ADR vs JDR - Detailed. PDF

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MODULE 1INTRODUCTION TO JUDICIAL DISPUTE REDRESSALJudicial process is basically the process of working of the courts. All the things done by the Judges in the delivery of Justice can be termed as Judicial Process. This process is an adjudicatory process where a Judge or any other competent authority...

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MODULE 1 INTRODUCTION TO JUDICIAL DISPUTE REDRESSAL Judicial process is basically the process of working of the courts. All the things done by the Judges in the delivery of Justice can be termed as Judicial Process. This process is an adjudicatory process where a Judge or any other competent authority decides the outcome. Provisions of the Relevant Statutes govern, restrict and control the procedures and decisions of Judicial process. In Judicial system in accordance with law and the Constitution, the Judges are required to decide upon the issues between the parties. There are two sets of laws that govern the lives of citizens in every civilized society they are– (i) substantive laws and (ii) procedural laws. The role of substantive laws is to decide the rights and obligations of the citizens, on the other hand the procedural laws are made to provide an enforcement framework for the substantive laws. It can be said that the importance of substantive laws is contingent upon the qualitative deliverance of the procedural laws. Constitution of India provides various provisions for judicial process, article 14 defines the various duties of the state which includes providing justice by giving equal protection of law to each and every citizen. Similarly, Article 141 of the constitution lays down the hierarchical system of courts and says “the laws declared by the supreme court shall be binding on all other courts in India” Article 356 read with article 365 of the constitution provides for the consequences to the state for non-compliance of constitutional obligations.

Indian judicial system is one of the oldest judicial system, its working is renowned all over the world however it is also well understood that the Indian judicial process is becoming inefficient in dealing with various pending cases, it is choked with long unsettled cases. Even setting up of various fast track courts the cases are still piling up and the problem prevails. To deal with such problem Alternative Dispute Resolution (ADR) mechanism becomes useful to play its part, let us discuss about this mechanism in detail.

INTRODUCTION TO ARBITRATION

The concept of Alternative Dispute Resolution (ADR) mechanism can be defined as a substitute method to the conventional way of resolving disputes. ADR can help to resolve all the matters of dispute consisting civil, commercial, industrial and family etc., where the parties are not able to conclude to any negotiation and reach the settlement. In most cases, ADR in its methods uses a neutral third party who helps the parties to discuss their differences, facilitate communication and resolve the dispute. Such ADR techniques plays a very significant role in India to deal with the situation of pendency of cases in courts of India, which subsequently helps in reducing the burden on various courts in the count. There are various types of Alternative dispute redressal techniques which are used, which are arbitration, conciliation, mediation, negotiation and lok Adalat. The main aim of ADR is to provide social, economic and political justice in the country and enrich integrity, equal justice in the society. An important feature of

ADR is that it helps in provide the function of Free legal aid through some of its techniques as provided under article 39-A relating to Directive Principle of State Policy (DPSP). The acts in India which deals with the provisions of ADR is Arbitration and Conciliation Act, 1996 and further Section 89 of the Civil Procedure Code, 1908 also says that , if it appears to court there exist elements of settlement outside the court then the court may formulate the terms of the possible settlement and refer the same for either Arbitration, Conciliation, Mediation or Lok Adalat. Likewise, to make the ADR methods more effective and reliable, the Legal Services Authorities Act, 1987 has also been amended to include the use of ADR methods. The constitutional validity of ADR and section 89 of Civil procedure code was upheld by the Hon'ble Apex Court in the case of Afcons Infrastructure Ltd. & Anr Vs. 2 Cherian Varkey Construction Co. (P) Ltd. & Ors, reported in (2010) 8 SCC 24, but the frequency with which ADR is utilized for resolution of disputes remains minute, which arises due to lack of knowledge about the same or on account of the reluctance of the parties. The alternate forums accorded under Section 89 are economically more viable as there are relatively lesser amount of transaction costs and thus, there is a need to make people aware about the same. MODULE 2 DIFFRENCE BETWEEN ALTERNATIVE DISPUTE REDRESSAL AND JUDICIAL DISPUTE REDRESSAL

Now let us differentiate between the judicial form of dispute redressal and Alternative dispute redressal method. ALTERNATE DISPUTE

JUDICIAL DISPUTE RESOLUTION

RESOLUTION Parties take part in the process actively

The communication of the issues is done

and define the issues. They retain

through the lawyers. There is lack of

control over the outcome.

control of the outcome and is dependent

The parties have the opportunity to

upon the legality of the issues. The parties have the right to represent

discuss the issue from their perspective.

their sides within the limits of the law and rules. This procedure focuses on

The discussions, negotiations and

what is legal and what isn’t. The dispute and documentation during

documentation do not become part of

the trial becomes part of the public

public record and hence maintains

record and the confidentiality and

confidentiality.

