Lesson 15: Alternate Dispute Resolution Mechanism

Section 1: The Judicial Backlog and the Need for ADR Mechanisms

Core Concept & Simple Definition

Alternative Dispute Resolution (ADR) refers to those methods of resolving disputes that serve as alternatives to litigation in regular courts, offering decision-making processes that do not involve court trials or violence.

Clear Explanation in Basic Words

Under the Constitution of India, protection of life and personal liberty is provided through a structured hierarchy of courts. The Supreme Court of India stands at the apex of the entire judicial system, followed by High Courts for each State or group of States (such as Punjab and Haryana sharing a High Court at Chandigarh, and the seven North Eastern States being under the Guwahati High Court), beneath which lies a hierarchy of subordinate courts. However, traditional court litigation—which means to fight a case in a court of law—is highly technical, formal, extremely expensive, and plagued by severe delays.

Parties to a dispute often wait for justice for years. On 25th February 2002, the then Union Law Minister Mr. Arun Jaitley informed Parliament that as many as two crores and thirty-four lakh cases were lying pending in various Indian courts for final disposition. Participating in regular civil suits is exhausting, expensive (court fees, lawyers' fees, document copies, repeated travel), damages human relationships, and causes emotional stress. The weaknesses of this court system created the urgent necessity for alternative remedies that provide cheap, expeditious, and consensual justice outside crowded courtrooms.

Historical Roots and Ancient Lineage

Alternative Dispute Resolution is not an entirely foreign concept to India. Arbitration was very popular and prevalent in ancient India, where community disputes were referred to traditional Panchayats. The binding decisions delivered by these Panchayats were called Awards. Today, arbitral institutions and statutory ADR forums modernise this ancient practice to promote direct communication between parties, allowing them to solve their underlying concerns amicably.

Why the Concept Matters

Significance: ADR relieves regular courts of the heavy burden of petty civil cases so judges can dedicate their valuable time to serious, heinous criminal cases that pose grave threats to society. Furthermore, in India, where millions of citizens are poor or illiterate, ADR provides a vital boon for securing affordable and speedy justice without incurring state expenditure funded by taxpayers.

Section 2: Primary Consensual ADR Techniques: Conciliation, Mediation, and Negotiation

Core Concept & Simple Definition

Consensual ADR comprises non-adjudicatory dispute settlement procedures—chiefly Conciliation, Mediation, and Negotiation—where parties retain control over the outcome and work voluntarily toward an amicable compromise.

Conciliation

Conciliation is a voluntary and non-binding process in which an independent third person, called a Conciliator, assists the disputing parties in resolving their dispute by agreement. Key statutory and procedural features include:

• Appointment & Role: Appointed by mutual consent of both parties, or referred directly by a Civil Court. The Conciliator solemnly urges the parties toward an amicable reconciliation.
• Expression of Opinion: A Conciliator may assist by expressing an opinion to the parties regarding the merits of the dispute to help them arrive at a fair settlement.
• Absence of Judicial Formality: The Conciliator does not make any binding decision. No evidence is formally recorded, nor are legal arguments heard.
• Confidentiality & Termination: All discussions before the Conciliator are completely confidential and have no legal bearing on court or arbitration proceedings. Any party may terminate conciliation at any time without assigning any reason.

Mediation

Mediation is a process for resolving a dispute with the aid of an independent third person, called a Mediator, who assists the parties to reach a negotiated resolution. The mediator represents an acceptable intervention of a neutral party who has absolutely no authority to make a decision.

Pre-Trial Mediation under Section 89 CPC

Introduced by the Amendment Act of 2002 into Section 89 of The Code of Civil Procedure, 1908, Pre-Trial Mediation enables civil courts to refer parties to alternate settlement mechanisms before the commencement of formal court trials. It plays a significant role in family matters, preserving relationships and resolving disputes before domestic bitterness deepens.

Negotiation and Settlement in Criminal Law

Negotiation is the most common form of ADR where parties discuss issues directly, cooperate, and bargain for mutual advantage without necessarily involving a third party. When successful, the parties execute a binding settlement agreement. While ADR primarily governs civil suits, Indian procedural criminal law also allows for settling trivial criminal cases:

1. Compounding Offences (Section 320 CrPC, 1973): Permits the compromise of specified petty criminal cases, legally termed as "compounded".
2. Plea Bargaining (Section 265A CrPC, 1973): Allows an accused person who is willing to plead guilty to negotiate a mutually satisfactory disposition and compromise the case with the victim, subject to mandatory court approval.

Section 3: Adjudicatory ADR: Arbitration, Med-Arb, Medola, and Mini-Trial

Core Concept & Simple Definition

Arbitration is an adjudicatory ADR mechanism where disputing parties execute an agreement to refer their differences to one or more impartial persons who decide the matter in a judicial manner after recording evidence.

Arbitration Agreement, Tribunal, and the Award

The foundation of this process is an Arbitration Agreement—a contract wherein two or more persons agree that their existing or potential dispute shall be decided in a legally binding manner by impartial arbitrators. Key procedural attributes described in the textbook include:

• Appointment & The Umpire: The person conducting proceedings is the Arbitrator, appointed by the consent of the parties (or by the Court if parties fail to agree). Where more than one arbitrator is appointed, the leading arbitrator is designated as the Umpire, who is responsible for conducting proceedings.
• Odd Number Rule & Majority: The number of arbitrators on a tribunal can only be an odd number. Decisions are reached by majority vote.
• The Arbitral Award: The formal decision rendered by the Arbitrator or Arbitral Tribunal is called an Award. The Award is legally binding on the parties and enforceable by regular civil courts. There is no appeal against the Award.

