INTRODUCTION
One of the most important challenges being faced by the Indian Judiciary is the immense backlog of cases. As per data from the National Judicial Grid, as of 8 November 2022, there are 4,31,30,195 cases currently pending across all courts in the Indian Jurisdiction.2 One possible means to reduce the burden on the Indian Court System is the settlement of disputes outside the Courts, using means of Alternate Dispute Resolution (ADR). Mediation, being one such tools of ADR is defined by the Black?s Law Dictionary as “the act of a third person who interferes between two contending parties with a view to reconcile them or persuade them to adjust or settle their dispute.”3 Resolution through the process of mediation is picking up pace at rapid level, especially in cases involving family matters, labour law and other commercial disputes. Currently, mediation may be ordered by the Court under Section 89 of the Civil Procedure Code or through mechanisms stipulated by Section 37 of the Consumer Protection Act 2019 and Section 442 of the Companies Act. Interestingly, the Commercial Courts Act 2015, allows for a slightly different form of mediation before the parties approach the courts for their disputes. Section 12A of the act makes it mandatory for the parties to attempt pre-institutional mediation before initiating a suit. Such a form of mediation, where the parties make an attempt to resolve their disputes, failing which they approach the Court of Law is termed as „pre-litigation mediation.? Even the Mediation Bill 2021, which is expected to receive Parliamentary assent in the coming future, also envisages for a mandatory pre-litigation process. Pre-litigation Mediation has been subject of debate since a quite some now, with varied views being presented by various proponents. If the Mediation Bill receives parliamentary assent, it is bound to bring about a significant change in the manner in which civil/commercial disputes are adjudicated upon. Though this paper, the author aims to analyse the concept of pre-litigation mediation in India through the lens of the Mediation Bill 2021. By analysing the current framework and by comparing it to the approaches followed by other jurisdictions containing Pre-litigation Mediation provisions, the author aims to assess the viability of mandatory Pre-litigation Mediation in India and explore solutions which may be incorporated in the Mediation Bill 2021.
1 Dispute Resolution Quotes, ADR Toolbox. Available at – http://www.adrtoolbox.com/library/adr-quotes/
2 National Judicial Data Grid (District and Taluka Courts of India) Available at – https://njdg.ecourts.gov.in/njdgnew/?p=main/pend_dashboard
3 Henry Campbell Black. Black’s Law Dictionary, Revised 4th Edn., 1968. Available at – latestlaws.com/wpcontent/uploads/2015/04/Blacks-Law-Dictionery.pdf
Pre-Litigation Mediation in the Mediation Bill 2021
Section 2(r) of the Bill defines pre-litigation mediation as a process “for settlement of disputes prior to the filing of a suit or proceeding of civil or commercial nature.”4 As per Section 6 of the Bill, irrespective of the existence of an agreement to enter into mediation, the parties are compulsorily mandated to take steps to settle the disputes by pre-litigation mediation, before filing any suit or proceedings of civil or commercial nature in any court or tribunal across India, 5 barring certain forms of disputes which the Mediation Act itself deems unfit for mediation. Such disputes, as per Section 7, have been defined under the First Schedule to the Bill and include disputes involving prosecution for criminal offences, serious allegations of fraud forgery/impersonation/coercion, disputes which affect the rights of a third party not part of the mediation proceedings, disputes which by virtue of any law for the time being in force may not be submitted for mediation, amongst others. Additionally, just like how the Commercial Courts Act does not preclude the parties from approaching the Court for urgent interim relief, pre-litigation mediation under the Mediation Act, per Section 8, the parties are not barred from approaching the Court/Tribunal in cases where “exceptional circumstances” can be shown, prior to initiation of mediation. At this juncture, it becomes imperative to clarify that contrary to popular notions, mandatory pre-litigation mediation does not force the parties to settle their dispute through mediation – it only makes it mandatory for them to attempt the mediation process.6 Professor Dorcas Quek Anderson, terming it as the „Mandatory Mediation Paradox? has explained how the same must be understood as “coercion into and not within” 7 the process of mediation. The provision, in no way precludes the right of the parties to approach the court of law – it only mandates them to try at mediating their disputes, failing which they may approach the Court freely. The Mediation Bill also has provisions to this effect – Section 20 stipulates that it would only be mandatory for the parties to attend the first two sessions of a mediation, after which they may withdraw from the mediation process.8 However, while the clause gives certain limited autonomy to the parties to withdraw from the process, it also imposes upon them consequences if they fail to attend the first two mediation sessions. Per Section 20(2), in case a party fails to attend the first two mediation sessions without any reasonable cause which resulted in the failure of mediation, it gives the court power to take the said conduct of such party into consideration and impose such costs as deems fi in subsequent litigation on the same subject matter between the parties.
