Understanding the Types of Alternative Dispute Resolution (ADR) in India

Narmadha Ragunath
Mar 29
3 min read

Introduction

Alternative Dispute Resolution (ADR) is an umbrella term covering different mechanisms that allow parties to resolve disputes outside the courtroom. Each type of ADR has its own process, scope, and advantages. In India, arbitration, mediation, conciliation, negotiation, and Lok Adalats form the core pillars of ADR. This article introduces each of these processes, supported by statutory references and case law.

1. Arbitration

Arbitration is a process where parties submit their dispute to a neutral third party — the arbitrator, whose decision (known as the arbitral award) is binding.

Law: Governed by the Arbitration and Conciliation Act, 1996, based on the UNCITRAL Model Law.
Key Features: Party autonomy, binding award, limited judicial intervention.
Example: If two companies include an arbitration clause in their contract, any dispute arising will be referred to arbitration instead of court.
Case Law: In Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd. (2011) 5 SCC 532, the Supreme Court laid down the principle of arbitrability, clarifying which disputes can be referred to arbitration.

2. Mediation

Mediation is a voluntary process where a neutral mediator helps parties communicate, identify issues, and reach a mutually acceptable settlement. Unlike arbitration, the mediator does not impose a decision.

Law: Recently given statutory recognition under the Mediation Act, 2023.
Key Features: Voluntary, confidential, and non-binding until a settlement agreement is reached.
Example: A family dispute over inheritance may be referred to mediation to preserve relationships.
Case Law: In Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (2010) 8 SCC 24, the Supreme Court emphasised the importance of mediation in civil disputes.

3. Conciliation

Conciliation is similar to mediation but with a slightly more formal structure. The conciliator can propose terms of settlement, unlike a mediator who only facilitates discussion.

Law: Part III of the Arbitration and Conciliation Act, 1996.
Key Features: Flexible, voluntary, and non-binding unless parties sign a settlement agreement (which then has the status of an arbitral award under Section 74).
Example: Two business partners in conflict may use conciliation to resolve their issues without escalating to arbitration.
Case Law: In Haresh Dayaram Thakur v. State of Maharashtra (2000) 6 SCC 179, the Supreme Court highlighted the importance of conciliation as a non-adjudicatory ADR mechanism.

4. Negotiation

Negotiation is the most basic form of ADR, where the parties themselves attempt to resolve disputes without third-party intervention.

Law: Not governed by any statute in India, but widely recognised as the starting point of ADR.
Key Features: Informal, voluntary, controlled entirely by the parties.
Example: A landlord and tenant discussing a revised rent agreement to avoid litigation.

5. Lok Adalat

Lok Adalats are a uniquely Indian contribution to ADR, designed to provide quick and affordable justice.

Law: Governed by the Legal Services Authorities Act, 1987.
Key Features: Informal, voluntary, settlement-driven, and decisions (awards) are binding on parties and enforceable as a decree of court.
Example: Lok Adalats often resolve motor accident compensation claims, matrimonial disputes, and cheque bounce cases.
Case Law: In State of Punjab v. Jalour Singh (2008) 2 SCC 660, the Supreme Court clarified that Lok Adalats cannot adjudicate disputes on merits; they can only pass awards when parties agree to a settlement.

Conclusion

ADR is not a one-size-fits-all mechanism. While arbitration provides a binding outcome suitable for commercial disputes, mediation and conciliation emphasise dialogue and consensus, making them ideal for personal or relational conflicts. Negotiation allows parties to retain control, whereas Lok Adalats ensure access to justice for marginalised communities. Together, these ADR methods represent India’s attempt to create a more inclusive, efficient, and accessible dispute resolution framework.