A bird's eye view of the different dispute resolution mechanisms

02 September 2022

The Japanese yin-yang symbolizes that white is black and black is white. Everything is interconnected and yet unique. It depends upon the perspective of the person. The phrase ‘this world holds different types of people’ is a very common one, but what makes people different is a very relevant question in this context. The answer to this is in their perspective. This world is a hub of people of different mindsets, so differences and conflicts among them are common. In every aspect of life and every field of existence, conflicts are a given, but we also have different dispute resolution mechanisms to fix them. Accordingly, this article discusses the various dispute resolution mechanisms that can be devised to effectively resolve disputes.

What are disputes?

In the words of M. Esther Harding, “Conflict is the beginning of consciousness”. Disputes are a fundamental part of human life, just like the rising of the sun and the setting of the moon; disputes have become commonplace in our lives. Until the time you and I exist, disputes will exist too, because we can’t think alike and where there is a difference of thoughts or opinions, disputes are bound to be born. Disputes might be big or small, easy or complex, depending upon the parties and their interests involved. There are various kinds of mechanisms to help untangle these disputes.

What is dispute resolution?

Gersh Budker quotes, “An intelligent person should never resolve a dispute with brute force”. Hence, any dispute resolution mechanism introduces a path that paves the way for both the parties involved in the dispute. It serves as a path in which there is mostly no win-lose situation but only a win-win situation. Dispute resolution mechanisms analyse the situation by finding out why the parties have entered a deadlock and then construct a road that leads to the solution that holds some good for both parties. It includes various processes that inherently lead to an almost perfect solution that can be available at any given time and situation.

The parties usually mention beforehand in their contract, the dispute resolution mechanism they would seek if any dispute arises. The mechanism becomes active in different stages at different levels of the conflict.

What are the dispute resolution mechanisms?

A wide range of dispute resolution mechanisms, such as litigation, arbitration, mediation, negotiation, conciliation, etc., are referred to as ‘dispute resolution mechanisms’. The dispute resolution mechanisms can broadly be classified into two types: one being litigation, where the dispute is taken to court; and the other being ADR, alternative dispute resolution, which involves all those methods to extinguish issues without ringing the doorbell of the courts. They resolve the issue themselves or by consulting a third party.

Let’s study these mechanisms closely.

(1) Litigation

The go-to mechanism chosen by the people is litigation. It refers to the process of preparing and presenting a case in court. When parties fail to resolve their issue by themselves, then they prefer reaching the court rather than appointing any authority lower than the court. Approaching the court is promising because the judgement is binding on both parties. Every dispute, except the trivial ones, can be taken to court, and irrespective of which nation the parties belong to, they can approach the court. The parties hire advocates and lawyers to present their case and respective side.

(2) Arbitration

When the parties decide not to take the matter to court, they often opt for the process of arbitration to resolve the matter. Often they also mention in their contract that in case of any dispute, it will be resolved by arbitration. It is a consensual process. It is also one of the most popular forms of alternative dispute resolution mechanisms. In arbitration, a neutral third party serves as a judge who is responsible for resolving the dispute, and any aspect of the arbitration process can be negotiated among the parties. The arbitration is headed and decided by an arbitral panel or a single arbitrator, depending on the agreement of the parties. To comprise a panel, either both sides agree on one arbitrator, or each side selects one arbitrator and the two arbitrators select the third. An arbitrator need not be a lawyer. He can be anybody the parties hold competent enough, and often it’s the master of the field the issue is about.

Arbitration can broadly be classified into three types:

National arbitrations: When the dispute arises between two parties residing in the same state, then the arbitration takes place in that particular state and the dispute is resolved with the help of the concerning substantive law of that state.
International commercial arbitration: Usually used to settle disputes that arise from commercial contractual relations between parties who are in two different states.
Investor-State arbitration: A procedural mechanism that allows an investor from one country to bring arbitral proceedings directly against the country in which it has invested.

Another basis of differentiation is;

Ad-hoc arbitration: when parties have to determine all aspects of arbitration like the number of arbitrators, manner of their appointment, procedure for conducting the arbitration, etc., because the arbitration is not administered by any institution, it is called Ad-hoc arbitration.
Institutional arbitration: An institutional arbitration is one in which a specialized institution of a permanent character intervenes and assumes the functions of aiding and administering the arbitral process, as provided by the rules of that institution.

The difference between litigation and arbitration is as follows.

(3) Mediation

This third mechanism hammers out a resolution that is sustainable, voluntary, and mostly non-binding. The mediator cannot force either party to follow a certain course of action, or do something that either party refuses to do. The goal of mediation is for a neutral third party to help disputants come to a consensus on their own. Mediators are individuals trained in negotiations, which bring opposing parties together and attempt to work out a settlement or agreement that both parties may accept or reject. Mediation often is not binding and does not give any judgement, unlike arbitration and litigation. Mediation holds some benefits over other mechanisms, i.e., it is time-effective and cost-effective. The conflicting parties are naturally drawn to this mechanism because they want to clear out their conflict and work their way out.

(4) Negotiation

This is the simplest and the foremost step towards dispute resolution; it is not so formal and is the most flexible and cost-effective. It allows the parties to choose the steps of the process. It is not compulsory for either of the parties to participate in the process of negotiation. The parties have the free will to either accept or reject the decisions that come out of the process of negotiation. There is no restriction on the number of parties that can participate in the process of negotiation. They can vary from two individuals to processes involving many parties. The result of the negotiation is reached by the parties together without resorting to a neutral third party. The parties can delegate representatives to act on their behalf. When negotiating on behalf of the client, the counsel must ensure that there is no divergence between his or her negotiating stance and the mandate of the client. Negotiation comes with a bunch of problems of its own like taking undue advantage of the weaker party if the parties are unequal, termination of the process at the free will causing a huge loss of time and money invested in the process.

(5) Conciliation

Conciliation is an alternative dispute resolution method in which an expert is appointed to resolve a dispute by convincing the parties to agree upon a settlement. In conciliation, the conciliators also evaluate and intervene while resolving the dispute. However, the parties are not bound to follow the decision of the conciliator. Usually, all matters of civil nature are appropriate for conciliation, and it is an affordable mechanism under alternative dispute resolution mechanisms other than the conventional process of litigation in courtrooms. The primary difference between arbitration and conciliation is that arbitration is the process by which parties select an independent person who renders a decision regarding the case. While, conciliation attempts to make parties come to an agreement about the problem.

Conclusion

Interactions are an everyday thing. Every day, an unknown number of contracts are signed and numerous deals and obligations get carried out. In the midst of all this, disputes are a common thing. There are dispute resolution mechanisms to put an end to these disputes and offer a solution so that individuals may continue to work and interact. The methods mentioned above give a glimpse into the different mechanisms that can be used to help resolve disputes.