Libertatem Magazine

What Is the Concept of Alternative Dispute Resolution?

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“Litigation has not kept up with modern, fast-moving society… there have been revolutionary changes in the business practices since the basic court structure was adopted from English Common Law… Compared to modern business, Civil Courts have changed very little… Alternative dispute resolution allows the lawyers to use new processes, encourages problem-solving attitude and an openness to compromise” – Robert Coulson

The adversarial system of adjudication as adopted in India has been borrowed from the democracies of the west; the United Kingdom being the cardinal source. The adaptability of this method of imparting justice divorced from the ground realities has often been a subject of deepened controversies. Partly, the current ailments of the judicial processes, in particular, the mounting arrears of cases in all forms of the judicial tier is attributed to this setup. The complex procedures from the initiation to the final adjudication of a suit lead to inordinate delays in the working of the judiciary. 

Nani Palkhiwala once describing the pathetic condition of the litigation in the country observed, “…The law may or may not be an ass but in India, it is a snail; it moves at a pace which would be regarded as unduly slow in the community of snails. A lawsuit once started in India is the nearest thing to eternal life ever seen on this earth….

This has thus initiated a need to recognize other systems of the traditional justice delivery system at least in the procedural respects, to tackle the aforementioned problem. In this backdrop, there has always been a dire need for a robust system of Alternative Dispute Resolution (ADR) procedures- a mode of adjudication, which has always been the part and parcel of the Indian judicial social set up.

The present-day adjudicatory system is the legacy of British colonial rule that reigned over India for centuries. There are many sides to the existing judicial system but its shortcomings have become more prominent than its achievements. The inherent shortcoming of this system of justice dispensation lies with its formalities and technicalities and on top of it, it is costly and time-consuming. Anyone would stand testimony to the fact that in Indian courts, a case takes approximately 15 to 20 years to be disposed of (sometimes, even a lifetime!) and then, of course, one has the recourse of appeals, reviews, etc., which further prolongs final decision of the case. 

It is a fact that a large number of cases are pending for their disposal at different levels in various courts. Long pendency of matters in various courts frustrates the litigant public and also shakes their belief in the efficacy of the judicial system. This system of justice dispensation consumes, to a great extent, time over procedural wrangles, technicalities of law, and its costlier nature further delays the discretion of justice to the needy. It is a well-known maxim of law “justice delayed is justice denied” and our system just confirms to the same. It would be deleterious to the efficacy of, not only judicial adjudication but also maintenance of ‘rule of law’ if we continue with the existing Formal Legal System (FLS).

The judicial process is set in motion by the action of an aggrieved party. Each party’s case is presented before the learned judge in the straightjacket of rules of procedural and substantial law by advocates since the common man is not well versed with the court crafts and the legal language to be used. The judge understands the dispute involved and then pronounces the decree keeping in mind the known legal concepts, precedents, arguments advanced and the evidence led before him. The parties are then bound by the verdict and may face legal sanctions if not complied with. Even though the dispute gets adjudicated the interpersonal relationship of the parties worsens and the disputes between the parties remain there. Thus what the FLS aims at is the adjudication of the dispute and not the resolution of disputes.

Humans are not known to throw up their hands in despair when any challenge arises. To counter the challenges of ever-increasing pendency in courts, tardy procedures involved in litigation, etc., new procedures which are more informal cost-effective and speedy have been looked for and all these procedures have come to be known by a compendious expression ADR. Seekers of justice are in millions and it is becoming rather difficult for the Courts to cope up with the ever-increasing cases with the present infrastructure and manpower. Courts are clogged with cases because of the ever-increasing number of cases the Court system is under great pressure. Therefore, if there was at the threshold a permanent mechanism or machinery to settle the matters at a pre-trial stage, many matters would not find their way to the Courts. Similarly, if there are permanent forums to which Courts may refer to cases, the load of cases could be taken off the Courts. 

The ADR process is extra-judicial. It can be used in almost all contentious matters, which are capable of being resolved under the law by agreement between the parties. It can be employed with very encouraging results in several categories of disputes, especially civil, commercial, industrial, and family disputes. In particular, these techniques have been shown to work across the full range of business disputes, banking, contract of performance and interpretation, construction contracts, intellectual property rights, insurance coverage, joint ventures, partnership differences, personal injury, product liability, professional liability, real estate, and securities.

The processes like arbitration and mediation have been perceived as a valuable complement to this system not just because they help prevent some cases going to trial, but more widely because they speed up the process of settlement and thereby reducing the cost and time allotted in litigation. There is a striking contrast between this reality and the lack of attention devoted by most lawyers to the processes, problems, and skills involved in settling although trial attorneys are overwhelming dissatisfied with the typical ad hoc process of settlement and parties complain that compromise comes too late, is too expensive, and too stressful. Further, the urge to reduce disputes to mere private affairs and ensure active involvement in the proceedings at all stages can only be possible under the ADR method of dispute resolution. 

The arbitration system that was proposed and is being followed in India is a very quick and somewhat cost-effective method of dispute resolution. It is detached from the delays and the hefty cost of litigation which form the litigation system. ADR is not an alternative to the court system but only meant to supplement the same aiming on less lawyering.

