The legal framework of alternative dispute resolution methods, and their role in easing court congestion.

Abstract:

The Domain of alternative dispute resolution (ADR) plays a significant and pivotal role in alleviating court congestion. In this paper, we delve into the different methods of ADR mechanisms, which comprise arbitration, mediation, negotiation, and conciliation. We will examine their effectiveness in resolving disputes outside the traditional courtroom setting. With a comprehensive analysis of relevant legislation and case law, this paper aims to explain the legal framework of ADR practices, highlighting their procedural and regulatory mechanisms. Furthermore, it aims to explore the interdependent relationship between ADR and the judicial system, showcasing how ADR methods ease out the burden of the court and the parties by offering a faster, cost-effective, and often more amicable means of dispute resolution. By outlining a deeper understanding of ADR’s legal framework and its influence on court congestion, this research aims to contribute to the ongoing discussion surrounding the evolution of dispute resolution mechanisms in modern legal systems in India.

Keywords: Alternative Dispute Resolution, Arbitration, Conciliation, Mediation, Negotiation, Lok Adalat.

Introduction:

In a fast-paced world like ours, where events are happening in the blink of an eyelid, anything time-consuming looks like tiresome work for us. Even a 1-minute video creates unrest and we skip it, we are in such a hurry nowadays. Given this situation, it is only a matter of debate how people are still engaging in long, time-consuming traditional courtroom methods in resolving their disputes instead of making a smart choice by opting for out-of-court settlements which not only guarantee quick resolvent but also facilitate amicable relations after the issue is settled.

Alternative Dispute Resolution is the child of the new generation matter settlement method. It was identified and brought into our legal system for the advancement in resolving disputes and for saving the courts time for more serious matters of greater public interest. It is well structured and made according to the needs and preferences of the upcoming generation which believes in instant actions and settlements.

For a fact everybody wants to save their valuable time and quick action when it comes to resolving a dispute because it helps them engage in business-related matters without having to think or worry about conflicts and then the lengthy litigation process for resolving it, straining business relations.

Given the present scenario of our world, we see new startups emerging on an almost everyday basis, which indicates the fact that more and more people are engaging in activities, where there are associations there arise disputes, ADR methods could offer better and more timely solutions in resolving these disputes thus saving time and money of the parties[1].

ADR mechanisms not only save time for the parties involved but also save them from spending whooping amounts in reaching settlements in years-long litigation methods. Now, time and money are the most valuable things in our world, so when we can save both these things through ADR methods, then why do we even need to get involved in traditional courtroom settlements?

 ADR consists of procedures that involve non-courtroom processes to resolve disputes. It encompasses methods such as Mediation, Arbitration, Conciliation, and Negotiation. These are the more prevalent and well-known methods in this domain. In India, there has emerged a new mechanism, known as the Lok-Adalat or the people’s court. While the MACN (Mediation, Arbitration, Conciliation, and Negotiation) is practiced all over the world, the mechanism of Lok Adalat is practiced and is limited to the Indian Legal framework.

These methods are proving to be very effective in resolving disputes in the present era given their day-to-day growing popularity.  

Research Methodology:

This paper is descriptive and is based on information from secondary sources to explain the ADR mechanism and its role in easing the burden of the court. Such as articles, Journals, Acts, and websites were used to find information for the completion of this paper.

Review of Literature:

This paper aims to provide a comprehensive overview of Alternative Dispute Resolution (ADR) mechanisms of the Indian legal system while highlighting the need for faster and more efficient dispute resolution methods in today’s fast-paced world by exploring and delving into various forms of ADR tools for quick resolution and shifting the burden from the courtroom.

It also aims to analyze the broader impact of ADR on the Indian legal system, particularly in addressing the significant backlog of cases. It identifies key factors contributing to this backlog, such as judicial vacancies and government litigation, and highlights the role of ADR in alleviating these challenges. Overall, this paper emphasizes the need for ADR in the modern legal system and advocates for its wider adoption to enhance access to justice and update legal processes in India.

