WHAT ARE THE MAIN FORMS OF ALTERNATIVE DISPUTE RESOLUTION?

Alternative Dispute Resolution (ADR) is an alternate way of dispute resolution apart from traditional litigation. It includes methods and techniques used to resolve disputes between parties who are at odds with each other with a third party's help. ADR is adopted as a method to settle disputes parallel to the court system.

Despite the previous backlash to ADR by many famous parties and their advocates, ADR has successfully gained acceptance among the general public and legal professionals in the last few years. Moreover, few courts now have a prerequisite for some parties to resort to ADR of any type, generally Mediation, before allowing them to try their cases in Court. Even parties to merger and acquisition transactions are turning to ADR to resolve their post-acquisition disputes.

The demand for ADR has increased due to a surge in cases of traditional courts. ADR also serves in a way by costing less than litigation, a preference for confidentiality, and the parties' choice and consent to control over the selection of the individuals who will decide their dispute. A few judiciaries in certain jurisdictions, including England and Wales, favor this (ADR) mediation to resolve disputes.

After the 1990s, multiple American courts have also encouraged to promote the use of ADR to resolve disputes. In simpler words, Alternative Dispute Resolution (ADR) is a way to resolve disputes without litigation. Using ADR methods, one can reduce his litigation period, court expenses and expeditiously resolve disputes. There are different forms of alternative dispute resolution, which include as follows:

What Is Alternative Dispute Resolution?

The term ADR is an umbrella term for several processes that help disputing parties resolve their disputes without filing court cases. Settlement methods are less time-consuming, less expensive, and offer greater flexibility than out-of-court resolution processes.

What Is It?

Alternative dispute resolution describes outside court-based mechanisms through which parties can settle their disputes. 

Alternative dispute resolution approaches offer several settlement options to help different groups find solutions to disputes arising from differences between business contracts or family conflicts. 

ADR establishes settlements through joint party agreements rather than enforcing a decision by a judicial body.

Scope Of Alternative Dispute Resolution

The broad application of ADR includes resolution methods for commercial conflicts and disputes within the labor sector and family disputes, as well as international cases. The system shows flexibility that allows its utilization as a solution that meets specific conflict requirements. 

Through business dispute resolution, ADR maintains beneficial business partnerships because parties stay away from court proceedings' adversarial process. Mediation becomes a valuable tool for family disputes because it produces beneficial outcomes for everyone who participates.

Importance Of ADR In The Legal System

ADR reduces the workload of the court system by providing an important resolution option for the deteriorating level of judicial resources. ADR creates an efficient dispute resolution system that helps courts clear their pending cases, save costs, and expedite dispute resolution. 

Confidentiality in resolution matters as ADR provides a safe place for cases that require confidentiality and sensitive treatment. ADR offers flexibility as its process enables participants to create innovative solutions through customized procedures that courts cannot traditionally provide.

Objectives Of ADR

ADR seeks to achieve three primary purposes:

• ADR helps disputes end sooner with lower expenses.

• Encourage teamwork and flexible problem-solving in cases involving businesses or families.

• ADR adjusts its resolution methods based on every participant's requirements.

• Maintain privacy standards in your proceedings since this information remains sensitive for most parties.

• Help people who feel intimidated by normal court processes take part in dispute settlement.

Characteristics Of ADR

ADR stands out for being more casual and adaptable than court trials. These are the main qualities of ADR:

• People who want to solve their conflict through ADR must give their active agreement for the process to work.

• ADR uses neutral third parties, including mediators or arbitrators, who support both sides in a conflict and guide the resolution process.

• ADR settings keep confidential data safe because these sessions remain private compared to public court hearings.

• ADR cuts overall dispute handling expenses because it replaces time-consuming court procedures.

• In ADR processes, parties can design their methods because specific requirements do not exist.

• Under ADR systems, final decisions such as arbitration result in faster closure than court judgments.

Different Types Of ADR

ADR follows several unique ways to handle conflicts. We will look at the specifics of all ADR types separately.

Arbitration

When people in conflict agree to take their dispute to neutral arbitrators, these individuals will listen to arguments and reach a reconciliatory decision. 

What Is Arbitration?

The arbitration system follows a legal structure but works faster than a trial with informal procedures. 

Through arbitration, the parties must submit their dispute to an arbitrator, who will make a final decision that the courts must follow.