Five Non-Arbitrable Categories of Disputes

Virtually all civil disputes can be submitted to arbitration unless explicitly barred by law. Under the textbook, the following five specific categories cannot be decided by arbitration:

1. Matters involving criminal questions or questions of public law;
2. Matrimonial matters (such as divorce, maintenance, or custody of children);
3. Insolvency matters (such as declaring a person as an insolvent);
4. Dissolution of an incorporated company; and
5. Disputes relating to age.

Specialized Hybrid ADR Techniques

• Med-Arbitration: A technique where a dispute unresolved by conciliation is referred to an authorized third person whose decision is binding. It is an informal, unofficial reference not governed by the Arbitration Act.
• Medola: Used when an arbitrator finds it impossible to reach an agreement. A negotiating person replaces the arbitrator, acts without bias, seeks a middle course during discussions, and attempts to secure an agreement that is binding on the disputing parties.
• Mini-Trial: An elected independent person hears the contentions, arguments, and evidence presented by both sides and produces a reasoned "Conclusion" on which both parties agree.

Section 4: The People's Court: Lok Adalat and Permanent Lok Adalat

Core Concept & Simple Definition

Lok Adalat (People's Court) is an indigenous, voluntary, and conciliatory dispute resolution forum monitored by the judiciary to provide cheap, speedy, and consensual justice for petty and pending matters.

Origin, Evolution, and Financial Model

Camps of Lok Adalats were initially started in the State of Gujarat in 1982 and subsequently expanded across the entire nation. Lok Adalats are organized with financial assistance from the Government of India and monitored directly by the Judiciary. They represent the most popular ADR technique in India.

Statutory Recognition under the Legal Services Authorities Act, 1987

Lok Adalats were conferred statutory standing under Section 19 of the Legal Services Authorities Act, 1987. Crucial statutory features include:

• Deemed Civil Court Decree: Under Section 21 of the Act, every Award passed by a Lok Adalat is legally deemed to be a decree of a civil court (or an order of any other civil court).
• Refund of Court Fees: When a compromise or settlement is arrived at before a Lok Adalat, the entire court fee paid by the parties is fully refunded. A similar refund applies to cases settled in court-referred mediation cells.
• Finality: Since an Award is based on voluntary compromise, no appeal lies against a Lok Adalat award.

Permanent Lok Adalats (Section 22-A)

Established through the Legal Services Authorities (Amendment) Act, 2002, Permanent Lok Adalats provide a permanent institutional mechanism for resolving disputes concerning Public Utility Services (detailed under Section 22-C). A Permanent Lok Adalat consists of one Chairman and five other members.

Section 5: Constitutional Mandate & The Legal Services Authorities Act

Core Concept & Simple Definition

The Legal Services Authorities Act, 1987 (enacted and implemented as the amended Act of 1994) translates the constitutional directive of equal justice and free legal aid into a functional nationwide statutory framework.

Constitutional Grounding: Article 39-A

The foundational bedrock of the Act is Article 39-A of the Constitution of India, which mandates that the State shall ensure the legal system promotes justice on a basis of equal opportunity. It directs that no citizen shall be denied justice merely by reason of economic poverty or other disabilities. This mandate requires the state to provide free legal aid through suitable legislation.

Six-Tier Institutional Structure under the 1994 Amendment Act

1. National Legal Services Authority (NALSA) [Section 3]: Apex body responsible for formulating effective legal aid policies, promoting mediation, and funding legal awareness. The Chief Justice of India serves as its Main Guardian, assisted by a Working Chairman appointed by the President in consultation with the CJI.
2. State Legal Services Authority (SLSA) [Section 6]: Established in every State. The Chief Justice of the High Court is its Main Guardian. Its Working Chairman is appointed by the Governor in consultation with the High Court Chief Justice. It organizes Lok Adalats and implements NALSA guidelines.
3. District Legal Services Authority (DLSA) [Section 9]: Established in every administrative District. The District Judge serves as its Chairman. It coordinates block-level committees and organizes district Lok Adalats.
4. Supreme Court Legal Aid Committee [Section 3-A]: Chaired by a sitting presiding Judge of the Supreme Court to provide legal aid and organize Lok Adalats for cases pending in the apex court.
5. High Court Legal Aid Committee [Section 8-A]: Chaired by a sitting Judge of the High Court for organizing Lok Adalats and expediting disposal of High Court cases.
6. District/Block Legal Service Committees [Section 11-A]: Operates at the grassroots taluk/block level under the chairmanship of the Senior Civil Judge of the area.

Statutory Legal Aid Funds & Entitlement

Dedicated funds—the National Legal Aid Fund (Section 15), State Legal Aid Fund (Section 16), and District Legal Aid Fund (Section 17)—are established to finance legal aid programs. Under Section 12 of the Act, weaker sections of society are granted statutory eligibility for free legal aid, ensuring access to justice regardless of financial standing.