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Alternative dispute resolution (ADR) implies privately addressing any  issues out of the court with the help of an unprejudiced dispute resolution body. Settling consumer disputes this is simpler, quicker and more affordable than going to court.

This paper basically attempts two topics that is:





When negotiation fails, arbitration might be a good option for settling your settlement dispute with the insurance agency and with accident claim cases . Arbitration is a method of alternative dispute resolution where an impartial individual is picked to hear the two sides of a disagreement and decide an outcome. Settling consumer disputes this is simpler, quicker and more affordable than going to court. This paper attempt to address both of the topic .At last there is conclusion based on my opinion upon the topic .



Arbitration is a form of dispute resolution. Arbitration is the private determination of a dispute by an independent third party. An arbitration hearing may involve the use of an individual arbitrator or a tribunal. A tribunal may consist of any number of arbitrators though some legal systems insist on an odd number for obvious reasons of wishing to avoid a tie. One and three are the most common numbers of arbitrators. Alternative dispute resolution (ADR) means settling a complaint out of court with the assistance of an impartial dispute resolution body. Resolving consumer disputes this way is easier, faster and less expensive than going to court.The disputing parties’ hand over their power to decide the dispute to the arbitrator(s). Arbitration is an alternative to court action (litigation), and generally, just as final and binding (unlike mediation, negotiation and conciliation which are non-binding).


General principles of arbitration are as follows:

  • The object of arbitration is to obtain a fair resolution of disputes by an impartial third party without unnecessary expense or delay.
  • Parties should be free to agree how their disputes are resolved, subject only to such safeguards as are necessary in the public interest.
  • Courts should not interfere.

There are many types of ADR, such as

  • Mediation
  • Conciliation
  • Negotiation
  • Arbitration
  • complaints boards.
  • The process of arbitration differs among cases. The following is a list of the main steps in arbitration, however it should not be viewed as an exhaustive list.
  • Initiating the Arbitration – A request by one party for a dispute to be referred to arbitration.
  • Appointment of Arbitrator – Arbitrators may be appointed by one of three ways: (1) Directly by the disputing parties, (2) By existing tribunal members (For example, each, each side appoints one arbitrator and then the arbitrators appoint a third), (3) By an external party (For example, the court or an individual or institution nominated by the parties).
  • Preliminary Meeting – It is a good idea to have a meeting between the arbitrator and the parties, along with their legal council, to look over the dispute in question and discuss an appropriate process and timetable.
  • Statement of Claim and Response – The claimant sets out a summary of the matters in dispute and the remedy sought in a statement of claim. This is needed to inform the respondent of what needs to be answered. It summarizes the alleged facts, but does not include the evidence through which facts are to be proved. The statement of response from the respondent is to admit or deny the claims. There may also be a counterclaim by the respondent, which in turn requires a reply from the claimant. These statements are called the ‘pleadings’. Their purpose is to identify the issues and avoid surprises.
  • Discovery and Inspection – These are legal procedures through which the parties investigate background information. Each party is required to list all relevant documents, which are in their control. This is called ‘discovery’. Parties then ‘inspect’ the discovered documents and an agreed upon selection of documents are prepared for the arbitrator.
  • Interchange of Evidence – The written evidence is exchanged and given to the arbitrator for review prior to the hearing.
  • Hearing – The hearing is a meeting in which the arbitrator listens to any oral statements, questioning of witnesses and can ask for clarification of any information. Both parties are entitled to put forward their case and be present while the other side states theirs. A hearing may be avoided however, if the issues can be dealt with entirely from the documents.
  • Legal Submissions – The lawyers of both parties provide the arbitrator with a summary of their evidence and applicable laws. These submissions are made either orally at the hearing, or put in writing as soon as the hearing ends.
  • Award – The arbitrator considers all the information and makes a decision. An award is written to summarize the proceedings and give the decisions. The award usually includes the arbitrator’s reasons for the decision.



Arbitration can be a good choice for resolving settlement disputes because it can save you time and money. If you live in a no-fault insurance state, you may be required to arbitrate your accident settlement disagreement.


Arbitration Timeline:

A benefit of arbitration is that it can be scheduled much quicker than a trial. Although each claim involves a unique set of circumstances, the following is a typical timeline in car accident arbitration:


  • Days 1 – 15: Filing and initiating
  • Days 16 – 45: Arbitrator selection
  • Days 46 – 75: Information exchange and preparation
  • Day 76: Arbitration hearing
  • Days 77 – 85: The award



Requesting Arbitration:

When your settlement negotiations have settled out, tell the claims adjuster you want the claim referred to arbitration. You can’t force the insurance company into arbitration, but let them know if they refuse your next step is to file a lawsuit. Threatening to sue is only effective if you have a good claim, so highlight your strongest facts when writing your request for arbitration letter.


