School of Excellence in Law

NAME : S. KISHORE KUMAR

SUBJECT : ALTERNATIVE DISPUTE RESOLUTION

MECHANISM

TOPIC : COMPARATIVE STUDY ON

THREE MECHANISMS OF ADR

COURSE : IV th YEAR B.COM LL.B. (HONS.)

SECTION :B

REGISTER NO. : HB17054

SIGNATURE OF SIGNATURE OF

STUDENT FACULTY

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 PERFORMANCE REPORT
ALTERNATIVE DISPUTE RESOLUTION MECHANISM

Name: KISHORE KUMAR. S

Register Number: HB17054
Year: IVth YEAR
Course: B.COM. LL.B., (Hons.)
Section -B
PROJECT MARKS

Date of Signature Faculty Signature Marks Remarks

Submission (Student)

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 TABLE OF CONTENT
SI CONTENTS PAGE
NO. NO.

1 INTRODUCTION 5

2 WHAT IS ALTERNATIVE DISPUTE RESOLUTION? 5

3 METHODS OF ADR SYSTEMS 6

4 ARBITRATION 6

5 MEDIATION 14

6 CONCILIATION 18

7 NEGOTIATION 22

8 COMPARATIVE STUDY ON THREE MECHANISMS 23

9 CONCLUSION 26

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 TABLE OF CASES

SI CASE LAWS CITATION

NO.
Order dated 27 November
2019 in Special Leave
Uttarakhand Purv Sainik Kalyan Nigam Ltd. Vs. Petition (C) No. 11476 of
1
Northern Coal Field Ltd. 2018
Judgment dated 27
2 Hindustan Construction Company Limited & Anr. November 2019 in Writ
Vs. Union of India & Ors. Petition (Civil) No. 1074 of
2019

3 Board of Control for Cricket in India Vs. Kochi AIR 2018 SC 1549
Cricket Pvt. Ltd
Judgment dated 13
4 The Oriental Insurance Co. Ltd. and Ors. Vs. November 2019 in Civil
Dicitex Furnishing Ltd. Appeal No. 8550 of 2019

5 Associated Construction Vs. Pawanhans (2008) 16 SCC 128

Helicopters Ltd

6 National Insurance Co. Ltd. Vs. Boghara Polyfab AIR 2009 SC 170.
Pvt. Ltd

7 Mohd. Mushtaq Ahmad v. State (2015) 3 AIR Kant R 363

Criminal Petition No. 7258

8 Gurudath K. v. State of Karnataka of 2014, order dated 20-11-
2014.

9 Afcons Infrastructure Ltd. v. Cherian Varkey (2010) 8 SCC 24.

Construction Co. (P) Ltd.

10 Haresh Dayaram Thakur v. State of Maharashtra AIR 2000 SC 2281

and Ors

11 Mysore Cements Ltd. v. Svedala Barmac Ltd AIR 2003 SC 3493

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"The courts of this country should not be the places where the resolution of disputes begins.
They should be the places where the disputes end after alternative methods of resolving
disputes have been considered and tried." -Sandra Day O'Connor

Introduction:

Courts are an essential institution without which society would end up in chaos. Their
importance cannot be emphasized enough, though many of the disputes which arise between
individuals or organizations are such that, they are solvable without the interference of the
judicial authorities. Such conflicts, which do not require the juridical system, instead, need a
specific set of formal regulations to achieve their end. Dispute resolution resolves the conflicts
that occur amongst individuals or organization. In turn, the judicial burden is reduced.

In this assignment, we will analyze the types of ADR methods while focusing on their
advantages, disadvantages, and differences.

What is Alternative Dispute Resolution?

Alternative Dispute Resolution often referred to as ADR, is a set of methods or

techniques that allow parties to a dispute to reach an amicable settlement. It consists of ways in
which parties can settle their differences without recourse to litigation. Alternative Dispute
Resolution (ADR) methods are now widely accepted and have been gaining recognition at the
national as well as international level. Modes of ADR have been in existence from a long time
and were used long before the sophistication of civilization.

ADR involves continuous efforts made by a third party, who is neutral and assists the disputing
parties to come to a settlement. The qualification and the skill of the neutral third party vary,
concerning the modes of dispute resolution.  

ADR is a vast topic and includes a broad range of activities. Legal luminaries Nancy Atlas,
Stephen Huber, and Wendy Trachte in their 'Alternative Dispute Resolution: The Litigator's
Handbook,' has defined ADR as being:

"Anything except a bench or jury trial under the auspices of some judicial body."

