Beyond the Courts: Evolution and Future of ADR

The Author, Amisha, 1st year law student at National Law University, Delhi. She is currently interning with LatestLaws.com and Indian Dispute Resolution Centre.

With the evolution of human society, dispute-resolution methods have evolved constantly. Society has moved a step ahead of traditional litigation, and we can see the emerging trends of Alternate Dispute Resolution (ADR). It refers to a practice where disputes can be resolved without trial in the courtrooms[1].  The most common practices for resolving disputes through ADR are arbitration and mediation, as well as conciliation and negotiation. Arbitration is a formal procedure almost similar to litigation and involves a neutral third party which makes a binding decision. On the other hand, mediation is more of an informal procedure in which a neutral third party helps the parties to reach a consensus on their own. The decision of mediation is non-binding in nature. This article will track down the evolutionary history of ADR, along with its advantages and limitations, followed by a comparative analysis of litigation and ADR, and what are the future prospects of ADR. Will the litigation go obsolete? The current scenario and legal provisions related to ADR would also be covered.

Evolution of ADR

ADR has gained momentum in recent times, specifically in commercial matters, but it has always been there since a long time back. In the ancient Indian scriptures such as Vedas and Dharam Shastras, emphasis was laid on resolving disputes through amicable ways such as arbitration and mediation. The most common practice of arbitration existed in form of village panchayats in India and other Asian nations. Elders of the village used to settle disputes between and within families. Similarly, the disputes between various trade guilds were also settled by some reputed and knowledgeable person. Additionally, the royal courts in various dynasties such as Mauryan empires, also resolved disputes with the help of a mediator or arbitrator who was well versed in personal laws and principles. Long way back, there were instances when king himself used to adjudicate the disputes. Therefore, it is evident that focus has always been on resolving disputes amicably by appointing a neutral third party in a free and fair manner. The prevalence of alternate dispute resolution methods such as arbitration and mediation could be sensed everywhere. It is only after the advent of Britishers in India that formal legal systems were established, as a result local ADR methods received a setback.

 It is not that alternate dispute resolutions methods were only practiced in India, there are instances which depicts their usage worldwide. When seen at a global level, arbitration and mediation were practised in the Kingdom of Syria.[2]  In case of China, Confucius ethics were the roots of origin of mediation practices. There are evidences which hints towards ADR methods practiced in Greek nations, England. USA and other countries since centuries ago. The most basic point to understand here is that with development of human society and various businesses combined with the human nature to have diverse views, disputes in the society were inevitable all over the world. That’s how the methods of dispute resolution originated and function in the absence of a formal justice system. And that’s the reason different methods of dispute resolution can be traced globally in ancient history with slight variations.

After the advent of formal courts, the alternate methods of resolutions came to be perceived as not at par with courts and lacking formal element. The formal judicial system single-handedly overpowered the long-established and practised methods of dispute resolution resulting in alternate methods being practised at a small scale. But in the last 10 years, ADR has seen phenomenal development.[3] ADR methods are used in wide variety of matters such as commercial, family, employment etc. all over the world.

Legal Frameworks

ADR despite being an informal system of resolving disputes has been governed by rules and regulations. The growing popularity of ADR in recent years has demanded a more robust legal framework. Therefore, a significant evolution of legal frameworks is evident of increasing usage of ADR. Beginning with pre-Independence India, The Indian Arbitration Act was established in 1899. This act was modified and introduced as The Arbitration Act, 1940. Subsequently after the independence of India, The Arbitration and Conciliation Act 1996 was enacted. This is a comprehensive act containing 85 sections and 3 schedules. The amendment of this act in 2019 led to establishment of Arbitration Council of India with an aim to frame policies governing the grading of arbitral institutions and recognising professional institutes' providing accreditation of arbitrators[4]. The India International Arbitration Centre Act was established in 2019 and later amended in 2022 further led to establishment of various rules and regulations governing arbitration in India. The 2019 Act led to establishment of India International Arbitration Centre which provides excellent arbitration related services in commercial cases at both national and international level to ensure smooth arbitrational proceedings. The very recent development is the enactment of Mediation Act,2023 to establish an effective and robust mediation ecosystem in India. This depicts the dedication of the Indian government and the steps taken now and then to revitalise and strengthen contract enforcement and commercial dispute resolution regime including ADR[5].

For regulating ADR, on global scale, there are UNCITRAL Arbitration rules adopted in 1976 which provide a comprehensive set of procedural rules upon which parties may agree for the conduct of arbitral proceedings arising out of their commercial relationship and are widely used in ad hoc arbitrations as well as administered arbitrations[6]. Then, there is International Centre for Dispute Resolution (ICDR), international division of American Arbitration Association (AAA), which provides efficient, fair and economic alternate dispute resolution services globally. To determine, whether the case is international or not, ICDR uses UNCITRAL Model Law’s definition[7].

