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  • Writer's picturebrillopedia


Author: Nandini Chachre, IV year from Manipal University Jaipur.

Co-author: Soumya Swaroop, IV year from Manipal University Jaipur.


Alternative Dispute Resolution (ADR) is not new to the Indian society. Rather, it was practiced for a long period of time. Indians always believed to resolve the issue/dispute within the four walls so that they can maintain and protect their dignity and reputation.

In ancient times, when there use to be kulas, when people use to stay in joint family with their clans and the caste system was also prevalent in the society. Then, the dispute among the kulas were resolved by the head of the family, either clan or kulas. Similarly, when there was common trade, shrenis or cooperation among the people, they use to appoint a person to resolve the issue.

During the British rule in India, there was a drastic change in the legal administration of India. Many legislations were also introduced during that era. In 1772, the Courts were empowered to transfer the dispute to arbitration either at the request of the parties or at discretion of the Court. In 1859, Code of Civil Procedure (CPC) was enacted, with Section 312 and 327 talking about arbitration. However, these Sections were repealed in 1882.

In 1899, The Indian Arbitration Act was enacted which gave effect to the Alternative Dispute mechanism in India. The Act was based on English legislation.

In 1908, CPC was amended. Section 89 along with second schedule gave a wide power to the Courts to refer the dispute to ADR mechanism. Then, The Indian Arbitration Act and Section 89 read with second schedule of CPC,1908 were the two effective legislations to deal with arbitration.

In 1937, GENEVA CONVENTION was signed and adopted by India. Also, a parallel legislation was introduced by the name of The Arbitration (Protocol and Convention) Act, 1937. The Indian Arbitration Act,1899 and Section 89 of CPC,1908 was repealed and replaced by The Arbitration Act,1940.

In India The Arbitration (Protocol and Convention) Act, 1937 was referred for the enforcement of the foreign award and The Arbitration Act,1940 was referred for referring disputes to the ADR mechanism were in force. In 1961, India became the signatory to the NEW YORK CONVENTION. The Foreign Award (Recognition and Convention) Act,1961 was enacted.

In 1996, The Arbitration (protocol and Convention) Act, 1937, The Arbitration Act,1940 and The Foreign Award (Recognition and Convention) Act,1961 was repealed. The same was consolidated in a single legislation following the rules of UNCITRAL model law. The Act was named The Arbitration and Conciliation Act,1996. The Act contains 87 Sections and four parts.

In 2002, Section 89 with Order X (Rule – 1A to 1C) was reintroduced in CPC so as to make The Arbitration and Conciliation Act more effective.


Arbitration is one of the processes of ADR in which an impartial person (third party) is appointed to study the dispute. Also, hear both the parties in order to come to a decision or judgement which is binding on both the parties.

The third party is referred as an Arbitrator. Such person is appointed by the parties who have a dispute between them. Such party is interested in resolving the dispute through arbitration.

For the parties to refer the matter to arbitration tribunal, a prior agreement is required. The agreement is ‘arbitration agreement’. Arbitration agreement refers to an agreement by the parties to submit all or certain issues that may arise or has arisen between them in respect to legal relationship. The said agreement has to be in writing. The arbitration agreement may be in the form of arbitration clause either in a separate agreement or in contract agreement.

The parties are free to determine the number of arbitrators, provided the number of arbitrators shall not be even number. In case of failure the arbitral tribunal shall consist of sole arbitrator.

The parties are free to agree upon the procedure for the appointment of the arbitrators. The arbitrators can be of any nationality unless it is agreed by the parties. Failing to an agreement between the parties in arbitration with three arbitrators then each party shall appoint one arbitrator and the two appointed arbitrators shall appoint the third arbitrator who shall act as a presiding one.

In case of any failure in appointing the third or sole arbitrator or each party fail to appoint one arbitrator for them then in that case, the appointment shall be made on application of party by the arbitral institution designated by Supreme Court for International Commercial Arbitration or by High Court in cases other than International Commercial Arbitration. The application made for the appointment of the arbitrators shall be disposed of by the arbitral institution within 30 days from the date of the service of notice on other party. The institution shall seek a disclosure in writing from the prospective arbitrators with regard to –

  • Qualification required by the parties

  • Content of disclosure and other consideration as are likely to secure the appointment of independent and impartial arbitrator.

In case of International Commercial Arbitration the sole or third arbitrator shall be of nationality other than that of the parties where the parties belong to different nationalities.

The arbitrators can be challenged on various grounds only if –

  • Circumstances give a doubt in regard to his/her impartiality.

  • He does not possess the qualification as agreed by the parties.

The parties shall challenge the arbitrator appointed either by him or in whose appointment he has participated only for the reasons he has become aware of after the appointment is made.

The parties are free to decide or agree upon the procedure of challenging the arbitrator. In case of any failure, the party (who tends to challenge the arbitrator) shall within 15 days from the date the arbitral tribunal is formed or date when the party becomes aware of the circumstances regarding the grounds of challenge, shall send a written statement stating the reason of challenge to the arbitral tribunal. Unless the challenged arbitrator withdraws from his office or other party agrees to the challenge, the arbitral tribunal shall decide on the challenge. In case the challenge is not successful then arbitral tribunal shall continue with the proceeding and make an arbitral award. The challenging party may make an application for setting aside the arbitral award in accordance with section 34 of Arbitration and Conciliation Act,1996.

During the proceedings the parties may also apply for interim measured to the arbitral tribunal for –

  • The appointment of guardian for the minor or a person of unsound mind for the purpose of the proceeding.

Interim measure of protection for any of the following matters:-

  • Preservation or custody or sale of any goods which are subject matter of the proceeding.

  • Interim injunction or appointment of receiver.

