Critical Analysis of Alternate Dispute Resolution in India

Critical Analysis of Alternate Dispute Resolution u/s 89 of CPC for Settlement of Disputes Without Court's Intervention

Advent of Alternate Dispute Resolution (ADR)

With litigation overflowing in the courts, judgments taking several decades to be pronounced, ADR as well as ODR came like rays of light at the end of a dark tunnel. The very purpose of the development of ADR is to widen the ease and accessibility to justice. ADR has a number of mechanisms under its umbrella; namely arbitration, conciliation, mediation and Lok Adalats. These are different mechanisms of dispute resolution that are usually used by parties to resolve disputes. ADR gives flexibility to the parties to decide the location of the proceeding without getting confused with the application of the law. It gives convenience to parties that they can attend proceedings at their own ease. With several facilities such as deciding on dates, venue, time, etc. give ease to the parties where the parties can discuss the issue at hand freely with their lawyer without worrying about these things.

More and more jurisdictions are setting up their legal systems to bring ADR as well as ODR into the mainstream. Arbitration clauses in almost all commercial agreements are the new normal at the present. From increased use of ODR for small value disputes to having a systemic regime for enforcement of awards and settlement agreements from ADR and ODR. Arbitration and Conciliation Act, 1996 is the cornerstone as it enforces the awards given in arbitral proceedings in the Indian courts. The future of the enforcement aspect of ADR and ODR is pretty clear and has no turning back as more countries are bringing them into their legal regime. ADR strictly follows the principle of impartiality in all of its different mechanisms. Taking an instance, both parties either mutually decide the arbitrator for their dispute or nominate an arbitrator from both sides and the third one mutually. In mediation, the mediator is a neutral third party with no interest in the dispute.

ADR also ranks itself a runner up position as dispute resolution it has a lower cost to both parties with time efficiency in getting arbitration awards. In the future, with deeper penetration of the internet and with the need for timely resolution of disputes at a fairly lower cost, ADR and ODR check off this box. In times when the world was facing pandemic, ADR and ODR was a great help of Judiciary system as it considerably reduced the burden of Courts and gave ease to parties to dispute to resolve their matters during the hard times. The pandemic has made this mechanism of dispute resolution even more relevant because it checks off the list of resolving disputes without contacting any person physically at the convenience of staying at home and not rushing to any of the crowded premises. Find and contact arbitration and mediation lawyers near you.

Settlement of Disputes Without Court Intervention u/s 89 CPC

The legal position with regard to ADR practices was cleared in the case of Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd. where Arbitration was referred to as a means of ADR that is undertaken on account of a prior agreement between parties to resolve disputes by process of arbitration or by filing an application/joint memo before the court, the latter occurs in the case of no arbitration agreement beforehand. The award given by the Arbitrator i.e. the presiding officer, is binding as a decree of the court or any settlement arrived at by parties during arbitration proceedings is given the same effect as award given by the court. The purpose of Section 69 Court Fees and Suit Valuation Act, 1955 is to reward parties who have chosen to withdraw their litigations in favour of more conciliatory dispute settlement mechanisms, thus saving the time and resources of the Court, by enabling them to claim refund of the court fees deposited by them. Such refund of court fee, though it may not be connected to the substance of the dispute between the parties, is certainly an ancillary economic incentive for pushing them towards exploring alternative methods of dispute settlement.

It rewards the parties to dispute who have chosen to withdraw their litigations from courts, thereby, saving precious time of the court. In return, the courts by enabling the parties to claim refund of their court fees gives them an incentive for choosing an alternative method for dispute resolution. The High Court has observed in numerous cases that Section 69-A of the 1955 Act and Section 89 of the CPC should be interpreted in a liberal manner so as to include all the out of court dispute settlements. The object behind doing so was to recognise all the lawful methods used by parties who settle their disputes privately out of court, thereby saving court’s time. The Court held that there can’t be different treatment for the methods explicitly mentioned u/s 89 of CPC and the other lawful methods used by the parties to resolve dispute as the same would be violative of Article 14 of Indian Constitution.

The Supreme Court relied on the judgments Directorate of Enforcement v. Deepak Mahajan5 and Shailesh Dhairyawan v. Mohan Balkrishna Lulla and observed that section 89 of CPC exists to solve the dispute resolution problem of the parties outside the court by giving it a recognition. Further, in order to achieve the object of a legislation, it is important that is interpreted in a way that it actually solves the problem at hand. Therefore, it need to be moulded in a way that justice is achieved without any difficulty. Hence, a wider and purposive interpretation of sec. 89 of CPC read with sec. 69-A of the 1955 Act is needed. The Supreme Court taking reference from the decisions passed by various high courts across India, held that the purpose of Section 69-A of the 1955 Act is to provide a reward to parties who have chosen to withdraw their litigations to resolve it by an alternate method, thereby saving time and resources of the court. The refund of the court fees also acts as an ancillary economic incentive pushing the parties to settle the disputes amicably through alternative means. The parties to dispute who settle their matter amongst themselves without the help of court to arrange for a third-party institution are even more deserving of the benefit arising out of Section 69-A of the 1955 Act. The sole object is to further encourage the parties to resolve their disputes privately and reduce overloaded work of Indian Judiciary by providing for refund of court fees.

