IMPORTANCE OF ALTERNATE DISPUTE RESOLUTION IN BUSINESS

People are aware of the judicial system known as litigation to solve their disputes. Litigation is either civil or criminal in manner. People get stressed since the litigation process often procedure oriented and time consuming along with the fear of losing. Over the recent pandemic of COVID-19 people became aware of Alternate Dispute Resolutions which could help them in a better and easier way. 

Alternate Dispute Resolution (ADR) includes – negotiation, mediation, arbitration and conciliation.

Negotiation – is where parties sit down on a table on their own and solve the dispute by negotiating the terms of settlement. It is not legally binding to the parties.

Conciliation / Mediation – are not legally binding but allow a neutral third party to be a conciliator / mediator. The mediator helps the disputed parties to come to a conclusion and then drafts a settlement agreement based on what has been agreed by both parties. The mediator or conciliator can only give an opinion but cannot decide how to resolve the dispute.

Arbitration – is legally binding on the party in form of an award from a third party known as an arbitrator. The arbitrator is like a judge which listens to both the parties and then decides as per law and gives them an award. The award is usually confidential and cannot be appealed. 

Lok  Adalat (INDIA) – it is an informal court which is presided by a retired judge or expert to resolve civil disputes between two parties. It provided low cost alternatives ADR services in the country. It was a faster cheaper and more accessible than traditional courts and was very popular. Resolutions passed in the Lok Adalat are final and binding as per law and they cannot be appealed in any court.

ADR can be done anywhere it is not necessary it has to be done in a particular place. It is a quicker and stress free option to solve disputes. Over the recent pandemic a lot of companies had conducted their arbitrations or mediations online via Zoom, WebEx, Microsoft Teams or Google Meet. The software to be used depended on the parties and the arbitrator / mediator. International trade Disputes were solved using online dispute resolution. Most companies even added an arbitration clause in their agreements.

Landmark cases:

1. NATIONAL HIGHWAYS AUTHORITY OF INDIA V. SAYEDABAD TEA ESTATE

The Supreme Court held that an application under section 11 of the arbitration and conciliation act,1996 shall not be maintainable on account of  provision of Section 3G(5)of the national highways act which provides the central government to appoint an arbitrator. It also observed that the NH act had an overriding effect over the arbitration act in land compensation matters under the NH Act.. 

It held that since the power was exclusively invested in the central governments hand to appoint an arbitrator under a special enactment, the application under Section 11(6) was not maintainable and could not be invoked.

2. M.T.N.L V. CANARA BANK & ORS 

The Supreme Court while invoking the Doctrine of group of companies permitted that non-signatories to an arbitration agreement to also participate in the arbitration proceedings. It also observed that there was factual background to suggest the parent company or holding company or a member of group of companies had intention to bind the non-signatory to the arbitration proceedings.

3. HINDUSTAN CONSTRUCTION COMPANY LIMITED & ANR. V. UNION OF INDIA & ORS.

The Bench observed that Section 87 of the Arbitration Act is against the intent of the Arbitration and Conciliation (Amendment) Act, 2015 and further nullifies the ratio laid down in the recent judgment of Board of Control for Cricket in India Vs. Kochi Cricket Pvt. Ltd. wherein it was observed that the intent and purport of Section 87 is contrary to the overall scheme of the Arbitration Act and the 2015 Amendment. The decision was to use the case of Board of Control for Cricket in India Vs. Kochi Cricket Pvt. Ltd. as a guiding principle for determining the applicability of the 2015 amendment. 

On 12^th November 2022 the Department Of Consumer Affairs opted to settle its pending cases via Lok Adalat. It gave the consumers the chance the disputes through online resolution systems with the companies they had a dispute with. Here the parties were mediated via Zoom with the help of firm who specialized in dispute resolutions. In case the disputes were resolved then the parties would go to the Lok Adalat and sign the Award (a judgment awarded in the Lok Adalat).

ADR does not only save time, it helps parties solve their disputes without their business relationship getting affected. It also makes both the parties feel they have won since there is only a win-win situation in ADR as both parties usually come to a mutual level of settlement.