  • The amount in dispute is secured.

  • Detention, preservation or inspection of any property which are the subject matter of the dispute in arbitral proceeding.

Arbitral tribunal shall have same power as any court has for the purpose of, and in relation to any proceeding before it.

Section 34 of the 1996 act allows an aggrieved party to ray for setting aside the arbitral award. The powers of the supervising court to set aside an arbitral award have been crystallized in the limited grounds provided under section 34 of the 1996 act and also by judicial pronouncements in this regard.

The main purpose of this provision is to give the arbitral tribunal an opportunity to take steps that in its opinion will eliminate the grounds available for setting aside an award.

It empower the court to merely adjourn the proceedings challenging the arbitral award.


Conciliation is an ADR. In this process the disputed parties use a conciliator, who basically meets with both the parties separately and together in an attempt to resolve the dispute and arrive at a negotiated settlement. Conciliation is a voluntary, confidential and interest based process.

A conciliator is a person who is an impartial person. Such person acts as a judge in order to resolve the dispute between the parties having a legal relationship either through a contract or an agreement or any other means. The conciliator is also called an administrative judge.

The proceeding of conciliation shall commence as soon as the party sends a written invitation to other party to conciliate. In the invitation the party shall briefly identify the subject of the dispute. The proceeding shall be initiated as soon as other party accepts the invitation to conciliate. The acceptance has to be a written acceptance. However, there shall be no conciliation proceeding if the other party rejects the said invitation. In case the party initiating the conciliation does not receive acceptance or rejection from other party within 30 days from the date when the invitation was sent or any other date as specified in the invitation, the former party can elect to treat it as a rejection and the same shall be informed to the latter party.

In conciliation proceeding there shall be one conciliator unless parties agree that there shall be two or more conciliators. As soon as there is more than one conciliator then, they have to act jointly.

Bothe parties shall agree upon one name who would act as a single conciliator. However, in case of two conciliators each party shall select or appoint one conciliator each. In case of three conciliators, each party shall appoint one conciliator each and also agree upon one name who shall be the third conciliator and act as a presiding conciliator.

The parties may also enlist the assistance of a suitable institution or person for the appointment of conciliators. The party may request such institution or person to recommend the names of people who shall be suitable to act as a conciliator. Also, the parties may agree that the appointment of one or more conciliators be made directly from such institution or person.

Upon the appointment of the conciliator, they shall request the parties to submit a written statement stating the nature of the dispute and point in isuue. The same shall be served by one party to the other. The conciliator may also request the parties to further submit certain documents acting as evidence, statement of his position and facts and grounds in support with other evidences. The same shall gain be served to the other party. During the proceeding, at any stage the conciliator may request the party to submit additional information that the conciliator deems fit.

The appointed conciliators shall act in an impartial manner and assist the parties so as to reach to a conclusion. The conciliator shall be guided by the principles of fairness, justice and objectivity along with other factors like rights, duties of the parties and circumstances surrounding the dispute. The proceeding shall be conducted by the conciliator in such a manner that the wishes of the parties including request for oral hearing and speedy settlement is also given a consideration. At any stage of the proceeding the conciliator shall issue a proposal for a settlement of dispute. Such proposals need not to be in writing and also need not to be accompanied by statement of reason.

The communication between the conciliator and the parties can be either orally or in writing. The conciliator may meet the pries together or separately. The place of meeting shall be determined by the conciliator unless the parties have agreed upon a place where the meeting with conciliator shall take place.

When it appears to the conciliator that there is an existence of a possible settlement he shall formulate the terms of the settlement and submit it to the parties for their observation. Once, the parties thoroughly go through it. The conciliator shall reformulate the settlement terms as per the observation of the parties. In case, the parties reach to an agreement regarding the settlement they shall draw up and sign the agreement or shall request the conciliator to assist them in drawing up and signing the agreement. Once the agreement of settlement is signed by the parties it shall be final and binding on the both the parties. The settlement shall also be authenticated by the conciliator and a copy of the settlement agreement shall also be served to each party.


  1. Arbitration is one of the processes of ADR in which an impartial person (third party) is appointed to study the dispute. Also, hear both the parties in order to come to a decision or judgement which is binding on both the parties. Whereas, Conciliation is an ADR. In this process the disputed parties use a conciliator, who basically meets with both the parties separately and together in an attempt to resolve the dispute and arrive at a negotiated settlement.

  2. In Arbitration the third party is referred as an arbitrator. While, in Conciliation the third party is referred as a conciliator.

  3. In Arbitration, the third party has a power to enforce its decision. However, in Conciliation the conciliator has no power to enforce its decision.

  4. Arbitration is a legal proceeding. But, Conciliation is not a legal proceeding.

  5. In Arbitration a prior agreement is required for the matter to be referred in arbitration. Whereas, in Conciliation no prior agreement is required.

  6. Arbitration is available for future and existing disputes between the parties. However, in Conciliation the process is available for existing disputes.


Mediation is a process in which the third party acts impartially in order to assist parties in arriving at a mutually agreeable solution.

The third party in mediation is referred as a mediator. The mediator helps the parties to settle the dispute or arrives at a solution mutually.


ADR is an alternative available to the disputed parties to resolve their disputes outside the court. It has various procedures like arbitration, conciliation and mediation. However, there are certain pros and cons of ADR. They are:-


  1. The ADR process is inexpensive and flexible in nature.

  2. The process is more confidential than courts.

  3. The process is risk free and potential for continued working relationship.


  1. There is no gurantee of a resolution and can also be stalling tactic.

  2. Lack of neutral third party reduces the chances of agreement of complex, multi party disputes.

  3. Power imbalances may also go unchecked.

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