Analysis:

Alternative Dispute Resolution (ADR) in India, is governed by the regulations outlined in the Arbitration and Conciliation Act of 1996. Here we will delve deeper into each of these methods one by one.

  1. Arbitration[2]:

Arbitration is one of the oldest forms of resolving disputes in India. In the older days, whenever there arose any dispute among people, they used to take the matter to the head of the society or village to address it and to seek an amicable resolution. This was popularly known as the Panchayat among Indians, which was a similar method to today’s Arbitration, where a neutral third party is chosen to resolve a dispute and reach an amicable solution and settlement. Here, a fact to be noted about the Arbitrators is that they have the power to impose decisions or Arbitral Awards, and the parties will have to accept them.

The first legislation related to Arbitration was instituted in the year of 1899 when the Indian Arbitration Act was enacted. The application of this act was limited to the then presidency cities i.e. Madras, Bombay, and Calcutta.

Within a few years from the enactment of the first legislation related to Arbitration, the Civil Procedure Code was passed in the year 1908 which consisted of provisions related to Arbitration in its Second schedule, thus shaping and arranging its legal validity further and also laying the foundation and paving the way for the culmination of the Arbitration Act, 1940. As this act was passed pre-independence, it was majorly based upon English laws such as the English Arbitration Act of 1934 and it remained in working for nearly fifty years post-independence.  

The Act of 1940 mainly involved domestic arbitration cases, and enforcement of foreign awards was covered by separate legislation such as the Arbitration (Protocol and Convention) Act of 1937 for Geneva Convention awards and the foreign awards (Recognition and Enforcement) Act of 1961 for New York convention awards.

At the international level, there were various laws enacted such as the United Nations Commission on International Trade Law (UNCITRAL), and Model Law on International Commercial Arbitration adopted on the 21st of June 1985, these laws were brought in to create uniformity in dealing with matters involving international disputes among member countries to avoid complications of different laws in different countries for same matters. The model law contains 36 Articles.

The enactment of the UNCITRAL Model law served as a base for consideration while enacting legislation related to domestic Arbitration by member countries to maintain a balance across various jurisdictions as far as Arbitration was concerned.

  • Mediation[3]:

Mediation serves as a voluntary and binding process where an impartial and neutral mediator facilitates disputing parties in settling their dispute. The mediator’s role is not to enforce a solution but to create an environment encouraging to resolution of all disputes between the parties involved. Mediation has emerged as a well-established alternative dispute-resolution method, demonstrating significant success in Indian Cities. Litigants who engage in the mediation process have consistently expressed their endorsement of its effectiveness.

Mediation is somewhat type of facilitated negotiation, where parties take the assistance of a neutral third party (known as the mediator) to encourage resolving their dispute. In mediation, the active participation of both parties is desired for effective and quick resolution.

It doesn’t always require a formal setting for discussion and resolution of conflicts it can be held in an informal setting as well, where the mediator may be an acquaintance. However, in such situations, it’s crucial to select a mediator that is acceptable to both parties and possesses relevant expertise in dispute resolution.

Alternatively, mediation in a formal method is where the parties hire a professional, neutral mediator. Formal mediators are trained in negotiation techniques and work towards achieving a mutually satisfactory resolution for both parties. Regardless of the formality, the mediator’s role is not to pass judgment on the rightness or wrongness of either party’s position; rather, it is to facilitate the parties in reaching a mutually agreeable solution.

  • Conciliation[4]:

Conciliation is a process that involves the resolution of disputes without resorting to litigation. It comprises the appointment of independent individuals who are then approved by the parties, to facilitate a settlement through consensus or persuasive methods.

Conciliation is not to be confused with Arbitration in any way. The HALSBURY’S LAWS OF ENGLAND, provide a distinguished definition for both i.e. “arbitration” and “conciliation”. Arbitration might be referred to as a judicial or non-judicial process that is mainly concerned with determining and enforcing rights and liabilities according to established legal principles, whereas Conciliation, on the other hand, is persuading parties to reach an agreement and is distinctly different from arbitration. The chairperson of a conciliation board is not considered an arbitrator.

