Vibrant dispute resolution key to inspiring confidence

A strong legal framework to ensure the timely resolution of commercial disputes will help attract foreign investments in India. Commercial disputes in India can be resolved either through litigation or alternative dispute resolution (ADR) methods.

Indian law originated from common law principles and civil litigation is based primarily on the adversarial system of dispute resolution, whereby two parties present their case before a neutral person in a courtroom, who decides the truth on the basis of the parties’ submissions and evidence.

ADR has gained popularity among the business community globally over the past two decades as a means to resolve commercial disputes in a limited time frame and at minimal cost. Arbitration, mediation, conciliation and lok adalats are ADR methods that are statutorily recognized in Indian law.

Arbitration is a process by which disputes are heard by a third neutral person, appointed by parties to the dispute by mutual consent or through court intervention. The dispute is resolved on the basis of claims and evidence submitted by the parties. The arbitration process starts with insertion of arbitration clauses in commercial contracts, which specify venue, language, governing law, jurisdiction, etc. The arbitrator’s decision in the form of an award is binding and final unless challenged in an appeal or set aside by a court.

Mediation is a means by which parties consent to resolve disputes with the assistance of a third person who has knowledge and experience in the field of the dispute. Court-annexed mediation is facilitated by every court in India at both the pre- and post-litigation stage. Discussions during mediation are not recorded or binding. Under section 89 of the Code of Civil Procedure, 1908, courts may also refer matters for mediation.

In conciliation any party can ask another party to appoint a conciliator to try to resolve their disputes. Once the parties are on the verge of settlement, the conciliator suggests terms of settlement.