LEGALEYE

Alternate Dispute Resolution: Complementary or Antithesis to our Adversarial System of Justice - A Critical Appraisal
*Viveka Dalal

“Discourage litigation. Persuade your clients to compromise, whenever you can. Point out to them the nominal winner is often a real loser; in fees, expenses and waste of time. As a peace-maker, the lawyer has a superior opportunity of being a good person.”

Abraham Lincoln

The Indian Judicial System is one of the oldest legal systems of the World which follows adversarial litigation in which both the sides present arguments before the Court of law.The responsibility for the production of evidence is placed on the parties while the judge acts as an umpire. There is pendency of the cases coupled with the delay in the administration and disposal of cases in the Adversarial system.

CJI Ramana said among the several factors that contribute to delays in courts is “an Indian phenomenon called ‘luxurious litigation i.e it is a specific type of litigation wherein parties with resources attempt to frustrate the judicial process and delay it by filing numerous proceedings across the judicial system"

The Indian Judiciary is becoming inefficient due to long unsettled cases pending in the Indian courts.To deal with these pending cases, Jurists stressed on the development of a robust Alternate Dispute Resolution (ADR)mechanism. It provides a substitute to the conventional methods of resolving disputes. As dispute resolution is the process of deciding a dispute or conflict arising between the Parties, the decision can be arrived at either in adversarial manner i.e. in courts, or by parties themselves or a neutral third party.

Parties choose ADR as an alternative to the Adversarial System in India as it is more cost efficient, peaceful, speedy and creates win-win situation for both the parties. ADR provides various modes of settlement including arbitration, conciliation, mediation, negotiation and lok adalat.

The need to evolve alternate mechanisms prompted the introduction of 'Section 89' in the Code of Civil Procedure, 1908 and the Arbitration and Conciliation Act, 1996. Section 89- Settlement of disputes outside the Court- was inserted in the code through its 1999 Amendment Act, based on the recommendations of Malimath Committee report and 129th Law Commission Report. The aim was to increase access to justice through reducing costs and pendency.

Section 89 enables the courts to determine whether a matter can be resolved through ADR. It provides for reference to arbitration, conciliation, judicial settlement (may also be brought about through a Lok Adalat) and mediation.

The court is not bound to decide each case itself, but can refer the dispute to ADR, the failure of which would revert the case back to the court for normal adjudication proceedings.

According to Section 89 , 1) where it appears to the court that there exist elements of a settlement which may be acceptable to the parties, the Court shall formulate the terms of settlement and give them to the parties for their observations and after receiving the observations of the parties, the Court may reformulate the terms of a possible settlement and refer the same for-

a) Arbitration

b) Conciliation

c) Judicial settlement including settlement through Lok Adalat

d) Mediation

2) where a dispute has been referred-

a) for arbitration or conciliation, the provisions of the Arbitration and Conciliation Act, 1996 shall apply as if the proceedings for arbitration or conciliation were referred for settlement under the provisions of that Act;

b) To Lok Adalat , the Court shall refer the same to the Lok Adalat in accordance with the provisions of section 20(1) of the Legal Services Authority Act, 1987 and all other provisions of that Act shall apply in respect of the dispute so referred to the Lok Adalat;

c) For judicial settlement, the Court shall refer the same to a suitable institution or person and such institution or person shall be deemed to be a Lok Adalat and all other provisions of the 1987 Act shall apply.

d) For mediation, the Court shall effect a compromise between the parties and shall follow such procedure as may be prescribed.

Section 89 of CPC,1908 embodies the Legislative mandate to the court to refer sub judice disputes to various ADR mechanisms, in order to enable the parties to finally resolve their pending cases through well- established dispute resolution methods other than litigation.

Through this provision, a mandatory duty has been cast on civil courts to make an endeavour for settlement of disputes by relegating the parties to the ADR process.

