ADR stands for Alternative Dispute Resolution that refers to dispute settlement processes outside the courtroom. ADR is increasingly seens as a preferred mode of dispute resolution due to efficiency, cost effectiveness and ability to provide quicker resolutions. The law relating to ADR in India has evolved significantly over the years to accommodate the changing needs of the legal landscape. This article delves into the laws relating to ADR in India and the key elements involved in the process.
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Laws on ADR in India
The development of ADR in India adopts principles from the United Nations Commission on International Trade Law (UNCITRAL). A set of Legal provisions regarding ADR exists in many statutes as well as judicial precedents which have led to its expansion. Several legal framework regulates ADR practices in India:
The Arbitration and Conciliation Act, 1996
The Arbitration and Conciliation Act, 1996 is the prime legislation on ADR in India. The Act provides for the enforcement of arbitration agreements, conduct of arbitral proceedings, and the enforcement of arbitral awards. It covers domestic and international arbitration and lays down a comprehensive mechanism for conciliation as well.
Arbitration under this Act is executed by an agreement between the parties to resolve disputes through an arbitrator. The Act defines the procedure for initiating arbitration, appointing arbitrators and enforcing awards.
Conciliation refers to a process where an impartial conciliator facilitates communication between parties to help them resolve disputes without resorting to arbitration. Conciliation under the Act is voluntary and non-binding.
The 2015 Amendments to the Arbitration and Conciliation Act, 1996 further strengthened the arbitration process by making it faster and more effective. These amendments also streamline the enforcement of foreign arbitral awards, making India a more flexible country in terms of international arbitration.
Read about Arbitration Agreement in ADR
Civil Procedure Code (CPC), 1908
Section 89 of the Civil Procedure Code, 1908 encourages the use of arbitration, conciliation and mediation, to settle civil disputes only. This provision was introduced in 1999 and was later expanded to require judges to refer the cases for ADR in case both the parties are consenting to it.
The Legal Services Authorities Act, 1987
The Legal Services Authorities Act, 1987 established the foundation of legal aid in India and created the National Legal Services Authority (NALSA) to regulate legal aid in India.
Under this Act, the concept of Lok Adalats was introduced. Lok Adalats operates as a form of ADR and mostly resolves disputes by conciliation and negotiation.
Lok Adalats provides a cost-effective and accessible way for people to settle cases outside the courtroom.
Lok Adalats are particularly effective in resolving family disputes, property disputes and labour disputes. The decision is binding and is recognised by the Courts.
The Consumer Protection Act, 2019
The Consumer Protection Act, 2019 uses the mechanisms of ADR in consumer related disputes. With the help of this Act, consumers can resolve their complaints through mediation and online dispute resolution (ODR). The Act also provides for the establishment of Consumer Disputes Redressal Commissions, which encourage ADR as an alternative to litigation.
UNCITRAL Model Law
India has adopted the United Nations Commission on International Trade Law for resolving the disputes arising in the international commercial transaction. This law has helped India become a part of international arbitration on a larger scale as it invites international business to make contracts in India by providing them with smooth arbitration clauses and procedures.
Key Elements in ADR Procedures
To ensure the success of ADR mechanisms, there are several essential elements that are needed in the proceedings:
Impartiality: The arbitrators, mediators and Conciliators can be chosen by the parties during the formation of contract or during the dispute resolution and so maintaining impartiality becomes a significant factor for carrying out a fair and unbiased proceeding.
Consent: Arbitration and Conciliation can be mandatory in some cases but mediation and negotiation are usually voluntary which means that the latter can be carried out only when both the parties are consenting to take part in such proceedings.
Nature of Award: In cases of arbitration, the award is binding and possesses the same effect as a judgement. This nature of award helps parties to have a closure and ensures that the dispute is resolved without the need for further litigation.
Advantages of ADR in India
ADR offers a wide range of advantages which contributes in increasing the popularity and usage in India, following are the advantages of ADR in detail:
Cost- effective: Traditional litigation can be expensive and time-consuming. Arbitration and Mediation in ADR is less costly and thus, makes it accessible for a wider range of individuals, businesses and companies.
Faster Resolution: ADR processes tend to be faster than Court procedures, helping parties resolve disputes in less time.
Confidentiality: ADR proceedings keep the confidentiality clause as a paramount consideration, and violation of this clause can result in legal consequences.
Flexibility: The parties involved in ADR can negotiate terms of the arbitration clauses as per their needs which makes it more flexible than the rigid nature of courtroom proceeding.
Summary
The law relating to ADR in India has undergone significant changes due to changing environment in formation of Contracts, amalgamation of foreign companies, investments etc,. The legislations like Arbitration and Conciliation Act, 1996, Civil Procedure Code, 1906, The Legal Services Authorities Act, 1987, The Consumer Protection Act, 2019 and international laws on arbitration such as UNCITRAL regulates the arbitration clauses, conciliation and mediation proceedings in India as well as outside India. The flexibility in Indian ADR laws and adoption of UNCITRAL Model Law brought numerous positive changes in Indian Alternative Dispute Resolution systems.
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Laws relating to ADR in India: FAQs
Q1. What are the laws relating to ADR in India?
The Arbitration and Conciliation Act, 1996 governs the proceedings of arbitration and conciliation, and mediation is often directed by courts as per CPC, 1908. There are other laws such as The Legal Services Authorities Act, 1987, The Consumer Protection Act, 2019 that also contains ADR for dispute resolution.
Q2. Is India limited to domestic arbitration agreements?
No, India has adopted the United Nations Commission on International Trade Law (UNCITRAL) which allows Indian companies, businesses and individuals to form arbitration agreements outside India.
Q3. Which Act talks about the formation of Legal Aid in India?
The Legal Services Authorities Act, 1987 established the system of legal aid and created the National Legal Services Authority (NALSA) for regulating legal aid in India.
Q4. Can criminal cases be taken to alternative dispute resolution?
No, ADR only occurs when there are civil disputes such as family disputes, property issues, consumer disputes, etc.
Q4. How does ADR help the Courts of India?
Since ADR can be provided in most of the civil matters, it takes away the burden of Courts and helps the Courts focus on the most urgent matter which mostly involves criminal cases.
