 Alternative Dispute Resolution means

resolving the dispute outside the court system

 Alternative Dispute Resolution (hereinafter
referred to as “ADR”) is a term for describing
process of resolving civil disputes in place of
litigation and includes arbitration, mediation,
conciliation
 As the name suggest, it simply refers to an
alternate way to settle conflicts which a person
or corporate entity might encounter.
 Under the rule of East India Company
 During early and medieval periods, laws were not
codified and were governed by social sanctions
 The British government gave legislative form to
the law of arbitration by promulgating regulations
in the three presidency towns: Calcutta, Bombay
and Madras.
 In Bengal Resolution Act, 1772 a provision was
made to submit all the cases of disputed accounts
and other matters to arbitrator for decision and the
awards of arbitrator were implemented as decrees
of the court
 The Bengal regulations of 1781 and 1782
developed the rules for arbitration between the
parties in suits
 Bengal Regulation of 1787 empowered the
Court to refer certain suits to arbitration
 The Bengal Regulation act, 1793 authorised the
Courts to recommend parties to suit to refer
matters of accounts, partnership debts, non-
performance of contract to arbitration
 In this Regulation, the procedure for
conducting an arbitration proceeding was also
provided.
 The Bombay Regulation of 1827 and Madras
Regulations of 1816 empowered the arbitrator
to settle disputes
 These regulations remained in force till the
enactment of the Civil Procedure Code, 1859
 Under the Rule of British India
 Law relating to the arbitration was
incorporated in Sections 312-327 of the Civil
Procedure Code, 1859
 Section 312- Enabled the parties to a suit to
apply to the Court, if they so desired, that an
order be passed that the matters in dispute be
referred to arbitration.
 Procedure for arbitration, making and filing of
awards was laid down in these sections
 Provision was made for reference to arbitration
without the intervention of Courts
 This Act was repealed by the Act of 1877 which
consolidated the law of civil procedure which
was further replaced by the Act of 1882
 The Act of 1882 made the provision for filing
and enforcement of awards made by
arbitration without the intervention of Courts
 The Civil procedure Code, 1859, the Indian
Contract Act 1872 and the Specific Relief Act,
1877 mandated that contract to refer the
present or future differences to arbitration
could not be specifically enforced
 The CPC , 1882 was replaced by the present
Code of Civil Procedure, 1908
 The Second Schedule of CPC, 1908 comprised
the law regarding arbitration
 First Statutory enactment on arbitration
 Based on the British Arbitration Act of 1889
 . It expanded the area of arbitration by defining
the expression ‘submission’ to mean “a written
agreement to submit present and future
differences to arbitration whether an arbitrator
is named therein or not”
 The Arbitration Act, 1940, dealt with only
domestic arbitration.
 Enacted on the pattern of the English
Arbitration Act, 1934
 Under the 1940 Act, intervention of the court
was required in all the three stages of
arbitration in the tribunal, i.e. prior to the
reference of the dispute, in the duration of the
proceedings, and after the award was passed.
 The Arbitration Act, 1940 repealed Section 89 ,
104 and Second Schedule to the Civil procedure
code, 1908
 It remained in force till 1996 until it was
repealed by Arbitration and Conciliation Act,
1996
 Independent India
 Article 51 – Constitution of India- State shall
endeavour to foster respect for international;
law and treaty obligations and encourage
settlement of international disputes by
arbitration
 The Indian Arbitration Act, 1940 and the
Arbitration (Protocol and Convention) Act,
1937 have been in force even after getting
indpendence
 Government decided to review the Arbitration