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In simple words, ADR, as the name suggests, is nothing but an alternative method to litigation to
resolve disputes that exist between individuals or organizations.

Nowadays, due to the vast resources required for litigation, people prefer alternative dispute
resolution methods to settle matters which do not require the intervention of judicial authority.

Methods of Alternative Dispute Resolution System:

The techniques or modes of ADR, though widely accepted all over the world, may vary from
region to region. This fluctuation depends on the legal framework of a country. The following
are the methods of settlement that are widely accepted:

 Arbitration
 Mediation
 Conciliation
 Negotiation

Arbitration:

Arbitration is a mode of ADR wherein the dispute between the parties goes through a
process to achieve an amicable resolution by an impartial third party known as an 'arbitrator,'
without recourse to litigation.  In the case of arbitration, the arbitrator, after reviewing the dispute
between the parties comes to a settlement. Such a decision taken by an arbitrator shall be binding
on both parties. Unlike other methods of dispute resolution, once the parties have submitted a
matter to arbitration, neither can withdraw from the procedure.

Arbitration can either be voluntary or mandatory. In the case of compulsory arbitration, the
parties to the dispute enter into Arbitration either under a statute, an order of the court, or
through a specific clause included in the contractual agreement between the parties. Whereas on
the other hand, in the case of voluntary arbitration, it is up to the discretion of parties to enter
into arbitration. The decision that results from the proceeding is known as an 'arbitral award.'

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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.

Arbitrators, or Tribunal members, are commonly appointed by one of three means:

1. Directly by the disputing parties (by mutual agreement, or by each party appointing
one arbitrator)

2. By existing tribunal members (For example, 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)

Arbitration, while being nicknamed the ‘businessman’s method of resolving disputes’, is

governed by state and federal law. Most states have provisions in their civil practice rules for
arbitration. These provide a basic template for the arbitration as well as procedures for
confirmation of an arbitrator’s award (the document that gives and explains the decision of an
arbitrator), a procedure that gives an award the force and effect of a judgment after a trial in a
court. Many states have adopted the Uniform Arbitration Act, although some states have specific
and individual rules for arbitration.

Classifications Of Arbitration:

1. Commercial Arbitration is the most common of disputes. Just as it sounds, it is a

dispute between two commercial enterprises.

2. Consumer Arbitration surrounds disputes between a consumer and a supplier of goods

or services.

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 3. Labor Arbitration involves the settlement of employment related disputes. This form or
arbitration can be divided into two main categories: Rights Arbitration and Interest
Arbitration.

 Rights Arbitration (a.k.a. Grievance Arbitration) deals with the allegation that an existing
collective agreement has been violated or misinterpreted. Various legislatures require that
the parties who enter into a collective agreement set out a procedure for the handling of
disputes and differences. The idea is that parties should be obliged to meet at different
steps in their own specific grievance procedure to review and discuss the grievance.
However, the fact is that the parties themselves cannot resolve many disputes and for this
reason arbitration is necessary so that the matter may be determined. Typical arbitration
awards deal with a complaint that a specific item in collective agreement has been
violated.

 Interest Arbitration (a.k.a. Contract Arbitration) is normally imposed by a statute, and

involves adjudication on the terms and conditions of employment to be contained in a
resulting collective agreement. Since statutes, usually prohibit a legal strike, or lock out,
these contract disputes must be resolved somehow; in this case by interest arbitration. For
example, collective bargaining in a new collective agreement covering a fire force or a
hospital may break down into an irresolvable deadlock. The contractual matters still in
dispute between the parties would be put to an interest arbitrator or tribunal for a ruling
and determination, which would then form the relevant provisions of the collective
agreement between the two parties.

The kinds of labor disputes taken to an arbitrator are as many and as different as the wide range
of decisions and actions that effect employers, employees and trade unions. Liability can span
from cents to millions, and there can be a solitary griever or a union of grievers.

It is also worthy to note that some labor disputes employ ‘med/arb’ to resolve their differences as
opposed to straight arbitration. Med/arb takes place when disputants agree from the start that if
mediation fails to result in agreement the mediator, or another neutral third party, will act as
arbitrator and be empowered to reach a binding decision for disputants.

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Typical Steps in an Arbitration

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.

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  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

Advantages of arbitration:

Choice of Decision Maker – For example, parties can choose a technical person as arbitrator if
the dispute is of a technical nature so that the evidence will be more readily understood.

