By Aditya Kashyap
Intern, H.K. Law Offices
What is Mediation?
Mediation is one of the most common types of alternative dispute resolution (ADR). In this process, a neutral third party acts as a facilitator to assist the parties in resolving their differences and coming to an agreement. A mediator is a third party who remains neutral and objective while facilitating a settlement between two or more disputing parties.
In the process of mediation, both parties come to an agreement to bring in a third party who remains impartial and works to find a resolution to the conflict that will be acceptable to both parties. This process cannot begin until both parties have reached an agreement on it, and even then, it has no bearing on the law. There is no undue financial strain placed on either party because the fee for the mediator as well as the costs associated with the mediation process are split evenly. In addition, the process is easy to follow and requires a shorter time commitment than alternative options.
While the way in which a mediation proceeds may vary a lot depending on the country and region where it is taking place, there are certain fundamental principles of mediation which are followed universally.
Firstly, mediators must prioritise confidentiality. No one—not even the mediator or parties—can discuss the mediation or the information shared therein. Mediators must always keep parties’ information private. Secondly, neither side should force the other to start mediation. Both parties must consent freely. Lastly, a mediator must be a neutral third party with no interest in the outcome. These mediators must remain neutral to uphold justice and natural justice. Only a neutral mediator can ensure that neither side gets a better settlement. Neutral mediators are needed to reach fair agreements.
Mediation in India
In spite of the fact that India does not have a law that specifically regulates mediation, a number of other laws, including the Code of Civil Procedure, the Arbitration and Conciliation Act, the Companies Act etc., all contain provisions that address the process. The lack of uniformity in the procedure and the absence of formal authority both contribute to the continuation of ambiguities and make it impossible to resolve them. In order to reduce the amount of unpredictability that can result from situations like these, legislation should be enacted to make mediation more accessible. As a direct consequence of this change, the number of pending legal matters in the judicial system will decrease. The Supreme Court of India, in the case M.R. Krishna Murthi v. New India Assurance Co. Ltd., emphasized the significance of this issue and recommended a statute to govern the mediation proceedings.
The Committee on Mediation and Conciliation of the Supreme Court of India is of the opinion that mediation has the potential to be an efficient strategy for the settlement of legal disputes. It is imperative that India pass a law that will regulate mediation on both the domestic and international levels given that India is a signatory to the Singapore Convention on Mediation. Given that India is a signatory to the convention, it is imperative that India pass a law that will regulate mediation (previously known as the United Nations Convention on International Settlement Agreements Resulting from Mediation).
Overview of the Bill
This bill aims to promote and make institutional mediation—in particular—more accessible as a means of resolving disputes. This applies to disputes of all kinds, including commercial ones.
The bill also suggests mandatory mediation before starting any Litigation. In addition, it safeguards the rights of litigants to quickly approach reputable adjudicative forums or courts for urgent relief. The mediation will be conducted in confidence, and under certain conditions, participants will be protected from legal action if they reveal information they learned during the mediation. In order to ensure that accurate records of the settlement are kept, the Mediation Settlement Agreement (MSA) that is reached as a result of the mediation process can be registered with the legal authorities of the state, the district, or the taluk within ninety days. The proposed legislation will create the Mediation Council of India in addition to including provisions for community mediation.
An In-depth Look at the Features and Pitfalls of the Bills
The mediation process will be conducted in confidentiality, and will be done on a voluntary basis, and will come to an end no later than one hundred and eighty days after it initially starts (may be extended beyond 180 days if both the parties agree). After the first two meetings, either of the parties has the option to call off the mediation process. When the court becomes involved in the process of mediation, it is required to operate in accordance with the guidelines that were established by the supreme court of the land. In addition, the Bill outlines the types of disputes that should not be settled through the use of mediation. Conflicts involving individuals whose mental capacities are in question and those which result in criminal charges are included in the list of conflict which cannot be referred to mediation. This list is not comprehensive and the central government has the ability to amend it
When the disputing parties decide to go the mediation route, they will appoint a mediator to facilitate the process. This mediator can be anyone, including a member of the MCI. According to the Bill, in order to be appointed as mediators outside of their country of origin, individuals must first demonstrate that they satisfy the statutory requirements for qualification, experience, and accreditation. The MCI will be granted the authority to establish rules in this area thanks to the new bill. Both the number of mediators and the procedure for selecting them are entirely up to the parties who are engaged in the conflict. If the parties are unable to come to an agreement on a mediator, they may ask the mediation service provider to appoint one or more mediators on their behalf. The role of a mediator is to assist disputing parties in resolving their differences through means that are mutually acceptable. This is accomplished by drawing attention to key issues, elaborating on points of contention, and coming up with innovative solutions that are beneficial to all parties involved. This individual is required to always act in a manner that is objective and impartial. Under the proposed legislation, it will be necessary for mediators to ensure that the parties’ “voluntary nature, confidentiality, and self-determination” are safeguarded at all times. Because of this, they are unable to exert any influence over the parties involved in the settlement negotiations and cannot impose their will on them. A mediator’s primary function is not that of an arbitrator but rather of a facilitator, with the objective of assisting the disputing parties in arriving at a resolution that is to the mutual advantage of all those involved. Realistically, mediators appointed by the court are frequently retired judges or law officers, and these individuals may not have the mentality necessary to view mediation as merely helping parties who feel they have been wronged. In the future, mediators should be guided and trained to leave the adjudicatory approach at the door, regardless of their affiliation with a mediation service provider. This is because the adjudicatory approach can make things more difficult.
