INTRODUCTION TO

ADR
Introduction

ADR: Alternative Dispute Resolution Mechanisms.

These are mechanisms that help parties settle disputes without litigation, i.e.,
without approaching the courts in order to receive a verdict on the matter.
These mechanisms may be used to supplement or even supplant litigation as the
method of choice to settle a dispute. Often, courts themselves encourage the
use of ADR mechanisms to bring more equitable and effective settlements for
disputes between parties.
They may or may not involve a third party who helps the parties arrive at a
solution.
Reasons for A D R

Article 39A of the Constitution of India: Guarantees equal access to justice for all in India.

This means access to speedy relief for their disputes or legal injury.

These numbers of pendency are just for

the Supreme Court. Across India, that
number is close to 5 crore.

For context, the US Supreme Court hears

only 100-150 of the 70,000 cases presented
before it.

ADR helps with access to relief.

Encouragement of A D R

S. 89 of the Civil Procedure Code:

If the court feels that there is scope for settlement outside of litigation, the court may
explore the same and refer the parties to any of the following ADR processes:
1. Arbitration;
2. Mediation;
3. Conciliation; or
4. Judicial settlement, including settlement through Lok Adalat.

Except mediation (currently), there are laws that govern each of these processes. There
is a draft Mediation Bill, 2021, yet to be passed.
Arbitration

This process is governed by the Arbitration and Conciliation Act of 1996, which
mirrors the UNCITRAL Model Law
It attempts to replicate the adjudicatory process of courts in the following
manner, and for the following reasons.
When parties litigate in courts, except in matters concerning state secrets, there
is no corporate secrecy that is entertained, and all documents submitted to the
court are published.
This means that conflicts that may contain sensitive information cannot always
be taken to court.
Arbitration

Arbitration affords the parties secrecy, as it is their own personal court.

Arbitrations occur in one of two ways: either through a clause in the agreement
between the two parties mandating arbitration, or the court referring the matter to it.
If there is an arbitration clause in the agreement, then the courts must enforce it.
In the arbitration process, both the parties come to an agreement regarding both the
number of judges to hear the matter and who the judges are. If it’s a single judge, they
are picked by simple agreement between the parties.
For three judges, each party picks a judge, and the two judges pick the presiding judge
among them.
Arbitration

It is always preferred to have odd-numbered benches, so that there is no split verdict.

The parties also decide the following:
1. The venue: The physical location where the arbitration is held.
2. The seat of arbitration: The country/state whose procedural law is to be applied to
proceedings. Arbitration proceedings are not bound by standard rules of evidence
and procedure.
3. The governing law: The substantive law governing the dispute.
4. The subject matter of the dispute that arbitrators must adjudicate upon. The
arbitrators must restrict their decisions only to such subject matters.
All of these things may form clauses of the arbitration agreement itself.
Arbitration

Arbitral awards (the decisions of the arbitrators) are final and binding upon the parties. There is
no appeal from the award.
That being said, the award may be challenged by either party as being invalid under S. 34 of the
Arbitration Act. The award may only be set aside as bad in law, but no orders may be passed on
the subject matter itself.

If the award is set aside, the entire process of arbitration is conducted afresh.
Arbitration proceedings follow the principle of res judicata, i.e., once decided, the same matter
cannot form the subject matter of a proceeding before any other court or arbitral tribunal.
Arbitral tribunals may also grant interim relief and hear matters regarding the extent of their
own jurisdiction.
Conciliation

Under this method, a neutral third party called as a conciliator talks to the parties
in conflict to come to a settlement regarding the dispute that is mutually
accepted by all of them.
Conciliation is also governed by the Arbitration and Conciliation Act, 1996.
Unlike arbitration, there need not be any contractual obligation to go to
conciliation. Matters may be referred for disputes arising out of any legal
relationship.
Like arbitration, conciliation is also a voluntary process, and cannot be imposed
upon any party except unless the law provides for it.
Conciliation

There is generally just one conciliator, though there may be more. The parties
may appoint conciliators the same way arbitrators are appointed.
The parties may make their own submissions regarding the dispute to them, and
they are also not bound by rules of evidence or procedure.
Conciliation proceedings, like arbitrations, are strictly
confidential by default.
The conciliator may make proposals or suggestions on
what he thinks may resolve the dispute at hand.
Conciliation

Conciliators must also be fair, unbiased and impartial. Like arbitrators who are
appointed, he must disclose any potential conflict of interest which may make
him biased towards any parties to the proceedings.

The difference between mediation and conciliation is how active the neutral
party is.

In mediation, the mediator is extremely passive and cannot make any

suggestions or recommendations on what she views to be the best solution to
the dispute, unlike the conciliator.
Mediation

Similar to conciliation, a neutral third party seeks to facilitate the creation of an

amicable and mutually agreed upon and mutually beneficial solution for the
parties at conflict.
Mediation also follows no rules of evidence and procedure and is far more
informal than conciliation. It is however bound by strict codes of confidentiality.
Nothing produced in a mediation proceeding may be used in a court of law.
The end product of a mediation is a mutually drafted agreement which is then
signed by the parties and may be passed as a decree by court. There is no
appeal from such a decree passed via mediation.
Mediation

Any violation of this decree or agreement may be met with either civil contempt
(breach of decree) or suit for breach of contract.

