Significance of Mediation: An Address at the Online Workshop on the Mediation Act, 2023

-Prof. Jose P. Verghese*

At the outset let me express my humble appreciation for the conduct of this workshop as a part of the Project on Pan India Legal Literacy and Legal Awareness Programme granted to CEERA NLSIU by the Department of Justice, Ministry of Law and Justice, Government of India under the Designing Innovative Solutions for Holistic Access to Justice (DISHA) Scheme. Both CEERA and its Director Prof. Sairam Bhat, who deserves a big applause.

By way of introduction to this address, I must say that the Mediation Act, 2023 was long due, as mediation as an effective alternate dispute resolution method was oscillating among the other methods like negotiation, conciliation, arbitration etc., without having any specific and detailed statutory stipulations. Now there is a sigh of relief that mediation has been statutorily recognised, with its own procedure, and very rightly replacing conciliation from the statute books, instead allowing mediation takes its place for all practical purposes. The Act is result of a long-drawn process that was initiated through a Bill for the purpose in 2021, which was subjected to nation-wide discussions. I myself had participated in the consultation that followed, through the auspices of ASSOCHEM.

Mediation was in practice in our country from time immemorial. Angada of Ramayana and Lord Shri Krishna of Mahabharata were in fact the first mediators of ancient India. Kautilya in his Arthasastra had given mediation a pristine importance. He had named it Shama which means ‘peace’ to be the first of the four methods (Upayas) to be resorted while dealing with the difficulties that a Vijigishu may face while making efforts to establish a Chakravartikshetra in the then known Bharatvarsha, the vast expanse between the Himalayas and the seas. In the process he had advocated some 28 different kinds of Sandhis (Agreements for peace) to be resorted to by the king.

All other methods like negotiation, conciliation, arbitration etc. were introduced into India by the British, through the Civil Procedure Code (CPC) in 1908, where mediation was still absent. Mediation as a dispute resolution method came to be referred to in CPC, by section 89 through an amendment in 1999; and now by section 59 of the Mediation Act, section 89 has been totally replaced by a new section 89, vide, Schedule IV to the Act of 2023.

The constitutional validity of amendments made to the Code of Civil Procedure by Amendment Acts of 1999 and 2002 was rejected in Salem Advocates Bar Association, T.N. v. Union of India [(2003) 1 SCC 49]. In order to work out the modalities to operationalise the provisions in the amendments was subsequently undertaken by a committee headed by Justice M. Jagannadha Rao, a former Judge of the Supreme Court who was also the Chairman, Law Commission of India, who also had suggested elaborate changes to the Arbitration and Conciliation Act of 1996. His report had three parts and it was considered by Supreme Court in the second Salem Advocates Bar Association case in the year 2005. The second part contained the Civil Procedure Mediation Rules, 2003; and there were 28 Rules formulated: These were, Rule 1 : Title; Rule 2 : Appointment of mediator; Rule 3 : Panel of mediators; Rule 4 : Qualifications of persons to be empanelled under Rule 3; Rule 5 : Disqualifications of persons; Rule 6 : Venue for conducting mediation; Rule 7: Preferential consideration in the appointment of mediators; Rule 8: Duty of mediator to disclose certain facts; Rule 9 : Cancellation of appointment; Rule 10 : Removal or deletion from panel; Rule 11 : Procedure of mediation; Rule 12 : Mediator not bound by Evidence Act, 1872 or Code of Civil Procedure, 1908; Rule 13 : Non-attendance of parties at sessions or meetings on due dates; Rule 14 : Administrative assistance; Rule 15 : Offer of settlement by parties; Rule 16 : Role of mediator; Rule 17 : Parties alone responsible for taking decision; Rule 18 : Time limit for completion of mediation; Rule 19 : Parties to act in good faith; Rule 20 : Confidentiality, disclosure and inadmissibility of information; Rule 21 : Mediation sessions and meetings are private; Rule 22 : Immunity; Rule 23 : Communication between mediator and the Court; Rule 24 : Settlement Agreement; Rule 25 : Court to fix a date for recording settlement and passing decree; Rule 26 : Fee of mediator and costs; Rule 27 : Ethics to be followed by mediator; and Rule 28 : Transitory provisions, for urgent preparation of mediation panels.

