Alternative Dispute Resolution (ADR) in India is governed by a combination of statutory provisions, judicial pronouncements, and international conventions. The legal framework ensures that ADR mechanisms—Arbitration, Mediation, Conciliation, Negotiation, and Lok Adalats—are efficient, fair, and enforceable.
1. Constitutional Provisions on ADR
The Indian Constitution promotes ADR as part of its commitment to speedy justice and alternative dispute resolution mechanisms. The key constitutional provisions include:
Article 39A – Equal Justice & Free Legal Aid
- Ensures free legal aid and encourages ADR for resolving disputes, especially for weaker sections of society.
Article 14 – Right to Equality
- ADR mechanisms must ensure fairness and non-arbitrariness in resolving disputes.
Article 21 – Right to Life & Personal Liberty
- Includes access to justice, which ADR mechanisms help achieve by providing efficient dispute resolution.
Directive Principles of State Policy (DPSP) – Articles 38 & 43
- The state should promote social justice and settlement of disputes through ADR.
Judicial Recognition
- Afcons Infrastructure Ltd. v. Cherian Varkey Construction (2010): Supreme Court emphasized that courts must refer cases to ADR wherever possible.
2. Arbitration and Conciliation Act, 1996
The Arbitration and Conciliation Act, 1996 is the primary legislation governing arbitration and conciliation in India. It is based on the UNCITRAL Model Law on International Commercial Arbitration.
Key Provisions of the Act
| Sections | Provisions |
|---|---|
| Part I (Sections 1-43) | Governs domestic and international arbitration within India. |
| Section 7 | Defines arbitration agreement. |
| Section 8 | Courts must refer disputes to arbitration if an agreement exists. |
| Section 34 | Limited judicial intervention in arbitration awards. |
| Section 36 | Enforcement of arbitral awards as court decrees. |
| Part II (Sections 44-60) | Deals with enforcement of foreign awards under the New York Convention and Geneva Convention. |
| Part III (Sections 61-81) | Governs conciliation. |
2015 & 2019 Amendments
- 2015 Amendment: Limited judicial interference, fast-tracked arbitration, and established a time frame for awards.
- 2019 Amendment: Set up the Arbitration Council of India (ACI) to promote institutional arbitration.
Arbitration and Conciliation Act, 1996 (Bare Act)
3. Mediation Act, 2023
The Mediation Act, 2023 aims to institutionalize mediation in India and make it the preferred mode of dispute resolution.
Key Provisions
- Section 3: Defines mediation as a structured dispute resolution process.
- Section 7: Mediation agreements must be in writing.
- Section 14: Provides for mandatory pre-litigation mediation in civil disputes.
- Section 22: Confidentiality in mediation proceedings.
- Section 27: Mediation settlements have the same status as court decrees.
Judicial Recognition
- Salem Advocate Bar Association v. Union of India (2005): Supreme Court held that courts should encourage mediation under Section 89, CPC.
4. Legal Services Authorities Act, 1987 (Lok Adalats)
This Act establishes Lok Adalats (People’s Courts) for quick dispute resolution.
Key Provisions
- Section 19: Lok Adalats can settle civil, criminal (compoundable), and family disputes.
- Section 20: Cases can be referred to Lok Adalat by courts or parties.
- Section 21: Lok Adalat decisions are binding and final, with no appeal.
Case Law: State of Punjab v. Jalour Singh (2008)
- Supreme Court ruled that Lok Adalat awards are final and cannot be challenged.
Legal Services Authorities Act, 1987
5. Code of Civil Procedure (CPC), 1908 – Section 89
Key Features
- Courts must encourage ADR methods before trial.
- Recognizes arbitration, mediation, conciliation, and Lok Adalats.
Judicial Interpretation
- Afcons Infrastructure Ltd. v. Cherian Varkey Construction (2010): Section 89 should be interpreted liberally to promote ADR.
6. Consumer Protection Act, 2019
This Act promotes mediation for consumer disputes.
Key Provisions
- Section 37: Courts can refer disputes to mediation before formal proceedings.
- Section 79: Recognizes online dispute resolution (ODR) for consumer cases.
7. Indian Contract Act, 1872 – ADR Clauses in Contracts
- Section 28: Validates arbitration clauses in contracts.
- ADR clauses in commercial agreements ensure that disputes are resolved outside courts.
Case Law: Fuerst Day Lawson Ltd. v. Jindal Exports Ltd. (2001)
- Supreme Court held that parties must honor arbitration clauses in contracts.
8. International Conventions & ADR
India follows several international ADR treaties:
1. New York Convention, 1958
- Provides for recognition and enforcement of foreign arbitral awards.
- Implemented in Part II of the Arbitration Act, 1996.
2. Geneva Convention, 1927
- Governs enforcement of foreign awards in signatory countries.
3. UNCITRAL Model Law on International Commercial Arbitration
- Basis for India’s Arbitration & Conciliation Act, 1996.
9. Industry-Specific ADR Laws in India
| Sector | ADR Laws & Mechanisms |
|---|---|
| Banking & Finance | RBI’s Ombudsman Scheme for Banking |
| Telecom | TRAI’s Telecom Dispute Settlement & Appellate Tribunal (TDSAT) |
| Insurance | IRDAI’s Insurance Ombudsman |
| Construction & Infrastructure | FIDIC Arbitration Clauses |
10. Challenges in India’s ADR Legal Framework
| Challenges | Issues |
|---|---|
| Judicial Interference | Courts still intervene in arbitration, delaying proceedings. |
| Lack of Awareness | Many businesses and individuals are unaware of ADR mechanisms. |
| High Cost of Institutional Arbitration | Foreign arbitration (SIAC, ICC) is costly. |
| Limited Mediation Culture | Mediation is underutilized due to lack of trained mediators. |
Case Law: ONGC v. Saw Pipes (2003)
- Supreme Court held that arbitration awards can be set aside if they violate Indian laws, increasing judicial intervention.
11. Conclusion
India has a robust legal framework for ADR, but challenges remain in implementation and awareness. The Arbitration and Conciliation Act, 1996, the Mediation Act, 2023, and Legal Services Authorities Act, 1987 have strengthened ADR mechanisms. Future reforms should focus on institutional arbitration, training mediators, and promoting online dispute resolution (ODR).
