• Manish Modak


    BA. LL.B

    Expertise IT, Retail,Due Diligence, Licence and Registration, Transaction, Asset Management, FDI, Risk, Assessment, Election Laws, Corruption and Bribery Laws, Adoption, Legal Strategy

  • Siddhartha Ray

    Sr. Associate

    B.A.LL B

    Practices Constitutional, Civil,Biotechnology,Tourism & Hospitality,Appellate, International Laws, Treaties & Conventions, Human Rights,

ArbitrationIn a rapidly developing society human needs are bound to multiply resulting into conflict of interests. People become more conscious about their individual rights and litigation becomes an inevitable part of their life due to rising incidence of disputes among them. The problem is further compounded when there is lack of discipline in the litigation process an judicial mechanism finds it difficult to cope up with the enormous caseload. Particularly, in a modern technologically and economically well advanced society, litigation is a primary means of resolving disputes. When it fails to meet the need of the people there is oblivious need to search for new alternative methods of dispute resolution. It is in this context that the alternative modes of dispute resolution have gained primacy in the present millennium.

Justice delivery institutions in most of the developing countries in the world are currently confronted with serious crises, mainly on account of delay in the resolution of the disputes particularly the delay in disposal of the commercial and other civil matters. We must admit that this situation has eroded public trust and public confidence in the justice delivery institutions. It obstructs economic growth, development and social justice to the citizens in a country. The crises therefore, call for an urgent solution. The cause for such backlog of cases is institutional and the delay in disposal of the cases, is due to procedural laws. Administrative institutions have failed to monitor the status, substance and pace of litigation in the courts. The beginning of the modern ADR movement is from United States of America. As Chief Justice Warren Burger of the U.S. Supreme Court once observed on noticing the increase of cases from 2000 to about 5000 in the US Supreme Court between 1963 to 1982 made the following remarks: –

“We are moving towards a time when it will be impossible for the courts to cope up with the dockets. If something is not done, the result will be a production of line of justice that none of us would want to see.”

Centre for Public Resources (CPR) in New York was a leader in the movement towards Alternative Dispute Resolution (ADR). It was assumed that the High Cost of litigation and long span of time, were misuse of public resources. Therefore, number of ADR techniques, which includes mini trials, having main focus on arbitration, mediation and disputes resolution by negotiation. Alternative dispute resolution mechanism principally consist of mediation, negotiation and arbitration as techniques for resolution of disputes by the consenting parties.


The legal system in India is viewed by many as part of ‘colonial legacy’. Undoubtedly, judiciary is the important institution which has withstood many challenges during the last-more than fifty years to retain its integrity. But with the mounting pressure of cases-civil, criminal, revenue, industrial and others the workload of judiciary increased leaps and bound and it has now reached a stage of unmanageable magnitude and the cases remain undecided for years together for one reason or the other.

The preamble to the constitution of India promises to secure socio-economic and political justice and equality of status and of opportunity to all the citizens. Art. 39-A contains a directive principle which holds that the state will ensure that the legal system operates in a manner so as to promote justice to all an to ensure that no citizen is denied the opportunities of securing justice by reason of economic or any other disability. But the ground reality is that the law hardly reaches the vulnerable sections of the society here majority of the people are illiterate, rustic and rural and are ignorant about existence of their legal rights and remedies. And those who are aware of their right, find it difficult to get them translated into reality because of the legal and procedural ordeals on has to undergo in the process of litigation.


The report of the Malimath Committee (1989-90). The committee was headed by Hon’ble Mr. Justice V.S. Malimath, the two other members being Hon’ble Mr. Justice P.D. Desai and Hon’ble Dr. Justice A.S.Anand.

In India the situation is all the more worse. The Indian judicial system has been stretched almost to a breaking point right from the Apex court to the lowest subordinate courts. The Malimath Committee which is also known as the Arrears committee, undertook a comprehensive review of the working of the court system, particularly all aspects of arrears and Law’s delay and made various useful recommendations for reducing litigation and making justice readily accessible to the people at the minimum cost o time an money.

The Malimath Committee underlined the need for alternative dispute resolution mechanism such as mediation, conciliation, arbitration, Lok Adalats etc. as a viable alternative to the conventional court litigation.


In the complexities of modern life-style disputants want a decision and that too as quickly as possible. As a problem of over-burdened courts, a number of tribunals were established in India. Even after formation these adjudicatory tribunals and setting up of Family courts, H.R. commissions, Women commissions for the protection of rights of men and women, the problem of delay in courts still persists unabated thereby defeating the cause of justice.

