Mediation bill 2023 paving the way for effortless dispute resolution

With rise in rapid industrialization and a robust boost in commerce, one cannot obliviate a pivotal aspect of the commerce industry, being disputes that may arise between the parties under the contractual agreement.

The escalation in disputes arising from contractual agreements, coupled with the arduous nature of litigation, has compelled parties to explore alternative avenues for dispute resolution. This has led to the adoption of Alternate Dispute Resolution (ADR) mechanisms, such as Arbitration, Conciliation, and Mediation.

While Arbitration being a preferred mode of mechanism due to a streamlined process and resolving disputes in a time framed manner, Conciliation was preferred when parties were seeking resolution of disputes through an expert who would aim to help the parties to reach to a mutually acceptable settlement. However, Mediation was an unexplored avenue due to lack of a clear legislative framework and inadequate infrastructure.

With an exponential increase in resolving the disputes, parties considered resolving in the conventional way i.e. requiring them to seek redress through the appropriate courts of law. However, the backlog of cases and lengthy process of trials hinders the justice dispensation within time.

As a matter of fact, the Hon’ble Chief Justice of India N. V. Ramana (Retd.) emphasized the formation of mediation centres as the alternate dispute resolution mechanism, as it can reduce the pendency of cases and it further allows the litigants a degree of control over the dispute resolution process.

With an intention to increase the settlement of disputes outside the Court and encourage and facilitate mediation, the Hon’ble Supreme Court formed a panel in 2020 headed by Shri Niranjan Bhat to prepare a draft legislation on Mediation. After deliberations and recommendations finally, the Lok Sabha passed the Mediation Bill 2023 on 7th August, 2023, right after its approval by the Rajya Sabha. The bill, in an attempt to encourage settlement and resolving disputes by way of mediation, introduces innovative features aimed at addressing the shortcomings of the existing legal framework.

People are privy to the concept of out of Court settlement, but its efficacy has been hindered by a lack of comprehensive rules and measures, as well as the absence of an autonomous governing body and the Mediation Bill aims to void the said gaps.

Section 89 of the Code of Civil Procedure, 1908 vests a discretion upon the Courts to direct the parties to attempt settlement especially in commercial disputes. But the Section is a discretionary power vested upon Courts and not a mandatory provision and hence, failed to meet the object of settlement through courts.

In 2018, to appeal the parties to the commercial contract and facilitate settlement before initiation of any commercial suit, the Parliament on 10th August 2018, passed a bill by inserting Section 12A to the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015. The 2018 amendment for the first time, tossed the concept of as “Pre-institution mediation and settlement”, routing parties to first approach the mediation Centre and attempt to settle the matter and then litigate after failure to succeed in mediation. However, certain gaps and deficiencies in the Act were not thoroughly addressed during discussions and deliberations in the Lok Sabha.

In an attempt to stage India at the centre point where disputes can be settled with an effective and backed up piece of legislation, the Mediation Bill hammers resolving disputes of both domestic as well as international nature and transactions which is the need of the growing times.

The mediator’s role encompasses facilitating party autonomy, fostering constructive dialogues, and ensuring active participation by all parties involved, ultimately culminating in a well-negotiated resolution.

Mediation Bill :A Boon to the Commercial Disputes?

The Mediation Bill has several features which are likely to attract more parties towards mediation as against the Court preferred modes of resolving disputes.

Unbiassed Mediator:

To curb the possibility of any kind of bias in any case that may arise during the conduct of mediation proceedings, the Mediation Bill under Section 12 (1), mandates filing of disclosure before initiation of mediation proceedings by the assigned/elected mediator. This will help eliminate any justifiable doubts that may that doubt his independence or impartiality while conducting mediation.

Mediated Settlement Agreement a Binding Contract:

After effective mediation, parties shall reduce in writing under a settlement agreement termed as “Mediated settlement agreement” all terms and conditions duly authenticated by the Mediator. This formalized document serves as a binding contract, outlining the rights, responsibilities, and obligations of each party based on their consensus during the mediation process and shall be enforceable in accordance with the provisions of the Code of Civil Procedure.

