Alternate Dispute Resolution Mechanism
Dilpreet Singh 3 Apr 2020

Alternate Dispute Resolution Mechanism

Introduction to ADR

The concept of Conflict Management through Alternative Dispute Resolution (ADR) has introduced a new non-adversarial resolution mechanism. The conflict is basically ‘lis inter partes’ and the justice dispensation framework in India has found an alternative to adversarial litigation in the form of an ADR process.

New methods of dispute resolution, such as ADR, make it easier for parties to deal with the underlying issues in dispute in a more cost-effective and efficient manner. In addition, these mechanisms have the advantage of providing the parties with an opportunity to minimize hostility, regain power, gain acceptance of the result, settle the conflict in a constructive manner, and achieve a greater sense of justice in each particular event. Dispute resolution typically takes place in the private sector and is more effective and efficient. ADR is generally divided into at least three types: negotiation, mediation, and arbitration.

The need of ADR in India

ADR has been given a great importance in the Indian justice system for a variety of reasons but primarily due to the enormous pending court cases. In the last few years, the numbers of court cases have shown a huge increase, which has highlighted the need for alternative methods for dispute resolution.

In a developing country like India with major economic reforms underway within the framework of the rule of law, strategies for swifter resolution of disputes for reducing the burden on the courts and to provide means for expeditious resolution of disputes, there is no better option but to strive to develop Alternative Dispute Resolution (ADR) mechanisms by establishing facilities for providing settlement of disputes through arbitration, conciliation, mediation, and negotiation.


 Effect of ADR

The motive of the mechanism of ADR is to develop a workable and fair alternative to our traditional judicial system. It is a fast track justice system. Specific ADR techniques exist viz. Arbitration, mediation, conciliation, mediation-arbitration, mini-trial, private tribunal, final arbitration offers, court-annexed ADR and summary trials.

Scientific laws of these techniques have been developed in the USA, UK, France, Canada, China, Japan, South Africa, Australia, and Singapore. ADR has emerged as an important phenomenon in these countries, not only helping to minimize the expense and time taken to settle conflicts, but also offering a comfortable environment and a less formal and less difficult platform for various forms of conflicts.

The Arbitration Act,1940 did not follow either the universal or domestic principles of dispute resolution standards. Huge delays and court interference have undermined the very intent of arbitration as a way to settle conflicts promptly. In some cases, the Supreme Court has consistently stressed the need to amend the law. It was agreed in the conferences since the entire burden of the justice system cannot be carried by the courts alone, an alternative conflict settlement system should be adopted. The Government of India thought it necessary to provide a new forum and procedure for resolving international and domestic disputes quickly.

Thus, came The Arbitration and Conciliation Act,1996, hereinafter referred to as “the Act”. The Arbitration and Conciliation law is essentially the same as in developed countries. Conciliation has been given formal approval as a way of resolving disputes under this Statute. Furthermore, the new Act also ensures the arbitrators freedom and impartiality regardless of their nationality. The Act brought in numerous amendments to speed up the arbitration process. This legislation has created trust among international parties interested in investing in India or going for joint ventures, foreign investment, technology transfer, and foreign collaborations.

ADR has the advantage of being more versatile, and avoid seeking recourse to the courts. Parties are free to withdraw at any point of time in conciliation/ mediation. The resolution of conflicts by ADR has been shown to be quicker and cheaper. The parties involved in ADR are not developing strained relations; rather, they are maintaining the ongoing relationship among themselves.

Elements of the Act

Part I of the act formalizes the arbitration process and Part III formalizes the conciliation process. (Part II deals with the compliance of international awards under the New York and Geneva Conventions)

Ø  Arbitration: The arbitration process will only begin if there is a binding Arbitration Agreement between the parties before the dispute occurs. As per Section 7 of the Act, such an arrangement must be made in writing. The contract in terms of which the dispute occurs must either contain an arbitration clause or refer to a separate document signed by the parties to the arbitration agreement. The presence of an arbitration agreement can also be inferred by written communications, such as letters, telegrams, which provide a record of the agreement.

