TOPIC 1: INTRODUCTION TO ARBITRATION LAWS

I. EXPLANATION TO ALTERNATIVE DISPUTE RESOLUTION

The meaning of the term Alternative Dispute Resolution (ADR) refers to a
number of processes that would help settling differences between disputing
parties without recourse to the court system. These methods allow an
independent third party to facilitate agreement. Alternative dispute resolution
(ADR) includes arbitration, mediation, negotiated rulemaking, impartial fact-
finding, and minitrials as its major forms. The main goal of alternative dispute
resolution (ADR) except for binding arbitration is that it requires the parties
involved to reach a voluntary and consensual agreement instead of having a
court or another authority impose a decision on them. There are several key
advantages ADR has over traditional litigation. One of these is that it helps
avoid exorbitant costs, lengthy delays and uncertainties sometimes associated
with judicial processes. This paper usually offers a better and more affordable
option for litigation which can be expensive and time-consuming. Besides this,
ADR procedures can be customized to suit the particular needs and situations
of the involved parties hence are more flexible in nature generally. Another
essential advantage of ADR is the importance attached to enhancing
communication between disputants. That said hard-fought litigation often
ruins relationships. ADR, however, advocates for communication and
collaboration making it more conducive for parties to express their concerns
freely and work towards a win-win solution. In addition to facilitating conflict
resolution, this emphasis on communication can help build long-term
relationships. ADR offers an opportunity for the parties to create innovative
and individualized solutions which are closer to their requirements. However,
alternative dispute resolution (ADR) is a flexible way of handling legal
disputes that goes beyond win-lose situations. By allowing the parties to
actively mold the outcome, ADR can lead to more satisfying results that endure
over time. It comes in handy in place of adversarial litigation. 1

1
Alternative Dispute Resolution, DOL (2024), https://www.dol.gov/general/topic/labor-relations/adr (last visited
Jul 3, 2024).
 II. DIFFERENT FORMS OF ALTERNATIVE DISPUTE
RESOLUTION

Dispute Resolution Mechanism (DRM) includes processes such as Lok

Adalats, Arbitration, Conciliation and Mediation which help in settling the
disputes out of court. In many countries this ADR, especially mediation is
believed to be an effective means of conflict resolution. It involves a neutral
third party who helps contending parties in negotiations to find common
ground for settlement. It is a less formal process, is cost effective and takes
lesser time compared to trials thereby enabling the disputing parties to decide
on how or when to solve their issues themselves. In civil cases one can choose
from various ADR mechanisms including Arbitration, Conciliation,
Mediation, Judicial Settlements, and Lok Adalat among others. According the
suggestions of Law commission and Malimath committee section 89 of India
Civil Procedure Code encourages settlement of dispute outside the court.
According to the presentation made by Law Commission before Judges it was
suggested that courts should set aside a day for judges’ private chambers where
litigants would be allowed to have face-to-face meetings without lawyers on
friendly terms before trials begin. The Malimath Committee similarly
recommended that referral should be mandatory for ADR such as Arbitration,
Conciliation, Mediation or Lok Adalat in certain matters if necessary. If ADR
fails then regular court proceedings are followed. These steps are meant at
reducing court loads cutting down costs while speeding up resolutions in
Courts. This mode provides both flexible and collaborative ways through
which disputes can be resolved thus benefiting both parties and the legal
system itself.2

The different types of ADR are as follows:

Arbitration3

Outside court arbitration is a way of resolving disputes that are more flexible
and efficient. Instead of engaging the court, disputing parties choose an

2
Oishika Banerji, Models of Alternative Dispute Resolution -
iPleaders, IPLEADERS (2021), https://blog.ipleaders.in/models-of-alternative-dispute-resolution/ (last visited Jul
4, 2024).
3
IBID
independent third party called an arbitrator instead. 4 Unlike judges, arbitrators
are appointed through either mutual agreement between the parties or obtained
from an arbitration institution. They have expertise in the disputed matter
which makes them grasp issues in question better. The process of arbitration
commences with both sides agreeing on the applicable rules to govern it. Such
aspects may include choosing one presiding officer, defining matters to be
resolved and setting deadlines for submission of evidence and arguments
respectively. These procedures ensure fair treatment as well as help in
maintaining good order of work during the whole process. During this period
each part presents its own case; where there will be evidence showing;
witnesses testifying; legal arguments put forward after which there is a retinue
to whom he or she listens before making his or her ruling. The arbitrator
remains objective throughout all this, hearing whatever evidence and points
counsel for each side make. Upon due deliberation therefore, the arbitrator
delivers a final decision known as an arbitral award which is legally binding
on both parties like a court’s judgment. In case one party does not adhere to
the outcome voluntarily, enforcement may follow by taking it through courts
of law. Arbitration has several advantages over traditional litigation processes.
It’s often faster and more private, with hearings scheduled at the convenience
of the parties. Parties can also choose arbitrators who specialize in the type of
dispute, ensuring decisions are based on expert knowledge. This makes
arbitration particularly popular for resolving commercial disputes,
international conflicts, and labor issues. Arbitration provides an effective
alternative to court, tailored to the specific needs of the parties involved. It
promotes efficient resolution of disputes while maintaining fairness and
upholding the rule of law. 5

Conciliation6

Conciliation is a process used to resolve disputes where a neutral third party,

known as a conciliator, assists in facilitating a settlement between conflicting

4
What is Arbitration?, WIPO.INT (2024), https://www.wipo.int/amc/en/arbitration/what-is-arb.html (last visited
Jul 4, 2024).
5
What is Arbitration?, WIPO.INT (2024), https://www.wipo.int/amc/en/arbitration/what-is-arb.html (last visited
Jul 4, 2024).
6
Oishika Banerji, Models of Alternative Dispute Resolution -
iPleaders, IPLEADERS (2021), https://blog.ipleaders.in/models-of-alternative-dispute-resolution/ (last visited Jul
4, 2024).
parties.7 Unlike arbitration, where the arbitrator makes a binding decision, in
conciliation, the conciliator doesn't impose a solution. Instead, they act as a
facilitator to help the parties reach a mutually agreeable resolution. The
conciliator listens to each party's concerns, encourages open communication,
and guides them through discussions to explore possible solutions. 8 The
process begins with both parties agreeing to participate in conciliation.

