Alternative Dispute Resolution

Discourage litigation. Persuade your neighbours to compromise whenever you can.

Point out to them how the nominal winner is often a real loser in fees, expenses and
waste of time” - Abraham Lincoln

Introduction
Disputes arise because of perceived differences in interests. If there is an interaction
between two or more people or companies, and one person believes that his or her
interests are not identical to those of the others, there will be a dispute. People or
companies who have a contractual relation or who are engaged in a dispute are
traditionally referred to as "parties".
Several methods are available for resolving disputes between two parties. Most
common and highly established method is through the courts. This method of dispute
resolution becomes more effective when the disputing parties are from the same
country. However, with the opening up of the economies all over the world and
globalization in general, the interaction between people and companies, from different
parts of the world and with converging interests, has increased. This increased
interaction, in the form of joint ventures, contracts, agreements, between individuals and
parties, brings forth issues that can be termed as disputes and need resolving .

The option available to the parties is to go to the domestic courts of either country for
the resolution of that dispute. This approach, though, has its share of problems-not only
in reaching a verdict but also in its enforcement. The first is the jurisdiction of the courts;
the laws relating to jurisdiction of courts in a country are not made keeping in view the
transnational disputes. The other difficulty is dissimilarity in the legal system of two
countries, such as common law system in one country and civil law system in another.
In-spite-of tremendous work done by many international organisations, uniformity of
different legal systems is still a distant dream. The next constraint is the choice of law
applicable to the agreement and the consequential dispute between the parties.
Availability of assets of the defendant in that jurisdiction is also a consideration for the
purpose. The reason being, that the enforcement of the judgement in any other
jurisdiction may be a prolonged and cumbersome process. In most of the cases the
absence of a treaty for the enforcement of foreign judgements between countries may
render the judgement worthless.

Apart from these difficulties, conventional difficulties, like undue delay in the
dispensation of justice, complicated procedural formalities, transportation of entire
evidence and witnesses from one country to the other country, high cost of litigation,
judicial imperfection, etc., cannot be ignored. It is for these reasons that companies and
organizations have been exploring various alternatives to litigation to solve their
disputes.
The term "Alternative Dispute Resolution" or "ADR" is often used to describe this
wide variety of dispute resolution mechanisms that are short of, or alternative to, full-
scale court processes. The term can refer to everything from facilitated settlement
negotiations in which disputants are encouraged to negotiate directly with each other
prior to some other legal process, to arbitration systems or mini trials that look and feel
very much like a courtroom process.

According to the John Murdoch & Will Hughes (1993 cited in Brown and Marriott, 2000,
p.342), ADR is based on the philosophy of empowering the disputants, putting them
back in control of their own dispute. In litigation the control of dispute resolution is out of
the parties and mainly on the lawyer and judges.

Some of well established alternatives to court adjudication are:-

1) Negotiation
2) Conciliation
3) Mediation
4) Mini-trials
5) Arbitration

Other than the above listed mechanisms of dispute resolution resorted to by the
business and corporate world, there are some other mechanisms, available in our
society, which have played important roles in establishing peace and justice for
centuries and are still functional and relevant. For example, the ‘villege Panchayat’
was, and still is, a forum for settlement of disputes in rural India. The ‘Khap’ panchayat
in Northern India is another highly influential and all pervasive dispute resolution
institution that cannot be given a miss here.

Advantages of ADR

1. Financial advantage – ADR mechanisms put less financial burden on disputing

parties since the process is focused and swift.

2. Duration of dispute resolution process is less- Time taken to solve a dispute

through the process of litigation may be much longer than through any of the ADR
methods.

3. Win-Win solution for both the disputing parties – ADR methods like mediation or
negotiation helps disputing parties find win-win solutions and achieve their real goals.
This, along with all of ADR’s other potential advantages, may increase the parties’
overall satisfaction with both the dispute resolution process and the outcome.

4. Ability to address the underlying issues for a dispute - If the case is referred to a
court, it will examine evidences and take a decision complying with the law of the land.
Judges do not address the underlying issues. But most of the ADR methods examine
and help resolve any underlying issues that need addressing.
5. Increased Control over the Process and the Outcome: In ADR, parties typically
play a greater role in shaping both the process and its outcome. In most ADR
processes, parties have higher opportunity to tell their side of the story than they do at
trial. Some ADR processes, such as mediation, allow the parties to fashion creative
resolutions that are not available in a trial.

6. Freedom to use professional knowledge to make decisions - ADR processes,

such as arbitration, allows the parties to choose an expert in a particular field to decide
on the dispute. Involvement of an expert helps in understanding the issues better and
the solution is more inclusive.

7. Privacy and confidentiality - Arbitration, Mediation and other forms of ADR are not
open to public scrutiny like disputes settled in court. This helps to preserve positive
working relationships between the disputing parties.

