Introduction
- The Mediation Bill of 2021 was introduced in the Rajya Sabha on
December 20, 2021, and subsequently, on December 21, 2021, it was
referred to the Standing Committee on Personnel, Public Grievances,
Law & Justice for a thorough review. On July 13, 2022, the
Standing Committee released its 117th Report concerning the
Mediation Bill, wherein it presented specific recommendations
pertaining to the provisions of the B Some of these recommendations
were approved by the Union Cabinet. As a result, the Mediation Bill
of 2023, referred to as the "Mediation Bill" was
successfully passed by the Rajya Sabha on August 2, 2023, and by
the Lok Sabha on August 7, 2023. Following the receipt of
Presidential assent, on September 15 2023, the Mediation Bill was
formally enacted into law and designated as the "Mediation Act
of 2023," also known as the "Mediation
Act.".
- The Concept of Mediation is ancient and deeply rooted in our
country. It has been practised in the form of the Panchayat system
for centuries, in which respected elders of the village worked as
mediators between the parties and helped to resolve their
disputes.
Mediation is one of the key components of Alternative Dispute Resolution ("ADR") which also includes Arbitration and Conciliation. The growing adoption of the ADR mechanism has aided in reducing the burden on the judiciary and thus facilitated prompt and equitable delivery of justice to the nation's citizens. According to the "Survey of Dispute Resolution in India, 2023," conducted jointly by the Federation of Indian Corporate Lawyers (FICL) and the Centre for Trade and Investment Law (CTIL), participants have ranked Mediation/Conciliation as the second most favoured method of dispute resolution in India.1
- In its essence, Mediation constitutes a conflict resolution methodology wherein two or more disputing parties reach a mutually acceptable resolution, guided by a neutral third party. It is important to note that a mediator does not hold the role of a judge but rather functions as a facilitator, aiding the involved parties in identifying common ground and achieving consensus.
Need of the Mediation
Act.
- During a discussion on the draft legislation on The Mediation
Bill, Union Minister for Law and Justice, Arjun Ram Meghwal, said,
"Mediation is not a new concept for an ancient country like
India. Several examples of mediation are available in different
texts and scriptures." He added that the Bill aims at
addressing and resolving the problems of the poor. The Law Minister
said that about 70,000 cases are pending in the Supreme Court and
another 60 lakh were pending arbitration in high courts. He noted
that as many as 4 crore cases were pending in the district and
subordinate courts.2
- There has been a significant demand for the introduction of a
dedicated mediation law, aimed at establishing a formal framework
for the mediation process and eliminating discrepancies found in
various existing statutes, such as the Code of Civil Procedure
1908, the Industrial Disputes Act 1947, and the Commercial Courts
Act 2015, among others. Additionally, it became imperative to enact
legislation that could effectively address both domestic and
international mediation matters. Furthermore, India signed the
Singapore Convention on Mediation ("Singapore
Convention") on August 7, 2019, which has standardised and
unified rules for mediation in international commercial disputes;
however, the ratification of the Singapore Convention is still
pending.
- Furthermore, there is a lack of consistent procedural rules
governing the mediation process, resulting in proceedings adhering
to the guidelines prescribed by individual High Courts. These
inter-alia factors have created obstacles in fully realizing the
advantages of mediation. Additionally, some statutes such as the
Companies Act 2013, MSME Act 2006, and Industrial Relations Code
2020, among others, include provisions for mediation as a dispute
resolution mechanism. However, in cases falling under these
statutes, post-litigation scenarios are governed by the Code of
Civil Procedure (CPC), and even pre-litigation mediation remains
unregulated.
It is worth highlighting Section 12A of the Commercial Courts Act, which mandates pre-litigation mediation for all cases brought before commercial courts, except in cases requiring urgent relief. Regrettably, parties have sometimes exploited this exception to circumvent mediation, resulting in the provision's failure to achieve its intended objective.
Given the identified gaps in the existing legal framework, the Mediation Act seeks to regulate various aspects of mediation within the Indian legal system.
Core Provisions of the Mediation Act 2023
- Scope of the Mediation Act: The Mediation Act
will apply to mediation/conciliation proceedings carried out within
India under the following circumstances:
- when all involved parties reside in, are incorporated in, or operate their businesses within India,
- when the mediation agreement explicitly stipulates adherence to this Act,
- in cases of international mediation, which pertains to
commercial disputes involving at least one party that is a foreign
government, foreign national/resident, or an entity with its
business premises located outside India. The Statement of Objects
and Reasons of the Act states that Mediation will subsume
conciliation under Part III of the Arbitration and Conciliation
Act, 1996 and both terms "mediation" &
"conciliation" shall be used interchangeably.
- In instances where the central or state government is a party
to the mediation, the Mediation Act's jurisdiction is limited
to (a) matters pertaining to commercial disputes, and (b) other
disputes as specified by the respective government through
notification. However, the Mediation Act will not override the
statutes specified in the Second Schedule which include The
Industrial Disputes Act, 1947; the Industrial Relations Code, 2020;
the Family Courts Act, 1984; the Finance Act, 2016; the Sexual
Harassment of Women at Workplace (Prevention, Prohibition and
Redressal) Act, 2013, amongst others.
A broad aperture has been provided under Sections 4 & 5 of the Act for parties to commence mediation. This can be done either by incorporating a dedicated mediation clause within the contract, entering into a separate agreement, or in cases where no prior "mediation clause" exists, the parties may opt for mediation by mutual agreement to resolve any current or impending disputes.
