Litigation vs.

Alternative Dispute Resolution

Litigation refers to lawsuits; the process of filing claims in court, and ultimately going to trial.

Alternative Dispute Resolution is any other formal or informal process for settling disputes

without going to trial.

Meaning of Alternate Dispute Resolution:

• According to Black’s Law Dictionary Alternate Dispute Resolution, is a procedure for settling a dispute by means other than litigation, such as arbitration, mediation or mini-trial.

Purpose of Alternate Dispute Resolution:

In essence the system of ADR emphasizes upon:

1. Mediation rather than winner take all;

2. Increasing Accessibility to justice;

3. Improving efficiency;

4. Reducing Court delays and

5. Cutting costs of litigation.

Key Objective of ADR:• Litigants are in fact encouraged to resort

to alternative dispute resolution, so that the actual court systems would be left with a smaller number of important disputes that demand judicial attention, and other simple civil/commercial disputes could be decided through ADR.

• The main purpose of the idea was to ensure quicker trial by reducing backlog of court cases.

Modes of ADR:

• Arbitration • Conciliation• Mediation• Negotiation• Mini Trial• Fast Track Arbitration• Lok Adalat• Ombudsman• Tribunals

Benefits of ADR:

• Speed • Economy of Cost• Expertise• Restores Good Relations between Disputing

Parties• ADR System Is Devoid Of Corruption.• Confidentiality• Choice of Decision Maker• ADR Helps In Clearing Bottle Necks In

Litigation

Loop holes in ADR:

• Even Where Beneficial, Parties Cannot be compelled to go in for ADR.

• ADR Decisions Lack the Force of a Precedent

• Outcome of ADR May Not Be Similar In Similar Circumstances

• An Incompetent Mediator Can Defeat the Purpose of ADR

• Extra Cost Where ADR Is Unsuccessful

Key ADR Mechanisms (Definitions):

• Arbitration: Is a method of dispute resolution involving one or more neutral third parties who are usually agreed to by the disputing parties and whose decision is binding. – Neutral person (arbitrator) is involved.– Arbitrator does render a binding decision.– Arbitration may be mandatory, if chosen in

advance as the method for dispute resolution.

Mediation: Is a method of non-binding dispute resolution involving a neutral third party, who tries to assist the disputing parties to reach a mutually agreeable solution.

– Neutral person (mediator) attempts to get

parties to reach a voluntary settlement.– Mediation may be ordered by a judge.– Mediator does not render a decision.

Conciliation: Is a settlement of a dispute in an agreeable manner. It is a process in which a neutral person meets with a party to dispute and explores how the dispute might be resolved.

- the Conciliator tries to promote discussion between the parties to a dispute with a view to bring an amicable settlement between them.

Negotiation: consists of a mutual discussion by the parties of their dispute or difference, with a view to find out as to how best they can settle their disputes.

– Parties make offers and counter-offers for settlements.

– May be face-to-face or through lawyers.

Gist of Land Mark Cases where Court’s have Encouraged ADR:

1. In Bhasheer vs. Kerala State Housing Board (AIR 2005 Ker AIR 2005 Ker64)

• Held: Hon’ble Justice K. Padmanabhan Nair opined that, it must be ensured that in developing countries most of the cases are resolved by ADR mechanism of Arbitration, Conciliation and Mediation.

2. In PT Thomas vs. Thomas Job (AIR 2005 SC 3575)

• Held: That the experiment of Lok-Adalat, as an alternate mode of dispute settlement has come to be accepted in India as a viable, economic, efficient and informal one.

3. In Salem Advocate Bar Association Tamil Nadu vs. UOI (AIR 2003(1) SCW 46272003(1) SCW 4627

• Held: That, keeping in mind the law delays and the limited number of judges, which are available, it has now become imperative that resort should be had to ADR, with a view to bring an end to litigation at an early date.

Arbitration & Conciliation Act, 1996.

• Meaning of Arbitration as Defined u/s 2(1)(a)

- it covers any arbitration whether it is administered by any permanent arbitral institution or not .

- It also covers arbitration based on voluntary agreement by the private parties

or by operation of law.

- The act does not provide definition of word Arbitration

• But its literally recognized meaning is settlement´ of differences or disputes by mutual understanding or agreement by the parties where the rights and liabilities of the parties are adjudicated which are binding on them, such settlement may be before the arbitral tribunal but not by the court of law.

• However, the definition in section 2(1)(a) of the said Act is merely a clarification that the Act covers institutional and ad-hoc arbitration.

• This definition is based on the definition mentioned in clause (a) of article 2 of UNCITRAL model law.  According to that provision, the expression³arbitration´ is defined as under:-

• Arbitration´ is the means by which the parties to dispute get the matter settled through the intervention of an agreed third person.

