RESEARCH PAPER

Alternate Dispute Resolutions

LOK SABHA SECRETARIAT
LARRDIS August 2020

[The Research Paper is intended to serve only as a background aid to the Members of Parliament.
It is for restricted circulation and not for publication in any form.]

ALTERNATE DISPUTE RESOLUTIONS

Introduction
An affordable judicial system is a must for a country having a large number of
people at the bottom of the socio-economic pyramid. Article 39A of the Constitution of
India provides that "The State shall ensure that the operation of the legal system promotes
justice, on a basis of equal opportunity, and shall in particular, provide free legal aid, by
suitable legislation or schemes in any other way, to ensure opportunities for securing
justice are not denied by reason of economic or other disabilities”. In our country, the
constitutional mandate places all citizens equal before law and, at the same time, accords
equal protection of law to one and all. Articles 32 and 226 make provisions for judicial
remedy for the protection of Fundamental Rights of the citizens.

The Research Paper has been prepared by Shri Satya Vijay Ram, Additional Director under the supervision of Km. Manju
Jain, Director and Smt Kalpana Sharma, Additional Secretary for the use and information of the Members in the discharge of
their Parliamentary duties. Feedback is welcome and may be sent to lca-lss@sansad.nic.in.
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Q1. It is commonly said that Justice delayed is Justice denied. How far this
statement holds true for Indian Judicial System?
(a) Does our traditional method of dispute resolution meet the justice
requirements?
(b) If not, do we need a change in the mechanisms to deliver justice?
India’s legal profession is the world’s second largest, with over 1.4 million enrolled
lawyers in legal practices nationwide. The traditional method of dispute resolution or
litigation is not proving adequate to deliver justice as per the requirements. Quick delivery
of justice is the third in the trinity of an effective judicial system, the other two being
accessibility and affordability. As of 01.07.2020 according to website of Supreme Court
and National Judicial Data Grid (NJDG) there were 60,444 cases pending in the Supreme
Court of India, around 4.47 million cases pending in the High Courts and around 33.6
million pending before the subordinate judiciary. The old saying `justice delayed is justice
denied’ is, in fact, becoming a norm, rather than remaining an exception. Delay defeats the
parties of all hopes and they feel insecure in the process of seeking justice.
Underlining the need for solutions, the technique of Alternative Dispute Resolution
(ADR) has led to the development of ADR mechanism as an effort to design a workable
and fair alternative to the traditional judicial system. It consists of set of practices and
techniques to resolve disputes outside the courts. It is a fast track system of dispensing
justice. ADR has emerged as a significant mechanism which not only helps speedy access
to justice with reduced cost and time taken, but also provides congenial atmosphere and a
less formal forum for resolution of disputes. Since it actively involves parties themselves
to settle their disputes, it results in the amicable settlement of disputes. ADR, in fact, has
broadened the road of access to justice by manifold. ADR is also being referred as a global
system as it is not restricted by territorial jurisdiction.
Q2. (a) What are the alternative mechanisms to fast track the system of
dispensing justice?
(b) Though the arbitration, conciliation, mediation and negotiation are
sources for settlement of dispute, everyone is different. Explain?
Today, various forms of ADR mechanisms exist in India for resolving disputes
outside the courts. It is the nature of the dispute and relation of the parties which decide the
choice of ADR method, i.e. Arbitration, Conciliation, Mediation, Negotiation, Lok
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Adalats, Consumer Dispute Redressal System, etc.