Act, 1940 and for this purpose referred the
matter in 1977 to the Law Commission for its
examination
 The Law Commission in its 76th report
recommended for updating the Arbitration
Act, 1940 to meet the new challenges of the
modern developing economy of the country
 The government enacted the Arbitration and
Conciliation Act, 1996 in an effort to modernize
the 1940 Act.
 In 1978, it was recommended that it would be
in the interest of International Commercial
Arbitration if UNCITRAL would initiate steps
leading to the establishment of uniform
standards of arbitral procedure.
 The preparation of a Model Law on arbitration
was considered the most appropriate way to
achieve the desired uniformity.
 The full text of this Model Law was adopted on
21st June 1985 by UNCITRAL.
 In India, the Model Law has been adopted
almost in its entirety in the 1996 Act.
 This Act repealed all the three previous
statutes. Its primary purpose was to encourage
arbitration as a cost-effective and quick
mechanism for the settlement of commercial
disputes.
 It covers both domestic arbitration and
international commercial arbitration
 To Cover international as well as domestic
commercial arbitration and conciliation
 To make provision for an arbitral procedure which
is fair, efficient and capable of meeting the needs of
specific arbitration
 To provide that Arbitral Tribunal gives reasons for
its arbitral award
 To minimise the supervisory role of Courts in
arbitral process
 To permit an Arbitral Tribunal to use mediation,
conciliation or other procedures during the arbitral
proceedings to encourage settlement of disputes
 In addition to arbitration, conciliation has also
been recognised as a means of settling
commercial disputes
 The arbitral award and settlement during
conciliation have been treated at par with the
decree of Court
 Powers of the Court have been considerably
curtailed
 It specifically defines the term “international
Commercial Arbitration”
 The Act contains a statutory provision making
it mandatory for the arbitrator to give reasons
for the award
 The Act provides for the enforcement of certain
foreign awards made under the New- York
convention and Geneva Convention
respectively
 The first and foremost welcome amendment introduced by the
amendment is with respect to definition of expression 'Court'.
 The amended law makes a clear distinction between an
international commercial arbitration and domestic arbitration with
regard to the definition of 'Court'.
 In so far as domestic arbitration is concerned, the definition of
"Court" is the same as was in the 1996 Act, however, for the
purpose of international commercial arbitration, 'Court' has been
defined to mean only High Court of competent jurisdiction.
 Accordingly, in an international commercial arbitration, as per the
new law, district court will have no jurisdiction and the parties
can expect speedier and efficacious determination of any issue
directly by the High court which is better equipped in terms of
handling commercial disputes.
 Amendment to Section 8: (Reference of parties to
the dispute to arbitration):
 In Section 8, which mandates any judicial authority
to refer the parties to arbitration in respect of an
action brought before it, which is subject matter of
arbitration agreement . The sub-section(1) has been
amended envisaging that notwithstanding any
judgment, decree or order of the Supreme Court or
any court, the judicial authority shall refer the
parties to the arbitration unless it finds that prima
facie no valid arbitration agreement exists.
 Amendment to Section 11 (Appointment of Arbitrators):
 In so far as section 11, "appointment of arbitrators" is concerned,
the new law makes it incumbent upon the Supreme Court or the
High Court or person designated by them to dispute of the
application for appointment of arbitrators within 60 days from the
date of service of notice on the opposite party.

 As per the new Act, the expression 'Chief Justice of India' and
'Chief Justice of High Court' used in earlier provision have been
replaced with Supreme Court or as the case may be, High Court,
respectively.
 The decision made by the Supreme Court or the High Court or
person designated by them have been made final and only an
appeal to Supreme Court by way of Special Leave Petition can lie
from such an order for appointment of arbitrator.
 Amendment to Section 12:
 Amendment to Section 12, as per the new law
makes the declaration on the part of the arbitration
about his independence and impartiality
 A Schedule has been inserted (Fifth Schedule)
which lists the grounds that would give rise to
justifiable doubt to independence and impartiality
of arbitrator and the circumstances given in Fifth
Schedule are very exhaustive. Any person not
falling under any of the grounds mentioned in the
Fifth Schedule is likely to be independent and
impartial in all respects
 Insertions of new Section 29A and 29B( Time limit for arbitral
award and Fast Track Procedure) :
 To address the criticism that the arbitration regime in India is a
long drawn process defying the very existence of the arbitration
act, the Amended Act envisages to provide for time bound
arbitrations.
 Under the amended act, an award shall be made by the arbitral
tribunal within 12 months from the date it enters upon reference.
 This period can be extended to a further period of maximum 6
months by the consent of the parties, after which the mandate of
the arbitrator shall terminate, unless the Court extends it for
sufficient cause or on such other terms it may deem fit
 Also, while extending the said period, the Court may order
reduction of fees of arbitrator by upto 5% for each month such
delay for reasons attributable to the arbitrator.
 Also, the application for extension of time shall be disposed of by
Court within 60 days from the date of notice to the opposite party.
 Arbitration
 Negotiation
 Conciliation
 Mediation
 Lok adalats
 Ombudsman
 It is the simplest means for redressal of disputes.
 In this, parties begin their talk without interference of any
third party
 Negotiation involves two parties discussing and
compromising to obtain an agreed solution
 The aim of negotiation is the settlement of disputes by the
exchange of views and issues concerning the parties
 In India, Negotiation doesn’t have any statutory recognition.
Negotiation is self counseling between the parties to resolve
their dispute. Negotiation is a process that has no fixed rules
but follows a predictable pattern.
 It is a interpersonal communication process
 It resolves conflicts
 It settles the disputes
 It is a voluntary process
 It is a non-binding mechanism
 It is a controlled process
 It has capability to reach wide ranging solutions
 Mediation is a non-binding procedure in which an
impartial and neutral third party- mediator assists the
parties top a dispute in reaching a mutually satisfactory
and agreed settlement of the dispute.
 The basic motive of mediation is to provide the
parties with an opportunity to negotiate, converse
and explore options aided by a neutral third party,
to exhaustively determine if a settlement is
possible.
 The parties submit their disputes orally to the mediator
and mediator then holds private sessions with each party
separately and then summarizes their points in joint
meetings until agreement is reached
 Mediation is negotiation carried out with the assistance of a third
party. The mediator, in contrast to the arbitrator or judge, has no
power to impose an outcome on disputing parties.
 The concept of mediation is not foreign to Indian legal system, as
there existed, different aspects of mediation. The Village
Panchayats and the Nyaya Panchayats are good examples for this.
 A brief perusal of the laws pertaining to mediation highlights that
it has been largely confined to commercial transactions.
 In India, mediation has not yet been very popular. One of the
reasons for this is that mediation is not a formal proceeding and it
cannot be enforced by courts of law. There is a lack of initiative on
the part of the government or any other institutions to take up the
cause of encouraging and spreading awareness to the people at lar
 Conciliation – A binding procedure in which an impartial
third party – conciliator assists the parties to a dispute in
reaching a mutually satisfactory and agreed settlement of the
disputes.
 The Conciliator may interview the parties individually but
nay information or allegations made by a party in such
interview should be disclosed to other party for comments
 There is difference between mediation and conciliation
 In mediation, mediator helps the party to reach a mutually
agreeable settlement whereas in conciliation, the conciliator
would settle the disputes himself in an informal and friendly
manner with the agreement of both the parties.
 This consists in an attempt by a third party, designated
by the litigants, to reconcile them either before they
resort to litigation (whether to court or arbitration), or
after.
 The attempt to conciliate is generally based on showing
each side the contrary aspects of the dispute, in order to
bring each side together and to reach a solution.
 Section 61 of the 1996 Act provides for conciliation of
disputes arising out of legal relationship, whether
contractual or not and to all proceedings relating
thereto. After its enactment, there can be no objection,
for not permitting the parties to enter into a conciliation
agreement regarding the settlement of even future
disputes.
 Arbitration involves an independent third party who
actually makes suggestions and actually imposes a
decision on the parties.
 It is binding on the parties
 In arbitration, dispute is submitted to arbitral
tribunal consisting of a sole or odd number of
arbitrators which make a decision in the form of an
award on the dispute and finally settles the disputes.
 It is a procedure in which the dispute is submitted
to an arbitral tribunal which makes a decision (an
“award”) on the dispute that is binding on the
parties.
 It is a private, generally informal and non-judicial
trial procedure for adjudicating disputes.
 There are four requirements of the concept of
arbitration: an arbitration agreement; a dispute; a
reference to a third party for its determination; and
an award by the third party.
 Ad Hoc Arbitration

