A paradigm shift

What the world needs the most as of now, India has just obtained it — a mediation law. The Mediation Act, 2023, received the assent of the Hon’ble President on September 14, 2023, and the Act was published via notification a day later by the Ministry of Law and Justice. Mediation reduces the longevity of a dispute, relieves the burden on courts, and, most importantly, saves time and costs for the parties. The Act is an absolutely progressive step at the individual level as well as for the economy at large.

The concept of conciliation in India is age-old. Mediation is defined to include a process where parties request a third person, called a mediator, to assist them in reaching an amicable settlement. The Industrial Disputes Act, promulgated in the year 1947, refers to conciliation before initiating disputes. It was also used by the panchayat system for resolving community conflicts. The Code of Civil Procedure, 1908, allows courts to suggest various methods of dispute resolution, including mediation. This provision has been widely accepted and implemented, resulting in the establishment of various mediation centres and pre-litigation cells. The new Act has provided even more defined structure and is a solution-based approach.

Our legislature, in line with the standard of disclosure adopted under the United Nations Commission on International Trade Law (UNCITRAL) Model Laws, has included provisions clearly indicating that the mediator has no favourites. The intermediary is required to disclose in writing any circumstances, whether financial, personal, professional, or otherwise, that may give rise to any conflict of interest or justifiable doubts as to their independence, impartiality, or bias. A mediator so appointed cannot act as an advocate, arbitrator, counsel/representative of a party, or even be presented as a witness in any proceeding. Thus, the mediation proceedings are absolutely confidential and remain within the mediation room.

The Mediation Act provides a list of disputes and claims not fit for negotiation, such as the prosecution for criminal offenses, relating to the levy, collection, penalties, direct/indirect tax or refunds; any investigation, inquiry, or proceeding; disputes relating to claims against minors, deities, or persons with disabilities as specified; suits for declaration of title against the government; complaints or proceedings initiated before any statutory authority or body in relation to professionals; disputes that affect the rights of a third party not party to the case, except in matrimonial disputes where the interest of a child is involved; any proceeding falling within various jurisdictions as prescribed under the Act, as well as before statutory authorities; etc. The Act has been carefully framed to avoid misuse.

Any court or tribunal may, at any stage of a proceeding, refer the parties to undertake mediation, irrespective of whether there is an agreement for such proceedings or not. The court or tribunal may pass appropriate interim order/s in such court-referred mediations to protect the interests of any party, if it deems necessary. The Mediation Act is intended to cover civil as well as commercial disputes, including commercial disputes in which the Government or its agencies are a party. It also refers to disputes relating to compoundable offenses, including matrimonial offenses, with the caveat that it shall not be deemed a judgment or decree of the court, and the outcome must be seen by the Court.

The statute lays down a time-bound procedure for conducting mediations, provides for enforcement, and establishes a regulator to oversee mediators and mediation institutions. The parties have the option to withdraw from proceedings at any point. A settlement agreement arrived at in mediation can be challenged by either party before the court or tribunal of competent jurisdiction by filing an application within the prescribed time period, inter alia on grounds of fraud, corruption, impersonation, or if the dispute is not fit for mediation. There is also no compulsion to settle; it is entirely voluntary.

Some disputes cannot be settled and need to be firmly dealt with. It should be noted that criminal prosecutions and wrongdoing will not be condoned because of the Act.

The new legislation is a breakthrough and a game-changer in the way parties approach and resolve disputes. In some cases, the tendency to follow the crowd may have a positive impact, fostering peace and harmony. The institutionalisation of the mediation process is a boon for our vast population. The Act, in many ways, also facilitates the ease of doing business in India by simplifying certain litigations, which may attract greater foreign direct investments.

The writer is a practising Advocate in Supreme Court and High Court of Delhi. Views expressed are personal