Alternative Dispute Resolution Explained



  1. Introduction 
  2. What Is Alternative Dispute Resolution 
  3. The Origin And Evolution Of Alternative Dispute Resolution (ADR)
  4. Benefits And Drawbacks Of Alternative Dispute Resolution
  5. Arbitration
  6. What Is Mediation
  7. What Is Negotiation
  8. What Is Conciliation
  9. What Is Lok Adalat
  10. What Is Online Dispute Resolution (ODR)
  11. Conclusion


In today’s tech-driven world, people can easily connect globally for business or resolving issues without going to court. This shift towards Alternative Dispute Resolution (ADR) is because traditional litigation is slow and inconvenient. While India hasn’t fully adopted ADR over litigation yet, it’s recognizing the advantages. This article will explain ADR methods and their benefits in a straightforward way.

What Is Alternative Dispute Resolution 

ADR encompasses various methods for settling disputes outside of court, aiding parties in reaching agreements without litigation. Typically involving a neutral third party, these methods are sometimes employed alongside court proceedings with judicial approval.

The Origin And Evolution Of Alternative Dispute Resolution (ADR)

As per the 222nd Report of the Law Commission of India, the Constitution ensures equal access to justice for everyone through Article 39A, regardless of economic or other barriers. However, factors like poverty, illiteracy, and lack of legal awareness hinder this access to courts. In India, many people facing rights violations lack the resources for prolonged legal battles or legal representation. This has led to a perception that the court system is burdensome.

To address these challenges, India, like many other countries, is exploring Alternative Dispute Resolution (ADR). The courts are burdened with numerous pending cases that can take years to resolve, further emphasising the need for ADR. This led the Indian Government to enact Section 89 of the Code of Civil Procedure, 1908, and replace the old Arbitration Act, 1940, with The Arbitration and Conciliation Act 1996, aligning with the United Nations Commission on International Trade Law (UNCITRAL) mandates.

Benefits And Drawbacks Of Alternative Dispute Resolution

The pros of ADR include :

  1. Cost-Effectiveness: ADR is notably less expensive compared to traditional court proceedings.
  2. Time Efficiency: ADR processes are generally quicker, saving parties substantial time.
  3. Simplicity: ADR avoids the complexities often found in formal court systems.
  4. Confidentiality: Parties in ADR can freely express differing opinions without concern about these being disclosed in court.
  5. Preservation of Relationships: Unlike in adversarial court settings, ADR focuses on resolution rather than victory, allowing parties to maintain amicable relationships and continue future dealings.
  6. Suitability for Multi-Party Disputes: ADR provides a platform for all involved parties to present their perspectives collectively, avoiding repeated court appearances and offering a broader view of the dispute.
  7. Choice and Flexibility: Parties have the liberty to select the ADR method, as well as the individuals or bodies to facilitate resolution, making the process more tailored to their needs.
  8. Confidentiality Option: ADR allows parties to maintain confidentiality if desired, fostering open discussions and practical solutions.
  9. Comprehensive Issue Consideration: ADR addresses a wide range of issues, safeguarding shared future interests and promoting risk management.

Drawbacks of Alternative Dispute Resolution Include :

  1. Precedent-Based Disputes: ADR may not be suitable for cases that rely heavily on legal precedent for decision-making.
  2. Need for Court and Interim Orders: ADR may not be effective in situations requiring court intervention or interim orders.
  3. Enforcement Requirements: ADR may be less suitable when enforcement mechanisms are necessary for resolving the dispute.
  4. Live Testimony and Expert Analysis: ADR may not be ideal for cases where live testimony, expert analysis, or detailed evidence examination is crucial.
  5. Power Imbalance: ADR may not work effectively in disputes where there’s a significant power imbalance between the involved parties.
  6. Complex Cases and Expertise: Cases of intricate nature requiring meticulous examination of minor details and expert guidance might not be well-suited for ADR processes.
Also Read  A Guide On The Arbitration And Conciliation Act, 1996


The arbitration process is known for its informality, fostering amicable and efficient dispute resolution that saves time and money for involved parties. This makes arbitration a preferred choice, especially in the business sector, where quick resolution is preferred over lengthy court battles. The decision made by the arbitrator, called an arbitration award, is a judgement on the case’s merits.

Prior to commencing arbitration, parties must establish an arbitration agreement that outlines the process’s terms and conditions. This agreement dictates cost-effective measures, efficiency protocols, and rules of evidence application. It’s crucial that this agreement complies with The Indian Contract Act, 1972, and that both parties have the legal capacity to enter into contracts as defined in Sections 11 and 12 of the Act.

Arbitral decisions are conclusive and binding, typically allowing minimal grounds for objections from the parties involved. However, non-binding arbitrations also exist, offering parties the option to request a trial if dissatisfied with the arbitrator’s decision.

The main types of arbitral proceedings are:

Ad Hoc Arbitration: In ad hoc arbitration, the parties involved in the dispute oversee the arbitration proceedings themselves without involving an arbitral institution. If the parties cannot agree on an arbitrator or one party is hesitant to appoint a specific arbitrator, Section 11 of The Arbitration and Conciliation Act 1996 comes into play. Under this section, the arbitrator for the dispute will be appointed by either the Chief Justice of the Supreme Court or their designate, or the Chief Justice of the High Court or their designate. The arbitrator’s fee in ad hoc arbitration is mutually decided by the parties and the arbitrator.

Institutional Arbitration: Institutional arbitration involves parties agreeing in advance that an arbitration institution will manage the arbitration. Notable Indian institutions include the International Centre for Alternative Dispute Resolution and the Indian Council of Arbitration. These institutions craft arbitration rules based on their extensive experience in overseeing arbitral procedures and scenarios, ensuring readiness for any potential situations that may arise in future arbitration cases.

What Is Mediation 

Mediation is a structured, party-centred negotiation process where a neutral third party, known as the mediator, assists disputing parties in reaching a mutually acceptable settlement. The key features of mediation are:

  1. Neutral Mediator: The mediator is an impartial, independent third party who facilitates the negotiation between the parties. The mediator does not have the authority to impose a binding decision.
  2. Party-Controlled Process: The parties retain control over the outcome of the mediation. They actively participate in identifying the issues, generating options, and making the final decision on the settlement terms.
  3. Confidentiality: Mediation proceedings are strictly confidential, and the information discussed cannot be used in any subsequent legal proceedings unless the parties agree otherwise.
  4. Flexibility: The mediation process is informal and flexible, allowing the parties and the mediator to adapt the procedure to suit the specific needs of the dispute.
  5. Focus on Interests: Mediation aims to address not just the legal or factual issues, but also the underlying interests, needs, and concerns of the parties. This helps in finding creative, mutually-beneficial solutions.
  6. Voluntary Participation: Parties have the right to withdraw from the mediation at any stage without providing any reason. Participation in mediation is generally voluntary, even if court-referred or mandated by a contract.
  7. Relationship-Building: Mediation emphasises the restoration and preservation of the relationship between the parties, rather than just the resolution of the immediate dispute.
  8. Non-Binding Nature: Unless the parties agree to make the mediated settlement agreement legally binding, the outcome of mediation is generally non-binding. Parties retain the right to pursue litigation if they are not satisfied with the mediation process or outcome.
Also Read  A Guide On The Arbitration And Conciliation Act, 1996

The mediator’s role is to facilitate effective communication, foster mutual understanding, and guide the parties towards a mutually acceptable resolution. The mediator uses specialised techniques, such as active listening, reframing, and generating options, to assist the parties in overcoming impasses and finding creative solutions.

What Is Negotiation 

Negotiation is a form of dispute resolution where parties collaborate to find a mutually acceptable solution or compromise without the involvement of a third-party adjudicator. In negotiation, the parties have the option to be represented by their attorneys, and it is not statutorily recognized in India, meaning there are no specific legal guidelines governing the process.

