Why the Mediation Act 2023 is a great leap forward

An Alternative Dispute Resolution mechanism tries to solve legal disputes, but outside of the court system.

With a pendency of approximately 4,40,81,975 cases in the country – 87.4 percent in the District Courts, and 12.4 percent in the high courts, the Indian judicial system has been searching for a viable Alternative Dispute Resolution (ADR) mechanism. An ADR mechanism tries to solve legal disputes, but outside of the court system.

In 1996, Parliament enacted the Arbitration and Conciliation Act. While reframing the law on arbitration, this Act introduced “conciliation” as another alternative means to solve legal disputes. But in order to ensure ease of doing business in India, the Parliament has recently enacted the Mediation Act, 2023. With its enactment, the ADR system has been strengthened. It is a leap forward.

The Mediation Process

Mediation has an ancient ancestry; but in its modern form, it was born in the USA. Mediation is a system where a dispute between two parties is resolved by a mediator, who is a neutral person. The mediator facilitates the disputing parties in reaching an amicable solution.

In mediation, since both the parties agree to refer their differences to a neutral third party, the process is completely voluntary. It is also completely confidential. In fact, the mediator is legally bound to maintain not just the confidentiality of the proceedings, but more so the confidentiality of his conversations with each of the parties.

Since it is a speedy and an inexpensive method of resolving the problems, in few European countries, such as Italy and Greece, mediation is mandatory: no civil suit can be filed unless the parties first go through the mediation process.

The Mediation Act 2023

In India, mediation was sprinkled in different statutes. But we did not have a standalone law on mediation. The Mediation Act, 2023 has filled this glaring lacuna. The architecture of the Act has provided for the establishment of the Mediation Council of India, Mediation Service Providers, and Mediation Institutes.

It also provides for online mediation, and community mediation. It contains provisions for mediation agreement, for appointment of mediators, either by the parties themselves, or by the mediation service providers or by the mediation institutes. It not only deals with mediation proceedings, but also with the enforcement of the mediation settlement agreement.

Under certain circumstances, the Act makes pre-litigation mediation mandatory: in commercial disputes where no interim relief is sought; in motor vehicle accident claims before the Motor Accident Claims Tribunal. But in other civil cases, the parties may go for mediation at the pre-litigation stage.

It also carves out areas where mediation is not allowed, such as criminal cases (except where the offence is compoundable), in cases against minors, or persons of unsound mind, or cases affecting their party rights.

The Act deals with both domestic and foreign mediation. It prescribes that the mediation process should end within 180 days. However, the said period can be extended for another 180 days. The Act, therefore, provides a speedy, inexpensive remedy for resolving the lis between the parties.

Pros And Cons Of Mediation

* It provides for a speedy and cost-effective alternative method for resolving a civil/commercial dispute.

* It provides for online dispute resolution. This would make both national and foreign mediation very cost effective.

*It provides for community mediation. Considering the rift which may develop between different communities, both of caste and of faith, the mechanism for community mediation is an excellent idea. It is an idea out of the box.

However, on the negative side:

*The mindset of the people needs to change from litigation to mediation.

* Mediation should be made compulsory in all civil and commercial cases.

* Presently, a mediator is required to register with various mediation organisations: with the Mediation Council of India, with the court-annexed mediation centre, with a recognised mediation service provider, and with the Legal Service Authority.

* Training of mediators needs to be undertaken.

*  According to NITI Aayog, only 55 percent of India has access to the internet. With inaccessibility to digital infrastructure, the benefit of online mediation will take some time to percolate.

* The enforcement of international settlements under the Singapore Convention continues to be a grey area.

The benefit of mediation is clear and obvious. In 2010, Italy had a pendency of eight million cases. After making mediation compulsory in civil and commercial cases in 2011, nearly 50 percent of litigants accepted the invitation for mediation. With the introduction of mediation, hopefully the pendency will drop sharply in India as well.

Justice RS Chauhan (Retd.) was Chief Justice of the Telangana and Uttarakhand High Courts. Views are personal, and do not represent the stance of this publication.