In India the demand for Alternative Dispute Resolution(ADR) is increasing day by day. ADR acts as a substitute for the more common judicial process. Judicial proceedings are more complicated and time consuming; therefore the concept of ADR came into light to reduce the burden of the courts. It avoids the cost and time involved in the normal court proceedings. It is the process of settling disputes outside the court room without any litigation which involves methods like negotiation, conciliation, mediation, and arbitration. The formalized outcome of arbitration is called Arbitral award which outlines the final settlement between the parties. ADR is an increasingly attractive option for businesses these days as it enables confidentiality of the matters and preserves the goodwill of the businesses. ADR can be used in almost all kind of disputes including commercial, civil, labour, and family disputes in respect of which the parties are entitled to reach to a settlement. In India, laws relating to resolution of disputes have been amended from time to time to facilitate speedy results with the changing times. The Indian Judiciary system has encouraged out-of-court settlements to alleviate the increasing backlog of cases pending in the courts. To implement the ADR mechanism in an effective manner, few organisations like the Indian Council of Arbitration (ICA) and the International Centre for Alternate Dispute Resolution (ICADR) were established.  Moreover, the Arbitration Act, 1940 was also repealed and a new and effective arbitration system was introduced by the enactment of The Arbitration and Conciliation Act, 1996


Arbitration: The arbitration clause is usually mentioned in commercial agreements where the parties agree to refer present or future disputes arisen or arising between them to arbitration. The parties appoint an individual as an arbitrator. An arbitrator is a person who is appointed to determine differences and disputes between two or more parties by their mutual consent. The arbitrator imposes a decision that is legally binding on both parties.

Conciliation: It is an informal process where both the parties to a dispute appoint a neutral conciliator to bring them to an agreement. This is done by sorting out any misrepresentation between the parties and removing the technical difficulties and working out possible solutions. The conciliator in an attempt to resolve the differences between the parties meets them separately.

Mediation: Mediation is a non-binding procedure where an impartial third party known as a mediator tries to facilitate the resolution process but he cannot impose the resolution on the parties, and the parties to a dispute are free to decide according to their convenience and terms.

Negotiation: It is the process in which the discussions between the parties are initiated without the intervention of any other party (namely, third party), with the object of arriving at a negotiated settlement of the dispute.


As per section 2(1)(c) of Arbitration and Conciliation Act, 1996 “arbitral award” means an interim award.

Features of an arbitral award:

  • An arbitral award must be made in writing and on stamp paper of prescribed value.
  • The award is to be signed by the members of the arbitral tribunal and the signature of majority members of the tribunal is sufficient.
  • The making of an award is a rational process which is accentuated by recording the reasons.
  • The award must be dated.
  • The award may also include decisions and directions of the arbitrator regarding the cost of the arbitration.
  • The arbitration tribunal is under obligation to state the place of arbitration as determined in accordance with the act.
  • The arbitral tribunal may include in the sum for which award is made, interest up to the date of award and also a direction regarding future interest.
  • After the award is made, a signed copy should be delivered to each party for appropriate action.

Setting aside of an arbitral award:

As per section 34(2), an arbitral award can be set aside on the following grounds-

  • Incapacity of parties
  • Arbitration agreement is not valid under the law
  • If the applicant was not given proper notice or was unable to properly present his case
  • If the dispute is not within the scope of submission to arbitration
  • The composition of arbitral tribunal not in accordance with the agreement
  • If the subject matter is against the public policy of India


 India is a big nation having a variety of cultures and hence several dispute resolution mechanisms (DRMs) had evolved and been customized in India over time. ADR is a universal concept adopted by many countries. It provides an alternative method of tackling disputes which avoids going to courts. ADR procedures are less costly and hence expeditious. It helps in preventing further conflicts and in maintaining good relationship between the parties. Also, it preserves the best interest of the parties in any dispute.







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