Indian Dispute
Resolution System: Is Mediation the way forward? A special focus on mediation
in commercial matters.
Introduction
The adversarial
type of litigation has dominated the Indian dispute resolution system.
Arbitration has evolved as one of the alternatives to the usual court system.However,since it is also an adversarial dispute resolution system, one party always wins the matter and the
other party loses. Further with the
advent of COVID-19, the already high pendency of litigations is on a new high
and it is an appropriate time to discuss
the role and scope of alternative dispute resolution mechanisms, which would
provide a more robust, cost effective, and speedy method of resolving the
disputes; and answer to all this is perhaps
one of the oldest form of settling the disputes. The answer is mediation.
What is mediation?
Mediation is a process in which via a trained
professional i.e. a mediator, parties themselves negotiate and arrive at a
mutually agreeable settlement to their disputes and differences. Black’s Law
Dictionary defines Mediation as a method
of non binding dispute resolution involving a neutral third party who tries to help the disputing parties to reach a
mutually agreeable solution. Mediation is therefore
a process aimed at finding a middle path amidst the dispute between the parties
so that a mutually acceptable solution can be
worked out. It is a non
adversarial approach towards dispute resolution and is a well recognized ADR process all over the globe. The object of mediation process is to reduce tensions and posturing,
enabling the parties to realize and understand their priorities and interests
and steer them towards a self determined
and acceptable resolution. Role of mediator
in this process is to facilitate
the negotiation between the parties and leadpartiestowards the amicable
resolution of the disputes or differences between them.
The Need for Mediation in Commercial
Matters
One of the major
hurdles faced by the Indian judicial system is the pendency of cases As per the
statistics provided by the National Judicial Data Grid there are around 3.3
crore cases which are still pending. Further, with the advent of COVID-19 and
the courts taking up only ‘urgent’ matters, the situation is likely to worsen.
Furthermore, as far as, arbitration is concern it takes at least around two years to receive the first award,
however, the same will be subject to challenge in High Court and thereafter in
Supreme Court. All these permutations and combinations tilt the scale in favour
of mediation. Commercial firms and specially startups,
MSME and emerging companies should be encouraged to take up mediation as a
dispute resolving mechanism. Recognizing this, from August 2018, Pre-litigation
Mediation has been made mandatory for commercial disputes in India, under the
Commercial Courts Act, 2015. Further, Mediation is also globally gaining
importance as an Alternate Dispute Resolution mechanism.
Mediation is more
discussion-oriented and arbitration is more litigation based. Mediation is a
good first step in trying to resolve business disputes. It is an easy and
cost-effective step that seeks to maintain business relations between the
parties by putting forth an agreeable solution. Moving straight to arbitration
is a way of acknowledgement of loss of control over the situation. Arbitration
is a good way to settle the dispute if mediation does not work effectively or
the parties cannot bring themselves to work out a solution that benefits both
of them. Thus, both are an essential step of resolving business disputes.
Arbitration should follow mediation.
One of the key
drawbacks of arbitration is that clause in which it is written that the seat of
arbitration is in Singapore and the laws will be of U.K. which becomes
problematic not only for clients but also for the judges. In contrast to above,
mediation in “ADR” is seen as a
medium to douse the fire and putting disputes to a conclusion.
Mediation is a
mechanism to repair relationships whether they are commercial or matrimonial.
In the case of individuals, there is always an opportunity to talk and
reconcile but in the case of multinational companies, there are big guns, power
play, no connection and nothing personal between parties. In this whilst of
technological world they might had executed the agreement on mail, or might on
a video conference .Therefore, in absence of personal connection between the stakeholders
leaving no scope for negation, thereby, the disputes become larger.
