Types of Alternative Dispute Resolution Mechanisms

Four mechanisms are named in Section 89 of the Code of Civil Procedure, 1908: arbitration, conciliation, judicial settlement including settlement through a Lok Adalat, and mediation. Around these statutory four there is a wider family of processes, beginning with negotiation, which requires no neutral at all, and extending to hybrids such as med-arb, to evaluative processes such as early neutral evaluation, to institutional forms such as the ombudsman, and to online dispute resolution. The processes are best understood by asking two questions of each: who decides, and is the outcome binding.

1. Classification

The whole field can be ordered along a single axis running from processes in which the parties retain complete control of the outcome to processes in which a third person determines it.

• Consensual processes, in which the neutral has no power to decide and the dispute ends only if the parties agree: negotiation, mediation, conciliation and the ordinary Lok Adalat.
• Adjudicatory processes, in which the neutral determines the dispute and the outcome binds whether or not the losing party accepts it: arbitration, the Permanent Lok Adalat exercising its power to decide on merits, and expert determination where the parties have agreed to be bound.
• Hybrid processes, which combine the two in sequence: med-arb, arb-med-arb, and the settlement of a dispute during arbitration resulting in an award on agreed terms under Section 30 of the Arbitration and Conciliation Act, 1996.
• Evaluative and advisory processes, in which a neutral gives an opinion that the parties use as a basis for negotiation without being bound by it: early neutral evaluation, the mini-trial and non-binding expert opinion.

2. Negotiation

Negotiation is the resolution of a dispute by direct communication between the parties or their representatives, without a neutral. It is not regulated by any statute, it is available at every stage including after a suit has been filed, and the overwhelming majority of disputes are resolved by it without ever being described as alternative dispute resolution. Its outcome takes effect as a contract; in a pending suit it may be recorded as a compromise under Order XXIII Rule 3 of the Code of Civil Procedure, 1908, whereupon the court passes a decree in terms of the compromise.

Two styles of negotiation are distinguished in the literature. Positional or distributive bargaining treats the dispute as a fixed quantity to be divided, and each party moves from an opening demand towards a compromise. Interest-based or principled negotiation, associated with the Harvard Negotiation Project, directs attention to the interests underlying the stated positions, to the generation of options for mutual gain and to the use of objective criteria. A negotiator's strength in either style depends on the best alternative to a negotiated agreement, the course open to him if the negotiation fails, which sets the point below which settlement is irrational.

3. Mediation

Mediation is a process in which a neutral third person assists the parties to arrive at a settlement without any authority to impose an outcome. Until 2023 it was practised under Section 89 of the Code, under High Court rules framed after the Salem Advocate Bar Association litigation, and under scattered provisions in other statutes. It is now governed by the Mediation Act, 2023, the first Indian statute devoted to the subject.

The definition is important for two reasons. It states the defining limitation on the mediator's authority, and it absorbs conciliation into mediation, ending the distinction which Indian law had maintained since 1996.

3.1 The scheme of the Act

1. Pre-litigation mediation under Section 5 is voluntary. Parties may, whether or not there is a mediation agreement, refer a civil or commercial dispute to mediation before filing a suit. Compulsion exists only under Section 12A of the Commercial Courts Act, 2015 for commercial disputes of a specified value that do not contemplate urgent interim relief.
2. Disputes not fit for mediation are listed in the First Schedule and excluded by Section 6. They include disputes involving allegations of serious and specific fraud, forgery, fabrication of documents, impersonation or coercion; claims against minors and persons of unsound mind; proceedings involving prosecution for criminal offences; disputes before specified regulators and tribunals; and disputes relating to the levy or collection of taxes.
3. Reference by a court or tribunal may be made at any stage under Section 7, and the court may pass interim orders to protect the parties while the mediation proceeds.
4. Conduct of the mediation is governed by Chapters III and IV. The mediator is appointed by agreement or by a mediation service provider; he must disclose any circumstance likely to give rise to justifiable doubts as to his independence; and he is required to assist the parties in an impartial manner without imposing terms.
5. Time limit. Section 18 requires the mediation to be completed within 120 days from the date fixed for the first appearance before the mediator, extendable by a further 60 days with the consent of the parties.
6. The mediated settlement agreement under Section 19 must be in writing, signed by the parties and authenticated by the mediator. Where the mediation was not court-referred, it may be registered with the legal services authority within 180 days.
7. Enforcement and challenge. Section 27 makes the agreement enforceable in the same manner as a judgment or decree of a court. Section 28 confines a challenge to fraud, corruption, impersonation and mediation conducted in a dispute not fit for mediation, and prescribes a limitation of ninety days.
8. Confidentiality and limitation. Sections 22 and 23 protect mediation communications and bar their use as evidence, subject to stated exceptions, and Section 24 excludes the period spent in mediation in computing limitation.
9. Online and community mediation. Section 30 permits mediation to be conducted online at any stage with the written consent of the parties. Chapter X provides for community mediation, by a panel of three mediators, of disputes likely to affect the peace and harmony of the residents of an area; a settlement under that chapter is not enforceable as a decree.
10. The Mediation Council of India is provided for by Chapter VIII, and is charged with the registration and grading of mediators and the recognition of mediation institutes and service providers. It was established by notification dated 27 August 2026 with its head office at Delhi.

