Indian parliament approves new Mediation Bill

Last week saw a flurry of activity around the announcement that both houses of the Indian parliament had passed the Mediation Bill.

The text of the bill, as passed by parliament, is not available yet. What is available is the text of the bill as introduced in parliament nearly two years ago in 2021. This text sets out some important proposals on both when and how mediation should be used.

Mandatory pre-litigation arbitration

  • The draft text proposes that parties “take steps to settle [any] disputes” by pre-litigation mediation before approaching courts for any civil or criminal disputes, whether or not a mediation agreement exists.
  • Parties would not be obliged to come to a settlement in a pre-litigation mediation process, and could withdraw from mediation at any time after the first two sessions. However, even if they failed to reach a settlement, the court could at any point refer the parties back to mediation at their request.
  • The bill carves out an exception for some disputes which it feels are not suitable for mediation, such as those affecting third-party rights, and those involving criminal prosecution.
  • The bill suggests that the parties may approach a court for urgent interim relief before commencing or during mediation proceedings, in “exceptional circumstances”. In this case, the court could refer the parties to mediation if appropriate.

The regulation of mediation proceedings

  • The draft bill specifies a 180-day timeline to complete the mediation process whether contractual or pre-litigation, extendable by 180 more days if the parties agree.
  • It limits the mediator’s role to facilitating a voluntary resolution of the dispute, assisting in identifying issues, reducing misunderstandings, clarifying priorities, exploring areas of compromise and generating options for resolution.
  • According to the bill, the mediator can only facilitate resolution, and not impose any settlement.
  • The bill allows for mediation to be conducted online, through audio or video conferencing, secure chat rooms, and encrypted email services.
  • The mediation process should be confidential and parties should be prevented from using any communication or information from the mediation process in any court or arbitral tribunal.
  • The bill provides for termination of the mediation process in the following circumstances:
    • on signing of a mediated settlement agreement;
    • on a written declaration of the mediator, after consulting with parties, that further efforts at mediation are no longer justified;
    • if a party fails to appear before the mediator consecutively for the first two sessions without any communication;
    • if one party, after at least two sessions, says that they wish to opt out of mediation;
    • or, at the expiry of the prescribed time limit (of 180 days plus any agreed upon extension).
  • The bill proposes that any mediated settlement agreement should be final, binding, and enforceable in the same manner as a court judgment, and specifies limited grounds on which a settlement might be challenged.
  • The bill calls for the establishment of a Mediation Council of India, which would register mediators and recognise mediation service providers and mediation training institutes.

Between 2021 and 2023, the text of the bill appears to have undergone amendments. The bill was referred to the Standing Committee on Law and Justice in 2022, which recommended some modifications:

  1. Making pre-litigation mediation optional instead of mandatory, and introducing it in a phased manner.
  2. Reducing the timeline for mediation proceedings.
  3. Recommending that certain ambiguous terms in the legislation be clarified and defined, such as specifying what “exceptional circumstances” would allow a party to go to a court or arbitral tribunal for interim relief before or during mediation proceedings.
  4. Recommending that the bill be brought into conformity with the Singapore Convention on Mediation for cross-border enforcement of mediation proceedings.

Media reports suggest that several of the Standing Committee’s suggestions have been adopted, including making pre-litigation mediation voluntary instead of mandatory, and reducing the timeline for mediation to 120 days, extendable by a further 60 days. However, the text of the bill, as passed by the Lok Sabha, is still not available.

While more detailed commentary will need to wait until the text is published, on first view, several positives are evident.

Widespread adoption of mediation as an effective solution will help decongest India’s famously overburdened courts. Parliament’s decision to amend the law to make pre-litigation mediation voluntary and not mandatory is also a step in the right direction. Mediation, by its very nature, is voluntary, and the earlier text making it mandatory appeared to sacrifice a defining character of mediation in an attempt to unclog the courts. Parliament’s move to undo this is welcome.

On a practical scale, mediation can benefit parties even if it does not fully resolve a dispute. It can narrow the scope of disagreement, help parties identify specific issues needing judicial or arbitral determination.

It can also help parties to work out effective interim solutions that protect both parties’ interests and  parties are likely be more willing to comply with a mediated solution than a court-imposed one.

However, the success of the process depends as much on the parties as the procedure. No mediation, however well defined, can help parties who approach the process in bad faith, or who treat it as a box to be checked before the dispute winds its way to court or arbitration.

Photo: Photo 108620961 © Pattanaphong Khuankaew | Dreamstime.com

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