Lok Adalats are forums organised under the Legal Services Authorities Act, 1987, where disputes — including pending court cases and pre-litigation matters — are settled through conciliation. An award of a Lok Adalat is deemed to be a decree of a civil court, is final and binding, and no appeal lies against it.
The essential feature of a Lok Adalat is that it works only by agreement. It cannot impose a decision; if the parties do not reach a compromise, the matter goes back to the court or the parties must pursue other remedies. Lok Adalats are particularly effective for high-volume disputes such as bank recovery matters, motor accident claims and consumer and utility disputes.
Arbitration is different. An arbitral tribunal decides the dispute whether or not the parties agree, after hearing evidence and arguments. It is suited to complex commercial disputes where the parties genuinely disagree about facts, law or quantum.
The choice therefore depends on the dispute. If both sides are close to a settlement and want a quick, free and final outcome, a Lok Adalat can be ideal. If the dispute needs a reasoned decision on contested issues, arbitration is the better tool.
The two can also complement each other: parties sometimes settle part of a dispute through negotiation or conciliation and arbitrate only the remaining issues.