Alternate Dispute Resolution in Ancient India & It's Lessons

"Discourage litigation. Persuade your neighbors to compromise wherever you can. Point out to them how the nominal winner is often a looser - in fee, expenses and waste of time."-Abraham Lincoln

Indian judiciary is one of the oldest judicial system, a world-renowned fact but nowadays it is also well-known fact that Indian judiciary is becoming inefficient to deal with pending cases, Indian courts are clogged with long unsettled cases. The scenario is that even after setting up more than a thousand fast track Courts that already settled millions of cases the problem is far from being solved as pending cases are still piling up.

To deal with such a situation Alternative Dispute Resolution (ADR) can be helpful mechanism, it resolves conflict in a peaceful manner where the outcome is accepted by both the parties. This is not a full fledge mechanism that will cover up the short comings of the judicial system of India but with due diligence and proper knowledge, this mechanism of settling the disputes through alternatives rather than approaching the court may give better results in providing the justice that the people of the country desires.

To understand the topic of our project, we need to understand the Alternate Dispute Resolution thoroughly that what is the current stage of it and how this mechanism journey's through ancient India have gone and what did were the impacts that led to the whole development of this mechanism through time.

Alternate Dispute Resolution

The concept of Alternative Dispute Resolution (ADR) mechanism is capable of providing a substitute to the conventional methods of resolving disputes. ADR offers to resolve all type of matters including civil, commercial, industrial and family etc., where people are not being able to start any type of negotiation and reach the settlement. Generally, ADR uses neutral third party who helps the parties to communicate, discuss the differences and resolve the dispute. It is a method which enables individuals and group to maintain co-operation, social order and provides opportunity to reduce hostility.

Alternative dispute resolution is, in an insurance sense, a number of disparate processes used by companies to resolve claims and contractual disputes. Insured clients who are denied a claim are offered this course of action as a form of recourse. It is employed to avoid expensive and time-consuming litigation and arbitration. Alternative dispute resolution is designed to settle disputes outside of the courtroom with the help of an impartial third party. This path is generally accessible after efforts between the client and the insurer to resolve any differences between themselves fails and reaches an impasse.

In India, The Legal Services Authorities Act was passed in 1987 to encourage out-of-court settlements, and the new Arbitration and Conciliation Act was enacted in 1996. Procedure for plea-bargaining was included in the Code of Criminal Procedure in 2005. {Plea-bargaining is best described as a "pre-trial negotiation between the accused and the prosecution during which the accused agrees to plead guilty in exchange for certain concessions by the prosecution."}

Lok Adalat or "people's court" comprises an informal setting which facilitates negotiations in the presence of a judicial officer wherein cases are dispensed without undue emphasis on legal technicalities. The order of the Lok-Adalat is final and binding on the parties, and is not appealable in a court of law.

History Of ADR In India

The history of ADR can be traced to our historical path. The concept of Lok Adalats (People‟s Court) is an innovative contribution of India to the World Jurisprudence. India has a long tradition and history of ADR process like Mediation and Lok Adalat being practiced in the society at the grass root level, these are called Panchayats.

The ancient concept of settlement of dispute through Arbitration, Conciliation, Mediation or Negotiation known as the verdict or decision of Nyaya-Panchayat is conceptualized and institutionalized in the philosophy of Lok Adalat. Concept of mediation has been practiced with great frequency in the last quarter of the 20th Century. After the emergence of 21st Century this practice has been developed with more frequency in the Western countries.

Its roots can be traced in USA, notably at the Pound Conference in 1976. It was followed by two legislations - The Civil Justice Reforms Act, 1990 and The Administrative Dispute Resolution Act, 1996. There are many Statutes in America which make the mediation mandatory for dispute resolution. The State Bar Associations have set up mediation centers and the American Bar Association has its intensive section for dispute resolution. Other countries like United Kingdom has also introduced mediation system as an alternate for dispute resolution mechanism.