Mediation9

Mediation is a widely used method in Alternative Dispute Resolution (ADR)

where a neutral mediator facilitates discussions between conflicting parties. In
mediation, the mediator acts as a neutral facilitator, not as a judge or arbitrator.
Their role is to help parties communicate effectively and explore potential
solutions to their dispute. 10 Unlike arbitration, where a decision is imposed,
the mediator does not dictate an outcome. Instead, they encourage both sides
to express their perspectives, identify common interests, and brainstorm
mutually agreeable resolutions. 11 The mediation process begins with both
parties voluntarily agreeing to participate. They may select a mediator together
or through a mediation service. The mediator is impartial and skilled in conflict
resolution techniques, guiding the parties through structured discussions.
During mediation sessions, each party has the opportunity to present their case,
discuss concerns, and propose solutions. The mediator facilitates these
discussions, clarifies misunderstandings, and encourages constructive
dialogue. They may conduct private meetings with each party to delve deeper
into their interests and concerns confidentially.

7
VIA Mediation Centre, CONCEPT OF CONCILIATION AND ROLE OF CONCILIATOR | VIA Mediation
Centre, VIAMEDIATIONCENTRE.ORG (2024), https://viamediationcentre.org/readnews/NjM2/CONCEPT-OF-
CONCILIATION-AND-ROLE-OF-CONCILIATOR (last visited Jul 4, 2024).
8
Manupatra, Articles – Manupatra, MANUPATRA.COM (2024), https://articles.manupatra.com/article-
details/Conciliation-as-a-necessary-Precursor-to-Arbitration-for-Better-or-for-Worse (last visited Jul 4, 2024).
9
Oishika Banerji, Models of Alternative Dispute Resolution -
iPleaders, IPLEADERS (2021), https://blog.ipleaders.in/models-of-alternative-dispute-resolution/ (last visited Jul
4, 2024).
10
What is Mediation?, WIPO.INT (2024), https://www.wipo.int/amc/en/mediation/what-mediation.html (last
visited Jul 4, 2024).
11
Katie Shonk, What is Mediation?, PON - PROGRAM ON NEGOTIATION AT HARVARD LAW
SCHOOL (2024), https://www.pon.harvard.edu/tag/mediation/ (last visited Jul 4, 2024).
Judicial Settlement12

Judicial settlement is another alternative dispute resolution method mentioned

in Section 89 of the Code of Civil Procedure. Naturally, there aren't any
particular guidelines for these agreements in place at the moment. Section 89
of the Code does, however, define "Judicial Settlement." It was stated that in
the event of a court settlement, the terms of the Legal Services Authority Act,
1987 would take effect. This indicates that the judge in question is trying to
get a fair and amicable resolution to the disagreement between the parties. If a
friendly settlement is attempted in the matter in question and achieved, it will
be considered an agreement for the purposes of the Legal Services Authority
Act, 1987. According to Section 21 of the Legal Services Authorities Act of
1987, every award made by the Lok Adalat is considered a Civil Court decree.
There are no formal guidelines for judicial settlement in India. 13Judicial
settlement underscores the judiciary's role in facilitating fair and efficient
dispute resolution. By encouraging parties to negotiate and settle their disputes
with judicial guidance, it aims to reduce the burden on the courts and provide
parties with more control over the outcome of their case. This approach aligns
with broader efforts in India's legal system to promote access to justice and
alleviate delays in litigation through alternative means of dispute resolution. 14
Lok Adalat15

Lok Adalats are unique legal forums in India designed to provide swift and
straightforward resolution to disputes through conciliation. They operate as
fast-track courts where parties can voluntarily resolve their disputes with the
assistance of a conciliator, who acts as a neutral facilitator.16 These adalats
have jurisdiction of all around civil cases, including matters which are related

12
Oishika Banerji, Models of Alternative Dispute Resolution -
iPleaders, IPLEADERS (2021), https://blog.ipleaders.in/models-of-alternative-dispute-resolution/ (last visited Jul
4, 2024).
13
Oishika Banerji, Models of Alternative Dispute Resolution -
iPleaders, IPLEADERS (2021), https://blog.ipleaders.in/models-of-alternative-dispute-resolution/ (last visited Jul
4, 2024).
14
Oishika Banerji, Models of Alternative Dispute Resolution -
iPleaders, IPLEADERS (2021), https://blog.ipleaders.in/models-of-alternative-dispute-resolution/ (last visited Jul
4, 2024).
15
Oishika Banerji, Models of Alternative Dispute Resolution -
iPleaders, IPLEADERS (2021), https://blog.ipleaders.in/models-of-alternative-dispute-resolution/ (last visited Jul
4, 2024).
16
Lok Adalat, NALSA.GOV.IN (2019), https://nalsa.gov.in/lok-adalat (last visited Jul 4, 2024).
to family disputes, property issues, motor accident claims, and so on.17 Lok
Adalats play a vital role in promoting access to justice by offering a cost-
effective, accessible, and expeditious means of dispute resolution. They reflect
India's commitment to enhancing judicial efficiency and providing effective
remedies to litigants while alleviating the burden on the formal court system.18

Negotiation

Negotiation is a fundamental aspect of resolving conflicts where parties

communicate directly to find a mutual agreement without involving a neutral
third party. Unlike formal ADR methods like mediation or arbitration,
negotiation is often informal and relies solely on the parties' ability to discuss
and settle their differences. Effective negotiation requires several key
elements. First and foremost, good communication skills are essential. Parties
must clearly express their needs, concerns, and objectives while actively
listening to the other side's perspectives. This open exchange of information
helps build understanding and trust, laying the groundwork for constructive
dialogue. Understanding the issues at hand is equally crucial in negotiation.
Each party should have a clear grasp of the facts, legal implications (if
applicable), and the underlying interests or motivations driving their position.
This understanding allows them to make informed decisions and propose
realistic solutions during negotiations. Willingness to compromise is often a
hallmark of successful negotiations. Parties may need to give and take,
adjusting their initial demands or expectations to find common ground.
Flexibility in exploring different options and creative problem-solving can lead
to outcomes that satisfy both parties to some extent. While negotiation is
typically less formal than other ADR methods, such as mediation or
arbitration, parties can still benefit from preparing for discussions. This might
involve gathering relevant information, identifying potential areas of
agreement or contention, and strategizing how to address disagreements
constructively. In practice, negotiation can occur in various settings, from
business negotiations over contracts or terms of service to personal disputes
among neighbors or family members. Its simplicity and direct approach make
negotiation accessible to anyone seeking to resolve conflicts amicably and
without the need for formal legal intervention. When conducted effectively,

