DRAFT MEDIATION BILL, 2021: PAVING THE PATH FOR THE FUTURE WHILE WEAKENING THE FOUNDATION?
[Amol Verma is a final-year law student at Chanakya National Law Univeristy, Patna]
“To practice the process of Conflict Resolution, we must completely abandon the goal of getting people to do what we want.” – Marshall B. Rosenberg
The Indian judiciary has been characterized by a huge backlog of cases that results in undue delay in the disposal of matters. According to research, there are approximately 4.5 crore cases pending in all courts across India as on 15th September 2021. Hence, there is a growing need to find innovative and effective mechanisms in order to relieve the already overburdened judiciary with fresh litigations, when these can be better negotiated by amicable settlement outside the Courts in a speedier manner. Since the introduction of Section 89 of the Code of Civil Procedure, 1908 (hereinafter referred to as ‘CPC, 1908’) which heralded the regime of mediation in India to the Commercial Courts (Pre-Institution Mediation and Settlement) Rules, 2018, mediation as a form of ADR mechanism has witnessed a remarkable impetus in India. There are continuous evolvements happening in the statutes owing to the parties’ functions, judicial decisions, and the dynamic market realities. In an attempt to further strengthen the mediation framework, a Draft Mediation Bill, 2021 was introduced in the Rajya Sabha in December last year which is currently referred to the Standing Committee. The article critiques the potential legislation which is being touted as a harbinger of a comprehensive and uniform mediation regime, the need for plugging the legislative gaps before it culminates into an act and the practical challenges that clog its successful implementation.
Analysis of Mandatory Pre-Litigation Mediation
The concept of pre-litigation mediation is embedded under Section 6 of the Bill, which is a welcome move. According legal sanctity to the efforts of the parties to settle their dispute outside the courts before resorting to the judicial mechanism is a potential driver for the growth of professional mediation in India. At the same time, pre-litigation mediation has the effect of assuaging the burgeoning caseload of the courts. However, the Bill tends to dilute the essence of mediation as it provides – “whether any mediation agreement exists or not, any party before filing any suit or proceedings of civil or commercial nature in any court, shall take steps to settle the disputes by pre-litigation mediation”. The compulsion to mediate before knocking the doors of the court runs counter to the tenet of ‘party autonomy’ on which the entire edifice of mediation is built. Willingness of the parties stands at the highest pedestal in ADR mechanisms and forcing the parties to opt for a remedy they don’t want would do more harm than good.
Most importantly, in the absence of infrastructure and an adequate number of well-qualified mediators, the practice of making pre-litigation mediation mandatory would overburden the mediation regime rather than bolstering it. Further, piling on the misery of reluctant parties, the proviso to Section 25(d) of the Bill compels the parties to undergo at least two mediation sessions before communicating their desire to terminate the mediation proceedings to the other parties and the mediator.
Recently, the Madras High Court in Shahi Exports Pvt. Ltd. v. Gold Star Line Limited, has pointed out that pre-institution mediation is not mandatory u/s 12A of the Commercial Courts Act, 2015, and the right to approach the courts is a fundamental right guaranteed under the Indian Constitution.
Clubbing International Mediation with Domestic Mediation
Domestic mediation implies a mediation conducted in India. International mediation has been defined u/s 3(f) as a mediation where at least one of the parties is –
“(i) an individual who is a national of, or habitually resides in, any country other than India; or
(ii) a body corporate including a Limited Liability Partnership of any nature, with its place of business outside India; or
(iii) an association or body of individuals whose place of business is outside India; or
(iv) the Government of a foreign country.”
After perusing the aforesaid definition of international mediation, it becomes pertinently clear that domestic mediation and international mediation are two distinct types of mediation. However, Section 2(1) of the Bill equates domestic mediation with international mediation. Consequently, if parties undertake international commercial mediation in India that results in a successful mediation settlement agreement that as per Section 28(2) of the Bill the said agreement shall have the force of a judgment or decree of a Court. Having said that, it is of considerable importance to note that the United Nations Convention on International Settlement Agreements (hereinafter referred to as ‘Singapore Convention’) does not apply to an agreement that has the status of a judgment or decree of a court. Meaning thereby, if parties undertake international commercial mediation in India, they shall be deprived of the Singapore Convention as an aid in enforcement. Thus, the parties involved in an international commercial mediation would be reluctant to undertake mediation proceedings in India. Hence, the hopes of the Government to make India a dispute resolution hub are bound to suffer a death blow.
