Building up to a framework to regulate accessible modes of justice dispensation

The recently passed Mediation Bill of 2023 is a significant piece of legislation that has the potential to transform how access to justice is perceived in India. Over the past two decades, policies promoting and mandating mediation and conciliation have become increasingly familiar. These processes involve individuals in conflict seeking the assistance of a neutral third party to facilitate dialogue and understanding, ultimately leading to collaborative problem resolution. Mediation guides parties away from anger, mistrust, and hostility, helping them acknowledge their role in the conflict and work together to identify and address the underlying issues.

The Honorable Supreme Court, in the case of MR Krishna Murthi v. The New India Assurance Co. Ltd., extensively discussed the benefits of mediation and urged the government to explore the feasibility of enacting an Indian Mediation Act to address the lack of legal infrastructure for mediation. In response to this judgment and numerous other comments and opinions from various courts, the Mediation Bill of 2021 (the "Bill") was proposed and subsequently passed by both Houses of Parliament in August 2023 to promote mediation as an ADR method.

The Mediation Bill of 2023 provides a comprehensive policy framework aimed at promoting the use of mediation. By encouraging the resolution of disputes through mediation, whether before, during, or after court decrees, the bill aligns with the objective of providing access to justice on terms that are mutually deemed fair by the parties involved.

Introducing new pathways through Mediation Bill 2023

When the Bill was initially introduced, it included a mandatory provision that required parties, before filing any civil or commercial suit or proceeding in court, to take steps for pre-litigation mediation, regardless of whether a mediation agreement existed or not. However, following recommendations from the standing committee, pre-litigation mediation was made a voluntary process.

Pre-litigation mediation is defined as the process of engaging in mediation to resolve disputes before initiating a civil or commercial suit.

The Bill's objective is "to promote and facilitate mediation, especially institutional mediation, for the resolution of disputes, whether commercial or otherwise, enforce mediated settlement agreements, establish a body for the registration of mediators, encourage community mediation, and make online mediation an acceptable and cost-effective process." The Bill also introduces a "Schedule-I" that specifies certain disputes which are not suitable for mediation. This list includes disputes involving serious allegations of fraud, document fabrication, forgery, impersonation, coercion, criminal offenses, and more.

It clarifies that the provisions of the Bill do not prevent any court from referring disputes to mediation if it deems it appropriate, particularly in cases related to compoundable offenses or matrimonial offenses arising from civil proceedings between the parties.

The Bill also establishes the Mediation Council of India by the central government, composed of a chairperson, two full-time members with experience in mediation or alternative dispute resolution (ADR), three ex-officio members including the Law Secretary and the Expenditure Secretary, and a part-time member from an industry body. The Council's functions include registering mediators, recognizing mediation service providers and mediation institutes for mediator training, education, and certification.

Moreover, the Bill introduces the concept of "Community Mediation", which allows disputes likely to affect the peace and harmony among residents or families in a specific area to be settled through community mediation with the mutual consent of the parties involved. Parties can apply to the relevant authority, which could be constituted under the Legal Services Authorities Act, 1987, or to the District Magistrate or Sub-Divisional Magistrate in areas without such an authority, to refer the dispute to mediation.

Mediation: A Road Less Traveled?

With the emergence of Industry 4.0, companies have expanded their commercial operations globally. This globalization of commercial activities has brought about a multitude of legal issues, particularly when dealing with complex commercial disputes. To address these issues, many countries around the world have been adopting Alternative Dispute Resolution (ADR) methods, including mediation, arbitration, and conciliation.

While India has made significant strides in implementing arbitration as an ADR method, mediation, as a dispute resolution mechanism, is still facing challenges in terms of recognition and legal enforcement.

Furthermore, the Bill aims to amend provisions related to mediation and conciliation in various Indian laws, including the Indian Contract Act, 1872; the Code of Civil Procedure, 1908; the Legal Service Authorities Act, 1987; the Arbitration and Conciliation Act, 1996; the Micro, Small and Medium Enterprise Development Act, 2006; the Companies Act, 2013; the Commercial Courts Act, 2015; and the Consumer Protection Act.

While businesses have become more cautious about arbitration clauses in their commercial contracts, it's equally crucial to understand the relevant provisions of the Mediation Bill to ensure that dispute resolution clauses are legally sound.

The Mediation Act has laid down crucial foundations, integral to steering the evolution of mediation in India towards a more matured and established path. This landmark legislation signifies the onset of embedding mediation as a recognized and potent method within the nation's judicial framework. Recognizing that the journey towards legislative perfection is iterative, it's expected that the government will continually refine and enhance the Act. It's a truism that no law is birthed flawless; instead, it undergoes transformative phases of meticulous revisions, adapting over time to mend its shortcomings and meet the changing needs of society.