The Future of Alternate Dispute Resolution

ODR is a step towards development of ADR process. As the world is quickly changing into a digital world, the legal community as well needs to keep up with this aspect. The growth of online communication over last two decades have been immense, and in order to not become obsolete, ADR process needs to inculcate ODR. Online Dispute Resolution is one such innovation that ensures that the legal system would not become obsolete. It is the process of integrating technology to help facilitate alternative dispute resolution procedures, including arbitration, negotiation, and mediation.  Though ODR was developed in 1996, it has gained recognition in recent years as more people started using online services. ODR takes place in a variety of forms. For instance, a fully-automated negotiation is completely whereas, a simple monetary-focused claims are resolved using software algorithms. In ODR, the parties to the dispute never interact face-to-face unlike a typical online mediation. In recent times, the government and judiciary have become more vigilant towards the ODR process. The issue of easy access to suitable technology and awareness for ODR is the main concern for the needed growth of the process. ODR is still in its initial phase and therefore, has to overcome a lot of obstacles to be recognised as a legitimate online court mechanism by people at large.

The Apex Court has recognised the usefulness of technology in settling disputes and how some disputes might be resolved entirely and effectively virtually; in M/s Meters and Instrument Private Limited v. Kanchan Mehta. Several government bodies, departments, and agencies have created their own ODR systems to help them resolve their issues. Such as, in 2017, the ministry of MSME introduced SAMADHAAN, an online dispute settlement platform. In 2019, the RBI’s High-Level Committee advocated the establishment of ODR system to settle matters arising from digital transactions. By merging cutting-edge technology with the traditional ADR methods, the ODR portals have simplified the dispute resolution procedure, resulting in process which is both convenient and effective. The following are a handful of the most popular ODR platforms:

1. Centre for Alternate Dispute Resolution Excellence (CADRE)

CADRE is a web-based ODR system. For NestAway, which is a virtual start-up of home rental, CADRE aids in settling rental and tenant contractual conflicts for it. In the process, one of the parties approaches the platform first, and the platform then reaches out to other party. If there is an agreement between both the parties, an arbitrator will be chosen, and timely notifications will be delivered by e-mail, WhatsApp, etc. Typically, the parties don’t really meet in person but communicate electronically through video conferencing. Decisions that are valid and binding are made within 20-25 days.

The platform employs specially qualified arbitrators being well-versed with the Centre’s rules and guidelines. One of their primary responsibilities is to make sure that the entire procedure does not leave the customer/client go empty handed. Online arbitration, debt recovery, and tenant and rental contractual conflicts are some of the areas of competence of the Centre.

2. SAMA

SAMA is an ODR platform providing simple accessibility to advanced ADR providers and assists consumers in resolving disagreements/disputes virtually. In 2015, SAMA was established and is currently headquartered in Bangalore, Karnataka. SAMA aims at resolving disputes between landlords and tenants, employers and workers, companies and consumers, and experts and clients in an optimum way. The platform guarantees a timely and cost-effective settlement of the dispute that is completely unbiased and government acknowledged. Its areas of expertise include legal consultation, mediation, arbitration and other legal services. For example, ICICI Bank has used Sama to settle almost 10,000 matters with monetary amounts ranging up to Rs.20 lakhs.

3. Centre for Online Dispute Resolution (CODR)

It is an organisation that manages disputes online from start to finish. In 2019, CODR was co-founded by Vikas Mahendra. CODR is a private organisation specialising in virtual disputes from end to end. By allowing the client and his representative to manage the complete procedure, the platform tries to reduce the complexities while also ensuring the purposes of justice. The purpose of CODR is to ensure that the entire process is done in a fair and transparent manner while still respecting the confidentiality from both ends. The CODR platform majorly focuses on three key areas namely, Separation matters, Relationship Property matters and Dispute Resolution.

4. Presolv360

Presolv360 is a platform which provides and assists in dispute resolution services. It electronically facilitates and administers the dispute resolution process, as well as provides operational and technical assistance to parties involved in the process. The said platform is a completely integrated cloud-based virtual dispute resolution system, assisting parties in not only solving but also avoiding conflicts. Presolv360 provides a complete and wholesome solution that reduces the time, resources, and cost required to resolve conflicts. Commercial disputes, tenancy, family & inheritance, intellectual property, etc. are some of the areas of its specialty.

5. AGAMI

This platform is a non-profit platform for ODR, aiming to improve the legal and judicial systems by delivering timely and effective dispute settlement solutions. The platform was founded in 2018 with a goal to use ODR to settle one million conflicts by 2022. AGAMI strives to deliver justice in a reasonable amount of time. The team is made up of professionals from many disciplines wanting to raise awareness about ODR. The said platform’s works include various initiatives and other programmes that work together to inspire, enlighten, and encourage innovation across the globe.

Conclusion

Though arbitration and mediation are certainly constructive dispute resolution mechanisms, the importance of private amicable negotiation between the parties cannot be understated. There is no justifiable reason why Section 69-A should only incentivise the methods of out-of-court settlement stated in Section 89 CPC and afford step-brotherly treatment to other methods availed of by the parties. The purpose of Section 69-A of the 1955 Act is to provide a reward to parties who have chosen to withdraw their litigations to resolve it by an alternate method, thereby saving time and resources of the court.