What is ADR?

ADR is an abbreviation that stands for Alternative Dispute

Resolution. ADR refers to all those methods of resolving a dispute,
which are alternatives for litigation in the Courts. ADR processes
are decision-making processes to resolve disputes that do not
involve litigation or violence. ADR includes a variety of processes
through which litigants or potential litigants may resolve their
disputes. Unlike the courts, which use adversarial processes, ADR
focuses on effective communication and negotiation.
ADR includes Arbitration, Mediation, Conciliation, Negotiation,
Expert Determination, Early Neutral Evaluation by a third person,
Mini-Trial, Dispute Resolution Board and Lok Adalat etc. The
approach of judges, lawyers and parties throughout the world is
changing towards adoption of ADR instead of Court-litigation.
Arbitral institutions provide ADR services for quicker, less costly
and consensual resolution of civil disputes outside the crowded
Court system. ADR provides creative options to the parties to
resolve the disputes that are not available in traditional dispute
resolution forums. ADR promotes communication between the
parties. ADR enables the parties to work together to solve the real
concerns underlying the conflict by focusing on the parties' real
interest instead of their positions and claims.
When ADR is useful and recommended?

ADR can be used as an alternative to time consuming adversarial

process of court-litigation. ADR is an alternative for those parties
who are willing to communicate with each other and make
genuine attempt to resolve the dispute with the help of a neutral
party. Many disputes like consumer complaints, family disputes,
construction disputes, business disputes can be effectively
resolved by ADR. It can be used in almost every dispute, which
can be filed in a court as a civil suit

What is the difference between ADR and civil suit in a court?

When a civil suit is filed in a court of law, a formal process occurs,
which is operated by Advocates and managed by the court. The
parties virtually lose all control over the result of their dispute
when a court makes the decision. Litigation is a costly affair and it
takes a lot of time to get a final decision of the court. Litigation
harms relationships and causes emotional stress. Participation in
a civil suit is unpleasant and cumbersome. On the other hand,
ADR is a problem solving process, which promotes creative
solution to the parties, which emphasizes communication
between the parties. In ADR, parties work together to solve the
dispute.

As said in the words of – Sandra Day O’Connor 1

“The courts of this country should not be the places where
resolution of disputes begins. They should be where the disputes
end after alternative methods of resolving disputes have been
considered and tried.”
The above-quoted words of Sandra Day O’Connor who was the
first female associate justice of the Supreme Court of the United
States from 1981 to 2006, show that the importance of ADR is
increasing in recent years.
Now, what ADR, its types, its history, and its growth prospects
are, will be discussed.

ADR Define?
ADR is an acronym for “Alternate Dispute Resolution” when talked
about in the context of the law. It is a process through which the
disputes among parties are resolved amicably without the
intervention of judicial machinery and without any trial.
In simple words, ADR can be referred to as a method of settling
disputes outside the courtroom without getting involved in the
tedious and lengthy process of litigation.
More about ADR…

 ADR is a party-centric process in which both parties agree to

resolve the disagreement in a way that suits them both.
 Because it is a party-centric strategy, it includes party
autonomy, making it flexible.
 It benefits not only the parties but also the courts. The strain
on courts is also minimized by resolving conflicts through such
alternative approaches.
 ADR, with its various approaches, plays a vital role in India in
dealing with the state of cases waiting in Indian courts.
 People are free to express themselves without fear of legal
repercussions. They can reveal the truth without revealing it to a
court.
 Because the process does not involve the judicial machinery,
all proceedings and outcomes are kept confidential.
 However, not all situations can be resolved by ADR (for
example, constitutional cases, criminal cases, and non-
compoundable cases).