17
SCLSC, SCLSC.GOV.IN (2016), https://sclsc.gov.in/Lok-adalat (last visited Jul 4, 2024).
18
Lok Adalat, NALSA.GOV.IN (2019), https://nalsa.gov.in/lok-adalat (last visited Jul 4, 2024).
 negotiation can foster understanding, preserve relationships, and lead to
mutually beneficial outcomes for all parties involved. 19 20

III. DIFFERENCE BETWEEN DIFFERENT TYPES OF

ALTERNATIVE DISPUTE RESOLUTION

Method Third Party Role Level of Outcome Binding?

Formality

Arbitration Judge-like, makes More formal Award Yes

final decision (similar to court)

Conciliation Mediator-like, Less formal than Agreement No (can be

helps parties reach arbitration formalized
agreement into a
contract)

Mediation Facilitator, guides Informal Settlement No (depends

communication Agreement on parties'
agreement)

Judicial Varies (may Varies (can be Order/Award Yes (varies

Settlement involve judge or formal or depending on
(including conciliator) informal) the specific
Lok Adalats) method)

Negotiation No third party Informal Agreement No (depends

on parties'
agreement)

19
Oishika Banerji, Models of Alternative Dispute Resolution -
iPleaders, IPLEADERS (2021), https://blog.ipleaders.in/models-of-alternative-dispute-resolution/ (last visited Jul
4, 2024).
20
Vanshika Kapoor, Negotiation as a mode of ADR -
iPleaders, IPLEADERS (2023), https://blog.ipleaders.in/negotiation-as-a-mode-of-adr/ (last visited Jul 4, 2024).
 COMPARISON OF ADR METHODS

Arbitration21

 Proceedings that are conducted are taken place by a neutral arbitrator.

 The decision of the arbitrator or the arbitrators is legally binding on
both the parties.
 The time fixed for the proceedings is limited and fixed. The
proceedings has to be completed in a fixed period of time.
 The procedure is more formal than any other ADR procedures and is
required to follow a set of rules and regulations.

Meditation22

 The proceedings are facilitated by a neutral mediator.

 The decision made by the mediator is not binding but it helps both
the parties to reach to a mutually agreed settlement.
 Unlike arbitration there is no fixed time frame and the process is more
informal.
 The confidentiality of the proceedings is based on the trust of both
the parties.

Conciliation23

 The proceedings in this case as well is formulated by a neutral

consciliator. He provides an evaluation of the dispute.
 The decision of the conciliator is not legally binding on the parties of
the dispute.
 The parties involved in the dispute have full control over the process
and the outcome of the settlement.
 The confidentiality of the proceedings is not just only based on trust
but also determined by applicable laws.

21
< Comparative analysis of ADR methods with focus on their pros and cons - iPleaders>
22
ibid
23
ibid
 Negotiation24

 This procedure unlike any other procedure does not involve any
neutral third party and is directly discussed between the involved
parties or the parties in dispute.
 The parties involved have full control over the dispute and the
outcome.
 There is no time frame and the process is informal.
 The confidentiality is on the negotiating parties involved and no
external laws are applicable.

IV. EXPLANATION ABOUT ARBITRATION

1) HOW DID THE CONCEPT OF ALTERNATIVE DISPUTE

RESOLUTION ARISE?25

Many methods of dispute resolution of ancient times differ from techniques

used in modern days but have influenced their development. In the Polynesian
ancestry of Hawaiian Highlanders, disputes were resolved through a traditional
system that stressed on cooperative resolutions. Families would gather in order
to discuss interpersonal issues under the guidance of a respected leader who
would act as a mediator. This leader would listen to the arguments and help
the parties to reach a solution. China adopted mediation early, influenced by
Confucian ethics which emphasized harmony and viewed adversarial
proceedings as disruptive. Chinese mediators played a significant role not only
in resolving disputes but also in guiding parties toward more harmonious
future relationships, reflecting the cultural value placed on maintaining social
harmony. In the Western world, the roots of ADR can be traced back to ancient
Greece. Greek mythology includes stories of arbitration, and the Greeks had a
surprisingly formal arbitration system. Arbitrators were chosen by lottery and
aimed to facilitate amicable settlements. If that failed, witnesses were called
and evidence was submitted in writing. Although parties sometimes used

24
ibid
25
Ayush Verma, An Introduction to Alternative Dispute Resolution -
iPleaders, IPLEADERS (2020), https://blog.ipleaders.in/an-introduction-to-alternative-dispute-resolution/ (last
visited Jul 3, 2024).
tactics to delay rulings or challenge decisions, appeals were possible. One
famous appeal involved Demosthenes accusing Midias of using disrespectful
language, illustrating early self-policing mechanisms. This system
demonstrated both the challenges and the functionality of early ADR
methods.26

HISTORY TO ARBITRATION

Ancient Civilization

Traces of Alternative Dispute Resolution (ADR) can be found across various

ancient civilizations, showing that resolving disputes amicably is deeply
embedded in human history. In ancient Greece and Rome, respected
community figures often mediated conflicts and facilitated agreements. These
individuals, chosen for their wisdom and fairness, played a crucial role in
maintaining social harmony and preventing conflicts from escalating into
violence or prolonged litigation. Greece would undergo the arbitral process.
Arbitrators were picked by lots and had as their main focus, facilitating
friendly settlements. When there was no agreement to begin with, this involved
summoning witnesses and tendering evidence in writing. The structured
system sought fairness and mutual compliance and the appeal mechanisms
mirrored early self-regulation and accountability even as sometimes litigants
attempted to put off or challenge verdicts. In Rome, mediation was performed
through respected elders of the society or community leaders. Roman’s
emphasis on law and order influenced their ADR practices so that they could
achieve efficient dispute resolution that is fair. Through these methods social
stability could be maintained while disputes were resolved without having to
resort to more formalized legal processes which are adversarial in nature.