Timebound Process along with Option to Withdraw if Mediation Likely to Fail:

The bill aims to reduce the time limit under which the parties may complete the mediation process, requiring them to finish the process in a period of 180 days which may further be extending by another 180 days and not beyond that. The time bound process shall compel the mediation centers or mediator to resolve the disputes effectively and in a circumscribed time period, without any undue delay. Further, after the first two sessions, in case the settlement seems to hit a roadblock,  any party may voluntarily withdraw from the mediation without having to wait for the 180 days’ timeframe to get over . This provision empowers the parties by allowing them to assess the viability of the settlement and make an informed decision regarding their continued participation in the mediation proceedings.

Privilege Against Disclosure:

In an attempt to encourage parties to settle the dispute that has arisen, the acts safeguards the parties, by way of a confidentiality, under which, any participant, mediator, expert and/or advisors cannot be compelled to act as a witness or disclose any admission that if so, is required by any tribunal or Court of law or divulge any valuable information that might have been discussed during the mediation process. This provision, therefore, serves as a robust mechanism to uphold the sanctity of discussions and information shared during mediation, bolstering the parties’ confidence in the process and enhancing its effectiveness.

Mediation Council of India:

The Bill aims to establish a Mediation Council of India as a body corporate to perform the duties and discharge the functions under the Act.  The Council shall comprise people of ability integrity and standing with adequate knowledge and professional experience in dealing with problems relating to law, alternate dispute resolution, etc.

Online Mediation:

In COVID-19 pandemic, access to Judiciary was restricted owing to lockdown imposed all over the Country. As a response, the utilization of technology, specifically “video conferencing,” emerged as a viable solution to enable parties to participate from their respective convenient locations The adoption of online mediation has the potential to transform international mediation, particularly benefiting parties situated in remote areas. It will be a boon for parties to a remote location to resolve the disputes provide the process of approaching mediation centre is also covered under some e-process portal.

Expert Committee

Transactions involving and requiring expertise if the nature of transaction is such mandates technical expertise, the Mediation Council shall constitute committee of experts as it may be required to discharge necessary functions.

What Elements are Missing from the Mediation Bill?

Disputes Not Covered Under Mediation:

The Bill under Schedule A states various nature of disputes that cannot be referred to mediation. Despite the bill’s overarching goal of encouraging the resolution of civil or commercial disputes through mediation, Schedule A specifies certain disputes that are excluded from being settled through this method. One such instance being, “Land acquisition and determination of compensation under land acquisition laws”. In such instance, parties have the potential to engage in amicable negotiations, leading to a mutually satisfactory resolution regarding compensation.

Interim Measures Pending/Before Initiation of Mediation Proceedings:

As a preemptive measure to protect and safeguard the rights of any aggrieved parties, under Section 8 of the proposed bill, this provision enables the aggrieved party to approach the relevant court of law and file an application for interim measures, thus ensuring the safeguarding of their rights under “exceptional circumstances”. The legislature has failed to elaborate the concept of exceptional circumstances.

Community Mediation:

Community mediation aims to address conflicts that may arise amongst residents or families within a specific area or locality. However, the current framework of community mediation lacks clarity regarding the types of disputes suitable for mediation. Even more, considering Schedule A which enumerates disputes that cannot be resolved through mediation, most of the matters that turn up under Community mediation might be covered under Schedule A. It will be interesting to see how Parliament will broaden the scope of community mediation and how the Courts interpret this mediation provision.

As we traverse this new landscape of dispute resolution, Mediation Bill 2023 emerges as a beacon of hope, offering a well-lit path towards harmonious resolutions. By embracing mediation, parties can sidestep the adversarial nature of litigation and pave the way for collaborative problem-solving.

About Solomon & Co. 

Solomon & Co. (Advocates & Solicitors) was founded in 1909 and is amongst India’s oldest law-firms.  The Firm is a full-service firm that provides legal service to Indian and international companies and  high net-worth individuals on all aspects of Indian law.


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