ADR methods…
ADRs are major of 4 types, which are

 Arbitration
 Mediation
 Conciliation

Evolution2 of ADR
In earlier times…
Arbitration or mediation as an alternative to municipal court
dispute resolution has been practiced in India since Vedic times.
The ‘Brihadaranyaka Upanishad’ is the first work to mention the
different types of arbitral bodies, which are the Puga, Sreni, and
Kula. They were also known as Panchayats, and they dealt with a
wide range of conflicts, including contractual, marital, and
criminal matters. The rulings of these Panchayats would be legally
binding on the parties to the dispute. With the establishment of
Muslim control in India, the concepts of Muslim law were
integrated into Indian culture. Those laws, known as Hedaya,
were meticulously followed and included procedures for
arbitration. Tahkeem meant arbitration, while Hakam meant
arbitrator. To be an official judge presiding over the process, the
Tahkeem had to possess certain traits.
With the introduction of the East India Company, arbitration as a
form of conflict resolution gained traction. The British
administration brought with it laws governing arbitration, which
were first implemented in the presidential towns of Calcutta,
Bombay, and Madras.

Pre-Independence of India
The Bengal Resolution Act, of 1772 and the Bengal Resolution Act,
of 1781 were the first to make provisions for arbitration, requiring
parties to submit their disagreement to the arbitrator with mutual
consent and the arbitrator’s judgment to be binding on both.
These acts remained in effect until the Civil Procedure Code was
enacted in 1859. Sections 312 through 325 dealt with in-court
arbitration, and sections 326 and 327 dealt with out-of-court
arbitration. Section 89(1) of the Civil Procedure Code of 1908
required that conflicts be first addressed to ADR. The court was
charged with first attempting to assist the parties in reaching an
agreement without resorting to litigation.
The India Arbitration Act of 1899 was heavily influenced by its
British equivalent. The Act defined “submission” as “a written
agreement to submit present and future differences to arbitration,
whether or not an arbitrator is named therein.” “Next came the
Arbitration (Protocol and Convection) Act, 1937. This Act
implemented the Geneva
The Geneva Convention on the Execution of Foreign Arbitral
Awards (1927) and the Protocol on Arbitration Clauses (1923).
The Arbitration Act of 1940 was in effect until the 1996 Act was
passed. The 1940 statute only addressed domestic issues. The
Act had a noteworthy feature in that judicial involvement was
given careful consideration at practically all phases of the arbitral
process. The arbitral award itself has to be approved by a court of
law. The provisions of this Act undercut the objective of
arbitration, which was intended to be a process free of court
intervention. It reduced the pace of arbitration, making it unable
to provide a quick, efficient, and transparent conflict resolution
method.
Present Legislation.
In order to modernize the Act of 1940, the government enacted
the Arbitration and Conciliation Act, of 1996 in 1996. Various
committees on international arbitration and trade met in 1978
and agreed that UNCITRAL3 should take steps to develop
consistent rules of the arbitral process. This resulted in the
creation of the Model Law on Arbitration, which was thought to be
the most effective way to achieve the needed consistency.
UNCITRAL adopted the Model Law on June 21, 1985. This amazing
legacy had a significant impact on Indian law, and the Model Law
was completely included in the 1996 Act.
The 1996 Act fundamentally established arbitration as a cost-
effective and expeditious means of dispute resolution. Most
crucially, it includes provisions for both domestic and
international arbitration. The 1996 Act was revised twice, once in
2015 and once in 2019. “We have consolidated, single, effective,
and good legislation to deal with the ADR mechanism.”

ADR Legislations4 in India

1) Code of Civil Procedure, 1908

2) Indian Arbitration Act, 1899

3) Arbitration (Protocol and Convention) Act, 1937

4) The Arbitration Act of 1940

5) Arbitration and Conciliation Act, 1996

Evolution of ADR methods: Ancient Times
Alternative dispute resolution has been present in the judicial
fabric of India since ancient times. Its earliest mentions can be
found in the Bhradarnyaka Upanishad which mentions Puga,
Shreni, and Kula. Earlier also, many disputes in the villages,
municipalities were solved by the method of panchayats. This was
and still is a form of ADR. They used to deal with a myriad of
disputes, commercial, matrimonial, contractual, civil, and criminal
and everything else you can think of.

In Muslim law, similar provisions find a mention in the Hedayas

which are one of the principal sources of their laws. Fast
forwarding the timeline, then came the British Rule in India which
brought with itself specific laws and provisions dedicated to ADR
mechanisms. Such mechanisms were brought into effect in
Calcutta, Bombay and Madras. Let's understand these provisions
with the help of pointers.

