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ADR and Arbitration MCQs for CLAT PG

CLAT PG ADR and Arbitration questions 1-20 of 20, with answer keys and explanations covering arbitration agreements, tribunals, awards, court intervention, mediation, conciliation, and enforcement.

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Revise core LLB subjects through CLAT PG MCQs, passage-led questions, answer keys, explanations, statutes, and exam-oriented legal principles.

  • Arbitration Act Fundamentals5
  • Lok Adalat and Gram Nyayalayas5
  • Mediation Act and Commercial Mediation5
  • Sectoral ADR5
Passage or principleArbitration and Conciliation Act, 1996, Sections 5, 7, 8, 9, 16, 17, 34 and 36

Indian arbitration law is built around party autonomy, limited court intervention and tribunal competence. A valid arbitration agreement sends covered private disputes to arbitration, while courts intervene only at points permitted by the statute. The tribunal may rule on its own jurisdiction, grant interim measures after constitution, and decide procedure without being tied to the Code of Civil Procedure or evidence law. Court control is preserved at important points: reference to arbitration, interim protection, appointment assistance, setting aside on limited grounds, and enforcement. The post-2015 framework also rejects automatic stay merely because an award is challenged.

Question 1EasyArbitration Act Fundamentals

Which idea best explains why a tribunal may decide objections to its own jurisdiction?

  1. A

    Kompetenz-kompetenz under Section 16.

  2. B

    Res judicata under the Code of Civil Procedure.

  3. C

    Doctrine of election under property law.

  4. D

    Strict liability under tort law.

View answer and explanation

Correct answer: A. Kompetenz-kompetenz under Section 16.

Section 16 embodies kompetenz-kompetenz. It allows the arbitral tribunal to rule on jurisdictional objections, including objections to the existence or validity of the arbitration agreement.

Source note: Arbitration and Conciliation Act, 1996, Sections 5, 7, 8, 9, 16, 17, 34 and 36

Question 2MediumArbitration Act Fundamentals

What does limited court intervention under Section 5 mean?

  1. A

    Courts can never assist arbitration.

  2. B

    Courts supervise every procedural order.

  3. C

    Courts intervene only where the Arbitration Act permits intervention.

  4. D

    Courts replace arbitrators in every commercial dispute.

View answer and explanation

Correct answer: C. Courts intervene only where the Arbitration Act permits intervention.

Section 5 is a restraint provision. It does not abolish court powers; it channels them through specific statutory gateways.

Source note: Arbitration and Conciliation Act, 1996, Sections 5, 7, 8, 9, 16, 17, 34 and 36

Question 3EasyArbitration Act Fundamentals

After the tribunal is constituted, which provision most directly supports tribunal-granted interim measures?

  1. A

    Section 34.

  2. B

    Section 17.

  3. C

    Section 48.

  4. D

    Section 73.

View answer and explanation

Correct answer: B. Section 17.

Section 17 empowers the arbitral tribunal to grant interim measures. Section 9 concerns court interim measures, especially before tribunal constitution or where court assistance is appropriate.

Source note: Arbitration and Conciliation Act, 1996, Sections 5, 7, 8, 9, 16, 17, 34 and 36

Question 4MediumArbitration Act Fundamentals

Filing a Section 34 challenge after the 2015 amendments ordinarily has what effect on enforcement?

  1. A

    It automatically stays enforcement.

  2. B

    It converts the award into a mediated settlement.

  3. C

    It destroys the award immediately.

  4. D

    It does not by itself stay enforcement; a separate stay order is needed.

View answer and explanation

Correct answer: D. It does not by itself stay enforcement; a separate stay order is needed.

The amended Section 36 removed automatic stay. A party challenging the award must seek stay from the court.

Source note: Arbitration and Conciliation Act, 1996, Sections 5, 7, 8, 9, 16, 17, 34 and 36

Question 5MediumArbitration Act Fundamentals

Which dispute is least suitable for private arbitration under the passage logic?

  1. A

    A payment dispute under a supply contract.

  2. B

    A serious criminal prosecution.

  3. C

    A breach of a shareholders agreement.

  4. D

    A rent calculation dispute under a commercial lease.

View answer and explanation

Correct answer: B. A serious criminal prosecution.

