Alternative Dispute Resolution in India: From Panchayats to Professional Dispute Resolution

Y Babji, Legal Practitioner

Alternative Dispute Resolution is no longer merely an alternative to courts. It has become an important part of India's justice-delivery system, offering parties a quicker, less expensive and more flexible way of resolving disputes. Arbitration, mediation, conciliation, negotiation, Lok Adalats and Permanent Lok Adalats now operate alongside the formal judicial system.

From Panchayats to Statutory ADR

The roots of ADR in India are much older than the modern courts. Village panchayats traditionally resolved local disputes through discussion, compromise and community wisdom. The formal judicial system introduced during the colonial period gradually displaced many of these informal mechanisms. Arbitration subsequently received statutory recognition through the Arbitration Act, 1899, provisions of the Code of Civil Procedure, 1908 and later the Arbitration Act, 1940.

After Independence, India progressively constructed a broader ADR framework. The Family Courts Act, 1984, emphasised conciliation and settlement in matrimonial and family disputes. The Legal Services Authorities Act, 1987 gave statutory recognition to Lok Adalats and institutionalised free legal services. The Arbitration and Conciliation Act, 1996, substantially based on the United Nations Commission on International Trade Law (UNCITRAL) model, modernised arbitration and conciliation and sought to make Indian arbitration more efficient and internationally compatible.

The Consumer Protection Act, 1986 and later the Consumer Protection Act, 2019, introduced mediation mechanisms for consumer disputes. The Gram Nyayalayas Act, 2008, sought to take inexpensive justice closer to rural communities, while the Commercial Courts Act, 2015 gave considerable importance to pre-institution mediation in commercial disputes. The Mediation Act, 2023 is the latest major development, providing a statutory framework for mediation, including pre-litigation, institutional, community and online mediation and enforceability of mediated settlements.

Lok Adalat: The Numbers Tell the Story

Among all ADR mechanisms, Lok Adalats have produced the most spectacular numerical results. Established under the Legal Services Authorities Act, 1987 they settle both pending court cases and pre-litigation disputes. Under Section 21, a Lok Adalat award is treated as a decree of a civil court, is final and binding and ordinarily cannot be appealed.

The scale is extraordinary. National Lok Adalats settled 4.19 crore cases in 2022, 8.53 crore in 2023, 10.45 crore in 2024 and 14.84 crore in 2025. Of the 2025 figure, approximately 12.66 crore were pre-litigation matters and 2.18 crore were pending court cases. Permanent Lok Adalats, which principally deal with disputes relating to public utility services, disposed of 1.18 lakh cases in 2021-22, 1.71 lakh in 2022-23, 2.33 lakh in 2023-24 and 2.38 lakh in 2024-25.

These figures establish that ADR is no longer a peripheral experiment. It is dealing with disputes on a scale capable of significantly reducing the burden on conventional courts.

Mediation: Settlement Without Judgment

Mediation represents a different philosophy of justice. A mediator does not decide who is right or wrong and cannot impose a judgment. The mediator facilitates communication and helps the parties themselves arrive at an acceptable settlement. This makes mediation particularly valuable where the relationship between the parties needs to continue, whether in family, business, employment or community disputes.

The Mediation Act, 2023 seeks to make this process more structured, accessible and enforceable. Yet comprehensive nationwide statistics on mediation remain difficult to compile because mediation is conducted through courts, institutions and private practitioners and complete data on privately initiated ADR is not maintained.

Commercial disputes provide an encouraging indication of its growth. Applications for commercial pre-institution mediation increased from 3,680 during July 2018–March 2019 to 59,568 in 2024-25. During 2024-25, 52,730 applications were settled. For 2025-26 up to September 2025, 47,218 applications had been received and 30,353 had resulted in settlement.

Who Can Become a Mediator, Conciliator or Arbitrator?

An important misconception is that ADR is exclusively the domain of advocates or retired judges. The statutory framework is considerably broader. Being an advocate is not, by itself, a compulsory qualification for all three roles.

Under Section 8 of the Mediation Act, 2023, unless otherwise agreed by the parties, a person of any nationality may be appointed as a mediator. The Act does not prescribe that a mediator must necessarily be a lawyer, judge, advocate or even a graduate. However, professional mediation requires appropriate training, competence and where applicable, certification, registration and empanelment under the standards prescribed by the Mediation Council of India or the concerned mediation institution.

The position regarding arbitrators is similarly broad. Section 11(1) of the Arbitration and Conciliation Act, 1996, states that a person of any nationality may be an arbitrator unless otherwise agreed by the parties. An arbitrator therefore need not necessarily be a lawyer or judge. Depending upon the nature of the dispute, the parties may choose an advocate, retired judge, chartered accountant, company secretary, engineer, architect, scientist, industry professional or other domain expert.

There is also a common misunderstanding regarding the requirement of ten years' professional experience. The Eighth Schedule of the Arbitration Act, which had prescribed qualifications including ten years' experience for certain professionals, was omitted in 2021. Section 43J now provides for qualifications, experience and accreditation norms through regulations. Thus, there is no universal statutory requirement that every arbitrator must have ten years' professional experience, although arbitral institutions and parties may prescribe their own standards and generally prefer experienced professionals.

Conciliation under Part III of the Arbitration and Conciliation Act, 1996, is closer to mediation than arbitration. A conciliator assists the parties in reaching an amicable settlement but does not adjudicate the dispute. The Act does not require the conciliator to be a lawyer or judicial officer, although institutional rules may prescribe qualifications for empanelment.

The Crucial Difference

The simplest way to understand the three professions is this: the mediator facilitates, the conciliator promotes settlement and the arbitrator adjudicates. A mediator or conciliator helps the parties decide their dispute; an arbitrator decides it. The arbitrator therefore requires greater adjudicatory, legal, technical or subject-matter competence because the process culminates in an enforceable award.

A retired government officer, engineer, revenue officer, banker, police officer or other experienced professional is not automatically disqualified from becoming a mediator or arbitrator. Subject to applicable institutional rules, conflict-of-interest requirements and accreditation or empanelment conditions, professional and domain expertise can be a valuable asset in ADR.

The Promise and the Pitfalls

ADR offers speed, flexibility, confidentiality, lower costs and the possibility of preserving relationships. Arbitration allows parties to choose a neutral decision-maker and is particularly useful for complex technical and commercial disputes. Lok Adalats make settlement accessible to economically weaker sections and can substantially reduce court congestion.

Yet ADR is not a magic solution. Arbitration can itself become expensive and prolonged. Mediation can fail where parties are unwilling to compromise. There is also a danger that weaker parties may feel compelled to accept settlements simply because they cannot afford prolonged litigation. Most importantly, disposal should not become more important than justice. A settlement statistic is meaningful only when it represents a genuine and fair resolution.

The Road Ahead

India has travelled a long distance - from the informal wisdom of village panchayats to a sophisticated statutory ADR system involving arbitration, conciliation, mediation, Lok Adalats, Permanent Lok Adalats and court-annexed settlement mechanisms. The extraordinary Lok Adalat figures show the potential of this system, while the growth of mediation points towards its next phase.

The challenge now is not merely quantity but quality: competent and independent neutrals, professional training, ethical standards, affordable proceedings, institutional credibility, digital accessibility and reliable national data. ADR should not be regarded as “justice outside the courts.” It is another legitimate pathway to justice. The future Indian justice system should neither be entirely court-centric nor entirely ADR-centric. Courts should adjudicate what must be adjudicated, while disputes capable of settlement should be resolved early, fairly, economically and consensually.