Preparing for the Arbitration

Your first task is to select an arbitrator to hear your claim. Arbitrators are often retired judges or highly experienced lawyers. Once selected the arbitrator is both the judge and the jury so research each candidate and selected one with a reputation for fairness and integrity. The insurance policy or the laws of your state may determine the number of arbitrators and how they are selected, but you have an equal vote in the final choice. After you agree on an arbitrator, you will set a deadline for exchanging documents with the insurance company and set a date for the arbitration hearing. Carefully review the information provided by the insurance company so you understand the argument they are making against your claim and be prepared to present evidence that weakens their case.


What to Expect During the Arbitration?

Accidents insurance arbitration hearings usually occurs with all the parties in the same room so the arbitrator can hear a back and forth discussion of the claim. A typical hearing only lasts a few hours. This should be enough time for you to explain your damages and why the insurance company owes the amount you allege. The day of the arbitration, come prepared to perform the following tasks:

  •  Make an opening statement
  • Call and cross-examine witnesses
  • Present evidence that explains and supports your claim
  • Be prepared to handle opposition
  • Make closing remarks


As we disused above, arbitration is like a courtroom trial without all the detailed rules of procedure.


The Arbitration Award

Within a week or two after your hearing, the arbitrator issues an award statement giving a brief explanation of the outcome. The statement will offer few details about how the decision was reached. The award is legally binding and typically can’t be appealed if you’re unhappy with the results.

Recently, A bench led by justice AK Sikri also asked the government to consider amending the Motor Vehicles Act (MVA) and include the suggestions made by the court. The suggestions were made on propositions advanced by senior advocate Arun Mohan who argued a compensation case. The petitioner moved the top court after a Delhi high court order refused to grant him sufficient compensation for an ccident he had suffered in 1988.

Asking the Centre to enact the Indian Mediation Act, the court said mediation must be offered as an alternative dispute resolution (ADR) in motor accident claims cases. “Mediation is here to stay. It is here to evolve. It is because of the advantages of mediation as a method here to find new grounds,” the court said, asking the Centre to examine the feasibility of setting up an authority under the MVA.



ADR in Consumer Disputes

Alternative dispute resolution  (ADR) implies privately addressing any  issues out of the court with the help of an unprejudiced dispute resolution body. Settling consumer disputes this is simpler, quicker and more affordable than going to court.

The consumer protection Act, 1986 was sanctioned with a goal of giving better affirmation of the interests of buyers and for the smart and straightforward settlement of clients' inquiry. The Act gives convincing, prudent, direct and fast redressal of customers grievances. The Act gives convincing, prudent, direct and fast redressal of clients' complaints, which the basic courts are not prepared to give. This Act is another instance of ADR for the convincing contemplation of consumers' debate.

Several reports suggest that consumer Forum have become like civil courts which is as opposed to their point. The ADR have contributed to explain this crisis. But , the Consumer Fora were made for ensuring justice to customers which ADR modes can't be completely trusted with.

ADR can help enterprise to maintain good relationships with consumers and gain a positive reputation in the market. It also promotes competition. But the main advantage of the efficient use of ADR in consumer matters is increased satisfaction of the users that get another option to protect their rights- a process that is fair and appropriate and uses of simpler, cheaper and faster dispute resolution methods.

The preamble of the consumer protection act, 1986 declares that the act had been enacted to protect the interest of the consumers from exploitation and to present the consumer complaints in appropriate consumer court so that the objective of the Act is achieved and justice is done to the consumers. "The importance of the Act lies in promoting welfare of the society by enabling the consumer to participate directly in the market economy. It attempts to remove the helplessness of a consumer which he faces against powerful business, described as, 'a network of rackets' or a society in which, 'producers have secured power' to 'rob the rest' and the might of public bodies which are degenerating into storehouses of inaction where papers do not move from one desk to another as a matter of duty and responsibility but for extraneous consideration leaving the common man helpless, bewildered and shocked’’.

As per the amended section 8 (1) of the Arbitration and conciliation act, 1996, the forum should be "Judicial Authority" before which the parties applies for arbitration, should refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement agrees. The language of the amended section clearly states that the dispute should be referred to the arbitration if a party applies to a judicial authority unless the judicial authority finds that no valid agreement exists.