Arbitration is suited to private civil and commercial disputes. Serious criminal prosecution involves public law and sovereign adjudication and is generally non-arbitrable.

Source note: Arbitration and Conciliation Act, 1996, Sections 5, 7, 8, 9, 16, 17, 34 and 36

Passage or principleMediation Act, 2023 / Commercial Courts Act, 2015, Section 12A

Mediation is a consensual process in which a neutral mediator assists parties to reach settlement. The mediator does not adjudicate the dispute. Modern Indian law recognises mediated settlement agreements, confidentiality, mediator neutrality, online mediation and categories of disputes that are not fit for mediation. Commercial litigation has a separate pre-institution mediation filter under Section 12A of the Commercial Courts Act where the suit does not contemplate urgent interim relief. The policy aim is to resolve suitable disputes early while preserving access to court where settlement is inappropriate or urgency is genuine.

Question 6EasyMediation Act and Commercial Mediation

Which statement best captures the mediator role?

  1. A

    The mediator facilitates settlement but does not impose a binding adjudicatory decision.

  2. B

    The mediator acts as a Sessions Judge.

  3. C

    The mediator issues an arbitral award after trial.

  4. D

    The mediator conducts cross-examination under the evidence law.

View answer and explanation

Correct answer: A. The mediator facilitates settlement but does not impose a binding adjudicatory decision.

Mediation is facilitative and consensual. The binding outcome, if any, comes from a valid settlement agreement, not from a mediator-imposed decision.

Source note: Mediation Act, 2023 / Commercial Courts Act, 2015, Section 12A

Question 7MediumMediation Act and Commercial Mediation

Why are some disputes marked as not fit for mediation?

  1. A

    Because mediation is illegal in India.

  2. B

    Because no civil dispute can ever settle.

  3. C

    Because private parties cannot discuss settlement.

  4. D

    Because some matters involve public rights, status, serious offences or statutory functions requiring adjudication.

View answer and explanation

Correct answer: D. Because some matters involve public rights, status, serious offences or statutory functions requiring adjudication.

Non-mediable categories protect public interest and third-party rights. Private settlement cannot replace adjudication where the subject matter demands formal legal determination.

Source note: Mediation Act, 2023 / Commercial Courts Act, 2015, Section 12A

Question 8MediumMediation Act and Commercial Mediation

Under Section 12A of the Commercial Courts Act, pre-institution mediation is especially relevant when:

  1. A

    The dispute is a murder trial.

  2. B

    The plaintiff files an election petition.

  3. C

    The suit does not contemplate urgent interim relief.

  4. D

    The arbitration award is foreign.

View answer and explanation

Correct answer: C. The suit does not contemplate urgent interim relief.

Section 12A applies as a pre-institution mediation filter in commercial suits that do not contemplate urgent interim relief.

Source note: Mediation Act, 2023 / Commercial Courts Act, 2015, Section 12A

Question 9MediumMediation Act and Commercial Mediation

What is the practical function of confidentiality in mediation?

  1. A

    It allows parties to negotiate candidly without every concession becoming ordinary litigation evidence.

  2. B

    It permits fraud in all settlements.

  3. C

    It prevents any settlement from being enforced.

  4. D

    It makes mediation a criminal investigation.

View answer and explanation

Correct answer: A. It allows parties to negotiate candidly without every concession becoming ordinary litigation evidence.

Confidentiality supports open negotiation. It is usually subject to limited exceptions, but the baseline is that mediation communications are protected.

Source note: Mediation Act, 2023 / Commercial Courts Act, 2015, Section 12A

Question 10HardMediation Act and Commercial Mediation

Which ground is strongest for challenging a mediated settlement agreement?

  1. A

    The party later feels the bargain was commercially unattractive.

  2. B

    The mediation saved court time.

  3. C

    The settlement was procured by fraud or impersonation.

  4. D

    The mediator allowed both sides to speak.

View answer and explanation

Correct answer: C. The settlement was procured by fraud or impersonation.

Finality is important in settlement. Challenge grounds are narrow and focus on serious defects such as fraud, corruption, impersonation or non-mediable subject matter.