• Arbitration is a process that is carried out pursuant to an agreement to arbitrate the disputed matter 

Meaning of Arbitration:

• According to Bombay high court the object of arbitration is to decide a dispute, which has arisen.

• According to Halsbury - Arbitration ´means the reference of dispute or difference between not less than two parties , for determination, after hearing both sides in a judicial manner , by a person or persons other than a court of competent jurisdiction.´

Meaning of Conciliation:• Part 3 of the act deals with conciliation.

Conciliation means settling of disputes without litigation. Conciliation is the process by which discussion between parties is kept going through the participation of the conciliator.

• The main difference between arbitration and conciliation is that in arbitration proceedings the award is the decision of arbitral tribunal; while in the case of  conciliation the decision is that of the parties arrived at with the assistance of  the conciliator.

• The Parties are at liberty to evolve their own procedure of conciliation for negotiating and arriving at settlement of disputes. It is only when no such agreement or procedure has been evolved by the parties that the parties that the provisions of part 3 of the act are invoked and made applicable.

Meaning of Mediation• Mediation is most frequently adopted ADR

technique. It contemplates the appointment and intervention of neutral third person who helps the parties to reach a negotiated settlement. He does not have the power to adjudicate or impose an award. It is conducted on a confidential basis and without prejudice to the legal rights and remedies of the parties. The process may have to pass through several stages like preparation, joint sessions, private meetings and final result.

Meaning of Negotiation:• It is the simplest means for Redressal of

disputes. In this mode the parties begin their talk without interference of any third person. The aim of negotiation is the settlement of disputes by exchange views and issues concerning the parties. There is an ample opportunity for presentation of case in this mode of redressal. If there is an understanding and element of patience between the parties; this mode of redressal of dispute is the simplest and most economical.

• Negotiation is a communication process used to put deals together or resolve conflicts. It is a voluntary, non binding process in which the parties control the outcome as well as the procedures by which they will make an agreement. Because most parties place very few limitations on the negotiation process; it allows for a wide range of possible solutions maximizing possible ……..

Conciliation vis-à-vis Arbitration• Though like arbitration, conciliation is also

another means of settling disputes, they two differ in many vital aspects.

• The only similarity that appears between the two is that a third person is chosen or nominated by the parties to resolve their disputes. The main points of difference between arbitration and conciliation may be stated as follows:-1. The method of conciliation is generally applicable to existing disputes, while the mode of arbitration is available for existing as well as for the future disputes.

Conciliation vis-à-vis Arbitration

2. For adopting the method of conciliation, there is no need for a prior agreement for resorting to this method, but in arbitration a prior agreement for arbitration between the parties is required.

3. The pre-agreement in arbitration must be in writing but since no pre-agreements are required in conciliation, there is no such binding in the case of conciliation.

Conciliation vis-à-vis Arbitration4. The conciliation proceedings start by sending a

written invitation and a written acceptance thereof in between the parties. - The invitation may be accepted or rejected by the other party as it has no binding effect, being an invitation only.

- The prior written agreement in arbitration commands a binding effect upon the parties and its breach by resorting to court, compels court to refer the matter to the arbitration and parties are bound by the arbitral agreement.

Conciliation vis-à-vis Arbitration

5. While conciliation proceedings are in progress - there is a bar on parties from initiating arbitral or judicial proceedings as per section 77 of the new Act 1996. - In arbitration, he arbitral agreement itself suggest for redressal of disputes through arbitration and if any party approaches court, the other party may request the court to refer the matter to arbitration and court is bound to refer such matter to the arbitral Tribunal.

Conciliation vis-à-vis Arbitration

6. Where parties fail to determine the number of arbitrators/conciliators, the Act envisages odd number of arbitrators or sole arbitrator/ conciliator. Parties may agree for two or three conciliators and maximum number of conciliators cannot exceed three. - Where the number of conciliators is more than one, they as a matter of general rule should act jointly. Parties may seek assistance in appointment of conciliators, the assistance of any suitable institution or person.

Conciliation vis-à-vis Arbitration

6.In case of arbitrators there is no bar on their maximum number but the total should not be even number. When parties agree for three arbitrators, each party shall appoint one and these two shall appoint the third arbitrator who shall be presiding arbitrator.

7. While the role of conciliator is to help and assist the parties to reach an amicable settlement of their dispute, the arbitrator does not merely assist the parties but heal so actively arbitrates and resolves the dispute by making an arbitral award.

Conciliation vis-à-vis Arbitration

8. In case of conciliation a party may require the conciliator to keep the factual information confidential and not disclose it to the other party, but it is not so in arbitration as the information given by a party is subjected to scrutiny by the other party. Thus there is no question of confidentiality in case of arbitration awards.

