OVERVIEW OF THE MEDIATION BILL, 2021

Introduction

India does not have a standalone legislation for mediation in India, there are several statutes containing mediation provisions, such as the Code of Civil Procedure, 1908, the Arbitration and Conciliation Act, 1996, the Companies Act, 2013, the Commercial Courts Act, 2015, and the Consumer Protection Act, 2019. The Mediation and Conciliation Project Committee of the Supreme Court of India describes mediation as a tried and tested alternative for conflict resolution. As India is a signatory to the Singapore Convention on Mediation (formally the United Nations Convention on International Settlement Agreements Resulting from Mediation), it is appropriate to enact a law governing domestic and international mediation.

As per the Mediation and Conciliation Project Committee Supreme Court of India which was set up the Mediation and Conciliation Project Committee (2005) for encouraging amicable resolution of disputes pending in the courts in accordance with Section 89 of the Code of Civil Procedure. Mediation means, “Mediation is a structured process where a neutral person uses specialized communication and negotiation techniques or a process of facilitating parties in resolving their disputes or a settlement process whereby disputing parties arrive at a mutually acceptable agreement.”

The Mediation Bill, 2021 was therefore introduced in the Rajya Sabha on 20 December 2021 and the Standing Committee Report was presented on 13 July 2022. The Mediation Bill has been significantly modified by the Standing Committee’s current recommendations, which aim to institutionalize mediation and create the Mediation Council of India.

Need For Mediation Bill

  1. No Specific Law: Several statutes, including the Code of the Civil Procedure, 1908, contain mediation provisions, notwithstanding the fact that there is no separate mediation law in India. The Consumer Protection Act of 2019, the Companies Act of 2013, the Commercial Courts Act of 2015, and the Arbitration and Conciliation Act of 1996
  2. Supreme Court Directive: According to the Supreme Court of India’s project committee on mediation and conciliation, mediation is a tried-and-true method of resolving disputes.
  3. Complying with International Treaties and Agreements: It is appropriate to adopt legislation governing both domestic and international mediation because India is a member to the Singapore Convention on Mediation (officially the United Nations Convention on International Settlement Agreements Resulting from Mediation).

Provisions Related to Mediation in Various Existing Laws

  1. The Code of Civil Procedure, 1908 provides for ADR under Section 89(1)
  2. Section 14(2) and Section 23(2) and (3) of Hindu Marriage Act, 1955, Section 34 of the Special Marriage Act, 1954 and Section 9(1) of the Family Court Act, 1984, which requires the court tin the first instance to attempt reconciliation between parties
  3. Section 442 of the Companies Act, 2013 which provides for referral of pending disputes to mediation by the Central Government or the National Company Law Tribunal with Appellate Tribunal read with Companies (Mediation and Conciliation) Rules, 2016 (notified on 09 September 2016)
  4. Section 37 and Section 74 to 81 of the Consumer Protection Act, 2019 (which replaced the Consumer Protection Act, 1986) provides for reference of a dispute to Mediation and setting up of a Consumer Mediation Cell at each of the District Commissions, the State Commissions and National Commission;
  5. Chapter VI-A titled ‘Pre-Litigation Conciliation and Settlement’ of Legal Services Authorities Act, 1987 provides for establishment of permanent Lok Adalats and any party to a dispute being brough before the Court make an application to the permanent Lok Adalat for settlement of dispute.
  6. Section 12A of the Commercial Courts Act, 2015 provides for Pre-Institution Mediation and Settlement.

Highlights Of the Bill

  1. The Bill requires persons to try to settle civil or commercial disputes through mediation before approaching any court or tribunal. A party may withdraw from mediation after two mediation sessions. The mediation process must be completed within 180 days, which may be extended by another 180 days by the parties.
  2. The Mediation Council of India will be set up. Its functions include registering mediators, and recognizing mediation service providers and mediation institutes (which train and certify mediators).
  3. The Bill lists disputes that are not fit for mediation (such as those involving criminal prosecution, or affecting the rights of third parties). The central government may amend this list. If the parties agree, they may appoint any person as a mediator. If not, they may apply to a mediation service provider to appoint a person from its panel of mediators. Agreements resulting from mediation will be binding and enforceable in the same manner as court judgments.
  4. Disputes, other than commercial disputes, in which Central Government and State Government or its agency, entity etc. are a party, cannot be mediated unless the nature of disputes which can be referred to mediation are notified.
  5. Conciliation under Part III of Arbitration and Conciliation Act, 1996 has been subsumed in Mediation as per international practice of using the terms ‘conciliation’ and ‘mediation’ interchangeably.
  6. Mediated settlement agreement (MSA) may be challenged on limited grounds of fraud, corruptions, impersonation, etc., and no first appeal has been provided for.
  7. Establishment of the Mediation Council of India (MCI) to be headed by a chairperson to be appointed by the Central Government. A Secretariat to MCI has been provided for.
  8. Duties and functions of the Mediation Council of India have been laid down, inter alia, for promoting institutional mediation, registration of mediators, grading of mediation service providers etc.