Timeline of evolution of Provisions for ADR in India

As discussed above, ADR has developed hugely before and after
independence of India from the British Rule. Let us understand
such evolution with the help of pointers. The first such legislation
which opened the doors for ADR in India was the Bengal
Regulation Act 1781 and Bengal Resolution Act 1771. These acts
contained specific and \ However, even though both of these acts
remained in force and then came the Civil Procedure Code, 1908
which is still in force. No article on ADR is complete without the
mention of Section 89 (1) which shouldered the courts to enact
specific provisions for ADR mechanisms. The constitutionality of
Section 89 was challenged in the case of Salem Advocate Bar
Assn. v. Union of India. The honorable Supreme Court however
upheld the constitutionality of Section 89. The court also observed
that the provisions relating to Alternative Dispute Resolution were
very successful in foreign countries and henceforth India should
also keep such provisions in the judicial books of the country so
as to prosper in the judicial world. The court said that such
purpose can only be met by keeping the Section 89 intact. The
court also ordered to constitute a committee to review the
difficulties and hurdles that were there in amendment and
enforceability of such provisions. The committee subsequently
submitted its report and the court ordered all the High courts to
enact special provisions dedicated to ADR methods.
After this, the Indian Arbitration Act 1899 came which was
inspired and derived from its British Counterparts. This act gave a
beautiful explanation of 'submission' which basically meant a
written agreement that you will refer the matter of disputes of
past and future to a third person called arbitrator even if it is not
specified who will be the arbitrator.

 Mediation Bill, 20215

1) Code Of Civil Procedure, 1908

Sections 312 to 325 of the Code of Civil Procedure of 1859 deal
with arbitration in litigation, whereas sections 326 and 327
permits arbitration without judicial intervention. The Act of 1882
was abolished by the Code of Civil Procedure (Act 5 of 1908).
Section 89(1) of the Code of Civil Procedure of 1908 states that
cases must be encouraged to proceed to ADR. Under the First
Schedule, Order XXXII A, Rule 3 a duty is cast upon the courts to
help the parties in the first instance in reaching a settlement over
the subject matter of the dispute.
The second schedule dealt with arbitration in lawsuits, briefly
allowing for arbitration without the intervention of a judge. Order
I, Rule 1 of the schedule states that where all parties agree in any
dispute that any difference between them shall be referred to
arbitration, they may apply to the court for an order of reference
at any time before judgment is announced. This schedule
supplemented the terms of the Arbitration Act of 1899 in some
ways.

2) Indian Arbitration Act, 1899

This Act was heavily influenced by the British Arbitration Act of
1889. It broadened the scope of arbitration by defining
“submission” as “a written agreement to submit present and
future differences to arbitration, whether or not an arbitrator is
named therein.
3) Arbitration (Protocol and Convention) Act 1937
The Arbitration (Protocol and Convention) Act of 1937
implemented the Geneva Protocol on Arbitration Clauses of 1923
and the Geneva Convention on the Execution of Foreign Arbitral
Awards of 1927. The purpose of this Act was to give effect to the
Protocol and make the Convention operational in India.

4) The Arbitration Act Of 1940

The Arbitration Act of 1940 solely addressed domestic arbitration.
Under the 1940 Act, the court was required to intervene in all
three stages of arbitration in the tribunal, namely:

a) prior to the referral of the dispute

b) during the proceedings, and

c) after the award was made

Under this Act provisions were made for the following:
a) arbitration without court intervention
b) Arbitration in cases, that is, arbitration with court intervention
in pending lawsuits
c) In circumstances when no litigation was pending before the
court, arbitration with judicial participation was used.
Prior to an arbitral tribunal taking cognizance of a case, court
intervention was required to initiate the arbitration procedures. It
was imperative to prove the existence of an agreement and a
conflict. During the course of the proceedings, the court’s
participation was required for the extension of time for making an
award.
Finally, before the award could be enforced, it had to be
established a court rule. The primary functions of ADR were not
met by this Act. The Act’s scope of Judicial Interference failed its
fundamental aim. It lacked a quick, effective, and transparent
system for resolving disputes resulting from overseas trade and
investment transactions.

