The United Nations Convention on International Settlement Agreements Resulting from Mediation1, otherwise known as the 'Singapore Convention', defines 'Mediation' as a process, irrespective of the expression used or the basis upon which the process is carried out which the parties attempt to reach an amicable settlement of the dispute with the assistance of a third person or third persons lacking the authority to impose a solution upon the parties to the dispute.
For centuries in India, 'mediation' a phrase used interchangeably with 'conciliation'2, has existed in different forms and has been integral to the dispute resolution framework. The Panchayati system has existed and continues since the Vedic times. In pre-colonial India, respected businessmen – Mahajans, resolved disputes relating to trade and commerce. The liberalised economy is familiar with the private mediation process stipulated in contracts, 'court–referred mediations' under section 89 of the Code of Civil Procedure, 1908, and other non-rigorous mechanisms under different statutes3. Insertion of section 12A in the Commercial Courts Act, 2015 in 2018, mandating efforts at pre-litigation mediation of Specified Value commercial disputes was also an effort at promoting resolution through non-adversarial means.
Despite familiarity with the mediation process, resolution of disputes through the court processes has been the preferred mode in India. Data published by PRS Legislative Research4 reveals that as of December 2021, approximately 70,000 disputes were pending before the Supreme Court of India, 56 Lac cases pending before various High Courts and 4 Crore cases pending across various District and Subordinate Courts. This data also reveals the extent of burden on the formal dispute resolution mechanism in India.
In January 2020, the Supreme Court set up a panel headed by Mr. Niranjan Bhat, Senior Advocate and renowned mediator, to draft a legislation on mediation law. This draft was sent to the Government of India as a suggested enactment. Post consultations, a draft Mediation Bill was introduced in the Rajya Sabha and referred to the Department-related Parliamentary Standing Committee on Personnel, Public Grievances, Law & Justice for examination. A report was submitted by the Committee on 13 July 2022, whereafter, the revised Mediation Bill, 2023, was passed into law by the Parliament and received the assent of the President on 14 September 2023 ("Act"). Limited provisions of the Mediation Act have been notified to date, all of which relate to creating the infrastructure for promoting and regulating mediation under the Act, such as setting up the Mediation Council of India, creating the Mediation Fund and drafting the regulations and rules to give effect to the provisions of the Act. As on date, the substantive provisions of the Act relating to pre-filing mediation, appointment of mediators, conduct of mediation, enforcement of mediated settlement agreements, online mediation, recognition of mediation service providers and community mediation are not in force.
Key features of the Act
Mediation of civil and commercial disputes: The Act governs mediation proceedings conducted in India in relation to civil and commercial disputes, except (i) commercial disputes of Specified Value governed by the Commercial Courts Act, 2015, and (ii) disputes listed in the First Schedule of the Act, which cannot be mediated. Parties by consent, can refer disputes to mediation even in the absence of a mediation agreement, at any stage, including at the stage prior to filing proceedings in a court. In a first, the Act provides a legal framework for the conduct of pre-litigation mediation, similar to the framework under the Commercial Courts Act, 2015 in respect of civil disputes. However, unlike the Commercial Courts Act, 2015, pre-litigation mediation is not mandatory under the Act.
Online Mediation: In keeping with the trends of the post-Covid-19 pandemic world, the Act provides for online mediation by the use of electronic infrastructure, including secure chat rooms or conferencing by video and or audio. Statutory recognition to this form of alternate dispute resolution lends credibility to the process and makes it accessible to all stakeholders timely, and at fraction of the costs. Such a mechanism will necessarily expedite the resolution of disputes.
