Quick Answer: Alternative dispute resolution in India is no longer the backup plan when courts feel too slow. Between the Mediation Act 2023, mandatory pre-institution mediation for commercial disputes, and three rounds of amendments to the arbitration law, the framework has changed enough that in 2026, ADR is often where disputes are supposed to go first, not last.

Courts Were Never Designed for This Volume

India has over 4.57 crore pending cases across its court system. High courts are running at roughly 33 percent vacancy in judicial positions. This is not a recent development. The backlog has been building for decades, and anyone who has actually filed a case in a district court knows what it means in practice. You file, you wait. You get a date, you wait again. A commercial dispute that should take months can run for years, and by the time there is a judgment, the situation on the ground has often changed completely.

This is the context in which alternative dispute resolution started being taken seriously, not as a philosophical preference for amicable settlements, but as a practical response to a system that simply could not process everything being put through it.

What the Law Has Actually Done About It

The Arbitration and Conciliation Act, 1996, was the starting point. It gave arbitration a proper legal foundation, made awards enforceable as court decrees, and aligned India with international standards. The problem was the gaps it left in practice. Ad hoc arbitration, where parties handled everything informally without institutional support, produced inconsistent results. And the automatic stay on enforcement of awards, triggered simply by filing a challenge, meant a losing party could stall for years at minimal cost.

The 2015 amendments removed that automatic stay and introduced time limits for proceedings. The 2019 amendments pushed institutional arbitration and created the India International Arbitration Centre. The 2021 amendment tightened the fraud exception that was being used to obtain stays without genuine grounds. Three rounds of amendments in six years reflects how persistent the implementation problems were, and how seriously the government took fixing them.

Then came the Mediation Act, 2023. Mediation in India before this was largely court-annexed and inconsistent. The Act changed the foundation: it created the Mediation Council of India, set standards for mediator accreditation, and under Sections 27 and 28 made mediated settlements enforceable as civil court decrees. That enforceability question, what happens if someone walks away from a mediated settlement, used to be a genuine objection to choosing mediation. It is less of one now.

The Act also brought in pre-litigation mediation for certain disputes and recognised online dispute resolution under Section 30. For commercial disputes between parties in different cities, removing the logistical friction of having to be in the same room has made mediation a more realistic first step.

The Part That Actually Changes Day-to-Day Practice

The Pre-Institution Mediation and Settlement mechanism under the Commercial Courts Act requires parties to attempt mediation before filing certain commercial disputes in court. Combined with the Mediation Act’s pre-litigation mediation provisions, the practical effect is that a significant number of disputes that would previously have gone straight to filing are now resolving at the mediation stage. Not because people have become more cooperative, but because the process is faster, the settlement is enforceable, and going to court first is no longer the automatic choice.

Where this breaks down is when one party treats mediation as a procedural hoop to jump through rather than a genuine attempt to settle. The Act has good faith requirements, but how aggressively these are enforced is still being tested. Mediation works when both parties have some interest in resolving the matter. It works less well when one side has decided it wants a court judgment and is using mediation to buy time.

What Actually Matters When You Are in a Dispute

The arbitration clause in a contract is usually drafted once, when the relationship is good, and then forgotten. It only matters when things go wrong, at which point a vague clause becomes very expensive. A clause that names an institution, specifies a seat, and defines the number of arbitrators creates a workable process. A clause that just says disputes will be resolved by arbitration, without any of that detail, creates a dispute about procedure before the substantive dispute is even addressed.

Core Legal Solutions advises on dispute resolution across arbitration, mediation, and litigation. The observation that holds across matters is straightforward: the mechanism decision, which forum and which process, is almost always made too late. In 2026, with a mature ADR framework in place, getting that right before a dispute arises is considerably cheaper than fixing it after one has.