This article has been written by Vibhuti Thakur, pursuing Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution and has been edited by Oishika Banerji (Team Lawsikho). 

It has been published by Rachit Garg.


Considered to be a fast track system of dispensing justice, alternative dispute resolution (ADR) is one of the primary alternatives of the age-old court system. With the prime aim of reducing the excessive burden on the Indian judiciary, the Arbitration and Conciliation Act, 1996 was introduced. This introduction made rooms for arbitration and conciliation to be viewed as the prime ways of dispute resolution. Alongside these two, negotiation and mediation, although not governed by legislations, are considered to be methods of ADR. The ADR mechanism can be considered to be the consequence of the desire to settle disputes peacefully in a shorter time with more efficiency and it is expressly provided in the Directive Principles of States Policy under the Indian Constitution, that India being a welfare state aims at providing speedy and effective justice to all its citizens. One thing that needs to be aware of amidst this effective alternative of the court system, is the challenges that surround this mechanism. With every new thing introduced, comes a series of detriments that remain unwelcomed but does come along. The same has been discussed at large in this present article. 

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Origin and history of ADR 

Although a system similar to ADR existed in society since ancient times. In almost all ancient societies such a system was there for dispute resolution. Examples can be seen in many mythological stories. One such prevalent example in Indian society is the Panchayat system which is redeveloped into Lok Adalat in the present day.

Meaning and purpose of ADR

Indian system recognises 5 types of methods of ADR:

  1. Arbitration: It involves a voluntary and flexible method where parties choose the arbitrator (s) of their own choice. The award of arbitration is binding.
  2. Negotiation: This technique requires parties to be ready and cooperative in settling the dispute in the presence of an unbiased third party called negotiator.
  3. Conciliation: It is a method where parties try to improve and reconcile their relation with each other in the presence of a conciliator who helps the parties in the process.
  4. Mediation: It is an informal way of resolving disputes where a neutral facilitator called mediator helps parties to come to a mutual agreement as to settlement of disputes.
  5. Lok Adalat: It is one of the most effective methods of ADR as this involves voluntary actions of parties for solving disputes. It is very cost effective and is usually conducted on holidays so that it’s very convenient for parties to resolve disputes. Its primary purpose is peaceful and amicable resolution of disputes. Apart from that it is a speedier procedure and it saves money and anxiety cost of parties.

Why ADR is better than litigation

  1. Litigation involves a huge sum of money from court fee to costs and advocate’s fees. Justice is expensive in the Indian judicial system. Whereas the ADR method is cost effective.
  2. Litigation takes decades of time for settlement due to huge pendency of cases and large judges to population ratio. While ADR method resolves disputes in a very short span of time.
  3. In litigation the final decision of the Court is imposed on both parties. One party always feels at loss. But in ADR due to mutual agreement both parties feel satisfied with the final award and the relationship between the parties does not become resentful.
  4. ADR is less technical and procedural as compared to the litigation process. ADR saves the exertion of parties which happens in litigation.

Major challenges in ADR mechanism in India

Even after so many benefits, the ADR method is facing many challenges in its development in India. Few challenges are summed up below:

Circumstantial factors

There are certain factors which practically block the growth of ADR in India.

  1. Lack of government support: India being a developing nation has a lot of uneven growth going on. Some areas are more developed than others and ADR is one such area which has got limited support from the government.
  2. Lack of infrastructure and credible arbitral institutions: Even after 27 years of passing of Arbitration and Conciliation Act, 1996 there are not enough ADR centres in India. Main reason is the lack of funding. Small cities and towns are devoid of such methods of dispute settlement. In order to go for ADR parties will have to travel from their place to the cities where such facilities are available. ADR was meant to save the parties from anxiety about the cost of parties but lack of infrastructure defeats the purpose. This is one of the greatest hindrances in the growth of ADR in India. 