As conciliation is a process that revolves around persuasion and convincing thus the presence of Assurance and faith serve as vital components. Serving as one of the highly effective methods of Alternative Dispute Resolution (ADR), it is commonly sought in both domestic and international disputes. However, there are notable distinctions in its application between domestic and international matters.

Conciliation unlike Arbitration doesn’t have a binding effect on the parties that is the parties involved in conciliation are not compelled or obligated to adhere to the process; the process can continue until both parties reach a mutually satisfactory agreement. In this, as no parties are bound to adhere to the process, if the parties are not satisfied with the procedure or the chosen conciliator then any of the parties may withdraw from the process at any stage of the Conciliation process, such withdrawal is considered a normal part of the process even if there exist a clause related to it. Compliance with any settlement reached after the conclusion of the process is entirely a voluntary decision and relies only on the good faith of the parties involved.

  • Negotiation[5]:

ADR emerged as an alternative to traditional dispute resolution methods. Negotiation is one such method in the ADR mechanism.

In Negotiation, the parties in dispute collaborate to resolve their issue through exchange of dialogue and negotiating their choices. It enables individuals to address conflicts and reconcile differences without resorting to confrontation, making it a valuable technique for reaching agreements amicably. This process includes identifying shared interests, considering various solutions, and reaching compromises that meet the needs of all involved parties.

It is a process that encompasses both direct and indirect ways of communication that the parties utilize with contrary interests to develop a joint strategy aimed at resolving their disagreement. It serves as a versatile tool capable of addressing current issues and establishing the groundwork for future relationships among individuals or groups. This process includes identifying shared interests, considering various solutions, and reaching compromises that meet the needs of all involved parties.

Negotiation is given more importance than other tools of ADR because of its ability to uphold relationships unlike litigation, which frequently leads to clear winners and losers, it enables individuals to collaborate towards a resolution that addresses the needs of all parties involved. This cooperative approach encourages understanding, nurtures trust, and sustains positive relationships for future engagements.

  • Lok Adalat[6]:

It is one of the methods in ADR, that is practiced only in India. It provides a platform for resolving disputes either pending in court or at the pre-litigation stage through amicable settlements. Established under the Legal Services Authorities Act of 1987, Lok Adalat holds statutory authority. Decisions rendered by Lok Adalat’s are deemed to be decrees of civil courts and are final and binding on all parties involved, without provision for appeal. However, dissatisfied parties retain the right to initiate litigation by filing a case in the appropriate court jurisdiction, adhering to the requisite procedures.

There is no court fee required when filing a matter in Lok Adalat. If a case referred from a court is settled in Lok Adalat, the original court fee paid on the complaint or petition is refunded to the parties. Individuals overseeing Lok Adalat cases, known as Members, act solely as statutory conciliators and lack judicial authority. Their role involves persuading parties to resolve outside of court, without pressuring or coercing them to compromise. Lok Adalat does not make independent decisions but rather bases its outcomes on the agreements reached by the parties involved. Members of Lok Adalat provide impartial assistance to parties in their efforts to achieve a mutually acceptable settlement.

For a case to be referred to Lok Adalat, two conditions are required to be fulfilled:

(A) If a case is currently under consideration in a court.

(B) If a dispute arises before litigation.

In the latter situation, the State Legal Services Authority or District Legal Services Authority, upon receiving an application from one of the involved parties before litigation, may refer the matter to Lok Adalat for amicable resolution. Subsequently, notice would be issued to the other party involved.

The inception of ADR in the Indian Legal System:

The Indian legal system embraced arbitration as a means of dispute resolution and enacted comprehensive legislation to govern its application, towards the end of the 20th century. The inspiration was drawn from the enactment of the UNCITRAL model law and arbitration rules at the international level, which aimed to merge provisions concerning both international and domestic arbitration, as well as the enforcement of foreign arbitral awards by international arbitral tribunals to facilitate a common ground for all the countries worldwide.

