The Mediation Bill as passed by both Houses in August 2023 and currently awaiting Presidential assent, seeks to codify, institutionalise and promote the process of mediation, by establishing the Mediation Council of India, recognising mediation service providers, and providing for the registration of mediators. It also provides for online and community mediation.
Essentially, it makes pre-litigation mediation voluntary in nature, allowing parties to choose whether or not to participate in the process.
Originally, the Bill had made pre-litigation mediation compulsory, but the Standing Committee on Personnel, Public Grievances, Law and Justice proposed to make pre-litigation mediation voluntary and not mandatory.
Now, a provision acknowledges the autonomy of the involved parties and allows them to opt-out of mediation after undergoing two sessions if they desire. Mediation can be coaxed but not forced.
Further, the Bill provides for creation of a ‘Mediation Service Provider’ or MSP, to conduct mediation procedures, accreditation, maintenance of panels and all operations ancillary thereof. The MSP shall be graded by the Mediation Council of India.
The Bill provides an indicative list of subject matters not fit for mediation, including disputes involving allegations of fraud, forgery, claims involving minors, persons suffering from intellectual disabilities and mental illness, disputes affecting the rights of third party which is not part of the mediation proceeding, tax disputes and disputes under the Competition Act.
Although, an indicative list goes a long way in reducing doubt, broadly worded subject matters such as “settlement of matters which are prohibited being in conflict with public policy or is opposed to basic notions of morality or justice or under any law for the time being in force” would possibly warrant liberal interpretation, which may prove to be a bone of contention between parties.
The Bill expands mediation to include family disputes, community conflicts and other unconventional domains in addition to civil and commercial disputes. Moreover, the Mediation Bill will have an overriding effect for conducting mediation over other laws, except for legislations specified under the second schedule and to proceedings conducted by the Lok Adalat. The second schedule includes the industrial disputes, industrial relations code, sexual harassment of women at workplace act, family courts act, finance act etc.
The Bill also provides for parties to seek interim relief before the commencement or during the mediation proceedings, by approaching the appropriate court/tribunal, in “exceptional circumstances.”
It is probable that the threshold for the grant of interim relief would be similar as under Section 9 of the Arbitration and Conciliation Act of 1996. However, the Bill is silent on the meaning of “exceptional circumstances”, leaving it up to judicial interpretation to fill in this lacuna.
Further, the Bill initially envisaged that the mediation process must be completed within 180 days, which may be extended by another 180 days by the parties. However, it appears that adhering to the suggestions of the Report of the Standing Committee, this was reduced to an initial period of 120 days, which could be extended by 60 days. Even if the parties fail to reach a settlement through pre-litigation mediation, the court or tribunal may at any stage refer the parties to mediation if they request the same.
Enforcing Settlements
The Bill seeks to enforce mediated settlement agreements (MSA) as per the provisions of Civil Procedure Code, as if it were a judgement or decree passed by the court. With this development, parties to the dispute will have quicker access to resolution in addition to reduced burden on the courts. This provision follows India’s ratification of the Singapore Chapter of UN convention on International Settlement Agreements Resulting from Mediation in 2019.
The mediation settlement agreements may be challenged within the period of 90 days from the date of receipt of the copy. The challenge can be made on the narrowed scope under grounds of fraud, corruption, impersonation or subject matters falling within the first schedule. Furthermore, the Bill ensures that any information disclosed during mediation shall not be used in subsequent proceedings except if required to prove domestic violence, child abuse, coercion etc.
Nonetheless, it lacks sanctions and penalties in the event of breach which renders the provision essentially moot.
The Bill has followed the suit of codifying the mediation provisions in International Centre for Settlement of Investment Disputes (2018), Uniform Mediation Act of USA, Model Law on International Commercial Conciliation (2002), among others. The code emerges as a beacon of hope in addressing the issues of binding confidentiality, party empowerment, procedural clarity, bias and neutrality.
However, the loopholes require immediate attention so as to instill confidence in the process.
(The authors are lawyers)