Salient Features of the Mediation Bill, 2021

  1. Definition and Applicability: Section 2 of the Mediation Bill defines ‘domestic mediation’ as one conducted in India, where:
    All or both parties habitually reside in or are incorporated in or have their business in India. The Mediation Agreement provides that the Mediation Act, 2021 would apply to the mediation. The mediation is international mediation. ‘International mediation’ as per Section 3(f) of the Bill is defined as mediation that relates to commercial disputes arising out of legal relationships, contractual or otherwise, under the law in force in India and where at least one of the parties, at the time of conclusion of that agreement, is:
    An individual who is a national of, or habitually resides in, any country other than India. Body corporate including limited liability partnership of any nature, with its place of business outside India. An association or body of individuals whose place of business is outside India. The government of a foreign country.
  2. Mandatory Pre-Litigation Mediation and Settlement: Before bringing a lawsuit or initiating a procedure before a court or tribunal, a party must take action to resolve the issue through pre-litigation mediation in line with the Bill’s requirements, and this can be done regardless of whether a mediation agreement is in place. Therefore, pre-litigation mediation is required under Section 6(1) of the Bill.
  3. Disputes Not Fit for Mediation: According to Section 7 of the Bill, no dispute or subject on the suggestive list under the First Schedule shall be resolved by mediation under this Bill. The First Schedule’s topics include I disputes involving claims against children or people who are mentally ill, (ii) disputes involving criminal prosecution, (iii) disputes impacting third parties’ rights, (iv) conflicts concerning the assessment or collection of taxes, etc. In accordance with the First Schedule, the central government may alter the list of issues that are not appropriate for mediation.
  4. Mediation Process and Time-Limit for Completion of Mediation: The mediation process will be kept private. After the first two mediation meetings, a side may leave the negotiations. According to Section 21 of the Mediation Bill, the mediation process must be completed within 180 days of its start, however this deadline may be extended by another 180 days with the parties’ agreement. Section 26 of the Bill. requires that court-annexed mediation (i.e., mediation performed at a mediation centre established by any court or tribunal) be carried out in compliance with any guidelines or norms established by the Supreme Court or High Courts.
  5. Recognition and Enforcement of Domestic and International Mediation Settlement Agreements: A ‘Mediated Settlement Agreement’ has been defined under Section 22 to mean and include an agreement or interim agreement in writing between some or all parties resulting from mediation which settles some or all the disputes between such parties and which is authenticated by the mediator. The Bill has incorporated Section 28 to recognize domestic mediation as final and binding between the parties and the person claiming thereunder. The Bill provides that a Mediated Settlement Agreement can be enforced in accordance with the provisions of the Code of Civil Procedure, 1908.
  6. Grounds to Challenge a Mediated Settlement Agreement: The Bill provides certain grounds to challenge the Mediated Settlement Agreement. Section 29(2) of the Bill lays down four grounds of challenges for a domestic Mediated Settlement Agreement:
    a. Fraud;
    b. Corruption;
    c. Impersonation; and
    d. relating to disputes not fit for mediation.
  7. Recognition of Institutional Mediation: Section 3(l) of the Draft Bill defines a ‘Mediation Service Provider’ as a body or organization that provides for the conduct of mediation and has in place procedures and rules to govern the conduct of the mediation in conformity with the Bill. Lok Adalats constituted under the National Legal Services Authorities Act, 1987 and mediation centres annexed to courts are also included in the term ‘Mediation Service Provider’. As per Sections 41 and 42 of the Bill, Mediation Service Providers shall be graded by the Mediation Council of India and shall be required to maintain a panel of mediators, provide infrastructure and facilities for the efficient conduct of mediations, register and file Settlement Agreements, amongst other functions.
  8. Online Mediation: Chapter VII of the Bill recognizes online mediation setup including pre-litigation mediation conducted by using applications and computer networks, resorted to either wholly or in part, at any stage of the mediation process, with the written consent of the parties. The process of conduct of all such online mediations shall be in such manner as may be specified.
  9. Establishment of the Mediation Council of India: Chapter VIII of the Mediation Bill envisages the establishment and incorporation of the Mediation Council of India by the Central Government and lays down its broad duties, powers, and functions.
  10. Community mediation: The Mediation Bill under Chapter X provides for the kind of disputes wherein community mediation may be resorted to i.e., any dispute likely to affect peace, harmony and tranquillity amongst the residents or families of any area or locality. It also lists out the kind of persons which may be included in the mediation panel by the concerned authorities, i.e., persons of standing and integrity who are respected in the community, representative of area/resident welfare associations etc. Further, Section 45 of the Bill spells out the procedure for community mediation.

