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A Critical Analysis Of Mediation Bill, 2021: The Future Of Dispute Resolution In India

Mediation is a form of ADR. ADR, or Alternate Dispute Resolution, refers to ways in which disputes can be resolved between people without going through any formal trial. The ADR proceedings are less formal in comparison to traditional court proceedings and help in saving money along with getting speedy outcomes.

Mediation is a way of resolving conflicts with the help of a neutral third party that while guiding through the process, helps reach the disputed parties to come to an agreement. It is a voluntary process that does not impose a solution but creates a facilitating environment for the disagreeable parties to come to settle.

This third, neutral party here is called a mediator, who is not a judge but rather a facilitator that helps the parties to reach common ground and communicate. And if it has been agreed upon, the decision of the mediator can be binding upon the parties, just like a court's decision. The concept of mediation, as a form of ADR, is not new to India but dates back centuries. Before, informal panchayats that used to exist were the medium to solve a dispute between two parties, where the village head or the elderly were appointed as mediators.

This started gaining popularity when Lok Adalats were re-introduced in the judicial system of our nation, whose decisions were given the same status as that of a civil court. With the laying down of the Arbitration and Conciliation Act, enacted in 1996, clear definitions were set and a consolidated set of rules were given in this respect.

Why Is There A Need For A Mediation Bill

The total number of pending cases in the Supreme Court of India is 71,411 as on August 2, 2022, out of which 56,365 are civil matters and 15,076 are criminal matters. 59,55,907 cases are pending in 25 High Courts across the country as on July 29 this year. The figure for backlogs in subordinate courts is 4.13 crores.

This shows the congestion in the Indian judicial system, toppled by a lack of judges, flexible procedures, and resources. India still has a long way to go to address her backlog of cases.

Therefore, to tackle this problem of arrears and delays, ADR, and Mediation specifically, prove essential, and thus, it becomes important to bring it under certain statutory limits. Previously, mediation was governed by the Code of Civil Procedure or the rules laid down by mediation centers of various High Courts.

But now, the central government has tabled a draft mediation bill aiming to institutionalize and give formal statutory backing to the mediation process in India. With the passing of the bill, mediation could be popularised to get expeditious and enforceable remedies in a structured informal framework, where the parties play an active role. And hence, this bill becomes essential.

Till now, the bill has not been passed yet and is being referred by Parliamentary Standing Committee on Law and Justice, which has recommended some major reforms in the bill. The passing of the bill is much awaited and will start a new era of dispute resolution in the country.

Current Scenario
At Present, Mediation In India May Be:
  1. Court Referred (under Code of Civil Procedure, 1908)
  2. Private (under a contract)
  3. As per the provisions of a certain statute (e.g.- the Companies Act, 2013 or the Consumer Protection Act, 2019) These services are provided by private centers for ADR or centers set up by the respective courts or tribunals.

This is known as court-annexed mediation. Also, in the 129th report of the Law Commission of India, it was opined to make it obligatory for the Court to refer to mediation for the settlement of disputes. It was referred to within the landmark case of Afcons Below Ltd. v. M/s Cherian Varkey Constructions, 2010.

Another landmark decision came from the apex court in 2013 in the case, B.S. Krishna Murthy v. B.S. Nagraj 5where it directed to attempt to settle the marital dispute by way of mediation and also directed the family court to refer cases with the consent of parties in cases like maintenance, custody, etc. for mediation. One of the most renowned cases settled through mediation was the one between Mukesh and Anil Dhirubhai Ambani over the takeover of MTN, the South African telecom giant.

