Jul 22,2020 | 08 min read

Alternate Dispute Resolution By Akshat Dabral


Dispute resolution is the process of resolving the dispute between the transacting parties. In the process, a decision may be taken either in a friendly or adversarial manner, also, by parties themselves or involving a neutral third party.

Majorly, dispute resolution can be classified as:

  • Traditional Dispute Resolution - The dispute resolution takes place in a traditional way, that is, going through the proceedings before the Court.

  • Alternate Dispute Resolution - This is an alternative method of resolving the dispute without going through all the litigation process. This method is more flexible, less hectic, cost-effective, and more party-centric, that is, it includes negotiation, mediation, arbitration, conciliation.

  • Hybrid Method of Dispute Resolution - As per the name, it is a crossover between the above two mentioned methods of dispute resolution.

Alternate Dispute Resolution (ADR)

In India, out of the huge amount of proceedings going on, the percentage of cases which are taking a substantial amount of time to resolve it is also high due to several limitations of the judiciary system. To reduce the burden of the court and by considering the need for faster access to justice, an alternative mechanism evolved, that is Alternate Dispute Resolution.

To strengthen the traditional system of dispute resolution, Section 89 was introduced in the Code of Civil Procedure, 1908, which eventually became the Arbitration and Conciliation Act, 1996. It helps to open the passage of statutory reference to ADR.

The most common types of ADR are:

  1. Conciliation and Mediation - In this type, an independent trained mediator is involved For the settlement or resolution of the dispute between two parties. In the term Conciliation and mediation, Mediation refers to the facilitation of communication and Conciliation refers to evaluative methods, such as making recommendations as to an outcome. Usually, conciliation is used in the situation of employment. It is a compulsory process before claiming to the Employment Tribunal. Mediation and Conciliation are simply called a mutual agreement. Decisions taken by using this method are not legally binding.

  2. Arbitration - Arbitration is a more formal type of ADR than Mediation. Arbitration is a simplified version of trial proceedings which involves the limited discovery and simplest rules of evidence. It is the most popular method of ADR. Nowadays it is widely used in the business entities and receiving positive results. Hence include Statutory Arbitration under the provisions of MSME. Decisions taken by Arbitration are legally binding and should be followed by parties.

Emerging Field

Nowadays, the legal system is also using modern technology to ease the process. In the recent summit hosted by ETLegalworld for Alternative Dispute Resolution, it has been discussed over several points including emerging trends which are likely to shape the legal world in the coming years. Speakers were focused on various aspects including how technology and innovations are transforming the legal landscape.

The speaker suggested in the summit that during the challenging time like COVID-19, while the exploration of virtual ADR with virtual hearings and Online Dispute Resolution (ODR) the consent of the parties is essential. He also said that we should acquaint ourselves with Digital Literacy and Committed Patience.

While discussing the future plan and vision for justice in Indian Judiciary, there has been shed light on various topics, such as challenges and solutions of Indian Judiciary and virtual courts, the flexibility of ADR and adaptability on ad-hoc and institutional arbitration, new strategies for international arbitration centres and virtual courts, Force Majeure clause and impact on commercial contracts.

Corporates Are Taking Up The Same

Due to the emerging technology, the world of the business market is changing very fast. Along with the economical development of countries, a considerable increase in the number of commercial disputes as well. The situation is not different in India. The increase in disputes leads to the litigation process to the already overburdened courts where late results for the commercial disputes creates the economic blockage as well as the money drain. 

Recently, it is observed that to avoid the precious time and money, corporates in India or those who are doing business with Indian firms, tend to go for Alternative Dispute Resolution method.  MSME organizations are already struggling to establish their business in the business world. For that time and money, both are very important. Therefore, they can not afford to invest money for court fees and legal advisor fees, and that too for don't know how much period of time. Hence, nowadays, business entities are less interested to take the legal route. Instead, to safeguard expenses, they prefer Arbitration.

Arbitration processes become popular because there is no court fee, time frame for closing the matter, no strict procedure needed to follow, the importance of time, can avoid conflict in a relationship, and so on. Additionally, expenses such as fees of Arbitrator, stenographer, legal advisor, the place for meeting or venue, travelling can be claimed. In this method, most of the time claimed expenses are passed which gives a boost to corporates to go for Arbitration.

Courts Exercise By Settling Matters

The National Legal Services Authority (NALSA) conducts Lok Adalats, one of the alternative dispute redressal mechanisms. A Lok Adalat is a forum where disputes or cases which are pending in the court or at the pre-litigation stage are settled or compromised. It has been given statutory status under the Legal Services Authorities Act, 1987. The decision made by the Lok Adalat is considered as a decree of the civil court and would be final & bound on all parties. There would be no appeal against such a decision before any court of law. If the parties are not satisfied with the Lok Adalat decision and there is no provision for an appeal against it, they can initiate litigation by filing a case in the appropriate court by following the procedure in exercise of their right to justice.

An Introduction to Alternative Dispute Resolution - iPleaders

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