Alternative Dispute Resolution In India – Evolution And Advantages


As the title suggests, this article is written to highlight and document the evolution or the development of Alternative Dispute Resolution (popularly known as ADR) in India over time. While going through this journey, we will find out that ADR as a concept or medium of resolving disputes was never alien to a historically diverse country like India. In addition to this, we will discuss why ADR has become so popular and effective these days, what are its advantages which keeps parties attracted to it instead of going to courts, and what are the different forms in which they are practiced.

History of ADR And Its Development in India

Early India

To begin with, firstly it is important to define what is ADR? ADR, as stated earlier stands for Alternative Dispute Resolution which exactly as its name suggests is nothing but an alternative mode of sorting out disputes between two or more parties outside the premises of the court. All the impediments that come with a court room litigation are taken care of through this mechanism.

While we may think that ADR is something that was introduced in our country through our colonial masters, the truth is in a way exactly its opposite. In ancient India, when there were no courts or official institutions, the parties used to resolve their disputes privately in villages through the help of elders which were mostly learned and experienced men usually forming the panchayat or the council of village, this is what is known as Arbitration and is one of the forms of Alternative Dispute Resolution (ADR).

It was a British historian who said that “arbitration was something which as an ordinary feature of the ancient Indian life and prevailed through all works and ranks of people to a much larger extent than what was prevalent in England.”[1] The earliest known traces of arbitration come from the ‘Bhradarnayaka Upnishad’ which had mentioned different arbitral bodies like the Shrenis, the Kulas or the Pujas, these bodies which denote different clans and even trade corporations used to decide issues ranging from contract disputes, matrimonial or family disputes to even crime related issues.[2] Hence even in the times when our country was ruled by different kings, owing to the vast diversity of language, and culture, majority of the issues were dealt by people privately with the help of well-learned elders.

Advent of British

When the British came, apart from the establishments of courts and the creation of codes, they also institutionalized the concept of arbitration in India and the first step in this direction was the Bengal Resolution Act of 1772 and Regulation Act of 1771 which allowed the parties to submit their disputes to an independent arbiter and their verdicts were seen as binding on the parties. This can be seen as the first step taken by the British in the presidency towns to encourage arbitration in India.

Next came the Code of Civil Procedures, 1859 which was the first civil code of India and it contained Section 312 to 325 which dealt with the arbitration in suits while the Section 325 and 326 dealt with arbitration outside courts. It was repealed further in 1877, 1882 and finally in 1908 to give it the present form. The Code of Civil Procedures of 1908 stated that it was the duty of the courts to assist the parties in reaching an amicable solution through settlements outside courts.[3]

Another major Act specifically for the purpose of arbitration was the Arbitration Act of 1940 but still it required much assistance of the court and in the case of M/S Guru Nanak Foundation v. M/S Ratan Singh & Sons[4], the court observed that the Act was ineffective and defeated the very purpose for which it was enacted as it was riddled with delays and proceedings at every stage had become highly complex and technical. Hence the court stated that the Act should be less complex and more real with regard to the ground realities of the parties, in addition to this, it required a fast process with minimum court intervention in the matters. Another major problem with the Act was that it dealt with only domestic issues and did not talk about international disputes.

Independent India

The Industrial Dispute Act, 1947 became the first Act of modern India which recognized the importance of conciliation under the ambit of ADR when it provided a conciliatory mechanism for the workers and the management to resolve their disputes. In conciliation, unlike Arbitration, the neutral person does not decide for the parties but being an expert on the issue provides the parties with probable solutions to resolve a dispute.

In 1996 came the Arbitration and Conciliation Act which was an effort to modernize the 1940 Act. It also contained the provisions of the ‘Model Law’ which was adopted by the United Nations Commission on International Trade Law in order to homogenize international arbitration law for an efficient trade process. More importantly, it brought in several changes like minimum interference of the court in order to expedite the process of arbitration and conciliation. All this was done at a time when India had just started opening its doors for foreign investors and hence it became an important tool for attracting foreign investors to invest in India.

Apart from Arbitration and Conciliation, the Act also provided the scope of Mediation between the parties in which the neutral mediator does not decide for the parties and even may not be an expert on the matter but he/she acts as a facilitator thereby helping the parties to reach the solution among themselves without him/her giving any personal or professional advice. Hence their role is to make sure that the parties are able to understand the issues of each other in order to work a way out of them.

As already mentioned above, Justice through the village panchayats were always an important aspect of early India and the same was carried forward in Independent India. It not only made it easier for the locals to get justice but was also a much more effective way before going to a court as the local leaders or representatives like the sarpanch had a much deeper knowledge regarding the local people, their customs as well as issues.

However, this sometimes can also go the other way as caste prejudices also play a major role in most of the villages of India. To check this and also to make justice available easily to locals from the villages, another important step with respect to arbitration was the setting up of Lok Adalat for resolving the issues. It was Junagarh, Gujrat where the first Lok Adalat was set up. In Lok Adalat, issues are presided over generally by retired Judicial officers, experts in various fields as well as social workers. It is one of the forms of ADR based on the Gandhian Principles which helps local people coming from villages to get a cheaper and expeditious justice. After initiation in Junagarh, it went on to spread all over the country and was eventually given a statutory status through the Legal Services Authorities Act, 1987.

Under the Family Courts Act, 1984 it becomes the duty of the courts to try and solve the issues privately among parties. The Special Marriage Act and The Hindu Marriage Act also had scope for Reconciliation and Arbitration.

Advantages of Alternative Dispute Resolution

The advantages of Alternative Dispute Resolution are as follows –

1. One of the most prominent advantages of ADR is the speedy disposal of disputes in an effective manner. This concerns one of the worst problem of our courts which is inordinate and the vast amount of time take they take to resolve a dispute. ADR can help in saving all this valuable time.

2. Whether it is family matters or business relations, it is never desired to have any enemies, the concept of us versus them is finished in ADR as both the parties come towards a solution among themselves and in a friendly manner so that no ties are broken in the process forward.

3. Another important aspect of family and business matters are that in both of them, privacy and confidentiality are supreme. You don’t want everyone to know about your personal matters as a family or about your business operations as well as trade secrets as a company. All these interests remain protected in a personal setting as an ADR mechanism.

There are many other advantages of using different ADR mechanisms as against going to courts and hence it as a way of resolving any dispute continues to attract people and becomes even more important in this age of globalization as well as in times where privacy of one as an individual has become a thing of supreme importance and debate.

[1] Tewari, O.P, The Arbitration & Conciliation Act with Alternative Dispute Resolution, 4th Edition(2005) Reprint 2007, Allahabad Law Agency, Faridabad, pp. 2- 4

[2] O P Malhotra, Indu MalhotraLexis Nexis, The Law and Practice of Arbitration and Conciliation (2nd ed., 2006)

[3] Civil Procedure Code 1908, Order XXXII A Rule 3

[4] 1981 AIR 2075, 1982 SCR (1) 842

This article has been written by Harshvardhan Nathawat, B.A. LL.B student at NALSAR University of Law.

Also Read – Dispute Resolution in International Law

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