Types of ADR

By
Kavita Singh
Associate Professor
NLIU. Bhopal
 Various Modes of ADR -
• Mediation,
• Negotiation,
• Conciliation,
• Arbitration and
• Lok Adalat

 A conflict has the potential to develop into a major dispute but if tackled
timely may result in a win - win situation.
 Mediation -

• Cooperation between the parties can be ensured by participation of a third person i.e. a
mediator
 Role of a Mediator -

• Facilitates negotiation process which has come to a dead end .

• Help parties to be more interest - oriented rather than defend or attack according to their fixed
positions.

• A mediator has no authority to determine the dispute, he is not an arbitrator, he is not a judge, he
is merely a conciliator, a broker who tries to bring together the two parties who are quarrelling
over an issue.
 The following are important role indicators of a Mediator –

i) The mediator derives his authority from the parties i.e. parties must approach the mediator and
tell him the disputes and the parameters with in which he has to resolve the disputes.

ii) It has to be a consensual resolution – no force can be applied to the parties.

iii) Mediator assists the parties with their negotiations

iv) There has to be an active participation by the parties.

v) Confidentiality is most important in a mediation to settle the dispute.

 Characteristics of Mediation – It is a non binding procedure controlled by parties –

i) It promotes communication and cooperation.

ii) It provides the parties a basis to resolve disputes on their own.

iii) It is voluntary, flexible and informal.

iv) It is private and confidential, avoiding public disclosure of personal or business problems.

v) It can reduce hostility and preserve ongoing relationships.

vi) It avoids uncertainty about time and cost and the stress of going to trial courts etc.

vii) It allows to make mutually acceptable agreements tailored to meet the needs.

viii) It can result in win – win situation.

 Three Kinds of Barriers in Dispute Resolution –
i) Tactical and Strategic Barriers – These stem from parties efforts to maximize short and
long term gains.

ii) Psychological Barriers – these stem from differences in social identity, needs , fear,
interpretations, values and perceptions of one another.

iii) Organizational, Institutional and Structural Barriers – this can disrupt the transfer of
information and prevent leaders from reaching decisions that are in the interest of the parties in
dispute.
 Negotiation - is a process in which disputant parties discuss possible outcomes directly
with each other. Parties exchange proposals and demands , make arguments and continue the
discussion until a solution is reached .

 In Negotiations , there are three approaches/kinds to resolve the dispute -viz.

i) Interest based - Focus of discussion is on the interest of the parties .

ii) Rights based – When negotiation between parties fail then the parties resort to what they
consider to be their right.

iii) Power based – Resorting to threat or power tactics as a way of communication for the
purpose of persuasion.

*Note – Rights based and Power based approaches are used when parties cannot resolve
their issues by interest based negotiation.
 Essentials of Negotiations –

• There must be two or more parties.

• They must be cooperative and prepared to reach an agreement.

• All of them must be interested in reaching a decision acceptable to all.

• They must take care of needs of others.

• They must be prepared to compromise with each other.

• Parties must be willing to give concessions to each other.

• Parties must not take adamant stand rather willing to consider other’s points.
 Characteristics of Negotiation –

i) It is voluntary, private and confidential.

ii) It is quick and inexpensive

iii) It is informal and unstructured.

iv) The parties control the process.

v) Negotiated agreements if reduced to writing in the form of agreement becomes

enforceable.
 Factors Affecting Negotiations – (NOTRICKS – Need, Option, Time ,
Relationship, Investment , Credibility, Knowledge and Skills)

• Need- Selection of dispute resolution method is more or less based on the need situation of
the parties i.e. parties can go for any mode of dispute resolution.

• Option – Option negotiation is a process which is partly at the option of the parties . The court
or any other authority cannot compel the parties to go for negotiation. Even u/s.89 of CPC,
courts cannot compel the parties to go for negotiation or any other form of alternate dispute
resolution.

