This article was authored by Akshita Goyal from SLS Pune and Rahul Naresh from SLS Hyderabad.


Litigation has been overburdening courts due to the procedural formalities that take up time and also due to the quantum of cases that come knocking at the court’s door. In order to help the court out, and in the interests of speedy affordable justice, Alternative Dispute Resolution (ADR) methods came to its rescue. The available ADR methods that exist are arbitration, mediation, conciliation, negotiation, Lok Adalats, and facilitation. Arbitration and mediation as ADR methods are the most used and renowned as compared to the others and while both the methods have proved to be fruitful in their own ways, the question remains as to which method is a better dispute resolution method and why.

Mediation as a process has been spoken quite highly by several legal practitioners, one of whom is the greatest leaders that we know of, Mahatma Gandhi. While explaining a life changing moment, he said, “I realized that the true function of a lawyer was to unite parties riven asunder. The lesson was so indelibly burnt into me that a large part of my time during the twenty years of my practice as a lawyer was occupied in bringing out private compromises of hundreds of cases. I lost nothing thereby–not even money; certainly not my soul.”[1] This realization came after the parties had been referred to arbitration and Gandhi realized that the outcome was not a win-win situation at all and that it would be hard for the defeated party to pay the costs of it.


Litigation is evidently burdening the Indian courts as the incoming suits are much faster than those outgoing, i.e. the number of suits being filed by aggrieved persons is only increasing by the second, because of the never-ending increase in the spectrum of law and the introduction of new wrongs like torts, those under international law, etc., while the speed of the disposal of the cases is much slower. Appeals that go from the District Courts to the High Courts and then the Supreme Court only increase the burden at each level of the judicial hierarchy. Further, the introduction of the Public Interest Litigation (PIL) after the Hussainara Khatoon case[2] has not just made the judiciary often encroach upon the boundaries of the legislature but also proved to be a way of increase in the quantum of cases that exist. The procedural formalities that are required in litigation, though might be a necessary evil for maintaining discipline, unfortunately also prove to be the menace that leads to delay because small mistakes in procedure that allow for appeals or prove to be a reasonable ground for granting orders are contributing to the delay. The pendency of cases that exist at the district court level is abnormally high at about 2.8 crores as of 30th September, 2016.[3] The number of judges have also time and again proved to be lesser than the number required for the faster disposal of the avalanche of cases that exist. As of 7th January, 2018, the 24 High Courts have a sanctioned strength of 1079 judges as opposed to the sanctioned strength of 906 in 2014, but are still functioning with 395 vacancies.[4] While the courts have tried to fast track their procedure and increase their efficiency, the best alternative to this obstacle to justice seems to be quite literally, alternative modes of dispute resolution like arbitration and mediation.

Mediation can be defined as intervention; interposition; the act of a third person who interferes between two contending parties with a view to reconcile them or persuade them to adjust or settle their dispute[5] while arbitration can be defined as the investigation and determination of a matter or matters of difference between contending parties, by one or more unofficial persons, chosen by the parties, and called “arbitrators,” or “referees.”[6]


Arbitration in India is mainly governed by the Arbitration and Conciliation Act, 1996 (hereinafter, referred to as the Act) and the subsequent major amendment made to it w.e.f 23rd October, 2015. Mediation, however, does not have any rigid or specific laws in the form of Acts that govern it, but its governance is left to the discretion of well learned judges who determine mediation in India through case laws. It is, however, given legal recognition through various provisions of the Civil Procedure Code, 1908, the Industrial Disputes Act, 1947 and was advocated as an alternative to legislation through the 129th Law Commission of India Report. Mediation has been advocated by judges themselves for the resolution of multiple disputes of differing natures. It has been looked at and practiced as a viable method of dispute resolution when it comes to serious issues like determining state boundaries in a diverse country like India. Issues like these stir up the habitants of these states, for, they feel connected to their hometown as if they owe an allegiance to the land. The Apex Court in such a tense situation deemed it fit not to resolve the matter on its own, or refer it to arbitration, but to rely on mediation to determine the future of the 2 states- Assam and Nagaland.[7] The Chief Justice of India himself also stepped in to mediate between the involved parties in relation to the Babri Masjid issue. Mediation has also been preferred as the mode of resolution for important domestic disputes including the one between Reliance Company hotshots Mukesh and Anil Dhirubhai Ambani regarding the takeover of the South African Telecom major MTN and between drug manufacturers as a method of resolution for disputes that involve patents, for example, the dispute between Glenmark and Merck.[8] The apex court in a case[9] held that all cases relating to trade, commerce and contracts, consumer disputes and even tortious liability could normally be mediated. The scope that mediation has, to provide as an ADR mechanism is seen through its involvement in the disputes of various legal subjects.