In Asia, particularly in China, the roots of mediation stemmed from the

Confucian tradition. Endorsing harmony, the Confucian ethics considered the
adversarial, fight-it-out-in-court approaches to conflict solving as damaging to
the wellbeing of the entire society. This explains how Chinese mediators
weren’t just helping to resolve disputes, but also to keep the peace between the
civil relationships of the parties involved – culturally, reciprocal social

26
VIA Mediation Centre, Origin of ADR across the globe | VIA Mediation
Centre, VIAMEDIATIONCENTRE.ORG (2024), https://viamediationcentre.org/readnews/MjY3/Origin-of-ADR-
across-the-globe (last visited Jul 3, 2024).
harmony was as crucial as resolving the dispute itself. Similarly, in many parts
of Africa, there are generations-old traditions of mediation and arbitration.
Elders or leaders of neighbourhoods or villages would offer to arbitrate a
conflict between two parties, weighing the merits of their positions. Settling
disputes through mediation was considered not simply an act of declaring right
or wrong, but part of a social equilibrium essential to the community.27

The ancient practices of ADR in Greece, Rome, Asia, and Africa highlight the
universal need for non-adversarial dispute resolution methods. These early
systems laid the foundation for modern ADR techniques, emphasizing
mediation, arbitration, and the pursuit of amicable solutions.

Medieval and Early Modern Europe

Commercial arbitration has a long history of being used to settle disputes
between medieval merchants in English fairs and marketplaces, as well as
throughout Europe, the Mediterranean, and the Baltic Sea. The ability of courts
to compel parties to arbitrate disputes led to a rise in the use of commercial
arbitration. The English Arbitration Act of 1889 was the first of its kind. It was
eventually merged into an act of 1950 and included into arbitration statutes in
the majority of British Commonwealth nations. The Federal Arbitration Act of
1925 and the New York state arbitration statute from 1920 both followed it in
the US. The latter concerned with the enforcement of arbitration awards and
agreements in maritime, interstate, and foreign commerce transactions in
federal courts. The Uniform Arbitration Act of 1955, as amended in 1956, was
recommended by the American Bar Association and supported by the
Commissioners on Uniform State Laws. It was approved by the majority of
U.S. states, occasionally with slight modifications. The arbitration agreement
was no longer revocable, as it had been under common law, as a result of this
act, which allowed for the judicial enforcement of an agreement to arbitrate
current and future conflicts. In addition, it allowed for the suspension of any
legal action brought in violation of a voluntary arbitration agreement and the
replacement of arbitrators in the case that a party failed to choose an arbitrator.
As a result, the courts are crucial in carrying out arbitration agreements and

27
Adenike Aiyedun & Ada Ordor, Integrating the Traditional with the Contemporary in Dispute Resolution in
Africa, 20 LAW, DEMOCRACY & DEVELOPMENT 154
(2017), https://scielo.org.za/scielo.php?script=sci_arttext&pid=S2077-49072016000100009 (last visited Jul 3,
2024).
providing judicial support when a party refuses to cooperate. The notion of
contemporary arbitration law, which acknowledges the enforceability of
awards and the irrevocability of arbitration agreements, is also prevalent in
almost all national arbitration statutes.28
18th and 19th Centuries
When it came to utilizing discretion to settle debate, the US and the UK were
pioneers. It was at first utilized in the John Jay-negotiated Jay Arrangement of
1795.29 It moreover had a critical affect on the determination of noteworthy
challenges around British backing for the Confederacy amid the American
Gracious War in the Alabama Claims case of 1872. A concept for efficient
discretion was proposed at the To begin with Worldwide Conference of
American States in 1890, but it was rejected. The Lasting Court of Discretion
was built up and an assertion framework was concurred upon by the major
worldwide powers at the Hague Peace Conference in 1899. Ambassadors and
upper lesson individuals talked a part around discretion between 1890 and
1914. Assertion was utilized to parley the Venezuelan issue between the Joined
together States and Britain in a quiet way in 1895. Both nations came to the
realization that a framework would be decent to avoid potential future dangers.
The Joined together States and Britain proposed the Olney-Pauncefote
Settlement in 1897, which called for the assertion of critical debate. The U.S.
Senate rejected the agreement, and it was never executed. 30
20th Century Developments
The Changeless Court of Discretion (PCA) was the to begin with lasting
between time organization for settling universal debate through intervention
and tranquil implies. Set up by the 1899 Tradition for the Pacific Settlement of
Worldwide Debate at The Hague, amid the to begin with Hague Peace
Conference started by Despot Nicolas II of Russia, the PCA pointed to advance
enduring peace and restrain the development of deadly implements. The
conference centered on fortifying universal debate determination, propelled by
effective interventions like the “Jay Treaty” Blended Commissions and the

28
Arbitration | Advantages, Process & Types | Britannica, ENCYCLOPÆDIA
BRITANNICA (2024), https://www.britannica.com/topic/arbitration (last visited Jul 4, 2024).
29
Wikipedia Contributors, Jay Treaty, WIKIPEDIA (2024), https://en.wikipedia.org/wiki/Jay_Treaty (last visited
Jul 5, 2024).
30
Wikipedia Contributors, Arbitration, WIKIPEDIA (2024), https://en.wikipedia.org/wiki/Arbitration (last visited
Jul 5, 2024).
Alabama discretion. Article 16 of the 1899 Tradition highlighted assertion as
the most compelling and evenhanded strategy for legitimate debate,
particularly in deciphering worldwide traditions. Article 20 formally built up
the PCA, guaranteeing it was continuously open for uncertain discretionary
debate and working beneath the convention's procedural rules. The 1899
Tradition was reexamined at the 1907 Hague Peace Conference. Nowadays,
the PCA settle debate including states, state substances, between time
organizations, and private parties, proceeding its bequest of universal
intervention and quiet debate determination. The 1899 and 1907 Traditions are
accessible in the PCA Rules and Establishing Traditions segment. 31
HOW DID ALTERNATIVE DISPUTE RESOLUTION ARISE IN
INDIA?32
In the 222nd Report of the Law Commission of India, it is stated that Article
39A of the Constitution guarantees equal access to justice for all citizens and
prohibits any citizen from being denied this opportunity due to a disability,
whether it be financial or otherwise. The report goes on to say that "access to
justice" in India refers to the general public's ability to use the legal system.
However, even it has been hampered by things like ignorance, poverty,
illiteracy, and social and political regression, among other things. Many people
continue to live in poverty in developing nations like India. Frequently,
individuals lack the financial resources to engage in protracted legal battles
when their rights are violated. They lack the funds to hire an attorney. They
are ignorant of the judicial system and its protocols. As a result, individuals
frequently consider the legal system to be a hassle. Many nations share the
same causes of these inefficiencies, which is why ADR is being investigated.
The courts are severely burdened by the excessive number of ongoing cases,
many of which drag on for years. For these reasons, the Indian government,
following the directives of the United Nations Commission on International
Trade Law (UNCITRAL), replaced the previous Arbitration Act, 1940 33, with

