Does India Need a Legislation on Mediation?

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.

Professional Training

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.

Appropriateness 

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. 

Conclusion

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.  

RTI Act Overrides Arbitration & Conciliation Act but Conciliation Proceedings Are Confidential: CIC

The Chief Information Commission passed an order dt. 08.08.2015 in Rama Aggarwal v. Delhi State Legal Services Authority holding that notwithstanding that the Right to Information Act, 2005 overrode the provisions of the Arbitration and Conciliation Act, 1996, conciliation proceedings were confidential in nature and that the Public Information Officer was not bound to disclose information relating to, or pertaining to, conciliation proceedings in view of Sections 8(1)(e) and 8(1)(j) of the Right to Information Act, 2005.

Factual Background:

Anil and Rama Aggarwal had marital issues and were referred to the Delhi State Legal Services Authority for counselling and conciliation. Later, Rama Aggarwal filed proceedings under the Protection of Women from Domestic Violence Act, 2005 and for divorce. Rama Aggarwal filed an RTI application seeking, among other things, information pertaining to the conciliation proceedings before the Delhi State Legal Services Authority. The PIO of the Delhi State Legal Services Authority and the First Appellate Authority rejected the application (in respect of those queries on the conciliation proceedings).

Question before the CIC: 

On appeal, the CIC had to decide whether the PIO and the First Appellate Authority were wrong in denying information on conciliation-related proceedings. 

Decision of the CIC:

The CIC took into consideration the relevant provisions under the Hindu Marriage Act, 1955, the UNCITRAL Conciliation Rules (Article 14), the Arbitration and Conciliation Act, 1996 (Sections 70, 75 & 81), the (Delhi) Mediation & Conciliation Rules, 2004 (Rules 20 and 21) and the decisions of the Supreme Court in Haresh Dayaram Thakur v Maharashtra AIR 2000 SC 2281 and Moti Ram v. Ashok Kumar.

The CIC, after discussing Section 75 of the Arbitration & Conciliation Act, 1996 (1996 Act) which provides that notwithstanding anything to the contrary, the parties shall keep all matters relating to the conciliation proceedings confidential, stated that the RTI Act will definitely override the 1996 Act (irrespective of the non-obstante clause).

At the same time, the CIC held that conciliation proceedings would be exempt from disclosure on the ground that information in conciliation proceedings were made available in conciliation proceedings owing to the fiduciary capacity of the conciliator (and the institution administering conciliation). The CIC held:

"As per the traditional definition, a ‘fiduciary’ is a person who occupies a position of trust in relation to someone else, therefore requiring him to act for the latter's benefit within the scope of that relationship. Anything given and taken in confidence expecting confidentiality to be maintained will be information available to a person in fiduciary capacity. Therefore communication made during conciliation proceeding between the parties and also communication between mediator and other parties, qualifies to be made in fiduciary capacity."

Hence, the Court held that the PIO could refuse disclosure of information under Section 8(1)(a) of the RTI Act, which exempts disclosure on the ground that the information was made available to a person in his fiduciary relationship. 

The CIC also held that the proceedings of mediation related to personal information and the disclosure of the same would cause unwarranted invasion of the privacy of the individual concerned, which is a ground for refusing information under Section 8(1)(j) of the RTI Act. 

The CIC also recognised that disclosure of such information on account of larger public interest was allowed but held that it was in larger public interest that alternative dispute resolution (including mediation) proceedings are kept confidential. The CIC held that if mediation proceedings are allowed to be disclosed under the RTI Act, this would result in the parties not adopting such mechanisms thereby resulting in the burdening of the courts. The CIC also held that conciliation proceedings would also include counselling proceedings between spouses. 

On the basis of the above reasoning, the CIC rejected the appeal.

Key Takings:

The decision is correct in holding that mediation proceedings between private persons cannot be disclosed under the RTI Act as this would result in invasion of privacy and persons choosing court based dispute resolution. One of the chief reasons for choosing mediation and other ADR mechanisms is confidentiality. However, question arises whether mediation proceedings between the State and a private person could be afforded the same protection. The question is complicated and requires consideration but this blawgger would lean in favour of disclosure at least after the resolution of the dispute between the State and the private person.

Secondly, Section 22 of the RTI contains a non-obstante clause; so does Section 75 of the 1996 Act. Despite the conflict, the CIC did not provide justification(s) why the RTI Act overrode Section 75 of the 1996 Act. Nevertheless, the decision of the CIC is correct. Perhaps, it could have justified the same by referring to the ratione of the RTI Act and that the RTI Act was a later law.

The CIC has rightly balanced the need for confidentiality of mediation proceedings and the requirement of disclosure under the RTI Act. 

[A subsidiary point is that the CIC has stated that conciliation and mediation are interchangeable expressions thereby adding another authority on the vexing distinction between conciliation and mediation in Section 89 of the Code of Civil Procedure, 1908.]

