Arbitration: The potential Alternative Dispute Resolution


 The Alternative dispute resolution is an option for traditional judiciary proceeding. The difference between ADR and judiciary are many. Comparatively ADR is best way of dispute resolution. The judiciary have burden of pending cases. The ratio per judge is very serious. The ADR includes mainly three methods like Arbitration, negotiation and Conciliation. In west ADR is very popular way of dispute resolution. The benefits of ADR are numerous like saving time, costs, result oriented, speedy; maintain confidentiality and cooperative approach that maintain company’s relation and employer- employee relation too.


India is second most populating country in the world. In limited sources and limited machineries there is lack of efficiency,transparency and swiftness. And Indian judiciary is no exception to this presumption.

The Indian government said approximately 3.2 crore cases were pending in high courts and subordinate courts across the nation while 56,383 cases were pending in the Supreme Court.

It also said 74% of the total 3.2 crore cases were less than five years old. Similarly, 20,334 out of the 56,383 pending cases in the apex court were less than one year old.[1]

The current judges numbers are 14,576 as against the sanctioned strength of 17,641.

 So the ratio will be like that[2]


Pending cases in India Judges number Ratio per judges
3,12,80,000 14,576 2,145

 So we need an alternative method which solves disputes with more economical and efficient and speedily. Alternative Dispute Resolution (ADR) means methods of resolving a dispute which are alternatives for litigation in the courts. It includes mainly arbitration, mediation, conciliation, negotiation.

 What is ADR?

 In General meaning

It is a familiar method of dispute resolution with flexibility in procedures, rules and regulations.


Arbitration is a structure of alternative dispute resolution of a legal method for the resolution of disputes outside the courts, where the parties to a dispute appoints its one or more persons called as Arbiters,Arbitrators or Arbitral tribunaland such decision is known as The award

 Some important statistics: Use and effectiveness of Arbitration as a mechanism

Of ADR: American case study (source: National Arbitration Forum, Washington)

 78% of people find faster recovery in Arbitration

83% of people find Arbitration equally or more fair

59.3% of people find Arbitration less expensive

84.6% of people find ADR equally or more suitable for insurance/reinsurance sector[3]


ADR also include mediation a type of settlement negotiation prepared by an impartial and independent third party and non-binding resolution by experts. The examples of ADR are commercial disputes, consumer and employment matters. Arbitration can be either voluntary or compulsory and can be either binding or non-binding.


The parties to a dispute have the same opinion to make use of the services of a conciliator, who then meets with the parties individually in an effort to resolve their outstanding issues by way of improving interactions, interpreting issues, providing technical assistance, exploring probable solutions result in a negotiated settlement. 

Ithas no legal status, no power to seek evidence or take witnesses testimony, no decision, and no award. 


 In Mahabharata, when both parties were strong-minded to decide the clash in battle fields,
Lord Krishna made efforts to resolve the conflict.

 The notion of private arbitration can be found back to the Roman and Canon law. Arbitration as a dispute resolution mechanism was used in Common Law since the 14th Century.

Importance after the 19th Century, with the advent of trans-national trade and commerce.

 panchayatsystem works in the villages. The Indian system places a lot of importance on resolution of disputes by negotiation which is only conciliatory.

Arbitrating on property disputes and torts.Panchayat is a representative body of the members of a particular village which consists the elder most people or the most respected and experienced elder. One of the most important functions of these panchayats is the dispensing of justice.[4]

 The best example where conciliation played an integral role is of the highly politically sensitive case of the Beagle channel dispute over the ownership of certain islands in the entrance to the channel between Chile and Argentina. The mediator was the Vatican. The process was remarkable because it was flexible enough to accommodate the changing political environments in both countries and the mediator used a range of tools to great advantage. This process served to protect a fragile peace between the countries and ultimately allowed them to create an agreement that has lasted until this day[5].

 Indian perspective:

Features of Arbitration & Conciliation Act 1996

The object of Arbitration Act is to run quick redress to commercial dispute by private Arbitration.

Arbitration Agreement [section 7]- The base of an arbitration is the arbitration agreement between the parties. the provision of arbitration can be made at the time of entering the agreement itself, so that if any dispute arises in future, the dispute can be referred to arbitrator as per the agreement. Even refer a dispute to arbitration after the dispute has arisen. The agreement must be in writing and signed by both parties. It can be in form of exchange of letters, document, telex, telegram etc.

 Appointment of Arbitrator

[Section 11(3)] The parties can mutually appointing the arbitrator/s as per arbitration agreement. If parties fail to agree then each party will appoint one arbitrator and appointed two arbitrators will appoint the third arbitrator who will act as a presiding arbitrator.

 [Section 12(1)] An arbitrator is to be independent and impartial. If there are some situations due to which his independence or impartiality can be challenged, he must disclose the circumstances before his appointment.

Otherwise Appointment of Arbitrator can be challenged on grounds

(a)Circumstances shows that a justifiable doubts as to his independence or impartiality

(b)[Section 12(3)] He does not hold the qualifications agreed to by the parties.The challenge to appointment has to be decided by the arbitrator himself.

