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Arbitration and Conciliation Act, 1996.


ADR refers to an array of method for resolving legal disputes with out resorting to court system. ADR plays a pivotal role in the American legal process, but it is often overshadowed by Hollywood’s glamorous portrayal of jury trials. One might imagine that all legal disputes are battled out in large courtrooms filled with jurors and spectators. In reality, about five percent of civil cases ever make it to trial. In some states, that rate has reached as low as 0.2 percent.The same is true of criminal cases, with only 10 percent reaching trial. The other 90 to 99.8 percent of legal disputes are resolved through some form of ADR. ADR methods have gained substantial traction over the past 30 years.

They are increasingly popular with clients, attorneys, and judges alike. There are four primary reasons for their rise in popularity. First, ADR increases court efficiency.The general public has never been more litigious. Court dockets are bursting at their seams, and there are only so many judges available to handle the ever-increasing caseload. As a result, many judges now issue court orders requiring the parties to engage in some form of ADR before allowing a case to proceed to trial. ADR is generally less risky than trial. At trial, a judge or a jury decides the case, which may lead to unintended outcomes. Jury trials, in particular, are known to be a bit of a “coin toss”—sometimes literally.In Kentucky, a man was convicted of murder when the jury flipped a coin after reaching a stalemate in deliberations.Of course, when the judge discovered the true nature of the conviction, he ordered a new trial. Still, the point is well taken—trial offers no guarantee of a fair or favorable decision. Most forms of ADR reduce the amount of risk the parties undertake by leaving the outcome entirely in their hands. Finally, ADR proceedings are private.Court records and proceedings are open to the public, and by virtue of its adversarial nature, litigation tends to flush out cherished secrets or embarrassing facts and allegations. Unfortunately for the parties, the media salivate over such “news worthy” information, which usually ends up making headlines. Parties engage in ADR in order to keep their reputations or trade secrets intact while they work toward a resolution. In ADR There are 3 forms of methods typically take one of three forms :-

1 Direct Negotiate , 2. Mediation, 3 Arbitration.


Alternative dispute resolution (ADR), or external dispute resolution (EDR), typically denotes a wide range of dispute resolution processes and techniques that act as a means for disagreeing parties to come to an agreement short of litigation: a collective term for the ways that parties can settle disputes, with the help of a third party However, ADR is also increasingly being adopted as a tool to help settle disputes alongside the court system itself. The rising popularity of ADR can be explained by the increasing caseload of traditional courts, the perception that ADR imposes fewer costs than litigation, a preference for confidentiality, and the desire of some parties to have greater control over the selection of the individual or individuals who will decide their dispute.[Some of the senior judiciary in certain jurisdictions (of which England and Wales is one) are strongly in favour of this (ADR) use of mediation to settle disputes. Since the 1990s many American courts have also increasingly advocated for the use of ADR to settle disputes.However, it is not clear as to whether litigants can properly identify and then use the ADR programmes available to them, thereby potentially limiting their effectiveness.


What is Arbitration ?

Arbitration, a form of alternative dispute resolution (ADR), is a way to resolve disputes outside the judiciary courts. The dispute will be decided by one or more persons (the 'arbitrators', 'arbiters' or 'arbitral tribunal'), which renders the 'arbitration award'. An arbitration decision or award is legally binding on both sides and enforceable in the courts, unless all parties stipulate that the arbitration process and decision are non-binding. Arbitration is often used for the resolution of commercial disputes, particularly in the context of international commercial transactions. Arbitration can be either voluntary or mandatory, mandatory arbitration can only come from a statute or from a contract that one party imposes on the other, in which the parties agree to hold all existing or future disputes to arbitration, without necessarily knowing, specifically, what disputes will ever occur.

Types of arbitration proceedings

  • Domestic arbitration:

The domestic arbitration is a type of arbitration where the subject matter of an agreement or a contract is governed wholly by the Indian Law or when the cause of action of a dispute wholly arises in India or when the parties opt for an Indian jurisdiction.

In a domestic arbitration the whole procedure is governed by the Indian law.

In domestic arbitration:

  • The parties should not be from any nationality or a resident in any country other than India;

  • A body corporate should not be incorporated in any country other than India;

  • The Government should not be of a foreign country;

In International arbitration:

The international arbitration may result in the application of different set of rules. In this type of arbitration, the law governed for the resolution of disputes can either be Indian law or a foreign law. The arbitration proceedings can take place in India or outside India.