31
History | PCA-CPA, PCA-CPA.ORG (2024), https://pca-cpa.org/en/about/introduction/history/ (last visited Jul 5,
2024).
32
Ayush Verma, An Introduction to Alternative Dispute Resolution -
iPleaders, IPLEADERS (2020), https://blog.ipleaders.in/an-introduction-to-alternative-dispute-resolution/ (last
visited Jul 3, 2024).
33
The Arbitration Act, 1940, INDIANKANOON.ORG (2024), https://indiankanoon.org/doc/1052228/ (last visited
Jul 5, 2024).
The Arbitration and Conciliation Act 1996 34, and enacted Section 89 of the
Code of Civil Procedure, 1908. 35

2) SOME EXAMPLES OF ALTERNATIVE DISPUTE RESOLUTION

 Divorce Dispute:36
After deciding to file for divorce, the husband and the wife can't agree
on who will keep the house or who would be responsible for paying
spousal support.

 Tenant-Landlord Disagreement:37
Regarding who should pay for post-disaster repairs to the house, a
tenant and landlord cannot agree.

 Community Association Dispute:38

A community association governs the neighborhood, and a resident
believes that board members are unfairly enforcing laws or
misinterpreting them.

 Community Opposition to Development: 39

A group of people living in a nearby area are against the construction
of a trash transfer station because they believe harmful substances
may be spilled into the air.

 Workplace Harassment Complaint:40

34
THE ARBITRATION AND CONCILIATION ACT, 1996 _______ ARRANGEMENT OF SECTIONS
_______ PREAMBLE PRELIMINARY SECTIONS, https://legislative.gov.in/sites/default/files/A1996-26.pdf.
35
India Code: Section Details, INDIACODE.NIC.IN (2024), https://www.indiacode.nic.in/show-
data?actid=AC_CEN_3_20_00051_190805_1523340333624&sectionId=33427&sectionno=89&orderno=95 (la
st visited Jul 5, 2024).
36
Alternative Dispute Resolution (ADR), BAMBOOHR.COM (2024), https://www.bamboohr.com/resources/hr-
glossary/alternative-dispute-resolution-adr (last visited Jul 3, 2024).
37
IBID
38
IBID
39
IBID
40
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 A person wants to settle a conflict regarding his employer's failure to
take disciplinary action against the person after a supervisor harassed
him because he belong to a protected class.

 Business Dispute with Vendor:41

Due to the vendor's failure to deliver the agreed-upon quantity of
materials that the company believes it paid for, a construction
company and the vendor are embroiled in a commercial dispute.

 Product Liability Claim Against Manufacturer:42

A person purchased a costly product and now want to sue the maker
because following the directions on the package caused harm to him
or damage to his property.

 Personal Injury Claim from Slip and Fall Accident: 43

A person is requesting a settlement from the restaurant owner after
he was injured in a slip and fall accident while attending their happy
hour after work.

3) HOW DOES ALTERNATIVE DISPUTE RESOLUTION WORKS

Agreement To Alternative Dispute Resolution

Agreement is crucial to use Alternative Dispute Resolution (ADR) because it

involves both sides of the dispute voluntarily opting for methods like
mediation, arbitration, or negotiation to resolve their dispute outside of
traditional court proceedings. 44 This agreement can stem from mutual
willingness to explore faster, more flexible, and potentially less adversarial
ways of reaching a resolution. In voluntary ADR agreements, both parties
decide to engage in the process without external compulsion. 45 They may

41
IBID
42
IBID
43
IBID
44
Alternative Dispute Resolution (ADR), BAMBOOHR.COM (2024), https://www.bamboohr.com/resources/hr-
glossary/alternative-dispute-resolution-adr (last visited Jul 3, 2024).
45
L McGregor, Alternative Dispute Resolution and Human Rights: Developing a Rights-Based Approach
through the ECHR, 26 EUROPEAN JOURNAL OF INTERNATIONAL LAW 607
(2015), https://academic.oup.com/ejil/article/26/3/607/2599587 (last visited Jul 3, 2024).
choose ADR due to its perceived benefits such as confidentiality, cost-
effectiveness, and the ability to maintain control over the outcome. This
voluntary approach fosters a cooperative environment where parties can
openly discuss their concerns and work towards mutually acceptable solutions.
It often leads to quicker resolutions and preserves relationships, which can be
particularly beneficial in ongoing business or personal disputes. In some cases,
courts may mandate ADR as part of the legal process. This can occur through
court-ordered mediation or arbitration, where parties are required to attempt
resolution through ADR before proceeding to trial. Court-mandated ADR aims
to alleviate court congestion, reduce litigation costs, and encourage parties to
find common ground outside of litigation. Even when mandated, ADR
typically maintains the voluntary nature of the final agreement reached.
Regardless of whether ADR is voluntary or mandated, its success hinges on
the willingness of both parties to engage sincerely in the process.

Selection of Method

Selecting the method of ADR depends on the type or the characteristic of

dispute or the type of desired objective of the parties involved.