In such a scenario,
a trained mediator comes to play when the parties and their representatives do
not take a stand and just come to watch the process. Thus, the mediators are trained
to touch upon the reality and the problem.Further, after normalcy and walk of
life resumes, the courts and tribunal come to rescue however, the litigants may
face practical difficulty in filling the petition and passed orders on judicial
side protecting the right to institute processing belatedly bring the scope of
mediation
Role of
the Mediator
The role of the mediator is to only
assist the parties involved. One of the
main functions of the mediator is to remove the obstacles in the communication
of the parties,assist in the identification of the issues and to reach at a
mutually agreeable agreement. The powers of the mediator are just limited to
facilitate with the communication and the mediator cannot compel a party to
make a particular decision or in any other way impair or interfere with the
party's right ofself-determination. Mediation is all about facilitating or
assisting negotiation between the parties. Mediation works between the parties
because it gives chance to the parties to come to a settlement where both
parties do not have to compromise their rights instead leads to a better
solution.
Benefits of Mediation
·
Speedy Settlement
One of the key
imperative advantages of mediation over tradition dispute resolution methods is
that mediation being an informal process takes less time to reach a settlement
between the parties. It is essentially a type of a negotiation between the
parties facilitated by an independent expert known as a mediator.
·
Cost
Effective
One of the key frameworks
which mediation over other dispute resolution mechanisms is that when it comes to cost is perhaps
the most effective system. There are
no stamp duties obligation involved.
Similarly,
the role of the lawyers is also
quite limited and parties if they are
well versed with the facts of their dispute can also forego the services and
can handle the dispute on their own taking the help of the mediator in coming to an agreeable settlement. Fees
of mediators and institutions conducting the Mediation are competitive
generally based on the amounts in dispute.
·
Win-Win Situation
The best thing
about the mediation process is that nobody succeeds or fails. This is so
because the parties themselves come to a solution which is mutually amicable solution
to both of them. However, in the case of arbitration the arbitral award is
passed in favor of one of the parties. This is in turn spoils the relationships
between the parties.
·
Maintenance
of Privacy and Confidentiality
Unlike court or arbitration, (unless it
is agreed in the contract that arbitration will be confidential), the Mediation
is private and confidential. The discussions or negotiations between the
parties would not go beyond the four walls, even if parties could not arrive at
an amicable solution to their disputes. In case parties fail to arrive at
resolution to the dispute in Mediation, during court or arbitration proceedings
such discussions and negotiations between the parties are not recognized as
evidence.
Let us take Dispute online: Modern version of the ancient technique
Currently with the advancement in
technology, all the three main ADR techniques-Arbitration, Conciliation and
Mediation- are available with an online option. Whilst all the three are
beneficial as against traditional litigation as discussed earlier, yet Online
Mediation has a significant advantage over Online Arbitration when it comes to
overall turnover rate and effortless dispute resolution.
There are basic two-fold benefits of opting for Online
Mediation:
·
Efficiency:
The litigants need not travel to the Mediation Centre/Facility, more focused
environment is provided by online mediation by establishing tighter deadlines
for settlements; e.g., Online Consumer Mediation Centre at National Law School
of India University strives to complete the mediation process within 21 days.
·
Comparatively more informal than the traditional Mediation Process: The ability of litigants negotiating
during the online mediation have the special advantage of being more candid
with their settlement offers. This is achieved by eliminating the factor of
posturing. With the removal of posturing, the focus of parties is concentrated
towards solving the dispute rather than forming a rapport using physical
posturing. This sole thing makes online mediation process more efficient.
There are a number of organizations that provide online
mediation facilities in India currently. According to a circular posted on
Department of Justice’s (Ministry of Law & Justice, Government of India) on
13 September 2018, department suggested for the Governmental departments and
Organizations to explore other domains for settlement of disputes, i.e., Online
Dispute Resolution (ODR). This suggestion came after the figure that out of
pendency of 3.3 crore cases, 46% of the cases involve Government Agencies.
