Mediation Act, 2023
Polity & Governance
29th Sep, 2023
Delay in Justice and overburdened courts in India have pushed for Alternate Dispute Resolution (ADR) and mediation laws which will help to resolve disputes without court involvement.
Alternate Dispute Resolution (ADR):
- Alternate dispute resolution (ADR) refers to means by which disputes are settled outside the traditional court system. In India, modes of ADR include arbitration, negotiation, mediation, and Lok Adalats.
About the Act:
- Objective: The Mediation Act, 2023 aims to foster a link between the mediation and the arbitration of commercial disputes, thus reducing the burden on Indian courts.
- Mandatory Pre-Litigation Mediation: Parties involved in civil or commercial disputes must engage in at least two mediation sessions. Only after these sessions can a party opt to withdraw from the process. This approach aims to alleviate the burden on the Indian judicial system and promote faster dispute resolution.
- Timely Resolution: The Act sets a timeline for the mediation process. It must be completed within 180 days. However, this period can be extended by an additional 180 days if all parties involved agree to the extension.
- Mediation Council of India: The Mediation Council is to be established to regulate the profession of mediators, may not have representation of practising mediators with adequate experience.
- 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), and
- 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: (a) commercial disputes, and (b) other disputes as notified.
- The Act applies to international mediations only if they are conducted in India.
- Exemptions: Not all disputes are eligible for mediation under this act. Cases involving criminal prosecution or those significantly impacting the rights of third parties are deemed inappropriate for mediation.
What is “Mediation”?
- Under the Act, Mediation is defined expansively to include any process where parties request a third person (mediator) to assist them in reaching an amicable settlement and includes (a) pre-litigation mediation; (b) online mediation; (c) community mediation; (d) conciliation; or any other expression having a similar meaning.
- Currently, mediation in India can be court-referred, private (based on contractual agreements), or provided under specific statutes like the Commercial Courts Act, 2015, the Consumer Protection Act, 2019, or the Companies Act, 2013.
- This could lead to more out of court settlements and reduce the pendency in courts.
- Confidentiality, self-determination and voluntariness, are adequately safeguarded.
- Affords protection against admissibility and privilege against disclosure. All mediation communication is confidential.
- Ensures that non-settlement reports by the mediator do not disclose the cause of non-settlement.
- Any party can, at any point in the mediation, voluntarily opt out of the process.
- The shift from the voluntary nature of mediation to mandatory participation, which has been a cornerstone of traditional mediation. Critics argue that this may deter parties from engaging in the process willingly.
- Unlike other professional regulators like the Bar Council of India (BCI), the Mediation Council lacks adequate representation of experienced practitioners, leading to questions about its effectiveness in regulating the mediation profession.
- The requirement for the Council to obtain prior approval from the Central government for its regulations has raised concerns about potential government involvement as a party to mediations, potentially compromising neutrality.
What are the other ways of mediation?
- Panchayat: Mediation has a long history in India, particularly through the use of Panchayats for resolving community conflicts.
- 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. In India, modes of ADR include arbitration, negotiation, mediation, and Lok Adalats.
What about the Singapore Convention on Mediation?
- In 2019, India was amongst the first to sign the United Nations Convention on International Settlement Agreements resulting from Mediation, also called the Singapore Convention on Mediation.
- However, in 2023, when India promulgated its first standalone legislation on mediation, it chose not to incorporate the Singapore Convention.
Various countries including Australia, Singapore, and Italy have standalone laws on mediation.