Any method of resolving disputes without litigation i.e. outside the courtroom is known as Alternative Dispute Resolution (ADR). ADR is an umbrella term that includes all legally permitted processes of dispute resolution, other than litigation.
As per Tania Sourdin, “it is a method that usually involves a third party that is a skilled helper who either assists the parties of the dispute to reach at a decision by agreement or facilitates in arriving at a solution to the problem between the parties to the dispute”.
As per H.K. Saharay, “Arbitration is a process for settlement of disputes fairly and equitably through a person or persons or an institutional body without recourse to litigation by the disputing parties pursuant to an agreement”.
So, let us look at how the various ADR mechanisms entered the legal system in most developed countries in the world, in brief :)
ADR in ancient times:
ADR or some of its processes have been used in India since ancient times, some of these processes are:
Panchayats were/are usually prevalent in rural areas. It is a place where the chosen people from the area gather to hear the matter of two parties and try to settle them amicably.
2. Gathering or Family Council:
In case of a dispute arising in a family, the elders of the family intervene by hearing the matter and then providing a solution to it.
3. Adhikrita and Nripa. (Courts appointed by Kings):
Kings of states used to select the courts and in those courts, matters were heard to fix the said problems. The examples of King’s Council members gathering to hear matters were found to have been happening since the Mauryan era at Patliputra (present-day Patna).
4. Mughal Period :
Even from the onset of the Mughals arriving in India they were determined to administer the values of justice and law in their administrations. Judges, known as Kazee, used to follow Hedaya (guidance) to try and guide the two parties to resolve a matter.
ADR in India during British Era:
The regulation of 1787 empowered the then courts to refer suits for arbitration. The Bengal resolution of 1793 ( Act XVI of 1793) empowered courts to address a matter of arbitration with the consent of the parties involved where, the value of suit did not exceed 200Rs and thus, were primarily matters related to accounts, partnership, debts, non-performance of contractual obligations, etc.
Regulation XV of 1795 extended the 1793 resolution to the territory Madras. Similarly, Regulation XXI of 1803 extended XVI to territory ceded by Nawab Wazir. Similarly, the initiative taken at Madras was extended to the Presidency of Bombay in 1827.
The Civil Procedure Code, 1859 added the provisions which empowered the court to refer disputes to arbitration (Chapter VI Section 312-327 but, not applicable to SC and small cause courts). Under British Rule, Indian Arbitration Act, 1899 was introduced as the first Indian legislation regarding ADR and there it was provided- the matters that would be settled by agreement between parties and did not require court supervision, and everything else was left to the purview of Schedule 2 of Code of Civil Procedure, 1908. The next legislation regarding any ADR process would come in the form of the Arbitration Act of 1940 which consolidated and amended the laws of arbitration and got assent on 11th March 1940 from the Governor-General.
Arbitration Act, 1940 would ultimately prove to be technically complicated, time-consuming, and expensive in proceedings. The Act had only concerned itself with domestic arbitration and there was no substantial part on international ADR proceedings of any kind.
Further, there was increasing growth in this sphere in the World through various conventions that were joined by many nations.
The Conventions that shaped Alternative Dispute Resolution in the modern era:
1. 1927 Geneva Convention on the Execution of Foreign Arbitral Awards:
Article 2 of this convention provided that, the enforcement of an award could be refused by the contracting parties even if the conditions of the said article were fulfilled.
Some of the grounds based on which an award could be annulled are:
It is annulled in the country in which the award was made.
The party against whom the award is sought was not given ample time or opportunity to present their case or were not properly represented in a legal capacity.
The dispute between the parties decided on, was beyond the scope of what was submitted to arbitration in the agreement.
This article applied to any award which was given after the enforcement of the 1923 Geneva Protocol on Arbitration Clauses.
Read more about the convention, HERE.
2. 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (The New York Convention):
This convention provided for uniform legislative standards for recognition of arbitral awards and agreements or recognition of courts that are treated as ‘foreign’ under legislation due to some “foreign elements” in its proceedings. The main objective behind this convention was to prevent discrimination between domestic and foreign arbitral awards by compelling signatory parties to enforce foreign awards with the same standard as domestic awards.
However, any foreign award may be refused under certain grounds provided by the convention: