What is Alternative Dispute Resolution?

  • August 11, 2017
  • 5:48 pm
  • lexabhigyan

“Any form of dispute resolution, except adjudication by courts, as part of the justice dispensation system established and administered by the state”. It has been classified into:

  • Arbitration
  • Mediation
  • Conciliation
  • Neutral Evaluation
  • Settlement Conferences

Justice is the Key component for existence and survival of any civilization. But since the advent of the human race and prolonging disputes, the harmonious reconciliation between the parties have been crushed to an irrevocable stage. As it generally stated as ‘legal adjudication may be flawless but certainly it is heartless’.

ADR originated in USA in an attempt to find alternatives to the traditional legal system felt to be adversarial, costly, unpredictable, rigid, causing damage to legal and formal relationships also there were narrow rights based remedies The ADR system is more of cooperative rather than being competitive. Thus it tends to generate more smooth process, less escalation and ill-will between parties.

Constitutional Background of ADR Mechanism

The constitutional mandate giving power to such mechanisms began with Justice V.R Krishna Iyer and Justice P.N Bhagwati committee report enabling weaker sections to approach courts from lower level munsiff court to Supreme court.

The ADR revolution has received much parliamentary support and recognition. The advent of legal services authority act, 1987 giving recognition to lok adalats and article 39-A for the same.The legislative act for providing speedy and efficient justice was reflected in two acts namely, Arbitration and conciliation act, 1996 and Civil Procedure Code (cpc).


In arbitration, a neutral person called an “arbitrator” hears arguments and evidence from each side and then decides the outcome of the dispute. Arbitration may be either “binding” or “nonbinding.” Generally, there is no right to appeal an arbitrator’s decision..

The Act provides that the arbitral tribunal may rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement. Hence, the arbitrators shall have jurisdiction even if the contract in which the arbitration agreement is contained is vitiated by fraud and/or any other legal infirmity.


Composition of Arbitration tribunal and format of proceedings

Parties may decide as to the appointment of an arbitrator (Sole arbitrator). In case of non mention in the arbitration agreement both parties are entitled to appoint one arbitrator and those appointed arbitrator can appoint third arbitrator there is no limit on the number of arbitrators but the forum shall be of odd number of arbitrators. The arbitrators are masters of their own procedure and subject to parties agreement, may conduct the proceedings “in the manner they consider appropriate.” Neither the Code of Civil Procedure nor the Indian Evidence Act applies to arbitrations Indian law provides for a very healthy 18% interest rate on sums due under an award.


Conciliation is an alternative dispute resolution process whereby the parties to a dispute agree to utilize the services of a conciliator, who then meets with the parties separately in an attempt to resolve their differences. Conciliation differs from arbitration in that the conciliation process, in and of itself, has no legal standing. If the conciliator is successful in negotiating an understanding between the parties, said understanding is almost always committed to writing (usually with the assistance of legal counsel) and signed by the parties, at which time it becomes a legally binding contract and falls under contract law.


It aims to assist two (or more) disputants in reaching an agreement. The parties themselves determine the conditions of any settlements reached— rather than accepting something imposed by a third party. A third-party representative may contract and mediate between (say) unions and corporations

Neutral Evaluation

In neutral evaluation, both the parties get an opportunity to present the case to a neutral person (an evaluator). The evaluator hears shortened arguments, reviews the strength and weakness of each party and offers an assessment of possible court outcomes in an attempt to promote settlement. The evaluator may also give case planning regulation and settlement support with the consent of the parties.

Settlement Conferences

Settlement conferences may be either mandatory or voluntary. In both types of settlement conferences, the parties and their attorneys meet with a judge or a neutral person called a “settlement officer” to discuss possible settlement of their dispute. The judge or settlement officer does not make a decision in the case but assists the parties in evaluating the strengths and weaknesses of the case and in negotiating a settlement.

Benefits of ADR Mechanism

  1. Less time than court proceedings
    A dispute often can be easily with ADR; often in a matter of months, even weeks, while lawsuit to trial can take a year or more.
  2. Save Money
    ADR saves ample amount of money as compared to courts. They would have spent on attorney fees, court costs, experts’ fees, and other litigation expenses.
  3. Greater role of parties and desired outcome
    In ADR, parties typically play a greater role in deciding both the process and its outcome. In most ADR processes, parties have more opportunity to tell their sides. Mediation, allow the parties to fashion creative resolutions that are not available in a trial. Other ADR processes, such as arbitration, allow the parties to choose an expert in a particular field to decide the dispute.

Decline of Arbitration and ground reality

The basic problem which was faced was the lack of skill and knowledge of the arbitrators and due to constant misuse of the provisions of the Arbitration Act and its procedures, clients of arbitration mechanism had to resort court proceedings to restore their interest for which they claimed justice. The concept of arbitration saw a further decline due to lack of proper rules and regulations and allegations of bias and disproportionately huge expenditure disintegrated the balance of the mechanism. Arbitration had an image of subsequent obstructions, astronomical costs and delays. Employee arbitrators are not given much credibility to Indian arbitrations. “Nemo debet esse judex in propria causa” – a party to the agreement cannot be an arbiter in his own cause.

Future prospects and changes in the ADR mechanism

There are various ADR methods, it is generally seen for disputants to begin negotiations with early neutral evaluation and then move to nonbinding mediation. If mediation fails, the parties may proceed with binding arbitration. The objective of each type of ADR is for the parties to find the most effective way of resolving their dispute without resorting to litigation. The process has been criticized as a waste of time by some legal pracitioners who believe that the same time could be spent pursuing the claims in civil court, where negotiation also plays a prominent role and litigants are protected by a number of rights and rules. It has gained phenomenal success in past three decades. As international commerce and investments has increased in India, it will reduce arbitration costs of parties, who presently sustain heavy losses on account of arbitrations conducted abroad. Thus India can become gradually become an “International hub of Arbitration”.