Alternative Dispute Resolution in Environmental Disputes

Environmental disputes sit awkwardly in this subject. The machinery is specialised: the National Green Tribunal, constituted under the Act of 2010, decides substantial questions relating to the environment with judicial and expert members sitting together. But the settlement processes that dominate the rest of ADR have a narrow field here, because the beneficiary of an environmental obligation is the public and not the claimant, and neither party to a dispute can compromise a standard set for everyone.

The forum, why arbitration and mediation have a narrow field, and where settlement does work

1. The National Green Tribunal

Constitution. Established by the National Green Tribunal Act, 2010 for the effective and expeditious disposal of cases relating to environmental protection and conservation of forests and other natural resources, with judicial members and expert members sitting together, which is its distinctive feature.
Section 14. Original jurisdiction over all civil cases where a substantial question relating to the environment is involved and the question arises out of the implementation of the enactments specified in the First Schedule.
Section 15. Power to order relief and compensation to victims of pollution and other environmental damage, restitution of damaged property, and restitution of the environment.
Section 16. Appellate jurisdiction over orders of authorities under the specified enactments, including consent orders under the water and air legislation and environmental clearances.
Approach. The Tribunal applies the principles of sustainable development, the precautionary principle and the polluter pays principle, and it is not bound by the Code of Civil Procedure, 1908 or by the law of evidence.

2. Why Arbitration Does Not Fit

A claim to a clean environment is a right in rem. Its determination affects persons who are not before the tribunal, and it cannot be compromised by the parties who happen to be in front of it. On the tests in Booz Allen and Hamilton Inc. v. SBI Home Finance Ltd., (2011) 5 SCC 532 and Vidya Drolia v. Durga Trading Corporation, (2021) 2 SCC 1, such a dispute is not arbitrable: it is an action in rem, it has an erga omnes effect, it requires centralised adjudication, and the statutes in the First Schedule confer jurisdiction on designated authorities and on the Tribunal. An award purporting to decide whether an industry may discharge effluent would be liable to be set aside under Section 34(2)(b)(i).

⚠ The line between the standard and the money

What may not be settled is the standard: whether a clearance was validly granted, whether a discharge exceeds the prescribed limit, whether a forest may be diverted. What may be settled is everything that follows once the standard is applied: how much compensation is payable to identified victims, over what period the restoration will be carried out, who will bear the cost of the remediation plan, and how a concessionaire and an authority will allocate the consequences of an environmental condition between themselves. The first belongs to the Tribunal and the regulator; the second is ordinary dispute resolution.

3. Where Settlement Does Work

Compensation between identified parties. A claim by residents against a polluter for loss suffered is a right in personam arising from the breach, and may be settled or, in an appropriate case, mediated, subject to the Tribunal's satisfaction that the settlement is fair.
Restoration and compliance timetables. The Tribunal frequently approves a plan agreed between the polluter and the regulator, with milestones and a bank guarantee, which is settlement in substance even though it takes the form of an order.
Contractual allocation. A dispute between a concessionaire and a public authority about who bears the cost of an environmental condition is a commercial dispute and is arbitrable, even though the underlying obligation is environmental.
Land and rehabilitation. Disputes about compensation and resettlement arising from a project, as distinct from the validity of the clearance, are capable of settlement.
Community mediation. Chapter X of the Mediation Act, 2023 covers disputes likely to affect the peace and harmony of a locality, which includes many local environmental disputes, though the settlement is not enforceable as a decree.

4. The Objections to Settling Environmental Claims

Three are made. A private settlement may buy the silence of the individuals who sued while leaving the pollution in place, so the public gains nothing. A settlement is not published, so it creates no standard for the next case, whereas a reasoned order does. And the parties before the forum are frequently not the parties who suffer, since diffuse harm produces no single claimant with an interest proportionate to the damage. These are the reasons the Tribunal supervises compromises in matters before it rather than simply recording them, and the reason the categories held unsuitable for reference under Section 89 of the Code include matters involving the public interest.

5. Related Topics and Provisions

Topic or provision	Connection
Arbitrability of Disputes	Rights in rem and the four-fold test
ADR across Fields of Law	The sector-by-sector view
Section 89 CPC: Settlement of Disputes Outside Court	Why public interest matters are not referred
Sections 14 to 16, National Green Tribunal Act, 2010	Jurisdiction, relief and appeals
Chapter X, Mediation Act, 2023	Community mediation in local disputes