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EDITORIAL ANALYSIS : A clear message to industry on dispute resolution

 

 

Source: The Hindu

  • Prelims: Governance(Adhar, UIDAI, KYC, ODR, Mediation Act, 2023, Alternative Dispute Resolution (ADR), Enforcing Contracts, Srikrishna Committee etc
  • Mains GS Paper II: Government policies and interventions for development of various sectors and issues arising out of them etc
  • ARTICLE HIGHLIGHTS
  • Parliament passed The Mediation Bill, 2023, and upon receiving the assent of the President of India, is referred to as the Mediation Act, 2023.

 

 

INSIGHTS ON THE ISSUE

Context

Alternative Dispute Resolution (ADR):

  • ADR refers to a bouquet of mechanisms that enables disputing parties to resolve their differences amicably, without the intervention of courts.
  • The Indian legal framework encourages courts to refer the disputing parties to ADR procedures, including mediation, if there were elements of settlement which the parties may accept.

 

Features of the Mediation Act, 2023:

  • 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 disputes relating 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 by the 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.

Benefits:

  • It is expected to reduce the filing of frivolous claims before Indian courts.
  • Owing to the confidentiality of a mediation, it may also mitigate the risk of deterioration of the parties’ relationship due to a publicly fought dispute.
  • Concerns about the feasibility of a mediation conducted under the sword of an obligation as opposed to a sincere desire to arrive at an amicable resolution.
    • This may empower a recalcitrant defendant to delay a genuine claim.
    • The Act will provide some safeguards against these concerns.
  • It will require the mediation to ordinarily be conducted by an empanelled mediator, who must always be neutral and have uncompromising expertise.
  • Mediators must complete the mediation within 180 days from the parties’ first appearance.
  • The Act will not remove the refuge of Indian courts entirely.
  • A party may, in exceptional circumstances, seek urgent interim reliefs from a court before the commencement or during the continuation of a mediation.
  • These provisions prioritize expertise and efficiency, while ensuring that the obligation of pre-litigation mediation is not weaponised.
  • The aim to create a balanced framework encourages the parties to focus more on their commercial dealings and less on their disputes.

 

Issues:

  • The Act will effectively position mediation similar to commercial arbitration in India.
    • Both pieces of legislation impose stringent timelines for the conduct of proceedings
    • mandate confidentiality
    • obligate Indian courts to refer the parties to mediation or arbitration
    • provide a default mechanism for the appointment of a mediator or arbitrator
    • prescribes the procedure for the termination of their mandate.
    • Both ensures the enforceability of a mediated settlement agreement and an arbitral award, respectively.
  • The establishment of a Mediation Council of India equally mirrors the proposal in 2019 to establish an Arbitration Council of India (that is yet to be implemented).
  • Mediation and commercial arbitration are made allies, albeit at different stages of the same journey.
  • In commercial matters, courts will no longer be the default venue for dispute resolution.
  • Parties are expected to resolve their dispute amicably through mediation, and, alternatively, through commercial arbitration.
    • The doors of courts are open if required, this access must be perceived as a matter of last resort.

 

Way Forward

  • The Act will take this encouragement a step forward: Irrespective of a prior mediation agreement, it will obligate each party to take steps to settle their dispute through pre-litigation mediation before approaching an Indian court.
    • To facilitate this process, the Act will also require courts and relevant institutions to maintain a panel of mediators.
  • The Act will foster camaraderie between the mediation and arbitration of commercial disputes, and reduce the burden on Indian courts.
  • The Act places emphasis on institutional mediation in India.
  • It envisages “mediation service providers” to provide not only the services of a mediator but also all the facilities, secretarial assistance, and infrastructure for the efficient conduct of mediation.
  • India is home to experienced arbitration institutions, some of which provide mediation services that are on a par with global best practices.

 

QUESTION FOR PRACTICE

The emergence of Fourth Industrial Revolution (Digital Revolution) has initiated e-Governance as an integral part of the government”. Discuss.(UPSC 2020) (200 WORDS, 10 MARKS)