ADR Methods

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### Introduction Alternative Dispute Resolution (ADR) refers to methods of resolving disputes outside traditional court litigation. In India, ADR is governed primarily by **Section 89 of the Code of Civil Procedure, 1908** and the **Arbitration and Conciliation Act, 1996**. Its constitutional basis lies in **Article 39A**, which mandates equal justice and free legal aid. The Supreme Court in **Salem Advocate Bar Association v. Union of India (2005)** emphasized the mandatory nature of Section 89 in referring disputes to ADR. ### Arbitration Defined under **Section 2(1)(a) of the Arbitration and Conciliation Act, 1996**, arbitration is a process where parties submit their dispute to an **arbitral tribunal** whose decision (**award**) is **binding** on both parties. **Merits:** - Award is final and enforceable like a court decree under **Section 36** - Confidential proceedings; parties choose arbitrators with technical expertise - **Section 29A** mandates award within **12 months** from the date the tribunal enters upon reference, promoting speed - **Section 29B** allows parties by mutual written agreement to opt for **fast track procedure**, with award mandated within **6 months** - Foreign awards enforceable under the **New York Convention** **Demerits:** - Can be expensive, especially institutional arbitration - **Section 34** provides only narrow grounds to **set aside** an award — it is not an appeal; appeal against a Section 34 order lies separately under **Section 37**, meaning judicial review is strictly limited - Risk of power imbalance in drafting arbitration clauses ### Mediation Mediation is a voluntary, confidential process where a neutral **mediator** facilitates negotiation between parties without imposing any decision. It is now governed by the **Mediation Act, 2023**. **Merits:** - Parties retain full control over outcome - Settlement agreement is final, binding, and enforceable **as if it were a judgment or decree of a court** under **Section 27, Mediation Act, 2023** - **Section 18** mandates completion within **120 days** from the first appearance before the mediator, extendable by **60 days** with mutual consent (maximum **180 days**) - **Section 5** provides for **voluntary** pre-litigation mediation in civil and commercial disputes; mandatory pre-litigation mediation for commercial disputes of specified value is separately governed by **Section 12A of the Commercial Courts Act, 2015** - Preserves relationships; cost-effective **Demerits:** - No guarantee of settlement - Power imbalance may produce unfair outcomes - Unsuitable for complex legal questions requiring judicial interpretation ### Conciliation Governed by **Sections 61–81 of the Arbitration and Conciliation Act, 1996**, conciliation involves a **conciliator** who plays an **active role** — under **Section 67**, the conciliator may make **proposals for settlement** and suggest terms, making the conciliator's role more interventionist than a mediator's. **Merits:** - Flexible and informal procedure - Settlement agreement under **Section 73** is binding and enforceable as an arbitral award under **Section 74**, read with **Section 36** - Applicable to both contractual and non-contractual disputes under **Section 61** - Maintains amicable relationships between parties **Demerits:** - Conciliator cannot impose a decision; entirely dependent on parties' willingness - No guarantee of settlement - Limited awareness and use in India ### Negotiation Negotiation is the most fundamental form of ADR — a **direct communication process** between disputing parties without any third-party involvement. It has **no statutory recognition** in India but remains the most widely practiced form of dispute resolution. **Merits:** - Parties retain complete control over process and outcome - Fastest and least expensive method — no third-party fees - Wide-ranging solutions possible, beyond what legal remedies can offer - A negotiated settlement reduced to writing is enforceable as a **contract under the Indian Contract Act, 1872** **Demerits:** - No statutory framework or procedural safeguards - Power imbalance heavily favors the stronger party - No independent enforcement mechanism if one party refuses to honor the agreement ### Lok Adalat Established under the **Legal Services Authorities Act, 1987**, Lok Adalat (People's Court) was first held in **Gujarat in 1982**. It operates on principles of conciliation, compromise, and negotiation. **Article 39A** of the Constitution is its foundational directive. **Merits:** - Award under **Section 21** is final, binding, and **no appeal lies**; it has the same status as a civil court decree - Entirely **cost-free**; court fee is refunded for pending cases under **Section 16** - **Permanent Lok Adalat** under **Section 22B** (inserted by Amendment Act, 2002) is established for **public utility services** — it may decide the dispute on merits **after conciliation fails** under **Section 22C**, even without parties' consent, provided the dispute does not relate to an offence; its jurisdiction extends up to **₹1 crore** **Demerits:** - Regular Lok Adalat cannot adjudicate contested disputes — it can only record a conciliated settlement; if no settlement is reached, the matter is returned to court - Limited jurisdiction: civil, compoundable criminal, motor accident, and matrimonial disputes only - No appellate remedy even against a regular Lok Adalat award - May pressure weaker parties into accepting unfavorable compromises ### Online Dispute Resolution (ODR) ODR is the digital form of ADR, conducted through video conferencing, digital signatures, and online platforms. It is supported by the **Information Technology Act, 2000**, and the **Mediation Act, 2023** expressly recognizes **online mediation**. The **NITI Aayog ODR Report (2021)** recommended a national ODR framework for India. **Merits:** - Accessible from anywhere; removes geographic and logistical barriers - Cost-effective — eliminates travel and infrastructure costs - Particularly suited to e-commerce and cross-border disputes - Available 24/7; asynchronous communication possible **Demerits:** - Digital divide excludes rural and illiterate populations - Cybersecurity and data privacy risks - Unsuitable for disputes requiring examination of physical evidence - Internet connectivity issues can disrupt proceedings ### Conclusion Each ADR method serves a distinct purpose suited to different disputes and parties. The Supreme Court in **Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (2010)** laid down clear guidelines on which disputes are suitable for which ADR method. The **Mediation Act, 2023** and India's growing ODR infrastructure reflect the country's commitment to accessible, modern, and efficient dispute resolution. The choice of method must ultimately be guided by the **nature of the dispute, cost considerations, enforceability needs, and the relationship between the parties**.