Process of Arbitration

The process of arbitration involves the following steps:

Agreement to Arbitrate

The parties involved in a dispute must have a pre-existing agreement to submit their dispute to arbitration.

Initiation Of Arbitration

One party (the claimant) initiates the arbitration process by filing a "request for arbitration" or a similar document with the chosen arbitration institution or directly with the other party (the respondent).

Selection Of Arbitrator(s)

The parties agree on the selection of a neutral arbitrator or a panel of arbitrators. The arbitration agreement may specify a method for selecting arbitrators, or the parties may agree on a selection process.

Preliminary Hearing and Exchange of Information

The arbitrator(s) may hold a preliminary hearing to establish the procedures for the arbitration, define the issues to be decided, and set a schedule for exchanging information and evidence.

Arbitration Hearing

The arbitrator(s) conduct a hearing where both parties present their cases. This may involve presenting evidence, calling witnesses, and making legal arguments.

Arbitral Award

After the hearing, the arbitrator(s) deliberate and issue a written decision, known as an "arbitral award." This award is binding on both parties and can be enforced in court if necessary.

Types Of Arbitration

There are two types of Arbitration process:

Ad hoc Arbitration

Both parties design their own arbitration process since there is no official set of rules.

Institutional Arbitration

An established arbitration organization manages and controls this process in every detail through specific rules.

Legal Framework Governing Arbitration

India follows the Arbitration and Conciliation Act 1996 to govern all arbitration activities. Under this Act, the parties get their rights and duties along with the rules for the appointment of arbitrators. The Act also includes the methods for enforcing arbitration award results.

Relevant Case Study-Arbitration

A landmark case law for arbitration is ‘Dhansar Engineering Company Pvt Ltd v. Eastern Coalfields Ltd’ whose case summary is as follows:

This case involved a review application filed by Dhansar Engineering seeking reconsideration of an order dated December 1, 2022, rejecting arbitration under Section 11(6) of the Arbitration and Conciliation Act, 1996. The dispute arose from a work contract awarded by Eastern Coalfields, which was later foreclosed due to alleged non-compliance by Dhansar Engineering. The applicant argued that an arbitration clause was incorporated via a 2017 Circular, but the court ruled that the clause was not explicitly referenced in the contract. The review was dismissed, holding that no valid arbitration agreement existed between the parties.

Mediation

When there is a dispute between parties, a mediator is a neutral person who helps them reach an agreement through respectful dialogue. The mediator helps the parties communicate better by pushing them toward agreement through negotiation but does not make decisions for them. During collaboration, people work together to develop original solutions that everyone accepts.

Legal Recognition Of Mediation In India

Mediation stands out as an excellent choice to resolve legal issues in India. Many courts in India have established mediation programs along with guidelines that promote mediation before turning to the court system. The approach focuses on friendly conflict resolution to maintain good connections between people.

Mediation Process

As per the International Chamber of Commerce (ICC), the process of mediation involves the following steps:

Initiation

A party submits a written Request for Mediation to the ICC International Centre for ADR, including details of the dispute and parties involved.

Response

Upon receiving the Request, the Centre informs the other parties and may assist in facilitating their agreement to mediate.

Mediator Selection

Parties may jointly nominate a mediator for confirmation by the Centre. If they cannot agree, the Centre appoints a mediator after consulting the parties.

Preliminary Discussions

The mediator and parties discuss how the mediation will be conducted, considering factors like cultural and legal backgrounds, and specific dispute details.

Mediation Sessions

The mediator facilitates discussions, which may include joint meetings and private sessions, to help parties reach a mutually acceptable settlement.

Confidentiality

All aspects of the mediation are confidential, encouraging open communication and fostering a conducive environment for settlement.

Conclusion

The mediation concludes when parties sign a settlement agreement, or if any party decides to terminate the process after the initial meeting and receipt of the mediator's procedural note.

Case Study Based on Mediation

The case study of ‘Acta de Brasilia negotiations between Peru and Ecuador’ is as follows:

The Acta de Brasilia, signed on October 26, 1998, marked the resolution of a long-standing territorial dispute between Peru and Ecuador. This conflict, rooted in colonial-era ambiguities, had led to multiple military confrontations, notably the Cenepa War in 1995. Mediation efforts by Brazil, Argentina, Chile, and the United States facilitated negotiations, culminating in the Acta de Brasilia.