In United Kingdom, besides, Civil Procedures Reforms of 1999, Lord Chancellor‟s Department announced in 2001 that all government disputes should be resolved through settlement measures. Likewise, ADR mechanism was encouraged and implemented in Australia, South Africa and Sri Lanka. Justice Warren Burger the former Chief Justice of the American Supreme Court while discussing the importance of ADR, had observed:
The harsh truth is that we may be on our way to a society over run by hordes of lawyers, hungry as locusts, and bridges of judges in numbers never before contemplated. The notion that ordinary people want black robed judges, well-dressed lawyers, and fine paneled court rooms as the setting to resolve their disputes, is not correct. People with legal problems like people with pain, want relief and they want it as quickly and inexpensively as possible." "The obligation of the legal profession is to serve as healers of human conflict and we should provide mechanism that can produce an acceptable result in shortest possible time, with the least possible expense and with a minimum of stress on the participants. That is what justice is all about.

Evolution of the mechanism in India….

1. Arbitration

   Though arbitration prevailed in India, in the form of panchayats (which have been now given recognition in the Constitution of India)[i] before the Britishers came in and established their authority. In 1923, the League of Nations gathered and agreed to the Geneva Convention. The Geneva Convention also contained clauses for arbitration.[ii]
   
   The first arbitration dedicated provision in the Civil Procedure Code, 1908 which had Section 89 providing for arbitration but the same was repealed by Section 49 and Schedule III to the Arbitration Act, 1940.[iii] Prior to enactment of the Arbitration Act, 1940, the Britishers enacted Arbitration (Protocol and Convention) Act, 1937 wherein the Preamble of the Act stated that India was signatory as a State to the Protocol on arbitration as established by League of Nations.
   
   The League of Nations intended to bring the world closer through trade which made it realize the importance of arbitration. As a result, the Protocol on Arbitration Clauses, 1923 came into existence. There were several lacunae in the Protocol, hence, a need for amendment was felt. The League of Nations came up with another Convention for Enforcement of Foreign Arbitral Awards which was lacking in the 1923 Convention.[iv]
   
   This Convention of 1927 is also known as the Geneva Convention of 1927. This Convention formed the basis for other enactment i.e. the Arbitration (Protocol and Convention) Act, 1937. Section 3 of the Arbitration (Protocol and Convention) Act, 1937 refers to the existence of the Arbitration Act, 1899.
   
   The Arbitration Act, 1940 came into picture repealing all the previous laws governing arbitration. The Arbitration (Protocol and Convention), 1937 failed to achieve its objective. Then after several years of work, in 1958, the world came up with a convention i.e. the New York Convention, which is still running its course till date. Then, the Arbitration Act, 1940 was repealed and replaced by the Arbitration Act, 1960.
   
   In 1981, in Guru Nanak Foundation v. Rattan Singh [v], Desai, J. observed with regards to the 1961 Act that the arbitration system has become ineffective. The point was that even in cases if the arbitrator passed an arbitral award, the parties used the provisions of the Act to challenge the award. This observation presented the 1961 Act as an additional layer which party may choose or not, prior to the litigation process.
   
   The lacunae in the provisions of the 1961 Act, made it redundant and people ended up approaching the courts for litigation. Arbitration as a process was meant to be cost effective and time efficient, but the 1961 Act failed miserably to achieve this objective. This Act would be further repealed and replaced by the Arbitration and Conciliation Act, 1996. In 1985, United Nations Commission on International Trade Law (UNCITRAL) presented a comprehensive model for arbitration.
   
   The present Arbitration and Conciliation Act, 1996 is based on that UNCITRAL model. The Arbitration and Conciliation Act, 1996 has been subjected to two more amendments in 2015 and 2019.
    

2. Mediation

   In 1996, the Government brought an amendment to Section 89 of the Civil Procedure Code, 1908 which gave scope to the court to formulate settlements, if it appears to the court that there is a possibility of settlement between the parties and after receiving the referral from the parties to make amendments in such settlement and refer the same to arbitration, Lok Adalat, conciliation or mediation. Mediation in India is governed by the Mediation Rules of 2003.
   
   These proceedings are more informal in nature as compared to arbitration and conciliation. The role of the mediator is more of a person who provides guidance and clears any misunderstanding that arises between the parties. The parties reach settlement on their own. Mediator regulates the settlement process. At the end of the process, a settlement is arrived between the parties rather than a decision.
   
   The Law Commission of India suggested establishment of commercial courts, first, in the form of creating division in the High Court itself or establishing separate commercial courts. The second suggestion resulted in the passage of the Commercial Courts Act, 2015. In 2018, the present day Government, in alignment of its policy of improving the ease of doing business, came up with an amendment to the Commercial Courts Act, 2015.
   
