Introduction

 Arbitration, Conciliation, Mediation and Negotiation are the Alternative

Dispute Resolution for solving civil nature disputes.
 Through these methods one can resolve their disputes without access to
the regular judicial system, i.e. judicial courts.
 The Article 39A of the Indian Constitution states that The State shall
secure the legal system which promotes justice on a basis of equal
opportunity and provide free legal aid, by suitable legislation or schemes
or in any other way, to ensure that opportunities for securing justice are
not denied to any citizen by reason of economic or other disabilities.
 The supreme court also recognized the importance of ADRs. In
Empire Jute Co. Ltd. And others v. Jute Corporation of India
(2007 SC). The Supreme Court stated the principle that courts would
not exercise their writ jurisdiction under Article 226 or 32 or
discretionary power under Article 142 of the constitution to grant
relief to the parties when there was an alternative forum i.e.
arbitration available to resolve the dispute between the parties.
 Not only Constitution , CPC also provide Section 89 Order 10 Rule 1-A to
1-C to the parties to opt for ADR processes.

Section 89  C.P.C.  "Settlement of disputes outside the Court”. -

 (1)Where it
appears to the court that there exist elements of a settlement which  
may   be   acceptable   to   the   parties,   the   court   shall formulate   the
terms   of   settlement   and   give   them   to   the parties   for   their  
observations   and   after   receiving   the
observations of the parties, the court may reformulate the
terms of a possible settlement and refer the same for-  

 a) arbitration

  b) conciliation

c) judicial settlement including settlement through Lok Adalat or 
 d) mediation

  (2) Where a dispute has been referred

(a) for arbitration or conciliation, the provisions of the Arbitration and

Conciliation Act, 1996 shall apply as if the
proceedings for arbitration or conciliation were referred for
settlement under the provisions of that Act;
(b)  to Lok Adalat, the court shall refer the same to the
Lok Adalat in accordance with the provisions of sub-section
(1) of section 20 of the Legal Services Authorities Act, 1987
and all other provisions of that Act shall apply in respect of
the dispute so referred to the Lok Adalat; 
(c) for judicial settlement, the court shall refer the same
to a suitable institution or person and such institution or person  
shall   be   deemed   to   be   a   Lok   Adalat   and   all   the
provisions of the Legal Services Authorities Act, 1987 shall
apply as if the dispute were referred to a Lok Adalat under
be prescribed.
(d) It is a cost-effective method to resolve disputes as trial is the
expensive one. ADR procedures the provisions of that Act;
(e)  for mediation, the court shall effect a compromise
between the parties and shall follow such procedure as may are
generally more flexible than court procedures.

 Thus, ADR provides speedier mechanism to resolve a matter in dispute

rather than the court system. 

Types of ADRs

1. Arbitration
 MEANING

 Arbitration is a term derived from the nomenclature of Roman law.

Arbitration is a private arrangement of taking disputes to a less
adversarial, less formal and more flexible forum and abiding by
judgment of a selected person instead of carrying it to the established
courts of justice.
 Arbitration is a dispute resolution process which is governed by the
Arbitration & Conciliation Act, 1996. The provisions of Part 1 and Part II
of the Arbitration & Conciliation Act, 1996 are applicable to the
arbitration proceedings.

PROCEDURE

I. Arbitration can be chosen by the parties either by way of an

agreement (Arbitration Agreement) or through the reference of
the Court.
II. The parties in an arbitration have the freedom to select a qualified
expert known as an arbitrator.
III. The process of dispute resolution through arbitration is
confidential, unlike the court proceedings which are open to the
public.
IV. This feature of arbitration makes it popular especially for
commercial disputes where business secrets revealed during the
process of dispute resolution are protected and preserved.
V. Similarly, companies can maintain their commercial reputation, as
they can prevent the general public or their customers from
discovering the details of their on-going legal disputes.
VI. The decision rendered by an arbitrator is known as an arbitral
award. Similar to a judgment given by a judge, the arbitral award
is binding on the disputing parties.
VII. Once an arbitral award is rendered, it is recognised and enforced
(given effect to) akin to a court pronounced judgment or order.
VIII. Therefore, an arbitral award holds several similarities with a court
order or judgment. However, unlike a judgment rendered by a
 judge in the court, the award does not hold precedential value
(the doctrine of stare decisis which means ´stand by the decision)
for future arbitrations.
IX. Arbitrators are free to base their decisions on their own
conception of what is fair and just.
X. Thus, unlike judges, they are not strictly required to follow the law
or the reasoning of earlier case decisions.

2. Mediation

MEANING

 Mediation is a method of ADR in which parties appoint a neutral third

party who facilitates the mediation process in-order to assist the parties
in achieving an acceptable and voluntary agreement.
 Mediation is premised on the voluntary will of the parties and is a
flexible and informal technique of dispute resolution.
 Further, mediation and arbitration differ on the grounds of the nature of
an award rendered. The outcome of mediation does not have similar
binding like an arbitral award.
 However, though non-binding, these resolution agreements may be
incorporated into a legally binding contract, which is binding on the
parties who execute the contract.