Advantages of ADR and future possibilities

The increased use of ADR mechanisms is triggered by the advantages it has over the court trial. In the initial phase of ADR, reduced cost and time compared to litigation were most visible and considered. But with increased usage of the mechanisms, whole lot of other benefits were realized. First, of all, ADR mechanisms are faster in comparison to litigation. Courts are flooded with cases anytime, resulting in very lengthy trials taking years. But ADR mechanisms can sum up the matters in weeks or months saving time . Then, as court trials spans over years consisting multiple hearings, there comes across a hefty amount for litigation including lawyers and experts' fess and other expenses. While on the other hand, ADR is comparatively cost effective as it does not include court expenses or lawyers' fees. ADR mechanisms provide a flexible resolution process by listening to both sides at length and focusing on what each one of them exactly wants. While in litigation, parties cannot go beyond the walls of formal rules and procedure. As a result, both the parties reach at a solution though mutual cooperation and the results turns out to be satisfactory and desired. Another significant advantage of ADR over courts is privacy which results in quicker mutual settlements. Only invited people can attend the proceedings unlike the courts which are open to public. This helps in keeping privacy of the matters intact. But in litigation, everyone gets to know about the details of the matter and the parties which might negatively harm the parties involved in other spheres of life and business. Along with privacy, interested parties can also use confidentiality clause which binds the parties to keep the whole procedure and matter confidential. Additionally, in ADR, the interested parties may choose a neutral decision-making body with expertise though mutual decision. But litigation absolutely lacks this flexibility and the parties have to reluctantly accept the Judge and the judgement. Considering the fact that “Judge may be fully versed with the law but not necessarily the nuances of the field[8]”, there might be subtle inefficiency in dealing with matters of particular field and parties might not get a sense of justice and satisfaction. Generally, arbitrators’ decision is binding on the parties leading to saving time and cost of the parties by restricting the right to appeal[9].

It is clearly evident that ADR has shown a significant promise worldwide because of the flexibility and mutual cooperation it carries. This led to quicker and cost-efficient dispute resolutions and preserving the cordial relations between the parties. The blend of technology and ADR, the advent of online dispute resolution (ODR), has revolutionised the ADR completely and still much column left to harness the full potential. This overcomes the territorial restrictions leading to reduced costs and making ADR more convenient and efficient. At the launch of NITI Aayog ODR Handbook in 2021, Chief Justice D.Y.Chandrachud, acknowledging the potential of ODR said, “Online Dispute Resolution has the potential to decentralize, diversify, democratize and disentangle the justice delivery mechanism for the citizens in India”[10]. Then, in the era of globalisation, there is a need of system which can help in solving international disputes. As a result, there would be high demand of international arbitration and ADRs in the coming future. With the passage of time and the success rates of the settlements, the ADR mechanism has been successful in garnering the credibility of the public as well as formal justice system. As a result, there has been an increase in support from the government as well as courts to incorporate ADR mechanisms in justice system. It is visible in the form of increased ADR programs, which also include emphasis on education and training in the specialised field of arbitrators and mediators. This is an active step towards ensuring the quality of ADR mechanisms. Apart from this, the Indian judiciary is clogged with pending cases, as of September 2021 approximately 4.7 crore cases are pending in courts throughout the nation. This pendency of cases and workload on the judiciary reflect an irresistible need to have alternate methods of dispute resolution. Even at global level, courts are not considered effective due to the high costs and time consumption which affects fairness, violation of human rights and impede public’s access to justice[11]. Amid this crisis in judiciary system, ADR might prove to be a sigh of relief when used effectively. Therefore, ADR mechanisms are considered as less adversarial and are capable of providing better substitute for the conventional court system and have a promising future ahead[12].

Criticism

ADR has successfully established its potential and is seen as the best alternate to judiciary by all the stakeholders. It has gathered all the public attention in recent years, but it has been taken with a tinge of salt by the critiques. Starting with, public attention and popularity are not surely the signs of quality, therefore, a thought must be given to the limitations it carries[13]. The major issue which needs to be considered is the presumption of similarity between skills required for ADR mechanisms and courts. A judge may be good at law but not necessarily good at settlement mechanism, as both the practices are two different areas. Additionally, there is no strict specifications for being an arbitrator. In such case, there is high probability of compromise in the decision reached by settlements which defeats the very purpose of law and justice. Then, in cases, where arbitration award is non-binding, there are high chances of pursuing litigation by the unsatisfied party. And in case where the decision is binding, then the party may lose the right to appeal.  This defeats the very purpose of ADR mechanisms and as a result, ADR mechanisms carry high risk of being ineffective. Then the privacy and flexibility ADR offers is desirable only in case which include private disputes and does not involve constitutional values. However, if ADR is extended to resolve difficult issues of constitutional or public law - making use of nonlegal values to resolve important social issues or allowing those the law seeks to regulate to delimit public rights and duties - there is real reason for concern[14]. There is high risk to the constitutional values which are the core of litigation and get replaced by non-legal values which are essentially in conflict with each other. Despite being the methods which seem highly promising, there is gap between theory and practice which raises serious concerns for considering ADR as a substitute to litigation.

Conclusion

With the emerging need to have alternate methods of dispute resolution, ADR has taken the forefront. ADR has been a dynamic mechanism the way it transformed itself from ancient roots to become one of the preferred methods of dispute resolution in modern times. It certainly carries some elements which overpowers the traditional litigation system. With the increasing quest for quicker and global method to reach at a finality, ADR is seen as an alternate to litigation. Former Chief Justice of India, N.V.Ramana emphasisng the need of ADR mechanisms said, “ability of resolving disputes at a faster pace will help the growth of society, country, nation and world”[15].   It appears to very promising in the future looking at the benefits it has. However, there are some issues which needs to be addressed to get the maximum possible benefit. There must be clear understanding on which issues can be resolved using ADR and which needs adjudication by the courts. This way, efficiency of the both ADR and courts would improve leading to better outcomes. In conclusion, ADR mechanisms would prove to be great alternate to litigation, however, formal judiciary system would still remain the foundation of the justice system across the world.

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