Particularly, civil litigation in India is notoriously known for pendency of cases flooded by adjournments, revisions, appeals, cross- appeals etc. on an average a civil litigation takes 5-8 years for its final disposal and cases are not wanting when civil cases have lingered in the courts for even 15 to 20 years for one reason or another.

In Surjeet Singh & other V/s Harbans Singh & others , AIR 1996 SC135, the Supreme Court expressed its anguish for long delay as the case was lying pending in civil Court at Patiala since 1948 with no sight of its finalization. In yet another case of Dr. Buddhikota Subbarao V/s K.Parasharan, AIR 1996 SC 2678 ,the apex court observed “ no litigation has a right to unlimited drought on the time and public money in order to get his mater settled in the manner as he wishes. “

The noted jurist Mr.N.A. Palkhivala attributing this cause to legal profession inter-alia, observed:

“The fault is mainly of legal professionals. We ask for adjournments on the most flimsy grounds. If the Judge does not readily grant adjournment, he is deemed highly unpopular, I think it is the duty of the legal profession to make sure that it co-operates with the judiciary in ensuring that justice is administered speedily and expeditiously , it is a duty of which we are totally oblivious”.

In the Indian context, if money suits and claims pertaining to property rights are referred to arbitration or conciliation, it would reduce the files of the various courts by 50% .

While inaugurating International Arbitration Conference in New Delhi from March 2-4 of 2000 Hon’ble the then President of India, Mr.K.R.Narayanan said that in the era of globalization International Arbitration should take into account socio-economic profiles of the countries while dealing with a dispute to arrive at a just solution.

Alternative Dispute Resolution (ADR) is a term for describing process of resolving disputes in place of litigation and includes arbitration, mediation, conciliation, expert determination and early neutral evaluation by a third person. In many important respects, arbitration is similar/common with court based litigation than the other forms of ADR. Prior to the enactment of The Arbitration and Conciliation Act, 1996, none of these forms of ADR except arbitration have any statutory basis in India. Mediation and Conciliation require an independent third party as mediator or conciliator to assist the parties to settle their disputes. The expert determination requires independent experts in the subject of disagreement of the parties to decide the case. Such expert is chosen jointly by the parties and his decision is binding.

The objective of ADR as the phrase itself suggest is to resolve disputes of all sorts outside the traditional legal mechanism i.e. courts/judicial system. There is a broad spectrum ranging from the purely consensual mode of resolution of disputes to an executive procedure like arbitration, conciliation or negotiation. Though a combination of some of the technique like negotiation, conciliation, mediation and arbitration may also be used to resolve certain disputes. ADR thus offers an alternative route for resolution of disputes. The emphasis in the ADR, which is informal and flexible, is on “helping the parties to help themselves”.

The Arbitration and conciliation Act 1996 also contains provision relating to conciliation in contractual matters arising out the legal relationship, The arbitral proceedings being informal, less expansive and relatively speedier, have proved to be an efficient alternative means for the redressal of disputes and differences between the parties. Like arbitration , conciliation and mediation as an alternative means of settlement of disputes also needs to popularized commenting on this point, the former CJI Mr. Justice A.M.Ahmadi observed,

“while we encourage ADR mechanisms, we must create a culture for settlement of disputes through these mechanisms, Unless the members of the Bar encourage their clients to settle their disputes through negotiations, such mechanisms cannot succeed.”


With the acceptance of Welfare ideology, there was mushroom growth of public services and public servants. The courts particularly the High Courts were inundated with cases concerning service matters. The Swarn Singh Committee therefore, inter-alia recommended the establishment of Administrative Tribunals as a part of Constitutional adjudicative system. Resultantly the Constitution (42nd Amendment) Act 1976 inserted Part XIV-A to the Constitution of India consisting of Articles 323A and 323B. Article 323A provides for the establishment of Administrative Tribunals for adjudication or trial of disputes and complaints with respect to recruitment, conditions of service of persons appointed to public services and other allied matters. Article 323B makes provision for the creation of Tribunals for adjudication or trial of disputes, complaints or offences connected with tax, foreign exchange, industrial and labour disputes, land reforms, ceiling on urban property, election to Parliament and State Legislatures, etc. Parliament has power to enact any law under Article 323A while both Parliament and State Legislatures can make laws on matters of Article 323B, subject to their legislative competence. Therefore, in some cases, expert bodies like Central Administrative Tribunals constituted under Section 4 of the Administrative Tribunals Act 1985, have been empowered to adjudicate matters relating to service conditions etc. Similarly the Consumer Disputes Redressal Mechanism provided for better protection of the consumers, thereby providing for the establishment of the District Consumer Disputes Redressal Forum at district level, State Consumer Disputes Redressal Commission, at the State Level and National Consumer Disputes Redressal Commission at the National Level to adjudicate the Consumer Disputes/cases under the Consumer Protection Act, 1986. The Income-tax Appellate Tribunal are empowered to hear appeals under Section 253 of the Income Tax Act, 1961, Central Excise and Gold Appellate Tribunal (now known as Central Excise and Service Tax Appellate Tribunal) is empowered to hear appeals under Section 35(b) of the Central Excise and Salt Act, 1944. The Debt Recovery Tribunals set up under the provisions of The Recovery of Debts due to Banks and Financial Institutions Act 1993, have been empowered to adjudicate cases relating to debts /loans of Commercial Banks and Financial Institutions. The tribunal system was evolved in our country to provide an alternative to the regular courts. The tribunals are presided over by the experts of the respective fields and the adjudication mechanism is cost effective, thus less costly in comparison to the regular courts and they are effectively resolving the disputes by taking much less time in comparison to the regular courts.


