Finding a solution to a legal issue can be challenging due to the amount of time it takes, and how costly it will be, as well as how taxing it will be on everyone involved. Since many court cases in India can take years to get resolved, many are now looking for alternative methods of resolution. One such alternative method of resolution is ADR.
Mediation and arbitration are two of the more common forms of ADR in India. Both mediation and arbitration are similar in that they allow for the resolution of a conflict outside of the court; however, they differ greatly in how they are conducted, and understanding how these two differ will provide you with greater clarity as to which method would be best suited for your situation, and minimize any pressure on you during the process of resolving your issue.
Understanding Alternative Dispute Resolution in India
The term Alternative Dispute Resolution (ADR) in India refers to a means of resolving disputes in India without needing to go through the conventional court system. The basic premise of ADR is to provide a quicker solution, at less cost than litigation, and with a minimum of conflict involved in the process.
Both Indian courts and the Indian legislature have actively promoted and encouraged the use of ADR over the years, in order to relieve some of the burden placed on the judicial system, and to facilitate the peaceful resolution of disputes.
There are currently many different systems of ADR used throughout India today, for example, resolving commercial issues in addition to resolving family-related disputes, employment matters and disputes arising out of contracts.
Of all the ADR processes in India, mediation and arbitration are the two most popular, as they provide a structured but flexible approach to the resolution of legal disputes.
What Mediation Really Means
Mediation is a voluntary collaborative method for dispute resolution in which an impartial third party facilitates communication between disputing parties so they may understand the other’s position and the reasons behind it.
Instead, the mediator’s role is to provide impartial guidance for communicating and negotiating with each other and ultimately arrive at a mutually acceptable resolution. Because mediation is primarily about enabling parties to communicate freely and fully, it frequently leads to practical and durable resolutions because the final outcome is determined by the parties themselves through discussion and negotiation.
In India, mediation is widely used for resolving family matters, business partnerships, workplace issues, as well as disputes between neighbours or regarding properties.
How Arbitration Works in Practice
Arbitration is more formal than mediation. During arbitration, the parties provided a ‘case-in-chief’ to an arbitrator or an arbitrating panel. The arbitrator or panel of arbitrators listens to both sides and reviews the evidence, producing a final decision after taking into consideration the submissions by both parties.
While arbitration produces an arbitration award which constitutes a binding and enforceable decision under law, mediation does not create a legal obligation for either party. In India, the Arbitration and Conciliation Act of 1996 establishes rules governing the conduct of arbitrations and requires that all arbitration awards, by law, function as judgments of a court, with very limited rights of appeal available after the award has been issued.
Arbitrations are used frequently for cases concerning contractual disputes between companies, construction contracts, infrastructure contracts, and international commercial contracts, as they allow the parties to achieve a final and enforceable decision without participating in long and complex court disputes.
Mediation vs Arbitration in India: The Real Difference
Mediation and Arbitration differ regarding determining responsibility and the outcome of any dispute. Mediation allows the parties to decide what the terms of the settlement will be, since the mediator only provides a way to facilitate discussion between the parties; whereas, in an arbitration setting, the arbitrator is responsible for making a binding decision about the outcome of the dispute.
Collaborative problem-solving and mutual respect are the focus of the mediation process; while the arbitration process focuses on determining each party’s legal rights and obligations. The mediation process is more flexible than arbitration, which follows a structured/legal framework, similar to that of a court trial, although normally not as rigid as most court cases.
From a practical standpoint, mediation is generally faster and less expensive to complete. However, in the cases of complex commercial disputes, arbitrations tend to take longer and cost significantly more money to complete, but this structure does give the parties the assurance of having a final resolution to their dispute.
Choosing the Right Method for Dispute Resolution in India
What you are trying to accomplish and what type of dispute is at hand will guide you toward making a decision about whether or not to pursue mediation or arbitration. Mediation is best used in situations where only individuals are involved within an ongoing relationship and where there is mutual willingness and desire between the two parties to discuss openly, while producing something that meets everyone’s desires.
Throughout the year, the mediation process will help facilitate communication and resolution of the issue through an impartial third party. Arbitration is typically utilized when an individual is addressing a contractual obligation with regard to their fee or service agreement and a mediation type of resolution is not feasible due to the complexity of the subject matter and possible outcomes.
Most likely in your case, if both of these options seem appropriate to of you based on your priorities, it is still suggested that you discuss them with an attorney capable of providing you with legal advice and representing your interests.
Legal Support for ADR in India
In India, the legal system supports alternative dispute resolution by creating a strong framework for the use of these methods through the Civil Procedure Code. This includes Section 89 that requires judges to recommend using ADR if they believe it would be appropriate, and the Arbitration and Conciliation Act of 1996 provides guidance on how to process arbitration actions.
The introduction of the draft Mediation Bill is another example of the government’s desire to make mediation a standard way for people to resolve their disputes legally. Courts are encouraging parties to make an attempt at mediating their dispute before going to court.
Why ADR Is Gaining Popularity in India
In India, the increased usage of alternative dispute resolution (ADR) has increased due to an increasing awareness of the limitations of traditional litigation. Traditional court cases can take several years to complete and are often expensive, as well as technically complex. In addition, they can be an emotional burden to all parties involved.
ADR methods typically allow for a faster, less costly, and more private method of resolving disputes. They enable parties to select their own mediator or arbitrator based upon the specific expertise required to resolve the particular dispute, especially in cases where the dispute involves a technical or commercial component.
For businesses, ADR provides an opportunity to preserve the business relationship while efficiently resolving disputes, and, for individuals, ADR provides a less threatening and more favourable method of resolving disputes.
Final Words
There are no right or wrong answers regarding mediation and arbitration, since mediation provides flexibility, cooperation and the ability to maintain relationships, while arbitration provides clarity and assurance of legally binding outcomes.
Both mediation and arbitration are strong options for resolving disputes in India within the framework of alternative dispute resolution. It is essential to understand your dispute, what you wish to achieve, and what resolution you desire.
By taking time to educate yourself about the various benefits and disadvantages associated with mediation and arbitration today, you can avoid lengthy court cases and potentially negative psychological impacts resulting from these situations.