reputation of the companies is put at

The parties cannot depend upon the

stake. The parties can depend upon the

resolutions that were resorted to in

precedents for resolving their disputes

similar cases as them. There is a lack of

or making their side stronger.

precedents in ADR as the cases don’t become a part of public record. The true issues of the dispute and its

The parties feel pressurized and face

root cause come to light as the parties

more stress being a part of court

are put up in a non-confrontational

proceedings.

setting. This process maintains amicable

Usually, in litigation the tension

relations or attempts at improving the

between the parties becomes worse and

relation between the parties. This is

the relationship worsens as all attempts

important if the parties wish to continue

are made at winning the suit.

to work together in the future. This is a win- win situation as the result

In litigation, one party wins the suit and

of this dispute resolution mechanism is

the other loses it causing animosity

dependent on the parties and it protects

between each other. There is no

the interests of the parties.

assurance if the interests of the winning

ADR lacks the legal authority for

part have been protected. In cases where there is immediate action

passing injunctions.

required for injunction, then the parties have the option to approach courts for

Due to procedural limitations, the

passing an injunction order. There a number of judicial remedies

parties don’t have access to judicial

available to the parties that can assist

remedies like petitions for additional

them in strengthening their case.

parties, discovery of documents. The parties are able to choose the form

Once a party files a suit, the other party

of alternate dispute mechanism which

has to conform to the procedure. Both

would be best suitable for them. There is the parties must report to the court on greater party autonomy as the parties

the dates of hearing decided by the court

choose the location and the time best

or else an ex-parte order may be passed.

suitable for them to resolve the dispute. The procedure of dispute resolution

Litigation covers broader aspects and

occurs in a timely manner and relatively takes into consideration witnesses, lesser time is taken than judicial

experts. Due to the burden on courts,

resolution.

litigation procedures take longer and the

This process is more cost effective.

case is prolonged for years. Since the litigation in most cases runs for years to come, it turns out to be quite

If the parties reach at a mutually

costly in the long run. The decision though appealable is

agreeable solution then the settlement

legally binding on the parties and is

can turn into a legally binding one.

final unless a petition for appeal is filed.

With the exception of arbitration*, there Once a case comes to the court, then the can be cases where the parties are

resolution that is passed is a decree and

unable to reach at a settlement and

it is legally binding and final.

hence their dispute doesn’t get resolved or there is no legally binding decision. Most ADR procedures concern

In cases where there is a need for statute

themselves with protecting the interests

interpretation or it involves a breach of

of the parties and reaching at a mutually law, the litigation process aims at agreeable decision and hence less heed

providing an authority for it.

is paid to the legality of the issues. It is ideal for those cases where the

It is ideal for cases where there are

parties need to maintain their relation

implications for several individuals or

and confidentiality.

where the parties intend for a third party to be responsible for their decision.

*In arbitration, the arbitrator passes an award. In case, the parties feel that the decision has not been made correctly, then they can approach the court for challenging the award. However, there are limited grounds for challenging such an award.

BENEFITS OF ADR:  Maintains amicus relation between the parties: this is significant in the situations where the parties intend to continue the relation after resolving the dispute.  Convenient: the time and place of the dispute resolution is decided by the parties themselves and hence it is quite flexible.

 Time efficient: Due to the burden of cases over the judiciary, judicial proceedings often run for a long period of time and are dragged on for years and years. ADR ensures that the dispute is resolved in a timely manner, it’s a speedy procedure.  Protects the interest of both the parties: in ADR, unlike Judicial Dispute Resolution, there is no winning party but the dispute is resolved with the aim to ensure that both the parties get what the desire from the dispute resolution.  Maintains Confidentiality: Since the law allows for media to witness judicial proceedings as part of the public’s right to know, renowned parties are at a threat of damaging their reputation or having their company’s secrets leak out to the public.  Less formal: ADR procedures are usually less formal and it ventures into parties expressing their opinions more freely.  Party Autonomy-more control: ADR allows and guides the parties themselves to choose a resolution that would be viable for both of them. The parties will be inclined towards conforming to the final decisions as they played a part in reaching such a decision (they will have greater commitment).  Neutrality: Since both the parties decide on the mode of alternative dispute resolution together, both the parties can expect a neutral to the law. In case, the parties are from two different countries, then going for judicial proceedings in one country but the other party at a disadvantage as that party is unfamiliar with the law and procedures of that country.  Expense is reduced: unlike litigation, ADR is not prolonged and hence the expenses are reduced in the long run.

