From an Alternate Mode of Dispute Resolution to a Branch of Law: Mediation has arrived!

On August 7, 2019, India became one of the first signatories to the United Nation Convention on International Settlement Agreements Resulting from Mediation (Singapore Convention). In furtherance of its obligations under the convention and also in its effort to promote and strengthen 'Mediation' as a mode of alternate dispute resolution, the Ministry of Law and Justice, on November 5, 2021 released the Draft Mediation Bill, 2021 (Bill) for public comments and consultations.

For the most part, the Bill is a welcome move. A stand-alone law was required to give some sanctity to the concept of mediation as a means of dispute resolution. However, the devil always lies in the details and the question to be asked is whether the lawmakers have managed to strike that fine balance between party autonomy and statutory surveillance.

Before the jury gets out on the Bill, let us examine some of its positive features and red flags:

  1. Mediation and Conciliation:
    The Bill fortunately does away with the artificial distinction created by Section 89 of the Code of Civil Procedure,1908 which referred to 'mediation' and 'conciliation' as separate modes of dispute settlement. The term conciliation has been included in the definition of mediation under Section 4 and Part III of the Arbitration and Conciliation Act, 1996 has been suitably amended to make them interchangeable concepts.
  2. Provision for Interim Reliefs:
    Section 8 of the Bill provides that in exceptional circumstances, a party, may, before or during the commencement of mediation, approach the court of competent jurisdiction for interim reliefs.

    However, this provision doesn't restrict the party to mean a party to the mediation agreement. This point may need clarification as it may lead to a party, without a mediation agreement/clause approaching the courts seeking reliefs against the other party who never agreed to mediate.

    What is a little baffling here is that there is no provision for an appeal against order passed by the court under this section. There ought to have been a provision for at least one appeal against grant or refusal of interim relief by the court. One wonders how this will pass the doctrine of constitutionality. Even the Arbitration Act provides for an appeal under Section 37 against interim order passed under Section 9.
  3. Pre-Litigation Mediation:
    Section 6 provides that a party "shall" before filing any suit or proceeding, take steps to settle disputes by pre-litigation mediation in accordance with this Bill Whilst appearing to promote mediation, this section ignores its core concept, i.e. voluntariness. No party can be forced to mediate. Moreover, this provision would lead to confusion in cases where a party wants to file commercial suits, RERA or consumer complaints etc. as those proceedings are governed by special statutes which already provide for mediation.
  4. Recognition & Enforcement of Domestic and International Mediation Settlement Agreements:
    Part I (Section 28) and Part III (Section 50) of the Bill recognizes settlement agreements arising from domestic or international mediations. This is a step in the right direction as the currently trend is to enforce settlement agreements (except those executed under special laws like the arbitration or MSME law) by filing a suit for specific performance.

    However, one must not loose right of the fact that a settlement agreement is eventually a contract as per the Indian Contract Act, 1872. A contract can be challenged on various grounds (undue influence, free consent, misrepresentation etc.). However, the Bill only provides for 4 grounds to challenge a domestic mediation settlement agreement. Further, the challenge is required to be made within a period of 3 months (extendable for another 30 days) but not thereafter. What about cases where issues like fraud and gross impropriety are discovered after 3 months. Even the law of limitation gives a litigant 3 years to challenge a contract. This issue would require some clarity.
  5. Mediation was widely projected as the most appropriate means of conflict resolution that will reduce the burden on courts. This Bill has, inter-alia, made it into another branch of law. One can expect separate roster in civil courts (including High Courts) only dealing with litigation arising out of mediation. Fundamental concepts of mediation such a voluntariness, out of court and flexibility are likely to be impacted. The Bill makes mediation too prescriptive and regimented for a common person who seeks refuge in mediation after having languished in the courts for several years. Does the Bill read well to the legal practitioner and the foreign stakeholder? Surely, Yes! Does the Bill serve the common Indian litigant? After reading 4 parts, 8 chapters, 67 sections and 7 schedules and several procedures stated therein, only time will tell.

    By - Arush Khanna