What are the salient features of the Mediation Bill? What are the anomalies which need to be rectified before it is enacted? How does it fulfil the Singapore Convention on Mediation?
What is the Mediation Bill, 2021?
“DISCOURAGE litigation. Persuade your neighbors to compromise wherever you can. Point out to them how the nominal winner is often a real loser – in fees, expenses, and waste of time. As a peacemaker, the lawyer has a superior opportunity of being a good man. There will still be business enough.” This quote by American lawyer and statesman Abraham Lincoln aptly describes the relevance of the Alternative Dispute Resolution (‘ADR’) process in justice delivery.
One of the preeminent things that emerges when one talks about the Indian judiciary is the lackadaisical and tardy processes of the courts. It is not unreasonable for a person to expect a 10-15 years timeline in courts before the case gets finally decided. According to data of the National Judicial Data Grid, a total of 4,27,35,471 cases (civil and criminal) are presently pending in Indian Courts. Justice V.V. Rao of the Andhra Pradesh High Court, in 2010, opined that it would take nearly 320 years to complete the backlog of cases in the Indian judiciary. To rectify this lugubrious situation, the Union Government brought in the Mediation Bill, 2021.
The Mediation Bill was introduced in the Rajya Sabha on December 10, 2021 to institutionalise mediation and establish the Mediation Council of India, but the same was referred to a Parliamentary Standing Committee for review, which successfully submitted its report on July 13 this year, and recommend certain changes. The Bill states that its objectives are to “promote and facilitate mediation, especially institutional mediation, for resolution of disputes, commercial or otherwise, enforce mediated settlement agreements, provide for a body for registration of mediators, to encourage community mediation and to make online mediation as acceptable and cost effective process and for matters connected therewith or incidental thereto”.
The Law Commission of India, in its 238th report on the amendment of Section 89, recommended substituting the section with an amended provision which would be in line with the Afcons Infra. Ltd. ruling. But the recommendations are yet to be implemented.
Although the Bill endeavours to fulfil its objectives, it suffers from certain anomalies which should be rectified.
Also read: The contours of mediation in commercial disputes
What are the lacunae in the existing legislation that necessitate the Bill?
Section 89(1)(d) of the Civil Procedure Code (‘CPC’), 1908 empowers courts to refer parties to mediation for effective disposition of their cases. Additionally, mediation finds reference in certain other statutory provisions such as Section 37 of the Consumer Protection Act, 2019 and Section 12A of the Commercial Courts Act, 2015. Mediation also finds statutory recognition in the Companies Act and the Insolvency and Bankruptcy Code, among others. However, the Supreme Court and various high courts rely on section 89(1)(d) of the CPC while referring parties to mediation.
The Supreme Court in the case of Salem Advocate Bar Association, Tamil Nadu versus Union of India (2005) succinctly highlighted the error inherent in section 89 of the CPC. Although the court somehow seemed satisfied, and considered the anomalies in the section as creases that could be ironed out.
The Supreme Court in Afcons Infra. Ltd. & Anr versus Cherian Varkey Construction Co. (P) Ltd. (2010) held that section 89(1)(d) is not adequate and needed a modified interpretation. It stated that the section is “badly worded” and suffered from “draftsman’s error”.
The court went on to settle the difference between the terms ‘judicial settlement’ and ‘mediation’, and the need to interchange them for a proper interpretation of section 89(1)(d). It also clarified the procedure to be followed while referring the cases to mediation, and also expounded on the practice of formulating the issue for the parties before referring them to mediation. It was held that mere reference to mediation without formulating the terms of settlements is sufficient and no further inquiry into the matter is required.
Additionally, section 89 does not talk about the enforcement of the mediation settlement. Hence, when a settlement is reached in a case where the court has directed the parties to mediation, in such cases, the settlement so reached would be reverted to the court concerned for settlement and disposal, as purported in Afcons Infra. Ltd. As a result, the process becomes tedious, thereby discouraging parties to opt for mediation.
The Italian ‘opt out’ model can also be introduced in India. This process allows the parties to get acquainted with the process and understand the prospects of mediation better. Data suggests that such a method could significantly increase the prospects of parties availing mediation.
Later, the Law Commission of India, in its 238th report on the amendment of section 89, recommended substituting the section with an amended provision which would be in line with the Afcons Infra. Ltd. ruling. But the recommendations are yet to be implemented. The Bill seeks to follow Afcons Infra. Ltd. but suffers from certain anomalies.
Also read: Gandhi’s experiments with non-violence and mediation
What are the problems in the Bill?
There has been a buzz around the Mediation Bill since its inception. Majorly, there are three contentions against the Bill – (a) it seeks to put a peremptory restriction on the parties making mediation mandatory, also known as pre-litigation mediation, which seems to violate Article 21 of the Constitution, (b) Clause 26 of the Bill goes against the spirit of the Constitution, as orders and directions of the courts cannot supersede statutory provisions, and (c) the Bill is ambiguous on enforceability of cross-border settlements and international obligations.
