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ADR is a way of resolving disputes amicably without the involvement of court procedures. In India, the three major mechanisms are Arbitration, Mediation and Conciliation. Arbitration is when the dispute between the parties is presided over by an Arbitrator(s) as per the agreement between the parties and proceedings are conducted as per due process of law and the award is binding and enforceable in the court of law. Mediation is process where a third party assists the parties to the dispute to resolve it amicably. The mediator merely acts as a facilitator for negotiations and doesn’t impose or gives any decision. Conciliation is a less formal form of arbitration. It is a non-binding process of resolving the dispute between the parties wherein the Conciliator meets the parties separately to assist the resolution process. There is no requirement of agreement between the parties foe initiating conciliation. The parties resort to this process as per their free will. Some other forms of ADR includes Negotiations and Lok Adalat.
The Arbitration proceeding in India is governed by the Arbitration and Conciliation Act, 1966. As per the provision of the Act, the arbitration proceeding in respect of a particular dispute is initiated by a party issuing a notice in writing to the opposite party about its intention to refer the dispute to arbitration. The proceeding is deemed to be commenced on the date on which a request for the dispute to be referred to arbitration is received by the Respondent.
All disputes of civil nature which may involve matters relating to private rights, property, monies, damages, breach of contract, specific performance etc. can be referred to Arbitration. Disputes which can be decided by a civil court can be referred to arbitration. There are certain areas of disputes which are not referred to arbitration such as criminal matters, matrimonial disputes, custody matters, insolvency proceedings, etc. Generally, disputes involving morality, public policy and likewise are not subject matters of Arbitration Proceedings.
An arbitration agreement can be separately executed between parties or an arbitration clause is to be incorporated in the agreement so executed between parties. An arbitration agreement/clause must show an intention to refer the dispute to arbitration. It must define the scope and subject matter of reference. The agreement/clause may or may not contain the name of Arbitrator(s). It must then provide for a mode of appointment and number of arbitrator(s). It must also mention the venue of arbitration and the law/statute which would be applicable to the arbitration proceeding.
Arbitration is a way to amicably settle a dispute between the parties. Even though the matter is presided over an arbitrator, due process of law is followed and the award of the arbitration is final and legally binding upon the parties and is enforceable in the court of law. Arbitration proceedings are more confidential in nature than regular court proceedings. Though arbitration proceeding is less time consuming, it is an expensive affair. Often the parties do not agree upon a single arbitrator and appointment of an arbitrator(s) can become expensive and time consuming. In arbitration proceedings, disputes over impartiality of arbitrator may arise.
