Arbitration and Mediation are being seen as the much-needed alternative to the traditional form of litigation which is Litigation. These alternative dispute redressals align with the Indian constitutional framework of facilitating justice and reducing the burden of courts. However, the time has perhaps come to reconsider the status of ADR mechanisms as 'alternatives', Given the huge pendency in Indian courts, and more importantly, the suitability of ADR mechanisms to resolve certain categories of disputes, they should be treated at par with the public court system[i].

Pendency in Indian courts is the first issue that comes to mind when one thinks about the problems facing the Indian judiciary. According to data obtained from the National Judicial Data Grid, the total pending cases (civil and criminal) across all courts in the country as of November 12, 2020, are 3,59,08,679. Out of these, civil cases number 98,01,986, which is a little over 27% of the total pending cases. According to the World Bank's Ease of Doing Business Rankings for 2020, even though India ranks 63 overall, it stands at a dismal 163 (out of 190 countries) as far as contract enforcement (mainly a judicial function) is concerned[ii]

Historical Context and Legal Framework
The first formal statute relating to the subject of arbitration in India was the Indian Arbitration

Act, 1899, applicable only to the Presidency towns of Madras, Bombay and Calcutta. Subsequently, after the Code of Civil Procedure, 1908 came into force, the Second Schedule of the said code provided for the recourse to arbitration. Subsequently, the above laws laid down the comprehensive legislation relating to arbitration i.e. the Arbitration Act, 1940. The said Act of 1940 was predominantly based on the English Arbitration Act of 1934 and was in force for the next more than half a century.

The Act of 1940, dealt only with domestic arbitrations while the enforcement of foreign awards was dealt with by the Arbitration (Protocol and Convention) Act, of 1937 for Geneva Convention Awards and the Foreign Awards (Recognition and Enforcement) Act, of 1961 for the New York Convention Awards[iii].

India's journey towards embracing arbitration and mediation can be traced back to the Arbitration Act of 1940. However, the Arbitration and Conciliation Act of 1996, significantly shaped the modern landscape modelled after the UNCITRAL Model Law on International Commercial Arbitration [iv]. This Act aimed to create a robust and efficient framework for arbitration and conciliation, providing a comprehensive legal structure for dispute resolution outside traditional court settings.

Arbitration in India

Arbitration in India is a legally binding process where disputing parties agree to submit their conflicts to one or more arbitrators, whose final decision is enforceable. The 1996 Act[v] brought substantial changes, emphasizing minimal court intervention and promoting the autonomy of the arbitral process. The amendments in 2015[vi] and 2019[vii] further streamlined the arbitration process, addressing issues like arbitrator independence, time-bound arbitration proceedings, and interim measures.

The India International Arbitration Centre Act, 2019, was enacted to provide for the establishment and incorporation of the India International Arbitration Centre to create an independent, autonomous and world-class body for facilitating institutional arbitration and to declare the Centre to be an institution of national importance[viii]

Advantages of Arbitration:

• It is an efficient solution: Arbitration offers a much faster dispute resolution in comparison to the traditional approach of litigation.
• Expertise: The decision of choosing arbitrators with knowledge relevant to the dispute is at the helm of the parties.
• Confidentiality: Arbitration proceedings are closed-door proceedings and this ensures the safeguard of sensitive information from getting leaked.
• Enforceability: Arbitral awards are enforceable in almost 160 countries in the New York Convention.

Challenges in Arbitration:

• Costs: Arbitration despite being faster can be expensive specifically with international arbitrations.
• No way to recourse: The scope for challenging an arbitral award is narrow and is primarily restricted to procedural issues.
• Enforcement issues: Enforcement of arbitral awards can be tiresome due to judicial intervention and bureaucratic hindrances and delays.

Mediation in India

Mediation is a voluntary process where a neutral third party, the mediator, assists the disputing parties in reaching a mutually acceptable solution. Much before the adoption of the formal British judicial system, the traditional Panchayat system prevailed in India whereby community issues were resolved by a group of village elders. Disputes were also referred to respected businessmen called Mahajan's, to informally resolve the same amongst contesting parties.

The formal integration of mediation into the Indian legal system during the post-British era can be traced to the Industrial Disputes Act, of 1947, wherein detailed procedures were prescribed for settling disputes out of court. Subsequently the enactment of the Legal Services Authority Act, of 1987 provided for the establishment of Lok Adalat's, which gave further impetus to the concept of mediation. Further, commercial mediation was given a statutory flavour through the introduction of Section 89 into the Code of Civil Procedure, 1908[x].

The mediator facilitates communication and negotiation, but the final decision rests with the parties. Mediation in India has gained prominence, especially with the introduction of court-annexed mediation and the enactment of the Commercial Courts Act[xi] which mandates pre-litigation mediation for commercial disputes.

Advantages of Mediation:

• Control: Parties retain control over the outcome, fostering more desirable and acceptable results.
• Less expensive: Mediation is way less cost incurring in comparison to arbitration and litigation.
• Speedy: Mediation sessions are flexible and fasten dispute resolution.
• Preservation of Relationships: Mediation helps in preserving amicable relationships, important in commercial and family disputes.

Challenges in Mediation:

• Voluntary Nature: The success of mediation depends on the willingness of parties to cooperate.
• Lack of Formal Structure: Unlike arbitration, mediation lacks a binding decision, which can lead to non-compliance and most of the time it does.
• Limited Awareness: There is still a lack of widespread awareness and acceptance of mediation in India.