Mandatory pre-litigation mediation
Clause 6 of the Bill seeks to provide for compulsory pre-litigation mediation, which would mean that the parties involved would have to mandatorily try mediation first and then approach the court. This clause is applicable in all sorts of cases, barring criminal and certain other cases.
The main contention here is with regards to the mandatory nature of the clause: it essentially binds parties to enter into mediation even in the absence of a prior mediation agreement. Hence, this could amount to violation of Article 21, which among other things guarantees right to unfettered access to justice.
The Supreme Court, in M.R. Krishna Murthi versus The New India Assurance Co. Ltd. (2019) while considering an issue of accident claim, opined the insertion of a mandatory pre-litigation mediation clause in the Motor Vehicles Act, 1988 so as to effectively resolve disputes. So, the Supreme Court has time and again recommended the use of the pre-litigation model of mediation in some types of cases. Despite that, it would be a little too presumptuous to expect litigants in a heavily litigating country like India to enter into mediation prior to litigation.
Additionally, mediation on such a colossal scale has certain practical and logistical issues as well, which would include inclination of the parties to sit and talk, the availability of quality mediators in each district, and the subject expertise of the mediators, among other things. It is also true that generally, litigation is considered to be the last resort opted by parties with meagre scope of mediation.
The Italian model of adjudication can be of some use in such situations, where the parties involved must apply to participate in an information session with a trained mediator before filing a lawsuit, after which they may choose to stay and take part in the mediation process or to opt out. This ‘opt out’ model can also be introduced in India. This process allows the parties to get acquainted with the process and understand the prospects of mediation better. Data suggests that such a method could significantly increase the prospects of parties availing mediation.
Clause 26 of the Bill makes the process of mediation court-annexed, which means when this Bill becomes law, the Supreme Court and the high courts would possess powers to formulate rules for court-annexed mediation. The Parliamentary Standing Committee objected to the said clause as it would go against the common law practice of superiority of statutes in situations where statutes are established.
The government can consider relaxation of the mandatory two mediation sessions, even reducing it to one session if need be. It can also consider changing the time interval between each session from 180 days to 120 days so that parties would be encouraged to opt for mediation.
The Supreme Court, in Supreme Court Advocates-on-Record-Assn. versus Union of India (2015) held that separation of powers or distribution of powers is the tectonic structure of our Constitution. Thus, an act of Parliament to grant power to formulate rules for court-annexed mediation, despite there being an existent legislation, would raise questions on the constitutionality of the clause. This would also be a problem while ascertaining the uniformity of rules across the spectrum as it would be on the court to decide the rules on a case-to-case basis.
Cross border settlement
One of the major issues with the Bill relates to its international enforceability and adherence to international treaties on mediation.
The United Nations General Assembly adopted the United Nations Convention on International Settlement Agreements Resulting from Mediation, also known as the Singapore Convention on Mediation, on December 20, 2018. The Convention provides for a uniform and efficient framework for the enforcement of international settlement agreements resulting from mediation and allows parties to invoke such agreements. India is a dualist State by nature while enforcing international laws and customs.
Article 51(c) of the Constitution obliges the government to adhere to international laws and treaties. Hence, the Mediation Bill is a laudable step towards fulfilling the Singapore Convention. But there are certain sections that are not completely in sync with the Convention.
According to Clause 28(1) of the Bill, the settlement agreement resulting from mediation will be final and binding only on the ratification of a court; whereas Article 1(3)(a)(ii) of the Singapore Convention states that in case of interference of courts in reaching a settlement, the Convention would not apply to settlements reached thereof. Hence, clause 28 of the Bill and Article 1 of the Singapore Convention are contrary to each other.
Also read: Singapore Convention on Mediation enters into force
This could have a detrimental effect on the international enforceability of the mediation settlements concluded in India. This would deter India from availing the worldwide benefits of international enforceability of mediation settlements. Hence, the government needs to clarify this issue as well.
What is the way ahead?
Additionally, the Bill could play a pertinent role in enhancing the rights of citizens, by providing another level of appeal in the adjudication process, which would mean adding a layer of alternative efficacious remedy.
Mediation undoubtedly has been the single most successful form of ADR around the world. The government can consider relaxation of the mandatory two mediation sessions, even reducing it to one session if need be. It can also consider changing the time interval between each session from 180 days to 120 days so that parties would be encouraged to opt for mediation.
After rectifying the anomalies existing in the Bill, which have already been put forth by the parliamentary committee, the Bll would be good to go. The legislation would set a right precedent in the world of ADR. It is a long needed legislation, and the time is ripe for India to enact her own Mediation statute. In this endeavour, the Mediation Bill is a step in the right direction.