ALTERNATIVE DISPUTE RESOLUTION: THE CONCEPT AND ITS NEED
Alternative dispute resolution (ADR) or
out-of-court settlements have been gaining popularity in the last few decades
because of the various conveniences they offer over regular litigation such as
simpler procedure and a speedier form of justice. Parties step in voluntarily
and have an opportunity to also engage in dialogue through some of these means,
leading to swifter resolution.
THE
IMPORTANCE AND NEED FOR SWITCHING TO ADR
Under Article 21 of the Constitution of India,
the state actually has an obligation to provide speedy trial and justice to the
people. With this immense burden on courts, even the judiciary and the
legislature are encouraging parties to try and use more and more of out of
court settlement techniques.
As early as 1979, in its Report on Delay and
arrears in Trial Court, the Law Commission of India discussed the importance of
Conciliation Courts, and had recommended their incorporation in the system,
based on their success in Japan, France and Norway. [77th Report of the Law
Commission of India, 1979]. In fact, the Law Commission dedicated an entire
report to the Need for Justice Dispensation through ADR, wherein it was
observed:
“Justice in all its facets –
social, economic and political – is required to be rendered to the masses of
this country without any further loss of time – the need of the hour. The new strategy consists in dispute-resolution by conciliation,
mediation and negotiation. The constitutional promise of securing to all
citizens, justice, social, economic and political, as promised in the Preamble
of the Constitution, cannot be realised unless the three organs of the State,
i.e., the legislature, the executive and the judiciary join together to find
ways and means for providing to the Indian poor equal access to the State’s
justice system.” [See 222nd Report of the Law Commission of India, 2009].
Looking to the future of dispute resolution
through ADR, the report further stated:
“The ADR method is
participatory and there is scope for the parties to the dispute to participate
in the solution-finding process. As a result, they honour the solution with
commitment. Above all, the ADR methods are cheaper and affordable by the poor
also. As of now, there are some aberrations when it comes to the
expenses incurred in arbitration. In course of time, when there is good number
of quality arbitrators, the expenses of arbitration will also decrease. The
promotion of institutional arbitration will go a long way in improving the
quality of ADR services and making them really cheaper.” [Ibid].
In Shakuntla Sawhney v. Kaushalaya Sawhney
[(1979) 3 SCR 232], the Supreme Court has observed that “Finest hour of justice
is the hour of compromise when parties after burying the hatchet, re-unite by a
reasonable and just compromise”. ADR offers parties the opportunity to reach
this compromise in a speedy, affordable manner.
In the famous Salem Advocates case [(2003) 1
SCC 49], the Hon’ble Supreme Court observed as under:
“It is quite obvious that the reason why
Section 89 has been inserted is to try and see that all the cases which are
filed in court need not necessarily be decided by the court itself. Keeping in mind the law’s delays and the limited number of judges
which are available, it has now become imperative that resort should be had to
alternative dispute resolution mechanism with a view to bring to an end
litigation between the parties at an early date.”
ADVANTAGES
OF ADR
SAVES TIME: One
of the biggest issues facing courts in recent times is that they are so
overburdened with cases that providing speedy justice is no longer feasible.
Court proceedings go on for years, often having to be carried out by the
successors of the parties. To overcome this issue, different modes of ADR
provide a swifter path to justice.
LESS EXPENSIVE: Naturally
prolonged litigation with various appeals and challenges over the years becomes
very costly, and unaffordable to many. ADR can provide an affordable
alternative and expenses for only a limited period of time.
CONTROL OVER THE PROCEDURE AND
OUTCOME: Parties can choose the manner in which they want their
dispute to be resolved. They can choose to arbitrate or go conciliation or
mediation. By choosing the seat of arbitration, parties essentially get to
decide the applicable laws. By going for mediation, parties have the chance to
either settle or refuse a settlement that seems unfavourable or unfair to them.
Thus, ADR processes offer the parties a lot more control over their cases.
