Some provisions will need clear definitions for certain phrases such as ‘public policy’, ‘gross impropriety’. The litigatory potential of a few other provisions needs to be examined
While the Bill is a step in the right direction, there are certain areas that require consideration. Some of these are highlighted here. (Representative image)
By Neil Hildreth
As per the National Judicial Data Grid, close to 40 million cases are pending before the various courts in India. Mediation, a form of alternate dispute resolution (ADR), is one of the solutions proposed to address such pendency. In India, mediation is not a new concept. Section 89 of the Code of Civil Procedure 1908 (CPC), inserted in 2002, introduced mediation as one of the means for settlement of disputes. In addition, several legislations such as the Companies Act 2013, Arbitration and Conciliation Act 1996, and Commercial Courts Act 2015 provide for mediation.
While there has been an increase in the number of cases being referred to mediation, there remains certain challenges, which is hampering the growth of mediation as a viable ADR. Lack of dedicated legislation and reluctance of the parties to mediate are two of such challenges. Against this backdrop, the Centre has introduced the draft Mediation Bill 2021.
While the Bill is a step in the right direction, there are certain areas that require consideration. Some of these are highlighted here.
The Bill introduces the concept of “public policy” as a ground for challenging any settlement. This concept appears to have been taken from the Arbitration and Conciliation Act 1996. However, the Bill does not specifically define its broad contours, leaving with the possibility of misuse by parties attempting to derail settlements.
- Similarly, the Bill enables a party to challenge the settlement on grounds of “gross impropriety”, without even defining the term. In absence of a defined term, interested parties can argue bias on part of the mediator to challenge a settlement, leading to protracted litigation—thereby derailing the objective of the Bill.
- The Bill provides for ‘community mediation’ for the purpose of maintaining peace, harmony and tranquillity amongst the residents of, or families in, a community. However, such ‘community mediation’ may prove to be antithetical to individual rights in general and women rights in particular. ‘Community Mediation’ may be susceptible to similar criticism that khap panchayats have faced in the past.
- The Bill seeks to introduce mandatory pre-litigation mediation, requiring the attendance of parties in at least two mediation sessions. Such an approach not only imposes the process of mediation on unwilling parties having no intention to settle, but also burdens them with the added cost of mediation (Section 30 provides that costs of mediation shall be borne by the parties). This approach may not prove to be cost-effective.
- Further, in addition to providing a negative list containing matters not fit for mediation, it may be prudent to restrict the mandatory pre-litigation mediation process to only a few matters where mediation has been shown to be successful.
- Section 29 provides for challenging a mediation settlement/agreement on the grounds of, inter alia, corruption, impersonation and fraud. Further, this provision bars any challenge to a mediation settlement agreement after the expiry of 90 days from the date of receipt of mediation settlement agreement. However, the Bill ought to calculate the limitation period from the date on which the party becomes aware of existence of such grounds and not from the date of receipt of mediation agreement. It would be inequitable to bar a party, especially underprivileged parties, from challenging a settlement based on the date of the settlement instead of knowledge.
- Further, the Bill envisages approaching courts for interim measures ‘before the commencement of’ or ‘during the continuation of’ mediation proceedings. However, it does not envisage approaching courts after the conclusion of mediation proceedings but prior to enforcement of the mediation agreement.
- The Bill also fails to specify under what provision would an international mediation take place in India, which relates to non-commercial dispute arising under a foreign law. This would give rise to catena of litigation, challenging the mediated settlement on the grounds of lack of jurisdiction.
- In addition, there is lack of clarity on the consequences of non-registration of a settlement agreement.
The existing framework of laws has contributed to a feeling of insecurity in mediation and there is no denying that the Bill is a welcome first step in the right direction; not only does having a dedicated enactment legitimise mediation, but also serves to promote public confidence in what is a very useful tool to settle disputes expeditiously outside of a court.
However, the Bill does pose some questions which ought to be addressed before it is enacted. In addition to ironing out the issues, the government would also have to take steps to promote mediation amongst the public at large, by creating general awareness. The first step in this direction would be to have a set a guideline in place for Public Sector Undertakings to resolve the dispute through mediation. Being the largest litigator, the government ought to set an example for the public.
The author is Executive director, Lumiere Law Partners.
With contributions from Rahul Jain, director, Lumiere Law Partners