• Time – an important factor – At times – party negotiating under a deadline will be under
pressure situation which will give advantage to the other party.
• Relationship - If parties are related to each other , negotiation can be more effective and it
can run more smoothly. If parties are not related or not known to each other , they will be
apprehensive about a lot of matters and it will hamper the process of negotiation to some
extent.

• Investment - More energy and time is invested therefore more chances of negotiations to take
place.

• Credibility – Trustworthiness of parties is an important factor in negotiation. In absence of

mutual trust, negotiation becomes very difficult.
• Knowledge – The success of negotiation will be more to the party who understands the
problem very well and deal with it more effectively.

• Skill - Result of negotiation depends upon the skill i.e. who is more skilful . The person who is
more skilful is able to turn negotiation to his own advantage.

 Obstructions/Hindrances/Disadvantages of Negotiation –
Negotiation is successful only when parties are willing to make certain concessions to each
other . However, there are certain disadvantages also –

i) Parties may be situated unequally i.e. one party may be dominant and the other party may be
weaker party. One party may be well represented and the other party is not so well
represented. Such inequalities reduces the chances and value of negotiation.
ii) In negotiation, parties have to trust and understand each other. It is not possible for the parties to sit
together and discuss freely and arrive at a effective decision in absence of mutual trust. Mutual trust is
necessary in a situation where parties bargain hard to reach solution or settlement.

iii) Negotiation is a process which is carried by the parties without the help of a mediator or a third
person . In absence of a mediator, the parties may stick to their stand adamantly and thus spoil chances
of arriving at a solution.

iv) Good will amongst parties is a pre requisite of effective negotiation. If there is an ill will amongst
the parties , parties view each other with suspicion and then negotiation is bound to fail .

v) All the disputes are not suitable for negotiation. Where there are no chances of compromise , the
parties have to resort to other alternative modes of settlement.
 Conciliation – Part III of Arbitration and Conciliation Act,1996 deals with Conciliation.
• Settling of dispute without litigation. Thorough conciliation, discussion between the parties is
kept is going through the participation of a conciliator.

• Conciliator meets the parties both separately and together in an attempt to resolve their conflict.

• lowering tensions.
 Conciliation is affected by –

Lowering Tensions Improving Communications

Encouraging Parties to Explore

Sorting Out Issues
Potential Solutions

Assisting Parties in Finding a

Mutually Acceptable Outcome
 Charateristics of Conciliation –

Conciliator Usually has no

* Conciliation Process has Authority to to Seek
no Legal Standing Evidence or Call Witness

Often the Parties are in Need Conciliator Usually Does not

of restoring or Repairing a Write Decision or Give
Relationship , Either Personal Award
or Business
• Conciliator assists each of the parties to independently develop a list of all of their objectives.

• Helps each of the parties to prioritize their objectives from most to least.

• He goes back and forth between the parties and encourages them to adjust their priorities with
each other.

Arbitration - A technique of ADR for resolution of disputes outside the court.
• When parties agree to have their disputes decided with the mediation of a third person , but
with all the formalities of judicial adjudication.
• Submission by two or more parties of their disputes to the third person i.e. arbitrator an
impartial Adjudicator.
•Arbitrator’s decision is final and binding as either parties have agreed or legislation has
decreed and is enforceable in courts.
•A third party reviews the evidence and imposes decision.
•Limited rights of review and appeal of awards.
 Arbitration can be –
i) Voluntary or Mandatory - Mandatory arbitration come from statute or a contract that is
voluntarily entered into where parties agree to hold all existing or future disputes to
arbitration without even knowing what disputes will arise in future.

ii) Binding or Non Binding – In a non binding arbitration – arbitrator remains removed from
the settlement process and only determines the liability or quantum of damages payable in
appropriate cases.

*Note – A non binding arbitration cannot be imposed upon parties and therefore it is not
an arbitration.
 1. Ad hoc
 Classification of Arbitration -
2. Institutional

1. Ad hoc Arbitration - Arbitration agreed to and arranged by the parties themselves

without recourse to an arbitral institution.

