Litigation never creates harmony among the litigants. In an adversarial system, it is inevitable that one party will come out as a loser. This naturally breeds bitterness in the relationship between the parties. In contrast, a collaborative approach to solve the problems is the characteristic feature of Alternative Dispute Resolution Mechanisms. However the method to be chosen for resolution depends on the nature of the dispute and the mindset of the parties.
If the parties are willing to come together to agree on a common goal, then mediation or conciliation can be opted as the alternative mechanism for dispute resolution. By virtue of the introduction of Section 89 into the Code of Civil Procedure, the court before which a matter is pending is empowered to refer the parties to any of the ADR methods after seeking their willingness. But if the parties want to settle the dispute judicially through a neutral third party of their choice which has the status of a decree of the court, then arbitration offers the better alternative. Arbitration is the process of resolving disputes between two or more parties by referring the same to an impartial third party whose decision is considered to be final and binding on them.
Parliament enacted The Arbitration and Conciliation Act, 1996 to consolidate and amend the law relating to arbitration in India. The main objective of the Act was to promote dispute resolution through arbitration, and offer arbitration as a cost effective and speedy mechanism for dispute resolution. In this paper the author intends to convey the drawbacks in the implementation of the Arbitration and Conciliation Act and holds the view that radical changes are needed both in law and in practice in order to offer arbitration as an effective Alternative Dispute Resolution Mechanism.