The justice dispensation system in India has come under great stress for several reasons; chief of them being the huge pendency of cases in Courts. In India, the number of cases filed in Courts has shown tremendous increase in recent years for a variety of reasons resulting in pendency and delays underlining the need for alternative dispute resolution methods. It is in this context, the following Resolution was adopted by the Chief Ministers and the Chief Justices of States in a Conference held in New Delhi on 4th December 1993 under the Chairmanship of the then Prime Minister of India and presided over by the Chief Justice of India :-
'The Chief Ministers and Chief Justices were of the opinion that Courts were not in a position to bear the entire burden of justice system and that a number of disputes lent themselves to resolution by alternative modes such as arbitration, mediation and negotiation. They emphasized the desirability of disputants taking advantage of alternative dispute resolution which provided procedural flexibility, saved valuable time and money and avoided the stress of a conventional trial.
It was felt that in a developing country like India with major economic reforms under way within the -work of rule of law, strategies for swifter resolution of disputes for lessening the burden on the Courts and to provide means for expeditious resolution of disputes, there is no better option but to strive to develop alternative modes of dispute resolution by establishing facilities for providing settlement of disputes through arbitration, conciliation, mediation, negotiation, etc.
As the Arbitration Act of 1940 proved ineffective for early settlement of disputes by arbitration, the first major step taken in this direction was the enactment of Arbitration and Conciliation Act, 1996 which was brought into force with effect from August 22, 1996. This Act, based on the UNCITRAL Model Law on International Commercial Arbitration and the UNCITRAL Conciliation Rules, provides the basis for the growth of the ALTERNATIVE DISPUTE RESOLUTION (ADR) movement in India on scientific lines.