Further, the Apex Court has also asserted its authority and adjudged that mediation should be the preferred ADR method when it comes to matrimonial disputes like custody of child, maintenance, etc. The court in this case[10] looked at the success rate and contributions of the mediation centres in helping the resolution of matrimonial disputes effectively, while at the same time, avoiding litigation. It also directed Family Courts to settle matrimonial disputes through mediation. In disputes with an emotional stake as well, however, if arbitration is employed, it would not only take away the amicability between parties that are or were once part of the same family, but also would advocate the imposition of an arbitral award on the parties that would be passed without their say. On the contrary, mediation would allow the family members to respect the emotions involved and maintain amicable relations, while also having a valid say in the final outcome of the mediation proceeding. These issues may be very delicate at times and therefore require flexible methods to achieve parity which can be provided for by employing mediation.

Amicability of the parties involved is a serious point of contention between the two ADR methods in question- arbitration and mediation. Arbitration resembles a trial procedure wherein the parties’ counsels find evidence to prove their case while at the same time discrediting the other party. This becomes a battle between the parties that results in it ending with the defeat of one party and the victory of another. As Mahatma Gandhi said, “In the meantime mutual ill-will was steadily increasing. I became disgusted with the profession. As lawyers the counsel on both sides were bound to rake up points of law in support of their own clients.” Its inevitable outcome is that the relations that once subsisted between the parties would be destroyed and they would now be willing to lock horns with each other. Mediation, on the contrary, very well preserves the relations of the parties as it respects the amicability that exists between them and uses that very relation to resolve the dispute at hand. This is why the Supreme Court in a case[11] held that lawyers should advise their clients to try for mediation for resolving the disputes, especially where relationships, like family relationships, business relationships, are involved. Additionally, in arbitration, the parties rarely ever communicate with each other and as it resembles a trial procedure, it is the advocates representing them who do the negotiating, if the scope for such negation exists. However, in mediation, it is the parties who do most of the negotiating and it is essential for parties to resolve disputes of their own making. The advocates usually only sit there to guide and facilitate their respective parties as to what the possible approaches might be. The outcome of the mediation proceedings cannot be arrived at without the mutual consensus of the parties which is why their direct communication is extremely necessary. This communication also contributes to them resolving their disputes effectively and subsequently improving their relations with each other as opposed to arbitration wherein the parties would most likely end up deteriorating their relations due to the constant lack of direct uncensored communication between them and the mutual ill will that would arise.

The mediator in a mediation proceeding is merely a facilitator who helps the parties come to a resolution but it is the parties who compromise and settle for an outcome that proves to be victorious for both, thus creating a win-win situation without resulting in the defeat of either. The apex court has also talked about beauty of mediation by stating that, “There is always a difference between winning a case and seeking a solution. Via mediation, the parties will become partners in the solution rather than partners in problems. The beauty of settlement through mediation is that it may bring about a solution which may not only be to the satisfaction of the parties and, therefore, create a win situation, the outcome which cannot be achieved by means of judicial adjudication. Thus, life as well as relationship goes on with Mediation for all the parties concerned and thus resulting into peace and harmony in the society.[12] Mahatma Gandhi also reiterates the importance of creating a win-win situation as the outcome of the proceedings when he says, “both were happy over the result, and both rose in the public estimation. My joy was boundless.[13] This outcome did not take place after arbitration as in this case, it was impossible for Tyeb Sheth to meet the complete amount awarded at the end of arbitral proceeding, and this inability of his friend is what prompted Mahatma Gandhi to resort to mediation as the solution. This shows that creative solutions that stem from compromise may not be available through arbitral proceedings where the arbitrator would be bound by pre-existing law in the form of statutes and precedents. The mediator is given the freedom to come up with creative settlements within the ambit of law, by listening to each parties’ emotional interests, connections with the subject matter of the dispute, their strengths, weaknesses etc. The arbitrator, however, only gets to listen to the parties’ story the way their respective advocates seek to portray it through the discrediting of the other party.