3.2 Styles of mediation

Facilitative mediation confines the mediator to managing the process, clarifying issues and carrying offers between the parties, without expressing any view on the merits. Evaluative mediation permits the mediator to indicate his assessment of the strength of the respective cases, which is common in commercial matters where the parties want a reality check. Transformative mediation aims at the recognition and empowerment of the parties rather than at settlement as such, and is used in community and family disputes. Indian practice is predominantly facilitative, and the statutory description of the mediator's function in the Mediation Act, 2023 reflects that model.

4. Conciliation

Conciliation, as it stood in Indian law from 1996, was governed by Part III, Sections 61 to 81, of the Arbitration and Conciliation Act, 1996, drawn from the UNCITRAL Conciliation Rules, 1980. Its principal features were that the process began with a written invitation and the other party's acceptance; that the conciliator was not bound by the Code of Civil Procedure, 1908 or by the law of evidence; that he might make proposals for settlement at any stage, which distinguished him from a facilitative mediator; that the settlement agreement under Section 73 had, by Section 74 read with Section 30, the same status and effect as an arbitral award on agreed terms; and that the conciliator was barred from acting as arbitrator or as a witness in the same dispute.

By Section 61 of the Mediation Act, 2023 read with its Sixth Schedule, Sections 61 to 81 of the Arbitration and Conciliation Act, 1996 were substituted by a new Section 61, which provides that a reference to conciliation in any other enactment is to be construed as a reference to mediation under the Mediation Act, 2023, with a saving for conciliation proceedings already commenced. The older learning on conciliation therefore retains its importance for understanding the sectoral statutes that still use the word, and for proceedings begun before the change, but the process itself is now conducted as mediation.

5. Arbitration

Arbitration is the reference of a dispute, by agreement, to one or more private persons who decide it by an award which binds the parties and is enforceable as a decree. It is the only consensual process that produces an adjudication, and it is governed by the Arbitration and Conciliation Act, 1996. An arbitration agreement must be in writing under Section 7; where a party to such an agreement brings an action in a court, Section 8 requires the court to refer the parties to arbitration on the application of the other party.

5.1 Kinds of arbitration

• Ad hoc arbitration is conducted by a tribunal constituted by the parties themselves, with the procedure and fees settled between them; this remains the dominant form in India, particularly in government and public sector contracts.
• Institutional arbitration is administered by an institution under its own rules, which supply the machinery for appointment, fees, timetable and scrutiny of the award. Indian institutions include the India International Arbitration Centre, established by statute in 2019 and declared an institution of national importance, the Mumbai Centre for International Arbitration, the Delhi International Arbitration Centre and the Indian Council of Arbitration.
• Domestic and international commercial arbitration. The latter is defined by Section 2(1)(f) by reference to a party who is a national of, or habitually resident in, a country other than India, or a body corporate incorporated abroad, or an association whose central management is exercised abroad, or a foreign government.
• Fast track arbitration under Section 29B, which the parties may adopt at any stage; the award must be made within six months and the tribunal decides on written pleadings and documents unless the parties request an oral hearing.
• Statutory arbitration, where a special statute itself directs the reference of a class of disputes to arbitration, as Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 does on the failure of the reference to the Facilitation Council.