 Mediation: Mediation is ideal for disputes where parties seek to

improve or maintain communications, private relationships, business
matters family matters, community disputes, etc. A mediator
facilitates discussions between the parties involved and help them
identify underlying the interest and explore options finally
negotiating mutually admissible solutions. It is different from
arbitration because in mediation the decision is not binding on the
parties but it allows them voluntarily to agree to the agreement or not.
 Arbitration: this method is suitable when both the parties involved in
the dispute require a binding decision from a neutral third party. This
third party is Either a panel of arbitrators or a single arbitrator who
acts similar to a judge. This involves the process of hearing the
arguments of both the parties, submissions of evidences and all those
procedures similar to the court proceedings. Finally, the decision
which is given is enforceable by law in nature. This process is more
strict and formal than mediation process and is usually used in
 disputes like commercial disputes, labour disputes, international
conflicts, etc.

The decision whether mediation or arbitration should be taken up or not

depends on factors like complexity of the issue in hand, the level
hostality, the urgency or need for confidentiality, and the type of
outcome desired. 46

Preparation

After the method of ADR is selected the preparation of the case begins.

In case the parties who go for mediation, the first thing they have to do is to
gather all the documents like image, financial records, notices, other important
docments to support their sides. These evidences help them make their
arguments stronger. The parties also state what outcomes a hope to achieve
after this process is completed and what compromises they are ready to make.

If the parties go for arbitration, then they have to go through a proper code trial
but with lesser formalities. They have to follow all the procedures like
submission of evidences, statements from witnesses, and legal arguments from
both the parties in advance. The parties also lay the legal positions and express
what kind of remedies or decisions they expect through this arbitration process.
Unlike mediation where the final decision is a mutual agreement, arbitration
focuses on the decision of the arbitrator who will make the final decision, based
on the arguments and evidences presented by both the parties, which is binding
on both of them.

It allows parties to engage constructively, present their perspectives clearly,

and increases the chances of reaching a satisfactory resolution or obtaining a
favorable decision. By organizing their case thoroughly, parties demonstrate
their commitment to resolving the dispute through ADR while ensuring
fairness and addressing their interests. This proactive approach helps maintain
the integrity of the ADR process, whether it aims for mutual agreement in
mediation or a binding decision in arbitration.

46
Ali Oromchian, Mediation vs. Arbitration: A Comprehensive
Comparison, DMCOUNSEL.COM (2024), https://www.dmcounsel.com/blog/mediation-vs.-arbitration-a-
comprehensive-comparison (last visited Jul 3, 2024).
The Arbitration Process

In mediation, a neutral mediator plays a crucial role in helping parties resolve

their dispute. The mediator guides discussions between the parties,
encouraging open communication and understanding. 47 Unlike a judge or
arbitrator, the mediator doesn't impose a decision but rather facilitates the
process of finding common ground. 48 This allows both sides to explore their
concerns, interests, and possible solutions in a confidential and non-adversarial
setting. Parties have the opportunity to express their perspectives and work
together to reach a mutually agreeable solution that meets their needs.

On the other hand, arbitration involves a neutral arbitrator who functions

similar to a judge in court but with less formality. They have to go through a
proper code trial but with lesser formalities. They have to follow all the
procedures like submission of evidences, statements from witnesses, and legal
arguments from both the parties in advance.49 Arbitration offers a more flexible
process compared to traditional court proceedings, allowing parties to choose
their arbitrator and agree on procedural aspects. 50

Both mediation and arbitration not only fosters quicker resolutions but also
helps preserve relationships and reduce the adversarial nature often associated
with traditional litigation.

Outcome

In Alternative Dispute Resolution (ADR), both mediation and arbitration aim

to achieve a settlement that resolves the dispute without going to court. 51

47
WHAT IS THE DIFFERENCE BETWEEN MEDIATION AND
FACILITATION?, https://cavuhb.nhs.wales/files/toolkits/dignity-at-work-consensus-mediation-service/what-is-the-
difference-between-mediation-and-facilitation-pdf/.
48
Frequently Asked Questions | Delhi Dispute Resolution Society
(Regd.), DELHI.GOV.IN (2024), https://ddrs.delhi.gov.in/en/ddrs/frequently-asked-questions (last visited Jul 3,
2024).
49
ADR Types & Benefits -
alternative_dispute_resolution, CA.GOV (2024), https://www.courts.ca.gov/3074.htm?print=1 (last visited Jul 3,
2024).
50
What is ADR? |
NYCOURTS.GOV, NYCOURTS.GOV (2024), https://ww2.nycourts.gov/ip/adr/What_Is_ADR.shtml (last visited
Jul 3, 2024).
51
Andy_Vincent, Alternative Dispute Resolution and Settlement Agreements | Lane & Co, LANE & CO.
SOLICITORS (2015), https://www.laneandcosolicitors.com/alternative-dispute-resolution/ (last visited Jul 3,
2024).
  Mediation:

In mediation, a neutral mediator guides discussions between the parties to help

them find common ground and reach a mutually acceptable solution. The
mediator doesn't impose a decision but facilitates a collaborative process
where parties can explore their interests and negotiate terms. Once an
agreement is reached, it's written down in a settlement agreement. This
document outlines what each party agrees to do or not do to resolve the dispute.
Signing this agreement makes it legally binding, and either party can enforce
it if the other doesn't comply. 52

 Arbitration:

Arbitration involves a neutral arbitrator who acts like a private judge. The
arbitrator listens to arguments, reviews evidence, and then makes a final
decision that both parties must follow. This decision is binding and enforceable
in court, like a judge's ruling. Depending on the arbitration agreement, the
decision may be final (binding arbitration) or subject to appeal in limited
circumstances (non-binding arbitration).

The goal of both mediation and arbitration is to provide a structured and fair
way for parties to resolve conflicts outside of traditional court trials. These
methods offer advantages like flexibility, privacy, and the ability to customize
solutions to fit the specific needs of the dispute. By using ADR, parties can
often achieve quicker resolutions while maintaining or improving relationships
compared to formal litigation processes.

Enforcement (Where Necessary)

This is the final step of alternative dispute resolution. Whenever the parties fail
to comply with the binding decisions of the mediation or arbitration, the parties
can approach the courts with the disputes in order to find a settlement. Once
the issue reaches the courts the normal court procedure begins which is more
formal than mediation or arbitration process. The enforcement mechanism

52
Mediation Settlement Agreement: All You Need to
Know, CONTRACTSCOUNSEL.COM (2021), https://www.contractscounsel.com/t/us/mediation-settlement-
agreement (last visited Jul 3, 2024).
shows that the agreements carry legal weight and provide a reliable means for
resolving disputes effectively.