Enforceability of mediated settlement agreements: Unlike arbitration, mediation has not had the backing of Indian legal practitioners due to the lack of clarity over the enforceability of settlement agreements made outside a court process. This was unlike consent terms filed in a court proceeding as a result of mediation efforts, which is preferable as the resultant agreement is usually in the form of an undertaking to the court and in most cases stipulates enforcement mechanism in the event of a breach. The perceived weakness of a non-court-backed mediation process has been addressed by the Act. Chapter VI of the Act deals with the enforcement of mediated settlement agreements. Section 27 (2) of the Act provides for mediated settlement agreements to be enforced in the same manner as if it were a judgment or decree of a court. Critically, the grounds for challenging a mediated settlement agreement are not expansive and limited to fraud, corruption, impersonation or the dispute or matter covered by Schedule I of the Act: as not fit for mediation. This recognition of mediated settlement agreements independent of a court process brings certainty and finality to disputes.
Community Mediation: Similar to the framework in Australia5 and the United Kingdom6, the Act provides for mediation amongst communities in relation to disputes affecting peace, harmony and tranquillity amongst the residents or families of any area or locality. Cooperative housing societies and condominiums in urban India can benefit from this framework and find resolution and finality to all their disputes by mediated settlements.
Critical omissions and missed opportunities
Despite the positives, the Act is a few tricks short and has missed the opportunity to reduce the strain on the fatigued judicial system.
Pre-filing mandatory mediation: The Supreme Court in the context of section 12A of the Commercial Courts Act, 2015, has ruled that pre-filing mediation is mandatory unless urgent reliefs are warranted. In the event the mediation efforts are a non-starter or unsuccessful, a report is required to be prepared. Section 21 of the Act similarly stipulates the filing of a report in the event the mediation effort is a non-starter or unsuccessful. Within such a framework, a mandatory prescription of mediation effort, at the pre-filing stage would have achieved the balance between the need for party autonomy and the dual benefit of maintaining relationships between the parties and reducing the burden on the judicial system. At the stage of pre-filing, merits of the dispute will have already been evaluated and well-advised parties are usually open to adopting meaningful positions in a bid to avoid litigation. A trained mediator can assist the parties in isolating critical issues, exploring options and arriving at solutions. This opportunity of providing disputing parties a formal set-up to discuss resolution has been missed and should be reviewed at the earliest.
Excluding international mediated settlement agreements: The provisions of the Act are applicable only to domestic and international mediation proceedings conducted in India. Consequently, a mediated settlement agreement arrived at between an Indian litigant and its foreign counterpart outside of India is not recognised and enforced as a decree of a court. Although India has not ratified, it is a signatory to the Singapore Convention, and the rationale for excluding mediated agreements from foreign seated mediation proceedings is not clear. This necessitates a relook.
Looking ahead
As with the proverbial pudding whose proof is in its eating, only the implementation of the Act will reveal the extent of its effectiveness. Unlike the Insolvency and Bankruptcy Code, 2016 (Code), which is yet to deliver on its promise, the hope is that the Act can achieve its stated objective of reducing the burden on the judicial system while resolving disputes timely. Similar to the Code, the Act has the potential to contribute to the ease of doing business in India, but first, a few critical tweaks are required.
Footnotes
1. Prepared by the United Nations Commission on International Trade Law and adopted by a General Assembly resolution passed on 20 December 2018.
2. Draft Guide to Enactment and Use of the UNCITRAL Model Law on International Commercial Mediation and International Settlement Agreements Resulting from Mediation (2018) clarifies that in the Model Law on International Commercial Conciliation (2002), UNCITRAL used the term "conciliation" with the understanding that the terms "conciliation" and "mediation" were interchangeable.
3. Special Marriages Act 1954; Hindu Marriage Act 1955; Family Courts Act 1984; Legal Services Authorities Act 1987; Companies Act 2013; and, Consumer Protection Act 2019.
5. https://www.cjc.justice.nsw.gov.au/Pages/cjc_whatis_mediation/com_justice_neighbours.aspx; https://www.qld.gov.au/law/legal-mediation-and-justice-of-the-peace/settling-disputes-out-of-court/mediation-services/neighbourhood-mediation; https://www.legalaid.wa.gov.au/find-legal-answers/homes-and-neighbours/dealing-neighbours/get-help-dealing-neighbours; https://www.lawhandbook.sa.gov.au/ch27s11s10s01.php;
6. https://www.gov.uk/how-to-resolve-neighbour-disputes/print
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