A clear message to industry on dispute resolution
Given the delays and increased cost of litigation in Indian courts, the discussion surrounding the Indian legal system inevitably gravitates towards Alternative Dispute Resolution (ADR).
GS-02 (Judiciary, Dispute redressal mechanism)
Alternative Dispute Resolution (ADR), Online Dispute Resolution (ODR), NITI Aayog, Mediation Bill, Lok Adalats, Plea-Bargaining, NALSA.
Discuss the significance and implications of the Mediation Act, 2023, in the context of the Indian legal system. How does this legislation impact the resolution of disputes and the burden on Indian courts? (Word Limit: 250)
Dimensions of the Article:
- The Mediation Bill, 2023
- Balancing Act: Benefits and Concerns
- Mediation vs. Arbitration
- Parliament’s Clear Message to Indian Industry
The Mediation Bill, 2023
- The recent approval of The Mediation Bill, 2023, during the monsoon session of Parliament marks a significant moment in India’s legal landscape.
- Earlier, Indian law had encouraged courts to refer disputing parties to ADR methods, including mediation, if a possibility of settlement exists.
- Regardless of any prior mediation agreement, it will compel each party to engage in pre-litigation mediation before resorting to Indian courts.
- Additionally, the Act mandates courts and relevant institutions to maintain a roster of mediators.
Balancing Act: Benefits and Concerns
- This requirement is anticipated to reduce the influx of frivolous claims filed in Indian courts. The confidential nature of mediation may also shield the parties’ relationship from deterioration due to a publicized dispute.
- Nonetheless, concerns arise regarding the viability of mediation when enforced as an obligation rather than a sincere attempt at amicable resolution. In such cases, it might empower an uncooperative defendant to delay a legitimate claim. Thankfully, the Act includes safeguards to address these apprehensions. It stipulates that mediation must ordinarily be conducted by a neutral empaneled mediator with unwavering expertise.
- Parties are also mandated to complete the mediation within 180 days from their initial engagement. Importantly, the Act retains the option for parties to seek urgent interim relief from a court in exceptional circumstances before or during mediation. These provisions prioritize expertise and efficiency while preventing the misuse of pre-litigation mediation.
Mediation vs. Arbitration
- An aspect that often goes unnoticed is how the Act effectively positions mediation alongside commercial arbitration in India. The parallels between the respective supporting legislations are evident.
- Both impose strict timelines for proceedings, emphasize confidentiality, require Indian courts to refer parties to mediation or arbitration, offer default mechanisms for mediator or arbitrator appointment, and define the procedure for terminating their roles. Moreover, both ensure the enforceability of mediated settlement agreements and arbitral awards, respectively.
- The establishment of a Mediation Council of India mirrors the proposed Arbitration Council of India from 2019. Thus, mediation and commercial arbitration become allies, albeit at different stages of the same journey.
Parliament’s Clear Message to Indian Industry
- Parliament’s message to the Indian business world is unequivocal: courts should no longer be the default arena for resolving commercial disputes. Parties are encouraged to amicably settle their disputes through mediation and, alternatively, through commercial arbitration.
- While access to Indian courts remains available when necessary, it must be seen as a last resort. In this context, the Act fosters cooperation between the mediation and arbitration of commercial disputes, alleviating the burden on Indian courts.
The Rise of Institutional Mediation
- The Act also emphasizes the importance of institutional mediation in India, similar to recent amendments prioritizing institutional arbitration under the A&C Act. It envisions “mediation service providers” offering not only mediation services but also all necessary facilities, secretarial assistance, and infrastructure for efficient mediation.
- These mediation service providers are akin to arbitration institutions, some of which in India already offer mediation services aligned with global best practices. Thus, these institutions are poised to play a significant role in India’s mediation landscape. This approach positions India as a global hub for all aspects of commercial dispute resolution, not just arbitration.