The apex court of our country emphasized the need for a win-win situation to ensure that both the parties are content with the outcome and the proceedings end in the interests of justice, by restating the words used by the well learned Mr.Sriram Panchu, Senior Advocate and Mediator, Mr. Fali S. Nariman, a Senior Advocate of the apex court and a respected jurist that, “the same subject matter of disputation between two parties can be dealt with in two different ways, not necessarily exclusive: first, by attempting to resolve a dispute in such a way that the parties involved win as much as possible and lose as little as possible through the intervention of a third party steeped in the techniques of mediation; and second, (failing this) the dispute would be left to be resolved by each party presenting its case before a disinterested third party with an expectation of a binding decision on the merits of the case: a win-all lose-all, final determination.” The apex court then stated that the second option mentioned may not be the best alternative for us.[14] The jurisprudence of such learned judges is what guides the path to justice and it can be inferred that mediation can provide for the best outcome for the parties involved by creating an acceptable result that contributes to a win-win situation acceptable and arrived at by both the parties involved rather than a win-all lose-all one imposed upon the parties involved by an arbitrator.

The arbitral award has to be rendered within 12 months as per the new Arbitration and Conciliation (Amendment) Act, 2015. This time period however, with the mutual consent of the parties can be extended to 6 months more, thus making it 18 months. This 18-month time period can be further extended by the Court’s discretion if they feel it is needful to do so. However, the court may choose to cut the arbitrator’s fee by 5% for each month that the delay persists.[15] This provision would only lead to a forceful expedition of the arbitral proceedings by the arbitrator who in his interest may look for personal economic gain and this may not be in the interests of justice. This provision would also imply that the rendering of the arbitral award would be a time-consuming process if the court’s discretion is allowed to take a part in it, adding to the already lengthy period of 18 months that the parties might have to undergo. Further, fast track arbitration proceeding also has to render an award within 6 months and this can take place without oral hearings unless deemed fit by the arbitral tribunal or requested for by the parties involved.[16] This might well too be a forceful decision passed by the arbitral tribunal if enough preponderance on the evidence had not taken place and yet their mandate to render an award was about to end. Mediation, however, according to a Bangalore Mediation Centre Report, takes a maximum period of 60 days i.e. 2 months and an average of 2 hours.[17] This proves that mediation as an ADR method is evidently less time consuming and parties seeking earliest termination of their disputes must opt for this method. As arbitration requires gathering and presentation of evidence by both parties, and mediation simply involves amicable discussion between the parties till they reach a settlement or compromise, the time taken for mediation is evidently much lesser when put in relation to arbitration.

The appealable nature of the outcomes of both the methods can also be taken into consideration here, as in arbitration, arbitral awards can be appealed to the courts on various grounds, while in mediation, the final agreement between the parties is usually made and enforced under contract law, and therefore has no scope for appeal. Vague grounds such as “public policy” exist, on the basis of which, an arbitral award can be challenged, but since this term has not been defined anywhere and is completely left to the judge’s discretion, the time taken to adjudicate such a question of law would also add to the burden of the courts. Further, after the new amendment to the Act[18] in 2015, the ground of “patent illegality” has been removed as a ground for appeal only in case of international commercial arbitral awards and not in the case of domestic arbitral awards.[19] This not only neglects the domestic arbitral awards in the mere endeavour to promote international commercial arbitration, but also discriminates between the two in such a way that this vague ground could still be used to increase litigation by filing an appeal without knowing the actual meaning of the undefined words, in the case of a domestic arbitral award. Further, an appeal from international commercial arbitral awards can only be made to the High Courts of competent jurisdiction, while the unamended definition of court applies to domestic arbitral awards wherein they would have to appeal to the district courts of competent jurisdiction first.[20] This would prove to be very time consuming as it would trigger the general form of litigating all over again and would lead to judicial interference which ironically, was exactly what ADR was designed to avoid. In mediation, however, due to the lack of the appealable nature of the rendered outcome, it sticks to its purpose and does not increase litigation while at the same time, increasing the time taken to resolve the dispute. Even if, in the future, the outcome of a mediation proceeding is made appealable, the scope and possibility of such an appeal would be very minimal as the outcome is rendered after both the parties involved, agree to it. Without their mutual consent, the outcome will not be rendered. Therefore, if the parties involved in the mediation wish to change certain terms of the contract, they can mutually agree to do so and amend the provisions of it, without having to approach the court at all. However, in arbitration, the arbitral award is imposed by the arbitrator on the parties without their consent, which inevitably creates the possibility of an appeal being made by the losing party who would most likely not agree to the outcome and in order to avoid its enforcement, would look for ways to overcome it.

