Impact of Alternative Dispute Resolution (ADR) Mechanisms on ease of doing business in an Economy: Policy for India

Abstract

Alternative, Amicable or Appropriate Dispute Resolution-like mechanisms have had their presence globally for a long time. Initially, they were used to resolve land disputes or disputes arising out of a war. However, with merchants exploring foreign lands to expand their trade and businesses, development in ADR in the form of Lex Mercatoria was seen. Since then, resolving commercial disputes outside the court has gained popularity because of its time-efficient mechanism, which the municipal courts failed to provide. This paper begins with an explanation of the concept of ADR and its importance as a necessary institution in the business of a country. Thereafter, the focus of this paper has been directed towards the relationship between ADR and its effect on the “ease of doing business” index of a country. Although the ranking is no longer published, the criterion is relevant to make improvements for international businesses approaching a particular country. Providing a comparative analysis amongst countries with different “ease of doing business” rankings and taking into consideration their ADR system, the authors have surfaced-out certain factors responsible for a country with higher ease of doing business rank. Subsequently, the paper highlights the scenario of India and the development of ADR therein. It deliberates upon the challenges faced by the ADR system in India, including lack of confidence in ADR, resistance to change, and requirements of standardization. Keeping the challenges faced by India in the backdrop, along with the best practices implemented in other countries, the paper in the end provides an analysis of the data along with some recommendations as a contribution towards framing a policy for ADR in contemporary India. This would also help in improving the “ease of doing business” environment in relation to ADR administration.