The agreement reaffirmed the validity of the 1942 Rio Protocol, clearly demarcated the border, and included provisions such as granting Ecuador private property rights over a 1 km² area in Tiwinza for ceremonial purposes, while maintaining Peruvian sovereignty. Additionally, both nations established ecological protection zones to preserve biodiversity and promote cooperation.

This accord effectively ended one of the Western Hemisphere's longest territorial disputes, fostering improved bilateral relations and regional stability.

Conciliation

During conciliation, the neutral party plays a stronger role than in a regular mediation process. The conciliator helps the parties speak but also brings forth good ideas and possible solutions. This method helps when one party has more influence over the situation than the other.

Legal Framework

In India and other countries, conciliation is governed under alternative dispute resolution regulations. This system includes specific standards that govern how conciliators operate so that the process remains free from bias and transparent to all participants.

Process of Conciliation

The process of conciliation involves the following steps:

• A dispute arises between parties, and they agree to attempt resolution through conciliation.

• The parties select a neutral third party, the conciliator, often based on their expertise or impartiality.

• The conciliator meets with the parties, separately or jointly, to understand the nature of the dispute and their respective positions.

• The conciliator facilitates communication between the parties, helping them to identify common ground and explore potential solutions.

• Unlike a mediator, the conciliator can actively suggest possible solutions and offer recommendations to bridge the gap between the parties.

• The parties are not obligated to accept the conciliator's suggestions, but these recommendations can help them move toward a mutually agreeable settlement.

• If a settlement is reached, it is often formalized in a written agreement, which may or may not be legally binding, depending on the applicable laws and the parties' intentions.

Relevant Case Studies

Property owners and workers in conflict find acceptable solutions through conciliation because a neutral facilitator helps resolve their differences. When parties find solutions at work and consumer levels through conciliation, their relationships stay intact and the matter gets resolved faster.

Negotiation

Through negotiation, the disputing parties talk directly to one another without outside support. The disputants solve their problems by working together without referring to a neutral party. Disputing parties start with negotiation as their first choice for settlement even before exploring other ADR options.

Process Of Negotiation

The process of negotiation involves the following steps:

• Negotiation begins when parties with differing interests or needs recognize a potential for mutual gain or a need to resolve a conflict.

• The parties engage in communication, either directly or through representatives, to explore each other's positions, identify common ground, and understand the underlying issues.

• They propose options, make concessions, and explore potential trade-offs to create a mutually acceptable agreement.

• Throughout the process, parties may employ various strategies, including persuasion, compromise, and problem-solving, to reach a resolution.

• If successful, the negotiation concludes with a mutually agreed-upon solution, which may be a formal contract or an informal understanding.

Practical Examples

When two businesses cannot agree on contract terms, they must work out a solution together. Negotiation creates space for the two parties to talk about their concerns, which allows them to find mutually helpful adjustments to their contract deal. 

This solution both solves the current problem and keeps the future business relationship healthy.

Lok Adalat

The Indian legal system applies Lok Adalat strongly as a special ADR method considered unique throughout the country. The forum provides an easy way to resolve conflicts through informal mediation instead of going to regular courts. 

Government bodies support Lok Adalats to help solve small conflicts and family or consumer concerns in an expedited manner.

Process Of Lok Adalat

The following process is observed in Lok Adalat to resolve disputes:

• Referral of Dispute: A dispute, either pending in court or at a pre-litigation stage, is referred to the Lok Adalat by the court, one of the parties, or by an application to the Legal Services Authority.

• Notice to Parties: The Lok Adalat issues notices to all parties involved in the dispute, informing them of the date, time, and venue of the Lok Adalat proceedings.

• Conciliation and Mediation: The Lok Adalat bench, comprising a judicial officer, advocate, and social worker, facilitates discussions between the parties, attempting to reach an amicable settlement through conciliation and mediation.

• Settlement and Award: If the parties reach a consensus, the terms of the settlement are recorded, and an award is passed by the Lok Adalat bench. This award is considered a decree of a civil court and is binding on all parties.

• No Appeal: There is no appeal against the award passed by a Lok Adalat. If no settlement is reached, the case may be referred back to the regular court.