4. Mediation Bill 2021, Bill No. XLIII of 2021, As introduced in the Rajya Sabha. Available at – http://164.100.47.4/BillsTexts/RSBillTexts/asintroduced/Mediation-RS%20int-20%2012%2021-E.pdf
5. Supra, Note 4 at Section 6.
6. Deepika Kinhal & Apoorva. Mandatory Mediation in India: Resolving to Resolve. Indian Public Policy Review 2020, 2(2): 49-69. Available at – https://vidhilegalpolicy.in/wp-content/uploads/2021/03/MandatoryMediation-in-India-Resolving-to-Resolve.pdf 7 Quek Anderson, Dorcas, Mandatory Mediation: An Oxymoron? Examining the Feasibility of Implementing a Court-Mandated Mediation Program (January 1, 2010). Cardozo Journal of Conflict Resolution Vol 11.2 (Spring 2010), Available at SSRN: https://ssrn.com/abstract=2843509
Advantages of Pre-Litigation Mediation
As per De Palo & Giuseppe,10 one of the best methods to increase the number of mediated disputes is to ensure that parties themselves make a serious and reasonable attempt at it at an early stage of the dispute resolution process.11 Thus, the first major advantage of prelitigation mediation would be to ensure that parties get an opportunity to resolve their disputes at a nascent stage itself, saving on countless years spent in the adversarial-litigation system.
Secondly, a mandatory Pre-litigation regime would grant more legitimacy to the mediation process. It would be correct to say that in the Indian context, there exists a notion (though misplaced), that the party which suggests mediation is usually the weaker party. Per Kinhal & Apoorva, this „first-to-blink? syndrome is also taken care of by mandatory mediation and the “parties or their lawyers do not have to risk appearing weak by suggesting mediation.”12 Moreover, the fact that mediated settlement agreements, as stipulated by Section 22 of the Bill, are enforceable as decrees in a Court of law further strengthens the legitimacy of the process and helps overcome the „initial inertia? that the parties might have while choosing mediation as a means of dispute resolution.
Thirdly, the process of mediation ensures privacy and preservation of relationships. Section 23 of the Bill mandates that all conversations and proceedings during the mediation process would be kept entirely confidential, a right solidified by the decision of the Supreme Court in Perry Kansagra v. Smriti Madan Kansagra. This would be particularly useful while mediating disputes pertaining to divorce or other family matters, where it also assists the parties in separating the problem from the person and focus on the future.15 Its application may also be found in the business setting where mandatory mediation gives the parties a platform to air out their concerns, mitigate loss of business and avoid permanent long term damage to their working business relationship.
Fourthly, mandatory mediation would be beneficial for the Indian Legal system in general. Apart from taking away the burden of pendency, a mandatory mediation regime would also create a huge demand for mediators and other personnel involved in the process of mediation. This would create more employment opportunities and most importantly, create a system that promotes amicable settlement of disputes17 As Susskind would state, such a system would help improve the „legal health? of the country.
Lastly, mediations may also be held in the online mode, breaking territorial restrictions and even enable the parties to a mediation to judge the strength their claims so as to be able to take an informed call about taking the matter further to litigation.
https://www.europarl.europa.eu/RegData/etudes/BRIE/2018/608847/IPOL_BRI(2018)608847_EN.pdf
Concerns regarding Mandatory Pre-Litigation Mediation
While it is evident through the above discussion that mandatory mediation has its distinct advantages, it is the author?s opinion that given the current provisions of the Mediation Bill, it may end up doing more harm than good. Firstly, it has been argued the bill „mandates? prelitigation mediation on parties, even if they do not have an agreement to mediate.20 This fact, coupled with the fact that if the parties do not attend the compulsory mediation sessions as envisaged by Section 20 they may face adverse effects at later stage in the Courts, goes against the very basis of the concept of voluntariness, which is the bedrock of the mediation process. Terming the above as the „antithesis of mediation,? it has been argued that taking away the „voluntariness? from mediation is tantamount to denial of justice.21 Proponents have also argued that the above infringes upon a person?s fundamental right to approach the Courts of Law.22 Secondly, spilling over from the aforementioned issue, scholars like Cohen have argued that coercing the parties into mediation might just render the process ineffective as the parties to the process may not act in good faith and may just sit through the mediation process, just to comply with the letter of the law.23 Section 20 of the Mediation Bill might also lead to the same effects – the parties may just try to get through the two mandatory mediation sessions and later on withdraw from the process. This would mean that even if a person just sits through the session, without even participating, they would have deemed to have attended the mandated sessions and therefore, complied with the law. Such acts of theirs would have no legal repercussions. Thirdly, the above brings about another connected issue, rightly flagged by the 117th Report on the Mediation Bill 202124, per which, the mandatory provision may just be misused by the parties as a delay tactic. As per the report, Section 6 of the Bill prevents the parties from approaching the Court, and “Section 20 and Section 25 of the Bill make such unwilling parties to stay in mediation for at least two mediation sessions and compels the party who fails to attend the first two mediation sessions “without reasonable cause” with the possibility of costs in subsequent litigation for such “conduct”. Consequently, the parties have to wait for several months before being allowed to approach courts or tribunals.” 