BACKGROUND: Mediation and Conciliation, as a form of dispute resolution, finds a mention in several legislations, such as the Arbitration and Conciliation Act, 1996; the Code of Civil Procedure, 1908; the Companies Act, 2013; and the Commercial Courts Act, 2015, among others. However, a need was felt to bring about a comprehensive law governing the various aspects of mediation. With that in mind, the Mediation Bill, 2021 ("2021 Bill") was introduced in the Rajya Sabha on December 20, 2021, to promote mediation as a preferred mode of Alternate Dispute Resolution, inter alia by institutional mediation.
The 2021 Bill was referred to the Parliamentary Standing Committee on the Mediation Bill ("Committee") on December 20, 2021. After meeting with several stakeholders, the Committee gave its report on July 13, 2022. Following consideration of the Committee's recommendations/observations, the Cabinet approved amendments to the 2021 Bill. Subsequently, the Rajya Sabha passed the Mediation Bill, 2023 ("2023 Bill") on August 01, 2023, and the Lok Sabha on August 6, 2023.
KEY HIGHLIGHTS OF THE 2023 BILL AS APPROVED BY THE RAJYA SABHA AND LOK SABHA:
Comprehensive legislation: The Mediation Bill when enacted ("Mediation Act") would have an overriding effect for conducting mediation and conciliation over other laws except for the legislations specified in the Second Schedule. The Second Schedule includes the Industrial Disputes Act, 1947; the Family Courts Act, 1984; the Industrial Relations Code, 2020; the Finance Act, 2016; the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, amongst others.
Further, the provisions of the Mediation Act will not be applicable to proceedings conducted by Lok Adalat and Permanent Lok Adalat under the Legal Services Authorities Act, 1987.
Additionally, Section 61 to Section 81 of the Arbitration and Conciliation Act, 1996 would stand amended and substituted to inter alia reflect that where conciliation is referred in any enactment, it would mean a reference to the Mediation Act. However, all ongoing conciliation proceedings will continue under the provisions as if they had not been amended.
Disputes not fit for mediation: Not all disputes can be referred for mediation. The First Schedule sets out a list of disputes or matters that cannot be mediated. These include disputes involving prosecution for criminal offences, direct or indirect tax disputes, disputes where rights of third parties are involved (except where it concerns the interest of a child in matrimonial matters), proceedings under the legislations specified in the First Schedule, disputes which cannot be mediated under any law, and any subject matter notified by the Central Government.
However, a court can still refer disputes relating to compoundable offences (including compoundable matrimonial offences) for mediation. Further, the outcome of such mediation shall not be deemed to be a judgment or decree of the court and would be subject to consideration by the court in accordance with the prevailing law.
Applicability of the Bill:
The Mediation Act would apply only to mediations conducted in India, and
- all or both parties habitually reside in or are incorporated or have their place of business in India; or
- The mediation agreement provides that the dispute would be resolved as per the provisions of the Bill; or
- There is an international mediation; or
- There is a commercial dispute where one of the parties is a government or a government entity;
- Such other government disputes as may be notified.
While the term "international mediation" was defined in the 2021 Bill, the 2023 Bill provides further clarity on what would constitute a "place of business".
Territorial jurisdiction: Unless otherwise agreed by the parties, Mediations are to be undertaken within the territorial jurisdiction of the court or tribunal of competent jurisdiction to decide the subject matter of dispute:
If the parties agree to conduct the mediation at any place outside the territorial jurisdiction, for the purposes of enforcement, challenge, and registration of the mediated settlement agreement, such mediation shall be deemed to have been undertaken within the territorial jurisdiction of the court or tribunal of competent jurisdiction.
Who can be a Mediator?: A Mediator can be appointed by the parties or by a mediation service provider, and such person may be a person registered with the Mediation Council. A person of any nationality can be appointed as a Mediator. However, a mediator of foreign nationality shall be required to have such qualification, experience, and accreditation as may be specified.
In cases where the parties are unable to agree on the choice of a Mediator, they can make an application to a mediation service provider for the appointment of a mediator. The mediation service provider would need to appoint a Mediator as consented to by the parties or from its panel, within a period of 7 days.
However, when it comes to any pre-litigation mediation, unless otherwise agreed to by the parties, a Mediator who is appointed shall either be:
- registered with the Council; or
- empanelled by a court-annexed mediation centre; or
- empanelled by an Authority constituted under the Legal Services Authorities Act, 1987; or
- empanelled by a recognized mediation service provider.
