Judiciary Role in Promoting Alternative Dispute Resolution

Alternative Dispute Resolution

The true purpose of law was declared by Gandhi, “I realized that the true function of a lawyer was to unite parties given as under. The lesson was so indelibly burnt unto me that the large part of my time, during the twenty years of my practice as a lawyer, was occupied in bringing about private compromises of hundreds of cases.”[1] In doing so, he recognized that the least harmful way of solving a dispute is not by means of a long, drawn out legal battle in the vicinity of the courts but rather, a settlement by whereby each part can maximise their gain and cut back their losses and in present legal scenario worldwide Alternative Dispute Resolution is the best possible option to achieve this outcome.

Alternative Dispute Resolution (hereinafter referred to as “ADR”) is hence an attempt to devise machinery capable of providing an alternative to the conventional methods of resolving disputes. ADR offers to resolve matters of litigants, whether in business causes or otherwise, who are not able to start any process of negotiation and reach any settlement. This concept covers a number of methods of dispute resolution which fall into two broad categories: court-annexed options and community-based dispute resolution mechanisms. Court-annexed ADR includes mediation and conciliationwhere a neutral third party assists disputants in reaching a mutually acceptable solution. Supporters argue that such methods decrease the cost and time of litigation, improving access to justice and reducing court backlog, while at the same time preserving important social relationships for disputants. Community-based ADR is often designed to be independent of a formal court system that may be biased, expensive, distant, or otherwise inaccessible to a population. These include arbitration and negotiations.

The first step in the advent of ADR mechanisms in India was taken way back in 1940 when the first Arbitration Act was passed but due to its inadequacy and loop-holes it was never fully implemented. Many years later in 1996, The Arbitration and Conciliation Act was passed which was based on the UNCITRAL[2] model, Section 30[3] of which encourages arbitrators, with the agreement of the parties, to use mediation, conciliation or other procedures at any time during the arbitration proceedings to encourage settlement. The Legal Services Authorities Act, 1987 brought about the establishment of LokAdalat System for settlement of disputes cheaply and expeditiously and also in the spirit of compromise by give and take formula. Further, Section 89 of the Civil Procedure Code, 1908[4]which is based on the recommendations made by the Law Commission of India and Malimath Committee made it obligatory for the Court to refer the dispute after issues are framed for settlement with the concurrence of the parties by any ADR mechanism. Where the parties fail to get their disputes settled through any of the ADR methods, the suit would come back to the Court it was filed in.

Hence, the first of the above is a set of forms of ADR find place in various statutes of India:In Labour law, namely Industrial Disputes Act, 1947 conciliation has been statutorily recognized as an effective method of dispute resolution in relation to disputes between workers and the management. The other area where Alternate Dispute Resolution recognized in India is in family law. Sections 5, 6 and 9 of the Family Court Act, 1984[5] provide for the Government to encourage the despairing parties to arrive at a settlement through the association of Social Welfare Organisations, permanent counsellors and an obligation on the Court to make effort for settlement before taking evidence in the case.

Undoubtedly, the concept and philosophy of theLokAdalat (more popularly known as the Peoples’ Court) is an innovative Indian contribution to the world jurisprudence. It has very deep and long roots and has been proved to be a very effective alternative to litigation. The system has received laurels from the parties involved in particular and the public and the legal functionaries, in general. It also helps in emergence of jurisprudence of peace in the larger interest of justice and wider sections of society.LokAdalat (people’s courts), established by the government settles dispute through conciliation and compromise. The LokAdalat is presided over by a sitting or retired judicial officer and two other members.

While the LokAdalats are a concept that has flourished in both rural and urban settings alike, when it comes to the other mechanisms of ADR the only field where the Courts in India have recognized the same is in the field of arbitration. The Courts keen to see whether the arbitrator can exceed his jurisdiction while deciding the issue which has been referred to him for arbitration. The scope of interference of the award passed by an arbitration was dealt with by the Apex Court when they said –

“It is the function of the Court of law to oversee that the arbitrator acts within the norms of Justice. Once they do so and the award is clear, just and fair, the Court should as far as possible give effect to the award of the parties and make the parties compel to adhere to and obey the decision of their chosen adjudicator. It is in this perspective that one should view the scope and limit of corrections by the Court of an award made by the arbitrator.”[6]

The power to decide the jurisdiction of the arbitrator to decide a particular issue or not is therefore ultimately vested with the Law Courts as per cases like Union of India Vs.G.S.Alwal& Co.[7] and State of Orissa and another Vs.Damodar Das[8].

By way of the Supreme Court’s decision in SBP & Co v Patel Engineering Limited[9], the power of the Chief Justice in appointing an arbitrator was held to be a judicial power and not administrative. This allowed the Indian Courts had to look into the validity of the arbitration agreement and the dispute itself before proceeding to appoint arbitrators.

In matters dealing with domestic awards, an example of non-interference on the Supreme Court was demonstrated when they held that if the award by the arbitration is well-reasoned, then courts should not interfere. As regards favoring enforcement of foreign awards, the Delhi High Court refused the challenge to the enforcement of foreign award by holding that the ground of “public policy” must be narrowly interpreted when refusing enforcement of foreign awards.

Further, The Bombay High Court recently held in Mulheim Pipecoatings v WelspunFintradee[10], that an arbitration agreement would survive even if the agreement (containing the arbitration clause) was suspended by a subsequent agreement. However, this position has been slightly modified by the Supreme Court’s where it was held that an arbitration clause in an agreement cannot survive if the agreement containing arbitration clause has been superseded. The Supreme Court in Enercon v EnerconGmBH[11], while determining whether an arbitration clause is unworkable or incapable of being performed, held that the court ought to adopt the attitude of a reasonable business person, having business common sense as well as being equipped with the knowledge that may be peculiar to the business venture.

Through the examples given above, it is not hard to see that the implementation of Alternative Dispute Resolution mechanisms is the need of the hour, the purpose of the same being multi-fold. One, to reduce the burden of the Courts of Law, to provide less expensive, more speedy modes of obtaining justice and as seen above, the end goal og justice and equality is upheld with the Courts in Inida intervening when a gross miscarriage of justice is in the making.


[1]http://www.ebc-india.com/lawyer/articles/2002v1a3.htm visited on 9th April at 15:04 p.m.

[2]The United Nations Commission on International Trade Law (“UNCITRAL”)

[3]Section 30 ofArbitration and Conciliation Act, 1996 – Settlement

[4]Section 89 of Civil Procedure Code, 1908 – Settlement of disputes outside the Court by means of arbitration, conciliation, judicial settlement including settlement through LokAdalat or mediation.

[5]Section 5 of Family Courts Act, 1984 – Association of social welfare agencies, etc.; Section 6 of Family Courts Act, 1984 – Counsellors, officers and other employees of Family Courts.; Section 9 of Family Courts Act, 1984 – Duty of Family Court to make efforts for settlement.

[6]Food Corporation of India Vs. JogindarlalMohindarpal,1989(2) SCC 347

[7]See 1996(3) SCC 568

[8]1996(2) SCC 216

[9][2005] 8 SCC 618

[10][2014(2) ABR 196

[11][2014] 5 SCSC 1

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