Alternate Dispute Resolution

Published On: 16th March, 2024

Authored By: Shubra Jain
Dr D.Y Patil Law College, Pune


The legal history of arbitration in India dates back to the 19th century. The process was standardized by Act VIII of 1859, which addressed arbitration among parties to a lawsuit and arbitration without the involvement of the court. This was followed by the Indian Contract Act of 1872, which allowed for dispute resolution through arbitration under Section 28. Subsequently, the Indian Arbitration Act of 1899 was enacted, modeled after the English Act of 1899, and applied to the presidency towns of Bombay and Madras. The Code of Civil Procedure of 1908 introduced provisions related to arbitration law, which extended to other parts of British India.

The modern arbitration law in India has a long history, with the first arbitration law enacted in 1772 by the Bengal Regulation Act of 1772 during British rule. The Indian Arbitration Act of 1899 was a significant development, officially recognizing arbitration in India and applying to the presidency towns of Calcutta, Bombay, and Madras.

The evolution of arbitration in India has been a significant aspect of the country’s legal history. The Arbitration Act of 1940 was a pivotal development, consolidating and amending existing laws to provide a comprehensive framework for arbitration in the country.

In 1925, the civil justice committee proposed various changes to the arbitration law. Subsequently, the Indian Legislature enacted The Arbitration Act of 1940, which, as its preamble indicates, consolidated and amended existing laws, serving as a comprehensive code concerning arbitration. This act allowed for arbitration to be conducted independently or with court involvement, either in the absence of a pending lawsuit or as part of ongoing litigation.

The evolution of arbitration in India has been a significant aspect of the country’s legal history. The Arbitration Act of 1940 was a pivotal development, consolidating and amending existing laws to provide a comprehensive framework for arbitration in the country.

Over time, the 1940 Act became old-fashioned. The Law Commission of India and different groups representing businesses said it needed to be changed to better fit today’s needs and make Indian economic changes work better. Apart from arbitration other ways to solve disagreements, like mediation and conciliation, should also be recognized by law. Any agreement made between parties through these methods should be treated the same as a mutually agreed arbitration decision.


The Arbitration and Conciliation Act of 1996 was created to unify and update the law governing domestic arbitration, international commercial arbitration, the enforcement of foreign arbitral awards, conciliation, and associated issues. This legislation was based on the United Nations Commission on International Trade Law’s (UNCITRAL) model law on International Commercial Arbitration.

The Arbitration and Conciliation Act, of 1996 was a significant development in Indian arbitration law, aiming to provide a comprehensive framework for various forms of arbitration and related processes. It was designed to align with international standards, particularly the UNCITRAL model law on International Commercial Arbitration, to facilitate and regulate both domestic and international arbitration in India.

The Arbitration and Conciliation Act of 1996 sought to streamline arbitration proceedings and promote conciliation in corporate disputes. The statute acknowledged the autonomy of parties in arbitral processes by allowing the arbitral tribunal the right to run procedures independently, restricting judicial review of decisions, and lowering the supervisory function of courts. Furthermore, the statute authorized arbitral tribunals to determine jurisdiction and address challenges to the legality of arbitration agreements, therefore increasing their autonomy.

The Arbitration and Conciliation Act of 1996 was a significant development in Indian arbitration law, designed to streamline arbitration procedures and promote conciliation in business matters. The act aimed to align with international standards, particularly the UNCITRAL model law on International Commercial Arbitration, to facilitate and regulate both domestic and international arbitration in India


Arbitration, Conciliation, and Mediation are examples of negotiating procedures covered under the phrase “Alternative Dispute Resolution” (ADR). Many countries have used this technique for successful conflict resolution. Among these strategies, mediation is the most common type of ADR and is frequently regarded as the best approach for dispute resolution. Mediation as a method of dispute resolution is not a new notion. It entails the peaceful resolution of disagreements mediated by a neutral third party, known as a mediator.ADR processes are often less formal, less expensive, and take less time than traditional trials. They also provide people with more control over when and how they resolve their problems. Arbitration, Conciliation, Mediation, Judicial Settlement, and Lok Adalat are the most popular ADR processes in civil proceedings. Section 89 of the Code of Civil Procedure allows for out-of-court dispute resolution based on the Law Commission of India’s advice, implying that the court may encourage parties to a lawsuit to attend hearings in person in order to reach an amicable resolution.

Alternative Dispute Resolution (ADR) refers to several techniques of settling conflicts other than traditional litigation. These methods, which include mediation, arbitration, and negotiation, are frequently preferred because of their informality, cost-effectiveness, and capacity to enable parties to take a more active role in conflict resolution.


