October 27, 2023
Alternative Dispute Resolution (ADR) has long been hailed as a more efficient and cost-effective way to resolve disputes outside the traditional court system. In December 2021, India's parliament introduced the Mediation Bill, a significant step towards strengthening the foundation and procedure of ADR, particularly concerning mediation. This move aims to address the lack of a uniform legal procedure for mediation and the absence of a central authority overseeing the entire process, which is currently managed by private ADR centers.
The absence of a standardized procedure and a formal governing authority has led to ambiguities and challenges within the mediation process. The need for a comprehensive legislation for mediation is evident to minimize these ambiguities and alleviate the burden on India's courts, which are often overwhelmed with pending cases. Notably, the Supreme Court emphasized the necessity for such legislation in the case of M.R. Krishna Murthi v. New India Assurance Co. Ltd. (2019). As a response to these needs, the Mediation Bill was introduced in the parliament in 2021 and has been forwarded to standing committees for recommendations and suggestions.
The Mediation Bill, 2021, introduces several key features to regulate and enhance the mediation process in India:
1. Definitions and Conceptual Clarification: The Bill provides uniform definitions for mediation, mediators, and other related legal terms. It also introduces the concept of pre-litigation mediation.
2. Institutional Mediation: The Bill encourages the use of institutional mediation as a mechanism to resolve disputes.
3. Exclusions: It outlines the types of disputes that are not suitable for mediation and, therefore, excluded from the Bill's provisions.
4. Mediator Roles and Functions: The Bill defines the role and functions of mediators and establishes provisions for their appointment, termination, and replacement.
5. Nature of Mediation Settlements: According to the Bill, agreements or settlements reached through mediation are binding on the parties and hold the same legal weight as court judgements.
6. Court-Referred Mediation: The Bill empowers courts and tribunals to refer cases to mediation and provides a framework for conducting such mediation.
7. Party Rights: Parties have the right to withdraw from mediation proceedings or request a change of mediator under the Bill's provisions.
8. Online Mediation: The Bill incorporates provisions for online mediation,aligning with the goal of Digital India.
9. Establishment of the Mediation Council of India: This formal legal authority is responsible for overseeing mediation and addressing related issues. The Bill outlines the council's composition, member incorporation, retirement,termination, and powers and functions.
10. Community Mediation: The Bill introduces the concept of community mediation and outlines its procedures.
11. Mediation Funds and Accounts: It addresses the management of mediation funds,accounts, and necessary audits while providing provisions for mediation service providers.
Section 4 of the Bill defines mediation as a process in which parties in dispute seek assistance from a third party, the mediator, to reach a mutually agreeable settlement. This definition encompasses online mediation, pre-litigation mediation, and community mediation.
Under Section 5 of the Bill, mediation agreements can take various forms, including written agreements submitted by parties, mediation clauses in contracts, and agreements in written documents. Section 6 stipulates that parties should attempt to resolve their disputes through mediation before taking them to civil or commercial courts, even in the absence of a prior mediation agreement.
Chapter IV of the Bill addresses the role of mediators, their appointment, termination,and party preferences. Mediators can be appointed by parties or mediation service providers and must disclose any potential conflicts of interest. Section 13 outlines the grounds for mediator termination, including party applications, conflicts of interest, or voluntary withdrawal.
Mediation proceedings commence either from the date a notice is served for mediation (in cases with a mediation agreement) or from the date a mediator is appointed (in cases without a mediation agreement). Parties have the option to withdraw from mediation after the first two sessions. The Bill emphasizes the importance of completing mediation proceedings within 180 days. Section 21 sets this time limit.
Termination of mediation proceedings occurs when a mediated settlement agreement is signed and authenticated, upon a mediator's declaration of unjustified proceedings, or if a party fails to attend the first two sessions without notice. Parties can also communicate their desire to leave mediation in writing.
Section 22 of the Bill defines mediated settlement agreements as written agreements signed by both parties, settling all or some of their disputes. These agreements are considered final and binding and are enforced similarly to court decrees under the Code of Civil Procedure, 1908. Section 29 provides a 90-day window to challenge these agreements on grounds of fraud, corruption,impersonation, or if mediation was unsuitable for the matter.
The introduction of the Mediation Bill, 2021, is a crucial step in standardizing and streamlining the mediation process in India. With defined procedures,regulations, and the establishment of the Mediation Council of India, this Bill has the potential to transform the landscape of alternative dispute resolution, reducing the burden on courts and providing a more efficient and cost-effective approach to conflict resolution.