Some Articles on ADR

Volume 4, Part 4 of the Supreme Court Cases Weekly contains a few articles that are deal with ADR and Mediation.

Arvind P. Datar, Senior Counsel, Madras High Court has written an article titled: Legal Consultancy Service- Service Tax on Lawyers. The article deals with the recent introduction of service tax on legal consultancy services. (We already had a post on this issue). As regards service tax on arbitral tribunals, Datar argues that service tax on arbitral tribunals is "unfortunate", the reason being that "most arbitrators are retired judges will find it extremely difficult and cumbersome to file service tax returns, maintain input and output credits and comply with all other procedural formalities". It is submitted that such a reason alone is not convincing.

[So far I have not heard of any article that comprehensively deals the merits of imposition of service tax on arbitral tribunals. If there is any, readers may please give the links/ references]

Sriram Panchu, regarded as one of India's foremost mediators, has written an article titled Recasting Section 89 CPC- Afcons Infrastructure Ltd v. Cherian Varkey Constructions Co. (P) Ltdd. The article deals with the recent case of Afcons Infrastructure v. Cherian Varkey Constructions. The decision is important for Alternative Dispute Resolution in India. The article by Panchu is comprehensive and is worth checking out.

Laila T. Ollapally has written on Mandatory Court Referral for Mediation- Parties Retain the Right to Voluntary Decision. The case also deals with a particular aspect of Afcons Infrastructure.

Happy reading!

It is Raining Mediation!

Mediation is so much in the news in the recent past that we have here an exclusive post on the latest news pertaining to mediation.

We all know that the Indian Premier League (IPL) is a cash cow. When the stakes are high, the cash cow walks into the lawyers’ den. The Board of Cricket Control in India (BCCI) has been on a legal war with World Sports Group (WSG) over the telecast rights of the IPL matches. The dispute concerns termination of media rights granted via an agreement dated 25.03.2009 to WSG in respect of broadcasts outside India of the IPL matches. BCCI and the WSG fought an intense battle in the Bombay High Court for interim measures under Section 9 of the Arbitration and Conciliation Act, 1996. The Division Bench of the Bombay High Court had granted an interim stay of sorts restraining BCCI from awarding the contract for those rights to anyone else till the issue of interim measures is heard and decided by the arbitral tribunal.

An SLP was filed by the BCCI challenging the said order. The Supreme Court has passed orders for an interim arrangement. Media reports state that the Supreme Court Bench hearing matter had purportedly stated during the hearing that the matter would go for mediation. Access the news reports from here and here. Access the court’s interim order from here.

[BY THE WAY, it is well known that BCCI has its main office in Mumbai. But it is not common knowledge that the BCCI is a society registered under the Tamil Nadu Societies Registration Act.]

The longest strike in twenty years in Gujarat has General Motors’ plant in Halol. The strike has been going on since March 16, 2011. The strike is against poor working conditions. The labour officers of the government tried mediating the dispute but have failed. News reports from here and here.

One of the top mediators in India, senior advocate Mr. Sriram Panchu, has been appointed to mediate disputes between the members of the Parsi community over performance of certain religious rites. The issue was relating to a decision by the Parsi Panchayat restraining two Parsi priests from performing religious ceremonies in the Tower of Silence and two fire temples, which are the properties of the Panchayat. The Division Bench of the Bombay High Court had earlier held that the Panchayat had no such power. The Panchayat filed an appeal before the Supreme Court challenging the decision of the Bombay High Court.

The Supreme Court suggested the parties to amicably settle the dispute through mediation. The Supreme Court appointed Mr. Panchu and allowed him to appoint a co-mediator to assist him. Check out the order of the Supreme Court from here.

Resolution of the Assam Nagaland Border Dispute by Mediation

On 20^th August 2010, the Supreme Court of India directed the decades old Assam Nagaland border issue to be resolved through mediation. A Two-judge bench consisting of Markandey Katju and T.S. Thakur, JJ ordered constitution of a panel consisting of two mediators who would, according to the Court, work under its auspices.

History of the Assam- Nagaland Dispute:

Prior to 1957, Naga Hills was a District in the State of Assam. In 1957, an area in the State of Assam, known as the Naga Hills Tsuensang Area was made a Union Territory. On 4 September 1962, due to popular demand for a separate state, the State of Nagaland Act (Act) was passed by the Parliament establishing the State of Nagaland on the Appointed Date. S. 3 of the Act read:

“Section 3 - Formation of State of Nagaland

(1) As from the appointed day, there shall be formed a new State to be known as the State of Nagaland comprising the territories which immediately before that day were comprised in the Naga Hills-Tuensang Area and thereupon the said territories shall cease to form part of the State of Assam.