Immediately thereafter, the High Courts started establishing Mediation Centres. Justice A. P. Shah, the then Chief Justice of the Delhi High Court, initiated the Delhi High Court Mediation Centre and was named ‘Samadhan’, and the first training workshop was held in March 2006. I was actively involved with this Centre from the beginning. The Bangalore Mediation Centre commenced in the year 2007. Hon’ble Mr. Justice Cyriac Joseph, Former Judge, Supreme Court of India and the then Hon’ble Chief Justice, High Court of Karnataka, was the founder.

My experience with mediation was with a matrimonial dispute to begin with and then on the issue of custody of a child, where the parents were at loggerheads. The first one was settled amicably, while the second one became very complicated with the issues of confidentiality and the welfare of the child.

And now ‘mediation’ gets full statutory recognition, as ‘arbitration’ has by the Arbitration and Conciliation Act of 1996; and now added to that are, the pre-litigation mediation (section 5), online mediation (section 30), community mediation (section 43 & 44), conciliation treated as mediation (sections 55, 56 & 61 r/w Schedule VI to the Act of 2023), and International mediation (section 2(iii), 3(g), 4(6) and 37(a), (b), (g) & (h).

If one may ask what exactly mediation is, I must say, it is a process in which a neutral third party assists the participants in resolving their disputes through a series of joint and separations sessions. The focus is on the problem and the parties get enough opportunity to express their grievances. It involves certain amount of bargaining, in order to arrive at an amicable solution to the problem. The mediator assists the parties to go to the root of the problem to find a solution, and for that purpose he may throw light on the rights, obligations, and liabilities, both in law and in the circumstances of the case, and also on the hidden dangers involved in, if the parties remain adamant with the dispute without co-operating for a solution. The process may involve certain amount of bargaining and apologies to dilute the ego that often propels the parties to maintain the ongoing fight. One of the parties may have to surrender certain perceived rights to maintain and restore healthy relationship between the parties. One may have to sometimes say sorry to the other if circumstances warrant. The effort of the mediator is to give expressions to the willingness of the parties to restore the pre-existed amicable relationship, based on ultimate human values which alone brings about true peace and prosperity.

Mediation presupposes certain amount of equality of the disputing parties. Even Gandhiji took initiative to maintain the welfare of the textile labour, as a part of his struggle for independence, and he was willing to play the role of a mediator to resolve the conflicts between the workers and the management of the Ahmedabad Textile Industry, in 1920 and succeeded by resorting to collective bargaining in favour of the workers. It was impossible to achieve that, if the workers were left alone to deal with the issues, in their individual capacity. It is for that reason that ordinarily the family disputes or commercial transactions that begins with a contract, were considered fit for mediation.

The next question is what are the disputes that can be referred and what are the disputes that cannot be referred for mediation under the Act. The scheme of the Act of 2023 is that all disputes which have arisen, or which may arise between the parties, unless declared as not fit for mediation (section 6 r/w Schedule I), can be referred to mediation [section 4(1)], and there shall be a mediation agreement in writing either independently or referred to in any document or contract.

In case of international mediation, the subject matter of the mediation agreement shall be a ‘commercial dispute’ as defined in the Commercial Courts Act, 2015, which is defined with 22 categories. This is given at the end as an Enclosure to this address.

The disputes that are declared as not fit for mediation are:

1. Disputes that are expressly prohibited as not fit for mediation.
2. Disputes that relate to claims against minors or deities;
3. Disputes against persons with intellectual disabilities under the Rights of Persons with Disabilities Act, 2016 (49 of 2016);
4. Disputes against persons with mental illness under the Mental Healthcare Act, 2017 (10 of 2017);
5. Disputes against persons of unsound mind, in relation to whom proceedings are to be conducted under Order XXXII of the Code of Civil Procedure, 1908 (5 of 1908);
6. Suits for declaration of title against Government.
7. Suits for declaration having effect of right in rem.
8. Disputes involving prosecution for criminal offences, with one exception, i.e., whenever one finds that it is appropriate to refer any dispute relating to compoundable offences including the matrimonial offences which are compoundable and pending between the parties, the court may then refer the matter to mediation.
9. Complaints or proceedings, initiated before any statutory authority or body in relation to registration, discipline, misconduct of any practitioner, or other registered professional, such as legal practitioner, medical practitioner, dentist, architect, chartered accountant, or in relation to any other profession of whatever description, which is regulated under any law for the time being in force.
10. Disputes which have the effect on rights of a third party who are not a party to the mediation proceedings except only in matrimonial disputes where the interest of a child is involved.
11. There are eight other categories of disputes where proceedings fall under the jurisdiction of a specific enactment, where:

(1)  The Tribunal constituted under the National Green Tribunal Act, 2010 (19 of 2010)

(2) Any dispute relating to levy, collection, penalties, or offences, in relation to any direct or indirect tax or refunds, enacted by any State legislature or the Parliament.