The Supreme Court of India in Fair Air Engineers Pvt Ltd & Anr vs. N.K. Modi, while holding that the consumer forum were judicial authority, inter alia observed that "It is seen that Section 3 envisages that the provisions of the Act are in addition to and are not in derogation of any other law in force. It is true, as rightly contended by Shri Suri, that the words 'in derogation of the provisions of any other law for the time being in force' would be given proper meaning and effect and if the complaint is not stayed and the parties are not relegated to the arbitration, the Act purports to operate in derogation of the provisions of the Arbitration Act. Prima facie, the contention appears to be plausible but on construction and conspectus of the provisions of the Act we think that the contention is not well founded. Parliament is aware of the provisions of the Arbitration Act and the Contract Act, 1872 and the consequential remedy available under Section 9 of the Code of Civil Procedure, i.e. to avail of right of civil action in a competent court of civil jurisdiction. Nonetheless, the Act provides the additional remedy".

Any dispute between the private parties can be adjudicated by arbitration as per the choice of the parties as long as disputes are not barred by legislation. The Supreme Court of India in the case of Booz Allen and Hamilton Inc. v SBI Home Finance Limited explained the conceptual framework of what kinds of disputes are arbitrable and non -arbitrable. "Adjudication of certain categories of proceedings are reserved by the Legislature exclusively for public fora as a matter of public policy. Certain other categories of cases, though not expressly reserved for adjudication by a public fora (courts and Tribunals), may by necessary implication stand excluded from the purview of private fora. Consequently, where the cause/dispute is not arbitrable, the court where a suit is pending, will refuse to refer the parties to arbitration, under Section 8 of the Act, even if the parties might have agreed upon arbitration as the forum for settlement of such disputes."

 The courts are required to draw a line between what is arbitrable and what is not arbitrable by ensuring that sensitive matters of public interest falls within the principle jurisdiction of the Courts and disputes between private parties can be freely choose to do arbitration rather than litigating their differences. Supreme court in its various decisions has interpreted section 3 of the consumer protection act and held that the act is enacted with the object to provide for better interest of the consumers and for this purpose consumer councils has been established so that the interest of the consumer can be protected by providing for better redressal, mechanism through which cheaper, easier, expeditious and effective redressal is made available to consumers. The court in Aftab Singh (Supra), further held that consumer act was envisaged as a special social legislation to protect consumer rights. Unlike other legislations that create dispute resolution mechanism between level players, this legislation established a level-playing field between unequal players i.e., consumers and large Corporations.

It can be said that there doesn’t exist much information on the impact that the ADR has made on the consumer dispute resolution.  ADR is no doubt has made a great impact on the quick disposal of the cases which the judiciary has been finding hard to do. There are no more doubts or arguments that courts are performing better than the ADR.  The ADR modes Consumer Protection Act, 1986, is also ineffective in the consumer dispute resolution. The ADR has also impeccably gained momentum even in the case of the consumer disputes although  the  consumer  fora exist under  the  Consumer Protection Act, 1986. The ADR has quite successfully entered into the field of consumer dispute resolution  as  well. So, the  real  question  is  what  is  the  exact  role  and involvement of ADR in the consumer dispute resolution. Also whether the ADR has been effective  in  the  resolution  of  consumer  disputes  is  another  question  which  the answer  seems  to  be  incomplete.  With  the  evolution  of  Online  Dispute Resolution, it is quite pertinent to take technology as an advantage by both ADR modes and also traditional Court.



By concluding this paper we observed that  ADR, as the name itself suggests is alternative to the traditional approaches made by the courts. The courts have been accused of slow disposal of cases and have been the cause of dissatisfaction.   ADR importance in  the  present  era  especially  where  the  failure  of  the  courts  is blatantly seen. It has, of late, become a fact that ADR is more effective indefinite terms of  time,  cost  and  satisfaction. 


Moreover, the use of ADR in consumer dispute itself  is  limited.  That is to say, all the modes of the ADR are not adequately explored and tested in the role, involvement and effectiveness in consumer dispute resolution. Much literature focuses on the consumer forum and its success itself. But how far have the consumer fora been capable of handling and disposing of the cases are another matter of inquiry.


As per many reports Consumer Protection Act has been failed in Implementation.   Much more revealing is the limiting of the modes of ADR and also the impact, the modes of ADR have made on the resolution of the consumer dispute resolution. In regard to this, therefore, a study is necessary to understand and critically analyse the role and evaluate the effectiveness of Alternate Dispute Resolution mechanism including not only arbitration and conciliation but also mediation, negotiation, Lok Adalat, regulatory authorities, ombudsman, online dispute resolution mechanism etc. in the consumer dispute resolution.






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