Major Recommendations/Observations briefly

  1. Habitual residence and Place of business- Clause 2
    The Committee observes that the Bill omits defining the phrases “habitual home” and “place of business.” The Committee observes that the terms “person resident in India” and “person resident outside of India” are defined under the Foreign Exchange Management Act and “Place of Business” is defined by the Goods and Services Act. The Committee holds the well-considered opinion that the absence of precise definitions frequently creates uncertainty and leaves room for multiple interpretations. In light of this, the Committee suggests that the terms “habitual abode” and “place of business” be either properly defined in the Bill or substituted with other relevant terminology found in other Acts.
  2. Government as litigant- Clause 2
    The Committee observes that, in accordance with the Proviso to clause 2(2), non- commercial disputes involving the Government as a party are, for the most part, beyond the purview of the mediation Bill unless specifically notified by the Central and/or State Governments. However, the Committee advises that the wording of clause 2 (2) may be adequately changed so that government-related conflicts are not excluded from the scope of the Mediation Bill, 2021, taking into account the current infrastructural and human resource constraints of the nation. The Committee is certain that such a move will convince the parties involved that mediation is a practical choice, one that even the government is willing to use in cases in which it is a party.
  3. Commercial dispute- Clause 3
    The Committee observes that the term of a “commercial dispute” in the Commercial Courts Act, which is relevant for the purposes of this Bill, includes both “ordinary commercial disputes” and “commercial disputes of Specified Value.” The Committee believes that this will lead to a dichotomy in which business conflicts with specified values are handled differently from those with unspecified values. Additionally, under Section 12A of the Commercial Courts Act, parties to a commercial dispute will be assigned mediators from panels kept by the Authorities listed in this section rather than having a choice of mediator. The Committee assumes that parties to a dispute whose value is less than the specified value and parties to civil disputes will be able to choose their own mediators, while parties to a commercial dispute whose value is specified will be required to go to the Legal Services Authority/Mediation Service Provider authorised by the Central Government and be bound to mediate through mediators they choose. Although the Ninth Schedule of the current Bill proposes to change Section 12A of the Commercial Courts Act, mediation in relation to commercial disputes of Specified Value is performed differently than that of ordinary commercial disputes.
  4. Definition of Court- Clause 3
    The Committee believes that the scope of the definition of “Court” has to be expanded. In light of this, the Committee advises that the term “Court” be used to refer to all courts with jurisdiction over the dispute that is the topic of mediation that are situated on Indian territory, from subordinate (primary) courts to the supreme court.
  5. International Mediation- Clause 3, 40
    The Committee notes that the Singapore Convention’s goal is to promote international trade and commerce by making it simple for disputing parties to enact and apply settlement arrangements internationally. The Ministry informed the Committee that India has not yet ratified UNISA. The Committee is aware that ratification of any international agreement requires that a national law be passed in the nation in question. Since the proposed Mediation Bill would also be covered by UNISA, this may be considered a partial ratification of it. Additionally, the Committee is aware of the Ministry’s justifications for not incorporating UNISA’s provisions into the Mediation Bill at this time, but it still thinks the current definition of “International Mediation” needs to be reviewed in order for the Singapore Convention’s provisions to be included in future legislation without any ambiguity.
  6. Definition of Mediation- Clause 4
    The Committee has noted the recommendations offered by the experts as well as the Ministry’s clarification. The Committee believes that the current definition of “mediation” needs to be revised in light of the Ministry’s response and the clauses in Clauses 17 and 18. Second, the Committee believes that there is no need to define “mediation” individually in Clause 4 since all definitions are provided in Clause 3 of the Bill. Therefore, the Committee advises that the term “mediation” be redefined to match the intent of the clauses in Clauses 17 and 18 of the Bill, and that the definition of “mediation” be relocated to the definitions under Clause 3.
  7. Mediation agreement-Clause 5
    The Committee observes that different agreements in various formats may define “mediation agreement” differently in various parts of the nation. Although the Ministry has stated that it is not possible to provide a template or format for a mediation agreement, the Committee advises the Government to take into account including some “important contents” in the mediation agreement, such as the method of conducting mediation, the location and time of mediation, confidentiality, the parties’ right to seek legal counsel, the method of termination of mediation, etc. The Committee also suggests that the Government think about expanding the use of international mediation beyond just economic issues.