Reference by court or tribunal: A court or tribunal has the authority to refer the parties to undertake mediation at any stage of the legal proceedings.
When an application for compensation arising out of an accident is made before the Claims Tribunal under the Motor Vehicles Act and no settlement is arrived at, the Claims Tribunal shall refer the parties for mediation to a mediator or mediation service provider under the Mediation Act.
Mediation Service Providers and Mediation Institutes:
A "mediation service provider" includes the following:
- a body or an organisation that provides for the conduct of mediation and is recognised by the Council; or
- an Authority constituted under the Legal Services Authorities Act, 1987; or
- a court-annexed mediation centre; or
- any other body as may be notified by the central government.
The functions of a mediation service provider are:
- accredit mediators and maintain a panel of mediators;
- provide the services of a mediator for the conduct of mediation;
- provide all facilities, secretarial assistance, and infrastructure for the efficient conduct of mediation;
- promote professional and ethical conduct amongst mediators;
- facilitate registration of mediated settlement agreements; and
- such other functions as may be specified.
On the other hand, a mediation institute would be a body or organisation that provides training continuous education, and certification of mediators and carries out such other functions as may be specified under the Mediation Act.
Mediator does not have authority to impose: Mediation is a process where parties attempt to reach an amicable settlement of their dispute with the assistance of a third person who does not have the authority to impose a settlement upon the parties to the dispute.
Mediation process: The mediation process is to be conducted in such a manner as may be specified. However, till such time as regulations in this regard are framed, court-annexed mediation would continue to be governed by existing rules.
A Mediator is to be guided by the principles of objectivity and fairness and the Mediator is required to protect the voluntariness, confidentiality, and self-determination of the parties, and adhere to the standards for professional and ethical conduct as may be specified.
Agreement to Mediate: An agreement to mediate must be in writing either in the form of a clause in a contract or a separate agreement, which can include an exchange of communications or letters including through electronic form, and any pleadings in a suit or any other proceedings in which existence of mediation agreement is alleged by one party and not denied by the other.
Disputes where the Government is a Party: Only commercial disputes and such other notified category of disputes where the Government is a party can be mediated. The Central Government, State Government or any of its entities or agency may frame schemes or guidelines for dispute resolution through mediation or conciliation. Further, any dispute where the Central Government or State Government or any of its agencies, public bodies, corporations, and local bodies including entities controlled or owned by them is a party, the mediated settlement agreement can be signed only after obtaining the prior written consent of the competent authority.
Commencement of mediation: Unlike the provisions of the 2021 Bill where mediation was deemed to have commenced upon a party issuing notice, the 2023 Bill provides that in cases where a mediation agreement is in existence, mediation proceedings shall be deemed to have commenced upon a party receiving notice.
Where there is no mediation agreement, mediation proceedings would be deemed to have commenced:
- when the Mediator gives consent, where the parties have agreed to appoint the mediator or;
- on the date of appointment of a mediator by the mediation service provider, where a party refers the dispute to a mediation service provider.
Confidentiality and non-disclosure: Confidentiality is of paramount concern when it comes to mediation and the Mediation Bill reinforces the confidentiality obligations of the parties in mediation.
The Mediation Bill casts an obligation on Mediators, mediation service providers, parties, and participants (including experts and advisors) in the mediation to keep all mediation communication (including any negotiations) confidential. Further, parties cannot produce any mediation communication as evidence in any legal proceedings.
Where no settlement is reached, the Mediator is required to submit a non-settlement report. The Mediator cannot disclose the cause of non-settlement or any other matter or thing referring to the conduct of the parties during mediation.
However, there is no privilege or confidentiality when:
- there is a threat or statement of a plan to commit an offence punishable under any law for the time being in force;
- information relating to domestic violence or child abuse; and
- statements made during a mediation showing a significant imminent threat to public health or safety.
Further, the obligation of confidentiality would not apply to a mediated settlement agreement where its disclosure is necessary for registration, enforcement, and challenge. Further, a Mediator is not restricted from compiling or disclosing general information for research, reporting, or training purposes so long as the information does not expressly or indirectly identify a party or participants or the specific disputes.
Mediator as a witness: A Mediator cannot act as an arbitrator or representative of either of the parties with respect to the disputed matter or be presented as a witness in any arbitration or judicial proceedings.