The primary object of ADR movement is avoidance of vexation, expense, and delay and promotion of the ideal of ‘access of justice’ to all. To put it otherwise, ADR aims at providing Cheap, Simple, Quick, and Accessible justice. In its philosophical perception, ADR is considered to be the mode in which the dispute resolution is qualitatively distinct from the judicial process. It is a process where disputes are settled with the assistance of a neutral third person generally of parties’ own choice. This neutral person is generally aware and familiar with the nature of the dispute and of the context in which such disputes normally arise. The proceedings under these procedures are mostly informal devoid of procedural wrangles and technicalities and are conducted in a manner agreed to by the parties.

Having recourse to ADR by no means intends to minimize the role of our Hon’ble Courts but it should be given a pragmatic view and may be considered as a supplement to the existing legal system so that our courts are less burdened and also the idea of “access to justice by all” shall be achieved.

Due to the recommendations of the Law Commissions as well as the Malimath Committee Report, Section 89 was inserted by the CPC (Amendment) Act, 1999 via Section 7 of the Amendment Act with effect from 1-7-2002. 

Undoubtedly, the legislative initiative towards the introduction of Section 89 CPC is the boldest step taken to counter the growing menace of court backlogs. It is in this backdrop that it can be seen that ADR procedures are distinguished from the usual formal judicial processes, and emphasizes on vivacious measures to impart justice through ADR to take the ADR culture even closer to the masses. Perhaps when the existing judicial forums are enveloped in delay, disenchantment towards the justice rendered by them, the introduction of court-sponsored ADR through Section 89 CPC seems the only means to alleviate and revamp the ailing judicial system. Based on the recommendations made by the Law Commission of India and Malimath Committee, Section 89 of CPC is a legislative bid to promote ADR. 

A plain reading of section 89 shall provide that if it appears to the court that there exists an element of settlement that is acceptable to the parties then the court shall formulate terms of the settlement and give them to the parties for their observations. After receiving the observations from the parties, the court shall reformulate the terms of the settlement and refer the same for arbitration, conciliation, judicial settlement, and mediation. 

It is clear from this section that the types of ADR open to the Court are four; (1) Arbitration; (2) Conciliation; (3) Judicial Settlement including settlement through Lok Adalat and (4) Mediation. This provision is laudable considering that before this provision was introduced, the last two aforementioned types of ADRs were not recognized by the law in India. However, this provision has been criticized on several grounds including the ground that this provision lacks sufficient detail and does not provide enough guidelines to effectively carry on the ADRs mentioned. This lacuna in the law needs to be addressed before ADRs, other than arbitration and conciliation, can become effective tools in the efforts to promote access to justice.

Our Constitution under Article 39A and Article 21 provides for free legal aid to the indigent persons and right to life respectively. Since our courts have been overburdened and face the crisis of a large number of pending cases, and the law has to help the poor who do not have the means i.e., economic means, to fight their causes, the concept of ADR has been recognized constitutionally in India to meet the ends of justice.

The ADR involving a distinct structural process with a third party intervention seems a viable option to take off the load from the overheated judicial system.No wonder, the Supreme Court in M/s. Guru Nanak Foundation v. M/s. Rattan Singh & Sons, observed,

Interminable, time consuming, complex and expensive court procedures impelled jurists to search for an alternative forum, less formal, more effective and speedy for resolution of disputes avoiding procedural claptrap and this led to the Arbitration Act 1940…”

At the brink years of independence Pandit Jawaharlal Nehru, the first Prime Minister, speaking in the Constituent Assembly concerning the justice delivery processes had urged to tackle the problem of the “poor and starving”, lest “all our paper constitutions will become useless and purposeless. It is this very aspect of the concern for the poor, which is largely manifested in the constitution itself. The mandates of social justice, equality, equal justice, and free legal aid are provisions well-knit to serve the needs of the poor. However, despite the promises, the great anxiety and warning given for the cause of the poor, at the commencement of the constitution of India, the administration of justice to the common poor men remained neglected and its beneficiaries turned out to be men having money power and lately the muscle and contact power. The failures of this very constitutional machinery necessitate an urgent need for reform, in the aspect of the adoption of the ADR mechanisms.

The insertion of Section 89 and the rules, if fairly and frequently utilized by the courts, there is every scope for the litigation to come to an end much faster and at a lesser cost. This will go a long way in reducing the burden on the courts also. It is, however, to be noted that the benefits of Section 89 CPC have not percolated as originally anticipated by the legislature. The complexities have been still immense.

In Sukanya Holdings Pvt. Ltd. v Jayesh H. Pandya, the Supreme Court said that section 89 of the CPC cannot be resorted to for interpreting Section 8 of the Arbitration and Conciliation Act, 1996 as it stands on a different footing and it would be applicable even in cases where there is no arbitration agreement for referring the dispute for arbitration. Further for that purpose, the court must apply its mind to the condition contemplated under section 89 of the CPC and even if the application under section 8 of the aforementioned Act is rejected, the court is required to follow the procedure prescribed under the said section.

Thus, it can be concluded that what while the legislators did a commendable job by insertion of Section 89 of CPC, the question which still begs to be answered is, how much is this provision used by courts?

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. is now on Telegram. Follow us for regular legal updates and judgments of the court. Follow us on Google News, InstagramLinkedInFacebook & Twitter. You can subscribe to our Weekly Email Updates. You can also contribute stories like this and help us spread awareness for a better society. Submit Your Post Now.

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