   The President, in May 2018, promulgated an Ordinance which amended the Commercial Courts Act, 2015. As per this amendment, the Government introduced pre-litigation mediation for all the commercial disputes. The provision concerned is Section 12-A(1) which states that in cases where no interim relief is required, the matter would be referred to compulsory mediation. Section 12-A(2) empowers the Central Government, through notification, to authorize the authorities under the Legal Services Authorities Act, 1987 for pre-institution mediation.

The Process
Dispute resolution outside court is not new. Village level institutions played the leading role, where disputes were resolved by elders, comprising council of village (popularly called panchayats) informal way of mediation. ADR is not a new experience for the people of this country also. It has been prevalent in India since time immemorial. Legal history indicates that down the ages man has been experimenting with procedure for making it easy, cheap and convenient to obtain justice.

Village level institution where disputes are resolved by elders, comprising council of village (popularly called panchayats). The system was that of monarchy in Ancient India. In earlier times, disputes were peacefully decided by intervention of kulas, srenis, parishads before the king came to adjudicate. Gramin head of Grama. Visyapati political head of many villages. Puga or a board of person who belonged to different sects and tribe but lived in same locality.

Panchayats were different systems of arbitration. Subordinate to the regular courts of law. Mitakshara, it can say that Kula court consisted of a group of relations near or distant. It is important to note that in ancient India when dispute arises in family it was settled by elders. If they failed to bring about any compromise the sreni or the guild courts used to intervene. Disputes between several guilds were settled by means of arbitration.

During Mauryans the king was the head of justice. There were special courts in the cities and villages presided over by the pradeshika, mahamatras and rajukas. Kantakasodhana looked after criminal matter. In civil cases the Hindu Code of law as envisaged in the Shastras was decision was taken by a body of arbitrators with a system of appeal to the king. Office of minister in charge of law and order was called Vinayasthiti Sthapaka.

Mughal period most villages resolved their cases in the village courts itself and appeal to the caste courts or panchayats, the arbitration of an impartial umpire(salis). Maratha period generally, the Patil and the panchayat used to adjudicate the cases. British Period modern arbitration law in India was created by the Bengal Regulations of 1772, 1780 and 1781 were designed to encourage arbitration.

The Arbitration Act of 1940 was enacted replacing the Indian Arbitration Act of 1899. It amended and consolidated the law relating to arbitration in British India and remained a comprehensive law on Arbitration even in the Republican India till 1996. In 1982 settlement of disputes out of courts started through Lok Adalats. First Lok Adalat was held on March 14, 1982 at Junagarh in Gujarat. India a long history of settlement of disputes outside the formal justice delivery system.

The concept of parties settling their disputes by reference to a person or persons of their choice or put tribunals was well known to ancient India. Long before the king came to adjudicate and disputes between persons such disputes were quite peacefully decided by the intervention of the Kulas, Srenis, Pugas and such other autonomous bodies. Since the ancient time arbitration, conciliation and mediation were the means for settlement of disputes outside the formal legal system.

These alternative means were recognised not only in India but also in other parts of the world. Thus, settlement of dispute outside the scope of the formal legal system may be called as an alternative means of settlement of dispute through a mediator is necessarily treated as an alternative means. It is universally admitted fact that arbitration, conciliation and mediation are efficient alternative means are less expensive and are not time consuming which are in fact very important factors for protection of commercial relationship.

In past years it has been witnessed that settling the disputes by the alternative means such as arbitration, conciliation and mediation and its scope have been considerably increased in the business field. Several developed and developing countries have adopted and recognised the alternative dispute resolution for resolving the international commercial disputes. In view of increasing importance of alternative means for settlement of disputes, it has become necessary to train the person for this purpose and impart expertise in this field as skilled persons are required to perform under the system of alternative disposal of disputes.

Thus with the object to give statutory recognition to alternative means of settlement of disputes the necessity of an organization was felt. On 4th December 1997 the Chief Ministers of States and the Chief Justices of the High Courts met in New Delhi to discuss at length the alternative means of disposal of disputes as well. Under this system there is procedural flexibility and also it is time and money saving besides the absence of tension of regular trial.

In this context the legendaries of various fields i. e. commercial, administrative and legal unanimously constituted an institution to be called. International Centre for Alternative Dispute Resolution-ICADR. This institution was established in Delhi on 31st May, 1995 and registered under the Society Registration Act, 1960. It is an autonomous non-beneficial institution.