Source note: Mediation Act, 2023 / Commercial Courts Act, 2015, Section 12A

Passage or principleLegal Services Authorities Act, 1987 / Gram Nyayalayas Act, 2008

India uses multiple institutions to make dispute resolution faster and more accessible. Lok Adalats under the Legal Services Authorities Act record compromise-based awards that are final and binding and deemed to be decrees. Ordinary Lok Adalats do not decide a case on merits when settlement fails. Permanent Lok Adalats for public utility services have a distinct structure: they attempt conciliation first and may decide eligible disputes on merits if settlement fails. Gram Nyayalayas are local courts meant to bring justice closer to rural communities for specified civil and criminal matters, with emphasis on simple procedure and conciliation in suitable civil disputes.

Question 11EasyLok Adalat and Gram Nyayalayas

What is the legal effect of a compromise-based Lok Adalat award?

  1. A

    It is only a private letter.

  2. B

    It is deemed a decree, final and binding, with no ordinary appeal.

  3. C

    It is an FIR.

  4. D

    It is an arbitral appointment order.

View answer and explanation

Correct answer: B. It is deemed a decree, final and binding, with no ordinary appeal.

Section 21 of the Legal Services Authorities Act gives Lok Adalat awards strong finality because they are based on compromise or settlement.

Source note: Legal Services Authorities Act, 1987 / Gram Nyayalayas Act, 2008

Question 12MediumLok Adalat and Gram Nyayalayas

What happens before an ordinary Lok Adalat if compromise fails?

  1. A

    The Lok Adalat conducts a full trial on merits.

  2. B

    The party refusing compromise is imprisoned.

  3. C

    The dispute becomes a foreign award.

  4. D

    The matter is returned or referred back for ordinary adjudication according to law.

View answer and explanation

Correct answer: D. The matter is returned or referred back for ordinary adjudication according to law.

An ordinary Lok Adalat is settlement-based. Without settlement, it cannot impose a merits decision like a regular court.

Source note: Legal Services Authorities Act, 1987 / Gram Nyayalayas Act, 2008

Question 13HardLok Adalat and Gram Nyayalayas

Which feature distinguishes Permanent Lok Adalat for public utility services?

  1. A

    It handles only international treaty disputes.

  2. B

    It can decide eligible public utility service disputes on merits after failed conciliation, subject to statutory limits.

  3. C

    It never attempts conciliation.

  4. D

    It is a private club with no statutory basis.

View answer and explanation

Correct answer: B. It can decide eligible public utility service disputes on merits after failed conciliation, subject to statutory limits.

Permanent Lok Adalat under Chapter VI-A has a hybrid role: conciliation first, and merits decision in eligible cases if settlement fails.

Source note: Legal Services Authorities Act, 1987 / Gram Nyayalayas Act, 2008

Question 14EasyLok Adalat and Gram Nyayalayas

The Gram Nyayalayas Act is most closely connected with which constitutional access idea?

  1. A

    Local, speedy and affordable justice for specified rural disputes.

  2. B

    Exclusive Supreme Court jurisdiction over village disputes.

  3. C

    Abolition of all district courts.

  4. D

    Mandatory international arbitration for rural land matters.

View answer and explanation

Correct answer: A. Local, speedy and affordable justice for specified rural disputes.

Gram Nyayalayas are intended to bring the justice system physically and procedurally closer to rural communities.

Source note: Legal Services Authorities Act, 1987 / Gram Nyayalayas Act, 2008

Question 15MediumLok Adalat and Gram Nyayalayas

In civil matters before Gram Nyayalaya, conciliation matters because:

  1. A

    The court cannot hear parties at all.

  2. B

    Every civil dispute must become a criminal offence.

  3. C

    Settlement is forbidden in rural courts.

  4. D

    The Act expects efforts toward settlement in suitable civil disputes.

View answer and explanation

Correct answer: D. The Act expects efforts toward settlement in suitable civil disputes.

The Gram Nyayalayas model combines local adjudication with settlement orientation in appropriate civil disputes.

