There are many problems whice arises in ADR. These problems are given below 

★Consent of the parties

For ADR to be successful, especially in arbitration proceedings, both the parties must agree to refer the dispute to be settled through arbitration or mediation. Under the Arbitration Act, 2001 if one party does not respond to the other party’s notice requesting arbitration to solve a particular dispute, the system provided by the current Act of 2001 as regards appointment of an arbitrator through Court on behalf of the non-responding party is very cumbersome and sometimes it takes years together to even get the arbitration tribunal constituted and the hearing started. So, it is basically, going through the same saga if both the parties do not agree to ADR.

★Lack of precise Rules  

Since no specific Rules of Procedure have been framed for arbitration, the parties are to depend on the Rules of arbitration determined by a Tribunal. This lacuna in the system makes ADR an uncertain game.

★No appeal on merit

Even if a party is not satisfied with the merit of the outcome of a resolution of a dispute through arbitration, there is no room for filing any appeal on merit. Only an award can be set aside if it can be seen that the Tribunal was biased. This aspect of the matter sometimes deters a prospective litigant from choosing arbitration over litigation. 

★Lack of institutional support

Countries where the system of ADR has become successful put much emphasis on institutionalization of the system of ADR. For example, in the UK, USA, Singapore, France etc., we will find that there are so many private institutions which offer institutional support for ADR. This is helpful because these institutions have their separate Rules of procedure and panel of Arbitrators.