Legal factors

  1. Court’s check on arbitral proceedings: Courts in India very often interfere in Arbitral and ADR proceedings. Although Courts do that to ensure proper justice to the parties, it also hinders the autonomy of ADR mechanism and renders ADR less effective. One of the benefits of ADR was that parties are free to choose their procedure and conduct but due to over interference of courts this benefit is hampered.
  2. Execution proceedings: After the award is passed, the parties again have to approach the Courts for execution purpose. In the ADR mechanism there is no other method for execution. The parties are now again in the same litigation process which was meant to be bypassed by ADR.
  3. Lack of professionally skilled lawyers: In India there are very few skilled arbitrators,negotiators and mediators because of the generalised theoretical system of education. There is a lack of skill development and awareness among the students and lawyers because of non availability of proper institutions for such skill development. A large number of cases fail in ADR settlement due to unskilled professionals in the field.
  4. Setting aside of award and appeal: Courts can set aside the award of arbitration on certain grounds and after that the dispute will be decided by the courts itself. It causes more complications and delay in the adversarial process. Moreover, there is a very narrow scope for appeal after the award from the ADR process. The parties have very few remedies.


  1. Lack of awareness: The larger strata of our society live in poor conditions where for them getting a good income is their primary focus. In such conditions lack of awareness about such mechanisms is expected. The lack of legal education in society is one of the greatest hindrances in the growth of ADR in India.
  2. Thought process of parties:  Since the Arbitration and Conciliation Act,1996 has passed in 1996 and Courts have only recently focused on promoting the ADR mechanism, it has not become a very popular method among the Indian society as of that. Moreover, Indian society has more faith in the conventional judicial system as compared to the newly developed system of dispute resolution. It is good to cherish the judicial system but accepting the new change is equally important. There are many instances in today’s time when the courts themselves refer parties to pursue arbitration instead of the lengthy court process. 
  3. Presence of influential party: There are chances of coercion in cases where one party is more influential than the other. This is one of the major drawbacks of the ADR mechanism. If the weaker party is negatively influenced by the other party then it will be a mockery of the justice system and it will render the ADR mechanism infructuous.
  4. Inability to settle: Despite all the efforts of negotiator/mediator/arbitrator if the parties are unwilling to resolve the dispute by mutual agreement then the ADR mechanism has failed and the parties will have to return to the adversarial system again after a loss of time they gave in the ADR process. It will cause the dispute settlement to further delay. There is no certainty as to the final award of the ADR. It all depends on the will and conduct of parties. Both parties have to come to an agreement in every step of the proceeding e.g., choosing arbitrator or the law by which they will be governed. If the parties don’t agree then the matter will go to Court again.

Other factors

  1. Increasing cost: Nowadays due to lack of skilled professionals in the field of ADR a lot of retired judges and senior lawyers are taking up work as arbitrators, negotiators or mediators and charging huge amounts of fees. This makes the ADR system expensive and inapproachable to financially weaker sections of the society.
  2. Inapplicability in criminal cases: All the cases are not suitable for the ADR process. Heinous crimes and serious cases of fraud and some issues of national and societal importance are not suitable cases of ADR mechanism. On one hand it is a positive thing that serious issues should not merely be resolved as a dispute but it is a drawback of ADR that in such cases this system is ineffective.

Solutions to the hindrances in growth of ADR

  1. Minimal court intervention: Courts in India need to limit their interference in the ADR process to a reasonable level so that the process of ADR can be more effective and at the same time the interest of justice is also preserved.
  2. Building infrastructure: There is a huge need of building ADR tribunals in every district of the states in order to make it more accessible to every citizen of India.
  3. Creating awareness in society: Legal education must be a part of school curriculum in order to make all the citizens aware of their rights and remedies to their legal issues.
  4. Regulation of fee for ADR: In order to make the process of ADR accessible and affordable to each and every sphere of society there must be a regulation of fee of arbitrators,negotiators and conciliators. 
  5. Proper training programmes for legal professionals: There must be proper training of legal professionals who wish to work in providing ADR solutions to the parties so that this method can be fructuous.


In the modern age of globalisation and technology it is the need of the hour to find better ways of dispute resolutions. Although the ADR system is comparatively new, it has a great role to play in the future judicial system. Developed countries already prefer such methods for settlement of disputes because time is of essence in the modern era. Our society and Government must also understand this need and address the challenges and shortcomings of ADR as soon as possible in a positive and more effective way.



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