ADR is an alternative to litigation which involves arbitration, mediation, negotiation, conciliation, etc. Settlement of disputes through a third party is not a new phenomenon. It has been practiced since time immemorial, dating back to ancient times. “In India, people believed in resolving disputes within four walls because this was somewhere considered as an element to protect their dignity and personality in the society.”[1]
In many parts of India, due to huge pendency of suits, alternative dispute resolution mechanisms are becoming more popular and crucial for resolving business disputes. ADR is necessary in today’s fast developing world as it provides for a swift, efficient and amicable settlement. ADR has undergone a huge change from dispute resolution by old men sitting under a tree to gaining a statutory recognition. India has developed its own progressive legislation based on the Model Law and the UNCITRAL Arbitration Rules.
This article talks about the evolution of ADR since the ancient times, the present scenario in the Indian context and what is its future.
THE PAST:
“Arbitration or mediation as an alternative to dispute resolution by municipal courts has been prevalent in India from Vedic times.”[2] The ‘Bhradarnayaka Upanishad’ is the earliest text mentioning the various types arbitral bodies which are the Puga, the Sreni and the Kula. They are also called the Panchayats and they dealt with disputes of a variety of nature including disputes of contractual, matrimonial and criminal nature. The decision of these Panchayats would be binding on the parties to the dispute and had legal obligations. With the arrival of Muslim rule in India, the Muslim law principles were absorbed in Indian culture. Those laws were systematically complied and were known as Hedaya which contained provisions for arbitration as well. Tahkeem was the word for arbitration while Hakam meant arbitrator. The Tahkeem needed to possess certain qualities to be an official judge presiding over the process.
Arbitration as a method of dispute resolution picked up pace with the arrival of the East India Company. The British rule brought with it legislations regarding arbitration, the beginning of which was by promulgating regulations in the presidency towns of Calcutta, Bombay and Madras.
LEGISLATIONS REGARDING ADR IN PRE-INDEPENDENT INDIA:
The first of legislations which made provisions for arbitration was the Bengal Resolution Act, 1772 and Bengal Regulation Act, 1781 which provided for parties to submit their dispute to the arbitrator with mutual consent and the arbitrator’s decision will be binding on both. These Acts remained in force till the enactment of the Civil Procedure Code, 1859. Sections 312 to 325 dealt with arbitration in suits while sections 326 and 327 dealt with arbitration without the interference of the judiciary. The Civil Procedure Code of 1908 encouraged that the disputes must be first referred to ADR under section 89(1). A duty was cast upon the court to first make an effort to help the parties come to a settlement without litigation.
The India Arbitration Act, 1899 was substantially derived from its British counterpart. This Act further expanded the scope of arbitration by the defining the expression of ‘submission’ which means “a written agreement to submit present and future differences to arbitration whether an arbitrator is named therein or not.”
Next came the Arbitration (Protocol and Convention) Act, 1937. This Act implemented the Geneva Protocol on Arbitration Clauses 1923 and the Geneva Convention on the Execution of Foreign Arbitral Awards 1927.
The Arbitration Act, 1940 was in force until the enactment of the 1996 Act. The Act of 1940 dealt only with domestic. This Act had a distinct feature, where intervention of the courts was given considerate importance in almost all stages of the arbitral. Even the arbitral award needed to be approved by the court of law. The provisions of this Act defeated the purpose of arbitration as arbitration was supposed to be a process without judicial interference. It slowed the pace of arbitration due to which it could not provide for speedy, efficient and transparent dispute resolution mechanism.
PRESENT LEGISLATION REGARDING ADR:
In 1996, the government enacted the Arbitration and Conciliation Act, 1996 in order to modernize the Act of 1940. In 1978, various committees on international arbitration and commerce met and decided that UNCITRAL should take steps to form uniform standards of arbitral procedure. This led to the development of the Model Law on arbitration which was considered to be the most efficient way to achieve desired uniformity. The Model Law was adopted on June 21st, 1985 by UNCITRAL. This remarkable legacy had a great impact on Indian law and the Model Law was absorbed entirely in the 1996 Act.
The Act of 1996 essentially provided for arbitration as a cost-effective and speedy dispute resolution method. Most importantly, it provides for both, domestic as well as international arbitration. The Act of 1996 was amended twice, once in 2015 and in 2019. “To deal with ADR mechanism we have consolidated, single, effective, efficient and good piece of legislation.”[3]
CONCLUSION:
We have come a long way in the development of alternative dispute resolution methods and the prominent objective was a speedy and effective settlement of disputes which gave the parties a chance to maintain amicable relations. “The evolution of ADR portrays an entangled scenario; and, one thing is sure that both legislature and judiciary has had a hard time in streamlining all the ADR mechanisms and rules regarding them.”[4] Various mediation centres have come up in India with almost every high court having its own centre and with this, there is a new avenue for settlement of disputes.
However, critics have argued that though the codification has given ADR a new dimension, the application is still not being done effectively. Questions are still raised about the interference of judiciary in the arbitral process. Arbitrators and lawyers often treat arbitration as an ‘extra work’. To cure this, government needs to take greater initiative of causing awareness and encouraging people to take up alternative dispute resolution mechanisms. The goal is to make India a global destination for ADR and necessary steps need to be take to achieve this enormous goal.
YLCC would like to thank Chaitrali Mane for her valuable contribution in this article.
[1] https://viamediationcentre.org/readnews/MzEx/Evolution-and-Codification-of-ADR-mechanism-in-India
[2]https://www.lawctopus.com/academike/arbitration-adr-in-india/#:~:text=It%20was%20introduced%20in%201982,conciliated%20result%20and%20negotiating%20efforts.
[3] https://viamediationcentre.org/readnews/MzEx/Evolution-and-Codification-of-ADR-mechanism-in-India
[4] https://www.scconline.com/blog/post/2021/02/07/evolution-of-adr-mechanisms-in-india/