• In case if parties do not agree as to who will be the arbitrator, or in case one of the parties is
reluctant , the other party can invoke S.11 of the Arbitration and Conciliation Act,1996 –
whereunder the Chief Justice of HC (Domestic Arbitration) or SC (International commercial
Arbitration) or their designate will appoint the arbitrator.

• Fee of the Arbitrator is agreed to by parties and the arbitrator – which is generally very high in
India.
2. Institutional Arbitration – administered by arbitral institutions – whereby parties stipulate in
arbitration agreement to refer the arbitral dispute for its resolution to arbitral institutions.

 International Arbitral Institutions Indian Arbitral Institutions

• International Court of Arbitration Indian Council of Arbitration

• London Court of International Arbitration International Centre for ADR

• American Arbitration Association

 All these institutions have expressly formulated rules for conducting arbitration.

• Such rules are formulated on the basis of experience and takes care of each and every possible
situation.
 Merits of Arbitration -

i) Promotes communication and cooperation.

ii) Provides a basis for resolving disputes on their own.

iii) voluntary, flexible and informal.

iv) Private and Confidential, avoiding public disclosure of personal or business problem.

v) Reduces hostility and preserves ongoing relationship.

vi) Avoids uncertainty of time, cost effective and reduces the stress of prolonged litigation.

vii) Mutually acceptable agreements tailored to meet the needs of the parties.

viii) Adaptability and access to expertise - In disputes involving technical subject matter, an expert
of that field will be appointed as arbitrator under the arbitral rules.
 Demerits of Arbitration –

i) To set aside an award under s.34 of the Act, an application has to be moved to the appropriate
court – thus involve all the formalities applicable to the plaint following the procedure prescribed
under CPC.

ii) Problem of execution of an arbitral award like a decree of civil court as contemplated by s. 36
of the Act arises. This involves the procedure laid down in CPC.

iii) When the court appoints arbitrator without indicating the fee, it may become very difficult
for the parties as the fee payable to arbitrators is very high and along with good number of
sittings – makes the whole procedure costly. There is no ceiling on the fee of the arbitrators under
the Act.
 Advantages of Institutional Arbitration -
1. Ad hoc arbitration – Procedure is agreed upon by the parties and the arbitrators. This needs
cooperation between the parties and in case of dispute – it is difficult to expect this kind of
cooperation .

Institutional arbitration – the rules are already in place so no waste of time in formulating rules .

2. Ad hoc arbitration - infrastructure facilities - like place, library facilities, trained staff are a
problem. Hotels etc are booked to conduct ad hoc arbitration – adding to the cost of arbitration.

Institutional Arbitration - Infrastructure facilities, trained staff, library facilities are there . Support
staff is also there..
Cost of arbitration is also cheaper
3. In Institutional arbitration – the institution maintains a panel of arbitrators along with their
profiles. The parties can choose from the panel. It also provides for specialized arbitrators .

Ad hoc arbitration has no such facilities.

4. Many arbitral institutions have an experienced committee to scrutinize the arbitral awards.
Before the award is finalized and given to the parties – it is scrutinized by the experienced panel .
This reduces the possibility of setting aside of the award by the court.

No such facility is available in ad hoc arbitration and therefore there is a higher risk of court
interference.
5. Institutional arbitration - arbitrator’s fee is fixed by the arbitral institutions – thus parties get
an idea in advance about the cost of arbitration.

Ad hoc arbitration – the fee is negotiated and thus the cost of arbitration may escalate.

6. Institutional Arbitration – Arbitrators are governed by the rules of the institution and they may
be removed from the panel for not conducting the arbitration properly.

Ad hoc arbitration - there is no such mechanism.

 7. Institutional Arbitration – for any reason, if the arbitrator cannot continue, a substitute may is
easily available and the proceedings can continue from where it stopped. The procedure remains
same.
Ad hoc arbitration - these facilities are not available.

8. Institutional Arbitration – Secretarial and administrative staff is subject to discipline of the

institution and it is easy to maintain confidentiality of the proceedings.