Conflict of Interest: The neutrality of the Mediator is a pillar of mediation. Any conflict of interest would need to be disclosed by the Mediator. This is a continuing obligation and if a Mediator becomes aware of a conflict of interest during a mediation, the Mediator is obligated to disclose the same to the parties.
If there is a conflict of interest, any of the parties would be entitled to replace the Mediator.
Online Mediation: Mediation, including pre-litigation mediation, can also be conducted by the use of electronic form or computer networks ("online mediation"). The online mediation process is to be conducted in such a manner as may be specified.
Language of Mediation: Mediation need not be conducted only in English. The Mediator can determine the language of the mediation proceedings with the consent of the parties.
Enforceability of a mediated settlement agreement: A mediated settlement agreement in writing and authenticated by the Mediator, is final and binding on the parties and is enforceable in the same manner as if it were a judgment or decree of a court.
Pre-litigation mediation: Unlike the provisions of the 2021 Bill, the 2023 Bill makes pre-litigation mediation voluntary. However, pre-litigation with respect to commercial disputes would continue to be governed as per the provisions of the Commercial Courts Act, 2015 and the rules framed thereunder.
Interim relief: The provisions pertaining to interim relief that was included in the 2021 Bill on account of there being pre-litigation mediation have been deleted. However, while referring a matter to mediation, the court or tribunal may pass interim orders to protect the interest of the parties.
Mediated Settlement Agreement: A mediated settlement agreement is required to be in writing. The terms of the mediated settlement agreement may extend beyond the disputes referred to mediation.
Timelines: Compared with the 2021 Bill, the 2023 Bill has significantly reduced the time within which the mediation is to be completed. Per the 2023 Bill, mediation is to be completed within a period of 120 days, with a maximum extension of 60 days.
Registration: While the 2021 Bill provided for mandated registration of mediated settlement agreements, the 2023 Bill provides for the voluntary registration of mediated settlement agreements by the parties with an Authority to be constituted in this regard or any other body as notified by the Central Government, within 180 days of receipt of the authenticated copy of the mediated settlement agreement. Registration beyond the period of 180 days may be allowed on payment of the specified fee. Not registering a mediated settlement agreement would not affect the enforceability of the mediated settlement agreement.
Termination of proceedings: Mediation is a voluntary process. The Mediation Bill provides for the termination of mediation proceedings on the date when:
- the mediated settlement agreement is signed and authenticated;
- a written declaration from the Mediator stating that efforts for mediation are no longer justified;
- a communication issued by a party wishing to opt out of mediation;
- the expiry of the time limit provided for completion of mediation.
Costs: Costs of mediation (other than community mediation) shall be as specified by the Central Government and the same shall be shared by the parties unless otherwise agreed to by them.
Challenge: A mediated settlement agreement may be challenged only within a period of 90 days from the date on which such party received a copy of the mediated settlement agreement. The period of 90 days can be extended by a court or tribunal for a further period of 90 days if there is sufficient cause. The grounds on which a mediated settlement agreement can be challenged are limited to fraud, corruption, impersonation, or those subject matters falling within First Schedule.
If a mediated settlement agreement is void under the Indian Contract Act of 1872, it shall not be considered to be a lawful settlement agreement.
Community Mediation: Where there is a dispute that could affect peace, harmony, and tranquility amongst the residents or families of any area or locality, and if the parties agree to mediation, such matter could be settled through community mediation by making an application to the concerned Authority constituted under the Legal Services Authorities Act, 1987 or District Magistrate or Sub-Divisional Magistrate in areas where no such Authority has been constituted, for referring the dispute to mediation.
The mediation shall be undertaken by a panel of three community mediators out of a panel that is maintained by the authority.
Any settlement agreement arrived at pursuant to a community mediation shall not be enforceable as a judgment or decree of a civil court.
Mediation Council of India: The Mediation Bill provides for the establishment of a 7-member Mediation Council of India for promoting domestic and international mediation in India and provides for the procedure of registration of mediators, recognising mediation institutes and mediation service providers.
Amendment of other laws: The Mediation Bill proposes to amend several laws including the Consumer Protection Act, 2019; the Micro, Small and Medium Enterprises Development Act, 2006; Section 442 of the Companies Act, 2013; the Arbitration and Conciliation Act,1996 and Section 89 of the Code of Civil Procedure 1908, whereby all references to conciliation or mediation in those statutes would mean mediation under the Mediation Act.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.