PROCEDURE

I. The neutral third party facilitating the process of mediation is

known as a mediator.
II. Mediation does not follow a uniform set of rules, though
mediators typically set forth rules that the mediation will observe
at the outset of the process.
III. Successful mediation often reflects not only the parties
willingness to participate but also the mediator’s skill.
IV. mediation may be considered in three ways:
 (i) Parties may agree to resolve their claims through a pre-
agreed mediation agreement without initiating formal
judicial proceedings (pre-litigation mediation).
(ii) Parties may agree to mediate, at the beginning of formal
court proceedings (popularly known as court referrals).
(iii) Mediation may be taken recourse of, after formal court
proceedings have started, or even post trial, i.e. at the
appellate stage. Mediation gives the participants an
opportunity to raise and discuss any issues they might wish
to settle.

 The mediator is merely under a duty to guide the settlement

proceedings in order to allow the parties to reach their own settlement
instead of imposing his opinions upon them. Mediation is regulated
under the Mediation Rules, 2009. 

3. Conciliation

MEANING

 Conciliation is a process similar to mediation as parties out of their own

free will appoint a neutral third party to resolve their disputes.
 The key difference between mediation and conciliation lies in the role of
the neutral third party. A mediator merely performs a facilitative role
and provides platform for the parties to reach a mutually agreeable
solution. The role of a conciliator goes beyond that of a mediator.
 A conciliator may be interventionist in the sense that he/she may
suggest potential solutions to the parties, in-order to resolve their claims
and disputes.
 Part III of the Arbitration and Conciliation Act, 1996 deals with
conciliation. it is a voluntary proceeding where parties in dispute agree
to resolve their dispute through conciliation. 

PROCEDURE
 I. Conciliator is the third party who is involved in settling the dispute of the
parties. There is one conciliator for the settlement but there can be
more than one conciliator, if the parties have requested for the same. 
II. Section 64 deals with the appointment of conciliator which states that if
there is more than one conciliator then the third conciliator will act as
the Presiding Conciliator.
III. Section 62 discuss the initiative of conciliation will start when one party
will send Written Invitation to conciliate upon the matter to the other
party. 
IV. If the other party rejects the invitation or the party who is willing for the
conciliation does not get a reply from the other party within Thirty days
then it will be treated as a Rejection of the Invitation.
V. Section 65 explains the submission of the statements of both the parties
to the conciliators. Each party should submit a brief written statement
regarding dispute as requested by the conciliator.
VI. According to Section 67(3) and 69(1), the conciliator can set up meetings
for the parties or he can meet parties together or separately. The place
of meeting can be decided by parties or conciliators. 

4. Negotiation

MEANING

 The word "negotiation" is from the Latin expression, "negotiatus", which

means "to carry on business".
  A negotiation is a bargaining process between parties when both seek
to reach an agreement that settles a matter of mutual concern or
resolves a conflict.
 The aim of negotiation is the settlement of disputes by exchange of
views and issues concerning the parties. There is absence of third party
in this redressal mechanism.

PROCEDURE
 I. Preparing and Planning: where the parties determine their goals for the
negotiation. Each party must first determine its “best alternative to a
negotiated agreement,” and “worst alternative to a negotiated
agreement”.
II. Defining Ground Rules: it pertains to the procedural requirements for
the negotiation. During this step, the parties will answer questions such
as, “How long will the negotiation last?”, “Where will the negotiations
take place?”, and “What will be the starting point for the negotiations?”
III. Clarification and Justification: parties will clear up and settle any
confusion about their positions. It’s an opportunity for educating and
informing one another on the issues in dispute. Each side clarifies its
demands to ensure the negotiation is properly focused.
IV. Bargaining and Problem Solving: Bargaining and problem solving is the
essence of the negotiation because it’s where the parties may compete
or cooperate as they each seek to advance their interests.

Introduction to Arbitration and Conciliation Act, 1996

Historical background

 Indian Arbitration law is based on English Law of Arbitration.

 The Bengal Regulation of 1772 provides that the parties to a dispute
relating to accounts etc. shall submit their cause to arbitration.
 Regulation of 1781 and 1782 provides that an arbitration award could be
set aside on the proof of gross corruption.
 The Regulations of 1793, 1795, 1816 and 1827 improves the law of
arbitration.
 Presently, the CPC, 1906 has provisions in this respect in section 89, 104
and its second schedule.

 In India the first statutory enactment on arbitration law was the Indian
Arbitration Act 1899.
 Before the enactment of Arbitration and Conciliation Act 1996, the law
of arbitration contained three enactments, namely,
 a. Arbitration Act, 1940
b. Arbitration (Protocol and Convention) Act, 1937
c. Foreign Awards (Recognition and Enforcement) Act, 1961

 The law commission of India in its 76th Report recommended the need
to update the arbitration act 1940 to meet the challenges of the
modern developing economy of the country.
 The present Arbitration and Conciliation Act 1996 received the assent of
the president of India on 16th August 1996. It is in force from 25th
January 1996.
 In Sundaram Finance Ltd. V. NEPC Indian Ltd. (AIR 1999 SC)

The supreme court pointed out that the Act of 1996 is very different
from the earlier Arbitration Act, 1940. Therefore, the provisions of the
Act have to be interpreted and construed independently. Refence to
1940 Act may lead to misconstruction. Further the court pointed out
that in order to get help in construction of these provisions it is relevant
to refer to UNCITRAL model laws than the rather Act of 1940.