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A COMPARATIVE ANALYSIS OF ADR SYSTEMS (ARBITRATION, MEDIATION,

CONCILIATION & NEGOTIATION)

Preprint · April 2020

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 A COMPARATIVE ANALYSIS OF ADR SYSTEMS (ARBITRATION, MEDIATION,
CONCILIATION & NEGOTIATION)

- Athith Pradeep

Sir Abraham Lincoln once asserted, “Discourage litigation. Persuade your neighbours to
compromise whenever you can. Point out to them how the nominal winner is often a real loser –
in fees, expenses, and waste of time. As a peacemaker, the lawyer has a superior opportunity of
being a good man. There will still be business enough.” This sage advice underscores the
limitations of litigation as the sole means of dispute resolution. Hence, the emergence of
Alternative Dispute Resolution (ADR) systems as a more efficient and flexible approach to
resolving conflicts.

ADR encompasses various methods such as Arbitration, Mediation, Conciliation, and Negotiation,
each with its unique characteristics and applicability. In a legal landscape where delayed justice has
been a persistent issue, understanding these diverse ADR systems is crucial to determine the most
suitable approach for resolving specific disputes.

NEGOTIATION

Negotiation, often an informal process, is the fundamental form of dispute resolution. It is

characterised by discussions aimed at reaching a mutually agreeable solution. While negotiation
lacks statutory recognition and is non-binding, it provides a flexible platform for parties to engage
in open dialogue to resolve disputes. Parties have complete control over the process and may be
represented by family members, legal counsel, or friends. There are no prescribed time limits, and
negotiations can continue until an agreement is reached. Negotiation, which is often employed in
business contexts, is a cost-effective way to maintain relationships and preserve the goodwill
among parties.

CONCILIATION

Conciliation, as a recognised mode of dispute resolution under the Arbitration and Conciliation
Act, 1996, aims to achieve a legally enforceable settlement between disputing parties through the
establishment of a settlement agreement. Once the involved parties have affixed their signatures
to this agreement, it attains finality and binding status.

Distinguishing itself from negotiation, conciliation involves the appointment of a neutral third
party, known as a conciliator, typically an expert in the relevant field. This appointment follows
individual meetings with each party in private sessions to thoroughly comprehend the intricacies
of the case. Subsequently, a joint session is convened with the intent of fostering understanding
and reaching a conclusive agreement.

To achieve this objective, a conciliator employs various strategies, including encouraging open
dialogue and providing legal and moral guidance to alleviate tensions between the disputants.
Unlike an arbitrator, a conciliator serves as both an evaluator and a facilitator but lacks the
authority to issue awards, summon witnesses, or authorise the submission of evidence.
Furthermore, conciliation differs from mediation in terms of the extent and nature of third-party
involvement. A conciliator actively proposes solutions and suggestions throughout the conciliation
process, whereas a mediator primarily assists parties in finding their own solutions, with less direct
involvement in issue resolution.

When an agreement expressly specifies arbitration as the method for dispute resolution, it implies
that negotiation or conciliation will be the recommended initial step in resolving the matter. Many
prefer conciliation over other ADR systems, such as arbitration and mediation, due to its cost-
effectiveness and its reputation for fostering amicable dispute settlements.

MEDIATION

The concept of mediation is ancient and dates back eons ago to the times when the leaders of a
village presided over and mediated dispute proceedings between their people. This ADR
mechanism received legislative recognition in India for the first time in the Industrial Disputes
Act, 1947.

In August 2023, the Indian Parliament passed the Mediation Bill, 2023, which underscored India's
commitment to promoting this efficient and peaceful method of dispute resolution. Today,
mediation in India operates within a well-defined legal framework. The Civil Procedure Code was
amended in 1997 to include Section 89, which empowers courts to refer cases for mediation.
Subsequently, the Mediation Rules, 2003, were introduced to provide a comprehensive procedural
guideline. The Mediation Bill, 2023, represents a significant milestone as it is the first standalone
legislation dedicated to mediation. This legislation aims to provide a comprehensive framework
for mediation, streamline mediation proceedings, enhance confidentiality, and bolster mediator
qualifications.

The mediation process typically involves a neutral and impartial third person who facilitates the
resolution of disputes. This is achieved by promoting free speech through an open dialogue where
the disputants express their needs, interests, and rights. This approach aims to negotiate and settle
the matter in conflict. Mediation is a confidential, structured, and dynamic process that follows a
set of procedures. Appreciable negotiation, assistance, interaction, and other social skills are
employed by the mediator to help the parties arrive at a resolution. These skills are imperative to
succeed in a disputant-centred settlement system like mediation. Unlike a conciliator, a mediator
is not an evaluator, and avoids providing any prescriptive solution or advice. He merely facilitates
the resolution process between the conflicting parties by helping them understand the pros and
cons of their situation. Therefore, the parties to the dispute have overall and absolute control over
the outcome of a dispute.

ARBITRATION

Arbitration is a legally binding dispute resolution method, recognised under the Arbitration and
Conciliation Act, 1996. It is characterised by its structured, confidential, and procedure-oriented
approach. The amendments to the Arbitration and Conciliation Act in 2015 and 2019 have brought
about significant challenges and changes to the administration of arbitration as a more independent
ADR system. The amendments to the Act emphasise self-administration and reduce court
intervention through the institution of an arbitration council of India and the establishment of
arbitral institutions designated by the Supreme Court and High Courts. Confidentiality of all
disputes play a major role in conducting an arbitration and has been enforced under the
amendment provision 42A inserted by the Arbitration and Conciliation (Amendment) Act, 2019.

Though expensive compared to the other forms of ADR, the arbitration process is deemed to be
a much more feasible system than litigation. Arbitration involves an unbiased and impartial third
person known as an arbitrator who decides an ‘award’ or ‘arbitration award’ that is binding on the
disputants and is appealable only in specific circumstances. The parties to an arbitration and the
arbitrator(s) are bound by a stipulated time-limit and an award must be decided within this
duration.

The arbitrator is either directly appointed by the disputants themselves or appointed indirectly by
the arbitrators delegated by each respective party to the dispute. The arbitrator is responsible for
carrying-out his duties which include, but are not limited to, presiding over the arbitration
 proceedings, requesting for evidence and other submissions, setting-up meetings and dates for
arbitration proceedings, and deciding an arbitration award. The arbitrator enjoys exclusive
protection subsequent to the insertion of section 42B by the Arbitration and Conciliation
(Amendment) Act, 2019.

It is also interesting to note that the Arbitration and Conciliation Act, 1996 is based on the
UNCITRAL Model Law on International Commercial Arbitration 1985 and the UNCITRAL
Conciliation Rules, 1980.

CONCLUSION

In comparison to litigation, ADR systems have gained recognition for their cost-effectiveness
and satisfactory conflict resolution. As society advances in technology, science, and other fields,
newer dispute resolution systems will be necessary for addressing complex issues. Understanding
these ADR systems empowers parties to select the most suitable dispute resolution method for
their specific situation. In conclusion, ADR plays a significant role in providing expedited and
fair justice delivery.

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