Department provided a list of
fourteen organizations that specialize particularly in the field of online
mediation. This clearly show the intention of Government for pushing towards
online mediation. The organizations are:
1. ASSOCHAM International Council of
Alternate Dispute Resolution (AICADR)
2. Bangalore International Mediation,
Arbitration and Conciliation Centre (BIMACC)
3. Centre for Advanced Mediation
Practice
4. Construction Industry Arbitration
Council
5. Delhi Dispute Resolution Society
(DDRS)
6. Indian Institute of Arbitration &
Mediation
7. International Centre for Alternate
Dispute Resolution (ICADR)
8. International & Domestic
Arbitration Centre in India (IDAC)
9. Mumbai Centre for International
Arbitration
10. NaniPalkhivala Arbitration Centre
(NPAC)
11. ODRways
12. Online Consumer Mediation Centre
13. Presolv360
14. Centre for Mediation &
Conciliation (CMC), an initiative of Bombay Chamber of Commerce and Industry
Every organization
has its own set of rules that resemble in parts with the Delhi High Court
Mediation Rules with respect to overall structure and function. For example,
the Mediation Rules at Online Consumer Mediation Centre, National Law School of
India University has its own set of rules regarding how mediation at their
centre operates.
The organization’s
role here is to provide with the possible online infrastructure to facilitate
the process. Role of mediator remains the same of a facilitator in the process
of mediation.
One factor that is common among all the organizations that facilitate
mediation process is that the final settlement agreement drawn in private
mediation is drawn according to section 73 of The Arbitration and Conciliation
Act, 1996. Section 73 sets out directions for drawing out settlement agreement
in the case of Conciliation proceeding. Hence, it would not be wrong to say
that although there are set differences in the textbook meanings of Mediation
and Conciliation, yet the terms are used interchangeably in case of private
mediation.
Under the ongoing scenario of COVID-19, Online Mediation/Conciliation can
make a huge difference when it comes to solving disputes. Everything from
filing complaint/request to appearing in front of Mediator/Conciliator can be
done without stepping out of residences.
Conclusion
In the light and scope mention above, we agree that no business is in
the business of dispute. Disputes are irrupted primarily due to ego issues,
differences in execution of contracts, lack of regular communication between
the parties, trust issue and also due to economic compulsion arising out
of force majeure events like COVID-19. The COVID-19 outbreak has disrupted the business
globally and there is
a possibility of arising differences or disputes between the parties to the
contract after COVID-19 on various contractual issues unless parties act
sensibly. Businesses must take into consideration that COVID-19 is a bad patch
and occasional, whereas maintaining business relationship is critical for
sustaining the business from long term perspective. Under the circumstances,
Mediation would be a useful mechanism wherein parties may address their
disputes without approaching the courts or arbitration. Regardless
whether the parties have a Mediation clause in the agreement, parties may
endeavor for amicably agreement to make an attempt to refer the dispute to the
Mediation.
Businesses must take into consideration that COVID-19 is a bad patch and
occasional, whereas maintaining business relationship is critical for
sustaining the business from long-term perspective. Mediation could be a useful
mechanism to address disputes.
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AUTHOR: ABHISHEK BHATI
Compiler and
Editor: Policy Document on Mediation for
Mediation & Conciliation Project Committee, Supreme Court of India and
Indian Council of Social Science Research
Research
Assistant: Research Project titled ‘Effectiveness
on Mediation’, funded by Ministry of Law & Justice.
Research Assistant:
Book on Mediation titled Mediation by
Law Centre-II, Faculty of Law, University of Delhi)
Contact: +91-9654041529
AUTHOR: GURKARAN SINGH
From a CA aspirant, to pursuing bcom hnrs,from
someone working at Pwc to someone pursuing law from Faculty of Law Delhi
University, life has been a roller coaster ride for Gurkaran Singh. Presently
he is pursuing Law from Law centre 2 Delhi University. He has authored a policy
document for ministry of law and justice. He has also worked as a research
assistant on a book on mediation
Disclaimer:
No reader should act on the basis of any statement contained herein without seeking professional advice. The results & the interpretation has been done on the basis of my understanding of the Act & Rules, where applicable and with reference to the general articles and analysis. The author explicitly disclaims any financial or other liability of any kind arising on account of any action taken pursuant to the results or interpretation of this document. With respect to information available herein before, the author doesn’t make any warranty, express/implied or assume any liability or responsibility for the accuracy, completeness, or usefulness of such information.
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