If you go to a real estate professional who is well-versed with the law of the same, the chances are that he or she will tell you not to include the ADR or Alternative Dispute Resolution clause in the real estate contract. The litigation law firms in Delhi will give you pretty good advice regarding real estate contracts including the need and implications of the ADR clause. For the most part, ADR clauses are sought to be dismissed by real estate lawyers as they can create a bigger mess for their clients than they can solve. Here is all you need about the Alternative Dispute Resolution clause.
What is the Alternative Dispute Resolution Clause?
Like the name suggests the alternative dispute resolution clause seeks to work out or solve the issues that may arise between two parties. Be it real estate or otherwise, there might be some contractual arousal of disputes in which the parties involved have contrasting dues and stands. These contractual differences that arise due to the difference in interpretation of the meaning and effects of a particular clause mentioned in the contract can lead to the negation of agreement. Even non-contractual differences can be taken care of by putting the ADR clause to use. For the most part, though, it leans towards the non-binding forms of dispute resolution.
What are the implications of the Alternative Dispute Resolution Clause?
There are three main implications that are made on the real estate contracts to make sure that the clause is enforceable in the right way to support the stand of both the parties of the contract.
- Clear: The alternative dispute resolution clause should be made in a way so that it is clearly understood by both the parties and even the legal authority upon reading. The lack of clarity can lead to Greater chances of misinterpretation by either of the parties causing a dispute. Even the courts and tribunals are of the opinion that clarity and simplicity of the language while drafting the clause makes it more effective.
- Concise: There should not be an unnecessary use of terms to make the clause lengthy and confusing. It should be reasonably long only to the point where it is necessary. Top lawyers in India always suggest that a concise clause is always better than pages of confusing terminologies.
- Workable: The most important part of the clause is that it should satisfy the needs of both parties. They both should agree on the terms so that it is workable for each of them.
What are the advantages of the ADR clause?
As the alternative dispute resolution clause leans more towards the non-binding forms of dispute resolution, it can be easily in first that it saves a lot of time and money for the parties to solve a problem without resorting to stronger versions of resolution. The intensity of the differences between the parties can cause a prolonged drawing of a contract which can adversely affect both parties. Resorting to a neutral third party or to the law with the help of this clause can work out the knots of disapproval for each other to stand on a clause of the contract.
What are the disadvantages of the ADR clause?
The reason why Corporate Law Firms in India are keen or withdraw their support on this clause is that the clause may be drafted in a way that largely favors one party and causes a loss to the other. On the other hand, it also takes up huge legal fees for hiring lawyers to insert this clause in a contract, especially in the case of real estate.
What are the forms of dispute resolution as mentioned by the ADR clause?
Largely, there are 2 forms of dispute resolution as per the ADR clause.
- Mediation: It is a non-binding form of dispute resolution wherein a neutral third party e enters between the two parties of the contract. The seek the possible areas of conflict resolution but the ultimate decision to agree on the resolved terms is on the parties.
- Arbitration: It is a binding form of dispute resolution in which a couple of arbitrators is introduced in the private process to resolve the conflict or dispute. It has much more International appeal and enforceability and it is flexible as well as the parties are in charge of choosing the arbitrators and the process that is to be followed.