Any party to the conflict may begin the process of appointing an arbitrator, and if the other party does not comply, the parties will contact the Chief Justice for the appointment of an arbitrator. There are only two grounds on which a party can challenge the appointment of an arbitrator — fair doubt as to the impartiality of the arbitrator and the lack of proper qualification of the arbitrator as specified by the arbitration agreement. A sole arbitrator or panels of arbitrators so appointed constitute the Arbitration Tribunal.

Section 34 of the Act provides certain grounds upon which a party can appeal to the principal civil court of original jurisdiction for setting aside the award.

When the time limit for filing an appeal for annulment of the award has expired or if such an appeal is denied, the award shall be binding on the parties and shall be treated as an order from the court.


Ø  Conciliation: The conciliation process is a less formal method of arbitration. This procedure does not allow any formal agreement to occur. Any party can request the appointment of a conciliator by the other party. One conciliator is preferred, but two or three are allowed as well. In the case of several conciliators, they will all work jointly. If the party refuses the request to negotiate, there can be no conciliation.

Parties may send the statements to the conciliator explaining the general nature of the dispute and the points at issue. Every party shall give a copy of the declaration to the other party. The conciliator can request more information, request a meeting of the parties or communicate with the parties orally or in writing. The Parties can also send proposals for the settlement of the dispute to the conciliator.

When the conciliator believes that there are elements of the settlement, he can draw up the terms of the settlement and send them to the parties for their approval. When all parties sign a consent agreement, that shall be final and binding on all parties.


Ø  Mediation: A form of alternative dispute resolution is intended to assist two (or more) parties in achieving an agreement. The parties themselves decide the terms of any settlement instead of accepting anything dictated by a third party. Disputes may involve (as parties) states, organizations, communities, individuals or other representatives with a vested interest in the outcome of the dispute. Mediators shall use appropriate strategies to enable or strengthen dialogue between the parties, with the goal of helping the parties to reach an agreement (with practical effects) on the disputed matter. Normally, both parties must find the mediator to be neutral.

Disputants can use mediation in a variety of disputes, such as economic, legal, political, employment, community, and family matters.


Ø  Negotiation: Negotiation is a discussion designed to settle conflicts, to reach agreements on course of action, to compromise on an individual or collective basis, or to achieve results that represent specific interests. This is the main form of alternative dispute resolution.

Negotiations take place in business, non-profit organizations, government departments, legal cases, between nations and in personal circumstances such as marriage, divorce, parenting, and everyday life. The study of the subject is called the theory of negotiation. Those who work effectively in negotiations are called negotiators. Professional negotiators are also trained, such as union negotiators, leverage buy-out negotiators, peace negotiators, hostage negotiators, or can function under certain titles, such as diplomats, legislators or brokers.


Nowadays, court trials are very time-consuming and expensive, which makes people look for an alternative. Alternative Dispute Resolution and its mechanisms tend to be a successful form of dispute resolution. These approaches are less costly, confidential and not as time-consuming. In addition, the main purpose of the majority of ADR forms is to strengthen the relationship between the parties to the conflict and to help them achieve an agreement. This is what separates the methods of ADR from the ordinary methods of litigation. There can be only one winning party in a court trial, while after conciliation, mediation or negotiation all parties can be considered as winners, because there is no conflict between them anymore.

Did you find this write up useful? YES 0 NO 0

C2RMTo Know More

Something Awesome Is In The Work









Sign-up and we will notify you of our launch.
We’ll also give some discount for your effort :)

* We won’t use your email for spam, just to notify you of our launch.

SAARTHTo Know More

Launching Soon : SAARTH, your complete client, case, practise & document management SAAS application with direct client chat feature.

If you want to know more give us a Call at :+91 98109 29455 or Mail info@soolegal.com