Alternate Dispute Resolution Methods-

Arbitration- Arbitration is considered as an adjudicatory method of alternate dispute resolution mechanism governed by Arbitration and Conciliation Act, 1996 in which the neutral third party known as the arbitrator will decide the dispute on merits. An arbitration proceeding is commenced by issuing a notice to commence arbitration by one of the parties to the dispute, to the other party. Parties refer their dispute to one or more arbitrators. Decision of the arbitrator is an 'arbitral award' which is final and binding on the parties. If the parties agree to arbitration then the provisions of AC Act, 1996 will apply and the case will go outside the stream of the court. The court will, in such a case, make a short order referring to the nature of the dispute, the agreement between the parties, the name of the arbitrator; take their consent on record or allow the parties to sign the order and refer the case to the arbitrator. An arbitral award can be appealed against in a civil court. This makes the case go back to the adversarial process. Usually, Commercial agreements have arbitration clauses wherein the parties agree to resort to an arbitration process in case of disputes that may arise in future regarding the contract terms and conditions.

Conciliation-

Conciliation is recognised under Arbitration and Conciliation Act, 1996. If both the parties to the dispute agree to have negotiations with the help of the third party either by an agreement or by the process of invitation and acceptance which is mentioned in section 62 of A&C Act followed by appointment of conciliator(s) as provided in section 64 of AC Act,1996.

Conciliation is a non-binding procedure and its outcome does not necessarily result in a binding agreement. If parties arrive at a settlement, the settlement agreement signed by them, authenticated by the conciliator, is binding in the same way as the decision of the court. The settlement with the help of the conciliator has the same status and effect as if it is an arbitral award on the substance of a dispute given by an arbitral tribunal. If there is no settlement, the matter returns to the court for framing of issues and trial.

Lok Adalat-

Lok Adalat means “people’s court”.Lok Adalat included conciliation and negotiation methods together for the resolution of disputes. In Lok Adalat, the retired or sitting judge will help the parties to come to a settlement. The reference to lok adalat does not require consent of the parties. If the court is satisfied that the issues are not complicated and there is an element of settlement,may refer the case to the lok adalat.

The court should make a short order recording its satisfaction that the nature of dispute is not complicated and can easily be sorted. A lok adalat under section 20 of Legal Service Authority Act, 1987 determines a reference on the basis of a compromise or settlement between the parties at its instance , and puts its seal of confirmation by making an award in terms of the compromise or settlement. Lok Adalat cannot decide the case on merits; it facilitates the parties to come to a settlement. Lok Adalat can pass an award on the basis of settlement of the parties and Lok Adalat’s award becomes final and binding to the parties. If the Lok Adalat is unable to settle the referred case then, it sends back the case to the same court for further hearings from which the reference was received..If there is no settlement on the dispute which has reached the Lok Adalat at the first instance then, Lok Adalat must advise the parties to approach appropriate court for getting their remedies.

In Venkatesh v. Oriental Insurance Co. Ltd.,Karnataka High Court had given the affirmative answer to the following questions-

i)Whether the pending disputes can be referred to Lok Adalat by the Court on its own

motion or not?

ii) Whether the consent of all parties was necessary or not for the Lok Adalat referral by a Civil Court?

The Hon'ble High Court observed-"a Court can suo-moto or at the request of even one of the parties, refer the case to the Lok Adalat provided that it is done after giving a hearing to all parties and it is satisfied that there are chances of settlement or that the case is a fit one to be taken cognizance by the Lok Adalat, and records such satisfaction.

In Kamal Mehta v General Manager, Rajasthan Roadways Transport Corporation and Anr., FAO No. 798 of 1999 ,Rajasthan Roadways Transport Corporation,Punjab and Haryana High Court observed that Lok Adalat can pass an award in a dispute upon the basis of the compromise between the parties; it cannot transgression the powers of the court and pass an award on merits.

Mediation-

It is a process of resolving disputes between the parties outside the court of law by a neutral person (mediator) in a peaceful and amicable manner. Mediation helps in identifying the issues of conflicts, disagreements and the possible solutions i.e. the way by which it can be resolved. Mediation is more expeditious and less costly as it utilizes less formal procedures than litigation. Mediator works with the parties to a dispute to bring them to a mutually acceptable agreement. He does not decide the dispute or give an award. He is only a facilitator and incharge of the process of mediation. It is purely a voluntary process in which the parties can move or opt out at any time. But once the agreement is reached, signed and is accepted by the Court, it is enforceable in law by the court.