5.2 The statutory skeleton

The essential provisions of Part I run as follows. Section 5 limits judicial intervention to the occasions the Part itself provides. Section 9 permits a party to apply to the court for interim measures before or during the arbitration or after the award but before enforcement. Section 11 governs appointment by the court or by an arbitral institution designated for the purpose. Section 12, with the Fifth and Seventh Schedules, governs disclosure, challenge and ineligibility. Section 16 embodies the principle of competence-competence, under which the tribunal rules on its own jurisdiction and on objections to the existence or validity of the agreement. Section 17 gives the tribunal power to order interim measures, enforceable as orders of the court. Section 29A fixes the time for making the award. Section 31A governs costs. Section 34 states the grounds for setting aside, Section 36 the mode of enforcement and Section 37 the appeals that lie. Part II, Chapters I and II, govern the enforcement of foreign awards under the New York Convention and the Geneva Convention respectively.

6. Lok Adalat and Permanent Lok Adalat

The Lok Adalat is the distinctively Indian contribution to this field. It is organised under Chapter VI of the Legal Services Authorities Act, 1987 by the legal services authorities at the national, State, district and taluk levels, and it is composed under Section 19(2) of a serving or retired judicial officer together with other persons prescribed by rules, ordinarily a lawyer and a social worker. It takes up cases pending before a court that are referred to it, and pre-litigation matters brought to it directly by the parties.

The jurisdiction of an ordinary Lok Adalat is conciliatory. It has no power to decide a dispute; if the parties do not agree, the case is returned to the referring court under Section 20(5). Its subject matter under Section 19(5) extends to any case pending before a court and to any matter falling within the jurisdiction of a court but not yet brought before it, excluding offences that are not compoundable.

Chapter VI-A, inserted in 2002, creates the Permanent Lok Adalat for disputes relating to public utility services. Section 22A defines those services to include transport, postal, telegraph and telephone services, the supply of power, light and water, systems of public conservancy and sanitation, services in a hospital or dispensary, and insurance services, together with any other service notified by the appropriate Government. Section 22B provides for the establishment of the forum, and Section 22C for its procedure: a party may approach it before the dispute is brought to a court, after which the jurisdiction of the court is barred; the forum first attempts conciliation, and if the parties fail to reach agreement, it may decide the dispute on merits, provided the dispute does not relate to an offence which is not compoundable. The pecuniary limit fixed by the proviso to Section 22C(1) may be enhanced by the Central Government by notification, and it has been raised from ten lakh rupees to one crore rupees. An award of the Permanent Lok Adalat is also final under Section 22E.

The instrument produced by each mechanism and the provision under which it is enforced

7. Hybrid and Other Mechanisms

• Med-arb refers the dispute first to mediation and, on failure, to arbitration. Its convenience lies in the single appointment; its difficulty is that a neutral who has heard the parties in confidence during mediation may be disqualified from deciding, and the practice of appointing different persons at each stage, or of using the arb-med-arb protocol adopted by some institutions, answers the objection.
• Settlement during arbitration. Section 30 of the Arbitration and Conciliation Act, 1996 permits the tribunal, with the agreement of the parties, to use mediation or other procedures to encourage settlement, and where the parties settle, to record it as an award on agreed terms having the same status and effect as any other award.
• Early neutral evaluation obtains a frank non-binding assessment of the merits from an experienced neutral at an early stage, which the parties then use as a basis for negotiation.
• Mini-trial is a structured presentation of each side's case, usually to a panel consisting of senior executives of both parties and a neutral adviser, after which the executives negotiate with the benefit of having heard the opposing case stated at its highest.
• Expert determination refers a defined technical question, such as valuation or the quality of goods, to an expert whose determination binds the parties by contract. It is not arbitration, and the expert's decision is not an award.
• Dispute resolution boards are standing panels appointed at the commencement of a long construction or infrastructure contract, which visit the site, follow the progress of the work and give recommendations or decisions on disputes as they arise, before positions harden.
• Ombudsman schemes provide a free and informal mechanism for consumer complaints in regulated sectors. The Reserve Bank of India administers an integrated scheme for banks, non-banking financial companies and payment system participants; separate schemes exist for insurance and for the electricity sector, where Section 42(5) of the Electricity Act, 2003 provides for consumer grievance redressal forums and an Ombudsman.
• Online dispute resolution conducts negotiation, mediation or arbitration through technology, and is best suited to high-volume, low-value claims. Section 30 of the Mediation Act, 2023 recognises online mediation, and the policy framework was set out in the report of the committee constituted by NITI Aayog on the design of online dispute resolution for India.

8. Statutory Mechanisms in Particular Fields

Several statutes create their own machinery for settlement, and questions on this subject frequently turn on them rather than on the general law.

9. Related Topics and Provisions