According to Section 2(1)(a) of the Arbitration and Conciliation Act, any arbitration, whether conducted by a permanent arbitral institution or not, is considered arbitration. Although the Act does not define “arbitrator,” an arbitrator is commonly considered to be an individual selected by mutual consent to resolve differences and disputes between two or more parties. However, simply appointing an arbitrator by the parties is inadequate; the nominated individual must also agree to serve as an arbitrator and accept the reference. It is critical that the arbitrator maintains complete impartiality and independence, acting as an extra-judicial tribunal whose verdict is binding on the parties concerned. ADR techniques, such as arbitration, conciliation, and mediation, are often less formal, less expensive, and less time-consuming than traditional trials, giving individuals more control over when and how their issues are resolved. Arbitration, conciliation, mediation, judicial settlement, and Lok Adalat are the most prevalent alternative dispute resolution techniques utilized in civil proceedings. Section 89 of the Code of Civil Procedure allows for out-of-court dispute resolution based on the Law Commission of India’s advice, implying that the court may encourage parties to a lawsuit to attend hearings in person in order to reach an amicable resolution.

The duty of an arbitrator to disclose any potential conflicts of interest is a fundamental aspect of arbitration. This duty requires the arbitrator to reveal any known interests related to either party or the subject matter of the dispute that is unknown to the parties involved. The purpose of this disclosure is to allow each party to assess the arbitrator’s suitability and impartiality for the role. The duty of disclosure is based on the principle that an arbitrator’s independence and impartiality are essential for the integrity of the arbitration process. International standards, such as the IBA Guidelines on Conflicts of Interest in International Arbitration, emphasize the importance of arbitrator disclosure to maintain the fairness and credibility of the arbitration proceedings.

Arbitration parties are allowed to choose who they want to arbitrate their case. Typically, the parties choose the arbitrator or arbitrators. However, the court may appoint an arbitrator or umpire if deemed necessary. The parties to an arbitration agreement may specify that any reference therein be made to an arbitrator or arbitrators chosen by a person specified in the agreement, either explicitly or as the present holder of any office or appointment.

Types of Arbitration:

  1. Ad hoc Arbitration- This refers to a form of arbitration that is not handled by a formal organization, instead, parties have the authority to determine the number of arbitrators, the selection process, and the procedural rules governing the arbitration.
  2. Domestic Arbitration- arbitration in which disputes are governed by Indian Laws and arise entirely within the territorial jurisdiction of India is termed Domestic Arbitration.
  3. International Arbitration- International arbitration pertains to disputes involving at least one of the parties falling under the following categories:-
  4. An individual who is a citizen of, or habitually resides in, any country other than India; or
  5. A corporation incorporated in any country other than India; or
  6. An association or group of individuals whose central management and control is situated in any country other than India; or
  7. The government of a foreign country.


Conciliation is an informal process where the conciliator works to facilitate an agreement between the parties in dispute. This includes decreasing tensions, improving communication, interpreting concerns, offering technical assistance, investigating alternative solutions, and mediating a negotiated conclusion. Mediation, on the other hand, is an organized procedure in which the mediator helps the parties reach a mutually acceptable solution. Mediation, which is typically voluntary, leads to a formal agreement describing the parties’ future conduct. While mediation uses a variety of skills and strategies to facilitate a settlement, it does not have the authority to impose a conclusion.

Ultimately, the effectiveness of these processes hinges on the conciliator or mediator’s ability to encourage the parties to reach a resolution. The law formally recognizes conciliation in India, emphasizing its early and significant role in the case. Success in conciliation depends on the parties’ willingness to readjust. Contemporary thought suggests that conciliation does not replace arbitration or litigation, but rather complements these methods.

Commencement of conciliation proceedings

  • Section 62 Sub-section (1) requires the party initiating conciliation to send a written invitation to the opposing parties, succinctly explaining the subject matter of the dispute.
  • Subsection (2) states that conciliation proceedings will not proceed if the opposing parties decline the invitation.
  • Furthermore, sub-section (3) states that if the other party declines the invitation, conciliation proceedings will not start.
  • Subsection (4) states that if the party initiating conciliation does not receive a response within thirty days of the invitation’s dispatch date, or within the time frame specified in the invitation, they may reject the conciliation invitation and notify the opposing party in writing.


The adversarial method of dispute resolution is one in which the opposing claims of parties are represented to a neutral third party for resolution. As opposed to the adversarial mode of dispute resolution, non-adversarial Alternative dispute resolution mechanisms like mediation are informal, friendly to people, and simpler. They also enable the parties to communicate with each other about issues deriving from their conflict, identify their shared interest, and concentrate on coming to a resolution on their own. Such non-adversarial conflict settlement techniques aid in the parties’ time and financial savings.

