The document outlines the dispute settlement mechanisms in India, including court procedures and alternative dispute resolution (ADR) options such as arbitration, mediation, and conciliation. It highlights the legal framework supporting these mechanisms, including the Arbitration and Conciliation Act, and discusses the challenges in the Indian legal system, such as a high backlog of cases. The document emphasizes the growing importance of mediation in commercial agreements and the need for efficient dispute resolution to improve access to justice.

1. MECHANISM
Dispute settlement

2. Introduction
A dispute mechanism is a structured process that
addresses disputes or grievances that arise between two or
more parties engaged in business, legal, or societal
relationships.
Dispute mechanisms are used in dispute resolution, and
may incorporate conciliation, conflict resolution, mediation,
and negotiation. Otherwise known as grievance
mechanisms, dispute mechanisms are typical non-judicial
in nature, meaning that they are not resolved within the
court of law.

3. Characteristics of Dispute Settlement
Mechanism
Legitimate
Accessible
Predictable
Equitable
Rights- compatible
Transparent
1.
2.
3.
4.
5.
6.

4. Dispute
Settlement
Mechanism in
India
Dispute resolution in India may
be through courts, specialised
tribunals (such as those for
recovery of debt by banks or
company disputes, among
others) or alternative dispute
resolution (ADR) mechanisms
that include arbitration,
mediation and conciliation.

5. Alternative Dispute Resolution (ADR)
The Arbitration and Conciliation Act, 1996 has been enacted to accommodate the
harmonisation mandates of UNCITRAL Model. To streamline the Indian legal system
the traditional civil law known as Code of Civil Procedure, (CPC) 1908 has also been
amended and section 89 has been introduced. Section 89 (1) of CPC provides an
option for the settlement of disputes outside the court. It provides that where it
appears to the court that there exist elements, which may be acceptable to the
parties, the court may formulate the terms of a possible settlement and refer the
same for arbitration, conciliation, mediation or judicial settlement. Mediation and
conciliation have also been given statutory recognition through the Arbitration Act.
Afcons Infrastructure Limited v. Cherian Varkey Construction
Perry Kansagra v. Smriti Madan Kansagra
Case Law

6. Alternatives to
litigation
Arbitration
Mediation
Other forms of
alternative dispute
resolution
1.
2.
3.

7. Apart from the Arbitration Act, the Supreme Court of India in Salem Bar Association v.
Union of India (8) recommended the adoption of arbitral rules that were formulated by the
Jagannadha Rao Committee. The rules provide for the procedure according to which
referral to ADR mechanisms under Section 89 of the CPC can take place, including the
stage at which the referral can take place. The arbitration framework, however, has been
outlined in the central Arbitration Act, which provides for various matters such as the
interpretation of the arbitration agreement, interim measures that can be taken,
appointment and termination of arbitrators, place and procedure for the arbitration and
grounds for challenges and, the setup of an Arbitration Council in 2019.
Arbitration

8. India is also party to the three main international conventions that govern
international arbitrations in different territories and that have been consolidated
under the Arbitration Act:
• The Geneva Protocol on Arbitration Clauses of 1923;
• The Convention on the Execution of Foreign Awards 1923; and
• The Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York
Convention).
Arbitration

9. The most important component of mediation is that it is the parties to a dispute who decide the
terms of settlement. In conciliation, on the other hand, the conciliator makes proposals, and
formulates and reformulates the terms of settlement. Mediation was first given statutory
recognition in the Industrial Disputes Act 1947, where officers appointed under Section 4 of the
Act are ‘charged with the duty of mediating in and promoting the settlement of industrial
disputes’. Mediation, as a form of dispute resolution has not obtained independent force in India
but is mostly institutionally annexed to the courts through Section 89 of the Code of Civil
Procedure Code 1809. To that extent, this might compromise the independence of mediations
from court-related procedures and interference. Nevertheless, it gives mediations greater
legitimacy and compatibility with the formal dispute resolution processes in society.
Another point to be noted is the growing importance of mediation clauses in commercial
agreements. Both mediation and consultation form a mandatory aspect of the pre-arbitration
procedure.
Mediation

10. Conciliation has been inserted in Part III of the Arbitration Act and is less formal
than arbitration, but more formal than mediation. To the extent that it requires only
mutually consenting parties and not a formal written document executed to be able
to conciliate, it proves an easier form of dispute resolution. The parties can appoint
up to three conciliators. An important requirement of conciliation proceedings is the
independence and impartiality of the conciliator and the attempt to ensure the
appointment of a conciliator not having the nationality of either of the parties.
Other forms of alternative dispute
resolution

11. Conclusion
In India, the judge-to-population ratio is not adequate to meet
the huge volume of litigation, effectively adding to the delay in
redressal. This phenomenon is often referred to as the 'docket
explosion'. Considering the extensive legal framework and
significant backlog of litigation, Indian arbitration has made
strong attempts to bring about a dynamic change. However, the
recent amendments are expected to reduce many difficulties
with regard to timing, cost, finality of awards and interim reliefs
faced by both foreign and Indian parties wishing to arbitrate in
India.

12. Thankyou