Efficiency – Arbitration can usually be heard sooner than it takes for court proceedings to be
heard. As well, the arbitration hearing should be shorter in length, and the preparation work less
demanding.

Privacy – Arbitration hearings are confidential, private meetings in which the media and
members of the public are not able to attend. As well, final decisions are not published, nor are
they directly accessible. This is particularly useful to the employer who does not want his ‘dirty
laundry’ being aired.

Convenience – Hearings are arranged at times and places to suit the parties, arbitrators and
witnesses.

Flexibility – The procedures can be segmented, streamlined or simplified, according to the

circumstances.

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Finality – There is in general, no right of appeal in arbitration. (Although, the court has limited
powers to set aside or remit an award).

Having cited the above list of advantages, it is only appropriate to mention some of the most
commonly perceived drawbacks of arbitration.

Cost - One or both of the parties will pay for the arbitrator’s services, while the court system
provides an adjudicator who does not charge a fee. The fees for an arbitrator can be hefty. To
give an example, for an amount of claims up to $100,000, the minimum fee for a single arbitrator
is $2,000. The maximum fee can reach ten percent of the claim. However, supporters of
arbitration argue that this should be more than compensated for by the potential for the increase
in the efficiency of arbitration to reduce the other costs involved.

‘Splitting the Baby’ – Thomas Crowley states that because of the relaxation of rules of evidence
in arbitration, and the power of the arbitrator to ‘do equity’ (make decisions based on fairness),
the arbitrator may render an award that, rather than granting complete relief to one side, splits the
baby by giving each side part of what they requested. Thus both parties are leave the table
feeling that justice was not served.

No Appeal – Unless there is evidence of outright corruption or fraud, the award is binding and
usually not appealable. Thus if the arbitrator makes a mistake, or is simply an idiot, the losing
party usually has no remedy.

Narcotic/Chilling Effects – The chilling and narcotic effects are two related concepts, which
many theorists, including David Lipsky, believe to be inadequacies of interest arbitration.
Chilling occurs when neither party is willing to compromise during negotiations in anticipation
of an arbitrated settlement. Two measures most commonly used to weigh this effect are: the
number of issues settled during negotiations versus the amount of issues left for arbitration, and a
comparison with the management’s and union’s initial offers (chilling takes place when the two
parties take extreme positions and are not willing to budge). The narcotic effect refers to an
increasing dependence of the parties on arbitration, resulting in a loss of ability to negotiate.
Common methods of assessing the narcotic effect are: the proportion of units going to arbitration

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over time and, perhaps more importantly, the number of times an individual unit returns to
arbitration over a series of negotiations.

Disadvantages of arbitration:

 If arbitration is mandatory as per the contract between the parties, then their right to
approach the court is waived.
 There is a very limited avenue for appeals.
 Arbitration does not provide for the grant of interlocutory applications.
 Arbitration awards are not directly enforceable; they are executable subject to judicial
sanction.

Case laws regarding Arbitration:

1. Uttarakhand Purv Sainik Kalyan Nigam Ltd. Vs. Northern Coal Field Ltd.1

Relying on the doctrine of kompetenz – kompetenz enshrined in Section 16 of the Arbitration &

Conciliation Act, 1996 (Arbitration Act) and the legislative intent to restrict judicial intervention at pre-
reference stage, the Supreme Court held that the issue of limitation would be decided by an arbitrator.

It also reaffirmed that the legislative intent of the Arbitration Act is party autonomy and minimal judicial
interference in the arbitration process. It observed that the regime of the Arbitration Act outlines that once
an arbitrator has been appointed, all objections and issues are to be decided by the arbitrator.

The Supreme Court observed that the issue of limitation is a jurisdictional issue which should be decided
by the arbitrator in terms of Section 16 of the Arbitration Act and not before the High Court at the pre-
reference stage under Section 11 of the Arbitration Act. The Supreme Court observed that once the
arbitration agreement is not in dispute, all issue including jurisdictional issues are to be decided by the
arbitrator.

1
Order dated 27 November 2019 in Special Leave Petition (C) No. 11476 of 2018

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 2. Hindustan Construction Company Limited & Anr. Vs. Union of India &
Ors.2

A three (3) member bench of the Hon'ble Supreme Court comprising of Hon'ble Mr. Justice R.F.
Nariman, Hon'ble Mr. Justice Surya Kant and Hon'ble Mr. Justice V. Ramasubramanium (Bench) has
struck down Section 873 of the Arbitration & Conciliation Act, 1996 (Arbitration Act) as being
"manifestly arbitrary" in terms of Article 14 of the Constitution of India.

