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The field where the Indian Courts have recognized ADR is through the field of Arbitration. Arbitration was initially governed by the Indian Arbitration Act,1940 in the country. The courts were perturbed over the supervision of Arbitral Tribunals and very keen to see whether the arbitrator has exceeded its jurisdiction while deciding the matter or investigating the facts and circumstances of the dispute. But later from the case Food Corporation of India Vs. Jogindarlal Mohindarpal[1] Arbitration was successfully brought forth as a dispute resolution mechanism without any suspicion or queries.

Arbitration is a process of settlement is a tradition in India. Now, it has a social purpose that has to be fulfilled. There are a great need and requirement for arbitration and other dispute mechanisms due to the explosion of litigants in courts established to widen the scope of the Indian legal system by settling disputes. An important aspect of Arbitration is to render speedy justice, fair decision, and equality of law. It must also adhere to the principles of Natural justice and must comply with such practice and procedure which leads to appropriate dispute resolution and also assist to build confidence among the people for various ADR mechanisms. The courts also keep a check on the various mechanism with the norms of justice for its smooth functioning Court also tries to give awards to the parties and the parties have to comply with the decision of the Arbitrator. It is also necessary that the law of Arbitration is simple, fewer complications, and more responsive to the actual situations to resolve disputes effectively and efficiently.

The courts were keen on whether the jurisdiction for arbitration to adjudicate on a matter or not while interpreting the arbitration clause of the agreement. The authority to decide the jurisdiction of the arbitrator to decide on a particular issue was vested or not with Law Courts was decided in Union of India Vs.G.S. Alwal &Co[2]. and in the case State of Orissa and Anr. Vs. Damodar Das[3]

There was a delay in resolving disputes between the parties in the Law Courts and lead to a reduction in the investment of money by different countries. Further, there was no provision in the Arbitration Act, 1940 to settle disputes between an Indian and a Non-Indian as a lawful agreement between the parties and lead to difficulties to refer such matters in Arbitration. In order to avoid such problems in the future, several reforms have been made to the Arbitration Law in the past few years as part of economic reforms initiated in 1991.

Similarly, several steps have been taken to bring judicial reform in the country. A step on the minimization of Courts in the arbitration process by the adoption of the United Nations Commission on International Trade Law (UNCITERAL).Keeping this in mind the Government has introduced new legislation “The Arbitration and Conciliation Act, 1996.

There are distinct features when compared to the Arbitration Act, 1940

  • When there was an agreement, the Court was required to direct the parties to resort to the arbitration as per the agreement.
  • The importance of Arbitral institutions in promoting arbitration was the first time recognized in Law.


[1] 1989(2) SCC 347

[2] 1996(3) SCC 568


[3] 1996(2) SCC 216

  • Courts outlook on Arbitral Awards
  • Need for Arbitral Awards
  • Importance of Arbitral Awards

BY : Subhasree Pati

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