In M.R. Krishna Murthi v. The New India Assurance Co. Ltd., Civil Appeal No. 2476-2477 of 2019, the Supreme Court in an Order dt. 05.03.2019, stated:
“We recommend to the Government to examine the feasibility of setting up MAMA by making necessary amendments in the Motor Vehicles Act itself. In fact, the way mediation movement is catching up in this country, there is a dire need to enact Indian Mediation Act as well...[Para 27] We impress upon the Government to also consider the feasibility of enacting Indian Mediation Act to take care of various aspects of mediation in general.” [Para 39(a)]
Earlier, the High Level Committee to Review Institutionalisation of Arbitration Mechanism in India recommended in 2017: “The Government may consider the feasibility of having a standalone legislation for mediation after debate and discussions with the relevant stakeholders.” (p. 85).
So there have been calls for a legislation on mediation. Some mediation practitioners have argued that the present mediation regime is good enough and unnecessarily enacting a legislation will make mediation rigid. The answer lies somewhere between these extreme positions.
Mediation & Conciliation
Mediation in India refers to the method of alternative dispute resolution where a neutral third person attempts to make the parties settle the dispute. While both mediation and conciliation are similar, there is an important and crucial difference between mediation and conciliation: in mediation, the mediator does not propose settlement, rather she creates an atmosphere to enable parties propose and settle the dispute. This has significant implications on the legitimacy of the process and a sense of complete control of the parties over the dispute and its resolution.
Legal Regime on Mediation in India
The legal regime on mediation in India primarily leans towards court annexed mediation, which has been established through the Legal Services Authority Act, 1987. Section 89 of the CPC also discusses the role of ADR and mediation in civil suits. Supreme Court in Afcons Infrastructure and other decisions have construed Section 89 but lower courts hardly follow the provision as construed by Afcons Structure in the spirit of the provisions. Court fee statutes of several states provide that in case parties amicably settle their civil suit through Lok Adalat established under the Legal Services Authority Act, 1987, a part or the entire court fee is refunded.
Apart from this, several statutes provide for mediation. Most laws provide for mediation as an optional mechanism of dispute resolution while some contemplate compulsory reference to mediation. Examples are the Commercial Courts Act, 2015 and the Hindu and the Special Marriage laws.
Existing Problems with the Present Mediation Regime
It is common knowledge that the present regime on mediation suffers from several problems, some of which are listed below:
- Different frameworks for different types of mediation (Settlement agreements reached through private commercial mediation under the Commercial Courts Act, 2015 is an award u/s. 30(4) of the Arbitration and Conciliation Act, 1996 while such a status is endowed to settlement agreements reached through private commercial mediation outside the Commercial Courts Act, 2015.
- There is compulsory mediation in certain cases (commercial disputes and family disputes) while in other cases there is none in certain other types of disputes (motor vehicles, property).
- Each operating in its own field
- There is no specialised training depending on the kind of dispute to be handled? Family mediations and commercial mediations might entail different skill-sets.
- There is no privacy in court annexed mediation in family cases. Too many people surround the disputing parties and they may not be able to come forward and discuss the happenings of their bedroom in front of all these people!
The Dispute Resolution Wish List
The call for a mediation legislation is not good enough. As Dr APJ Abdul Kalam said, we should dream higher and higher. Following is a wish list regarding alternative dispute resolution.
Need for a Holistic Dispute Resolution Code
India does not just need a mediation legislation; rather disputes should be seen holistically and an alternative dispute resolution code (ADRC) needs to be enacted combining all methods of ADR into one legislation. CPC should not be disturbed but ADR legislations have to be combined in a code. The Alternative Dispute Resolution Code or the ADRC should cover the following aspects:
- There should be a central authority, which could lay down the best practices and minimum standards, and conduct research. It should not however empanel mediators and other dispute resolution professionals.
- It should provide fillip for specialised institutions all over the country providing various dispute resolution services.
- These institutions should enlist/ empanel experts in different fields and from different professions
- A dispute to be handled holistically.
The ADRC should enable professional training of the dispute resolution professionals. Professional training of dispute resolution professionals is an investment and hence it should be subsidised by the Government. Following are things that could be explored:
- There should be government sponsored training institutions which should provide training at nominal cost/ free.
- Apart from the dispute resolution professionals such as arbitrators, conciliators, and mediators, psychological counsellors and dispute resolution managers should also be trained
- Training in mediation & other ADR methods should be as a mandatory entry requirement for advocates, Government counsels, Legal officers in PSUs, designation as senior counsels, etc.
- Professional training should be open not only for lawyers but professionals from different fields
- There should be tax incentives for mediators, advocates, mediation institutions and training institutes
- Tapping hitherto untapped sources such as corporate counsel, junior advocates, and homemakers would also do a good deal in improving the dispute resolution process and at the same time provide employment opportunities to these people.