(3) Any investigation, inquiry or proceeding, under the Competition Act, 2002 (12 of 2003),

(4) proceedings under the Telecom Regulatory Authority of India Act, 1997 (24 of 1997).

(5) Proceedings under the Electricity Act, 2003 (36 of 2003).

(6) Proceedings under the Petroleum and Natural Gas Regulatory Board Act, 2006 (19 of 2006).

(7) Proceedings under the Securities and Exchange Board of India Act, 1992 (15 of 1992). And

(8) Proceeding under land acquisition laws.

A few remarks on the present Act of 2023 may not be out of place. One, the mediation is resorted for a quicker, more accessible and as a cheaper alternative to conventional settlement of disputes including litigation. The present Act in Section 28 permits challenging of the settlement agreement on four grounds:

“Sec. 28 (2) A mediated settlement agreement may be challenged only on all or any of the following grounds, namely:— (i) fraud; (ii) corruption; (iii) impersonation; (iv) where the mediation was conducted in disputes or matters not fit for mediation under section 6…”

The question is after the parties agree for a negotiated settlement, what remains for further challenge of that agreement between the parties. Normally no compromise agreement is further challenged in any ground what-so-ever. Probably, these provisions are just borrowed from the Arbitration Act of 1996. But by the present Act of 2023, conciliation of that 1996 Act has been replaced by mediation under this Act, and there were no further provisions for challenge of a settlement agreement after the same was arrived at during conciliation. Therefore, this provisions for incorporation of challenge procedure against the settlement agreement seems to be superfluous. And the same will go against the principle that mediation is a quicker, more accessible and a cheaper alternative to conventional settlement of disputes including litigation.

It is to be noted that 28 Rules formulated by the Civil Procedure Mediation Rules, 2003, as found in the second Salem Advocates Bar Association case in the year 2005, there was no such Rule for challenging the settlement agreement included in it.

Two, in the new Act there is a provision for registration in Section 20 of the Act:

Sec.  20 “(1) ….the mediated settlement agreement…… be registered with an Authority constituted under the said Act, or any other body as may be notified by the Central Government, in such manner as may be specified and such Authority or body shall issue a unique registration number to such settlement agreements:…”

“(2) The registration referred to in sub-section (1) may be made by the parties or mediation service provider within a period of one hundred and eighty days from the date of receipt of authenticated copy of mediated settlement agreement:

Provided that mediated settlement agreement may be allowed to be registered after the expiry of period of one hundred and eighty days on payment of such fee as may be specified in consultation with the Authority or any other body referred to in sub-section (1).”

This time period of 180 + 180 days does not seem to be in tune with the principle that mediation is a quicker, more accessible and a cheaper alternative to conventional settlement of disputes including litigation.

Three, the second observation is with reference to Section 27 of the present Act provided for the enforcement of the mediated settlement agreement, which reads as follows:

“Sec. 27 (2) Subject to the provisions of section 28, the mediated settlement agreement shall be enforced in accordance with the provisions of the Code of Civil Procedure, 1908, in the same manner as if it were a judgment or decree passed by a court, and may, accordingly, be relied on by any of the parties or persons claiming through them, by way of defence, set off or otherwise in any legal proceeding….”

It actually means that all the prolonged execution procedures contained in the Order 21 of CPC brought back into this mediation Act, which is against the avowed purpose of having quicker, more accessible and a cheaper alternative to conventional settlement of disputes including litigation, by mediation.

Again, it is to be noted that even in the Arbitration Act of 1996, the legislature had carefully avoided bringing in the provisions of CPC for enforcement of the award, and very strict procedures are given there, and that was further made more strict by the latest amendment so that the provisions of CPC are kept at bay as the same has an inbuilt tendency to prolong the procedure by bringing in Order 21 of the CPC for execution of a settlement agreement.

Among the 28 Rules formulated by the Civil Procedure Mediation Rules, 2003, as approved in the second Salem Advocates Bar Association case in the year 2005, there was no such Rule for the enforcement of a mediated settlement agreement, included in it.

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* A Senior Advocate in Supreme Court, presently settled in Bangalore.