INVESTMENTS IN ALTERNATIVE DISPUTE RESOLUTION (ADR) SYSTEMS: WHEN DO THEY MAKE SENSE?

Mr. Hamid Sharif Country Representative, The Asia Foundation, Pakistan

ADR: A Panacea? Alternative dispute resolution is increasingly embraced as a new panacea for better delivery of justice. Certainly its increasing popularity both in developed and developing countries demonstrates that litigants are turning to it as an alternative to the courts. But is it the panacea that it is often assumed to be; a sort of an oral rehydration therapy for the emasculated capacity of the formal system to resolve disputes efficiently and justly? If justice is a public good that the state should ensure, under what conditions is privatization of dispute resolution and justice through ADR appropriate? Under what circumstances may promotion of ADR at the expense of investments in the formal justice institutions amount to an abdication of the states fundamental duty to provide justice? ADR in the Shadow of the Law In one sense ADR has existed in one form or another in almost every society. In contrast to these informal and more accessible traditional systems, the expense and formalism of the courts does of course look daunting, wasteful and inefficient. It is, therefore, not surprising that when two parties are faced with a dispute and earnestly want a resolution of that dispute they explore more efficient options than the formal legal system. This is exactly what happens in developed jurisdictions especially in commercial (and increasingly) in other civil disputes. However, it is important to emphasize that this happens when both parties voluntarily agree to submit their dispute to ADR. Effective legal systems can in fact underpin and create incentives for parties to settle their disputes sensibly. This is so when parties know that an impartial decision can be expected from the legal system which will be legally enforced using the coercive power of the state. In most such systems of civil litigation parties are also lumbered with costs, particularly a losing party whose case is not considered to be meritorious. By creating surety of a decision that will be enforced, an efficient legal system creates incentives for parties to settle their disputes without incurring the costs associated with the formal system. Therefore, ADR in such systems takes place in the shadow of an efficient system of law that will eventually deliver an impartial decision that will be, if the need arises, enforced by the coercive power of the state. Is ADR possible without the Shadow of the Law?

Presented during the International Conference and Showcase on Judicial Reforms held at the Shangri-la Hotel, Makati City, Philippines on 28-30 November 2005.

If the effectiveness of the legal system in developed legal systems creates incentives for parties to resort to ADR, what sort of incentives are likely to push people to ADR where the legal system is dysfunctinal? What sort of ADR systems are likely to prevail in such poor and ineffective legal systems? Traditional Systems of ADR At the outset it is important to say a few words about traditional systems of ADR about which a lot of romanticism persists. It is increasingly clear that many traditional systems are subject to existing power relations in a community. Traditional tribal or social hierarchies play an important part in the composition and ultimately the decision of these tribunals. Caste, class and gender prejudices may not be easily overcome through such systems particularly when the power relations between disputants are asymmetrical or what is at stake are traditional norms and customs that clash with modern norms of justice. This is reflected in many egregious decisions of traditional ADR forums. For example, violence against women such as through honor killings is effectively condoned by these forums. ADR and Access to Justice As awareness about the defects of traditional ADR systems has emerged, developing countries often with donor support promote modern ADR systems that may build on traditional systems but are better designed to achieve just results. In other words, it is based on the experience of more developed countries with trained mediators, explicit rules of procedures and a system for getting the ultimate outcome of ADR recognized and enforced by the formal legal system. But where legal systems are weak in that there are endemic delays, or little hope of impartial justice and even less hope of effective enforcement, does investment of precious resources in ADR by developing countries or donors make sense? Or putting it another way, where the ineffectiveness of the legal system (with the dysfunctional courts as its public face) is so widespread that it seriously erodes legitimacy of state institutions, are investments in ADR a diversion of precious resources away from the essential task of making the formal system work? As a matter of public policy shouldnt the state invest these precious resources in bolstering the legitimacy of essential state institutions like the courts? This point is all the more pertinent when we examine the criminal justice system and its effects on the poor. It is quite clear that as in developed countries, in developing countries also the poor are more vulnerable to crime and less likely to be able defend themselves against it. And when they interact with the criminal justice system to seek protection this is likely to leave them more vulnerable to plunder by officials of the criminal justice system. I am specifically referring to qualitative studies on poverty where the poor have spoken of their experience with the police and the courts. In many countries it is also clear that disputes that are essentially civil in nature are deliberately criminalized to harass and coerce the weaker party. This is especially so in South Asia with respect to land and water rights. In its strategy to pressurize the other party one party will resort to use of the criminal law and the attendant humiliation to force the hand of the other (weaker) party. In such cases ADR may be of little use in furthering the cause of justice. If our objective is access to justice, then surely arent investments in the formal justice system likely to be more effective than in ADR since investments in the formal