Like the conciliator, the mediator is not a judge and cannot determine the
outcome of the dispute.

If no agreement may be reached through mediation, the parties may resume with
litigation.
Mediator’s opening statement
Good morning, I am , from the mediation program. I am your mediator today, which means that I am here to help you and
to aid your efforts to resolve your conflict. To help you, I will stress three things:
One, your voluntary participation. The mediation process exists for you benefit, which is why it can be voluntary. I
will be helping you make your own choices in your own self-interest by examining you essential needs and positions.
Two, I will emphasize fairness. This meant that I will treat each side equally and act only inside the limits you
authorize.
Three, confidentiality. The settlement conference is off-limits, just as stated in the mediation agreement you signed.
That is a contract. Even more, chat we talk about in private remains private unless you say otherwise.
To start the process, I will ask each side to put their issues on the table and to tell us about their case. You can
take the time you need, but most people take about 15 to 20 minutes to describe things. When both sides have finished,
we will then break into separate groups or caucuses and work from there to resolve the matters.
____________, I would like for you to start by sharing some information about how you see the situation. What
would you like to tell us?
L o k Adalat

This is a form of ADR that has been given legal recognition under the National
Legal Services Authority Act, 1987, as they are the ones who convene Lok
Adalats.

It is a form of ADR where disputes pending before courts or at the pre-litigation

stage are settled or compromised amicably outside of courts. Once a settlement
is reached, it is passed as a decree by the Lok Adalat. Such a decree has the
effect of a decree of the civil courts and no appeal may lie from such decree, due
to the doctrine of estoppel.
L o k Adalat

However, despite no appeal, parties are free to approach the court and litigate
from scratch, as going before the Lok Adalat does not deprive them their right to
relief.
There is no court fee payable at a Lok Adalat. If a matter pending before the
court is sent to Lok Adalat and the parties settle, even the court fee paid to court
is refunded back to the parties. This is done to encourage out of court
settlements.
The presiding officer in a Lok Adalat has the same functions and role as a
conciliator. They are governed by the same principles applicable to conciliators.
Advantages of A D R

1. Subject matter expertise (You pick the neutral party)

2. Control over proceedings.
3. Except arbitration, no other ADR is a zero sum game. ADR mechanisms
often allow for win-win situations, unlike litigation where the result is always
win lose.
4. More efficient and less time consuming.
5. Less expensive
6. It prevents relationships threatened by conflict from being destroyed.
7. It is party centric, and not focused on the institution.
8. It reduces the burden on courts.
Disadvantages of A D R

1. Advocates don’t get paid enough in this process (No, seriously. Who wants
to settle a dispute in 60 days when we could have a case that pays us for 60
months?)
2. ADR has no efficient enforcement mechanism beyond consent.
3. Its disregard for evidence and procedure may mean that evidence is
tampered with and it may hinder future litigation.
4. If there is an imbalance of power between the parties, then one side may
use ADR to coerce the weaker side into a settlement.
Tribunals

Tribunals are judicial or quasi-judicial bodies established by law to deal with certain
specific subject matters that require expertise.
They lend not just expertise, but also efficiency when compared to traditional courts.
They dispose of matters much faster than regular courts and reduce pendency in such
courts.
Tribunals may also be constitutional in nature, created under Arts. 323A and 323B.
The S C has also empowered Union and State Governments to create tribunals for
subject matters falling within their domain of legislation. (Union of India v. R Gandhi,
2010)
Structure of Tribunals
Role of Tribunals

S. Sampath Kumar v. Union of India:

It is constitutionally valid to create tribunals that function as alternatives to High

Courts provided they function with an equivalent or greater efficiency than the
High Courts. Such tribunals may be seen as substitutes to High Courts.

L Chandrakumar v. Union of India:

Tribunals may supplement the courts, but they are not substitutes. They cannot
supplant the judiciary.
Role of Tribunals

S. Sampath Kumar v. Union of India:

It is constitutionally valid to create tribunals that function as alternatives to High

Courts provided they function with an equivalent or greater efficiency than the
High Courts. Such tribunals may be seen as substitutes to High Courts.

L Chandrakumar v. Union of India:

Tribunals may supplement the courts, but they are not substitutes. They cannot
supplant the judiciary.
Role of Tribunals

While people with judicial experience are preferred and serving or retired judicial
officers head tribunals in general, there is no rule that only judicial officers must be
appointed as judges to the tribunal. If anything, the expertise of its non judicial
members is what gives the tribunal its unique efficiency in that subject matter.
Tribunals must also be free of executive interference and must have the same level of
independence as the High Courts themselves. (Madras bar Assn. v. Union of India,
2014)
There must be at least one member of the judiciary, either sitting or retired, on the
bench compulsorily. Further, judicial functions cannot be functioned by non-judicial
members. (Rojer Mathew versus South Indian Bank Limited & ors, 2019)