[By Inika Dular]
The author is 2nd year B.A. LL. B.(Hons.) student at the Rajiv Gandhi National University of Law, Punjab
Introduction
Mediation is well-established and historically practised in India since its three-tiered Panchayati-Raj system of managing rural development. According to the recommendation of the Justice Malimath Committee and the 129th Law Commission of India, mediation was formally established in India by the Code of Civil Procedure (Amendment) Act, 1999. Despite being long acknowledged, there were difficulties due to no legal foundation. The Mediation Act of 2023 attempted to fill this gap. The Act, complementing the 1996 Arbitration and Conciliation Act, strives to lessen the workload of Indian District and Taluka Courts.
As the Mediation Act completes one year of enforcement, this blog delves into the critical analysis of the legislation from observations throughout the year: firstly, the effectiveness of S.89 of the Code of Civil Procedure (CPC); secondly, understanding the Mediation Act; and thirdly, comparative international analysis and the way forward for mediation in India.
Mediation Under Section 89 of CPC vs. Mediation Act 2023
Section 89 of CPC, along with Order X Rules 1A, 1B, and 1C, was inserted by following the recommendations of the 129th Law Commission and Arrears Committee. After the enactment of the Arbitration Act of 1940, S.89 CPC has been amended to encompass other ADR methods.
Section 89 lays down an ambiguous legal basis for mediation in India, undermining ADR’s primary time-saving objective by requiring court involvement in settlement preparation. This was later done away with the 238th Law Commission report recommending eliminating the requirement of court reference in the cases of Conciliation and Lok Adalat disputes. Moreover, the legislation treats conciliation differently from mediation, despite being used interchangeably in modern times. The lack of relevant guidelines on settlement agreements, mediator regulation, and any procedures for penalising parties that prematurely terminate the mediation fails to offer clear principles, causing severe mediation failures.
Whereas, the Mediation Act sets up a 120-day mediation-term extendable by 60 days under Section 18. A conclusive mediated settlement-agreement becomes legally binding on the parties involved as stated in Section 27, granting the execution comparable to a judicial order, following the guidelines outlined in CPC. Additionally, Section 30 of the Act provides for online mediation, allowing parties with a multi-jurisdictional presence to participate conveniently and economically. With the formal institutionalisation of mediation as a crucial alternative conflict resolution technique, this legislative move represented a significant advancement in the Indian legal system. The Act aimed to encourage peaceful and quick resolution of disputes, demonstrating India’s dedication to peaceful conflict resolution, complementing its commitment to the Singapore Convention on Mediation highlighting the country’s innovative role in promoting mediation procedures globally.
Limitations of the Mediation Act against the Arbitration and Conciliation Act
Nevertheless, even within the commendable framework of the Mediation Act, there exist some noticeable lacunae. Notably, no formal procedures are in place to enforce mediated settlement-agreements resulting from foreign mediations, exposing a significant deviation from the global norms outlined in the Singapore Convention. The Act lost a crucial chance to establish a more inclusive legal framework at a time when mediation is becoming the go-to ADR method. To enforce international settlements made under Indian jurisdiction, ratification and implementation of the Singapore Convention is the need of the hour. The lack of such rules will have a major effect on the use of mediation, particularly when it comes to the settlement of international business conflicts.
Furthermore, the Mediation Act regrettably misses the same level of precision as the Arbitration and Conciliation Act, which delineates clear guidance on the types of interim orders that can be issued. The Arbitration and Conciliation Act restricts the scope of such measures to only those mediations that are referred by a court or tribunal, explicitly excluding mediations that arise from Mediation Agreements. It is imperative to meticulously scrutinize the rules that are anticipated to be formulated under Section 52 of the Mediation Act to address and rectify these significant gaps. The current ambiguity permits varied interpretations and potential inconsistencies in practice in the process of mediator nomination. This can be rectified by mandating adherence to guiding principles analogous to those outlined in Schedule 5 of the Arbitration and Conciliation Act for the appointment of an arbitrator. Such a requirement could potentially complicate the mediator selection process, further necessitating the development of clear and precise guidelines to ensure consistency and fairness in mediation practices.