Arbitration is a process for settlement of disputes fairly and equitably through a
person or persons or an institutional body without recourse to litigation by the disputing
parties pursuant to an agreement. It may be ad-hoc, contractual, institutional or statutory. A
neutral third person chosen by the parties to the dispute settles the disputes between the
parties in arbitration. The process of arbitration can start only if there exists a valid
Arbitration Agreement between the parties prior to the emergence of the dispute. The
object of arbitration is settlement of disputes in an expeditious, convenient, inexpensive
and private manner so that they do not become the subject of future litigation between the
parties. It is quite useful in resolving different kinds of disputes including international
commercial disputes.
Conciliation is an alternative dispute resolution mechanism which has been given
statutory recognition by incorporating provisions in Sections 61 to 81 of Part III of the
Arbitration and Conciliation Act, 1996. Conciliation is an informal process whereby the
parties, together with the assistance of the neutral third person or persons, systematically
isolate the issues involved in the dispute, develop options, consider alternatives and reach a
consensual settlement that will accommodate their needs. As against arbitration, it is
neither based nor controlled by existence of a prior agreement between the parties. That
apart, recourse to conciliation can be held even after parties have resorted to litigation and
the case is pending before a Court. Usually, the conciliator in this process would
independently investigate into the dispute and draft the report indicating the method of
settlement of disputes. Then it is left open to the parties to come to a final settlement in line
with the report of the conciliator, with or without any changes to be agreed by the parties.
Hence, unlike arbitration, the conciliator’s report would not be binding on the parties.
Mediation involves the amicable settlement of disputes between the parties with the
help of a mediator. Mediator plays the role of a facilitator in attaining cooperation between
the parties to the dispute. Mediation lays emphasis on the parties’ own responsibilities for
making decisions that affect their lives instead of a third party judging the fate of parties to
the dispute. Thus, mediation can be termed as assisted negotiation, wherein the mediator,
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by virtue of his influence, brings the parties to negotiating table and assists in the
settlement of their disputes. This party autonomy in the mediation makes it more popular
among the informed litigants.
While the Arbitration and Conciliation Act, 1996 first introduced mediation in
Section 30 as a form of alternative dispute resolution, it does not draw up the rules for
mediation as it does for conciliation. However, in 1999, the Government enacted the Code
of Civil Procedure (Amendment) Act, 1999 wherein a new Section 89 was introduced into
the CPC. This newly inserted section introduces the concept of ‘judicial mediation’, as
opposed to `voluntary mediation’. A court can now identify cases where an amicable
settlement is possible, formulate the terms of such a settlement, and invite the observations
thereon of the parties to the dispute. The Commercial Courts (Amendment) Act of 2018
has provided great impetus to mediation. The amendment has inserted a new Chapter IIIA
into the Commercial Courts Act, 2015. It entails that where a suit does not contemplate
urgent interim relief, the plaintiff has to undergo pre-institution mediation.
Negotiation closely resembles mediation. However, it is more often referred to as a
method wherein the parties themselves would settle their disputes. The negotiation process
provides the parties an opportunity to exchange ideas, identify the irritant points, find a
solution, and get commitment from each other to reach an agreement. Bargaining is a
common feature of the negotiation process. Even if a third party negotiator is involved in
the process of negotiation, his role would be limited to inducing the parties to the process
of negotiation. Alternatively, there may be communication between two or more agents of
parties to try and come to a mutually acceptable solution by way of bargaining. Thus, it
mainly involves communication for the purpose of persuasion. Hence, mediators would
have higher level of involvement in the settlement of disputes when compared to that of
negotiators. It is significant to note here that mediation and negotiation provide better and
satisfactory solution to certain kind of disputes such as family disputes, disputes with
neighbours, matrimonial disputes, industrial disputes and several petty disputes.
Lok Adalat is a unique system developed in India. It means people’s court. It is a
forum where voluntary effort at bringing about settlement of disputes between the parties
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is made through conciliatory and persuasive means. It encompasses negotiation, mediation

