Alternative Dispute Resolution in India – Significance and Challenges – Explained Pointwise

The Minister of Law and Justice recently reaffirmed the government’s commitment to legal reforms rooted in India’s civilizational ethos. Citing the doctrine of Panch Parmeshwar, which embodies the principle of collective consensus in dispute resolution, the Minister emphasised the need for global cooperation to strengthen Alternative Dispute Resolution (ADR) mechanisms.
The India Justice Report 2025 highlights significant challenges in India’s justice system, particularly including access, delays, and accountability. According to the National Judicial Data Grid (NJDG), the total number of pending cases in India is 4,57,96,239. In the Supreme Court, the number of pending cases is 81,768, and in the High Courts, it is approximately 62.9 lakh. These delays often result in injustice, increasing the focus on ADR as a faster, cost-effective, and socially inclusive way to deliver justice.

Introduction:

• Alternative Dispute Resolution (ADR) refers to non-judicial mechanisms such as arbitration, mediation, conciliation, negotiation, and Lok Adalats, which are used to resolve disputes outside traditional courts.
• ADR is vital for promoting access to affordable, timely, and amicable justice and helps ease the burden on the formal judiciary.

Types of ADR Mechanisms:

Legal & Statutory Foundations of ADR mechanisms in India:

1. Constitutional Provisions:

   • Article 39A: Mandates the state to provide free legal aid and ensure justice is accessible, which supports the growth of ADR as an affordable justice mechanism.

   • Articles 14 and 21: Guarantee equality before the law and protection of life and personal liberty, underpinning the right to access alternative dispute resolutions.

2. The Arbitration and Conciliation Act, 1996: This is the foundational law for Arbitration and Conciliation. It is based on the UNCITRAL Model Law and rules, making Indian awards easily enforceable internationally. The Act has been amended several times (notably in 2015 and 2019) to improve efficiency and reduce judicial interference.

3. The Code of Civil Procedure (CPC), 1908: Section 89 of the CPC explicitly mandates courts to refer disputes to ADR mechanisms (Arbitration, Conciliation, Judicial Settlement, Lok Adalat, or Mediation) where potential for settlement exists.

4. Legal Services Authorities Act, 1987: 

   • Establishes Lok Adalats (People’s Courts) to facilitate amicable resolution of disputes.

   • Ensures legal aid and organizes Lok Adalats at various levels.

   • Awards passed by Lok Adalats are binding and final without appeal.

5. Mediation Act., 2023:

   • A recent legal development focused on strengthening mediation as an ADR tool.

   • Provides the regulatory framework, accreditation of mediators, confidentiality protections, and enforcement mechanisms for mediated settlements.

Significance of ADR:

1. Relief to Overburdened Judiciary: India faces a massive backlog of cases in courts; ADR helps in reducing the pressure by resolving disputes quickly through arbitration, mediation, and Lok Adalats.

2. Affordable and Accessible Justice: ADR mechanisms are generally less expensive than litigation, making justice more accessible to economically weaker sections and promoting social equity.

3. Speedy Dispute Resolution: ADR resolves disputes faster than traditional court processes, which can drag on for years.

4. Confidentiality: Unlike public court trials, ADR processes are private, protecting the parties’ business secrets and personal dignity.

5. Flexibility and Party Autonomy: Parties have more control over procedures and outcomes, increasing satisfaction and compliance.

6. Preservation of Relationships: Especially crucial in family, commercial, and community disputes, ADR encourages collaboration, understanding, and long-term coexistence.

7. Supports Legal Framework: ADR aligns with constitutional mandates for justice (Article 39A) and is backed by various statutes, strengthening the justice delivery system.

8. Promotes Specialised Resolution: Arbitration and mediation offer expert resolutions in commercial and technical disputes, enhancing efficiency.

9. Empowers Marginalised Groups: Through Lok Adalats and legal aid services, ADR empowers marginalized and rural populations in India.

Challenges of ADR Mechanisms:

1. Lack of Awareness and Education: Many litigants, especially in rural and less literate populations, are unaware of ADR options. Legal professionals and judges also sometimes lack adequate training or understanding of ADR processes.

2. Trust Deficit and Perception Issues: ADR is often perceived as less authoritative or impartial than courts. Some parties distrust mediators or arbitrators, fearing unfair bias or inadequate transparency.

3. Inconsistent Quality and Standards: There is a lack of uniform standards for mediators, arbitrators, and conciliators, leading to variability in the quality and fairness of ADR outcomes.

4. Limited Institutional Support: ADR infrastructure, such as mediation centers and arbitration institutions, remains underdeveloped or unevenly distributed across regions.

5. Enforceability and Compliance Issues: While arbitration awards are legally binding, other ADR outcomes (especially mediation and conciliation agreements) may face enforcement challenges if parties renege.

6. Power Imbalances and Coercion Risks: ADR processes often occur without sufficient safeguards to protect weaker parties from coercion or unequal bargaining power.

7. Judicial Interference and Delays: Courts sometimes interfere in ADR processes or delay enforcement, undermining ADR’s efficiency benefits.

8. Cultural and Social Barriers: In certain disputes, societal norms and traditions may hinder open communication or acceptance of ADR outcomes.

9. Limited Scope for Complex Cases: ADR may not be suitable for all types of disputes, especially those involving serious criminal matters or complex multi-party litigation.

Conclusion: Alternative Dispute Resolution forms a vital part of India’s justice system, and this is timely and cost-effective for disputes outside the courtroom. ADR can become the answer for India’s judicial challenges, crowding the courtrooms and lack of access to courtrooms. ADR, therefore, is not only a relief mechanism for courts but a pathway to a harmonious, efficient, and accessible justice system in India.