5) Arbitration And Conciliation Act, 1996

In order to modernize the 1940 Act, the government enacted the
Arbitration and Conciliation Act in 1996. The UNCITRAL
Secretariat, the Asian African Legal Consultative Committee
(AALCC), the International Council for Commercial Arbitration
(ICCA), and the International Chamber of Commerce (ICC) held a
consultative meeting in 1978, and the participants unanimously
agreed that it would be in the interests of International
Commercial Arbitration if UNCITRAL initiated steps leading to the
establishment of uniform standards of arbitral procedure.
The creation of a Model Law on Arbitration was deemed the best
method to attain the needed uniformity. The full text of this Model
Law was adopted by UNCITRAL on June 21, 1985. The United
Nations has left a great legacy of International Commercial
Arbitration, which has affected Indian law. The Model Law was
nearly entirely adopted in India in the 1996 Act.
All three prior statutes were repealed by this Act. Its principal goal
was to promote arbitration as a low-cost and rapid method of
resolving commercial disputes. It applies to both domestic and
international commercial arbitration. It was a watershed moment
in India’s attempt to find an alternative to the traditional
adversarial legal system.
The changes brought about by the 1996 Act were so profound
that the whole case law on arbitration developed over the
previous fifty-six years became redundant. The Government of
India established the 1996 Act through an ordinance and then
prolonged its life through another ordinance before Parliament
passed it without reference to the Parliamentary Committee.
Arbitration, as practiced in India, became one more “inning” in
the game, rather than shortening the lifespan of dispute
resolution. Furthermore, the arbitrator and the parties’ counsel
saw arbitration as “extra time” or “overtime work” to be
completed after attending court proceedings. As a result, the
regular session of an arbitration hearing was always brief in
duration. The lack of a full-fledged Arbitration Bar effectively
precluded continuing day-to-day hearings over typical business
hours, i.e. 4-5 hours every day. As a result, the disposal period
was extended.
The Law Commission of India issued a report on the 1996 Act’s
experience and proposed a number of amendments. The
Government of India tabled the Arbitration and Conciliation
(Amendment) Bill, 2003, in Parliament based on the Commission’s
recommendations. The law ministry’s standing committee
believed that the Bill’s provisions allowed for disproportionate
court participation in arbitration processes.

6) Mediation Bill, 2021

The Rajya Sabha has introduced the Mediation Bill, 2021, which
will be a consolidated Act for the purpose of mediation in India.
The Bill aims to promote mediation (including online mediation)
and to allow for the enforcement of mediation-related settlement
agreements.
It was sent to the Joint Parliamentary Committee for further
review. Certain proposals have been made by the Joint
Parliamentary Committee. The Committee’s proposals are being
actively considered by the Government.

 Applicability

The Bill will apply to mediation proceedings held in India where:

 All parties reside in India, are incorporated there, or have a

place of business there,
 the mediation agreement states that mediation will be
conducted in accordance with this Bill, or
 there is international mediation (i.e., mediation related to a
commercial dispute in which at least one party is a foreign
government, a foreign national/resident, or an entity with its
place of business outside India).
If a central or state government is a party in certain
circumstances, the Bill will only apply to (a) commercial disputes
and (b) other disputes as notified by such government.

 Pre-litigation mediation

In the event of a civil or commercial disagreement, a person shall

first attempt to resolve the dispute through mediation before
addressing any court or certain tribunals as specified. Even if the
parties are unable to reach an agreement through pre-litigation
mediation, the court or tribunal may refer the parties to mediation
at any point of the proceedings if they desire it.

 Disputes not fit for mediation

Disputes not suitable for mediation include

 pertaining to claims against children or people of unsound

mind,
 involving prosecution for criminal offenses,
 influencing third-party rights, and
 relating to the levy or collection of taxes.

The central government may amend this list of disputes.

