Overview of the Mediation Bill, 2021

By - Sarthak Modi and Nehal Daga

Introduction

In a world where disputes are an inevitable facet of human interaction, governments and legal systems are increasingly turning to alternative methods of conflict resolution to alleviate the burden on courts and promote more efficient and harmonious solutions. One such significant stride towards streamlining conflict resolution mechanisms is through the Mediation Bill, 2021 (“Bill”), which has made its mark in the legislative landscape of India. The journey of the Bill through the review process of the Standing Committee, the Rajya Sabha, and the Lok Sabha reflects a meticulous approach to institutionalise the mediation process within the country’s legal framework. This approach specifically focuses on institutional mediation to resolve disputes, encourage community mediation, and make online mediation an acceptable and cost-effective process.

Various provisions such as section 89 of the Code of Civil Procedure, 1908, section 28 of the Indian Contract Act, 1872, and section 442 of the Companies Act, 2013 provide for mediation as a viable option for resolving disputes amicably. However, there was a vacuum prior to the introduction of the Bill, as no legislation provided for the procedure and related intricacies of this mechanism. Therefore, there was a need for a stand-alone law to remove the inconsistencies between the various pieces of existing legislation.

The key features of the Bill are abridged below:

Applicability of the Bill

The provisions of the Bill apply to the mediation proceedings conducted in India where:

all parties reside in, incorporated in, or have their place of business in India;
the mediation agreement states that mediation will be as per the Bill; or
there is an international mediation.

Non-applicability of the Bill

The Bill states that certain disputes should not be referred for mediation, such as:

allegations of serious and specific fraud, fabrication of documents, forgery, impersonation, coercion;
disputes relating to claims against minors or persons of unsound mind;
disputes involving prosecution for criminal offences;
disputes relating to levy or collection of taxes;
disputes involving environmental matters reserved for National Green Tribunal; or
other disputes mentioned in the first schedule of the Bill.

Pre-litigation mediation

The Bill introduces a concept of pre-litigation mediation wherein the parties may voluntarily attempt to resolve the disputes before filing any suit and the same can be carried out irrespective of the existence of any mediation agreement. The procedure for court-annexed mediation shall be determined by the Supreme Court or the High Court wherein the Supreme Court or the High Court will constitute a mediation committee that will maintain a panel of mediators for conducting mediations.

The Bill also permits online mediation, provided that both parties agree in writing to mediate disputes online. The parties must also only use secure computer networks, or video/audio conferencing when conducting online mediation.

Appointment of mediator

A person of any nationality may be appointed as a mediator provided that he possesses such qualifications, experience and accreditation as may be prescribed. The parties can either mutually agree upon a mediator and the procedure of its appointment or in cases of a dispute, a mediator shall be appointed by a mediation service provider from the panel of mediators within seven (7) days of such application. To ensure a bias-free and fair mediation process, a mediator is required to be a neutral third party and should be impartial in its conduct. The Bill recognizes and enforces the same by obligating the mediators to disclose any potential circumstance that may constitute a conflict of interest or is likely to give rise to justifiable doubts as to the independence or impartiality of the mediator in the conduct of the mediation before the commencement of the mediation process itself.

Interim relief prior to mediation

A party may file a lawsuit or other appropriate legal action before a court or tribunal with appropriate jurisdiction to request immediate interim relief prior to the start of, or throughout, mediation proceedings under the Bill. In addition, the Bill gives courts and tribunals the authority to refer parties to mediation at any point during the legal process.

Withdrawal from mediation

Either party may withdraw from mediation at any time after completion of the first two (2) mediation sessions. In case, any party fails to attend the first two mediation sessions without any reasonable cause which results in the failure of mediation, the court, in subsequent litigation proceedings on the same subject matter between the parties, may impose necessary costs on the party who had failed to attend the mediation sessions.