Essentials of negotiation:

  1. Communication Process: Negotiation involves a communication process aimed at resolving conflicts and reaching agreements through dialogue and discussion.
  2. Voluntary Participation: Parties enter into negotiation voluntarily, and the outcome is non-binding, meaning they are not legally obligated to accept the final agreement.
  3. Party Control: The key feature of negotiation is that parties have control over the outcome and the process. They actively participate in shaping the resolution, ensuring that their interests are considered and addressed.

Negotiation allows parties to engage in open dialogue, explore options, and work towards a mutually beneficial solution. It is a flexible and informal process that empowers parties to craft agreements that meet their needs and preferences, fostering a sense of ownership over the outcome.

What Is Conciliation 

Conciliation is defined as a process where a third-party conciliator assists the parties in reaching an amicable settlement of their dispute. The conciliation process can be initiated in respect of any dispute, whether contractual or not. The parties can either mutually appoint a conciliator or request the court or any institution to appoint one.

The conciliator must be an impartial and independent person. The conciliator facilitates communication between the parties and assists them in identifying the issues and exploring settlement options.

He/She may make proposals for a settlement but cannot impose a binding decision on the parties. The conciliation proceedings are confidential, and the conciliator cannot act as an arbitrator or representative of either party in any subsequent proceedings. The parties are required to cooperate with the conciliator and provide all relevant information.

Also Read  A Guide On The Arbitration And Conciliation Act, 1996

If the parties reach a settlement, the conciliator records it in the form of a settlement agreement. The settlement agreement is binding on the parties and can be enforced like any other contract.

The conciliation proceedings can be terminated if the parties reach a settlement, if the conciliator concludes that further efforts are unlikely to lead to a settlement, or if a party withdraws from the process.

The key advantages of conciliation under the Act are:

  1. It is a voluntary, flexible, and party-controlled process.
  2. It focuses on preserving the relationship between the parties and finding a mutually acceptable solution.
  3. The settlement agreement is binding and enforceable.
  4. It is a cost-effective and time-saving alternative to litigation.

However, the utilisation of conciliation under the Act has been relatively low compared to arbitration. This can be attributed to factors such as a lack of awareness, the preference for more adversarial dispute resolution methods, and the non-binding nature of the conciliator’s recommendations.

What Is Lok Adalat

Lok Adalats fall under The Legal Services Authorities Act, 1987, with specific provisions outlined in Sections 19, 20, 21, and 22. These adalats are organised by State Legal Aid and Advice Boards in collaboration with District Legal Aid and Advice Committees, aiding economically disadvantaged individuals in bypassing the inefficiencies of litigation. The primary goal of The Legal Services Authorities Act was to ensure access to justice for all, regardless of financial status, addressing the challenges faced by marginalised communities. Judicial decisions, like the Delhi High Court’s ruling in cases such as Abul Hasan and National Legal Service Authority v. Delhi Vidyut Board & Ors. AIR 1999 Del 88, have reinforced this access, leading to the establishment of permanent Lok Adalats. Importantly, decisions made by Lok Adalats are legally binding, similar to civil court orders, thus enhancing access to justice for economically underprivileged individuals.

What Is Online Dispute Resolution (ODR) 

Online Dispute Resolution (ODR) is a method of resolving disputes using digital technology and the internet. It involves the use of online platforms and tools to facilitate communication, negotiation, and settlement between parties involved in a dispute. ODR provides a convenient and efficient way to resolve conflicts without the need for physical presence or traditional legal proceedings. It encompasses various forms of alternative dispute resolution methods, such as mediation, arbitration, and negotiation, adapted to an online environment. ODR platforms often offer secure communication channels, document sharing, and virtual hearings to assist parties in reaching a resolution. The key benefits of ODR include accessibility, cost-effectiveness, speed, and the ability to handle disputes across geographical boundaries.


While there are several other dispute resolution methods like med-arb, mini trials, and summary jury trials, arbitration, mediation, and Lok Adalats remain the most prevalent ADR techniques in India. Despite ADR gaining popularity worldwide, India continues to heavily depend on litigation. However, the emergence and advancement of ADR methods, coupled with the aim to enhance access to justice, have positioned ADR as indispensable. All ADR methods, including negotiation, should receive legal recognition as they are effective and convenient, thereby alleviating the strain on the judicial system.


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