Alternate Dispute Resolution (ADR) is a dispute resolution method that employs non-adversarial (i.e. out of court) ways to adjudicate legal controversies. ADR methods are informal, cheaper and faster, in comparison to the traditional litigation process. It includes arbitration, conciliation and mediation.

The primary difference between arbitration, conciliation and Mediation is based on the role played by the third party who is selected by the parties seeking a settlement, in consensus. That Arbitration is the process by which parties select an independent person, who renders a decision regarding the case. Conversely Conciliation attempts to make parties come to an agreement about the problem at hand. In Mediation, the mediator acts as a facilitator who helps the parties in agreeing.

These three modes of ADR are the most effectively and efficiently used in the present world. But there is a huge confusion amongst people about the difference between the three as there are minor differences between these methods.

In case of conciliation and mediation the confusion is more as the terms are often used as synonyms. However, the Arbitration and Conciliation Act, 1996 clearly used these two terms as separate.Section 30(1) have used these two as two separate methods and the same is mentioned under Section 89 of the Civil Procedure Code (Amendment) Act, 1994


Arbitration as an effective mechanism for dispute resolution

Arbitration is a form of dispute resolution method in which the parties avoid the court proceedings and instead decide to resolve their dispute through appointing a third person, who is known as an arbitrator. An arbitrator is appointed in labour disputes, business and consumer disputes and family law matters.

an arbitration is the reference of dispute or difference between not less than two parties, for determination after hearing both sides in a judicial manner by a person or persons other than a court of competent jurisdiction.”

Arbitration is like a court procedure because the parties submit evidence similar to a trial where the third party hear the entire situation and give his decision which is binding upon the parties. In the case of Collins v Collin, the Court held that “An arbitration is a reference to the decision of one or more persons, either with or without an umpire, of some matter or matters in difference between the parties.” an arbitrator listens to the evidence which is brought by both parties and makes a decision which is generally binding upon both parties.

Arbitration means getting an arbitral award on an ongoing conflict, by the arbitrator. In the process of arbitration, the cause is heard and determined between the parties in a dispute before the person selected by the parties or appointed under statutory authority

The prospects of the arbitration or the reason due to which it is more preferable

  • Expertise in technical matters: an arbitrator can easily deal with technical matters which is scientific in nature because arbitrators are appointed on the basis of their knowledge and skill in the particular field. So they can resolve the dispute more efficiently and effectively.
  • The process of arbitration works more quickly and is more cost-effective than the courts.
  • There is the convenience of the parties in arbitration as they are free to decide the venue and time of the proceedings.
  • Privacy and confidentiality of the parties are maintained as there is no unnecessary publicity of the dispute.

Arbitration system faces some challenges which are briefly discussed:

  • If the parties, by agreement decide the arbitral award and decision to be final, then they waive their rights to access the courts.
  • Sometimes the arbitrator acts biased, due to which the very essence of arbitration is lost.
  • There is not always the case where the cost of the arbitration is cheaper. It can vary in complexities and may lead to a higher cost than the litigation. It can be seen in multiple parties, multiple arbitrators and complicated legal disputes.
  • It is very difficult to appeal arbitral rulings. Sometimes a party can face unfair result and finds the difficulty in appealing to the courts.


Conciliation can be described as the method adopted by the parties for resolving the dispute, wherein the parties out of their free consent appoint an unbiased and disinterested third party, who attempts to persuade them to arrive at an agreement, by way of mutual discussion and dialogue.

Conciliation is characterized by the voluntary will of the parties who want to conciliate the dispute. Its basic component is confidentiality in which the parties and the conciliator are not permitted to share or disclose to the external party, anything associated with the proceedings.

The conciliator plays an advisory role, wherein he/she suggests potential remedies to the problem. The conciliation process completes with a settlement between the parties which is final and binding upon the parties.

The adoption of conciliation process in India

The adoption of conciliation process was first recommended by the Law Commission of India in 77th and 131st report and in the conference of chief ministers and chief justices in their resolution of 1993. Whereas, the Himachal Pradesh High Court evolved pre-trial, in-trial and post-trial conciliation project in the subordinate court in Himachal Pradesh in the year 1984. The Calcutta resolution which was adopted in 1994, also stated the recommendation of conciliation courts to be constituted in the other states.

Difference between conciliation and arbitration

The main difference between conciliation and arbitration is that a conciliator doesn’t have the authority to ask for evidence or witnesses, and as such, conciliation as a process doesn’t have legal standing. On the other hand, the arbitrator needs to make a decision based on evidence and his final verdict is legally binding.

An arbitrator is usually a legal professional or a retired judge, or even an accountant or engineer. Both parties present their cases in front of the arbitrator and they don’t negotiate out of the arbitration session.

The conciliation process is the least formal and there is much space for improvisation. Unlike most arbitrations, this process can be done privately. Conciliation is more amicable and open to bargaining and it doesn’t involve a suit.

In the conciliation procedure an intermediary person will try to determine what are the goals of each party, and then suggest possible solutions. An intermediary person (a conciliator) needs to discuss with each side separately during the whole negotiation process. The goal of conciliation is to find an outcome that is mutually acceptable to both parties. A conciliator has a role to improve communication and lower tensions between two parties.

Kinds of Conciliation

  1. Voluntary Conciliation– In this method parties can voluntarily participate in the process of conciliation for resolving their dispute.
  2. Compulsory Conciliation– If parties do not want to take the opportunity of voluntary conciliation then they can go for compulsory conciliation. In this method, if the parties do not want to meet the other party to resolve the dispute then the process is said to be compulsory. This method is commonly used in labour cases.