  8. Pre-litigation Medication and Court annexed Mediation-Clauses 3,6,7,8,9, and Schedule-1
    Clause 3 of the Bill, the terms ‘Pre-Litigation Mediation’ and ‘Court annexed Mediation’ are defined as under: “pre-litigation mediation” means a process of undertaking mediation, as provided under Section 6, for settlement of disputes prior to the filing of a suit or proceeding of civil or commercial nature in respect thereof, before a court or notified tribunal under sub-section (2) of Section 6. “Court annexed mediation” means mediation including pre-litigation mediation conducted at the mediation centres established by any court or tribunal. Clause 6 of the Bill provides for pre-Litigation Mediation wherein it has been mentioned that whether any mediation agreement exists or not, any party before filling any suit or proceedings of civil or commercial nature in any court, shall take steps to settle the disputes by pre-Litigation mediation in accordance with the provisions of this Bill.
  9. Mediation Service Provider- Clause 3, 27, 41 and 42
    The Committee observes that, in addition to the Mediation Council of India, the Bill provides for multiple controlling authorities for different Mediation Service Providers, including those established under the Legal Services Authority Act, mediation centres attached to courts and tribunals, and others. On the other hand, the Bill gives the Mediation Council authority in Chapter 9 to identify and rank mediation service providers as well as identify and clarify the responsibilities of Mediation Institutes. The Committee advises the government to examine the viability of designating additional organizations, such as the State Mediation Council, to serve as providers of mediation services in addition to the Legal Services Power Act’s authority.
  10. Mediator-Clause 3(h), 6(3) and Clause 10-14
    The Committee notes that in the definition clause of the Bill, ‘Mediator’ is defined as a person registered with the Council (Mediation Council) whereas Clause 6(3) mandates that the mediator should be registered with the following in order to conduct pre-litigation mediation: registered with the Council; empanelled by a Court annexed mediation Centre; empanelled by an Authority constituted under the Legal Services Authorities Act, 1987; and empanelled by a mediation service provider recognised under this Act. The provision of Clause 6(3) has gone beyond the definition of Mediator under Clause 3(h). Therefore, the Committee. recommends that instead of multiple bodies registering Mediators, Mediation Council of India should be made the nodal authority for the registration and accreditation of mediators. The domestic and foreign mediators should be treated on equal terms. Therefore, the Committee recommends that the qualification, experience and accreditation prescribed in the proviso to clause 10(1) for foreign mediators should be made applicable to domestic mediators also. Besides that, foreign mediators willing to mediate in India should be required to be registered with the Mediation council of India as their Indian counterparts.
  11. Role of Mediator-Clause 18 and 19
    The clause 19 of the Bill provides that the mediator shall not act as an arbitrator or as a representative or counsel of a party in any arbitral or judicial proceeding in respect of a dispute that is the subject matter of the mediation proceedings and that the mediator shall not be presented by the parties as a witness in any arbitral or judicial proceeding. The Committee further notes that Clause 19(a) bars the mediator from acting as an arbitrator or a representative or counsel of a party in arbitral or judicial proceedings in respect of a dispute that is the subject matter of proceedings. However, the Bill provides for the Authority constituted under Legal Services Authority Act to function as a mediation service provider and empanel mediators. The Committee recommends that judicial officers, who act as mediators, should also be barred to preside judicial proceedings in same case on the lines as mediators are prohibited from acting as arbitrators / counsels / representatives in arbitral and judicial proceedings.
  12. Mediation Proceedings- Clauses 15, 16, 17, 20 and 21
    The time limit provided for the completion of mediation process in clause 21 of the Bill is too long. The Committee, therefore, recommends that it would serve the object of the bill better if the time limit is reduced to 90 days plus an extended period of 60 days (also mentioned in the Commercial Courts Act), instead of 180 days and further extension of 180 days with consent of parties (as stipulated in the Bill). The Committee accordingly, recommends that the provisions of the Bill may be suitably amended.
  13. Mediated Settlement Agreement- Clause 22, 23, 24 and 50
    The Committee suggests splitting Clause 22 into three clauses, the first of which should cover the specifics of the mediated settlement agreement and its process. The third Clause should deal with the registration of MSA, and the second Clause should address the submission of the non-settlement report. The Committee observes that while clause 23 mandates confidentiality, it makes no mention of any penalties, liabilities, or repercussions that can be imposed on someone who deliberately violates the confidentiality, contradicting the Bill’s stated goal of upholding confidentiality. The Committee advises that the Bill itself include an explicit provision for any instance of confidentiality breach. The Committee further recommends that the Bill should prescribe penalty consequences for a willing party for not attending before the registering authority without sufficient reason. The Committee recommends that the provision of Clause 50 be made part of Clause 22, which is recommended to amend above, and that it should necessarily include a time limit within which a written consent from competent authority shall be sought before signing the settlement agreement. The Committee notes that Clause 50 of the bill also provides for the settlement agreement where government is party.