- Holistic and specialized training to handle different kinds of disputes is necessary. Family dispute resolution is different from commercial dispute resolution even if the method of dispute resolution is the same.
Of all the important things of any reform on the dispute resolution processes, it is important to ensure that law provides for an appropriate dispute resolution mechanism as a default choice. It cannot be said that in all cases will a method be the only appropriate one. Practitioners have recognised for a long time that certain ADR processes are more appropriate in certain cases than others. For instance, in family disputes, mediation is more appropriate. Similarly, in Motor Vehicles & Insurance Disputes, Conciliation/ Ombudsman/ AI Based are better methods. In commercial Disputes, both mediation and conciliation are appropriate. Cases involving serious fraud are better resolved through litigation. It should be possible to make a list of types of disputes and appropriateness of dispute resolution process for those disputes. This entails a lot of research but is not impossible.
Negative incentives for rejection of settlement offers and ADR offers
At present there are no statutory rules which provide negative incentives in case settlement and ADR offers are unreasonably rejected. Too much discretion in award of costs is provided. But this option should be explored and would nudge the parties towards settlement. Settlement is in the interest of justice and the advantages of settlement for parties & legal system is well known.
Rejection of settlement offer during litigation/ arbitration should be for right reasons. If a party rejects settlement offer, but loses or is awarded compensation lesser than the amount offered through settlement, costs should be awarded accordingly. English Law, Civil Procedure Rules: Part 36 Offers contains detailed provisions in this regard and a similar set of provisions in India could be enacted.
Government/ PSU litigation and ADR
That Government is the largest litigant is cliche. Such general views are reductionist and completely ignore the varied nature of Government litigation. For instance, a contractual dispute involving a public sector undertaking is totally different form a tax authority filing an appeal against a tribunal's adverse decision.
The important question in this context is: how can Government settle disputes? Banks have the concept of One Time Settlement where fixed policies exist on when-how-why to settle. Such a policy is absent in the case of Public Sector Undertakings. So there is a dire need for Government bodies to evolve settlement policies and mechanisms. Clear guidelines balancing transparency, eliminating corruption, and enabling amicable settlement of disputes should be laid down so that government officials can freely and transparently explore options for settlement.
ADR Research & Standards Institution
The ADR Code envisaged at the beginning of this post must establish a research and standards institution. What should the institution do?
- The Institution/ Centre of excellence should focus on research on dispute resolution, especially on the empirical aspects
- There should be regular publications of Guidelines, Best Practices, Model Rules, Codes of practice, Standard fee schedules, etc.
- It should lay down minimum or expected standards on various ADR related aspects.
- There should be collection of statistics from dispute resolution bodies & institutions.
- Dispute resolution institutions should necessarily publish statistics pertaining to disputes handled by it subject, of course, to confidentiality and the ADR Research Institution should also publish regular reports on the data collected.
Mediation Related Issues that Require Focus
Whatever may be the reforms undertaken vis-a-vis dispute resolution, the following areas in mediation deserve immediate attention:
- What are the boundaries of confidentiality & privilege? Whether the following could be regarded as exceptions to confidentiality in mediation?
- Prevention of physical or psychological injury?
- Prevention or revelation of commission or concealment of crime?
- Threat to a party?
- when proceedings against the mediator are filed for negligence or misconduct in mediation?
- Mediator independence, conflict of interest, and immunity
- Regulating ADR Professionals. The lapsed 2018 Bill for further reforms in arbitration contemplates an Arbitration Council of India? Shouldn't it be ADR Council of India (and less intrusive)?
- Private Mediation and Limitation Periods also needs addressing. Bona fide efforts at settlement should be encouraged. There is uncertainty as to whether bona fide efforts at settlement could be considered as stopping time from running during settlement discussions. This needs clarity and is a good enough ground for stopping time from running.
- In order to provide incentives and less formality to mediation and conciliation, settlement agreements should be stamp duty-free.
- There is a debate as to whether privately mediated settlment agreements should be considered as an award. Most end up stating that these should be. Caution must be exercised. There are serious chances of misuse of the process.
To conclude, dispute resolution processes are operating as islands. Dispute is required to be seen holistically and concerted action is required to address disputes. There is a need for a dispute resolution code/ ADR Code covering mediation, conciliation, arbitration, lok adalat, and their variants. It is necessary that issues relating to mediation such as confidentiality, etc. as noted above should be addressed. Institutions should publish institutional statistics & statistics of ADR professionals. These reforms could go a long way in providing for an efficient and effective dispute resolution system. Most importantly, ADR should not be seen as a mode of reducing pendency of court cases; rather it should be viewed as ensuring that the disputing parties resolve their disputes with least costs and as soon as possible.