(2) Without prejudice to the power of the State Government to alter the appointed day, the name, extent or boundaries of any district, the State of Nagaland shall consist of three districts to be called the Kohima district, Mokochung district and Tuensang district, each comprising the areas respectively set out in the Schedule.”

1963:    The Act had defined the “Appointed Day” in Section 2 as:

‘(a) ‘appointed day” means the day which the Central Government may, by notifiation in the Official Gazette, appoint;’

On 1^st December 1963, the Appointed Day, the State of Nagaland was formally inaugurated, thereby making it the 16^th State in the Union of India.

Dispute:

The dispute is about Nagaland claiming about 1200 square kilometres of area in Assam. Nagaland has,claimed that the said area belonged to it prior to the British occupation but the British had excluded these areas for economic and administrative convenience. Assam disagreed. It argued that the areas demarcated were natural boundaries between the two states and the same had been accorded constitutional status.

(See, Hamlet Bareh, Encyclopaedia of North-East India: Nagaland, p. 316)

The border disagreement led to several clashes between the people of both states. BK Nehru, the then Governor of Nagaland and Assam had arranged a meeting in February 1970 between certain ministers of both States. Unfortunately, the meeting failed to bring any resolution of the dispute. In 16^th August, 1971, KVK Sundaram Commission was appointed by the Government of India to study the problem and recommend measures to the Government.

On 2^nd May 1972, both the States signed a peace accord to maintain peace between the States. Despite that, there are several armed conflicts between people of the two states.

An original suit was filed under Article 131 (Original Jurisdiction of the Supreme Court) by the State of Assam against the Union of India in 1988 for identification of the boundaries between the States of Nagaland, Assam and Arunachal Pradesh. On 13^th September 2004, the Supreme Court ordered for the appointment of a commissioner under Order XLVI of the Supreme Court Rules, 1966 read with Order XXVI Rule 9 of the Code of Civil Procedure, 1908, after consultation with all the parties. The States were asked by the Court to:

“cooperate with the Commission and render all possible assistance so that the Commission can function and smoothly discharge the duties, assigned to it by this Court.”

Despite the above order, the State of Nagaland did not file an affidavit or do anything to comply with the SC Order. A final opportunity was given on 11^th September 2006 by the Court to the Chief Secreatary of Nagaland to comply with the above direction. On 25^th September 2006, the Supreme Court appointed Hon'ble Mr. Justice S.N. Variava, a former Judge of the Supreme Court as the Chairperson of the Local Commission ordered to be constituted in its September 2004 order. Justice Variava was to be assisted   by   Mr.   Kamal Naidu, Retired Principal Chief Conservator of Forest, Andhra Pradesh, and Mr. S.P. Goel,   Additional   Surveyor   General of India, as Members. The mandate of the Local Commission was to “identify the boundaries between the States of Nagaland, Assam and Arunachal Pradesh”. The court also held:

“We may, however, clarify that this Local Commission is not the boundary commission postulated by the Constitution of India and that all factual and legal objections are kept open for the parties to be urged and   agitated   after   the   receipt   of   the   Report from the Commission. None should be taken to have given up any right on agreeing to the appointment of this Local Commission.  We hope that the Local Commission will be able to furnish the Report within a period of one year or such extended time, as may   be considered   necessary   by   this   Court. It would be open to the Commission to seek such directions from this Court, as deemed necessary.”

Justice Variava had expressed his inability to continue as the Commissioner. Hence, Retired Justice Tarun Chatterjee of the Supreme Court of India was appointed in his stead vide order dated 20^th January 2010.

Order dated 20^th August 2010:

On 20^th August 2010, a Division Bench of the Supreme Court consisting of Markandey Katju and T.S. Thakur, JJ. stated:

“[W]e are of the opinion that apart from the proceedings before the Local Commission appointed earlier by this Court, an attempt should also be made to resolve the dispute between the State of Assam and State of Nagaland by mediation.”

The court appointed “two of the foremost experts in mediation in India”, Mr. Sriram Panchoo, Senior Advocate, High Court of Madras and Mr. Niranjan Bhat, Senior Advocate, High Court of Gujarat, as the co-mediators. The major terms of the reference are summarized below:

1.      The Mediators shall have one assistant and the help of experts for the mediation.

2.      The Union Home Ministry shall be associated with the mediation.

3.      After three sittings, a preliminary report shall be filed by the mediators as to whether the dispute is capable of being resolved between the parties by mediation.

4.      On receipt of a positive reply from the mediators, the period of mediation may be extended with the consent of the parties.            

The Court also clarified that the mediation proceedings were to be independent of the proceedings before the  Commission appointed by the Court vide its previous orders (noted above).

The Order dated 20^th August 2010 can be accessed from here.

For further information on the dispute and related aspects, check out the below links

Hamlet Bareh, Encyclopaedia of North-East India: Nagaland

Sanjib Baruah, India against itself: Assam and the politics of nationality