4) PROS AND CONS OF ADR53

PROS-

 ADR are faster and cheaper because of the simplified procedures,

flexible scheduling, and expedited resolution. 54 They reduce legal fees
and court costs by avoiding lengthy trials and extensive discovery. 55
ADR's informality and focused approach streamline dispute resolution,
making it an efficient alternative to traditional court processes.
 ADR preserves relationships by fostering communication and
collaboration, helping parties find common ground. This approach
prevents the animosity often seen in court battles, maintaining positive
interactions.56 By focusing on mutual understanding and resolution,
ADR can help sustain relationships even amid disputes.
 ADR enables creative, mutually agreeable solutions, giving parties more
control over outcomes than in court. 57 This flexibility allows tailored
resolutions that meet both sides' needs, fostering satisfaction and
cooperation.
 ADR proceedings are often confidential, which is crucial for businesses
and individuals seeking to avoid negative publicity. This privacy
protects sensitive information and reputations, allowing parties to
resolve disputes discreetly without public exposure. Confidentiality in

53
Ayush Verma, An Introduction to Alternative Dispute Resolution -
iPleaders, IPLEADERS (2020), https://blog.ipleaders.in/an-introduction-to-alternative-dispute-resolution/ (last
visited Jul 3, 2024).
54
ADR Types & Benefits -
alternative_dispute_resolution, CA.GOV (2024), https://www.courts.ca.gov/3074.htm (last visited Jul 4, 2024).
55
What is ADR? |
NYCOURTS.GOV, NYCOURTS.GOV (2024), https://ww2.nycourts.gov/ip/adr/What_Is_ADR.shtml (last visited
Jul 4, 2024).
56
Benefits of alternative dispute resolution, LOCAL COURT OF NEW SOUTH
WALES (2024), https://localcourt.nsw.gov.au/alternative-dispute-resolution/benefits-of-alternative-dispute-
resolution.html (last visited Jul 4, 2024).
57
ADR, Ch.28 - Creative Solutions, ADR.GOV (2017), https://adr.gov/guidance/adrguide-home/ch28/ (last
visited Jul 4, 2024).
 ADR ensures that the details of the conflict remain private and
controlled by the involved parties. 58
 ADR can involve a neutral third party with specific expertise in the
disputed area, enhancing understanding of the issues. 59 This expertise
leads to more informed decisions and tailored solutions, as the mediator
or arbitrator comprehends the complexities involved, ensuring a more
effective and relevant resolution process.

CONS-

 ADR doesn't guarantee a resolution like court rulings do. If parties can't
agree, they might still need to go to court. This lack of certainty can
mean additional time and expense if the dispute remains unresolved
through ADR, potentially leading to further legal action.
 ADR methods like arbitration can produce binding decisions, but
enforcement may still require court involvement. Mediation agreements,
however, are typically not binding and depend on parties' good faith to
implement.60 This limitation means ADR outcomes might lack the same
enforceability as court rulings, potentially complicating the resolution
process.
 In ADR, a significant power or resource imbalance between parties can
impact fairness, potentially skewing the process. 61 Ensuring both sides
have an equal opportunity to be heard is crucial to maintaining equitable
outcomes and preventing one party from dominating or unduly
influencing the resolution.
 ADR decisions lack the ability to set legal precedents unlike court
rulings, which can be disadvantageous when establishing legal
principles is crucial. This limitation means that similar disputes may not
benefit from clear, standardized guidelines derived from previous ADR

58
What is ADR? |
NYCOURTS.GOV, NYCOURTS.GOV (2024), https://ww2.nycourts.gov/ip/adr/What_Is_ADR.shtml (last visited
Jul 4, 2024).
59
What is ADR? |
NYCOURTS.GOV, NYCOURTS.GOV (2024), https://ww2.nycourts.gov/ip/adr/What_Is_ADR.shtml (last visited
Jul 4, 2024).
60
Mediation: Frequently Asked
Questions, WIPO.INT (2024), https://www.wipo.int/amc/en/mediation/guide/ (last visited Jul 4, 2024).
61
Thomson Reuters
Legal, @WESTLAW1 (2022), https://legal.thomsonreuters.com/en/insights/articles/problems-and-benefits-using-
alternative-dispute-resolution (last visited Jul 4, 2024).
 outcomes, potentially complicating consistency and predictability in
legal interpretations.
 ADR success hinges on the competence of the neutral third party. An
inexperienced mediator or arbitrator can impede progress, affecting the
quality of facilitation and decision-making. Skilful mediators and
arbitrators are essential for effectively guiding parties through disputes
and achieving satisfactory resolutions.

V. DIFFERENT TYPES OF ALTERNATIVE DISPUTE

RESOLUTION

Unlike civil or criminal cases, disputes are sent to an arbitration tribunal,

whose binding decision cannot be appealed. This ensures swift resolution
without judicial proceedings. Different types of arbitration exist depending
on the case's jurisdiction, each tailored to specific legal frameworks and
requirements.62

Domestic Arbitration

In domestic arbitration, both parties involved must be Indian, and the

proceedings must occur within India. Although the Arbitration and
Conciliation Act, 1996, does not explicitly define domestic arbitration,
Section 2(2) implies that it pertains to disputes resolved within India. This
means that any arbitration agreement made between parties agreeing to
settle disputes in India falls under domestic arbitration. The arbitration
proceedings must take place within Indian territory and adhere to both
procedural and substantive Indian law, ensuring that the process aligns with
local legal standards. This provides clarity and consistency for all parties
involved. Domestic arbitration, governed by the Arbitration and
Conciliation Act, 1996, offers a streamlined, cost-effective, and efficient
dispute resolution mechanism by utilizing the familiarity of local legal

62
Sneha Mahawar, Types of arbitration, IPLEADERS (2024), https://blog.ipleaders.in/arbitration-type-
significance/ (last visited Jul 4, 2024).
 systems. Adhering to the Act ensures that the arbitration process is
conducted in accordance with Indian legal norms and practices. 63