Salient Features Of The Bill
  • Application of the Bill:
    The provisions of this bill would apply to mediation proceedings conducted in India, if:
    1. Only domestic parties are involved, i.e. all parties habitually reside or are incorporated in India
    2. The dispute is a commercial dispute and at least one of the parties is a foreign party
    3. If it's stated in the mediation agreement that the proceedings would be as per this bill
    4. The bill will apply in the following circumstances if the central or state government is a party to the bill:
      1. It's a commercial dispute
      2. Other disputes as notified.
  • Pre-litigation Mediation:
    The parties in conflict must take steps to settle their dispute whether commercial or civil, before approaching any tribunal or filing any suit in a court, by taking recourse to pre-litigation mediation, even when a mediation agreement does not exist. The court or tribunal can also refer the parties to a mediation proceeding, even if they were unable to settle through pre-litigation mediation if they request for the same.
  • Appointment of Mediators:
    The mediators can be appointed as agreed by the parties, and of any nationality, unless agreed otherwise, provided that the foreign mediator agreed must have the requisite qualifications that may be specified in the domestic regulations. The mediator can also be appointed by any institution rendering mediation services subjected to the acceptance of the person so appointed. In case of any conflict of interest or doubt, the parties may choose to replace the mediators. The bill also lays down the rules and processes to be followed for termination of the mandate of a mediator or to replace one.
  • Mediation Proceeding:
    The proceedings done through mediation must be completed within 180 days (may be extended by the parties for 180 days). These proceedings must be done confidentially. Also, the parties could opt to withdraw from this process after two sessions. Mediation annexed by a court must be conducted within the confines of the rules so framed by that court and within their territorial jurisdiction. With the consent of the parties, the mediator shall determine the language(s) which would be used during this process. The mediator shall not be bound by the Code of Civil Procedure, 1908 (5 of 1908) or the Indian Evidence Act, 1872 (1 of 1872).
  • Mediated Settlement Agreement:
    Agreements that are a result of mediation, duly signed by the mediator and the parties in dispute, are final and bounds the parties and are enforceable in law, just like court judgments are. Subject to the provisions of section 29, it shall be enforced in accordance with the provisions of the Code of Civil Procedure, 1908, in the same manner as if it were a judgment and/ or decree passed by a court, and may accordingly be relied on by any of parties or persons claiming through them, by way of defence, set off or otherwise in any legal proceedings. If the mediated settlement agreement is sought to be challenged by either of the parties, they may apply to the court or the tribunal with competent jurisdiction, which can be done on the following grounds:
    1. Fraud;
    2. Corruption;
    3. Gross impropriety;
    4. Impersonation.

    All the costs, unless agreed otherwise, including the cost of the mediation service provider, mediator's fee, etc., must be borne by both parties equally.
  • Online Mediation:
    Online mediation means conducting the mediation proceedings, including the pre-litigation mediation as defined in this act by the use of computer applications and networks, through secure rooms, encrypted e-mail services, and conferencing through audio and video mode. This must be in tandem with the provisions of the Information Technology Act, 2000. Online mediation can be adopted either fully or partially with the consent of the parties. This must be done by taking all necessary steps to maintain the confidentiality and integrity of the proceedings. The communication for this must be by way of the regulations provided in the IT Act, 2000.
  • Mediation Council of India:
    Through notification in the Official Gazette, the central government must establish an institution to be known as the Mediation Council of India, to achieve the purposes of this bill, which would perform the functions and duties specified in the bill. The council must be a body corporate by the same name, having a common seal, with perpetual succession, having the power to withhold or dispose of property (immovable and movable), and having the capacity to enter into a contract.

    The council must contain a chairperson, 2 full-time members, who have experience with mediation and ADR, 3 ex-officio members, including the Law Secretary and the Expenditure Secretary, and 1 one part-time member. The functions of the Council will include- the registration of mediators, frame regulations and guidelines, promoting domestic and international mediation in India, recognizing mediation service providers and institutes, etc.
  • Mediation service providers and Mediation institutes:
    As per the provisions of this bill, the mediation service providers recognized by the council, are required to be graded according to the regulations made by the Council. The service providers can perform the following functions- a) Maintaining a panel of mediators and accrediting them. b) Providing mediator services to conduct mediation. c) Providing infrastructural and other related assistance to conduct the mediation proceedings. d) Registration and filing of the mediated settlement agreement as per the provisions of this bill. The council shall also recognize Mediation Institutes which shall function as per the regulations laid down by the Council.
  • Community Mediation:
    Community Mediation may be used to settle disputes that are likely to hurt/ affect the peace and harmony amongst the families or the residents of that locality. This must be done through a panel of three mediators, which may include representatives of resident welfare associations, a person respected in the locality, or any other person deemed appropriate. The District Magistrate or Sub-Divisional Magistrate can constitute a panel for facilitating the binding settlement of the dispute for which an application has been filed by any party of a community dispute.
  • Mediation Fund:
    A fund called 'Mediation Fund' shall be maintained by the Mediation Council, for the purpose of promoting, encouraging, and facilitating Mediation in our country. The grants made by the Central and State governments, the amount deposited by others to contribute to this, interest received on investments out of this, or the amount received from any other resource shall be credited to the fund. The Comptroller and Auditor General of India shall audit the accounts of the Mediation Council.