TYPES
OF FACILITATIVE ADR
The most commonly opted for means of
out-of-court settlement are:
ARBITRATION: Arbitration
is the out of court settlement of a dispute between parties through a mutually
agreed arbitrator (or arbitrators). In India, arbitration is governed by the
Arbitration and Concilliation Act, 1996.
MEDIATION: Mediation
is an alternative dispute resolution process in which parties, with their
consent, approach a neutral mediator (a facilitator of dialogue) who helps them
explore possible solutions and reach a consensus. The aim of mediation is to
facilitate dialogue between the parties in dispute and give them a chance to
resolve their issues and reach a compromise that they can work with in the long
run. The Supreme Court has described mediation as a method of non-binding
dispute resolution with the assistance of a neutral third party who tries to
help the disputing parties to arrive at a negotiated settlement. It is also
synonym of the term ‘conciliation’. [See Afcons Infrastructure Limited v.
Cherian Varkey Construction Company Private Limited, 2010 (8) SCC 24].
There are some aspects of mediation that make
it one of the best choices while moving for an out-of-court settlement:
Voluntary: Parties
cannot be forced into mediation; they must opt for the same out of their own
will. They are not obligated to stay if the process becomes unpleasant or
uncomfortable to them.
Facilitated dialogue: A
mediator is present to enable parties to be able to fully communicate with each
other and explore all possible solutions available to them, and guide them to
the one that is acceptable to both parties. It is not a verdict but a decision
that parties reach themselves.
Ability to choose: A
good mediator will always be innovative and help parties see all the various
options available to them, but not force them into a decision. In a mediation,
the control is with the parties. They are not obligated to accept any award,
they are free to reach a settlement.
CONCILIATION: Like
mediation, conciliation is also a voluntary, confidential process aimed at
serving the interest of the parties involved. The conciliator, a neutral third
party, helps parties reach a settlement. The main difference from mediation in
conciliation proceedings is that the conciliator provides the parties with a
non-binding settlement proposal, which a mediator usually would not. In India,
conciliations are also governed by the Arbitration and Concilliation Act, 1996.
STAGES
AT WHICH DISPUTES CAN BE SETTLED OUT OF COURT
CIVIL DISPUTES
Civil disputes, particularly those of a
commercial nature, pertaining to contracts, matrimonial or custodial disputes
and torts are commonly addressed through ADR.
1. PRIVATE SETTLEMENTS: In
a voluntary/private mediation, parties themselves resolute to approach a
trained mediator who will address their issues with one another and help them
reach a compromise. Thus, parties can directly approach a mediation facility
rather than approaching a court for litigation. It is however clarified that
not all matters are appropriate to be directly be taken to mediation. Cases
involving bad faith, dealing with a burning question of law that requires a
precedent or public vindication are not best suited to mediation, so parties should
be clear about the outcome they want before participating in a mediation.
2. COURT-REFERRED DISPUTE
RESOLUTION: Under Section 89 of the Code of Civil Procedure 1908, the
court may refer a case pending before it for out of court settlement if it
believes a settlement is possible through those means, and the parties involved
agree to going for arbitration, conciliation, Lok Adalat or mediation, as the
case may be.
In court-referred ADR, the stage at which the
dispute resolution is supposed to start has been deliberated upon by the
Courts. The Supreme Court of India, in Afcons Infrastructure Limited v. Cherian
Varkey Construction Company Private Limited [2010 (8) SCC 24], examined Section
89 of the Code of Civil Procedure and observed as under:
“9. If section 89 is to be read
and required to be implemented in its literal sense, it will be a Trial Judge's
nightmare. It puts the cart before the horse and lays down an impractical, if
not impossible, procedure in sub-section (1). It has mixed up the definitions
in sub-section (2). In spite of these defects, the object behind section 89 is
laudable and sound...
