Mediation Bill: An Incomplete Settlement

Why in News?

• The Mediation Bill 2021, that aims to cut down the time to complete mediation proceedings got Parliamentary approval after the both houses passed it.
• With this, India now has a dedicated legislation governing mediation (Samadhan) but at the same time certain things in the bill need refinement.

 

The Mediation Bill, 2021

• It was introduced in the Rajya Sabha in December, 2021, with the Parliamentary Standing Committee being tasked with a review of the Bill.
• The Bill aims at institutionalising mediation and establishing the Mediation Council of India.

 

Key Features of the Bill

• Pre-litigation mediation
  • Parties must attempt to settle civil or commercial disputes by mediation before approaching any court or certain tribunals.
  • Even if they fail to reach a settlement through pre-litigation mediation, the court or tribunal may at any stage refer the parties to mediation if they request for the same.
• Disputes not fit for mediation
  • The Bill contains a list of disputes which are not fit for mediation.
  • These include disputesrelating to claims against minors or persons of unsound mind, involving criminal prosecution, and affecting the rights of third parties. The central government may amend this list.
• Applicability
  • The Bill will apply to mediations conducted in India:
    • involving only domestic parties
    • involving at least one foreign party and relating to a commercial dispute (i.e., international mediation)
    • if the mediation agreement states that mediation will be as per this Bill.
  • If the central or state government is a party, the Bill will apply to commercial disputes, and other disputes as notified.
• Mediation process
  • Mediation proceedings will be confidential, and must be completed within 180 days (may be extended by 180 days by the parties).
  • A party may withdraw from mediation after two sessions.
  • Court annexed mediation must be conducted as per the rules framed by the Supreme Court or High Courts.
• Mediators
  • Mediators may be appointed bythe parties by agreement, a mediation service provider (an institution administering mediation).
  • They must disclose any conflict of interest that may raise doubts on their independence.
  • Parties may then choose to replace the mediator.

 

Concerns Highlighted by the Parliamentary Standing Committee

• Pre-Litigation
  • The panel highlighted many key issues including mandatory and coercive nature of pre-litigation mediation.
  • Making pre-litigation mediation necessary may result in case delays and provide another instrument in the hands of truant litigants to prolong case disposition.
• Clause 26: The panel was against Clause 26of the draft which gives power to the SC or the High court to make laws of pre-litigation according to them.
• Non-Applicability to Non-Commercial Disputes: The members questioned the non-applicability of the provisions of the Bill to disputes/matters of non-commercial nature involving the Government and its agencies.
• Appointments: The panel had discussions about the qualifications and appointment of the Chairperson and Members of the proposed Mediation Council.

 

Recommendations Accepted by the Union Cabinet

• Reducing the Time for Concluding a Mediation
  • The Union cabinet has accepted the recommendations of the standing committee by reducing the time for concluding a mediation from 180 to 90 days.
• Making Pre-Litigation Mediation Voluntary
  • The recommendation for making pre-litigation mediation voluntary instead of mandatory was also much needed as voluntariness is an essential principle of mediation.
• Recognition and Enforcement of Agreements
  • Recognition and enforcement of settlement agreements arising out of mediation is a welcome move.
  • This is also in line with India’s commitment as a signatory to the United Nations Convention on International Settlement Agreements Resulting from Mediation (Singapore Convention). 

 

Provisions of the Final Bill that Require a Relook

• Limited Grounds to Challenge a Settlement Agreement
  • The limited grounds listed to challenge the enforcement of a settlement agreement and the fact that a period of 90 days is given to raise the challenge need a relook.
  • The fact that a settlement agreement is essentially a contract between the parties; there are several instances where grounds for challenge such as fraud and impersonation are detected at a later stage.
• Technical Flaws in Clause 8
  • Clause 8 of the Bill entitles a party to move the Court before the commencement or during mediation for interim relief but only in “exceptional circumstances”.
  • The term “exceptional circumstances”is not only undefined in the Bill but is also abnormal to the settled principles of seeking interim relief before the civil courts.
  • Moreover, there is no remedy of appeal available against an order passed under this proposed section.
• The Concept of Online and Community Mediation
  • A recent Niti Aayog report reveals that only 55 per cent of India have access to the internet and only 27 per cent possess compatible devices. 
  • For online mediation to be a success, the government will have to scale the bandwidth accessibility to remote parts of the country. 
  • As for community mediation, the Bill makes it mandatory to have a panel of three mediators.This requirement is unnecessary and impinges on the flexibility that mediation brings.
• Restricting the Government’s Participation in Mediation to only Commercial Disputes
  • The real issue is that the government is the biggest litigant in the country.
  • Restricting the ability of the government to participate in mediation proceedings arising only out of commercial disputes goes against the objective of enacting the legislation.

 

Way Forward

• Legal Aid Setup: Setting up legal aid or access to justice clinics with adequate IT infrastructure could address the issue of online mediation.
• Inclusion of Government Related Disputes in the Bill
  • The standing committee had also recommended that government-related disputes be included in the Bill.
  • The common litigant sees the government as an adversary before the court of law. The Bill provided a golden opportunity to the government to change that perception.
  • This will inspire confidence amongst all stakeholders but would also help in reducing pendency backlog.

 

Conclusion

• Mediation should be promoted as a preferred and voluntary mode of securing justice. 
• Although the legislature may have intended to lighten the load on the judiciary, the law needs to be improved because it may cause a delay in the administration of justice and raise the cost of litigation.

 

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Q1) Why is India called an Arbitration Unfriendly Country?

India struggles to enforce contracts: According to the World Bank’s Ease of Doing Business report, India has gone up from 142nd rank among 190 countries in 2014 to 63rd in 2019. While in ‘Enforcing Contracts', India's ranked at 163rd position which is a very minuscule improvement from the 186th rank in 2015. The report says it takes almost four years and 31% of the cost of the claim to enforce a contract in India.

 

Q2) What is The Arbitration and Conciliation Act, 1996 (ACA)? 

The Arbitration and Conciliation Act, 1996 ("Arbitration Act") has been enacted in order to consolidate and amend the law relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards as also to define the law relating to conciliation.

 

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Source: The Indian Express