9. A settlement agreement may be made by the parties themselves and the conciliator shall authenticate the same. An arbitration award on other hand is not merely a settlement agreement but it is judgment duly signed by the arbitrator.

Conciliation vis-à-vis Arbitration

10. The conciliation proceedings may be unilaterally terminated by a written declaration by a party to the other party and the conciliator, but arbitration proceedings cannot be so terminated.

11. Conciliator is subjected to certain disabilities under section 80 of the act and he cannot act as

a arbitrator or as a council or a witness in any arbitral or judicial proceedings but there is no such disabilities imposed on an arbitrator or parties to arbitral proceedings.

Conciliation vis-à-vis Arbitration

12. The arbitration proceedings or awards may be used as evidence in any judicial proceedings but the conciliation proceedings cannot be used as evidence in any arbitral or judicial proceedings.

13. Last but not the least, an arbitrator has to decide according to law , but a conciliator can conciliate irrespective of law.

Conciliation vis-à-vis Mediation • Though conciliation and mediation appear to be

similar in interchangeable terms, there is subtle difference between the two:

1. The power of conciliator is larger under the Arbitration and Conciliation Act and - whereas the powers of the mediator are too limited as he can only suggest proposals for the settlement.

2. The conciliator can make proposals for settlement, formulate or reformulate the terms of a possible settlement - whereas a mediator would merely facilitate a settlement between the parties.

2. In Mediation a mediator, who is neutral and intermediary, plays an active role by working out compromise formulas after hearing both the parties.

But in case of conciliation, the role of conciliator, who also plays the role of neutral intermediary, is to bring the parties together in a frame of mind to forget their animosities and prepare them for a compromise by adopting amid way approach which may be acceptable to both the parties in dispute.

Thus, a conciliator is an active participant in bridging the gulf between the parties and to suggest solution which is acceptable to the parties

Mediation vis-à-vis Arbitration 1. In the process of mediation there is a act of

third party relating to settling of disputes between two contending parties. Whereas arbitration is governed by the arbitration agreement wherein an arbitrator is nominated by the parties.

2. Arbitral award made in conclusion of the arbitral proceedings is binding on the parties to the arbitration, whereas settlement arrived at the end of mediation does not have such binding effect on the parties.

3. The decision of an arbitrator is known as award´. Whereas the decision of a mediator is known as a settlement´.

Mediation vis-à-vis Arbitration

4. The procedure of arbitration is based on the ordinary rule i.e. relevant arbitration law and procedure laid down in the arbitration agreement. Applicability of any such rule is minimal in case of mediation.

5. An arbitration award is treated as a decree and can be enforced legally but the settlement arrived at as a result of mediation is not legally enforceable. Thus, the terms of settlement may be accepted or rejected by the contending parties.

Difference between Negotiation and others

1. In negotiation, there is no interference of the third parties. Whereas in the arbitration and conciliation there is third party who acts as arbitrator and conciliator to settle the disputes between the parties.

2. The arbitral proceedings and award can be used as evidence in judicial proceedings but the negotiation proceedings cannot be used as evidence anywhere.

3. In the arbitration proceedings there is a procedure laid down under the act for the commencement of the proceedings but in negotiation the parties to dispute on their own motion start a process of negotiations through correspondence to find the mutually acceptable solution of the problem.

4. In the arbitration the award is given by the arbitrator and has a binding effect upon the parties but in the negotiation process there is compromise between the parties by mutual understanding and has no binding effect upon on the parties.

5. In the negotiation proceedings the parties will reach to compromise agreement with the mutual understanding but in the arbitration there is not a settlement agreement, there is judgment or award duly signed by the arbitrator.

Conclusion:• “Not even Invading Armies can Stop an Idea

whose Time has come”.• The time for Alternate Dispute Resolution, as a

means to assist regular court litigation has arrived. The Concept of resolution of disputes through modes other than ,those involving time consuming technical procedures ,though initially started on an experimental basis ,has in fact gained immense popularity. The growing spurt in the establishment of a number of mediation and conciliation centers at various High Courts and Lower Courts stands as a testimony to the success of this overtly popular phenomenon.

• Thus it would not be wrong to summarize that “In true sense of the term alternate dispute resolution has emerged as a lifesaving pill for our ailing judicial system. To say the least “The Era of Alternate Dispute Resolution” has dawned on our societies.

• So from the above discussion we can conclude that arbitration, conciliation, mediation & negotiation are the means of settlement of disputes between the disputed parties. Though these modes appear similar in certain aspects but there are certain differences between these modes.

• The main aim is to provide the redressal system to the parties.