The Bench observed that Section 87 of the Arbitration Act is against the intent of the Arbitration and
Conciliation (Amendment) Act, 2015 (2015 Amendment) and further nullifies the ratio laid down in the
recent judgment of Board of Control for Cricket in India Vs. Kochi Cricket Pvt. Ltd. 4, wherein it was
observed that the intent and purport of Section 87 is contrary to the overall scheme of the Arbitration Act
and the 2015 Amendment.

Accordingly, Section 26 of the 2015 Amendment was revived by the Supreme Court and the decision
rendered in Board of Control for Cricket in India Vs. Kochi Cricket Pvt. Ltd. continues to apply as the
guiding principle for determining the applicability of the 2015 Amendment.

3. The Oriental Insurance Co. Ltd. and Ors. Vs. Dicitex Furnishing Ltd. 5

The Supreme Court held that an arbitration clause can be invoked by an aggrieved party pursuant to
execution of no objection certificates or discharge vouchers.

The Supreme Court while upholding the concept of economic duress dealt in the case of  Associated
Construction Vs. Pawanhans Helicopters Ltd6 and National Insurance Co. Ltd. Vs. Boghara Polyfab
Pvt. Ltd.7 observed that a court which is required to ensure that an arbitrable dispute exists, has to
be prima facie convinced about the genuineness or credibility of the plea of coercion; it cannot be too
particular about the nature of the plea, which necessarily has to be made and established in the substantive
proceeding. If the court were to take a contrary approach and minutely examine the plea and judge its
credibility or reasonableness, there would be a danger of its denying a forum to the applicant altogether,

2
Judgment dated 27 November 2019 in Writ Petition (Civil) No. 1074 of 2019
3
Introduced by the Arbitration & Conciliation (Amendment) Act, 2019.
4
AIR 2018 SC 1549.
5
Judgment dated 13 November 2019 in Civil Appeal No. 8550 of 2019.
6
(2008) 16 SCC 128.
7
AIR 2009 SC 170.

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because rejection of the application would render the finding (about the finality of the discharge and its
effect as satisfaction) final, thus, precluding the applicant of its right event to approach a civil court.

Mediation:

Mediation is a mode of dispute resolution, where an amicable decision arises with the
help of a third party known as a 'mediator,' without recourse to the court of law. It is a voluntary
process, and unlike arbitration, it is more flexible; therefore, the parties to the dispute are under
no obligation to agree to the settlement. Thus, an agreement taken via mediation shall be binding
upon the parties, only as long as they agree to it. There may be instances where parties are
advised to adhere to Mediation, however, under such circumstances, the result is up to the
parties. Therefore, Mediation is a process where the parties are in total control over their final
settlement. Here, the mediator only acts as a facilitator and does not interfere in the decision of
the dispute. Therefore, it is a win-win pact.

Principles of the mediation:

Every process of ADR mechanism has its own basic principles on which it’s work and
giving positive outcomes. Like as other process mediation has its own fundamental principles
which are helpful in settling disputes between the parties on their mutual consensus. Parties
choose mediation process over litigation may be because of these principles which have given
effective way to the process. Mediation usually has seen in the family matters or any neighboring
issues which could be resolve by mediation process rather than go to court for justice.

In generally there are 5 basic principles usually seen in the mediation process and it should be
followed strictly by the mediator as well as the parties for an effective outcome. Five basic
principles of mediation process are as follows:-

 Parties should participate voluntarily8

 Confidentiality matters in the process
 Mediators are impartial

8
Principles of mediation, available at
https://rhizomenetwork.files.wordpress.com/2010/12/principles_of_mediation.pdf.

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  An agreement has to be settled with the satisfaction of parties concerned

 Mediation is without prejudice to other procedures

Advantages of mediation:

Informality – No court rules or legal precedents are involved in mediation. The mediator does
not impose a decision upon the parties. As opposed to adversarial forums, the mediator helps to
maintain a business like approach to resolving a dispute. There are no fixed solutions in
mediation. Parties can look to developing creative solutions to resolve matters and the solution
rests with the parties themselves.

Privacy and confidentiality – The mediation conference takes place in a private setting such as
a conference room at any of the Arbitration Associations. Mediation is not a matter of public
record. Its confidentiality is maintained.