  14. Enforcement of Mediated Settlement Agreement-Clause 28-31
    The Committee believes that there should be more grounds for disputing the mediated settlement agreement than the four specified in the BIII under Clause 29(2). The Committee advises that Clause 29 (2) be revised to reflect that the Mediated Settlement Agreement may be challenged on grounds that may be from time to time stated by the Central Government. The Committee observes that the deadline for contesting a mediated settlement agreement, for example on the basis of fraud, is set forth in Clause 29(3) of the Bill and begins to run on the date that the Committee receives a copy of the settlement agreement. The usual rule that the statute of limitations begins to run from the date of the cause of action and not the date of getting a copy of the settlement agreement is violated by this provision.
  15. Online Mediation- Clause 32
    The Committee is of the opinion that the definition of “Court” has to be broadened. In light of this, the Committee recommends that the term “Court” be used to refer to any courts located on Indian territory that have jurisdiction over the issue that is the subject of mediation, including the supreme court.
  16. Mediation Council of India- Clause 33 to 40
    The Committee observes that Clause 34 outlines the requirements and appointments for the Chairperson and Council Members. It states that the Chairperson and Full Time Members must have, respectively, “demonstrated capacity” and “knowledge & experience” in dealing with issues connected to “Mediation or Alternative Dispute Resolution.” The Committee believes that this could, however, result in the appointment to the Council of someone with experience or demonstrated ability in other dispute resolution processes other than mediation. Therefore, the Committee suggests that the terms “Mediation” and “Alternative Dispute Resolution methods” in section 34 be considered as a replacement for the terms “Alternative Dispute Resolution” and “Mediation.” The Committee recommends that the appointment of the Chairperson and Members of the Mediation Council of India should be made on the recommendation of a selection Committee constituted by the Central Government. Keeping in view the wide spectrum of duties and responsibilities assigned to the Mediation Council of India, the Committee recommends that mediation councils should be instituted in the states as well. These State Mediation Councils should function under the overall superintendence, direction and control of Mediation Council of India and discharge such functions as may be specified by it. Chairperson and Full Time Members must have, respectively, “demonstrated capacity” and “knowledge & experience” in dealing with issues connected to “Mediation or Alternative Dispute Resolution.” The Committee believes that this could, however, result in the appointment to the Council of someone with experience or demonstrated ability in other dispute resolution processes other than mediation. Therefore, the Committee suggests that the terms “Mediation” and “Alternative Dispute Resolution methods” in section 34 be considered as a replacement for the terms “Alternative Dispute Resolution” and “Mediation.” The Committee recommends that the appointment of the Chairperson and Members of the Mediation Council of India should be made on the recommendation of a selection Committee constituted by the Central Government. Keeping in view the wide spectrum of duties and responsibilities assigned to the Mediation Council of India, the Committee recommends that mediation councils should be instituted in the states as well.
  17. Mediation-Clauses 44 and 45
    The Committee thanks the Ministry for creating a framework for resolving conflicts that could potentially disrupt social peace, harmony, and quiet. The Committee believes that as community mediators are not trained and qualified mediators as described in clause 3 of the bill, the term “mediator” used in sections 44 and 45 of the bills needs to be replaced with “community mediator.” The Committee observes that the Bill’s Clause 44(3) establishes a panel of three mediators for use in community mediation. The mediation process will become stiff if there are just three mediators, hence there is no rationale for this. The Committee fully understands the rationale behind making the settlement agreement arrived at through the process of community mediation non- enforceable.

Conclusion

Mediation is a very effective mode of ADR in this country and effectively disputes will be resolved through the mediation process, the two disputing parties can work together to resolve their differences and come to a mutually agreeable resolution. It is a quick, simple, and economical procedure to settle conflicts; there is no need to appear in court or establish a specific courtroom. There isn’t a single piece of legislation in the nation that covers mediation, though. The parliament introduced a Law in this area in 2021 to close this gap. It is currently given to the standing committees for recommendations. If approved, it will assist in lessening the load on the courts caused by pending cases.