International Arbitration

International arbitration occurs outside the domestic territory due to either

a clause in the agreement between the parties or a cause of action involving
a foreign element related to the dispute or the parties. This type of
arbitration is chosen when parties from different countries are involved, or
the dispute has international aspects, necessitating a neutral ground for
resolution. The arbitration proceedings are governed by either foreign or
Indian law, depending on the circumstances that led to the case being filed.
Factors such as the location of the parties, the nature of the contract, and
specific agreement clauses determine the applicable legal framework.
International arbitration provides a mechanism for resolving cross-border
disputes efficiently and fairly, offering parties a platform that transcends
domestic legal limitations. This process ensures that the parties can select
arbitrators with expertise in international law, fostering a balanced
resolution. By adhering to international arbitration rules, parties can
achieve a binding and enforceable resolution that aligns with global legal
standards, enhancing the predictability and reliability of dispute resolution
in an international context.64

International Commercial Arbitration

International commercial arbitration, as defined by Section 2(1)(f) of the

Arbitration and Conciliation Act, 1996, refers to arbitration arising from a
commercial contract where either one of the parties resides in a foreign
country, is a foreign national, or where the core management committee of
an association, company, or a body of individuals is controlled by foreign
individuals. This provision distinguishes between purely domestic
arbitration and those involving an international element, highlighting the
global nature of commercial transactions today. Under Indian law, the
involvement of a foreign party in an arbitration would invoke Part I of the
Act, bringing it under the purview of international commercial arbitration.

63
Sneha Mahawar, Types of arbitration, IPLEADERS (2024), https://blog.ipleaders.in/arbitration-type-
significance/ (last visited Jul 4, 2024).
64
IBID
 However, this is only applicable if the arbitration takes place within Indian
territory. If the arbitration is conducted outside India, different legal
frameworks and jurisdictions come into play, and the Indian Act would not
apply.

Ad-Hoc Arbitration

When parties choose to resolve their issue through arbitration with mutual
consent, this is known as ad hoc arbitration. It is the most often utilized type
of arbitration in India since it has sufficient infrastructure and acceptable fees.
Arbitration does not follow the regulations of an arbitral institution since it is
conducted without the need for institutional procedures. The rules and
procedures to be followed are up to the parties to decide. Both domestic and
international business conflicts may be arbitrated using this type of procedure.
Since most of the issues are addressed in accordance with the applicable law
with regard to the arbitration's seat, jurisdiction is crucial. The arbitral tribunal
or the parties may decide whether to accept administrative support from a
suitable organization or people in accordance with Section 6 of the Act.
Furthermore, in accordance with Schedule 4 of the Act, the arbitral institution
will decide the arbitrator's remuneration, according to Section 11 of the Act.
One arbitrator would join the panel after being chosen by the Chief Justice of
a Supreme Court or a High Court, should the parties be unable to agree on the
number of arbitrators. 65
Fast Track Arbitration

The Arbitration and Conciliation Act, 2015 was amended to include fast track
arbitration in an effort to expedite the resolution of disputes between parties.
Fast track arbitration was primarily intended to simplify and expedite
commercial/trade disputes for the involved parties. This may be considered a
practical way to address the issues arising from the protracted and laborious
procedures in other types of arbitration. It preserves arbitration's primary goal
of quickly resolving disputes and does not entail any lengthy processes. Fast-
track arbitration may be used to settle a dispute in accordance with Section
29B of the Act if both parties consent before or at the time the arbitrator is
appointed. Only one arbitrator may be chosen by the parties with permission

65
IBID
when referring cases to fast-track arbitration. There will be no oral hearings
until and until necessary under the fast track system; the arbitrator will only be
able to use the written submissions that the parties have submitted. After the
matter is referred, the arbitrator has six months to make an award. 66

Institutional Arbitration

The arbitration process in institutional arbitration is governed by the norms

and procedures of the arbitral institution that the parties specify in their
agreement. Arbitrators are appointed by the organization or the parties from a
pre-arranged panel based on their relevant experience in the case. Under Part
I of the 1996 Arbitration and Conciliation Act, parties may choose arbitrators
on their own, based on the particulars of their dispute. If the parties do not
choose arbitrators directly, the institution steps in to make that arbitrators with
the necessary training and credentials are chosen. This structure maintains
professionalism while taking into account the desires of the involved parties,
resulting in a productive settlement process that complies with legal
obligations and business considerations. In order to give parties the
institutional support and knowledge required for successful conflict resolution,
institutional arbitration offers a dependable and well-organized process.
Because of its well-organized processes and effective dispute resolution tools
offered by reputable arbitration centers across the globe, institutional
arbitration is highly preferred by multinational corporations. Reputable
organizations providing trustworthy arbitration services include the
International Court of Arbitration in Paris, the Chartered Institute of
Arbitrators in the UK, the London Court of International Arbitration, the
National Arbitration Forum in the USA, the Singapore International
Arbitration Center, and others.

In M/S Nandan Biomatrix Limited v. D 1 Oils Limited (2009), 67 The SC

considered whether an arbitration agreement that required institutional
arbitration without naming a specific institution may be enforced. The parties
had specifically selected institutional arbitration as the means of resolving any

66
Sneha Mahawar, Types of arbitration, IPLEADERS (2024), https://blog.ipleaders.in/arbitration-type-
significance/ (last visited Jul 5, 2024).
67
M/S Nandan Biomatrix Limited vs D 1 Oils Limited on 11 February,
2009, INDIANKANOON.ORG (2024), https://indiankanoon.org/doc/21070/ (last visited Jul 4, 2024).
issues arising out of their agreement, the court noted in upholding the pact's
legitimacy. The aforementioned ruling emphasised the significance of the
parties' intents and the efficiency of institutional arbitration in offering a
methodical structure for efficiently settling business conflicts. These cases
demonstrate how institutional arbitration helps resolve multinational conflicts
with clarity, efficiency, and enforceability, boosting the trust and dependability
of arbitration as a favored mode of dispute settlement among corporations
around the world.68

68
Sneha Mahawar, Types of arbitration, IPLEADERS (2024), https://blog.ipleaders.in/arbitration-type-
significance/ (last visited Jul 4, 2024).