Alternative Dispute Resolution: Out of Court Settlement – A Win Win Alternative to Court Battles.

Courts are an essential institution without which society would end up in chaos. Their importance cannot be emphasized enough, though many of the disputes which arise between individuals or organizations are such that, they are solvable without the interference of the judicial authorities. 

Such conflicts, which do not require the juridical system, instead, need a specific set of formal regulations to achieve their end. Dispute resolution resolves the conflicts that occur amongst individuals or organization. In turn, the judicial burden is reduced.  What is Alternative Dispute Resolution?

ADR involves continuous efforts made by a third party, who is neutral and assists the disputing parties to come to a settlement. The qualification and the skill of the neutral third party vary, concerning the modes of dispute resolution.

Nowadays, due to the vast resources required for litigation, people prefer alternative dispute resolution methods to settle matters which do not require the intervention of judicial authority.  

Methods of Alternative Dispute Resolution.

  • Arbitration.
  • Mediation.
  • Conciliation.
  • Negotiations.


Arbitration is a mode of ADR wherein the dispute between the parties goes through a process to achieve an amicable resolution by an impartial third party known as an ‘arbitrator,’ without recourse to litigation.    In the case of arbitration, the arbitrator, after reviewing the dispute between the parties comes to a settlement. Such a decision taken by an arbitrator shall be binding on both parties. Unlike other methods of dispute resolution, once the parties have submitted a matter to arbitration, neither can withdraw from the procedure.

Arbitration can either be voluntary or mandatory. In the case of compulsory arbitration, the parties to the dispute enter into Arbitration either under a statute, an order of the court, or through a specific clause included in the contractual agreement between the parties.    Whereas on the other hand, in the case of voluntary arbitration, it is up to the discretion of parties to enter into arbitration. The decision that results from the proceeding is known as an ‘arbitral award.’

Advantages of arbitration:

  • -Flexibility- Arbitration proceedings are flexible and more economically feasible compared to litigation.
  • -Time-Consuming- Arbitration proceedings occur at an expeditious rate as compared to Litigation; therefore, it saves time for both parties.
  • -Confidentiality- The disputes which are subject to arbitration are treated with privacy, and are not released to the public.
  • -Arbitrator- The parties have the liberty to choose an arbitrator to handle their dispute.
  • -Enforceability- Arbitration awards are generally easier to enforce as compared to court verdicts.

Disadvantages of arbitration:

  • If arbitration is mandatory as per the contract between the parties, then their right to approach the court is waived.
  • There is a very limited avenue for appeals.
  • Arbitration does not provide for the grant of interlocutory applications.
  • Arbitration awards are not directly enforceable; they are executable subject to judicial sanction.


Mediation is a mode of dispute resolution, where an amicable decision arises with the help of a third party known as a ‘mediator,’ without recourse to the court of law. It is a voluntary process, and unlike arbitration, it is more flexible; therefore, the parties to the dispute are under no obligation to agree to the settlement.    Thus, an agreement taken via mediation shall be binding upon the parties, only as long as they agree to it. There may be instances where parties are advised to adhere to Mediation, however, under such circumstances, the result is up to the parties. Therefore, Mediation is a process where the parties are in total control over their final settlement.    Here, the mediator only acts as a facilitator and does not interfere in the decision of the dispute. Therefore, it is a win-win pact.

Advantages of mediation:

  • Parties have complete control over the settlement.
  • Less stress as compared to litigation and arbitration.
  • The relationship between the parties isn’t overly damaged.
  • Mediation proceedings are confidential.
  • The process resolves the dispute quickly.

Disadvantages of mediation:

  • Since the decision is at the discretion of the parties, there is the possibility that a settlement between the parties may not arise.
  • It lacks the support of any judicial authority in its conduct.
  • The absence of formality- Mediation proceedings are lacking in any procedural formality since they are not based on any legal principle.
  • The truth of an issue may not be revealed.


Conciliation is a method of dispute resolution wherein the parties to a dispute come to a settlement with the help of a conciliator. The conciliator meets with the parties both together and separately to enter into an amicable agreement.    Here, the final decision may be taken by reducing tensions, improving communications, and adopting other methods. It is a flexible process, therefore allowing the parties to define the content and purpose of the proceeding. It is risk-free and is not binding upon the parties unless they sign it.

Advantages of conciliation:
  • Flexibility: Since the conciliation process is informal, it is flexible.
  • The conciliator is often an expert in the disputed field.
  • Conciliation proceedings, like any other form of ADR, is economical as compared to litigation.
  • The parties to the dispute have the liberty to approach the court of law, if unsatisfied with the proceeding.

Disadvantages of conciliation:
  • -The process is not binding upon the parties to the dispute.
  • -There is no avenue for appeal.
  • -The parties may not achieve a settlement to their conflict.


Negotiation is a method of dispute resolution whereby a dispute between two individuals or groups is settled amicably by an impartial third person called as a negotiator, using different techniques. The negotiator, in this form of resolution, uses various communication methods to bring the parties of the dispute to a settlement.    The primary aim of this type of dispute resolution is to reach an agreement that is fair and acceptable by the parties. The parties engage in the dispute with each other until they reach a desirable outcome for all involved.

Advantages of Negotiation:

  • Flexibility: since negotiation is an informal process, it is relatively flexible.
  • Quick resolutions as compared to litigation.
  • It facilitates in maintaining a healthy relationship between the disputing parties.
  • Takes place in a private environment

Disadvantages of Negotiation:
  • The parties to the dispute may not come to a settlement.
  • Lack of legal protection of the parties to the conflict.
  • Imbalance of power between the parties is possible in negotiation.


If you are involved in the early-goings of a business dispute, then chances are that you’ve considered the possibility of a settlement (i.e., a negotiated compromise where both parties agree to an end to the dispute and to further litigation).    Despite the fact that the majority of cases end in a settlement, they are only vaguely understood by most people. As such, plaintiffs may not realize the point of settlement and the benefits in engaging in negotiations in order to reach a settlement compromise.

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