Indian judiciary's view on arbitration and mediation

In 2023, India charged full steam ahead in its journey to become the next global arbitration hub. Indian courts actively worked towards weeding out any lacunae that may be exploited by recalcitrant parties. In a slew of decisions, the Indian Supreme Court (the Supreme Court) cemented its pro-arbitration stance and emphasised the need for supervisory courts to have a hands-off approach while dealing with arbitrations.[xii]

Unfortunately, at the beginning of 2024 the Supreme Court undermined its above actions due to a long-standing, complex review of an arbitral award and reversed its previous judgement in its judgment in April 2024 in the case Delhi Metro Rail Corporation Limited v Delhi Airport Metro Express Private Limited.[xiii]

The Supreme Court exercised its extraordinary power of curative petition to annul its own judgement and arbitral award which is a breach of the doctrine of legal certainty and finality to Supreme Court Judgement. Chief Justice of India D Y Chandrachud has said, that arbitration is no longer an "alternative" but it is the preferred method of seeking commercial justice, which also provides a level playing field outside domestic court systems[xiv].

Chief Justice of India said[xv] "Our judiciary functions on the mantra that no case is small or big. Every aggrieved person who approaches the doors of the judiciary has the right to a just remedy. In attending to these grievances, the courts in India perform their plain constitutional duty. The width of our jurisdiction was designed to ensure the widest access to justice. But surely every case need not find a remedy before a court, with emerging forms of dispute resolution such as arbitration and mediation gaining acceptance".

The Supreme Court of India has initiated a court-integrated mediation process "Mediation and Conciliation Project Committee (MCPC)" in 2005 has encouraged amicable resolution of cases pending in the courts by Section 89 of the code of Civil Procedure [xvi].

Recent Developments and Trends
The Indian government has shown a proactive stance towards promoting arbitration and mediation. The New Delhi International Arbitration Centre (NDIAC) Act, 2019, aims to establish an autonomous and independent institution for better management of arbitration in India[xvii]. Furthermore, the enactment of the Mediation Act [xviii] provides for a comprehensive framework to promote and invigorate mediation as a successful mode of alternate dispute resolution.

The objective of the Mediation Act is to promote and facilitate mediation, especially institutional mediation, for the resolution of disputes, commercial or otherwise, enforce mediated settlement agreements, provide for a body for the registration of mediators, encourage community mediation and make online mediation as acceptable and cost-effective process and for matters connected therewith or incidental thereto.

The Mediation Act has been introduced with the primary goal of establishing mediation as a recognised and acceptable mode of alternate dispute resolution and granting validity to the settlements arrived thereunder, irrespective of its nature – domestic or involving foreign parties, however, conducted in India[xix]

Conclusion
Arbitration and mediation offer promising alternatives to traditional litigation in India, aligning with the global trend regarding alternative dispute resolution (ADR) mechanisms. While both methods have their advantages and challenges, the ongoing legal reforms and growing acceptance among stakeholders indicate a positive trajectory for ADR in India. For good reasons India sought to modernize and consolidate its arbitration laws in 1996, in the hope that it could encourage international investment; while that particular project has failed, India has thrived nonetheless.

Now, learning from experience, India has the chance once again to seize the initiative, creating a kind environment for arbitration centres and institutions to thrive in its main cities, thereby serving both Indian companies and international parties. If the opportunity is missed now, Singapore and Dubai will readily fill the vacuum[xx]. As India continues to evolve to become a hub for arbitration and mediation just like Singapore, London, etc, these mechanisms will play a crucial role in ensuring efficient and effective justice delivery.

End Notes:

1. Deepika Kinhal et al Apoorva, Mandatory Mediation in India - Resolving to Resolve, 2(2) Indian Public Policy Review 49, 49-69 (2020).
2. According to the Ease of Doing Business - Economic Profile of India. Accessed November 06, 2020. https://www.doingbusiness.org/content/dam/doingBusiness/country/i/india/IND.pdf
3. https://legalaffairs.gov.in/sites/default/files/arbitration-and-mediation_0.pdf
4. UNCITRAL Model Law on International Commercial Arbitration (1985)
5. The Arbitration and Conciliation Act, 1996
6. The Arbitration and Conciliation (Amendment) Act, 2015
7. The Arbitration and Conciliation (Amendment) Act, 2019
8. https://pib.gov.in/PressReleasePage.aspx?PRID=2003844
9. United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 10 June 1958)
10. https://corporate.cyrilamarchandblogs.com/2022/10/analysis-mediation-in-india/#_ftn5
11. Section 12A of The Commercial Courts Act, 2015
12. https://globalarbitrationreview.com/review/the-asia-pacific-arbitration-review/2025/article/the-year-india-almost-shed-judicial-parochialism-favour-arbitral-autonomy
13. 2024 SCC OnLine SC 522
14. https://www.deccanherald.com/india/arbitration-no-longer-alternative-but-preferred-method-of-seeking-commercial-justice-cji-d-y-chandrachud
15. CJI D.Y Chandrachud lecture at UK Supreme Court on 7 June 2024 on the topic 'Laws and Practice of commercial arbitration: Shared understandings and developments in UK and India'
16. https://mcpc.nic.in/
17. https://prsindia.org/billtrack/the-new-delhi-international-arbitration-centre-bill-2019
18. The Mediation Act, 2023
19. https://www.ibanet.org/india-mediation-act-2023-will-the-ADR-wave-pick-up-momentum
20. York, Stephen. "India as an Arbitration Destination: The Road Ahead." National Law School of India Review 21, no. 2 (2009): 77–103. http://www.jstor.org/stable/44283805