As an alternative mode of dispute resolution, mediation offers both a cost-effective and amicable solution compared to traditional litigation or arbitration. By encouraging open dialogue, mediation enables parties to arrive at mutually agreeable solutions while avoiding the hostility often associated with courtroom battles.
India’s socio-legal traditions are deeply rooted in the principles of dialogue, equity, and conflict resolution. Historically, mediation has played a crucial role in resolving disputes amicably, ensuring societal harmony in a diverse and multifaceted country like India. However, the journey of institutionalising mediation in India is marked by both significant strides and persistent challenges. While the adoption of mediation has grown, concerns surrounding its legal framework and implementation remain.
Legal Framework
1. Section 89 of the Code of Civil Procedure, 1908
Section 89 of the Code of Civil Procedure (“CPC”) provides the foundation for Alternative Dispute Resolution (ADR) methods, including mediation. It empowers courts to refer disputes to mediation, either with party consent or through judicial assessment. Settlements reached under this provision are enforceable as court decrees, lending legitimacy to mediation outcomes.
However, despite this statutory recognition, the lack of a robust legislative and judicial framework historically hindered the growth of mediation as a mode of dispute resolution in India.
2. Judicial Pronouncements
The formalisation of mediation received a boost through the Supreme Court’s landmark decision in Salem Advocate Bar Association v. Union of India. This judgement led to the establishment of a committee tasked with enhancing the application of Section 89 of the CPC to expedite justice delivery. The committee‘s 2023 Model Rules served as a blueprint for High Courts to establish their mediation rules.
Despite these efforts, the absence of a comprehensive legislation created inconsistency in mediation practice. In M. R. Krishna Murthi vs. The New India Assurance Co. Ltd. case, the Supreme Court underscored the urgent need for unified legislation to standardise mediation procedures in India.
3. Mediation Act
The enactment of the Mediation Act, 2023, marked a transformative step in India’s ADR landscape. By addressing gaps in the legal framework, the Act seeks to modernise and standardise mediation processes, thereby fostering trust in mediation as a viable dispute resolution method.
Key provisions of the Act
Scope and Applicability: Covers domestic mediations and international commercial mediations involving a foreign party but excludes cross-border mediation settlements conducted outside India, limiting enforcement under the Singapore Convention.
Mediation Agreement: Mandates written agreements, including electronic formats, enabling disputes to be referred to mediation even after they arise.
Exclusions: Matters such as criminal prosecutions and tax disputes are excluded from mediation.
Confidentiality: Ensures confidentiality of mediation proceedings, with limited exceptions for public interest or criminal cases.
Enforceability: Grants mediation settlement agreements the same enforceability as court decrees.
Timelines: Mandates the completion of mediation within 120 days, with an optional extension of 60 days upon mutual agreement.
4. Besides the Mediation Act some other legal enactments specifically provide for mediation.
- Section 12A of the Commercial Courts Act, 2015
The Section mandates pre-institution mediation for all suits not seeking urgent interim relief. Mediations, administered by Legal Services Authorities, must conclude within three months, extendable by two months upon mutual agreement. Settlements reached are enforceable as arbitral awards under Section 30(4) of the Arbitration and Conciliation Act, 1996.
Section 442 of the Companies Act, 2013
This provision facilitates disputes through a Mediation and Conciliation Panel established under the supervision of the Central Government. This panel mediates disputes arising during proceedings before the Central Government, the National Company Law Tribunal (NCLT), or the National Company Law Appellate Tribunal (NCLAT). The panel is tasked with resolving disputes within three months and submitting its recommendations to the relevant authority.
Conclusion
Mediation in India has evolved into a structured and reliable method for resolving disputes. Rooted in cultural traditions and supported by modern legislative measures, including the Mediation Act, it offers a cooperative, non-adversarial alternative to litigation. Provisions under Section 89 of the CPC, Section 12A of the CCA, and Section 442 of the Companies Act etc. provide a robust legal framework, encouraging parties to resolve their dispute through mediation.
However, challenges remain in raising awareness and accessibility, particularly for businesses and corporate entities. Targeted efforts to establishing mediation as a mainstream alternative can foster trust, expanding its reach, and cultivate a culture of constructive dialogue. Mediation’s potential to resolve intricate corporate and commercial disputes makes it a vital tool for preserving relationships and promoting harmony among stakeholders. With the legislative push and the efficiency of the process, the time is right for the stakeholders to effectively adopt mediation as a mode for resolving dispute.
