India has its ADR system more ancient than present day Anglo-Saxon adversarial system of law. Pre-Dispute resolution has been prevalent in India since vedic period. Prominent tretaise is Bhradarnayaka Upanishad, which prescribes several arbitral bodies viz. (a) Puga; (b) Sreni and; (c) Kula. The arbitral bodies were referred to as “panchayats” and dealt with disputes related to contract, matrimonial disputes and criminal disputes. Their decisions were binding and respected by the parties. In the Mughal era, Indians were governed by Islamic law (Shari’ah) present in Hedaya, compilation of several Muslim Laws. The Hedaya contained within itself the provisions of Arbitration.
British era also witnessed the roots of ADR in India where prudent and impartial businessman used to resolve the disputes between merchants through the technique of mediation. With the advent of East Indian Company in 1612 that subsequently lead to establishment of British Raj in India, the techniques of ADR gained pace. Bengal enacted first regulation for arbitration in 1772 and thereafter in 1780 and 1781, to encourage Arbitration. The Bengal Regulation Act, 1772 and 1781 empowers the parties concerned to get their dispute settled through a mutually appointed arbitrator and the decision shall be binding upon them. The Act VIII of 1857 had codified the procedure of procedure of Civil Courts except the provisions enacted by Royal Charter that contains section 312 to 325 dealing with the arbitration in suits. Section 326 and 327 of the Act stipulates for the Arbitration free from the intervention of the courts.
Inspired from the English Arbitration Act, 1899 India also passed Indian Arbitration Act in 1899. It was the first substantive law dedicated for arbitration that found its applicability only to the presidency town of Bombay, Calcutta and Madras. However, owing to several defects the Act was replaced by Arbitration Act of 1940. The ADR has established various modes for disputes resolution namely arbitration, conciliation, mediation, negotiation and Lok-Adalats.
Need for ADR
Huge pendency of cases before the Indian courts gives rise to a need for alternative modes of disputes settlement. Even the courts have expressed their opinions on need for establishing different modes of ADRs. The Courts are unable to bear the burden the cases. Even the court accepts the cases, long pendency of cases bring injustice to the individuals. ADR system is cost efficient to parties, time saving and the parties does not develop complex relations rather it facilitates the parties to come out with their own solutions thereby establishing a win-win situation for both. The ADR system avoids the intervention of courts and is more flexible. Beside this in conciliation and mediation the parties are at liberty to withdraw case at any stage.
Growth of ADR
Previous decades had witnessed major ameliorations in the ADR system in India. The Code of Civil Procedure enacted in 1908 (hereinafter referred to as (“CPC”) lead to emergence of section 89(1) of the CPC after its amendment in 2002. The provision casts a duty upon courts to settle the dispute through the ADR system, wherever possible. Post- Independence, India has witnessed major developments in the ADR systems. In 1982 LokAdalats were established for outside court settlement of disputes. Initially, the Lok-Adalats lacked statutory backing however after the enactment of Legal Services Authorities Act, 1987 that came into effect from November 1995 it gained the statutory status. The Arbitration Act, 1940 was amended in 1996 to include national as well as International Arbitration so as to compete with the global economy and commerce. It consolidated and amended the laws of arbitration existing in British India and remained in continuance till 1996 when the Arbitration and Conciliation Act, 1996 was introduced. The current law dealing with Arbitration is Arbitration and Conciliation, 2015.
Mediation involves a neutral party as mediator that facilitates the parties to arrive at settlement.Mediator as opposed to arbitrator has no power to impose an outcome on disputing parties. The concept of mediation was legally recognized in Industrial Disputes Act, 1947 stipulates that conciliation officers may resort to mediation for facilitating the parties to resolve their disputes. The recommendations of Mr. Jagannadha Rao committee constituted by Hon’ble Apex court in Salem Bar Association v. Union of India that framed rules for effective mediation in India. The court annexed mediation centres established in trail courts of Lucknow, Chandigarh, Prayagraj, Rajkot is seen as the major development in field of mediation. The system of Conciliation also faced major developments in the previous years. Contracts containing conciliation clauses has become a new trend. The amendment to Arbitration and Conciliation Act in 2015 has introduced changes to process of conciliation. An industrial dispute Act 1947 has introduced the concept of conciliation in India.
Negotiation as a ADR system is done for the purpose of persuading the parties and is the most prevalent method during the business deals.International Center for Alternative Dispute Resolution (ICADR) has been established for the purpose of providing facilities for dispute resolution, impart trainings and popularizing ADR techniques that includes negotiation. The recently drafted bill of Arbitration and Conciliation , 2018 is proposed to suggest various reforms in India’s ADR system.
ADR techniques have been prevalent in India since the Vedic Period and found their use on a regular basis however these practices were practiced informally. India shifted its attention to these techniques majorly after Independence where these systems were given legal recognition and various reforms were introduced periodically that lead to a major development in the ADR system in India. India is still inclined to bringing several reforms for acclimatizing its ADR system in India according to International standards.
Also read Romesh Thapar v. The State of Madras
O P Malhotra, Indu Malhotra, Lexis Nexis, The Law and Practice of Arbitration and Conciliation (2nd ed., 2006)
NripendraNathSircar, Law of Arbitration in British India (1942), p. 6 cited in 76’th Report of Law Commission of India, 1978, p. 6, para 1.14
Supra at 2.
Krishna Sarma, MomotaOinam&Angshuman Kaushik, “Development and Practice of Arbitration in India –Has it Evolved as an Effective Legal Institution”,AIGL, 14, 14 (2006).
 H.E. Chodosh, N.J. Bhatt, F.Kassam, Mediation in India: A Toolkit (U.S. Educational Foundation in India, Fulbright House, New Delhi, Feb. 2004).
AIR 2005 SC 3353.
 Stephen B. Goldberg, Frank EA Sander, Nancy H. Rogers & S.R. Cole, Dispute Resolution: Negotiation, Mediation and other Processes 19 (Aspen Law & Business, New York, 3rd Edn.).