The Indian economy was up for competition in the year 1990. And with competition, disputes and conflicts came. That requires quick decisions on disputes and proper negotiations to minimize the chances of disputes. To solve this problem, the Government of India enacted the Arbitration Conciliation Act, 1996(amended in 2015 by way of the Arbitration and Conciliation (Amendment) Act, 2015), Legal Services Authorities Act, 1987. In 2001 Civil Procedure Code, Sec. 89 was enacted to provide ADR methods liked Mediation, Conciliation, Lok Adalats, and Arbitration.

Following this amendment, the Supreme Court has repeatedly pointed that the courts must identify appropriate cases of mediation, conciliation, or Lok Adalat. According to the National Litigation Policy Of 2011, the average life of litigation in Indian courts is 15 years, and these policies planned to bring it down to 3 years by the end of 2020.

Alternative Dispute Resolution (ADR) 

ADR is a technique used to resolve conflicts and disputes between parties while delivering an agreeable experience for the parties involved. It can help reduce the burden of litigation on courts. The dispute resolution usually takes place in a private place in the presence of a neutral third party.

Types of ADR

  • Arbitration
  1. Part 1 of the Arbitration and Conciliation Act, 1996 establishes the process of Arbitration. If an arbitration agreement exists between the parties, before the dispute arises, then the party can take this option as a resolution. Section 7 of the act, states that such agreements must be in writing.
  2. Any party can initiate the process of appointing an arbitrator. If the other party is not cooperating, they can approach the office of chief justice for the appointment of an arbitrator. 
  3. Only on two grounds, The Party can challenge the appointment of an arbitrator,
  1. When there is reasonable doubt in the arbitrator’s neutrality
  2. As per the Arbitration agreement, When there is a lack of proper qualifications of the arbitrator.
  1. There is little scope of interventions of the judiciary in the process of Arbitration.
  2.  If the period for filing an appeal for setting aside an award is over or such appeal is rejected. Then the award is binding on the parties and is considered as a decree of the court.
  3. Trials are more formal than Arbitration, and rules of evidence are many times relaxed.
  • Conciliation 

Part 2 of The Arbitration and Conciliation Act, 1996 establishes the process of conciliation. Under Article 62 of the Arbitration and Conciliation Act,

  1. The party who initiates a conciliation shall send a written invitation briefly stating the subject of disputes in it.
  2. When the other party in written accepts a written invitation, then only Conciliation proceedings shall start.

Under Section 30 of the Act, any party can initiate a conciliation process, even if the Arbitration process is going on. In conciliation, the parties to the dispute use conciliator who meets with them separately to settle their dispute and lower the tensions between the parties. There is no need for a prior agreement like in Arbitration. According to Conciliator, there is a settlement element, then he may list the terms of settlement and send it to parties. If both the parties sign the document mutually, it shall be final and binding on both parties.

  • Mediation 

It aims to assist two or more parties in reaching an agreement. Rather than accepting something imposed by some other person, these parties themselves determine their settlement terms. Mediators help the parties to settle on the disputed matter. Mediation covered a variety of disputes such as legal, commercial, and family matters.

There are four stages in the process of mediation

  1. Opening Statement
  2. Joint session 
  3. Separate session
  4. Closing statement
  • Negotiation

It is a nonbinding procedure. Without third-party intervention, discussions between the parties initiated with the object to arrive at a negotiated settlement. It is the primary method of alternate dispute resolution in India.

  • Lok Adalats 

National and Legal Services Authorities Act, 1987 constituted the Lok Adalat system. It is an exclusively Indian approach that is on Gandhian principles. Lok Adalats means “People’s Court” There is no Court fee and no need to follow procedures given under CPC and Evidence Act. Parties can directly approach judges. The main motive of these Adalats is to do a compromise between the parties. If the Compromise has not arrived, it goes back to the courts. But if the Compromise has attained, it became binding on both parties. You cannot appeal for these awards even under Article 226 of the Constitution.

Advantages of Alternate Dispute Resolution 

  • People resolve their dispute in less time as compared to courts
  • It saves a lot of money as compared to the litigation process.
  • It is free from the technicalities of courts and has informal ways to resolve disputes.
  • It prevents further conflict and maintains a good relationship between the parties as they discuss their issues together on the same platform.
  • It preserves the best interest of both parties.

Landmark Judgments 

  • Bhargavi Constructions v. Kothakapu Muthyam Reddy

In this case, The court held that under Articles 226 and 227 of the Indian Constitution, settlements were appealed only on limited grounds.

  • Brahmani River Pellets Ltd. V. Kamachi Industrial Ltd.

In this case, both the parties consented to Bhubaneshwar as the venue for Arbitration proceedings. It shows the intention to exclude all the other jurisdictions. The apex court held that the Madras has no territorial jurisdiction in this case.

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

In this case, the apex court struck down Section 87 of the Arbitration and Conciliation Act because it is arbitrary as article 14 of the Indian Constitution.

  • Rashid Raza v. Sadaf Akhtar

In this case, the Apex court held that a mere simple allegation of fraud taints the effect of the Arbitration Agreement.

  • Tulsi Narayan Garg v. The Madhya Pradesh Road Development Authority, Bhopal and Ors.

In this case, the court held that if the person is a party to an arbitration agreement, then he cannot become an arbitrator in his cause.

  • Salem Advocate Bar Association v. Union of India

In this case, the court upheld the constitutional validity of section 89 of CPC. Constituted a committee to frame rules for smooth implementation of section 89 of CPC.

  • Venkatesh v. Oriental Insurance Co. Ltd.

In this case, The court held that at the request of either of the party, the case can be referred to Lok Adalat.  


Alternate Dispute Resolution is not substituted to the judicial system, is complementary to the court system. The main objective of ADR is to resolve the dispute in time and in a cost-effective manner. On the recommendation of Justice M. Jagannadha Rao Committee, discontent within the legal fraternity about the amendment in Section 89, was resolved. The present-day Indian Government wants the evolution of ADR by desiring to make India a global destination for Arbitration and other dispute resolution methods. 


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This article is written by Megha Patel, a 2nd year Law Student at the Mody University of Science and Technology, Laxmangarh, Rajasthan.

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