 Arbitral Proceedings

[Section 18] All Parties should be treated equally by the Arbitral Tribunal. Full opportunity shall be given to each party.

[Section 19(1)] The Code of Civil Procedure, 1908 or Indian Evidence Act, 1872 is not bounded to Arbitrational tribunal. The parties are free to agree on and decide the procedure to be followed by the Arbitral Tribunal.

 Procedure, Place and Language

[Section 19(3)] Unless parties agree on the procedure to be followed,  Arbitral Tribunal has full powers to decide the procedure.

[Section 19(4)] The Tribunal also has authorities to decide the acceptability, importance, materiality and weight of any evidence.

[Section 20] Place of arbitration will be decided by mutual agreement. if the parties failto agree, then will be decided by tribunal.

[Section 22] language to be used in arbitral proceedings can be decided bymutually. Otherwise, Arbitral Tribunal can decide.


The parties should Submit Statement of Claim, points of issue and relief or remedy sought and defense in respect of these particulars.

[Section 23] Such claim or defense can be amended any time. All relevant documents must be submitted.


Arbitral Tribunal can decide the mode of hearing. It will be oral hearing or on the basis of documents and other materials. but if one of the parties demands, the hearing shall be oral. [Section 24] Adequate advance notice of hearing should be given to both the parties.

 The award

The decision of tribunal is known as the award. And  it will be by majority.             

[Section 29] Such arbitral award shall be in writing and signed by the members of the tribunal.    

And also should be dated and place of tribunal. Copy of award should be given to each party. [section 31(6)] Tribunal can make interim award also. The award can be correct within appropriate time.


[Section 31(8)] The arbitration tribunal can decide the cost of proceeding and also share of each party. If the parties refuse to pay the costs, the Arbitral Tribunal may refuse to deliver its award.


What are the Benefits to Alternative Dispute Resolution?


In India, an average time for a case to be disposed is varies case to case. In civil cases it took 10 to 15 years averagely, some time even more. There were cases which took hundreds of years also. In ADR the proceeding in very flexible and informal, so it took very little time to resolved matters. And save a lot of time compare to court proceedings. So speedy proceeding is one on best feature of ADR.

 Money/ COST

One of the main reasons that parties wish to resolve their disputes outside of the courts is cost. Alternative dispute resolution usually costs much less than litigation. thelitigation’s fee and cost in court are very high due to its long and unending procedure.  And there is no balance between cost and benefit to parties

Whilethe ADR proceedings are time framed and speedy, the cost of ADR is comparativelow and efficient.the parties can save their money by choosing ADR.


In various situation parties themselves doubted could ever be settled or not? Yet, as with most disputes, even extremely charged, exceptionally complex disputes can be resolved through negotiations when both of the parties appreciate the risks of losing power over the end result.

 In Minnesota, many high-stakes cases of great complexity have been resolved through ADR, including securities fraud class actions, large business disputes, merger and acquisition claims, RICO claims, environmental disasters, and international transactions.[6]

 The success of ADR was acknowledged by the American Bar Association’s Standing Committee on Dispute Resolution:

 “The use of ADR to resolve all pending litigation following the L’Ambience Plaza construction collapse in Bridgeport, Connecticut within 20 months of the disaster, a process that involved five judicial bodies, more than 44 plaintiffs, approximately 40 potential defendants, several government agencies, and nearly 200 attorneys, represents a dazzling display of the potential impact of the sophisticated use of ADR in complex cases.”


— J. Michael Keating, Jr., ABA Dispute Resolution Kit (1989)[7]


Disputes resolved by courts are in public hearing. Even judgments pronounced are also public document. So it is publically accessible. While in ADRallproceedingswere conducted in private and stay strictly confidentiality.

Outstanding issues and undisclosed facts of proceeding are assured to be kept Confidentiality through an ADR mechanism.

 Company Relations

Company relationshipseven employer-employee relationships that might or else be vanished through the ill will that often characterizes legal actioncan be conserved.

 Global Jurisdiction

Global disputes can be solvedas per rules agreed in agreement, thereby avoiding the ambiguity inherent in being subjected to the jurisdiction of foreign courts.[8]

In judiciary the dates are scheduled by courts where in ADR dates can be scheduled by the parties and the panelist on agrees to meet. Compared to the court process, ADR is as fast as the parties want it to be.

the parties can control some of the process like selecting what method of ADR they want to opt, appointment the panelist for their proceeding, the span of the process.

In a mediations case, even the result. Different to the court proceeding, where the legal system and the judge control every aspect while ADR is much more flexible.

 Mutual Approach
ADR proceeds in a more informal, flexible way. This maintainsaoptimistic business relationship between the parties. With mediation, specifically, the result is cooperation between the parties.[9]


No doubt, the ADR is future of dispute resolution. The judiciary proceeding is strict, particular and time consuming. The judiciary has limitation of human resource,inordinance delay,costs, lack of infrastructure and technology, and old proceeding laws.

While on other hand speedy, cost efficient, time framed and various features. ADR is coming up as a alternative option for traditional judiciary proceeding.

[2],PTI Mar 6, 2010, 06.05pm IST