DISADVANTAGES OF ADR  No guaranteed resolution: Though ADR aims for reaching at a resolution that is convenient to both parties, the dispute between both the parties may turn out to be so hostile that they are unable to reach at a decision that protects the interest of both the parties. Certain parties are adamant and are unwilling to allow certain decisions.  Arbitration awards are final: there are very few exceptions that allow for arbitral awards to be appealed. So in case a party feels that the decision taken by the arbitrator is unfair, it has to approach the court and prove the inadequacies for having such an award to be set aside.  Procedural Limitations (Loss of judicial remedies): Unlike ADR, judicial proceedings allow for the provision of discovery which is an important aid in determining finance related disputes.  Exclusion of other parties: the dispute might involve more parties than just the ones involved in ADR. Judicial procedures allow additional parties to be part of suit in case the final decision affects those parties as well. In ADR, the interests of the additional parties are disregarded.  Protection of legal rights: while reaching at an amicable decision, the parties may have foregone some of their legal rights.  Unfit cases for ADR: There are limitations set to the kinds of cases which can be brought under ADR. Criminal cases and certain civil matters cannot be resolved through ADR. However, still there might be cases which though are not legally prohibited to be brought under the ambit of ADR, may still be unfit for ADR as they are unable to get the desired results through ADR processes.

Now let us study an in-depth differentiation between judicial process and 2 prominent methods of alternative dispute redressal.

The selected differ is limited to Mediation and arbitration as, other forms of ADR having certain similarities with mediation, which we will study further

JUDICIAL

ARBITRATION

PROCESS This is an

It is a quasi- judicial

1 adjudicatory process, adjudicatory process,

MEDIATION It is not an adjudicatory process, rather is a

where the outcome

where the court appoint negotiation process. A

is decided by a

an arbitrator.

process.

Judge or other authority. Relevant statutes 2 govern, restrict and

mediator facilitates the

Arbitration and

Statutory provision does

conciliation act,1996

not govern, restrict and

control the various

statutes govern, restrict control the various

procedures and

and control the various

procedures and decisions.

decisions.

procedures and

Thus, providing freedom

The parties are

decisions. The parties are binding

and flexibility Only if the parties reach

to the Award given in

to a mutually acceptable

decision given.

arbitration.

agreement, the settlement

The decision of the

is binding. The award given can be The settlement order or

3 binding to the

4 court is appealable The judicial process 5 does not give an opportunity to

challenged on some

the decree cannot be

specified grounds. The arbitration also

appealed and is final. Maximum opportunity is

does not give an

given to the parties to

opportunity to

communicate directly in

communicate

communicate directly

directly to the

to the parties.

parties. The proceedings are

The proceedings are

6 formal, follows strict formal, follow strict

presence of the mediator.

The proceedings are informal, flexible

procedures and are

procedures and are held procedures and held in

held in public

in private settings.

private settings.

setting. Active participation

Active participation of

Active participation of

7 of parties or personal parties or personal

parties or personal

appearance of the

appearance of the

appearance of the parties

parties is not

parties is not required

is required every time.

required every time. Judicial process

every time. Arbitration process

Mediation process

focuses on determines

focuses on the present

8 focuses on past events occurred and

the rights and liabilities and future and dispute is

determines the rights of parties and hence is and liabilities of

adversarial in nature

resolved by mutual agreement irrespective of

parties and hence is

rights and liabilities of

adversarial in nature

the parties and is hence collaborative in nature.

ARBITRATION In this form of ADR, the dispute is settled amicably by a neutral third party known as the arbitrator. This a less formal form of dispute resolution and at the end, the arbitrator gives his decision in the form of an award which is final and

is legally enforceable. It is a voluntary form of ADR unless an agreement clause exists making it mandatory. ADVANTAGES OF ARBITRATION  Flexibility: Arbitration allows for the parties to choose the venue (location), the seat (jurisdiction) and the date for the proceedings to take place. 

Arbitrator: The parties also choose the arbitrator on their own. They can choose to have more number of arbitrators (oddly numbered) if they wish to. However, a large number of arbitrators are discouraged in order to reach at decisions faster.

 Enforceability: In India, awards are legally enforceable.  Confidentiality and expeditious procedure DISADVANTAGES OF ARBITRATION  Limits on Award: Unless certain special circumstances exist, in most situations awards cannot be appealed. The judicial route has to be taken in order to have an award set aside after proving to the court that the exceptions are applicable in that case. This can turn out to be a very long process.  Award not directly enforceable: In India, once the limitation period for setting aside an award is over under the arbitration and conciliation act, 1996, then the award becomes legally enforceable. But till the objection petition exists, the award cannot be made legally enforceable. Other countries allow the execution of awards with subject to judicial approval.  Interlocutory Orders cannot be passed: The arbitrator doesn’t have the jurisdictional power to pass interlocutory orders which prove to be fundamental in resolving certain cases.

MEDIATION In this form of ADR, there exists a neutral third party known as the mediator who ensures that an amicable flow of conversation takes place between the parties and the mediator focuses on understanding the dispute on a deeper level in order to present the parties with solutions. This is a voluntary form of dispute resolution and the parties can opt out of it in case they feel that they are unable to reach at a decision. This form of dispute resolution is completely controlled by the parties. In case the parties are n...