Thus arbitration becomes international where at least one of the parties is a resident of another country other than India and the subject matter of the dispute is abroad. Depending on the terms of contract, the law applicable for resolving the dispute may be Indian Law or Foreign law.

  • Ad hoc arbitration:

Unlike in institutional arbitration, ad hoc arbitration is not administered by any institute. In this type of arbitration, the parties are at liberty to decide the procedure that has to be followed during the resolution of a dispute. The parties are free to decide an arbitrator and oher procedures like timetable for filling the documents, applicable rules etc. If the parties are not able to decide, then the arbitral tribunal will decide the procedure and other rules in a way it thinks fit.

However, the parties are free to adopt certain rules of an institution without completely following the institutional arbitration. Sometimes, an ad hoc arbitration can be turned into an institutional arbitration at some point if the parties feel necessary and they may by agreement make such an appointment.

  • Institutional arbitration

In institutional arbitration, parties take the help of an institute for deciding the procedures of arbitration. Such institution takes care of all the procedures like appointing an arbitrator, timetable for filing the documents etc. institutional arbitration lessens the burden of the parties by giving administrative assistance. This timely assistance helps move the arbitration process smoothly. The institutions will charge the parties a certain amount of money as fee for assisting them through the arbitration process.

Some of the prominent institutions in India are:

  • Indian Institute of Arbitration and Mediation, Delhi

  • Indian institute of Technical arbitrators, Chennai

  • Mumbai Center for International Arbitration

  • Bangalore International Mediation, Arbitration and Conciliation Centre etc.

Process of arbitration in india

The arbitration arises due to a dispute between the two parties. So, to start an arbitration procedure, the contract or the agreement that is executed between the parties must have an arbitration clause. The arbitration procedure will be carried on in the following manner:

  • Arbitration clause:

A contract or agreement that was entered by the parties must contain an arbitration clause in order to resolve the disputes through arbitration. An arbitration clause can be a separate agreement or an agreement in an agreement. That means the arbitration clause may be in the form of a separate agreement or in a contract. An arbitration clause says that when a dispute arises between the parties, it must be resolved through the process of arbitration. The parties shall also mention the seat and venue of the proceedings in the arbitration clause itself.

  • Notice for commencement of arbitration:

The provision for notice for commencement of arbitration was given in section 21 of the 1996 Act. When the dispute arises and the party has opted for arbitration, the aggrieved party will send a notice to the other party for invoking the arbitration proceedings. It contains the names of the parties and their representatives, a brief description of the dispute, a statement of relief sought etc.

  • Appointment of arbitrator:

After the respondent receives the notice from the applicant about commencement of arbitration, both the parties will appoint an arbitrator in a manner that is described in the arbitration clause. This provision is given under section 11 of the 1996 Act.

  • Statement of claim and defence:

This provision is given under section 23 of the arbitration and conciliation Act, 1996. After the commencement of arbitration and appointment of arbitrator by the parties, the claimant drafts a statement of claims which contains all the documents which they think are relevant to the case and also all the evidences proving their statements.

The respondent may also submit a counter claim or a statement of defense in support of his case which shall be examined before the arbitral tribunal.

  • Hearings and written proceedings:

The arbitral tribunal will hear both the parties and examine the evidences. The Tribunal will decide whether the documents or the evidences produced are valid or not and proceed the case further. This provision is given under section 24 of the 1996 Act.

  • Arbitral award:

After hearing the parties and examining all the issues a final award will be given by the arbitrator. This award shall be made in writing and shall be signed by all the members of the Tribunal. This award shall be final and binding on both the parties. However, an appeal cannot be filed before the Arbitral tribunal but the parties can appeal against the arbitral award before the court. Form and contents of the arbitral award are described under section 31 of the Act.That I explain in brief which is given below


Arbitration has developed significantly in India and also the justice is served to the people without any delay. Nowadays most of the people are including the arbitration clause in their contracts or agreements to resolve their disputes through arbitration without court’s involvement. However, there are some decisions and provisions which are not clearly interpreted. Hopefully, these would be identified and addressed by the Supreme Court and a clear interpretation and decisions are given in the near future.


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Nancy Maggo

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