The chief object of this institution is to inculcate and expand the culture of alternative dispute resolution. However, other objects of the International Centre for Alternative Dispute Resolution.

Lessons / Impact Of History
From the above, we can say that the history is vast in terms of ADR in India, this led to various lessons learnt which helped in the formation of the legislative intent of the mechanism. These lessons are:

1. Code of Civil Procedure
   The Code of Civil Procedure, 1859 in its sections 312 to 325 dealt with arbitration in suits while sections 326 and 327 provided for arbitration without court intervention. The Code of Civil Procedure (Act 5 of 1908) repealed the Act of 1882. The Code of Civil Procedure, 1908 has laid down that cases must be encouraged to go in for ADR under section 89(1). Under the First Schedule, Order XXXII A, Rule 3 a duty is cast upon the courts that it shall make an endeavor to assist the parties in the first instance, in arriving at a settlement in respect of the subject matter of the suit.
   
   The second schedule related to arbitration in suits while briefly providing arbitration without intervention of a court. Order I, Rule 1 of the schedule says that where in any suit, all the parties agree that any matter in difference between them shall be referred to arbitration, they may, at any time before judgment is pronounced; apply to the court for an order of reference. This schedule, in a way supplemented the provisions of the Arbitration Act of 1899.
    
2. Indian Arbitration Act, 1899
   This Act was substantially based on the British Arbitration Act of 1889. It expanded the area of arbitration by defining the expression 'submission' to mean "a written agreement to submit present and future differences to arbitration whether an arbitrator is named therein or not".
    
3. Arbitration (Protocol & Convention Act), 1937
   The Geneva Protocol on Arbitration Clauses 1923 and the Geneva Convention on the Execution of Foreign Arbitral Awards 1927 were implemented in India by the Arbitration (Protocol and Convention) Act, 1937. This Act was enacted with the object of giving effect to the Protocol and enabling the Convention to become operative in India.
    
4. The Arbitration Act, 1940
   The Arbitration Act, 1940, dealt with only domestic arbitration. Under the 1940 Act, intervention of the court was required in all the three stages of arbitration in the tribunal, i.e. prior to the reference of the dispute, in the duration of the proceedings, and after the award was passed.
   
   This Act made provision for:
   
   1. arbitration without court intervention;
   2. arbitration in suits i.e. arbitration with court intervention in pending suits and
   3. arbitration with court intervention, in cases where no suit was pending before the court.
   
   Before an arbitral tribunal took cognizance of a dispute, court intervention was required to set the arbitration proceedings in motion. The existence of an agreement and of a dispute was required to be proved. During the course of the proceedings, the intervention of the court was necessary for the extension of time for making an award.
   
   Finally, before the award could be enforced, it was required to be made the rule of the court. This Act did not fulfill the essential functions of ADR. The extent of Judicial Interference under the Act defeated its very purpose. It did not provide a speedy, effective and transparent mechanism to address disputes arising out of foreign trade and investment transactions.
    
5. Arbitration & Conciliation Act, 1996
   The government enacted the Arbitration and Conciliation Act, 1996 in an effort to modernize the 1940 Act. In 1978, the UNCITRAL Secretariat, the Asian African Legal Consultative Committee (AALCC), the International Council for Commercial Arbitration (ICCA) and the International Chamber of Commerce (ICC) met for a consultative meeting, where the participants were of the unanimous view that it would be in the interest of International Commercial Arbitration if UNCITRAL would initiate steps leading to the establishment of uniform standards of arbitral procedure.

The preparation of a Model Law on arbitration was considered the most appropriate way to achieve the desired uniformity. The full text of this Model Law was adopted on 21st June 1985 by UNCITRAL. This is a remarkable legacy given by the United Nations to International Commercial Arbitration, which has influenced Indian Law. In India, the Model Law has been adopted almost in its entirety in the 1996 Act.

This Act repealed all the three previous statutes. Its primary purpose was to encourage arbitration as a cost-effective and quick mechanism for the settlement of commercial disputes. It covers both domestic arbitration and international commercial arbitration. It marked an epoch in the struggle to find an alternative to the traditional adversarial system of litigation in India.