and conciliation as tools to settle disputes between the parties. Lok Adalats have been
given the powers of civil court under the Code Civil Procedure. One of the unique features
of Lok Adalat is that a number of disputes between different parties can be settled at one
go without wasting much time.
In 1987, Legal Services Authorities Act was enacted to give a statutory status to the
institution of Lok Adalat. Under section 19 of this Act, anybody can get his dispute
referred to Lok Adalat for its settlement. Once a compromise or settlement is arrived at
before the Lok Adalat, then the award based thereon, acquires the force of a decree of a
civil court. It attains finality and binds the parties to the dispute. The Act forbids filing of
appeal to any court against such an award except on the ground of fraud. The Lok Adalats
can settle all civil cases and compoundable criminal cases. There are also permanent Lok
Adalats operating for the settlement of cases relating to Public Utility Services like
transport services, postal services, telegraph services, etc. Added to this, national level Lok
Adalats are held on every month on a fixed day relating to different subject matters. A
huge number of cases are disposed off during national Lok Adalats.
Q3. (a) What strategy has been followed to formalize the process of Arbitration in
our country? Elaborate.
(b) We have to make India a robust center for international and domestic
arbitration: (i) What measures have been taken to strengthen the
arbitration landscape? (ii) Will the Arbitration and Conciliation
(Amendment) Act, 2019 help in institutionalization of Arbitration
Mechanism in India?
India’s first major consolidated arbitration enactment was the Arbitration Act, 1940
based on the (English) Arbitration Act, 1934. Other complementary legislations were
formed in the Arbitration (Protocol and Convention) Act, 1937 and the Foreign Awards
Act, 1961. However, Arbitration under these laws was never effective and led to further
litigation as a result of rampant challenges of awards. The Government of India thought it
necessary to provide a new forum and procedure for resolving international and domestic
disputes quickly.
The Arbitration & Conciliation Act, 1996 was enacted with a view to making
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arbitration, domestic and international, more effective in India. The Act is based on the
Model Law adopted by the United Nations Commission on International Trade Law
(UNCITRAL) in 1985. The Act recognizes that India’s economic reforms will become
effective only if the nation’s dispute resolution provisions are in tune with international
regime. Under Section 2 of the 1996 Act, Arbitration means any arbitration whether or not
administered by permanent arbitral institution. The Act is a composite piece of legislation.
It provides for domestic arbitration; international commercial arbitration; enforcement of
foreign awards and conciliation. Part I of the Act formalizes the process of Arbitration and
provides inter alia for arbitration of disputes; composition and jurisdiction of arbitral
tribunal; conduct of arbitration proceedings; recourse against arbitral awards and
enforcement. Part III formalizes the process of Conciliation and provides for application
and scope of Conciliation. Part II is about Enforcement of Foreign Awards under the New
York and Geneva Conventions.
The road to Amendment in the Arbitration & Conciliation Act, 1996 was set by ‘The
Law Commission of India’s Report No. 246’ which proposed several amendments to the
principal Act of 1996. The Act of 1996 was amended by the Arbitration and Conciliation
(Amendment) Act, 2015 to make the arbitration process more user-friendly, cost-effective,
speedy, with minimum court intervention.
A High-Level Committee to Review the Institutionalizing of Arbitration Mechanism
in India was set up under the Chairmanship of retired Justice B.N. Srikrishna by an office
order dated 13 January 2017. The Committee was established to identify the roadblocks to
the development of institutional arbitration, examine specific issues affecting the
arbitration landscape, and prepare a roadmap for making India a robust center for
international and domestic arbitration.
The Committee in its report dated 30 July 2017 recommended in Part I about the
strengthening of institutional arbitration in India through measures such as the grading of
arbitral institutions, the accreditation of arbitrators, the creation of a specialist arbitration
bar and bench, and the provision of governmental and legislative support for institutional
arbitration. The Committee also recommended further amendments to the Arbitration &
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Conciliation Act to clear ambiguities in the legislation and promote the use of India as a
seat of arbitration. In Part II, the Committee recommended the development of the
International Centre for Alternative Dispute Resolution (“ICADR”), an arbitral institution
receiving significant funding from the Government, as a flagship arbitral institution. In Part
III, made specific recommendations for effective dispute resolution, management and
prevention including inter alia creation of the post of an ‘International Law Adviser’ (ILA)
who shall advise the Government and coordinate dispute resolution strategy for the
Government in disputes arising out of its international law obligations, particularly
disputes arising out of bilateral investment treaties (BITs).
After examination of the said recommendations, it was decided to amend the
Arbitration and Conciliation Act, 1996. Hence, the Arbitration and Conciliation
(Amendment) Act was enacted on 9 August 2019. The Act provides for establishment and
incorporation of an independent body, namely, the Arbitration Council of India with the
duty to take all such measures as may be necessary to promote and encourage arbitration,
mediation, conciliation or other alternative dispute resolution mechanism and to frame
policy and guidelines for the establishment, operation and maintenance of uniform
professional standards in respect of all matters relating to arbitration. The other aspects
inter alia included: to frame policies governing the grading of arbitral institutions;
recognise professional institutes providing accreditation of arbitrators; make
recommendations regarding personnel, training and infrastructure of arbitral institutions;
maintain electronic depository of arbitral awards made in India.
The Council has to make grading of arbitral institutions on the basis of criteria
relating to infrastructure, quality and caliber of arbitrators, performance and compliance of
time limits for disposal of domestic or international commercial arbitrations, in such
manner as may be specified by the regulations. The qualifications, experience and norms
for accreditation of arbitrators have been specified in the Eighth Schedule to the Act.
Q4. (a) Are the ADR methods inexpensive and lead to faster resolution of
disputes?
(b) Does the congenial and less formal forum of ADR atmosphere help in
better dispute resolution? If yes, reflect on the merits.
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(c) It is said that confidentiality related to proceedings and awards is very