justice system are likely to deal with broader issues of civil, administrative and criminal justice? Moreover, these investments will improve the public provisioning of an essential public good (viz. justice) and enhance the legitimacy of the state. Taking a more Balanced Approach and the case of Post-Conflict Societies The choice between investments in public provisioning of an essential good like justice or its effective privatization through ADR is perhaps more nuanced and varies from state to state or even within different parts of a state. Take, for example, postconflict countries. Should such states make investments in public provisioning of justice where the prospect of successful (i.e. efficient and impartial) delivery of justice through public institutions will take years? Or should they simply facilitate the settlement of disputes (where the parties so desire) through ADR? To avoid a spiraling back to conflict, such countries may have little choice but to promote investments in ADR while pursuing a long term plan to strengthen formal legal systems. Hence in countries like Afghanistan (where the writ of the government may not extend much beyond Kabul) or Nepal (where the writ of the Government is not as strong outside of the Kathmandu Valley) investments in ADR may make sense so that people can get on with their lives as best they can by resolving disputes through forums other than courts. Use of ADR as a means of diffusing and reducing social conflict is also an important policy consideration for other countries as well e.g. PRC. Issues of Financing and Sequencing Therefore, serious questions of sequencing and financing arise when considering whether to invest precious resources in the formal or informal systems of justice. A system of ADR has a rightful place in a legal and judicial reform. However, it cannot be a substitute for the formal legal system that must ensure and underpin the delivery of an essential public good like justice. ADR, Role of Law and Public Policy The choice of investments in or between formal and informal systems of justice should also be informed by what a society considers is the role of law. An informal system is more likely to adhere to custom and convention as people are likely to be more comfortable with outcomes that conform to these. However, many laws are often designed to bring about structural changes in society such as issues of inequality with respect to gender or race, or changes in social norms relating to treatment of vulnerable groups. In such instances the coercive power of the state may be required and investments in ADR are unlikely to be helpful in achieving the purposes of such laws especially where ADR does not function in the shadow of the law but as an alternative to a dysfunctional formal justice system. ADR in the Midst of Conflict in Nepal Let me lastly finish off on a more hopeful note drawing on an ADR project carried out by The Asia Foundation (TAF) in Nepal. As already mentioned, the formal system in Nepal is weak, inaccessible and widely perceived to be inefficient and corrupt. Moreover, the writ of the government hardly extends beyond the Kathmandu Valley.

In such circumstances, hundreds of minor (in terms of pecuniary value) yet essential disputes of the poor remain unsettled making life further difficult for them. Recognizing this in 2002 TAF, approached the Ministry of Local Development in Nepal to prepare plans to introduce and pilot test community-based dispute resolution under the Local Self Governance Act (LSGA) of 1999. The initial implementation of activities was in just three districts. In November 2002, the activities were expanded to eight additional districts. The pilot project included 64 Village Development Committees (VDCs) and 11 municipalities in 11 districts. In November 2004, USAID provided support for a 12-month follow-on project to consolidate and expand mediation activities initiated in the 11 pilot districts, as well as three additional districts in the Far West. By October 2005, the follow-on project will result in a total of 2,766 community mediators offering dispute resolution services in 103 VDCs and municipalities of 14 districts As is traditional with TAF, the project was carried with five NGOs that are longstanding TAF partners with experience in implementing mediation and other governance and law-related programs, and had an ongoing presence in program districts. These NGOs were: Center for Legal Research and Resources Development (CeLRRd) Forum for Protection of Public Interest (Pro Public) Institute for Governance and Democracy (IGD) Rural Womens Unity and Development Center (RUWDUC) Service to Underprivileged Sectors of Society (SUSS) As of June 2005, 3,505 applications for mediation had been registered with NGO partners. Of these, 2,737 cases were settled, 173 cases could not be settled, and 595 cases remain pending. With an increasing rate of registration and a resolution rate of nearly 90 percent, the TAF program has established the interest-based facilitated model of community mediation as an effective alternative for dispute resolution in a range of socio-cultural settings. TAF implemented an interest-based facilitated community mediation model as the most appropriate and effective methodology for local-level dispute resolution in Nepal. Facilitated mediation is a process in which the parties involved can constructively explore ways to resolve a dispute with the help of local trained mediators. It is based on the principle that the mediator is neutral and does not make decisions for the disputants. Rather, the mediator assists the disputants in a search for their own solutions. The interest-based approach focuses on the discovery, understanding, and respect for the needs and interests of all parties involved in a dispute. Mediated agreements are based on the parties recognition of the interdependency of their interests. Mediators are trained to follow a consistent, relatively structured four-phase approach in the mediation process. In Phase 1, the mediation process is explained to the disputants, and the mediators assist the disputants in setting ground rules for their interaction during the mediation session(s). In Phase 2, the disputants tell their stories to the mediators. This clarifies the understanding of each party concerning the facts of the case. Issues and underlying interests begin to be identified. In Phase 3, the parties engage directly with each other, and express their understanding (not