The arbitrators in an arbitral proceeding get to determine questions of law and fact just as a well learned, qualified and experienced judge would get to do. However, an arbitrator may not be a legal expert as the Indian law does not have any qualifications laid down for a person to become an arbitrator except the fact that he/she must be of age and of a sound mind. What such a law seeks to provide for, is that arbitral institutions would be enabled to include in their panel experts from various professions ranging from trade, medicine, architecture, etc. who could be called upon to arbitrate disputes that involve their expertise. While this may be helpful to determine questions of fact, this is detrimental to society as these arbitrators are also given the freedom to adjudicate questions of law. In mediation, on the contrary, the mediator does not determine questions of law or fact but only guides the parties towards a mutual settlement as per both of the parties’ interests. This prevents an unqualified person from getting in the way of the judicial process and determining questions of law that he/she may not even completely understand. It thus ensures that the legal sanctity in the case is duly maintained.

Arbitral proceedings though presumably confidential, have exceptions to their confidentiality in English law, on the grounds of interests of justice,[21] irregularity of arbitral award,[22] when the parties’ consent to its disclosure or when it is reasonably necessary to disclose information to protect the interests of the parties to arbitration,[23] etc. Further, the Arbitration and Conciliation Act, 1996, talks about the confidentiality of conciliation proceedings[24] but doesn’t have any specific provision regarding the same when it comes to arbitration. On the contrary, when it comes to mediation, the apex court has said that, “In this connection, we would like to state that mediation proceedings are totally confidential proceedings. This is unlike proceedings in Court which are conducted openly in the public gaze. If the mediation succeeds, then the mediator should send the agreement signed by both the parties to the Court without mentioning what transpired during the mediation proceedings. If the mediation is unsuccessful, then the mediator should only write one sentence in his report and send it to the Court stating that the ‘Mediation has been unsuccessful’. Beyond that, the mediator should not write anything which was discussed, proposed or done during the mediation proceedings. This is because in mediation, very often, offers, counter offers and proposals are made by the parties but until and unless the parties reach an agreement which is signed by them, it will not amount to a concluded contract. If the happenings in the mediation proceedings are disclosed, it will destroy the confidentiality of the mediation process.”[25] It has also been reiterated multiple times that there are no exceptions to the confidentiality of the mediation proceedings. The California Supreme Court emphatically and unanimously emphasized[26] on this and also the CIC in India[27].

Additionally, as per Section 8 of the Act, the courts cannot refer those cases to arbitration that they think would deem fit for it if the parties do not have an arbitration clause or agreement in place. The Supreme Court of India also upheld the same in a recent judgement wherein the parties could not refer the case to arbitration due to the absence of an arbitration clause and it was also stated that the matter can only be referred to arbitration through the filing of a joint memo by the parties for the same.[28] This prevents the court from acting on its best judgment and not being able to take the advantage of an existing and well-established ADR method- arbitration, in order to reduce the burden on itself. However, courts can refer cases to mediation regardless of the parties’ intent to do the same if they believe that there is an element of settlement present in the dispute at hand. This allows the courts to use the ADR mechanism at its disposal and reduce the avalanche of cases that lie upon the courts awaiting resolution. Courts have often not only referred cases to mediation but also emphasized the need for doing so in various disputes like matrimonial disputes,[29] border disputes,[30] etc. As per Section 25 of the Act, the arbitral tribunal is given the power to render awards even without the presence of all the parties involved as long as sufficient notice was provided to the parties, asserting the details of the hearing. This implies that adding to the imposition of the arbitral award, the parties could now have their fate determined without their presence or say in the given matter as for whatever personal reason they were unable to attend, the arbitrator would essentially be determining the case only on the basis of the evidence provided by the solitary party present at the hearing. In mediation however, the presence both the parties is essential to the determination of the final outcome as it cannot be passed without the mutual consent and compromise of both the parties involved. This allows them to have direct and active participation in the determination of the fate of the dispute at hand.

