Alternate Dispute Resolution

An Idea The Time For Which Has Come

“It is not in truth alternative. It is not in competition with the established judicial system. It is an additional rage of mechanisms within the overall aggregated mechanisms for the resolution of disputes. Nothing can be alternative to the sovereign authority of the Court system. We can, however, accommodate mechanisms which operate as additional or subsidiary processes in the discharge of the sovereign’s responsibility. These enable the Court system to devote its precious time and resources to the more solemn task of administering justice in the name of the sovereign.”

-Sir Laurence Street,

Introduction

There is an old Chinese curse "may you live in interesting times". From a legal point of view, we cannot think of a time in the recent past that is more interesting than the present. Whatever our individual views may be on the merits or otherwise of the changes that are taking place, there is no doubt that we are experiencing a sea change in all aspects of the law – and this change is not merely one of practice and convenience, but of fundamental underlying theory as well.

Alternate Dispute Resolution or "ADR", as it is more commonly known, means the wide variety of methods by which conflicts and disputes are resolved other than through litigation and in a country like ours, where the backlog of cases is ever increasing and the common man is losing his faith in the system of administration of justice, it is imperative that this faith be restored and mechanism be adopted which does not have the complexities of long drawn litigation procedures but be as effective and binding on the parties adopting it.

The Americans with Disabilities Act[1] (ADA), also supports the use of alternative dispute resolution (ADR) as a quick and fair method for settling complaints without going to court. ADR is a non-judicial means of settling ADA disputes outside of the courtroom, avoiding costly and time-consuming litigation after a complaint or dispute arises. The use of ADR mechanisms is intended to supplement, not supplant, other enforcement mechanisms available under the ADA.[2]

The business community needs a fast track alternative to litigation[3]. The business community has neither the time, patience nor resources to waste on long, drawn out disputes. Nor does it want its affairs published in the local press. Options to litigation should be considered as part of a company’s policy. The evidence is great that arbitration and mediation alternatives to litigation make good business sense and that the inclusion of arbitration and mediation clauses in their contracts will help to ensure that disputes will be dealt with in a timely and cost effective way.

Common Processes of Alternate Dispute Resolution

The following are the most commonly used alternate dispute resolution mechanisms:

I. Mediation

II. Arbitration

III. Mini- Trial

IV. Conciliation

V. Ombudsman Strategy

The two most commonly used mechanisms to resolve disputes are Mediation and Arbitration which have been discussed in detail as below.

I. Mediation

Mediation[4] is a process of dispute resolution focused on effective communication and negotiation. The mediator acts as a facilitator assisting the disputing parties in communicating and negotiating more effectively, thereby enhancing their ability to reach a settlement. It is not the mediator's role to adjudicate the issues in dispute and indeed the mediator has no authority to do so. Mediation[5] is not a process to force compromise, although compromise is an element of the process. Each party's limitations are respected and a party is only expected to make a shift in its approach to the problem if it becomes convinced that it is reasonable to do so.

Initially in mediation the mediator will explain to the parties the process of mediation, the role of the mediator as facilitator not adjudicator, and the role of the parties in working towards a solution. The mediator will attempt to create an atmosphere where the parties can feel free to discuss the issues in dispute between them openly[6].

The time required to complete mediation varies according to the complexity of the issues being discussed. It can take less time if the parties are well prepared and understand their rights and obligations. If fewer issues are being discussed in mediation it can take less time. However, mediation can also take longer if the parties are highly emotional, do not understand their rights and obligations or simply need to discuss the issues at a slower pace in order to understand them more clearly. Because of the flexibility of the process, the mediator can accommodate all of these differences and move the mediation along at a pace with which the parties can be comfortable. Furthermore, the mediator can ensure that the discussions continue to move forward and toward resolution of the issues.

The benefits[7] which have been identified with mediation are as follows:

·                       Effective Process: Mediation generally enjoys an 80%-85% success rate.

·                       Better Results: The resolution is created by the parties and is therefore tailored to their specific needs. This tends to result in a lower incidence of breach of the agreement reached.

·                       Speed: A mediation can be arranged in a relatively short period of time and has the effect of bringing settlement negotiations "to a head" much more quickly than negotiations directly between parties, resulting in a faster disposition.

·                       Cost: Time, money and emotion can be saved through early resolution of the dispute. Furthermore, the cost of mediation can be included with taxable costs and disbursements payable to the successful party.

·                       Choice of Mediator: A mediator can be chosen who has expertise in negotiation, effective dispute resolution and in the particular areas of dispute, which expertise may be of assistance to the parties in resolving the dispute.