- Pre-litigation Mediation: In case of civil or
commercial disputes, a person must try to settle the dispute by
mediation before approaching any court or certain tribunals as
notified. Even if the parties fail to reach a settlement through
pre-litigation mediation, the court or tribunal may at any stage of
the proceedings refer the parties to mediation if they request for
the same.
- Subject matter of disputes: Section 7 of the
Mediation Act sets forth a prohibition on specific disputes as
outlined in the First Schedule, which are ineligible for mediation
referral. These encompass disputes encompassing criminal offense
prosecution, both direct and indirect tax disputes, conflicts
entailing the rights of third parties (with the exception of cases
involving a child's welfare in matrimonial matters).
- Interim Reliefs: Section 8 of the Mediation
Act incorporates a provision allowing parties to seek recourse to
the court or tribunal with appropriate jurisdiction in the event of
extraordinary circumstances, necessitating urgent interim relief
either prior to or during the mediation process. However, the Act
refrains from providing specific details regarding what constitutes
"exceptional circumstances," leaving this matter open to
judicial interpretation.
- Period of Mediation: As per the Act, mediation
is to be completed within a period of 120 days, with a maximum
extension of 60 days. The Mediation Act has fixed a time limit of
180 days to complete mediation. Furthermore, the Act stipulates
that parties have the right to withdraw from mediation after the
initial two mediation sessions. Nevertheless, if a party fails to
attend these first two sessions without valid justification,
resulting in the mediation's failure, such behaviour may be
considered by the court or tribunal when determining costs in any
subsequent legal proceedings involving the same subject
matter.
- Enforceability of Mediated Settlement Agreements
(MSA): Chapter 6 of the Act deals with the enforcement of
the settlement arrived through mediation. The Act envisions that
the settlement would be documented in writing, bearing the
signatures of the parties involved, and officially validated by the
mediator. Following this authentication, the settlement would be
enforceable in accordance with the provisions of the Civil
Procedure Code, 1908 treating it as if it were a court-issued
judgment or decree. This stands in contrast to a settlement
agreement reached through conciliation under the Arbitration Act
(which is currently proposed for removal), which carries the status
and legal effect of an arbitral award.
- Procedure to challenge the MSA: The threshold
to contest MSA is very narrow such as fraud, corruption,
impersonation, or if the subject matter of the dispute was
unsuitable for mediation. To initiate such a challenge, the
concerned party must file an application before the court or
tribunal that holds the requisite jurisdiction within 90 days from
the date they received the authenticated MSA copy. In cases where
the court is convinced that the applicant had valid reasons
preventing them from filing the application within the initial
90-day period, an extension of up to another 90 days may be
granted.
- Online Mediation: To keep abreast with the
acceptance of conducting online mediation during COVID times, The
Act embraces the concept of online mediation as a means to overcome
logistical challenges for parties to travel, etc. It offers parties
the option to engage in mediation virtually. Nevertheless, to
uphold the security and effectiveness of such online mediation, it
becomes crucial to establish clear regulations governing the
conduct of participants throughout these virtual proceedings, as
well as rigorous procedures to be adhered to during the mediation
process.
- Confidentiality: Confidentiality is at the
heart of a mediation process and is critical to a successful
resolution. The parties must be assured that they can share
sensitive information at the session, where it is necessary to see
that their true needs and interests may be met, without fear of
subsequent disclosure to their detriment. The Act explicitly
specifies that all proposals, admissions, as well as documents
exclusively created for the mediation process, must be treated with
the utmost confidentiality.
- Mediation Council of India: The Mediation Act
outlines the formation of a Mediation Council of India consisting
of seven members. The Council will consist of a chairperson, two
full-time members (with experience in mediation or ADR), three
ex-officio members (including Secretaries in the Ministries of Law
and Justice and Finance), and one part-time member (from an
industry body). This council's primary role is to foster the
practice of mediation, both within the country and on an
international scale, register mediators, recognise mediation
service providers and mediation institutes, etc.
- Institutional mediation: Chapter 9 of the
Mediation Act envisions the establishment of a 'Mediation
Service Provider and Mediation Institutes' whose primary
functions would be to accredit mediators, curate a panel of
qualified mediators, offer necessary facilities and administrative
support for the mediation process, and more. Furthermore, the
Mediation Act specifies that the grading of these Mediation Service
Providers would be overseen by the Mediation Council of
India.
Upon the official enactment of the Mediation Act into law, the specified statutes will undergo amendments as outlined from Third Schedule 3 to Tenth Schedule namely:
- The Indian Contract Act, 1872,
- The Code of Civil Procedure, 1908,
- The Legal Service Authorities Act, 1987,
- The Arbitration and Conciliation Act, 1996,
- The Micro, Small and Medium Enterprises Development Act, 2006,
- The Companies Act, 2013,
- The Commercial Courts Act, 2015,
- The Consumer Protection Act, 2019.
Conclusion
- The mediation principles embedded in current Acts barring a few like the Commercial Courts Act 2015, etc. have become somewhat outdated in the context of our contemporary times. The Mediation Act, serving as a comprehensive framework, will not only modernize these existing practices but also establish a unified and harmonized approach, aligning them with the demands of today. The age-old saying, "the proof of the pudding is in the eating," underscores that the real evaluation occurs during actual implementation. Any shortcomings or deficiencies in the Mediation Act will become apparent only when it is applied in practice.
Footnotes
2. https://newsonair.gov.in/News?title=Parliament-passes-Mediation-Bill-2023&id=465709
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.