...15. If sub-section (1) of
Section 89 is to be literally followed, every Trial Judge before framing
issues, is required to ascertain whether there exists any elements of
settlement which may be acceptable to the parties, formulate the terms of
settlement, give them to parties for observations and then reformulate the
terms of a possible settlement before referring it to arbitration,
conciliation, judicial settlement, Lok Adalat or mediation. There is nothing
that is left to be done by the alternative dispute resolution forum. If all
these have to be done by the trial court before referring the parties to
alternative dispute resolution processes, the court itself may as well proceed
to record the settlement as nothing more is required to be done, as a Judge
cannot do these unless he acts as a conciliator or mediator and holds detailed
discussions and negotiations running into hours.”
Thus, it is evident from the above judgment
that Courts cannot exactly follow the procedure laid down in Section 89 due to
its impractical aspects. A better guide to the process, which have been adopted
by a few High Courts with small modifications eventually too, are the Alternative
Dispute Resolution and Mediation Rules, 2003. These Rules specify In Rule to
that “where it appears to the Court that there exist elements of a
settlement which may be acceptable to the parties, formulate the terms and
settlement and give them to the parties for their observations under
sub-section (1) of Section 89, to be furnished to the Court within fifteen days
of the first hearing.
·
(b) At the next hearing, which shall be not later than fifteen
days of the first hearing, the Court shall reformulate the
terms of a possible settlement and direct the parties to opt for one of the
modes of settlement of disputes outside the Court as specified
in clauses (a) to (d) of sub-section (1) of Section 89 read with Rule 1A of
Order X, in the manner stated hereunder,
·
Provided that the Court, in the exercise of such power, shall
not refer any dispute to arbitration or to settlement through Lok Adalat or
judicial settlement, under the Legal Services Authority Act, 1987, as envisaged
under clauses (a) and (c) of sub-section (1) of sec. 89, without the written
consent of all the parties to the suit.”
Rule 2 therefore
states that the Court may, with the consent of parties, where it sees
possibility of a settlement while hearing a dispute, draw up the settlement and
send the dispute for alternative resolution.
Therefore, while in a private dispute, parties
may turn to out of court settlements at any stage as they please, a court may
refer a matter for ADR if it feels a settlement is possible, and all the
parties to the dispute agree to that method.
3.
PRE-INSTITUTION MEDIATION IN COMMERCIAL MATTERS:
CRIMINAL MATTERS
There is a belief that criminal matters cannot
be settled, but this is a misconception. In fact, in small offences, and often
in cases where parties are well known to each other, settling criminal disputes
is encouraged by the courts.
. PLEA BARGAINING: A
person accused of an offense may file an application for plea-bargaining in the
court in which such offense is pending for trial. The application for
plea-bargaining should be filed by the accused voluntarily. The accused and the
complainant are given time to reach a mutually satisfactory disposition of
cases including expenses, compensation etc. The secrecy of the matter is
maintained as to ensure that the statement made by the accused during
plea-bargaining shall be voluntary. The report of this mutually satisfactory
disposition is to be given to the Court, and the case is disposed of
accordingly. [See S. 265-B, 265-C, 265-D and 265-E of the Code of Criminal
Procedure, 1973].
A large number of criminal cases are disposed
of through the process of plea bargaining, saving the accused and the
complainant of the hassles of going to trial.
2. COMPOUNDING OF OFFENCES: The
Criminal Procedure Code provides for compounding of offenses in two parts. Part
one gives a list of offenses which can be compounded without the consent of the
court. These are less serious offences and some examples are causing hurt,
wrongful restraint, criminal trespass, adultery, etc. The second part provides
for compounding of serious offenses with the court’s permission; these offences
are of a more serious nature and therefore, the permission of the Court must
first be obtained. [See S. 320 of the Code of Criminal Procedure, 1973].
A large number of offences are compoundable,
and the accused and complainant must consider the option of compounding the
case out of court in a less expensive, solution driven manner, addressing the
needs of the complainant/victim, while also giving the accused a chance to
improve the situation.
By Shiv Mangal Sharma &
Aishwarya
Advocate Supreme Court