Time and cost savings – Mediation generally lasts a day. Complex matters may require more
time due to highly technical issue and/ or multiple parties. Without the formalities found in
litigation, mediation usually results in substantial costs savings.

Control – Parties have control over their participation in mediation. A party can decide to
terminate their participation at any point in mediation. Mediators help parties maintain control
over the negotiation that takes place.9

Disadvantages of mediation:

 Since the decision is at the discretion of the parties, there is the possibility that a
settlement between the parties may not arise.
 It lacks the support of any judicial authority in its conduct.

9
Avtar Singh, Law of Arbitration & Conciliation and Alternative Dispute Resolution system (Eastern Book

Company, 10th edition) page no. 521

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  The absence of formality- Mediation proceedings are lacking in any procedural formality
since they are not based on any legal principle.
 The truth of an issue may not be revealed.

Case regarding the mediation:

1. Mohd. Mushtaq Ahmad v. State10

The wife filed a divorce petition alongside an FIR against the husband under Section 498?A IPC
after disputes arose between the couple subsequent to birth of a girl child. The Karnataka High Court
directed the parties to mediation under Section 89 CPC. The matter was settled amicably through
mediation after which the wife decided to quash the FIR. The Court allowed this stating, “The court in
exercise of its inherent powers can quash the criminal proceedings or FIR or complaint in appropriate
cases in order to meet the ends of justice.”

2. Gurudath K. v. State of Karnataka11

The facts are identical to the case above. Here the court stated, “Even if the offences are
non-compoundable, if they relate to matrimonial disputes and the Court is satisfied that the
parties have settled the same amicably … Section 320 CrPC would not be a bar to the exercise of
power of quashing of FIR or criminal complaint in respect of such offences.” Thus, the court
allowed for the offences to be compounded on coming to the conclusion that the wife was under
no threat or coercion for the same.

The court’s inten-tion to settle matters as amicably as possible is clear. The intention of the court
matches the ideology of the advocates of mediation, which is to safeguard family relationships
and provide speedy justice.
Due to this move of the Indian courts, the accused are less apprehensive of being convicted in
cases of domestic violence. This is where critics of mediation come in, who hold mediation to be
ineffective as the wrongdoer escapes without being punished. Even though the law clearly debars
offences of such nature from being compounded, the judiciary has time and again ignored this

10
(2015) 3 AIR Kant R 363
11
Criminal Petition No. 7258 of 2014, order dated 20-11-2014.

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provision in the “interest of justice”. Besides being a boon to the accused, this is also a
corresponding threat to the society at large to have criminals roaming free on the streets.
As per India’s National Crime Records Bureau, the number of domestic violence cases filed
increased from 50,703 in 2003 to 118,866 in 2013.12 This is an increase of 134% within the span
of 10 years. Jawaharlal Nehru once said “You can tell the condition of a nation by looking at the
status of its women.” For many years, India has been a patriarchal society. Women have always
been mistreated and looked upon as a liability. Section 498-A was enacted for the upliftment of
women in this patriarchal society. The seriousness of this offence is denoted in the statute itself
by making it a non-bailable and non-compoundable one punishable with up to 3 years
imprisonment.
The critics of mediation believe that the seriousness of such crimes should not be undermined by
simply pardoning the accused and settling matters amicably. The accused must be sentenced to
imprisonment so they are reformed before entering the society again. In the cases we have seen
above, the victims of domestic violence have agreed to forgive the accused and settle the matters
amicably. But should the State acquit the accused merely because the victim’s approval has been
affirmed?
3. Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd.13 

The Supreme Court clarified that “even when a case is referred to a mediator the court
retains its control and jurisdiction over the matter and the mediation settlement will have to be
placed before the court for recording the settlement and disposal”. This shows the Court’s efforts
in attempting to avoid mediation to be carried out arbitrarily.

There should be no strict guidelines for which cases are to be referred to mediation. Cases should
not be divided into the category of compoundable and non-compoundable. What is really
essential is to distinctly look at the facts of each case individually to see whether mediation
would be a viable option for the parties or not. Domestic violence cases cannot be decided
through precedents unless the facts appear to be identical. Each case is of different magnitude
and must be judged by scrutinising the facts of the case and discomfort caused to the victim
carefully. The Indian courts are headed in the right direction in dealing with cases of this nature.
12
Pandey, G.. (2014), India “fails” victims of abuse, BBC News, available at <http://www.bbc.com/news/world-
asia-india-29708612> (accessed on 7-10-2017).
13
 (2010) 8 SCC 24.