Key Issues:
  • Unlike arbitration or litigation, mediation is a voluntary dispute settlement process with the consent of parties and does not involve their adjudication. The Mediation Draft Bill mandates pre-litigation mediation for commercial and civil disputes. This defeats the purpose of mediation which is essentially a voluntary mechanism. It may even cause further delay in the settlement of the dispute if the parties are unwilling to mediate.

    The Bill also mandates that the mediators conducting the proceedings must be registered with the Mediation Council of India, a recognized mediation service provider, selected by a Court annexed mediation center and a Legal Service Authority. This condition of registering them at all four places makes the process unnecessarily complex and redundant.
  • The Draft Bill does not specify whether a Mediation Service Provider could be a company.
  • It is stated in the Bill that the majority functions of the Council will be discharged by issuing regulations, which must be issued after taking approval from the Central Government. The Council would be playing a titular role only if Government's decision has to be taken for performing its function. There might be cases where even the government might be a party to the mediation proceedings, which would lead to a conflict of interests.
  • The Draft Bill also lacks liabilities or consequences of non-registration of a Mediated Settlement Agreement.
  • The Bill has no provision covering settlement agreements which are a result of international mediation that was conducted outside India. Even though India became a signatory of the Singapore Convention in August 2019, it has not ratified it yet. The Convention covers the enforcement of cross-border settlement agreements that result from international mediation. This is neither covered in Part I nor Part III of the Bill.
  • Section 22 of the bill talks about confidentiality that must be maintained on part of the parties in dispute as well as the mediator. However, the section doesn't talk about any punishment or liability that would be imposed on willful infringement of this primary objective of maintaining confidentiality.

Singapore Convention And Its Effect On Mediation In India

The United Nations Convention on International Settlement Agreements, which is also known as Singapore Mediation Convention has 55 signatories including India. This Convention aims to facilitate international trade by providing standard, unified rules to govern commercial disputes in an international setting. But India is yet to ratify this, which becomes imperative, to reap all the benefits and advantages of mediation.

With its ratification, a settlement agreement reached through international 'commercial', mediation would be mandatorily enforceable, as per Article 3 of the Singapore Convention. The ratification would also bring consistency of domestic laws with the Convention. Also, Article 5(1)(e) provides that the mediators must follow certain standards which will provide for a professional, ethical environment for mediation.

For India to ratify the Singapore Mediation Convention, the Indian Parliament must promulgate legislation, under Article 253 of the Constitution, that gives effect to the Convention. The demand for legislation has grown, considering it's a more economical process and furthermore, it saves business and foreign connections.

It is expected that settlements reached through this Convention would be enforceable and won't be reverted back to arbitration, even if the other party defaults. Thus, India's approval of the Singapore Mediation Convention would help in settling disputes with parties outside India and help them avoid the contractual route, seeking implementation.

To conclude, in no way can it be denied that the Bill in its current facet has its share of positives and negatives and this indeed is a step forward in the right direction, as far as encouragement and facilitation of mediation are concerned. Not only would it bring uniformity but would also bring simplicity and would generate confidence among the masses to take recourse to mediation as a form of dispute resolution, outside of a court.

At the same time, the Bill does have some gaps and concerns which need to be addressed before letting it come into force to ensure that when the Act, when enacted, contains clear provisions to provide better legal backing to it. In addition to this, the government must also take steps to make the general public aware of mediation and its advantages and promote it hugely, so that people could reap the benefits.

This would also help in providing relief to the distressed judicial system of the country and will become a popular mechanism to settle corporate and family disputes in the near future.

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