 An ad hoc arbitration is one which is not administered by

an institution and therefore, the parties are required to
determine all aspects of the arbitration like the number of
arbitrators, manner of their appointment, etc.
 Provided the parties approach the arbitration in a spirit of
cooperation, ad hoc proceedings can be more flexible,
cheaper and faster than an administered proceeding.
 The advantage is that, it is agreed to and arranged by the
parties themselves.
 However, the ground realities show that arbitration in India,
particularly ad hoc arbitration, is becoming quite expensive
vis-à-vis traditional litigation
 An institutional arbitration is one in which a specialized institution
with a permanent character intervenes and assumes the functions
of aiding and administering the arbitral process, as according to
the rules of that institution
 these institutions do not arbitrate the dispute, it is the
arbitrators who arbitrate, and so the term arbitration
institution is inapt and only the rules of the institution
apply.
 Incorporation of book of rules in the “arbitration
agreement” is one of the principle advantages of
institutional arbitration. Institutional Arbitration,
throughout the world, is recognized as the primary mode of
resolution of international commercial disputes. It is an
arbitration administered by an arbitral institution.
 An official appointed to investigate
individuals' complaints of maladministration
or a violation of rights against a company or
organization, especially a public authority.
 The ombudsman is usually appointed by the
government or by parliament, but with a
significant degree of independence.
 The Government of India has designated several
ombudsmen sometimes called Chief Vigilance
Officer for the redress of grievances and
complaints from individuals in the banking,
insurance and other sectors being serviced by both
private and public bodies and corporations.
 The CVC (Central Vigilance Commission) was set
up on the recommendation of the Santhanam
Committee
 In India, the ombudsman is also known as Lokpal
or Lokyukta
 Legal Services Authorities Act, 1987 gave a statutory status to
Lok Adalats
 Article 39-A of the Constitution which was inserted by the 42nd
Amendment provided for the Free Legal Aid
 Legal Services Authority Act contain various provisions for
settlement of disputes through lok adalats
 It is an act to constitute legal services authorities to provide free
and competent legal services to the weaker sections of the society
to ensure that opportunities for securing justice are not denied to
any citizen by reason of economic or other disabilities and to
organize the Lok Adalats to secure that the operation of the legal
system promotes justice on a bias of equal opportunity
 It means “People’s Court”
 Defined as forum where voluntary effort aimed at
bringing about settlement of disputes between the
parties is made through conciliatory and pervasive
efforts
 It not only minimises litigation expenditure but
also saves a lot of time of the parties and also
facilitates inexpensive and prompt remedy
 Organised by the State Legal Aid and Advisory
Boards or District Legal Aid Committees
 The days to conduct Lok Adalats are fixed month
in advance on Saturdays or Sundays only on
holidays
 Conciliator is the name given by the Statute to
members of Lok Adalat who are drawn from
retired judicial officers, social workers and
advocates
 A compromise deed is drawn up after settlement
and signature of parties are obtained. Then a
decree is passed
 Mutation of land cases
 Compondable criminal offences
 Enroachment on forest lands
 Family disputes
 Land acquisition disputes
 Motor accident claims
 Section 19-
 Every State Authority or District Authority or the Supreme Court Legal Services
Committee or every High Court Legal Services Committee or, as the case may be, Taluk
Legal Services Committee may organise Lok Adalats at such intervals and places and for
exercising such jurisdiction and for such areas as it thinks fit.

 Every Lok Adalat organised for an area shall consist of such number of -

(a) serving or retired judicial officers; and

(b) other persons,

 The experience and qualifications of other persons for Lok Adalats organised by the
Supreme Court Legal Services Committee shall be such as may be prescribed by the
Central Government in consultation with the Chief Justice of India.

 The experience and qualifications of other persons shall be such as may be prescribed by
the State Government in consultation with the Chief Justice of the High Court
 Section 19(5)- Lok Adalats shall have the
jurisdiction to determine and arrive at a settlement
or compromise between the parties to a dispute in
respect of-
 Any case pending before
 Any matter which is falling within the jurisdiction
of, and is not brought before,
 any court for which the Lok Adalat is organised
 Section 20-
 where in any case pending before any court for which the lok
adalats is organised-
 The Parties agree
 One of the Parties to the dispute make an application in the court
for transferring the case to lok adalats and if the court is satisfied
that there are chances of mutual settlement
 The court is satisfied that the matter is an appropriate one to be
taken cognizance of the Lok Adalat
 the Court shall refer the case to lok Adalat
 Lok Adalats have the powers of a civil court in respect of the following
matters-
 Power to summon and enforce the attendance of any witness
 Examining the witness on oath
 Power to enforce the discovery and production of any document
 Power to receive evidence on affidavit
 Power of requisitioning any public record or document or copy from any
court
 Abdul Hasan and National Legal Services Authority v. Delhi Vidyut
Board and Others- Delhi High Court passed the orders giving directions
forsetting up the permanent lok adalats
 One of the main drawbacks of India’s legal system and
law enforcement agencies are a lack of effective
delivery of legal remedies to the people in need.
 Pending cases are comparatively much more than the
cases settled. The main reason behind such a
phenomenon is that increase in the number of offences
as well as time taken to solve the cases on the part of
the judiciary.
 In such a situation, Alternative Disputes Resolution
mechanism plays an important role in resolving
disputes among people which is less important when
compared to serious offences so that court can save its
valuable time as well as parties affected will be
delivered justice with an effective solution for their
disputes
 Flexibility and control
 Low Cost
 Simplified rules of evidence and discovery
 Privacy and confidentiality
 Finality