The Limitations of ADR

Although ADR programs can play an important role in many situations, they are
ineffective, and perhaps even counterproductive, in serving some goals related to rule
of law initiatives. In particular, ADR is not an effective means to:

1. Define, establish and promote a legal framework - ADR programs do not set
precedent, refine legal norms, or establish broad community or national standards, nor
do they promote a consistent application of legal rules. Individual cases are solved case
to case basis and the results are private and rarely published.
.
2. Redress pervasive injustice or discrimination - ADR systems often reflect the
accepted norms i.e. the decisions or solutions generally confirm to the customs and
traditions of the society. These norms may include discrimination against certain groups
and populations.

3. Resolve disputes between parties with gross inequality - ADR programs do not
work well in the context of extreme power imbalance between parties.

4. Resolve cases that require public sanction - Since the results of ADR methods
are generally not made public, ADR settlements do not have any educational, punitive,
or deterrent effect on the population.

5. Resolve disputes involving multiple disputants - It is inappropriate or rather

ineffective to use ADR to resolve multi-party cases in which some of the parties or
stakeholders do not or can not participate.
The ADR Options

1. Negotiation
Negotiation is a general discussion where the parties talk about the issue and reach
an agreement to resolve a conflict. Legal or illegal conflicts can be the subject of
negotiation. It is up to the parties how they negotiate and based on what grounds they
will reach a resolution. Negotiation sometimes reconfirms or changes the relationship
between the parties or their obligations and rights. Negotiation is the most modest form
of the dispute resolution methods. The parties may have a negotiator who represents
them. The negotiator representing the party or an organization does not have to be
neutral as arbitrators are supposed to be.

2. Conciliation
A process in which a third party meets with the disputants separately in an effort to
establish mutual understanding of the underlying causes of the dispute and thereby
promote settlement in a friendly, amicable manner. Often the first step, at times is
sufficient to resolve disputes. Conciliators do not necessarily have to be neutral. Since
their objective is to make the parties more open to negotiation, mediation and
arbitration, they put the highest priority on making an atmosphere that facilitates
conversation.

Confidentiality is an essential characteristic in Conciliators; conciliators do not reveal

any things to the other party. Also, if there any judicial precedents relevant to the
dispute, conciliators should advise parties regarding that. He may explore potential
solutions, provide technical assistant and improve communication between disputants.

3. Mediation
Mediation refers to the resolution of conflicts by a third party who tries to encourage
both parties to concede. It is a voluntary and informal process in which the disputing
parties select a neutral third party to assist them in reaching a mutually-acceptable
settlement. Unlike a judge or arbitrator, the mediator has no power to impose a solution
on the disputants; instead, the mediator assists them in shaping solutions to meet their
interests.

The mediator's role and the mediation process may vary significantly, depending on the
type of dispute and mediator's approach. Mediators can employ a wide-range of
techniques, e.g.: assist parties to communicate effectively and to develop a cooperative,
problem-solving attitude; identify parties' underlying interests; identify and narrow
issues; transmit messages between parties; explore possible options for agreement and
the consequences of non-settlement.

Unlike conciliation, where the conciliator does not take any decision and only facilitates
the disputant to reach an agreement, a mediator first facilitates disputants to reach an
agreement, if, however, they fail, the mediator will make recommendations to settle the
dispute based on his findings.

4. Arbitration

Arbitration is an out-of-court resolution process where a third party adopts and decides
a case. While a mediation decision becomes binding only when the parties choose to
accept it, all arbitration awards issued by a third party arbitrator are binding on the
parties. If a negotiation or mediation fails to reach a conclusion despite a period of
painstaking efforts, arbitration comes in to prevent the efficiency of society and the
productivity of an organization from declining. Arbitrators resolve conflicts by making
decisions based on evidence presented and proposals from the parties involved. It is up
to the parties concerned whether to accept arbitration, but once they do, the arbitration
award is enforceable.

In court-annexed arbitration, one or more arbitrators, usually lawyers, issue a non-

binding judgment on the merits after an expedited, adversarial hearing. The arbitrator's
decision addresses only the disputed legal issues and applies legal standards. Either
party may reject the non-binding ruling and proceed to trial.

5. Mini-trial

A voluntary process in which cases are heard by a panel of high-level principals from
the disputing sides with full settlement authority; a neutral may or may not oversee this
stage. First, parties have a summary hearing, each side presenting the essence of their
case. Each party thereby can learn the strengths and weaknesses of its own case, as
well as that of the other parties. Second, the panel of party representatives attempts to
resolve the dispute by negotiation. The neutral presider may offer his opinion about the
likely outcome in court.

Similarly, Court-based mini-trial is a procedure, generally reserved for large disputes

where a judge, magistrate or non-judicial neutral presides over a one- or two- day
hearing like that described above. If however, the negotiations fail, the parties proceed
to trial.