ADR is a suitable alternative mechanism to resolve disputes in place of litigation. The Committee for implementing Legal Aid Schemes (CILAS) constituted by the Ministry of Law and Justice, Govt. of India in 1980 recommended the establishment of Lok Adalat. Consequently, Lok Adalat movement is accepted to be one of the components. It has assumed great importance and attained a statutory re-cognisation under the Legal Services Authorities Act, 1987, which was enforced w.e.f. November 9, 1995. They are not akin to regularly constituted courts but they supplement the existing justice administration system. They provide adequate and effective means of disputes resolution at a reasonable costs. Special status has been assigned to the Lok Adalat under the Legal Services Authorities Act which provides statutory base to such Lok Adalat, which are regularly organized primarily by the State Legal Aid and Advice Boards with the help of District Legal Aid and Advice Committees. Some of the Lok Adalats are being sponsored by the various voluntary legal aid agencies. The whole emphasis in the Lok Adalat proceedings is on conciliation rather than adjudication.

A Lok Adalat has jurisdiction to determine and arrive at a compromise or settlement between the parties to a dispute in respect of any matter falling within the jurisdiction of any civil, criminal, or revenue courts or of any tribunal constituted under any law for the time being in force for the area for which the Lok Adalat is being organized. In a case where a pending action or proceeding is referred to Lok Adalat by a Joint Application of the parties, the Lok Adalat is to proceed to dispose of that proceeding or matter and arrive at compromise or settle the disputes between the parties. In doing so, the Lok Adalat must be guided by legal principles and principles of justice, equity and fair play. In a case where no compromise or settlement can be arrived at, it is open to the parties to the proceeding, to request for transfer of their proceedings before the courts at a later stage from which it was transferred. Every award of the Lok Adalat is a civil decree and every award made by the Lok Adalat is deemed to be final and binding on all parties to the proceedings or disputes. No appeal lies to any court against such an award. The Lok Adalat is empowered to exercise substantive powers vested in a civil court under the Code of Civil Procedure while trying suit of proceeding.


The use of ADR, is promoted by the enactment of section 89 of the Code of Civil Procedure which is inserted by Section 7 of the Code of Civil Procedure (Amendment) Act 1999. The courts also encourage the parties to use an ADR procedure in appropriate cases. The Governments including Central Government are committed to settle their legal disputes out of the court by ADR methods whenever the other party agrees for it. Normally ADR is an alternative way of settlement of the disputes or issues. ADR is simple, cheaper, quicker and less stressful to all parties, in comparison to adversarial litigation.


The term ‘conciliation’ and ‘mediation’ have not been used with any precision. To begin with the term ‘conciliation1 was used more widely, while of late the term ‘mediation’ has become more popular. By and large these terms are used inter changeably. Section 61 of the Act1 provides for application of Part-Ill of the Act to conciliation of disputes arising out of legal relationship, whether contractual or not and to all proceedings relating thereto. The provisions of Part-Ill shall not apply where by virtue of any existing law which is in force, certain disputes may be in the exclusionary category of conciliation. Section 62 of the Act2 provides for commencement of conciliation proceedings. Section 63 provides for the number of conciliators and Section 64 provides for the appointment of conciliators. The parties may submit brief written statement describing the general nature of the dispute and the points at issue with a copy of such statement to the opposite party under Section 65 of the Act. The Code of Civil Procedure, 1908 or the Indian Evidence Act, 1872 are not binding upon the conciliators as per the provisions of Section 66 of the Act. The conciliator assists the parties in an independent and impartial manner in their attempt to arrive at an amicable settlement of their dispute. The conciliator is guided by the principles of objectivity, fairness and justice by taking into account the rights and obligations of the parties. The conciliators are free to conduct the proceedings, by taking into account, the circumstances of the case and willingness of the parties, including any request by a party that the conciliator should hear oral statement requiring speedy disposal/ settlement of the dispute. The conciliator is free to make any proposal for settlement of dispute at any stage under Section 67 of the Act. Section 75 of the Act provides that the proceedings before conciliator shall be confidential. The parties shall keep all matters relating to the conciliation proceedings as confidential. The agreement is also confidential except where its disclosure is necessary for the purposes of implementation and enforcement of the settlement. Section 73 empower the conciliator to formulate the terms of a possible settlement and submit the same to the parties for their observance. On observance, if the parties agreed, a written settlement agreement may be signed. The settlement agreement shall be final and binding on the parties and their representatives. The conciliator shall authenticate the settlement agreement and furnish a copy of such agreement to each of the parties under Section 73 of the act.


