Arbitration and alternative dispute resolution are often used as if they mean the same thing. They do not. Arbitration is one mechanism inside ADR. Conciliation, arbitration and mediation are three of the mechanisms sitting under it, and each answers one question differently: who decides.
That question is where most confusion starts. Litigation, arbitration and mediation each end in a different kind of finality. Negotiation, mediation and arbitration sit at three different points on a scale of party control. Conciliation is the one most comparisons skip, and it sits closer to arbitration than to mediation, for a specific statutory reason set out below.
Who Decides?
A conciliator may propose a settlement. A mediator, by statute, may not.
Section 67(4) of the Arbitration and Conciliation Act, 1996: "The conciliator may, at any stage of the conciliation proceedings, make proposals for a settlement of the dispute. Such proposals need not be in writing and need not be accompanied by a statement of the reasons; therefore, [1].
Section 16 of the Mediation Act, 2023 states the opposite. The mediator's role is to "facilitate voluntary resolution of the dispute by the parties," and the section requires the mediator to tell the parties, expressly, that "it is the responsibility of the parties to take decision regarding their claims" and that the mediator "shall not impose any settlement" [2].
One complication. Section 3(h) of the Mediation Act, 2023 defines "mediation" to include conciliation, alongside pre-litigation, online and community mediation [3]. The 1996 Act still treats conciliation as a separate process with its own chapter and its own proposal power under Section 67(4).
Two statutes now define the boundary differently. In practice, commercial conciliation still runs under Part III of the 1996 Act, where the proposal power sits, so the distinction above holds for most matters practitioners will actually see.
Adjudication, arbitration and mediation differ on the same axis, at the extremes. An arbitrator decides. A mediator does not. A conciliator sits between the two: the parties decide, but the conciliator is permitted to say what the decision should be.
Control, Cost, Time, Enforcement
| Arbitration | Conciliation | Mediation | |
|---|---|---|---|
| Who decides | Arbitrator | Parties, with proposals from the conciliator | Parties only |
| Governing statute | Arbitration and Conciliation Act, 1996, Part I | Arbitration and Conciliation Act, 1996, Part III (commercial); Industrial Disputes Act, 1947 (labour) | Mediation Act, 2023 |
| Statutory time limit | 12 months from completion of pleadings, +6 months by consent, then court order only [4] | No fixed deadline for commercial conciliation. Labour conciliation carries one: a conciliation officer's report is due within 14 days of commencement, extendable only by written agreement of the parties [5] | 120 days from first appearance, +60 days by consent [6] |
| Confidentiality | Statutory, Section 42A, since 2019 | Statutory, Section 75, since 1996 | Statutory, Section 22, extends to opinions and proposals made during the process [7] |
| How it binds | Court decree, Section 36 [8] | Status of an arbitral award, Section 74, once signed [9] | Court decree, Section 27 [10] |
| Grounds to challenge | Narrow, Section 34 | Very limited | Fraud, corruption, impersonation, or unfit subject matter, Section 28 [10] |
Cost and Delay in Arbitration
The 12-month limit under Section 29A is the tightest deadline of the three on paper [4]. Two facts complicate that in practice.
First, cost. Arbitrator fees were unregulated until the 2015 amendment inserted the Fourth Schedule. Ad hoc tribunals continued revising fees mid-proceeding until the Supreme Court capped fees under the Fourth Schedule at ₹30 lakh per arbitrator, in Oil and Natural Gas Corporation Ltd. v. Afcons Gunanusa JV, decided 30 August 2022 [11].
Second, delay. A 2026 empirical study in Arbitration International, analysing 2,020 Section 34 petitions filed before the Delhi High Court between 2021 and 2024, found the state is the most frequent challenger of arbitral awards in India, and that judicial timelines on these challenges routinely exceed the statutory limits set to constrain them [12].
Neither fact makes arbitration the wrong choice. Both facts mean the 12-month figure is a ceiling, not an expectation, particularly where the counterparty is a government body or the tribunal is ad hoc.
Where Each Is Actually Used
Arbitration: commercial contracts, construction disputes, any clause drafted for a final, enforceable answer.
Mediation: family and matrimonial disputes, business relationships worth preserving, and, since a 2018 amendment inserted Section 12A into the Commercial Courts Act, 2015, most commercial disputes not seeking urgent interim relief. The Supreme Court confirmed Section 12A is mandatory, not directory, in Patil Automation Pvt. Ltd. v. Rakheja Engineers Pvt. Ltd., decided 17 August 2022 [13].
