ARD also referred to as Alternative Dispute Resolution comprise of many kinds of dispute resolution other than approaching the Court. Arbitration, conciliation, mediation and other procedures that do not involve court procedures are included in this form of dispute resolution. ADR is a cheaper, faster and easier way of getting access to justice. This procedure helps parties to come to a solution that would benefit both the parties. However, ADR also comes with some limitations that are discussed further in the article.


Arbitration is a way of providing justice to parties by agreeing to some comprises so that none of the parties is harmed, Arbitration is a kind of out of court settlement. The Arbitrator after all the discussions issues an arbitral award. The arbitral award is then executed and if not executed legal actions can be taken to execute the arbitral award.

Arbitration is defined under Section 2(1)(a) of the Arbitration and Conciliation Act, 1996. This section does not mandate that an arbitral award shall also be associated to the arbitration agreement.

Black Law Dictionary defines arbitration as a method of resolving disputes which includes two parties and a neutral third party whose decision is binding on both parties.

It should be noted that although the act does not mandate the granting of an arbitral award, yet the decision of the arbitrator is binding on both the parties to the arbitration. Section 9 also makes a provision that during the arbitration also the parties can refer to court for interim measures.

The Supreme Court, in the case of P. Anand Gajapati Raju v. P. V. G. Raju (2000) provided some basic requirements for the parties to proceed for arbitration method of dispute resolution. It stated that:

  1. An agreement must be there.
  2. A party must bring an action in court against the other.
  3. The subject – matter must be the same in arbitration.
  4. At least one party demands arbitration.


Section 7 of the Act defines an arbitration agreement. It means an agreement made by the parties to use arbitration to resolve disagreements regarding a particular legal relationship. However, this is considered to be a submission agreement.

An arbitration agreement is a formal agreement reached by two or more parties. It stipulates that arbitration shall be used to settle any disputes or conflicts that may occur between them rather than going to court. In this agreement, each party chooses to take their problems to a panel or arbitrator for arbitration.

Essentials of an Arbitration Agreement:

Presence of a dispute – there should be some dispute between the parties then only they can refer to arbitration for dispute resolution. If there exists no dispute between the parties then the arbitration clause has no weightage.

Written Agreement – an arbitration agreement must be in written. An oral arbitration agreement is not maintainable and cannot be executed. If it is a written document with signature of the parties then it is a valid arbitration agreement. If it is a record telex, letter or telegram then also it will suffice to be a valid arbitration agreement.

Intention of parties – to form a legally valid arbitration agreement intention of the parties to enter into such agreement is necessary. If the parties do not intend to form an arbitration agreement then it cannot be enforced.


While considering to refer to arbitration for dispute resolution the parties should know the merits and the outcomes that arbitration may lead to.

One should notice that the person appointed as the arbitrator is the person of the choice of the parties. He is not a court appointed person but parties select who would be their arbitrators.

Arbitration is a much cheaper and easier way to access to justice. Arbitration does not grant a biased decision but a decision formed as a reasonable ground.


An expeditious resolution can however, be not guaranteed. Sometimes, due to parties or circumstances of the case arbitration is also hindered by delays.

It cannot grant punishments like imprisonment, death, injunction. These can only be provided in the court. Arbitration only provides a solution or a compromise to the parties disputing.

If the parties are more than two then problems may arise during arbitration.


The Act addresses efficient, affordable, and time-efficient alternative dispute settlement techniques. People these days typically choose to resolve disputes outside of court with the use of alternative dispute resolution (ADR) processes like arbitration, conciliation, mediation, etc. because of the backlog of cases, the strict procedural requirements of the courts, and the desire to avoid litigation. The Act outlines the process to be followed in arbitration proceedings, the composition of the arbitral tribunal, the tribunal’s conduct, and the arbitral awards that will be rendered in a dispute.

Contributed by – Ishita Saxena

(Symbiosis Law School, Noida 2023-28)

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