In our country, in the past statutory provisions on arbitration were contained in three different enactments i.e. the Arbitration Act 1940, the Arbitration (Protocol and Convention) Act 1937 and the Foreign Awards (Recognition and Enforcement) Act, 1961. The Arbitration Act, 1940 laid down the framework within which domestic arbitration was conducted in India, while the other two Acts dealt with foreign awards. The Arbitration and Conciliation Act, 1996 has repealed the Arbitration Act, 1940 (10 of 1940) and the Arbitration (Protocol & Convention) Act, 1937 (6 of 1937) and the Foreign Awards (Recognition and Enforcement) Act, 1961 under section 85 of the 1996 Act.

United Nations Commission on International Trade Law (UNCITRAL) prepared a Model Law on international commercial arbitration in 1985. The General Assembly of the United Nations has recommended that all member countries should give due consideration to the Model Law, for the desirability of uniformity of the Law of Arbitral Procedures and the specific needs of International Commercial Arbitration Practice. The United Nations Commission on International Trade Law (UNCITRAL) adopted the UNCITRAL Conciliation.

1.The Arbitration and Conciliation Act, 1996.

2 . ibid

Rules in 1980. The Arbitration and Conciliation Bill 1996 was passed by both the Houses of Parliament and received the assent of the President of India on August 16, 1996 and was enforced w.e.f. January 25, 1996 and the enactment came on the statute book as the Arbitration and Conciliation Act, 1996 (26 of 1996).

The object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay and expense. The parties should be free to agree as to how their disputes are to be resolved, subject only to such safe guards as are necessary in the public interest. In the matter governed by the provisions of the 1996 Act, the court should not intervene except as provided by those provisions. The main object of Arbitration is to exclude judicial intervention with the process of Arbitration. The Court is however required to direct the parties to resort to Arbitration as per the agreement and to provide alternative dispute resolution to those who cannot bear the cost and the time of ordinary civil court procedure as per the provisions of Section 89 CPC. There are separate enactments specially to settle disputes arising between employer and employee under the Industrial Disputes Act. Statutory tribunals are also some time lacking in their effort as they do not have the simplicity, transparency and practical approach to resolve the disputes, as in the Arbitration and Conciliation Act, 1996. The English Arbitration Act, 1996, provides that the provisions of law must not be construed as excluding the operations of rule of law consistent with those provisions, in particular any rule of law as to (a) matters which are not capable of settlement by arbitration, (b) the effect of an oral arbitration agreement or (c) the refusal of recognition or enforcement of an arbitral award on ground of public policy. The English Arbitration Act, 1996 must not be construed as reviving any jurisdiction of the court to set aside or remit an award on the ground of errors of fact or law on the face of award.

Arbitration is a process used by the agreement of the parties to resolve disputes. In arbitration, disputes are resolved with binding effect by a person or persons acting in a judicial manner in private, rather than by the regular court of law, that would have jurisdiction to adjudicate, but for the agreement of the parties to exclude it. The Arbitration and Conciliation Act, 1996 is a long leap in the direction of Alternative Dispute Resolution system. It is based on UNCTRAL model.

Commenting on arbitration as an ADR technique, Mr. V.R.Krishna Iyar of the Supreme Court observed:-

Interminable time consuming, complex and expensive curt procedure implied jurists to search for an alternative forum less formal, more effective and speedy for resolution of disputes avoiding procedural claptrap and this led them to the Arbitration Act……”


The justice dispensation system in India has come under great stress for several reasons, mainly due to huge pendency of cases in the courts. Alternative Disputes Resolution is a mode of resolution of disputes through arbitration, conciliation or mediation which provides an alternative route for resolution of disputes instead of resolution of such disputes through courts. The principle of ADR are successfully adopted in the Indian Legal System as an alternative to the justice delivery system.