According to the Civil Procedure ADR and Mediation Rules of 2003, “mediation” refers to a procedure in which there is a mediator and a dispute between them. This mediation follows the mediation rules established in Part II. The primary focus is on facilitating direct discussions between the parties or communicating through mediators, which aids in identifying issues, reducing misunderstandings, clarifying priorities, exploring areas of compromise, generating solution options, and emphasizing that the parties bear responsibility for making decisions.

Section 4 of the Mediation Act 2021 defines mediation as a variety of techniques, including pre-litigation mediation, internet mediation, community mediation, conciliation, and others. In these processes, parties hire a third party, known as a mediator or mediation service provider, to assist them in reaching a mutually acceptable resolution to their disagreement.

Mediation and conciliation are two types of alternative dispute resolution that have commonalities but also significant distinctions. Mediation is an informal process in which a third-party mediator encourages discussions between the parties in order to reach an agreement. The mediator’s responsibility is to facilitate the mediation session and ensure that the agreement reached is legally binding. Conciliation, on the other hand, requires a conciliator who serves as an advisor and may intervene to provide the parties with viable options. Conciliation is often facilitated by lawyers, and the settlement agreement achieved is legally binding.

Types of mediation:-

  1. Court-Referred Mediation – This provision pertains to cases currently before the court that may be recommended for mediation under Sec. 89 of the Code of Civil Procedure, 1908. Courts operate mediation centers staffed by certified mediators drawn from the panel of mediators associated with these centers.
  2. Statutory/Mandatory Mediation – Some disputes, like those involving labor law or family laws are required by law to go through the mediation procedure. Mandatory Mediation simply refers to the acts of attempting mediation rather than requiring parties to resolve their problems through mediation.
  3. Private Mediation – In private mediation, skilled mediators provide various services privately, on a fee-for-service basis, to the court, the public, members of the business sector, and government entities to settle disputes through mediation. Private mediation is applicable to both court-related disputes and pre-litigation matters.
  4. Online Mediation – Online mediation, including pre-litigation mediation, can occur at any point during the mediation proceeding as per law, provided there is a written agreement of the parties, which can be facilitated through electronic form or computer networks.


Section 89 of the Civil Procedure Code recognizes judicial settlement as an alternative method of resolving disputes. Although no specific regulations exist for such settlements, the word “judicial settlement” is clearly referenced in section 89 of the code. It states that the provisions of the Legal Service Authority Act of 1987 apply in the event of a court settlement. Essentially, the presiding judge seeks to resolve the dispute between the parties concerned peacefully through legal methods. Any such decision is considered an agreement under the Legal Service Authority Act, 1987, if it is reached by an amicable settlement. According to Section 21 of the Legal Service Authorities Act of 1987, each Lok Adalat award is recognized as a Civil Court decree. Notably, India lacks any written guidelines for judicial settlement.


Lok Adalats, also known as people’s courts, have been established by the government to resolve conflicts through mediation and mutual agreement. These legal bodies and dispute resolution entities are created for societal fairness by citizens themselves, based on settlements or agreements reached through formal discussions. The first Lok Adalat took place in 1982 in Una village of Junagadh (Gujarat). These Adalats also have jurisdiction over cases pending in regular courts. Section 89 of the Code of Civil Procedure allows for the referral of civil disputes to Lok Adalats. Once referred, Lok Adalats operates in accordance with the Legal Service Authority Act, 1987, and the conduct of Lok Adalats is governed by section 19 of the Legal Services Authorities Act, 1987.


The increasing recognition is that the courts are unable to handle the entire workload of the justice system. Many disputes are suitable for resolution through alternative methods such as arbitration, mediation, conciliation, negotiation, etc. These processes offer procedural flexibility, save valuable time and money, and avoid the stress of a conventional trial.

As a result, India urgently requires the establishment and promotion of ADR services for the resolution of both domestic and international issues. These services should be based on solid concepts, supported by implementation skills, and outfitted with complete and modern amenities. The International Centre for Alternative Dispute Resolution (ICADR) is a one-of-a-kind institution in the region, advancing ADR training and research while also providing ADR services to parties not just in India but around the world. The ICADR is a society registered under the Societies Registration Act of 1860 that functions as an autonomous non-profit organization, with panels of skilled professionals in the implementation of ADR proceedings.


  2. Book:- Jurisprudence, interpretation, and general laws

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