Alternative Dispute Resolution: The Legal Regulations in India

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Alternative Dispute Resolution (“ADR”) represents a variety of processes through which potential litigants may resolve disputes. The traditional view is that processes ranging from face-to-face negotiations to formal, binding arbitrations are used as an alternative to litigation. Today, however, ADR practitioners, and increasingly the public, recognize that litigation need not be the standard against which all other processes are deemed “alternative”. Instead, the process of litigation occupies a place within a spectrum of “Appropriate Dispute Resolution”.

ADR consists of a variety of approaches to early intervention and dispute resolution. Many of these approaches include the use of a neutral individual such as a mediator who can assist disputing parties in resolving their disagreements. ADR increases the parties’ opportunities to resolve disputes prior to or during the use of formal administrative procedures and litigation (which can be very costly and time-consuming). It typically is not intended to replace the more traditional approaches and it can provide long term solutions to employee-employer conflicts through stakeholders’ participation and buy-in. In contrast, traditional dispute resolution procedures often impose a “solution” handed down by a third party (e.g., a judge), where neither party walks away satisfied, and the disputing parties’ conflict continues or increases.

In the landmark case of Afcons Infrastructure Ltd. and Anr. v. Cherian Varkey Construction Co. (P) Ltd. and Ors,[1] the Supreme Court held that a Court should also bear in mind the following consequential aspects, while giving effect to Section 89 of the Code:-
(i) If the reference is to arbitration or conciliation, the court has to record that the reference is by mutual consent. Nothing further need be stated in the order sheet.

(ii) If the reference is to any other ADR process, the court should briefly record that having regard to the nature of the dispute, the case deserves to be referred to Lok Adalat, or mediation or judicial settlement, as the case may be. There is no need for an elaborate order for making the reference.

(iii) The requirement in Section 89(1) that the court should formulate or reformulate the terms of the settlement would only mean that court has to briefly refer to the nature of the dispute and decide upon the appropriate ADR process.

(iv) If the Judge-in-charge of the case assists the parties and if settlement negotiations fail, he should not deal with the adjudication of the matter, to avoid apprehensions of bias and prejudice. It is therefore advisable to refer cases proposed for Judicial Settlement to another Judge.

(v) If the court refers the matter to an ADR process (other than Arbitration), it should keep track of the matter by fixing a hearing date for the ADR Report. The period allotted for the ADR process can normally vary from a week to two months (which may be extended in exceptional cases, depending upon the availability of the alternative forum, the nature of case etc.). Under no circumstances the court should allow the ADR process to become a tool in the hands of an unscrupulous litigant intent upon dragging on the proceedings.

(vi) Normally the court should not send the original record of the case when referring the matter for an ADR forum. It should make available only copies of relevant papers to the ADR forum. (For this purpose, when pleadings are filed the court may insist upon the filing of an extra copy). However, if the case is referred to a Court annexed Mediation Centre which is under the exclusive control and supervision of a Judicial Officer, the original file may be made available wherever necessary.

[1] (2010) 8 SCC 24


The Authors of this article, Sanjeev Kumar is a Partner and Anshul Sehgal is a Managing Associate in the Litigation & Dispute Resolution Team at L&L Partners Law Offices, New Delhi. They can be reached out at [email protected] and [email protected] The views expressed are personal.


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