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Conciliation:

Conciliation is a method of dispute resolution wherein the parties to a dispute come to a

settlement with the help of a conciliator. The conciliator meets with the parties both together and
separately to enter into an amicable agreement. Here, the final decision may be taken by
reducing tensions, improving communications, and adopting other methods. It is a flexible
process, therefore allowing the parties to define the content and purpose of the proceeding. It is
risk-free and is not binding upon the parties unless they sign it.

Appointment of conciliators:

Section 64 deals with the appointment of the conciliators.When the invitation to the
conciliation is accepted by the other party, the parties have to agree on the composition of the
conciliation tribunal. In the absence of any agreement to the contrary ,there shall be only one
conciliator. The conciliation proceeding may be conducted by a sole conciliator to be appointed
with the concent of both the parties, failing to which the same may be conducted by two
conciliators (maximum limit is three), then each party appoints own conciliator ,and the third
conciliator is appointed unanimously by both the parties. The third conciliator so appointed shall
be the presiding conciliator. The parties to the arbitration agreement instead of appointing the
conciliator themselves may enlist the assistance of an institution or person of their choice for
appointment of conciliators. But the institution or the person should keep in view during
appointment that, the conciliator is independent and impartial.

Principles of Procedure
1) Independence and impartiality [Section 67(1)]-
The conciliator should be independent and impartial. He should assist the parties in an
independent and impartial manner while he is attempting to reach an amicable settlement of their
dispute.
2) Fairness and justice[Section 67(2)]-
The conciliator should be guided by the principles of fairness and justice. He should take into
consideration ,among other things , the rights and obligations of the parties, the usages of the
trade concerned ,and the circumstances surrounding the dispute ,including any previous business

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practices between the parties.
3) Confidentiality [Section 70]-
The conciliator and the parties are duly bound to keep confidential all matters relating to
conciliation proceedings. Similarly when a party gives a information to the conciliator on the
condition that it be kept confidential , the conciliator should not disclose that information to the
other party.
4) Disclosure of the information[Section 70]-
When the conciliator receives a information about any fact relating to the dispute from a party ,
he should disclose the substance of that information to the other party.The purpose of this
provision is to enable the other party to present an explaination which he might consider
appropriate.
5) Co-operation of the parties with Conciliator [S. 71]-
The parties should in good faith cooperate with the conciliator. They should submit the written
materials , provide evidence and attend meetings when the conciliator requests them for this
purpose.

Procedure of conciliation:
1) Commencement of the conciliation proceedings [Section 62]-
The conciliation proceeding are initiated by one party sending a written invitation to the other
party to conciliate. The invitation should identify the subject of the dispute. Conciliation
proceedings are commenced when the other party accepts the invitation to conciliate in writing.
If the other party rejects the invitation, there will be no conciliation proceedings. If the party
inviting conciliation does not receive a reply within thirty days of the date he sends the invitation
or within such period of time as is specified in the invitation, he may elect to treat this as
rejection of the invitation to conciliate. If he so elects he should inform the other party in writing
accordingly.

2) Submission of Statement to Conciliator [Section 65] –

The conciliator may request each party to submit to him a brief written statement. The statement
should describe the general nature of the dispute and the points at issue. Each party should send a
copy of such statement to the other party. The conciliator may require each party to submit to
hima further written statement of his position and the facts and grounds in its support. It may be
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supplemented by appropriate documents and evidence. The party should send the copy of such
statements , documents and evidence to the other party. At any stage of the conciliation
proceedings , the conciliator may request a party to submit to him any additional information
which he may deem appropriate.

3) Conduct of Conciliation Proceedings[Section 69(1),67(3)]-

The conciliator may invite the parties to meet him. He may communicate with the parties orally
or in writing. He may meet or communicate with the parties together or separately. In the
conduct of the conciliation proceedings, the conciliator has some freedom. He may conduct them
in such manner as he may consider appropriate. But he should take in account the circumstances
of the case, the express wishes of the parties, a party’s request to beheard orally and the need of
speedy settlement of the dispute.

4) Administrative assistance [S. 68]-

Section 68 facilitates administrative assistance for the conduct of conciliation proceedings.
Accordingly , the parties and the conciliator may seek administrative assistance by a suitable
institution or the person with the consent of the parties.