Source note: Legal Services Authorities Act, 1987 / Gram Nyayalayas Act, 2008

Passage or principleMSMED Act, 2006 / Consumer Protection Act, 2019 / Family Courts Act, 1984 / Industrial Disputes Act, 1947

ADR in India is not limited to the Arbitration and Conciliation Act. Several sectoral statutes embed settlement mechanisms. The MSMED Act channels supplier-buyer payment disputes to the Facilitation Council for conciliation and, if required, arbitration. Consumer law recognises mediation through consumer commissions and mediation cells. Family Courts emphasise settlement, counselling and welfare-sensitive resolution. Industrial dispute law uses conciliation officers to promote settlement before adjudicatory escalation. These mechanisms share a common aim: resolving suitable disputes faster while leaving non-settled or unsuitable matters to formal adjudication.

Question 16HardSectoral ADR

Under the MSMED Act framework, what happens when a delayed payment dispute is referred to the Facilitation Council?

  1. A

    The Council must file a murder prosecution.

  2. B

    The Council has no dispute resolution role.

  3. C

    The Council may undertake conciliation and, if conciliation fails, proceed through arbitration under the statutory scheme.

  4. D

    The dispute automatically becomes a foreign award.

View answer and explanation

Correct answer: C. The Council may undertake conciliation and, if conciliation fails, proceed through arbitration under the statutory scheme.

Section 18 of the MSMED Act creates a sector-specific ADR pathway: conciliation first, followed by arbitration if conciliation does not succeed.

Source note: MSMED Act, 2006 / Consumer Protection Act, 2019 / Family Courts Act, 1984 / Industrial Disputes Act, 1947

Question 17MediumSectoral ADR

Consumer mediation is institutionally linked with:

  1. A

    Consumer commissions and mediation cells under the consumer protection framework.

  2. B

    Only international arbitral institutions.

  3. C

    Only criminal courts.

  4. D

    Only Gram Sabha meetings.

View answer and explanation

Correct answer: A. Consumer commissions and mediation cells under the consumer protection framework.

The Consumer Protection Act, 2019 uses mediation as a formal settlement channel for suitable consumer disputes.

Source note: MSMED Act, 2006 / Consumer Protection Act, 2019 / Family Courts Act, 1984 / Industrial Disputes Act, 1947

Question 18MediumSectoral ADR

Why do Family Courts use settlement-oriented tools carefully?

  1. A

    Because every family dispute is purely commercial.

  2. B

    Because family judges cannot pass decrees.

  3. C

    Because family disputes often require welfare-sensitive resolution, but settlement cannot override consent, safety or legality.

  4. D

    Because counselling is a substitute for jurisdiction.

View answer and explanation

Correct answer: C. Because family disputes often require welfare-sensitive resolution, but settlement cannot override consent, safety or legality.

Family Courts encourage settlement and counselling, but courts must remain alert to coercion, domestic violence, child welfare, maintenance rights and statutory limits.

Source note: MSMED Act, 2006 / Consumer Protection Act, 2019 / Family Courts Act, 1984 / Industrial Disputes Act, 1947

Question 19MediumSectoral ADR

A conciliation officer under industrial dispute law primarily performs which function?

  1. A

    Acts as the final appellate court over all labour disputes.

  2. B

    Promotes settlement between employer and workmen and reports the outcome.

  3. C

    Issues arbitral awards in every case without party participation.

  4. D

    Decides constitutional validity of labour statutes.

View answer and explanation

Correct answer: B. Promotes settlement between employer and workmen and reports the outcome.

Industrial conciliation is designed to avoid escalation by promoting negotiated settlement. Failed settlement may lead to reference/adjudication under the statute.

Source note: MSMED Act, 2006 / Consumer Protection Act, 2019 / Family Courts Act, 1984 / Industrial Disputes Act, 1947

Question 20EasySectoral ADR

What common theme connects MSME conciliation, consumer mediation, Family Court settlement and industrial conciliation?

  1. A

    They all abolish courts.

  2. B

    They all create criminal liability for refusing settlement.

  3. C

    They all apply only to foreign states.

  4. D

    They all use settlement-oriented processes for suitable disputes while preserving formal adjudication where needed.

View answer and explanation

Correct answer: D. They all use settlement-oriented processes for suitable disputes while preserving formal adjudication where needed.

Sectoral ADR is pragmatic. It seeks early resolution in suitable matters but does not erase adjudicatory forums where settlement fails or the dispute is unsuitable.

Source note: MSMED Act, 2006 / Consumer Protection Act, 2019 / Family Courts Act, 1984 / Industrial Disputes Act, 1947

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