Arbitration promotes parties’ Independence, allowing them to freely select and determine the number of arbitrators. Parties can resort to arbitration as a dispute resolution method by entering into a written “Arbitration Agreement,” which may take the form of a clause within a contract or a separate agreement that not only provides safety to enter into any business venture or partnership but also guarantees a pre-planned amicable dispute resolvent.

In the case of Enercon (India) Ltd. v. Enercon GmbH & Anr.[7], it was established that even if a contract is incomplete, a reference to arbitration constitutes a separate agreement, known as the “Doctrine of Separability[8].”

The addition of Section 89 through the Code of Civil Procedure (Amendment) Act 1999 into the Code of Civil Procedure 1908 which mandates courts to resolve civil litigation disputes through Alternative Dispute Resolution (ADR), was the inception of the Indian Judiciary giving due recognition to ADR Mechanism. The modes of ADR provided in the Code include Arbitration, Mediation, Conciliation, or Lok Adalat. These mechanisms are considered extra-judicial and apply to a wide range of civil matters, including commercial, partnership, intellectual property, personal injury, family, insurance, industrial, and product liability disputes. Consequently, civil litigants increasingly started opting for ADR to navigate the complexities of the modern legal system[9]. It aims to ensure that the court facilitates out-of-court settlements through any of the ADR processes before the trial commences if the dispute is not of grave seriousness.

Arbitration and Conciliation are the most sought after by the parties while resolving their disputes, and both of these methods are regulated by the Arbitration and Conciliation Act, of 1996, thus replacing the previous Arbitration Act of 1940.

The burden of pending cases:

In 2023, the total number of pending cases in Indian courts was more than 50 million, or 5 crores, with over 169,000 cases pending for 30 years in district and high courts. District courts have over 85% of the pending cases. The government itself is the largest litigant with 50% of the pending cases.

Most of the pending cases are of Land and property disputes, constituting 66% of cases in civil courts and 25% of cases in the Supreme Court. India holds the record for the highest number of pending court cases globally thus creating a significant challenge to the judiciary[10].

According to a 2018 Niti Aayog strategy paper, with this prevailing rate of case disposal, it would take over 324 years to clear all pending cases. Delays in court proceedings lead to continued wait times for justice, affecting both victims and accused individuals[11].

These pending cases also impose a significant economic cost on the Country’s wealth estimated at 1.5%-2% of its GDP. India’s performance in civil and criminal justice, by the Rule of Law Index 2023 according to the World Justice Project, ranks 111th out of 142 countries in civil justice and 93rd out of 142 countries in criminal justice. Additionally, India was ranked 60th out of 87 countries for having well-developed legal frameworks by U.S News & World Report.

Causes of Pendency of Cases[12]:

There exist various reasons for the pendency of cases in the Indian courts and some of them are discussed below:

  1. Scarcity of Judges:

In India, there exists an evident shortage of judges, with many vacancies in high courts and district courts due to the cumbersome relations and the existence of disagreements between the central and state governments over the responsibility for appointing judges. Whereas, even those appointed judges often take leave which further delays case resolution.

  • Low Budget Allocation:

The insufficient budget allocation ranging between 0.8% to 0.9% of the total budget towards the judiciary hampers the functioning of the judicial system thus leading to the accumulation of pending cases in the courts.

  • Government Litigation:

Frequent engagement of the government in litigation also contributes to the backlog of cases that burdens the courts. The government often fails to verify its claim which further becomes a burden upon the judicial system.

  • Quality of Lower Court Judgments:

Lower court judges often lack specialization in judicial law and service which leads to decisions being challenged in higher courts. This results in a higher number of appeals while further contributing to the backlog of cases.