25 This is viewed as a means of delaying the ends of justice. Fourthly, it may be seen that per Section 8 of the Bill, if exceptional circumstances exist, a party may, before the commencement of mediation proceedings, file suit or appropriate proceedings before a court or tribunal having competent jurisdiction for seeking urgent interim relief.26 It is pointed out that in the above provision, the term “exceptional circumstances” has not been defined in the Act. While this may seem trivial, it has huge consequences. It seems like the drafters of the bill ignored the experience with the similarly placed Section 12-A of the Commercial Courts Act 2015, where it is often seen that the parties circumvent the mandatory mediation process by filing urgent interim applications before the Court, which may take a considerable time to get decided. This, as rightly pointed out by the 117th Report on the Mediation Bill 2021,27 “can lead to wide interpretation and use by parties to approach court for interim relief by contending various situations under “exceptional circumstances”” thereby impeding and delaying the entire process of mediation. Fifthly, it is pointed out that Schedule 1 of the Bill, which lists down the kinds of disputes unfit for mediation, is too wide and requires some pruning down.29 One such example being the fact that entry 7 prevents „disputes which have effects on rights of a third party who are not a party to the mediation proceedings?30 from being mediated. Such an exclusion would have an impact on parties who may have a child and opt in for mediation in some matrimonial matter. It must also be noted that entry 3 prevents claims involving persons with disabilities from being mediated upon – however, such persons are permitted to enter into litigation through a guardian ad litem or next friend. Since India is a signatory to the United Nations Convention on the Rights of Persons with Disabilities, it must strive to ensure that such persons with disabilities enjoy legal capacity on an equal basis with individuals who do not have disabilities. Therefore, “all disputes involving persons with disabilities should not be outrightly excluded from the purview of mediation and Courts should be empowered to refer suitable cases to mediation.” Lastly, implementing the pre-litigation mediation provisions of the bill is only going to lead to logistical nightmares, like lack of adequately qualified mediators as happened during the famous Amarchand-Mangaldas Split. Given the immense burden of cases, it is unlikely that the mechanism is going to be able to keep up. One such situation was illustrated in the case of Daramic Battery Separator India Pvt. Ltd. v. UOI,35 wherein the parties had to approach the Court for appointment of a mediator since NALSA was unable to find a suitable mediator for them from its pool of mediators, for settlement of their commercial dispute.
A Brief Comparative Analysis
USA is one of the leading jurisdictions when it comes to mediation. Interestingly, there is no statute that contemplates for mandatory mediation before approaching the Court of Law. Despite this, the Courts have always been in favour of mandatory mediation and the dispute settlement culture, as it exists, is tilted more towards settlement of disputes through voluntary mediation.37 On the contrary, In the European Union, as per Article 5.2 of Directive 2008/52, 38 the member states are obligated to participate in mandatory pre-litigation mediation. However, these obligations do not triumph over the right of access to the judicial system.39 This position has been affirmed by the EU Court of Justice in Menini v. Banco Popolare Società Cooperativa. Italy is yet another jurisdiction with a wonderful mandatory mediation framework having a high rate of effective implementation.41 The framework provides for an „opt-out? model of mediation, wherein post one mandatory meeting with a mediator, the parties may opt out of the mediation process.42 This is an inexpensive meeting, with penalties for non-attendance – however, post this meeting, there is no bar on the parties to enter into the adversarial Court process. This has led to a whooping 45% success rate for mediations in Italy.43 In contrast to this, Romania follows an „opt-in? model of mediation, wherein the parties to the mediation first attend an informal, inexpensive session with the mediator and then decide whether or not they want to „opt-in? and mediate their dispute or go via the adversarial route.44 Even Turkey has had a very effective mandatory mediation regime, wherein “if a party fails to attend the initial mediation meeting, it will pay litigation costs even if it later succeeds in the subsequent litigation.”45 This is without a doubt stricter than the approach followed by other jurisdictions.
Id. 34 Rohan Dhariwal and Shrey Patnaik, Shifts or Illusions? The Reality of India’s Growing Mediation Scenario, Kluwer Arbitration Blog, May 28, 2015, available at http://mediationblog.kluwerarbitration.com/2015/05/28/shifts-or-illusions-the-reality-of-indias-growingmediation-scenario/
35 (W.P.(C) 7857/2018), Delhi High Court.