Mediation also appears to be more convenient than arbitration as in the latter, the arbitrator gets to decide the venue, timings, etc. However, in mediation, the parties get to have a say regarding the same. Further, in arbitration, the arbitrator fixes a formal trial-like procedure to be followed with the gathering of evidence, presenting of witnesses, hearing arguments, etc., but in mediation the proceedings are relatively informal and the mediator is only present to facilitate the process. As per the amended Section 24 of the Act, the oral hearings must take place on a day to day basis and if a party requires an adjournment, he/she must present sufficient cause for it. This not only makes it inconvenient for the parties as they would now not be able to go on with their daily routine, but also allows for exemplary costs to be imposed on the party that fails to produce sufficient cause for adjournment. These costs would add to the already costly process of arbitration. Mediation, on the contrary, happens as per the parties’ convenience and there is no provision that requires it to take place on a day to day basis. Further, the mediation proceedings are far less expensive than arbitration is, thus contributing to be a more convenient ADR method to opt for. In mediation, the time taken is much lesser than in arbitration. So, the parties would be paying their advocates to take part in the mediation proceedings only for a couple of hours to a maximum of 2-3 months as compared to arbitration wherein they would be paying their advocate’s fees for 18 months and possibly longer. Further, arbitration can prove to be costlier than mediation because of its resemblance to a trial and therefore, the requirement of gathering evidence that would contribute to the costs. As per the newly inserted fourth schedule of the Act, the arbitrator’s fee is fixed and there is less to no scope of pro bono services in this area of dispute resolution. However, in mediation, mediators can often choose to offer pro bono services if they feel that it is necessary.[31] This would thus, contribute to lowering the costs of the mediation proceeding. Additionally, due to the informal and consensual nature of mediation, the parties can choose to opt out of it if they believe that this proceeding would not lead to a desirable outcome for both the parties involved, and so they would not be mounting up unnecessary costs. In arbitration, the costs would mount up even if a desirable outcome is not likely as the parties are not allowed to opt out of the proceedings as and when they wish to. Words said by Joseph Grynbaum, a trained mediation and arbitrator, “an ounce of mediation is worth a pound of arbitration and a ton of litigation” continue to be true.


To conclude, mediation proves to be better than arbitration is many aspects. While arbitration looks at the past and focuses on adjudication, mediation looks at the future and focuses on cooperation and negotiation. Mediation seeks to preserve the amicable relations between the parties involved while at the same time, producing a win-win situation for both the parties. Arbitration, however, results in a win all lose all situation that would deteriorate the relations between the parties involved. In mediation, due to the unappealable nature of the outcome, litigation and interference by the courts is truly avoided and upholds the basic principle as an ADR method is supposed to, while the case is not the same in arbitration as the arbitral awards rendered can be appealed on certain grounds. This results in court’s interference, that not only increases the burden on litigation but also results in a time-consuming process. The time taken in general for mediation is very low when compared to arbitration proceedings and the insertion of new provisions into the Act have also not been able to match the speed and efficiency of a mediation proceeding in India. Further, arbitrators though unqualified, get to determine questions of law along with questions of fact which might not be in the best interests of the parties as they lack legal expertise, however, in mediation such a situation is prevented as the mediator merely facilitates the process and doesn’t therefore, determine or adjudicate any questions of law.