Conciliation: its largest footprint in India is not commercial. It is labour disputes. The Industrial Disputes Act, 1947 has required government-appointed conciliation officers since before independence-era labour law was consolidated.
Section 4 provides for their appointment; Section 12(2) empowers them to "do all such things as he thinks fit for the purpose of inducing the parties to come to a fair and amicable settlement," language that anticipates Section 67(4)'s later proposal power for commercial conciliators by nearly fifty years. Section 12(6) is the deadline already noted above: 14 days, extendable only in writing, with the parties' agreement [14].
Most confusion between these three survives past the point where people have learned the basics. Everyone learns arbitration binds. Fewer learn that conciliation, not mediation, is the mechanism closer to arbitration on control, because a conciliator can propose an outcome and a mediator by law cannot. Fewer still know that "conciliation has no deadline" is only true for half of it.
That distinction decides which process actually gets you what you wanted. A mediator who stays hands-off will frustrate a party who wanted a neutral opinion. A conciliator who proposes terms will frustrate a party who wanted the other side to talk, not be told what to do. We run Online Mediation and Online Arbitration as separate tracks, with neutrals trained and evaluated differently for each, because the statutory difference above is not a technicality. It is the entire basis on which a party should be choosing.
Endnotes
[1] Section 67(4), Arbitration and Conciliation Act, 1996 — https://indiankanoon.org/doc/495258/
[2] Section 16, Mediation Act, 2023 — https://egazette.gov.in/WriteReadData/2023/248775.pdf
[3] Section 3(h), Mediation Act, 2023 — https://www.barandbench.com/law-firms/view-point/mediation-act-2023-latest-amendments-guide
[4] Section 29A, Arbitration and Conciliation Act, 1996, as substituted by the Arbitration and Conciliation (Amendment) Act, 2019 — https://ibclaw.in/section-29a-time-limit-for-arbitral-award/
[5] On commercial conciliation carrying no fixed deadline: Section 76, Arbitration and Conciliation Act, 1996 — https://ibclaw.in/section-76-termination-of-conciliation-proceedings/. On the labour conciliation deadline: Section 12(6), Industrial Disputes Act, 1947 — https://indiankanoon.org/doc/1139033/
[6] Section 18, Mediation Act, 2023 — https://indiankanoon.org/doc/177697739/
[7] Section 22, Mediation Act, 2023 — https://ibclaw.in/section-22-of-mediation-act-2023-confidentiality/; Section 42A and Section 75, Arbitration and Conciliation Act, 1996 — https://ibclaw.in/section-42a-confidentiality-of-information/ and https://ibclaw.in/section-75-confidentiality/
[8] Section 36, Arbitration and Conciliation Act, 1996, as quoted in Central Organisation for Railway Electrification v. ECI-SPIC-SMO-MCML (JV), 2024 INSC 857 — https://api.sci.gov.in/supremecourt/2019/28531/28531_2019_1_1502_57055_Judgement_08-Nov-2024.pdf
[9] Section 74, Arbitration and Conciliation Act, 1996, and its application confirmed in Haresh Dayaram Thakur v. State of Maharashtra and Ors., (2000) 6 SCC 179 — https://indiankanoon.org/doc/1600086/
[10] Sections 27 and 28, Mediation Act, 2023 — https://ibclaw.in/section-27-of-mediation-act-2023-enforcement-of-mediated-settlement-agreement/
[11] Oil and Natural Gas Corporation Ltd. v. Afcons Gunanusa JV, Supreme Court of India, judgment dated 30 August 2022 — https://www.livelaw.in/law-firms/law-firm-articles-/arbitral-fee-supreme-court-fourth-schedule-arbitration-and-conciliation-act-ongc-law-commission-report-pioneer-legal-215942
[12] Mohit Yadav, Gaurav Pathak and Anush Ganesh, "Empirical insights on section 34 challenges: the state, judicial delay, and India's arbitration credibility," Arbitration International, Oxford University Press (2026) — https://academic.oup.com/arbitration/advance-article/doi/10.1093/arbint/aiaf030/8713773
[13] Section 12A, Commercial Courts Act, 2015 — https://www.lexology.com/library/detail.aspx?g=16b68408-0096-4193-a2cf-b9dd42983b0b; Patil Automation Pvt. Ltd. and Ors. v. Rakheja Engineers Pvt. Ltd., (2022) 10 SCC 1 — https://indiankanoon.org/doc/164693074/
[14] Sections 4 and 12, Industrial Disputes Act, 1947 — https://indiankanoon.org/doc/1570927/
