Indian Law on Alternative Dispute Resolution

Have you ever come across the term ‘Alternative Dispute Resolution’? It is also called as ADR system. The ADR system is relevant when two parties involved in a feud come together to reach mutual consensus, with the help of a neutral third person. The third person is a trained independent individual, who helps the parties to resolve the dispute. The ADR system, under the Indian law, intends to improve the efficiency of legal system and speed up the course of action.

The ADR system includes several methods, such as:

• Mediation
• Adjudication
• Arbitration
• Conciliation
• Ombudsman Schemes
   

Indian Law: Why the ADR System is preferred by Entrepreneurs

A majority of the business houses in India are owned by small entrepreneurs. These companies undertake both written and verbal contracts. However, in many cases, no written contracts are executed and transactions are carried based on oral promises.
Dispute arises in cases where one of them fails to fulfill the promises. 

Following to the breach of the contract, by one of the parties, the other party files a lawsuit.

However, there are various disadvantages of filing a legal case, such as:

• The parties lose control over the matter.
• The timings and procedure of the case depends solely on the judges and lawyers.
• The court may take years, to sort out the matter.
• The parties can communicate only through their lawyers.
• The parties have to bear huge costs due to the delays and lawyer’s fee.

Typically, these small entrepreneurs have narrow supply chains and their businesses rely mainly on personal relationships. Such lawsuits bring an end to the long lasting business relations. Further, small companies involved in litigations can lose their competitive edge.

Also, the parties are directed by their lawyers to not to discuss the matter with the opposite party, in their absence. This puts an end to the communication, which is an indispensable part of trade and commerce.

Further, if we consider the global business prospective, it is difficult to oblige the overseas corporate houses and to answer in a foreign court.

Indian Law: Mediation as a Part of ADR System

The cost effective, customized, time effective facets of the ADR system provide several ways to resolve inevitable business issues. Top firms across the world are adopting ADR system to resolve their disputes. Most of them resort to mediation, before filing a lawsuit.  Mediation, for instance, is an example of a type of method under the ADR system, where a mediator helps both the parties to reach a mutual agreement. Mediation can also be used to settle disputes, such as consumer disputes, contract disputes, housing disputes and neighborhood disputes.