Time limit for completion of mediation

Mediation shall be completed within a period of one twenty (120) days from the date fixed for the first appearance before the mediator which may be extended for a period as agreed by the parties, but not exceeding sixty (60) days.

Mediation settlement agreement

It is a written agreement signed by the parties to settle their disputes which is authenticated by the mediator. The parties herein can also settle disputes that were not part of the scope of mediation prior to the commencement of the mediation proceedings. The mediation settlement agreement has the same binding effect and enforceability as a Court’s judgment or a decree, challengeable only on the grounds of fraud, corruption, impersonation or relating to any dispute not fit for mediation.

Confidentiality of mediation proceedings

All parties are required to keep the following aspects related to mediation confidential:

acknowledgements, suggestions, opinions, admissions, proposals, and promises made during the mediation proceedings;
documents prepared solely in relation to the conduct of mediation;
acceptance of, or willingness to, accept proposals made or exchanged in the mediation;
no audio or video recording of the mediation proceedings shall be made or maintained by the parties or the participants including the mediator and mediation service provider.

Mediation Council of India

The Bill also talks about establishing a Mediation Council of India (“Council”) to promote and regulate both domestic as well as international mediation in India. The members of the Council are to be selected from amongst the Supreme Court or the High Court judges, eminent persons and academicians in the field of mediation, and key government officials. The Bill also lays down the roles, responsibilities, and duties of the Council.

Analysis

The Bill was further amended in the year 2023 based on the suggestions and recommendations of the Standing Committee. Few suggestions have been incorporated; however, a plethora of shortcomings persist and warrant careful consideration and reflection. Some of such lacunas are elucidated herein:

Firstly, in pre-litigation mediation, the parties have the option to seek interim relief from a court or a tribunal in “Exceptional Circumstances” under section 8 of the Bill. However, there lies ambiguity surrounding what constitutes an exceptional circumstance as there exists no qualifying criteria for the same. This may lead to multiple court interventions along with delay which fails to fulfil the object of the Bill. Further, there is no appeal mechanism available against an order passed under the relevant section.

Furthermore, in the pursuit of successful mediation, the significance of confidentiality cannot be overstated. While the Bill does allocate a section to address this crucial aspect, it falls short by not specifying any penalties for breaching confidentiality.

Not only this, the competence of the mediation council also remains in question as only one member of the council is compulsorily required to have knowledge of mediation law. This may also not guarantee a comprehensive understanding of the nuances of mediation, as akin to any art, the process of mediation hinges on skill. Adding fuel to the fire, the dilution of the principles of mediation is exacerbated by the provisions enabling governmental control over the council.

Moreover, it is a widely acknowledged fact that the government is the biggest litigant in the country. However, confining the government’s scope for engagement in mediation exclusively to “commercial disputes” counteracts the very purpose of such legislation. Even after the recommendations of the Standing Committee of inclusion of government-related disputes within the ambit of the Bill, the same was purposely omitted. Such an inclusion would have not only fostered confidence regarding this mechanism amongst the public but also helped in the reduction of the overwhelming backlog of pending cases.

Lastly, the Bill fails to regulate international mediation conducted outside India. To accommodate the same, the Standing Committee had recommended that the definition of international mediation be revisited to bring the Bill in line with the Singapore Convention ratified by India in the future. This is so because the Convention provides a framework for cross-border enforcement of settlement agreements resulting from international mediation. However, disappointingly, this revision has not been undertaken.

Conclusion

It cannot be denied that the Bill has its fair share of merits and is, in some ways, a step in the right direction in terms of recognizing and promoting mediation. However, it is critical that certain shortcomings and concerns in the Bill as mentioned above, are addressed suitably as and when enacted, so as to support the promotion and facilitation of mediation, in order to achieve the desired results expeditiously.

– Sarthak Modi and Nehal Daga,

Associate, Solomon & Co.

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 services to Indian and international companies and high-net-worth individuals on all aspects of Indian law.

“Disclaimer”

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