Advantages of conciliation:

 Flexibility: Since the conciliation process is informal, it is flexible.

 The conciliator is often an expert in the disputed field.
 Conciliation proceedings, like any other form of ADR, is economical as compared to
litigation.
 The parties to the dispute have the liberty to approach the court of law, if unsatisfied with
the proceeding.

Disadvantages of conciliation:

 The process is not binding upon the parties to the dispute.

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  There is no avenue for appeal.
 The parties may not achieve a settlement to their conflict.

Cases relating to conciliation:

1.Haresh Dayaram Thakur v. State of Maharashtra and Ors.14

while dealing with the provisions of Sections 73 and 74 of the Abbitration and Conciliation Act
of 1996 in paragraph 19 of the judgment as expressed thus the court held that-
"19. From the statutory provisions noted above the position is manifest that a conciliator is a
person who is to assist the parties to settle the disputes between them amicably. For this purpose
the conciliator is vested with wide powers to decide the procedure to be followed by him
untrammeled by the procedural law like the Code of Civil Procedure or the Indian Evidence Act,
1872. When the parties are able to resolve the dispute between them by mutual agreement and it
appears to the conciliator that their exists an element of settlement which may be acceptable to
the parties he is to proceed in accordance with the procedure laid down in Section 73, formulate
the terms of a settlement and make it over to the parties for their observations; and the ultimate
step to be taken by a conciliator is to draw up a settlement in the light of the observations made
by the parties to the terms formulated by him. The settlement takes shape only when the parties
draw up the settlement agreement or request the conciliator to prepare the same and affix their
signatures to it. Under Sub-section (3) of Section 73 the settlement agreement signed by the
parties is final and binding on the parties and persons claiming under them. It follows therefore
that a successful conciliation proceedings comes to end only when the settlement agreement
signed by the parties comes into existence. It is such an agreement which has the status and
effect of legal sanctity of an arbitral award under Section 74”.

2.Mysore Cements Ltd. v. Svedala Barmac Ltd15

14
AIR 2000 SC 2281
15
AIR 2003 SC 3493

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it was said that Section 73 of the Act speaks of Settlement Agreement. Sub-section (1) says that
when it appears to the Conciliator that there exist elements of settlement which may be
acceptable to the parties, he shall formulate the terms of a possible settlement and submit them to
the parties for their observation. After receiving the observations of the parties, the Conciliator
may reformulates the terms of a possible settlement in the light of such observations. In the
present case, we do not find there any such formulation and reformulation by the Conciliator,
under Sub- section (2), if the parties reach a settlement agreement of the dispute on the possible
terms of settlement formulated, they may draw up and sign a written settlement agreement. As
per Sub-section(3) when the parties sign the Settlement Agreement, it shall be final and binding
on the parties and persons claiming under them respectively. Under Sub-section (4), the
Conciliator shall authenticate the Settlement Agreement and furnish a copy thereof to each of the
parties. From the undisputed facts and looking to the records, it is clear that all the requirements
of Section 73 are not complied with.

Negotiation:

Negotiation is a method of dispute resolution whereby a dispute between two individuals

or groups is settled amicably by an impartial third person called as a negotiator, using different
techniques. The negotiator, in this form of resolution, uses various communication methods to
bring the parties of the dispute to a settlement. The primary aim of this type of dispute resolution
is to reach an agreement that is fair and acceptable by the parties. The parties engage in the
dispute with each other until they reach a desirable outcome for all involved.

Advantages of Negotiation:

 Flexibility: since negotiation is an informal process, it is relatively flexible.

 Quick resolutions as compared to litigation.
 It facilitates in maintaining a healthy relationship between the disputing parties.
 Takes place in a private environment

Disadvantages of Negotiation:

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  The parties to the dispute may not come to a settlement.
 Lack of legal protection of the parties to the conflict.
 Imbalance of power between the parties is possible in negotiation.

Comparative study on 3 mechanisms of Alternative Dispute Resolution:

Selecting the best approach of ADR can be a tedious task, to have an in-depth
understanding, the approaches have been compared against each other as follows

Arbitration vs Mediation:
The fundamental difference between both the methods is arbitration is usually binding, while
mediation is not. The party who is not satisfied by the arbitrator's award has a limited right to
make an appeal against the arbitrariness. In contrast, mediation is an entirely different ball game
in which the mediator works with the parties attempting to solve their issues and settle their
lawsuit. 
An arbitrator decides the outcome as to who wins and who loses, whereas a mediator acts as a
guide to the parties to find their way to a mutually agreed settlement. The mediator, compared to
the arbitrator, has no power to impose a decision on the parties if they do not wish to agree.