 Mediation process

Mediation proceedings will be confidential. After the first two

mediation sessions, a party may withdraw from the process. The
mediation procedure must be completed within 180 days (even if
the parties fail to reach an agreement), which can be extended by
the parties for another 180 days. In the case of court-annexed
mediation (mediation conducted at a mediation center
established by any court or tribunal), the procedure must be
carried out in accordance with Supreme Court or High Court
directions or rules.

 Mediators
Mediators can only assist the parties in resolving their issues and
cannot force a resolution on them. Mediators can be appointed by
the parties themselves, or by a mediation service provider (an
entity that administers mediation). Mediators must disclose any
conflicts of interest that would cast doubt on their impartiality.
The parties can then elect to replace the mediator.

 Mediation Council of India

The Indian government will form the Mediation Council. The

Council will have a chairperson, two full-time members (with
mediation or ADR experience), three ex-officio members
(including Secretaries in the Ministries of Law, Justice, and
Finance), and one part-time member (representing an industry
association). The duties of the Council include (i) mediator
registration and (ii) recognizing mediation service providers and
mediation institutions (which offer mediation training, education,
and certification).

 Mediated settlement agreement

Mediation agreements must be in writing, signed by the parties,

and authenticated by the mediator. Such agreements will be
final, binding, and enforceable in the same way that court
judgments are (with the exception of agreements reached
through community mediation). Mediated settlement agreements
(other than those achieved through court-ordered mediation, Lok
Adalat, or Permanent Lok Adalat) may be challenged only for the
following reasons: (i) deception, (ii) corruption, (iii) impersonation,
or (iv) relating to conflicts unsuitable for mediation.

 Community mediation

To resolve issues that are likely to disrupt the peace and harmony
of a community, community mediation may be sought. It will be
led by a panel of three mediators (who may include community
leaders and RWA representatives).

 Interface with other laws

The Bill will supersede all other mediation laws (save the Legal
Services Authorities Act of 1987 and the Industrial Relations Code
of 2020). The Bill also amends several laws (such as the Indian
Contract Act of 1872 and the Arbitration and Conciliation Act of
1996).
Types of ADR
Looking at a broader sense, the classification of ADR can be done
as:

1. Court-annexed options like Mediation and Conciliation

2. Community-based dispute resolution mechanisms like Lok-
Adalat

In India, the following methods of ADR are practiced:

1. Arbitration
2. Mediation
3. Conciliation
4. Negotiation
5. Lok Adalat

 Arbitration

It is a method in which the dispute is brought to an arbitral

tribunal, which makes a binding ruling (an “award”) on the
matter.
The parties agree to bring their disagreement to a neutral tribunal
to determine their rights and obligations when they enter into an
arbitration agreement. Arbitration, while commonly referred to as
an alternative dispute resolution method, is not the same as
mediation or conciliation. A mediator or conciliator can only
recommend results, and the parties have the option of accepting
or rejecting those recommendations. In contrast, an arbitration
panel has the authority to make binding rulings on the parties.
It is a private, often informal, and non-judicial dispute resolution
technique. Arbitration must meet four requirements:
1. an arbitration agreement,
2. a dispute,
3. a referral to a third party for adjudication, and
4. an award by a third party.

 Conciliation

Conciliation is a less formal method in comparison to arbitration.

This procedure does not necessitate the presence of any prior
agreement. Any party may request that the other party appoint a
conciliator. A single conciliator is ideal, but two or three are
also permitted. When there are numerous conciliators, they must
all work together. There can be no conciliation if a party rejects a
conciliatory offer.
Parties may provide the conciliator with statements summarising
the overall nature of the dispute and the items at issue. When the
conciliator believes that settlement elements exist, he may
draught settlement terms and send them to the parties for
acceptance. If both parties sign the settlement paper, it becomes
final and binding on both sides.

 Mediation

Mediation is a process in which an external person called a

mediator, who is impartial to the disagreement, is assigned to
help the disputant parties in reaching an agreeable settlement.

Mediation can also be referred to as negotiation with the

assistance of a third party. In contrast to the arbitrator or judge,
the mediator has no authority to force a decision on contending
parties.