Mediation Council of India
The Mediation Council of India is going to be established by the central government according to the provisions of the Bill. The Council’s responsibilities include the following:
1. the registration of mediators;
2. the recognition of mediation service providers (institutions that administer mediations) and mediation institutes (institutions that provide training, education, and certification to mediators);
3. the grading of mediation service providers; and
4. the establishment of standards for the professional conduct of mediators, mediation service providers, and mediation institutes.
Mandatory Mediation Pre-Litigation
To avoid or resolve disputes prior to or during court proceedings, parties may choose to participate in mediation. According to Section 89 of the Code of Civil Procedure, the courts are permitted to use alternative dispute resolution techniques, such as mediation, to resolve civil cases that can be resolved without going to trial. Even before filing a lawsuit, mediation is required by both the Commercial Courts Act and the Consumer Protection Act. However, several courts have ruled that the pre-litigation mediation mandated by Section 12A of the Commercial Courts Act is advisory in nature rather than mandatory. The provision is procedural in nature and does not alter the substantive rights of the parties, so this is the case.
Clause 6 of the Bill seeks to make pre-litigation mediation mandatory for all civil and commercial disputes, whether or not the parties have agreed to participate in mediation. The purpose is twofold: (a) to reduce the burden on the judicial system, and (b) to get everyone involved in the conflict to give this approach a try. The law does not appear to be designed to coerce the parties into settling their dispute against their will or to otherwise undermine the principle of voluntarism. 6 Rather, it affords the parties the chance to explore an alternate course of action that safeguards confidentiality while also being more adaptable, less costly, and less time-consuming than the conventional one.
There is some reluctance among the parties to use mediation as their primary method of conflict resolution. The fact that mediated settlements are not legally binding unless and until they are annexed by the court is one of the primary reasons. The looming issue should be resolved, according to the Bill, once and for all by rendering mediated settlement agreements final and legally binding on the parties. In addition, the parties to such settlements will have the ability to rely on the agreement in the same manner as if it were a court order in any future litigation that may arise. A settlement out of court may be possible with the assistance of mediation, which can help parties save both time and money.
Any and all disagreements that arose between the parties are settled in accordance with the provisions of mediation agreements, as outlined in Section 22 of the Bill. According to the provisions of these agreements, as outlined in Section 22 of the Bill. This provision of the agreement states that the agreement must be reduced to writing and be signed by both parties before it can be considered valid. The document will be signed and authenticated by the mediator before being forwarded along with a cover letter to the service provider when the parties decide to use an institutional mediator. At long last, each party will be given a copy of the document via service of process.
After receiving a mediated settlement agreement, a party has ninety days from the date of receipt of that agreement to challenge the validity of the agreement’s legal standing. If the applicant can provide convincing evidence for their request, they will be granted an additional 90 days. There are not many different ways that a mediated settlement can be rendered invalid. Examples of this type of behavior include (a) fraudulent activity, (b) corrupt behaviour, (c) impersonation, and (d) conflicts that cannot be resolved through negotiation. The stated grounds of challenge in the current draught are obviously overbroad, vague, and open to judicial interpretation. In Indian courts, arguments have been made regarding allegations of fraud or corruption in the process of issuing arbitral awards. Even though there is not a lot of case law that is currently available, the case law that is there can help establish some guidelines that can be used to decide whether or not to uphold a challenge to a mediated settlement agreement.
In the event that mediation does not result in a settlement, the mediator will provide a copy of the report of failure to each of the parties, in addition to submitting it to the mediation service provider (in the case of institutional mediation). This will take place in addition to submitting it to the mediation service provider. Agreements that were reached through online mediation and in which parties utilized electronic signatures as a method for verifying their identities are also included in this category.
Mediation Service Provider
In Clause 3(l) of the Bill, the term “mediation service provider” refers to an entity or organisation that has been approved to carry out mediation by the MCI. Mediation centres that are attached to courts and are known as “Lok Adalats” are included in this category of service provider. Also included in this category are authorities that were established under the Legal Services Authority Act. The Madras High Court made history on April 1, 2005 by becoming the first court in the world to open its very own mediation centre. After that, a number of different High Courts and District Courts followed suit and adopted the same policies. In recent years, there has been a proliferation of private mediation centres across the world, one of which is the Indian Institute of Arbitration and Mediation, which is located in New Delhi. However, because there is a lack of real-time data, it is difficult to determine whether the existing mediation centres, whether court-driven or private, are operating in an effective manner. The bill will ensure openness, responsibility, and uniformity in the operation of mediation hubs by establishing a system of accreditation for mediation service providers.
The objective of mediation is to facilitate the parties involved in a dispute reaching a settlement through the utilisation of the knowledge and experience of a neutral third party (the mediator). It is a means of resolving legal disputes that does not involve the judicial system. Because it does not require going to court or using a specific courtroom, this method of conflict resolution is efficient, straightforward, and low-cost. In addition, it is quick. However, the nation does not have a coherent legal framework that covers mediation in any way. In 2021, a Bill was presented to the parliament in order to address this problem. At the moment, the standing committees are the ones who get it so they can make recommendations. In the event that it is passed, it will reduce the number of cases that are currently pending in the judicial system.