Limitation run
while a dispute is in any ADR process.
 Once the statute expires, judicial remedies may no longer be available.