The changes brought about by the 1996 Act were so drastic that the entire case law built up over the previous fifty-six years on arbitration was rendered superfluous. Unfortunately, there was no widespread debate and understanding of the changes before such an important legislative change was enacted. The Government of India enacted the 1996 Act by an ordinance, and then extended its life by another ordinance, before Parliament eventually passed it without reference to Parliamentary Committee.

Arbitration, as practiced in India, instead of shortening the lifespan of the dispute resolution, became one more "inning" in the game. Not only that, the arbitrator and the parties' lawyers treated arbitration as "extra time" or overtime work to be done after attending to court matters. The result was that the normal session of an arbitration hearing was always for a short duration. Absence of a full-fledged Arbitration Bar effectively prevented arbitrations being heard continuously on day-to-day basis over the normal working hours, viz. 4-5 hours every day. This resulted in elongation of the period for disposal.

Veerappa Moily also said in the ADR congress held in the year 2010 that the 1996 Act, although modeled along international standards, has so far proved to be insufficient in meeting the needs of the business community, for the speedy and impartial resolution of disputes in India.

The Law Commission of India prepared a report on the experience of the 1996 Act and suggested a number of amendments. Based on the recommendations of the Commission, the Government of India introduced the Arbitration and Conciliation (Amendment) Bill, 2003, in the Parliament. The standing committee of law ministry felt that provisions of the Bill gave room for excessive intervention by the courts in arbitration proceedings.

Conclusion
Human civilization has come a long way forward as far as methods for dispute resolution is concerned. The development of ADR mechanisms has been prominently driven by the objective of resolving the issues in a timely and cost effective manner. The evolution of ADR mechanisms 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.

The history of ADR mechanisms started with the enactment of arbitration laws which evolved a lot over time. With time the other ADR mechanisms knocked on the door of Indian Parliament and Parliament was prudent enough to incorporate these new methods for dispute resolution. The Government also ensured that these methods are used on a specific basis in particular industries, for instance, the Commercial Courts Act, 2015 and the Micro, Small and Medium Enterprises Development Act, 2006.

There has been discontent within the legal fraternity with regards to amendments in Section 89, which has been resolved based on the recommendations of Justice (Retd.) M. Jagannadha Rao Committee Report. The present day Indian Government is taking further steps in the evolution of ADR mechanisms wherein it desires to make India a global destination for arbitration and other dispute resolution methods.

India has a long history of settlement of disputes outside the formal justice delivery system. The concept of parties settling their disputes by reference to a person or persons of their choice or private tribunals was well known to ancient India. Long before the king came to adjudicate on disputes between persons such disputes were quite peacefully decided by the intervention of the kulas, srenis, pugas and such other autonomous bodies.

References

1. https://fdocuments.in/reader/full/chapter-ii-historical-background-of-the-adr-system-in-india-23-ancient-indian
2. https://www.ijlmh.com/the-evolution-and-development-of-adr-in-india-and-its-different-kinds/
3. https://viamediationcentre.org/readnews/MzU4/Ancient-History-of-Arbitration
4. http://www.ijtr.nic.in/Alternative%20Dispute%20Resolution%20Mechanism%20inModern%20Indian%20Society.pdf
5. https://www.scconline.com/blog/post/2021/02/07/evolution-of-adr-mechanisms-in-india/
6. https://www.lawctopus.com/academike/arbitration-adr-in-india/
7. https://viamediationcentre.org/readnews/MzEx/Evolution-and-Codification-of-ADR-mechanism-in-India
8. https://allindialegalforum.in/2020/10/28/historical-perspective-of-alternative-dispute-resolution/
9. National Alternative Dispute Resolution Advisory Council, ADR Terminology: A Discussion Paper (2002)
10. David Barker, "Remedies Outside the Court System"
11. P.M. Bakshi, "Alternative Dispute Resolution" (Vol.1 Part 2) Amity Law Review 43

End-Notes:

1. The Constitution (73rd Amendment Act), 1992; also refer to Article 40 of the Constitution of India.
2. League of Nations, Treaty Series, Publication of Treaties and International Engagements registered with the Secretariat of the League of Nations <https://treaties.un.org/doc/Publication/UNTS/LON/Volume%2027/v27.pdf>.
3. Section 89 (repealed), Civil Procedural Code, 1908.
4. Convention on the Execution of Foreign Arbitral Awards signed at Geneva on 26-9-1927 also known as the Geneva Convention, 1927.
5. (1981) 4 SCC 634.