·                       Freedom to Negotiate: Because the process is confidential and takes place on a without prejudice basis the parties have the freedom to develop and consider innovative settlement ideas.

II. Arbitration

Arbitration is a procedure for the resolution of disputes on a private basis through the appointment of an arbitrator, an independent, neutral third person who hears and considers the merits of the dispute and renders a final and binding decision called an award[8]. In an arbitration proceeding the parties put their case to a neutral arbitrator or arbitrators. The tribunal is typically made up of one or three people, as the parties may agree. The process is similar to the litigation process as it involves adjudication, however, the parties choose their arbitrator[9] and the manner in which the arbitration will proceed[10]. For example, if the dispute is fairly straightforward and does not involve any factual questions, the parties may agree to waive a formal hearing and provide the arbitrator with written submissions and documentation only, called a documents only arbitration, whereas in other cases the parties may wish a full hearing. Therefore, the parties create their own adjudicatory forum which is tailor made to the particular needs of the parties and the nature of the dispute.

The Arbitration proceeding can be favoured over the usual litigation process because the parties are free to choose an arbitrator who has expert knowledge of the law, business or trade in which the dispute has arisen, arbitration proceedings are also a speedier way of resolving disputes and are not expensive as opposed to the Court formalities if the process is kept simple.

III. Mini- Trial

The mini-trial is not really a trial at all but a combination of negotiation, mediation and adjudication processes. In this process, the parties select a mutually acceptable adjudicator, to preside over an abbreviated hearing and to render an opinion as to the likely outcome of the matter at trial. The adjudicator has no authority to make a binding decision other than on procedural matters relating to the mini-trial. With this process of dispute resolution counsel for each disputant make a summary presentation of their best case to the adjudicator, and in some instances high level business executives from each of the disputing corporations, who may meet after the summary presentations to attempt to negotiate a resolution of the dispute. The adjudicator will render an opinion as to the likely outcome of the matter at trial if the business executives are unable to negotiate a settlement, or as an impetus towards negotiating settlement.

IV. Conciliation

It uses a neutral third party to help resolve disputes by improving communications, lowering tensions and identifying issues and potential solutions by shuttling information between the disputing parties.

V. Ombudsman Strategy

It investigates and expedites complaints, helping either of the parties settle a dispute or proposing changes to make the system (or employer, government agency, business, etc.) more responsive to the needs of the complainant.

Alternate Dispute Resolution- An Indian Perspective

Inspired by the United Nations Commission on International Trade Law's Conciliation Rule, adopted by the General Assembly of the United Nations in 1985, and the recommendation made by the General Assembly, Parliament of India passed the Arbitration and Conciliation Act, 1996 which came into force on 25th January, 1996. The said Act intends to achieve consolidation and amendment of the law relating to domestic arbitration, international arbitration and enforcement of foreign arbitral awards as also to define the law relating to conciliation and the matters connected therewith or incidental thereto. Proceedings pending on arbitration commenced on or before January 25, 1996 will continue to be governed by the Act of 1940. Therefore the book deals with the Act of 1940 as well as arbitration law.

For the promotion and development of Arbitration and other Alternate Dispute Resolution techniques, Indian Society of Arbitrators (hereinafter referred to as ISA) was constituted. ISA has contributed substantially to the formulation and enactment of the Arbitration and Conciliation Act 1996, and is a leading arbitral institution in the country

Conclusion

It is suspected that one of the more stressful aspects of practising law is to be asked to address a situation that has become, frankly, a mess. One strategy is to try immediately to line up all the scattered bits into an orderly, logical line. This can divide the two sides at the outset. Unfortunately, once an adversarial fence is built it can be hard to tear down. Another option is to let the pieces lie, so that the fallout can be surveyed with the other party (negotiation) or with a guide (mediation) to see if any patterns or pathways become apparent. The pieces will still be there to build fences later if necessary. But hopefully the parties will find a way to pass through the devastation, rather than building a monument out of it. The above wording provides clarity and direction to the dispute resolution process. And, hopefully, it will convince the parties of the good intentions of both sides at the outset[11].

Alternate dispute resolution involves methods of resolving disputes other than through litigation. The methods are in addition to litigation and are by no means intended to replace litigation. Even the strongest proponents of ADR agree that certain matters must be resolved through the courts. However, there are other methods for resolving dispute which offer many advantages over the adversarial route, which should be explored before litigation is commenced or proceeds too far.