36 Supra, Note 6.
37 Linklaters, Commercial Mediation in the U.S., April 01, 2020, available at https://www.linklaters.com/en/insights/publications/commercial-mediation-a-global-review/commercialmediation-a-global-review/us
38 Directive 2008/52/EC of The European Parliament and of The Council of 21 May 2008 on Certain Aspects of Mediation in Civil and Commercial Matters. Available at -https://eur-lex.europa.eu/legalcontent/EN/TXT/PDF/?uri=CELEX:32008L0052&from=EN
39 Id. At S.No. 5.2. 40 Menini v. Banco Popolare Società Cooperativa Case C-75/16
The Way Ahead
Despite highlighting the inadequacies of the mandatory mediation regime envisaged by the Mediation Bill, it is the author?s firm opinion that mandatory mediation is still the way to go ahead, albeit with some changes. As we have seen, India follows an „opt-out? model of mediation where the parties can opt out of mediation after two mandatory mediation sessions. In this regard, a lot can be learnt from Italy, which has followed a similar model that has produced great results. It is the author?s opinion that the mandatory two session limit must be dropped down to just one. Further, just like Italy, the Indian Mediation Bill could also come with a sunset clause, wherein its viability is assessed after a certain number of years – and the Mediation Bill is introduced as a „pilot project? in a phased manner.46 This would also go along the recommendations of the 170th Standing Committee Report, which suggested that mandatory mediation be rolled out for certain kinds of disputes first, gradually moving on and increasing coverage.47 While it is true that the mandatory mediation model infringes upon the voluntariness aspect of mediation, the author would like to side with Kinhal & Apoorva when they say that it would be an “exaggeration to argue that mandating parties to simply attempt mediation would mean that mediation no longer remains voluntary. Even in mandatory mediation, parties are free to decide whether to continue with the process of mediation, or to enter into a settlement, after attending the sessions mandated under the law.” 48 Coming to the aspects of parties not entering the mandated mediations in good faith, and using the same as a delay tactic, there is not doubt that the same is going to be an issue in the initial years. However, the author feels that a lot can be learnt from USA and the aforementioned problem can be mitigated in the long run by creating a mediation regime, receptive to voluntary mediation and conducive to good faith settlements. This is a change that can be achieved in the longer run. The exceptions clause contained in Section 8 of the Bill, in the author?s opinion, requires serious reconsideration. The contours of the exceptions must be delineated very clearly so as to prevent its misuse. We need to learn from our mistakes and ensure that the mandatory mediation does not suffer from the same fate as is currently being faced by Section 12-A of the Commercial Courts Act. Lastly, efforts must be made to ensure that mandatory mediation does not suffer on grounds of inadequacy of infrastructure, ill-trained mediators and other logistical issues. Mandatory mediation is a huge change with the potential to revolutionize the disputes resolution process in India, just as it did in Turkey and Romania. It would be a shame to see the regime fail on these grounds. Efforts must be made to win public confidence and ensure that they trust and respect the mandatory mediation regime.
1. https://www.europarl.europa.eu/RegData/etudes/BRIE/2018/608847/IPOL_BRI(2018)608847_EN.pdf
2. https://www.gemme-mediation.eu/2019/10/22/mediation-and-judiciary-in-italy-2019/
3. http://mediationblog.kluwerarbitration.com/2018/03/03/turkey-mandatory-mediation-new-game-town/
Conclusion
It is rightfully said that “A lean compromise is always better than a fat lawsuit.”49 Mandatory Pre-litigation mediation is an excellent took to give effect to the above statement. Unlike the adversarial litigation system, mediation helps in creating a win-win situation for both the parties. The Indian pre-litigation mediation regime, as envisaged by the Mediation Bill 2021 is a huge opportunity for reforming the law and bringing it in conformity with other jurisdiction which have seen successes with the same. Such a regime would help reduce burden on the judiciary, grant legitimacy to the mediation process, help maintain confidentiality and preserve the sanctity of relationships. However, the Mediation Bill comes with its own flaws and if it were implanted as is, it would do more harm than good. A lot can be learnt from foreign jurisdictions and if the existing inadequacies of the Mediation Bill can be remedied, India can boast of an effective and successful mandatory pre-litigation mediation regime. This indeed would indicate the start of a new era where mediation is viewed not as a means of “alternate dispute resolution,” but one of ‘appropriate dispute resolution.’
1 Supra, Note 24.
2 Supra, Note 6.
3 Aishwarya Pratap Singh, A lean compromise is always better than a fat lawsuit. LiveLaw. 31 August 2022.
Available at – https://www.livelaw.in/columns/mediation-bill-2021-critical-analysis-208020