Case Study

A case study ‘Sonu vs. M/s DTC’ solved during Lok Adalat has following summary:

In this case, since the worker had been employed for less than 240 days in the previous year and had actually worked for only 4-5 months, efforts were made to reach a full and final settlement. After persuasion by the court and authorized representatives from both sides, the worker ultimately agreed to the settlement. The management made the payment immediately, statements from both parties were recorded, and the matter was resolved.

Legal Framework Of Lok Adalat

Lok Adalats derive their legal authority primarily from the Legal Services Authorities Act, 1987. This Act establishes the framework for organizing Lok Adalats and empowers them to facilitate conciliation and settlement of disputes. The Act also provides for the constitution of State and District Legal Services Authorities, which are responsible for organizing and administering Lok Adalats. Awards passed by Lok Adalats are deemed to be decrees of a civil court and are enforceable as such.

Other types of ADR

Various techniques create Alternative Dispute Resolution methods for solving disputes outside traditional court trials. These are some other techniques, used in the USA to solve disputes.

Early Neutral Evaluation (ENE)

When a neutral expert examines case details during the beginning stages this practice is known as Early Neutral Evaluation (ENE). The expert reviews cases without taking sides to show both parties their possible win-and-lose scenarios. 

Although these views hold no legal force, the evaluator offers opinions that help both sides find solutions faster through settlement talks.

Mini-Trial

During a mini-trial, parties deliver their evidence to a senior company director or retired judge without court procedures. Under this system, formalities stay minimal while the resolution remains non-lawful. 

Through objective evaluations,the neutral advisor indicates to both sides the best way they can agree on compromising terms. Business organizations typically use this process to resolve their commercial conflicts.

Med-Arb (Mediation-Arbitration)

In Med-Arb, parties use mediation and arbitration together as one process. Collaboration starts with parties using a mediator because they want to determine an acceptable resolution through negotiations. 

When mediation does not resolve the dispute, the parties turn to arbitration, which results in an official decision created by an independent party. When mediation does not produce results, the related dispute will be resolved through this approach effectively.

Online Dispute Resolution (ODR)

Individuals and organizations use online platforms to resolve disagreements virtually. The system uses online programs for both mediation and arbitration functions plus negotiation features. 

ODR helps solve e-commerce conflicts and international cases while addressing consumer complaints, especially. It lets parties handle conflicts online with easier access and better connection to others.

Advantages And Disadvantages Of ADR

There are some pros and cons of Alternative dispute resolution. 

Advantages

• ADR solutions cost less than normal court hearings, so they help save both time and money.

• Court delays drop when parties use this method to find faster solutions.

• ADR's methods can develop custom solutions according to what each disputing party needs.

• ADR protects the personal lives and business standing of participants because their proceedings stay hidden from public view.

• ADR builds harmonious working connections because its collaborative processes help maintain relationships in business settings and beyond.

Disadvantages

• ADR lacks an official discovery process to fully uncover needed information, like court action.

• After an arbitration ruling takes effect, parties have few chances to challenge it.

• The outcome usually benefits the party who possesses greater strength or expertise over the other, especially during negotiation and mediation.

• ADR methods based on consent, such as mediation or negotiation, produce agreements without official binding power, so both parties need to continue following them silently to be in effect.

Conclusion

Alternative Dispute Resolution (ADR) offers a diverse range of methods, from negotiation and mediation to arbitration and Lok Adalats, providing viable alternatives to traditional litigation. These processes emphasize amicable settlements, cost-effectiveness, and preserving relationships, addressing various disputes from commercial disagreements to family matters.

FAQ’s

A few FAQs based on types of ADR are:

Q1. What are the different types of alternative dispute resolution in India?

There are 5 different types of ADR including Arbitration, Conciliation, Mediation, Lok Adalats, and Negotiations. 

Q2. What are three alternative methods of resolving disputes?

Negotiation, mediation, and arbitration are the well-known methods that are used while resolving disputes.

Q3. What type of ADR is most common?

Mediation and abbreviation are the most common types of ADR

Q4. Which Act initiated the formal process of ADR in India?

The Arbitration Act of 1940 initiated the formal process of ADR in India.

ADR is becoming more convenient and thus more famous across the country. The main reason parties prefer ADR is that, unlike traditional litigation, ADR proceedings allow the parties to understand the other party's position, avoid hefty court expenses and reduce the time required to resolve the dispute, which can be years in Court proceedings.

Author: Shweta Singh