Characteristics of Alternate Dispute Resolution (ADR) and Advantages and Disadvantages of Alternate Dispute Resolution (ADR)

Below are the Characteristics of Alternate Dispute Resolution (ADR) and Advantages and Disadvantages of Alternate Dispute Resolution (ADR)


·        What is Alternative Dispute Resolution (ADR)? 

Alternative dispute resolution (ADR) refers to a range of dispute settlement methods which help the parties in the dispute to come to a settlement without going to court, or without litigating on the said matter. These methods usually involve a third party, who helps them in settling the disputes. In many cases, ADR methods are used alongside the litigation process as well through court authorization.

·        How did the concept of ADR arise?

As stated in the 222nd Report of the Law Commission of India, the Constitution has guaranteed access to justice for all, primarily through Article 39A, which states that everyone must have an equal opportunity of getting justice and this must not be denied to any citizen by reason of economic or other sort of disabilities. 

The report further states that ‘access to justice’ for the common masses in India means access to the courts of law. But even that has been hindered, due to factors like poverty, illiteracy, ignorance, social and political backwardness etc. 

In a developing country like India, many people still live in poverty. When their rights get violated, they often do not have the money to fight long battles in the Court. They do not have the money to afford a lawyer. They do not know the legal system and procedures. Therefore, they often think that the court system is an inconvenience. 

These kinds of inefficiencies are shared reasons among many countries, which is why ADR is being explored. The courts also have too many pending cases and these cases keep going on for many years which is a tremendous burden to the courts. 

These reasons prompted the Indian Government to enact Section 89 of the Code of Civil Procedure, 1908 and replace the earlier Arbitration Act,1940 with The Arbitration and Conciliation Act 1996, in accordance with the mandates of the United Nations Commission on International Trade Law (UNCITRAL).

·        Types of ADR methods

1.     Mediation

Mediation is a voluntary process wherein a neutral third party facilitates communication between the disputing parties to help them reach a mutually acceptable resolution. 

The scope of mediation in India has been recognized and encouraged by various statutes, including the Civil Procedure Code and the Commercial Courts Act. Mediation has proven effective in resolving a wide range of disputes, including civil, commercial, family, and community disputes.

2.   Arbitration

Arbitration is a formal process where parties agree to submit their dispute to an impartial arbitrator or a panel of arbitrators who render a binding decision. The scope of arbitration in India has been significantly enhanced with the enactment of the Arbitration and Conciliation Act 1996, which is based on the UNCITRAL Model Law. 

This legislation provides a robust legal framework for domestic and international arbitration, making India an attractive destination for resolving commercial disputes.

3.   Negotiation

Negotiation is an informal and direct form of dispute resolution where the parties involved discuss and try to reach a settlement without the involvement of a third party. 

While negotiation does not have a specific legal framework, it plays a vital role in the early resolution of disputes. It is often employed in conjunction with other ADR methods to achieve mutually beneficial outcomes.

4.   Conciliation

Conciliation involves the assistance of a neutral third party who facilitates communication between the parties to help them find a mutually agreeable solution. Although conciliation is not as commonly used as mediation or arbitration in India, it can be employed in various sectors, including labour disputes, commercial contracts, and family matters.

·        Difference between Mediation and Conciliation

In mediation, the mediator plays a more active role in the the process by proposing compromise solutions after hearing all parties while in the case of conciliation, the conciliator has to bring the parties into such a state of mind as to facilitate the parties to come to an acceptable compromise. 

5.    Lok Adalats

In a country like India where there are many illiterate people, the concept of Lok Adalats is a necessity. This was first introduced in 1982 in Gujarat. This concept mainly focused on reducing the burden of pending cases on the Courts and has incorporated the concept keeping in mind various factors like social justice. 

Lok Adalats are governed under The Legal Services Authorities Act, 1987. Sections 19, 20, 21 and 22 specifically deal with Lok Adalats. They have been organised by the State Legal Aid and Advice Boards with the aid of District Legal Aid and Advice Committees. These have helped poor people to avoid the inefficiencies of litigation. The aim of The Legal Services Authorities Act was to provide access to justice for all, whether he be poor or rich. Since the poor masses of the society were not being delivered on this promise, this Act was formed.

Ø Advantages and Disadvantages of Alternative Dispute Resolution (ADR)

·        Advantages of ADR

1.     Cost-Effectiveness

One of the primary advantages of ADR is that it is generally more cost-effective than traditional litigation. Court proceedings can be expensive, with costs including attorney fees, court fees and other related expenses. ADR, on the other hand, often involves fewer formalities and can be completed in a shorter timeframe, resulting in lower costs.

2.   Time Efficiency

ADR processes are typically faster than court litigation. Traditional legal proceedings can take months or even years to resolve, whereas ADR methods like mediation or arbitration can often be completed in a matter of days or weeks. This can be particularly beneficial in business disputes where a speedy resolution is desired.

3.   Flexibility

ADR offers more flexibility compared to the rigid structure of court proceedings. Parties have the freedom to choose the ADR method that best suits their needs and can tailor the process to their specific dispute. This flexibility extends to scheduling, location and even the choice of the neutral third party (mediator or arbitrator) who will oversee the process.

4.   Confidentiality

Unlike court cases, which are typically public, ADR proceedings are private and confidential. This is particularly advantageous in disputes where the parties wish to keep sensitive information out of the public domain. Confidentiality can also help preserve business relationships and reputations.

5.    Control over the Outcome

In ADR, the parties have more control over the outcome of the dispute. For example, in mediation, the parties work together to reach a mutually acceptable agreement, rather than having a decision imposed upon them by a judge. This can lead to more satisfactory and sustainable resolutions.

6.   Preservation of Relationships

ADR methods like mediation focus on collaboration and communication, which can help preserve and even improve relationships between the disputing parties. This is especially important in disputes involving ongoing business relationships or family matters.

·        Disadvantages of ADR

1.     Lack of Precedent

Decisions made in ADR do not set a legal precedent, which can be seen as a disadvantage in certain cases. Precedents are important in the legal system as they provide guidance for future cases. Without precedents, there may be less certainty and predictability in the law.

2.   Limited Scope for Appeal

In some forms of ADR, such as binding arbitration, the opportunities for appealing the decision are limited. This can be problematic if one of the parties believes the decision was unjust or if there was an error in the process.

3.   Enforcement Issues

While court judgments are enforceable by law, enforcing the outcome of an ADR process can sometimes be more challenging. For instance, if a party does not comply with the terms of a mediation agreement, the other party may need to go to court to enforce the agreement.

4.   Power Imbalances

In disputes where there is a significant power imbalance between the parties, ADR may not provide a fair resolution. One party may dominate the process, influencing the outcome in their favor. This is less likely to happen in a court setting, where there are more formal checks and balances.

5.    Lack of Legal Representation

In some ADR processes, parties may not have legal representation, which can be a disadvantage, especially for those who are not familiar with legal matters. This can lead to one party being at a disadvantage if the other party is more knowledgeable or has legal counsel.

6.   Inconsistency

Since ADR processes are less formal and more flexible, there can be inconsistency in how disputes are resolved. Different mediators or arbitrators may have different approaches, which can lead to varying outcomes for similar disputes.

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