Professional Regulatory Body with no Members from the Profession
Section 33 of the proposed law mandates the establishment of a Mediation Council of India as the nodal regulatory body. Section 34(1) vests vast powers with the Central Government to appoint as Chairperson any individual possessing professional experience or displaying capacity in handling problems relating to law, ADR, public affairs, or administration. Furthermore, there shall be two full-time members who possess expertise in ADR and ADR teaching and as far as one can reasonably decipher, they could just be from the field of arbitration. Moreover, the term ‘full-time member’ highlights the fact that the individuals so appointed won’t be active practitioners. Mediators, the most vital stakeholder in the mediation regime, do not find a place in the very body that regulates their profession. The composition of the Council appears to be that of a typical government regulatory body in the clothes of a professional regulatory body.
Diluting the Principle of ‘Confidentiality’
While Section 17(2) of the Bill, inter alia, preaches that confidentiality of the parties shall be sacrosanct and the mediator shall safeguard this confidentiality while upholding the standards of professional and ethical conduct. On the other hand, Section 18(1) provides that – “The mediator shall attempt to facilitate voluntary resolution of the dispute by the parties and communicate the view of each party to the other to the extent agreed to by them”.
Further subverting the principles of confidentiality, the proviso to Section 24(1) mandates disclosure of Information in matters where professional misconduct or malpractice by the mediator is claimed. It implies that a mere allegation of professional misconduct or malpractice against the mediator shall warrant the breach of confidentiality.
Loosely worded & Unwarranted Exclusions
The legislation is loosely worded when it employs the usage of the terms like ‘indicative’ while deliberating on the list of matters which are not suitable for mediation. This leaves room for a lot of subjectivity to creep in. The wide list of exclusions, inter alia, includes disputes wherein allegations of fraud, fabrication of documents, forgery, impersonation, coercion is advanced. This can be disastrous considering the fact that there is a glaring trend among parties to throw every charge possible involving the aforesaid allegations in commercial disputes. Similarly, the approach to exempt cases involving minors, deities, and persons with disabilities, aligns with a regressive perspective. Rather, in this regard, the Bill should have subjected the disputes pertaining to the people of above class to mediation proceedings, provided the Court has certified that the mediation proceedings shall be in their best interest.
Notably, the First Schedule also mentions that disputes involving criminal prosecutions shall not be the subject matter of mediation. It is a step in the right direction to not subject heinous offences such as rape, dacoity, murder, among others to mediation. However, it fails to recognize that there are certain criminal offences for which the remedy of mediation is more suitable and effective. For Illustration, this view has been endorsed by the Hon’ble Supreme Court in K. Srinivas Rao v. D.A. Deepa, wherein it was observed that cases u/s 498-A of Indian Penal Code, 1860, even though non-compoundable, can be referred to mediation.
The Bill while laying down the list of matters not fit for mediation, substantially ignores the dicta in Vidya Drolia v. Durga Trading Corporation, wherein the Apex Court had propounded the test to ascertain which disputes cannot be subjected to ADR.
Affixing a Limitation period for Challenge of the Agreement basis Fraud
U/s 29(2) one of the grounds for challenging the Mediation Settlement Agreement is if it is vitiated by fraud. Moreover, u/s 29(3) a limitation period of 90 days starting from the date on which the concerned party has received the copy of the Agreement, has been prescribed for lodging a challenge. This limitation period can be relaxed by the Court or Tribunal by a further period of 90 days, wherein the party displays sufficient cause for delay in making an application. In Venture Global Engineering LLC v. Tech Mahindra, the Supreme Court highlighted that fraud vitiates everything which can take any form, and recognized that parties may discover fraud in the making of the agreement after lapse of a significant period of time. Arguendo, even where limitation period is prescribed, it always runs from the date of discovery of fraud.
Conclusion and Way Forward
The very purpose of having a consolidated mediation law was to undo the diversity existing across different legislations and to bring them together at one place so that there’s uniformity at least for a structured mediation. Therefore, the nomenclature of the proposed law should have been a ‘Code’ rather than an Act as it amends several legislations such as the CPC, 1908, the Legal Services Authorities Act, 1987, the Arbitration and Conciliation Act, 1996, to name a few. While the Bill is appreciated for its attempt to mainstream mediation in India through a dedicated legislation, embracing the prospects of online mediation in times of COVID, adopting the model of community mediation, the proposal in its present form raises more questions than answers.
The provisions of the Bill which operate against the elementary propositions of mediation need a thorough re-examination. It is important to realize that mediation can be professionalized only when it strengthens the basic canons of mediation rather than undermining them.
At this stage, it is incumbent upon the lawmakers to engage in wider consultations with the mediators, mediation organizations among other stakeholders from the mediation circle before the proposed law culminates into a full-fledged Code.