The court annexed and court referred mediation centres have been established in almost all the high courts and district courts. The agreement reached comes to the court and may be accepted with or without modifications, which the court may suggest and to which the parties may agree.

On the acceptance of the agreement, it becomes binding on the parties under Order 23 Rule 1 CPC against which no appeal shall lie. The agreement may be vitiated only in case of misrepresentation or fraud.

The Family Courts Act also encourages the resolution of the matrimonial dispute through conciliation and mediation.The preamble of Family Courts Act, 1984 states that the purpose of establishing family courts for promoting conciliation in matrimonial disputes and ensuring the speedy disposal of the matrimonial disputes.

Judicial Settlement-

The court may at the stage of Section 89 or Order X Rule 1A,1B,1C, looking at the nature of dispute and on being satisfied that there are elements of settlement, refer the dispute for judicial settlement. The judicial officer to whom the case is referred shall make efforts for settlement between the parties and follow such procedures as may be prescribed.

Section 89 is an effective method to resolve the dispute between the Parties. The objective has been to reduce the burden of the court , ensure a compromise is arrived at between the parties and move towards a speedier method of administering justice.

In Afcons Infrastructure Ltd. vs. Cherian Varkey Construction Co. (P) LTD [2010] 8 SCC 24, Apex court has further laid down some detailed guidelines especially, on the referral of the dispute to each ADR mechanism and which kind of civil dispute can be referred under Section 89. In this case, the court held that if the dispute is going to be referred to arbitration or conciliation then, both parties must give their consent; whereas, if the dispute is going to be referred to mediation or Lok Adalat then, there is no requirement of the parties consent. In this case, the apex court also lists out the disputes which are capable and non-capable of settlement through ADR mechanisms.

Obstacle in Implementation of section 89 of CPC-

● Lack of Knowledge about ADR mechanism among the litigants. Advocates are not promoting ADR effectively which creates lack of willingness among the litigants or clients to pursue their case through these processes.

● Lack of expertise among advocates to take the ADR route. Advocates should be properly trained about the ADR mechanism.

Efforts should be made to spread awareness among people regarding Alternative Dispute Resolution. Awareness programs can be planned specifically for Litigants and the common public. Proper training must be provided to Advocates and judges about various new forms of ADR mechanisms and their importance.

In case H V Venkatesh Vs Oriental Insurance Company Limited And Ors 1,Justice R.V. Raveendran and K.L. Manjunath explained the importance of ADR and mandatory ADR referral of disputes -

“With the gradual growth in the number of laws and number of litigations, without a proportionate increase in the number of Courts, a stage has reached where the Courts are choked with cases. Delay has now virtually become a part of the judicial process. In commercial litigation, the delay can destroy businesses. In family disputes, the delay can destroy physical and mental health turning litigants into nervous wrecks. Long pendency leads to frustration and desperation. The delay, uncertainty about the final outcome, changes in-laws during the pendency of the cases, and the expenditure of time, energy and money during the period of litigation,take their toll on the patience of litigants and erode the confidence in the rule of law and the justice delivery system.When memories of litigation tend to be unpleasant and harsh, there is a tendency on the part of the litigant to avoid approaching the Courts, for relief, but seek remedy outside the legal framework. In this background, it became necessary to seriously consider the need to encourage alternative dispute resolution methods."

It can be concluded that the traditional adversarial justice system is overburdened with a backlog of cases. To deal with these pending cases, ADR can be a helpful mechanism. ADR is complementary to the Adversarial System of Justice as it reduces the burden of courts and provides speedy access to justice. Litigation is expensive and time consuming. In the Adversarial Legal System, Lawyers are more concerned about winning the case irrespective of whether or not justice has been delivered, which leads to further conflicts among the Parties.

Approaching a court can be a tiring process as court procedures are very formalised and cumbersome and courts are overburdened with cases. Litigation can be costly and parties have to wait for years to get final decisions due to a series of adjournments, appeals, revision and review petitions. Hence, various ADR mechanisms have evolved for quick resolution of disputes which helps parties to avoid costly and time consuming litigation.

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