much protected in ADR dispute resolution. How it helps in safeguarding
the interests of parties to the dispute?
There are various reasons for which ADR is preferred over the conventional way of
resolving the disputes:
a) Speedy and Economic Disposal of Cases: It has been observed that the Court
proceedings do not offer a satisfactory method for settlement of disputes as it
involves inevitable delays due to its lengthy procedures and technicalities. ADR, on
the other hand, provides an economic, expeditious and informal remedy for disputes.
This economic and speedy relief is very significant because ‘Justice delayed is
Justice denied’.
ADR mechanisms are also relatively inexpensive in comparison with the
ordinary legal process. ADR can also really help the poorer sections of the society
by being cost effective in nature.
b) Fewer Technicalities: Courts resolve disputes via a binding process by applying
legal and equitable principles to findings of fact. Any Court system is governed by
strict rules of pleading and of evidence.
ADR procedures are not afflicted with such rigorous rules of procedure. In
case of arbitration, however, the rules of arbitration institution, which are fixed, are
sometimes applied. Otherwise, the parties may meet and fix the procedures for
themselves with the help of a mediator. It is the substantive justice and not
procedural justice that gets prominence in ADR. The ADR thus facilitates access to
justice in effective and convenient way.
c) Scope for Parties’ Autonomy: Apart from the fixing of procedures, the parties to the
disputes enjoy autonomy with respect to choice of the arbitrator, conciliator or
mediator and fixation of date and place of settlement. This autonomy may lead to the
appointment of persons who are familiar with the business or have other relevant
expertise and can thus play an effective role in dispute resolution.
d) Confidentiality of Proceedings and Awards: ADR proceedings are conducted in
private and the awards are kept confidential. In case of conciliation proceedings,
Section 75 of the Arbitration and Conciliation Act 1996 specifically provides for the
confidentiality of all matters relating to the proceedings. In arbitration agreements
also, parties themselves, often provide for confidentiality of the proceedings and the
award. The confidentiality in the proceedings is helpful in the settlement of those
disputes which the parties don’t want to divulge to others.
e) Involvement of Parties to the Dispute Settlement: One of the foremost features of
ADR process is that the dispute remains under the control of the parties themselves
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and any settlement entered into is their own and do not represent a dictate from an
outsider. Through participation of parties themselves in the process of dispute
resolution, ADR processes create legal awareness and respect for rights of one
another and promote self-reliant development. They provide parties with the
opportunity to reduce hostility, regain a sense of control, gain acceptance of the
outcome, resolve conflict in a peaceful and cordial manner, and achieve a greater
sense of justice in each individual case.
Q5. Despite introducing various amendments to the Arbitration and Conciliation Act,
1996, the adoption of the ADR mechanisms is still faced with many impediments.
What could be the possible reasons for the same?
Despite the fact that the Indian legal system encourages dispute settlements through
ADR mechanisms, our masses have yet to embrace it whole-heartedly. The reasons being:
(a) Lack of ADR understanding among lawyers: The foremost reason for ADR’s
unpopularity owes Bar’s failure in reaching it to masses. In most of the developed
countries, the Bar is divided into litigating lawyers and non-litigating lawyers. The
percentage of non-litigating lawyers in all the developed countries is significantly
higher than the litigating lawyers. However, we don’t find many non-litigating
lawyers in India. This may be attributed to the lack of proper understanding of ADR
mechanisms by the lawyers, who are generally devoid of any training in
administering the ADR techniques.
(b) Missing enforceability of decisions: Another weakness of ADR, other than
arbitration, is the absence of enforceability of decisions/recommendations of
conciliators, mediators or negotiators by execution. This makes the people to
ultimately resort to the court proceedings in the cases where parties refuse to
implement such decisions/recommendations and consequently, the whole process of
ADR amounts to a waste of time and money in such cases.
(c) Lack of dedicated legal practitioners: The speedy disposal of cases through ADR
also requires sincere and dedicated persons administering it. However, in India we
do not have a separate group of people who are skilled and devoted only for the
resolution of disputes through ADR. Given this fact, the people who administer
ADR in India are the busy legal practitioners, having cases in courts almost every
day. This negates the advantage of ADR’s speedy proceedings by making it quite
lengthy and time consuming.
(d) A costly affair for Poor: While the ordinary court proceedings may be facilitated by
free legal aid, the ADR would often involve the payment to the arbitrators,

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conciliators, mediators or negotiators for hiring their services. This factor compels
the poor Indian masses from not resorting to ADR process.
Conclusion
India being a developing country needs alternative mechanisms of dispute resolution
for expeditious and effective disposal of justice within the framework of the rule of law
and lessening the burden on the courts. Majority of the persons do not want to become
involved in lawsuits due to delays, high costs, unwanted publicity, and ill will. Therefore,
it is needed to strengthen and promote the use of ADR mechanisms. In addition to
reducing the burden on the Courts and giving speedy justice to people, ADR processes are
relatively inexpensive too. Abraham Lincoln has rightly said “Discourage litigation.
Persuade your neighbours to compromise whenever you can. Point out to them how the
nominal winner is often a real loser – in fees, expenses, and waste of time”.

References
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case study of State of West Bengal, The WB National University of Juridical Sciences, 2017.
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of the Niti Ayog, 15.
4. Dispute Resolution in India- An Introduction, Nishith Desai Associates, 2020.
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Eng_14.pdf
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ytI7P0rm5Plwe5r8ubNVyJ.html
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Court of India, 2017.
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& Justice, 04-August-2017

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