 Procedure of Conciliation

The objective of the conciliation proceedings is to reach upon mutual terms, speedy and cost-effective settlement of the dispute. Section 62 discuss the initiative of conciliation will start when one party will send Written Invitation to conciliate upon the matter to the other party. There will be the commencement of procedure if the other party accepts the invitation in writing to conciliate. If the other party rejects the invitation or the party who is willing for the conciliation does not get a reply from the other party within Thirty days then it will be treated as a Rejection of the Invitation.

Section 65 explains the submission of the statements of both the parties to the conciliators. Each party should submit a brief written statement regarding dispute as requested by the conciliator. The statement should describe the general nature of the dispute and the points of issue. Each party should send a copy of their statement to the other party. The conciliator can also ask for the submission of written statements which includes issues of the parties, grounds of settlement etc. These statements must be supplemented by evidence, documents or visual representation. The copy of the same statement must be sent to the other party. Conciliator can also request for additional documents whenever he needs them. According to Section 67(3) and 69(1), the conciliator can set up meetings for the parties or he can meet parties together or separately. The place of meeting can be decided by parties or conciliators. He can also communicate with the parties orally or in written form. He must also consider the party’s expressed wishes like quick settlement of the case which also depends upon the circumstances of the case


  1. The conciliation procedure is of private nature. The documents, evidences or any other information which are used during the process are Confidential.
  2. One of the most important advantages is that they are Informal process and contains Simple procedures which can be easily followed by the general people.
  3. The process depends upon the circumstances of the case. In these processes the need of the parties comes first like quick settlement of their cases so there is no chance for delay.
  4. The selection of the conciliators depends upon the parties. The parties can choose conciliator on the basis of their availability, experience in particular field, previous track records of the cases, knowledge in subject area.
  5. The conciliation is cheap as compared to litigation. They are cost effective and most opted process for resolving disputes. It purely depends upon the nature of the dispute but is widely acceptable.


  1. Conciliator is not a legally qualified person for resolving disputes. His decision is not binding upon the parties.
  2. As the procedure of conciliation is informal and simple there is high possibility of delivering injustice.
  3. Miscommunication of information: The role of the conciliator to settle up the case by giving information of one party to another and vice versa. The process of sending and receiving information sometimes leads to mixed and incorrect information. So, by these processes one can easily interpret the information given.


Mediation is a form of alternate dispute resolution, wherein parties mutually appoint an independent and impartial third party, called as the mediator who helps the parties in reaching an agreement which is mutually accepted by the parties concerned.

Mediation is a systematic and interactive process, which employs negotiation techniques to assist the parties in finding the best possible solution to their problem.

As a facilitator, mediator attempts to facilitate discussion and build an agreement between the parties with an aim to settle the dispute. The decision made by the mediator is not binding like an arbitral award.

Basis for ComparisonArbitrationConciliationMediation
MeaningArbitration is a dispute settlement process in which an impartial third party is appointed to study the dispute and hear both the parties to arrive at a decision binding on both the parties.Conciliation is a method of resolving disputes wherein an independent person helps the parties to arrive at the negotiated settlement.Mediation is a process of resolving issues between parties wherein a third party assist them in arriving at an agreement.
EnforcementAn arbitrator has the power to enforce his decision.A conciliator does not have the power to enforce his decision.The decision made by the mediator is not enforceable like an arbitral award.
Regulated byThe Arbitration and Conciliation Act, 1996Arbitration and Conciliation Act, 1996Code of Civil Procedure, 1908
Prior AgreementRequiredNot RequiredNot Required
Available forExisting and future disputes.Existing disputes.Existing disputes.
ExampleDamages in case of breach of contract, matters of the right to the office, time barred claims etc.Resolving disputes between contractors and subcontractors etc.Commercial transactions in patents, trademark licenses, Joint ventures and R & D Contracts, music and film contracts etc.

Key Features:

  1. Arbitration refers to a method of resolving industrial disputes, wherein the management and the labour present their respective positions to the neutral third party, who takes a decision and imposes it. Conciliation is a method of resolving the dispute, wherein an independent person, who meet the parties jointly and severally and helps them to arrive at the negotiated settlement or resolve their differences. The process of dispute resolution in which a third party intervenes in an attempt to resolve it, by enabling communication between parties is called mediation
  2. The decision made by the arbitrator is acceptable to the parties concerned. On the other hand, the conciliator & Mediator does not have the right to enforce his decision.
  3. Arbitration requires a prior agreement between parties known as the arbitration agreement, which must be in writing. As against this, the process of conciliation doesn’t require any prior agreement.
  4. Arbitration is available for the current and future disputes whereas the conciliation & Mediation can be adopted for existing disputes only. 
  5. Arbitration is like a courtroom proceeding, wherein witnesses, evidence, cross-examination, transcripts and legal counsel are used. On the contrary, Conciliation is an informal way of resolving disputes between the management and labour and in mediation, the role of the third party is a facilitator, who facilitates interaction between the parties. 
  6. Minimizing the cost-exposure entailed in settling the dispute, maintenance of control over the dispute-settlement process and speedy settlement of disputes.


Arbitration, mediation and conciliation are considered as the main alternative dispute resolution mechanism to litigation. Business people prefer these mechanisms more convenient because it does not require a lot of lengthy procedures like courts. Here, dispute resolution is more informal as compared to litigation in courts. Over the recent years, they have turned out to be more effective than the litigation process. Access to justice is there without the involvement of the court. Parties are more comfortable as they can freely express their own views, needs and interest

Siddharth jain and Co.

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