The confidentiality of proceedings conducted through ADR methods is an essential factor as to why parties often opt for such methods as well. This is because they wish to keep their trade secrets, or otherwise, their personal issues private. While mediation unconditionally protects their secrets and respects the confidentiality that they expect from it, arbitration, however, has exceptions to the confidentiality of the proceedings. Arbitration has also proved to be costlier than mediation, thus adding to the inconvenience it already causes to the parties involved, while mediation continues to be more cost effective and convenient than the former. Therefore, the preferred and more efficient ADR method should be mediation over arbitration in India not only to secure the interests and respect the wishes of the parties but also in the interests of justice as it would contribute to reducing the burden on courts through litigation which is the primary purpose of the existence of an ADR method. It is in the best interests of society to stand by the Supreme Court Bench’s words when they firmly opinionated that, “mediation is new dimension of access to justice. As it is one of the best forms, if not the best, of conflict resolution.[32] Hence, mediation trumps arbitration.



  1. M.K. Gandhi’s, An Autobiography- The Story Of My Experiments With Truth (1927).
  2. Hussainara Khatoon and Ors v. Home Secretary, State of Bihar, Patna, AIR 1979 SC 1369.
  3. Richa Kachhwaha, ‘See You In Court’ Or ‘See You Out Of Court’? A Burdened Judicial System – Can ADR System Be An Answer? (Part I), Live Law (April 21, 2017, 7:07 PM),
  4. PTI, India’s judge-population ratio goes up marginally, The Indian Express (Jan 7, 2018, 1:52 PM),
  5. 10th edition, Black’s Law Dictionary (2014)
  6. 10th edition, Black’s Law Dictionary (2014); Duren v. Getchell, 55 Me. 24; Henderson v. Beaton, 52 Tex. 43; Boyden v. Lamb, 152 Mass. 416, 25 N. E. 609; In re Curtis-Castle Arbitration, 64 Conn. 501. 30 Atl. 769. 42 Am. St. Rep. 200.
  7. State of Assam v. Union of India and Ors, (2010) 10 SCC 408.
  8. Arjun Pal, The Impact of Mediation in India, iPleaders (August 31, 2017)
  9. Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd., (2010) 8 SCC 24.
  10. K. Srinivas Rao v. D.A. Deepa, AIR 2013 SC 2176.
  11. B.S. Krishna Murthy and Ors. V. B.S. Nagaraj and Ors., AIR 2011 SC 794.
  12. Vikram Bakshi and Ors. v. Sonia Khosla (Dead) By L.Rs., (2014) 15 SCC 80.
  13. Gandhi, supra, 1.
  14. Suresh Narayan Kadam and Ors. v. Central Bank of India and Ors., AIR 2016 SC 714.
  15. Arbitration and Conciliation Act, 1996, Sec. 29A.
  16. Arbitration and Conciliation Act, 1996, Sec. 29B.
  17. Akanksha Mathur, How Does the Mediation Process Work- Steps and Procedure, iPleaders (December 28, 2017)
  18. Arbitration and Conciliation Act, 1996.
  19. Arbitration and Conciliation Act, 1996, Sec. 34.
  20. Arbitration and Conciliation Act, 1996, Sec. 2(e).
  21. Teekay Tankers v. STX O&S, (2017) EWHC 253 (Comm).
  22. Symbion Power v. Venco, (2017) EWHC 348 (TCC).
  23. Ali Shipping Corporation v. Shipyard Trogir, (1998) 2 All ER 136.
  24. Arbitration and Conciliation Act, 1996, Sec. 75.
  25. Moti Ram (D) Thr. L.Rs. and Ors. v. Ashok Kumar and Ors., (2011) 1 SCC 466.
  26. Foxgate Homeowners Association v. Bramalea California, Inc. (2001) 26 Cal.4th 1, 4.
  27. Rama Aggarwal v. PIO, Delhi State Legal Services Authority, MANU/CI/0199/2015.
  28. Kerala State Electricity Board and Anr. v. Kurien E. Kathilal and Anr, MANU/SC/0231/2018.
  29. K. Srinivas Rao v. D.A. Deepa, AIR 2013 SC 2176.
  30. State of Assam v. Union of India and Ors, (2010) 10 SCC 408.
  31. Niranjan J. Bhatt, Court Annexed Mediation, Law Commission of India (Oct. 15, 2002)
  32. Vikram Bakshi and Ors. v. Sonia Khosla (Dead) By L.Rs., (2014) 15 SCC 80.


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