Ad hoc arbitration - difficult to expect professionalism from the secretarial staff.

 Cases Suitable for ADR – Generally following kinds of cases are suitable for ADR -

 All cases related to trade commerce and contracts including disputes arising from
contracts.

• Disputes relating to specific performance.

• Disputes between suppliers and customers.

• Dispute between bankers and customers.

• Dispute between developers/builders and customers.

• Disputes between land lords – tenants/licensor and liscensee.

• Dispute between insurer and insured.

 All cases arising from strained relationships i.e. disputes related to -

• matrimonial causes, maintenance, custody of children.

• Partition of joint family property.

• Partnership

 Cases where there is a need for continuation of the pre – existing

relationship in spite of disputes including disputes between –

• neighbours relating to easementary rights, encroachments, nuisance etc.

• Employers and employees

• Members of society, association or apartments etc.

 All cases relating to tortious liability including claims for compensation in motor
accidents cases etc.

All consumer disputes including disputes where a trader , supplier , manufacturer

, service provider is keen to maintain his business , professional relationship and
credibility.
 Cases Not Suitable for ADR -
• Representative suits under Order 1 Rule 8 CPC which involves public interests.

• Disputes related to election to public offices (as contrast to contention between two groups
who intend to exercise control over the management of a society or association etc)

• Cases involving grant of authority by the court after enquiry e.g. suits for grant of probate or
letter of administration.

• Cases involving serious allegations of fraud or forgery or impersonation etc.

• Cases requiring protection of court e.g. claims by minors, mentally challenged persons or
deities.

• Cases involving prosecution for criminal offences.

 Lok Adalat (People’s Court)- efforts to bring about settlement of disputes between the
parties is made through conciliatory and persuasive efforts.

• Lok Adalats are organized by State Legal Aid and Advisory Boards or District Legal aid
Committees.

• The day to conduct Lok Adalat is fixed in advance and wide publicity is given and usually
held on Saturdays and Sundays.

• After the proceedings a compromise deed is drawn up and signatures of both the parties are
obtained.

• In motor vehicle accident cases, compensation is ensured on the spot.

 The following are the most usual cases decided by Lok Adalat –

• Mutation of Land Cases.

• Compoundable Criminal Offences.

• Encroachment of forest lands

• Family disputes

• Land acquisition disputes

• Motor Accident Claims

• Causes which are not sub jaudice

 State of Punjab and Anr. v. Jalour Singh & Ors. (2008)2 SCC 660-
The court considered the scope of S.89 of CPC and provisions (SS. 19 -22) of Legal Services
Authorities Act,1987 and held that the function of the Lok Adalat relate purely to conciliation
and its order must be based on compromise or settlement between the parties. Any award of the
lok Adalat not based on compromise or settlement between the parties would be void.
 The Family Courts Act, 1984 - provides for the establishment of Family Courts to
secure speedy settlement of disputes relating to marriage and family affairs and for matters
connected therewith by conciliation mechanisms.

• Family Court has jurisdiction in both civil and criminal matters under the Act -

Civil Matters Criminal Matters

Suit and proceeding related to matrimonial issues, Jurisdiction over orders

spousal property, the legitimacy of any person, related to maintenance of wife,

maintenance, guardianship of the person or children and parents described

custody of or access to any minor. under Chapter IX of Cr. P. C.

• Any suit or proceeding of the above-mentioned nature should necessarily be heard by family
court excluding the jurisdiction of the district court or any other subordinate court or any
magistrate.

• Any such suit or proceeding which is already pending before any other court or magistrate
should be immediately transferred to the family court.

• The 59th Law Commission Report (1974) recommended Family Court to mainly focus upon
conciliation or settlement of the dispute.

• If there is a possibility for settlement between parties in a case on their own, the family court
should adjourn the proceedings of the case till the parties arrive at a settlement.
Consumer Protection Act,1986 - provide for settlement of consumer dispute.
• Act provides for effective , inexpensive, simple and speedy redressal of consumer’s
grievances which the civil courts are not able to provide.
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