 Negotiation

Negotiation is the most important mode of dispute settlement

since it is a discussion with the objective of persuasion. When
compared to processes of using mutual third parties, it has the
distinct benefit of letting the parties control the process and the
solution themselves.
Negotiation has no statutory recognition in India. Negotiation is
the self-counseling of the parties in order to resolve their issue.
Negotiation is a process with no set rules but a predictable
pattern.

 Lok Adalat

The system of Lok Adalat is constituted under the National Legal

Services Authority Act, of 1987. It loosely translates to “people’s
court”.
In a society like India, where illiteracy dominated other parts of
administration, Lok Adalat was a historical necessity. It was
established in 1982, and the first Lok Adalat was established in
Gujarat. This movement’s emergence was part of an attempt to
reduce the severe pressure on courts with ongoing cases. It was a
synthesis of notions such as social justice, fast justice, a
negotiated outcome, and negotiating efforts.

Legal Services Authorities Act of 1987:

The Legal Services Authorities Act of 1987 went into effect on
November 19, 1995. The purpose of the Act was to provide free
and competent legal services to the poorer parts of society in
order to ensure that no citizen’s access to justice is denied. The
concept of legal services, which includes Lok Adalat, is a major
advancement in conflict settlement.
Though conducting Lok Nyayalayas had an impact on settlements
prior to this Act, it has received no official acknowledgment.
However, under the new Act, a Lok Adalat settlement has the
force of a decree and can be enforced through Court as if it were
passed by it. Lok Adalat is addressed in sections 19, 20, 21, and
22 of the Act. Section 20 specifies the various scenarios in which
matters may be referred for Lok Adalat consideration.
Future prospects of ADR
After a thorough study of ADR, we concluded that it is a vital
instrument for resolving conflicts and providing justice in a cost-
effective and timely manner.
Because it is an out-of-court settlement, it lets the parties avoid
the time-consuming process of litigation while also reducing the
tremendous strain on the courts from pending cases.
It can be claimed that ADR is the finest way for settling disputes
between parties since, in a developing country like India, where
there are many pending cases, the Indian judiciary would gain
from the same.
Individuals nowadays find it extremely tiresome to go through the
entire litigation procedure in order to obtain justice, and many
individuals do not even approach the court due to a lack of money
and time. As a result, a move to a technique of dispute settlement
that is both amicable and saves time is required.
In other words, litigation is quite complex for the average person,
whereas ADR is a client-friendly strategy in which the client fully
knows his case and can watch its development.
The evolution of ADR has been drastically seen, and even the
Indian legal system is considering the same. This can be seen in
different case laws:

 In the case of Emkay Global Financial Service Limited v.

Giridhar Sondhi it was held that Arbitration Act aims at a speedy
resolution of disputes.
 Supreme Court in the case of Kinnari Mallick and Anr vs.
Ghansyam Das Damani held that a court has no jurisdiction for a
petition under section 34, and the power of the court is limited.
Such power can be invoked before setting aside an award with
the consent of one party.
 Again, in another landmark judgment of the Supreme Court
the place of proceeding was questioned. In the case of Brahmani
River Pellets Limited v. Kamachi Industries Limited, it was held
that when parties decide a place of jurisdiction that excludes all
 other court. Exactly when parties decide a place for
Arbitration in the contract itself, it excludes the jurisdiction of all
other courts.
 In the case of In Konkan Railway Corporation v. Rani
Construction Pvt. Ltd it was decided that the court must help the
parties in selecting an arbitrator rather than deciding the validity
of the arbitration clause.
 B.P. & Co. v. Patel Engineering Ltd. It was held that it is the
judiciary power of chief justice while appointing an arbitrator.
 Supreme Court invalidates the discretionary power of the
High Court appointing sole arbitrator by stating that appointment
must be made according to the arbitration Agreement.
 Supreme court in the case of Vinod Bhaiyalal Jain v.
Wadhwani Parmeshwari Cold Storage Pvt. Co., Ltd. Held that there
should be no biasness in part of arbitrators in order to deliver
proper justice to the partie

Conclusion
As seen above ADR i.e., alternate dispute resolution is now being
considered as an important method to solve disputes between the
parties due to the number of advantages that it provides.