There are various types of cases which require the appellant to go to arbitration. These are
usually situations in which the plaintiff is bound by the contract between the parties to go
through arbitration rather than going to the court.

 Mediation is a voluntary process, the parties are binding to attend it, but it does not require them
to resolve the case through it. In case of dissatisfaction, they can opt for a second round of
mediation or go to court for the same. 
 
Arbitration vs. Conciliation:
In India, the aforementioned acts are governed by their parent act, which has recently been
amended and made into an ordinance:
The Arbitration and Conciliation (Ordinance), 2015. The appointment of an impartial third party

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is common to both the methods of ADR. Whilst in arbitration the impartial third party is known
as an Arbitrator whereas, with conciliation, he is called a conciliator. The role of an arbitrator is
more active than passive than that of a Conciliator.

To invoke arbitration for a dispute, it is imperative to have an ADR clause in the contract itself,
however, that is not the case for conciliation. The decision given by the arbitrator is known as
an “Award”, this decision may or may not be binding, subject to the ADR clause in the contract,
on the contrary in conciliation the parties play a rather proactive role and the conciliator
facilitates the decision making. The inherent nature of the dispute should be kept in mind while
choosing the appropriate arrangement for resolving, as arbitration can be used for resolving
present as perceived future encumbrances, However, conciliation only helps in resolving
subsisting disputes.
 
Mediation vs Conciliation:
Mediation and Conciliation both attempt to maintain an existing business relationship and to
reconcile a lost balance of power between two parties. We sometimes use these concepts as
synonyms, but they vary significantly in their processes.

Mediation is enforceable by law whereas in conciliation it is upon the parties whether to accept
the settlement agreement or go to the court. In mediation, the mediator is like a facilitator who
controls the procedure through specific stages: Introduction, meetings and agreement whilst the
parties control the outcome whereas in conciliation, the conciliator is like interventionist who
may not follow an organized procedure, instead of administering the conciliation process as a
traditional negotiation, which may take different forms depending on the matter.

Mediation is regulated by the Code of Civil Procedure, 1908 and Conciliation is governed under
Arbitration and Conciliation Act, 1996.

Mediation is an agreement between the parties whereas conciliation results into settlement
between the parties. 

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In mediation, the confidentiality depends on the level of trust, but in conciliation the law binds
it.  

Difference between different types of Alternative Dispute Resolution (ADR)

systems:

ADR Methods Arbitration Mediation Conciliation Negotiation

Neutral Third Facilitator,

Adjudicator Facilitator Facilitator
Party Evaluator

Nature of the Not legally Not legally

Legally Binding Not legally binding
Proceeding binding binding

Level of
Formal Informal Informal Informal
Formality

Level of Confidentiality as Confidentiality Confidentiality as Confidentiality

Confidentiality determined by law based on trust determined by law based on trust

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Conclusion:

The various modes of Alternative Dispute Resolution (ADR) systems as discussed above, hold
many similarities as well as differences. These methods provide diverse techniques, which help a
party to a dispute to amicably settle their dispute. These modes of dispute resolution are now
widely accepted and applied in numerous areas of dispute.

The content of this article is intended to provide a general guide to the subject matter. Specialist
advice should be sought about your specific circumstances.

Reference:

 Law of Arbitration and Conciliation and Alternative Dispute Resolution Systems- Avatar
Singh 11th Edition

 http://www.legalservicesindia.com/law/article/1549/2/Comparative-study-of-ADR-The-
Indian-Perspective-

 https://www.mondaq.com/arbitration-dispute-resolution/777618/comparative-analysis-of-
adr-methods-with-focus-on-their-advantages-and-disadvantages

 https://www.google.com/search?
q=detailed+information+about+mechanism+of+adr+under+arbitration+and+conciliatio+
act&oq=detailed+information+about+mechanism+of+adr+under+arbitration+and+concili
atio+act&aqs=chrome..69i57.57620j1j15&sourceid=chrome&ie=UTF-8

 https://www.mondaq.com/india/trials-appeals-compensation/880718/10-landmark-
judgments-on-arbitration-by-supreme-court-of-india-in-the-year-2019

 https://www.casemine.com/search/in/mediation%2Bcases

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