  • Increased Awareness of Rights:

Growing awareness of legal rights among the public has empowered individuals to seek justice through the courts, further adding to the caseload.

  • Emergence of New Mechanisms and Rights:

New legal mechanisms, such as the Public Interest Litigation (PIL), and rights like the Right to Information (RTI), have encouraged more people to seek legal remedy. The judiciary’s active stance in implementing these mechanisms has also increased the number of cases.

Suggestion:

Over time and again various scholars and personalities from the executive, and the judiciary have highlighted the importance and advantages of using the ADR mechanism for decreasing the burden of pending court cases in India, for instance, in a 2017 conference, former Vice President Hamid Ansari highlighted the rising costs and delays associated with court proceedings which lead to the emergence of alternative dispute resolution methods. He emphasized arbitration as a swift and confidential means to resolve civil disputes by avoiding the traditional courts[13].

Former Justice Kurian Joseph supported this view by emphasizing that arbitration has the potential to reduce case backlogs. He stressed the need for judges, lawyers, and stakeholders to stay informed about arbitration’s evolving trends by enabling accessible out-of-court settlements for civil disputes[14].

Reducing the burden of criminal cases on the Indian Judiciary poses unique challenges compared to civil disputes, making the application of alternate dispute redressal (ADR) mechanisms difficult. However, recognizing the soaring pendency of criminal cases, the Law Commission of India recommended reforms, including plea bargaining[15].

Plea bargaining is an agreement between the prosecution and defense, where the accused pleads guilty in exchange for a reduced sentence. Subsequently, the Criminal Law (Amendment) Bill, of 2003 introduced plea bargaining into the Code of Criminal Procedure, 1973 which aimed to speed up criminal trial disposal.

In addition, various other Criminal ADR programs worldwide, such as the Victim-Offender Mediation Program (VOM), Victim-Offender Panels (VOP), and Private Complaint Mediation Service (PCMS) offer alternative dispute resolution mechanisms within the criminal justice system which contribute to case resolution efficiently.

Conclusion:

To address the issue of an increasing number of pending cases and to reduce delays in justice delivery there exists an urgent need to implement alternate dispute resolution mechanisms that can help shift some of the burden from the judiciary to other institutions leading to a win-win situation for all those involved in waiting for justice. “ADR” tools stand out as a prominent way for resolving the backlog of cases in Indian courts thus providing early resolution of disputes for civil and family matters.

By- Aradhana Jha,

Faculty of Law, Veer Bahadur Singh Purvanchal University


[1] Department of Legal Affairs, (https://legalaffairs.gov.in/arbitration), (last visited 14 April 2024).

[2] Ibid 1

[3] Law notes, (https://lawnotes.co/mediation/), (last visited 13 April 2024)

[4] Gauhati High Court, (https://ghconline.gov.in/library/document/conference2728072018/II2Conciliation%20as%20an%20Effective%20Mode%20of%20Alternative%20Dispute), (last visited 13 April 2024)

[5] Law notes, (https://lawnotes.co/negotiation-2/), (Last visited 13 April)

[6] National Legal Service Authority, (https://nalsa.gov.in/lok-adalat), (Last visited 14 April)

[7] Manupatra Articles, (https://articles.manupatra.com/article-details/Arbitration-A-Tool-to-Curtail-the-Pendency-of-Court-Cases), (Last Visited 14 April)

[8] SSRN eLibrary, (https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID3798261_code4604174.pdf?abstractid=3798261&mirid=1),(Last visited 14 April 2024)

[9] Ibid 8

[10] Wikipedia, (https://en.wikipedia.org/wiki/Pendency_of_court_cases_in_India#:~:text=In%202023%2C%20the%20total%20number,courts%20as%20of%20December%202022), (Last Visited 15 April)

[11] Ibid 10

[12] Unacademy, (https://unacademy.com/content/upsc/study-material/general-awareness/pending-cases-in-india/), (Last visited 15 April)

[13] Ibid 7

[14] Ibid 7

[15] Ibid 7