Comparative International Analysis
The government has incorporated elements of the Singapore Convention into Section 27 of the Mediation Act, aligning with international mediation frameworks. The Convention promotes the recognition of mediated settlement-agreements across jurisdictions under Article 3. At the same time, a corresponding EU Directive (2008/52/EC) seeks to standardize mediation practices within member states under Article 2, similar to how arbitral awards are enforced under the New York Convention. Global mediation infrastructure is further reinforced through institutions like the International Criminal Court and the International Centre for Dispute Resolution, which offer mediation as a first step towards conflict resolution. Independent entities, like the International Mediation Institute, ensure mediator neutrality and confidentiality, and privacy under Articles 6 and 7, respectively. The Singapore International Mediation Institute also upholds similar standards. However, discrepancies exist between the Act and international standards, revealing gaps in India’s alignment with global mediation practices.
Strengthening the Mediation Act’s Framework
Having been in practice for a year, several critical gaps have emerged that necessitate urgent attention to ensure the Act’s seamless operation. These gaps include, inter alia, the necessity for a thorough examination of the conditions that satisfy the criteria for exceptionality, warranting requests for temporary relief. Moreover, it is imperative to establish stringent standards for the selection of members of the Indian Mediation Council to cultivate both competence and confidence in the mediation process. Extending the Act’s purview to encompass non-commercial disputes involving government agencies is imperative. This extension addresses a significant gap in the current legal framework, ensuring that conflicts of this nature can be effectively resolved through the mediation process. By incorporating such disputes within the Act’s jurisdiction, the legal system will be better equipped to handle a broader range of issues, thereby promoting fairness and efficiency in resolving disputes involving governmental entities. This enhancement not only reinforces the principles of justice and equity but also contributes to the overall robustness of the dispute resolution mechanism, providing a comprehensive approach to managing both commercial and non-commercial conflicts.
Additionally, there is a need to carefully examine the enforceability of settlement agreements that arise from mediations conducted beyond the territorial jurisdiction of India. The establishment of a comprehensive and sophisticated legal framework is essential to enhance the international credibility and efficacy of the mediation process. Such a framework would provide the necessary clarity and ensure the effective cross-border enforcement of these agreements. This initiative should be in strict compliance with the provisions outlined in Article 7 of the Singapore Convention on Mediation, thereby fostering a more robust and reliable system for the resolution of international disputes.
The primary objective of the Act is to formalise the mediation process, which is anticipated to result in significant improvements in both efficiency and effectiveness of the same. This institutionalization is expected to enhance the acceptance and confidence of stakeholders in the mediation process. India must adopt this regulatory framework to bolster its reputation as an attractive investment destination amid increasing business conflicts and litigations.
Although mediation remains largely a voluntary and optional practice, its development as a robust ADR method is underscored by its formal recognition and codification into law. The global repercussions of the prevailing economic challenges highlight the critical need for swift and cost-effective justice, particularly in non-judicial settings.
Conclusion
As the Mediation Act of 2023 completes its first year of implementation, it is clear that while it represents a substantial advancement in formalizing mediation as a viable alternative dispute resolution mechanism in India, several critical issues remain unaddressed. The Act’s attempt to alleviate the burden on Indian courts by promoting peaceful and expedited conflict resolution has demonstrated India’s commitment to this form of dispute resolution. However, the Act’s lack of precision, particularly compared to the Arbitration and Conciliation Act, 1996, and its lack of comprehensive provisions for enforcing internationally mediated settlements, pose significant challenges.
To ensure the Act’s efficacy, it is essential to develop detailed guidelines under Section 52 to close existing gaps and establish stringent standards for mediator selection. Extending the Act’s scope to include non-commercial disputes involving government entities will further enhance its applicability and effectiveness. Additionally, aligning the enforcement of international mediation settlements with the Singapore Convention’s provisions is crucial for maintaining global credibility. India’s commitment to global mediation standards and its role in promoting peaceful dispute resolution is evident, but further reforms are needed to ensure that the Mediation Act aligns with international frameworks and bolsters India’s position as an attractive destination for investment and conflict resolution.
By addressing these gaps and refining the mediation framework, India can reinforce its dispute resolution mechanism, promote fairness, and strengthen its position as an attractive destination for investment and business. The formal recognition and codification of mediation underscore its potential as a swift, cost-effective, and robust method for resolving conflicts, especially in today’s complex economic landscape.