necessarily agreement) of the perspectives and interests of the other party. Issues are clarified and stated as open-ended questions and agreement is reached on the interests of all stakeholders. In Phase 4, the disputants develop options and craft solutions together. Options are evaluated relative to interests and the open-ended issue question(s). Consensus is reached on a solution that best meets all interests. Agreements are put in writing and signed by the disputants and mediators. These agreements are recognized by Nepali courts under Article 2 of the Contract Act, and by the Evidence Law of Nepal. As of June 2005, 3,505 applications for mediation had been registered with NGO partners. Of these, 2,737 cases were settled, 173 cases could not be settled, and 595 cases remain pending. With an increasing rate of registration and a resolution rate of nearly 90 percent, the TAF program has established the interest-based facilitated model of community mediation as an effective alternative for dispute resolution in a range of socio-cultural settings. Facilitated interest-based mediation offers a venue for disputants to explore interpersonal and social interests without the limitations of legal causes and remedies. Parties can involve other stakeholders and community members that may not be relevant or allowable in litigation. Additionally, the parties can include nonlegal remedies, such as an apology, and draw more heavily upon community norms and traditions than would be possible in a court of law. Perhaps most importantly, community members gain recognition and respect for their individual, shared, and collective interests. This strengthens and empowers individuals and entire communities to resolve conflicts and to build peaceful and productive social relations in all aspects of community life. Reports from program participants, NGO staff, and third-party evaluators cite improvements in social justice through the recognition and empowerment of women, dalits, and other marginalized groups in the mediation process. Mediators, many of whom are women and low caste themselves, have become respected and active citizens, taking leadership roles in other community development activities. Communities are experiencing quick, inexpensive, and effective resolution of disputes. As a result, there is a high level of commitment to this program at the local level. Community members have high hopes and many good ideas for the future of mediation in their villages and municipalities. Mediators in current project locations are receiving frequent requests for cases to be heard from surrounding, non-project communities. In addition, partner NGOs receive official requests from local government authorities in adjacent VDCs, municipalities, and districts to expand into their areas of jurisdiction. The facilitated, interest-based mediation model has also gained a dedicated following among NGOs, government agencies, and the donor community. The Local Development Training Academy (LDTA)the main training facility of the Ministry of Local Development and related agencieshas supported TAFs pilot project by providing two senior staff to be trained as Core Trainers. It also has replicated interest-based mediation training on its own using Core Trainers and resource materials developed by TAF. In April 2004, as a member of a network called Local Governance and Resource Institutes in Asia and the Pacific, LDTA organized mediation training in Kathmandu for participants from China, India, Indonesia,

Malaysia, Philippines, South Korea, and Sri Lanka. UNDP and UNFPA now use LDTAs support in training local-level officials on mediation for their Decentralized Local Governance Support Program and Population and Reproductive Health Project, respectively. TAF has also successfully convened a multi-donor working group that helps to promote and coordinate community mediation efforts. This group is comprised of all donors involved or interested in alternate dispute resolution (ADR) in Nepal, including DANIDA, DFID/ESP, USAID/SAVE, and UNDP. Meetings take place periodically, with NGO partners and other concerned Nepali professionals participating in most discussions. In addition to sharing information and materials on ADR activities being planned or implemented, the meetings provide an important forum for achieving conceptual clarity and common understanding about the legal dimensions and technical approaches to ADR implementation. Let me emphasize that this model has worked in the particular context of Nepal drawing upon traditional norms that promote settlement of disputes. Yet it is not a traditional ADR forum. A couple of insights form this project are worth sharing with you. Firstly, successful settlements generally lead to disputants and communities acquiring the capacity to solve their own disputes. This is especially so in communities that are more homogenous as there was a clear drop in the number of disputes registered over the project period. In contrast in more heterogeneous communities the number of disputes actually arose. This clearly merits more investigation. Secondly, that the need for a functional formal legal system still remains, especially for disputants who cannot settle their disputes through ADR. TAF therefore continues to advocate legal aid for those marginalized disputants whose cases cannot be settled so that they can pursue remedies that they consider to be more just through the formal legal system. The Nepal example shows that ADR can deliver dispute resolution to those who want it where the formal system has weak capacity. Yet the project also shows that for poor disputants who cannot get justice there is still the need and relevance of access to the formal justice system. The need for strengthening the formal legal system therefore remains and this is where greater societal gains may still lie although the task is extremely challenging.

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