An analysis of India’s Mediation Bill, 2021

Jan 14, 2022

Background

In December 2021, the Union Law Minister tabled the draft Mediation Bill (the “Bill”) in parliament.  Due to significant opposition, the Bill was sent to the Committee on Law and Justice for further scrutiny.  This article lists out some salient features of the Bill.

Salient features

  • Section 6 of the Bill proposes that parties to a civil or commercial dispute must take steps to settle their dispute through pre-litigation mediation before approaching a court of law.  Additionally, courts and tribunals are proposed to be given powers to refer parties to mediation and pass suitable interim reliefs to protect the interests of the parties to a court case pending completion of mediation proceedings. 
  • Potential mediator appointees will have to disclose any conflict of interest that may raise questions about their independence and impartiality.  The Bill gives a right to parties to terminate any mediator if he/she has given false or incorrect information on conflict of interest.
  • Section 22 of the Bill proposes to introduce an agreement known as “Mediated Settlement Agreement” (the “Agreement”) as a culmination of mediation-related disputes. The Agreement shall be final and binding once it is signed by the parties and authenticated by the mediator.  This Agreement will be enforceable like a judgment or decree under the provisions of the Civil Procedure Code.
  • Section 29(2) of the Bill allows an aggrieved party to challenge the Agreement in a court or tribunal of competent jurisdiction in the event of fraud, corruption, gross impropriety, or impersonation.
  • The Bill proposes the establishment of a Mediation Council of India (the “Council”) as a body corporate to promote and regulate domestic and international mediation in India. Members of the Council are proposed to be selected from among Supreme Court or High Court judges, eminent persons and academicians in the field of mediation, and key government officials.
  • Section 23(1)(iii) of the Bill makes mediation an effective tool to maintain the confidentiality of a dispute, as documents produced during mediation will not be admissible as evidence in any court or tribunal.  However, this can be somewhat problematic if one party decides to sue the counterparty following a failed mediation and is prevented from introducing key documents into evidence in court simply because they were a part of the mediation proceedings.
  • Chapter 10 of the Bill recognises community mediation as a resolution mechanism for community-related disputes that are likely to affect the peace and harmony among families or people of any area or locality. A three-mediator panel can be constituted and notified by the concerned authority, which can include persons of high integrity and standing in the community or representatives of welfare associations.
  • Prior written consent of the competent government authority will be required to sign an Agreement to which the government is a party.  Moreover, actions taken in good faith by the central or state government, its officers, members of the Council, mediation institutes, or mediation service providers, cannot be challenged and shall be free from any legal proceeding. 
  • To streamline the implementation of mediation in India, the Bill proposes to amend certain key legislations, including the Indian Contract Act, the Arbitration and Conciliation Act, and the Code of Civil Procedure.
  • The Bill has not been divided into four (4) parts as was the case with the earlier draft and does not address the enforcement of international commercial settlement agreements. 

Scope of mediation

The term “mediation” entails pre-litigation mediation, online mediation, and conciliation.  The time limit for a mediation proceeding shall be 180 days from the date of first appearance before the mediator.  A person of any nationality can be a mediator under the Bill, provided that a foreign mediator’s qualifications satisfy the requirements as may be specified by the Council.  Moreover, the parties shall be free to determine the procedure for the appointment of a mediator(s) or whether to us a mediation service provider as a mediator.

Chapter 7 of the Bill regulates online mediation, which includes pre-litigation mediation conducted through apps and computer networks.  At any stage of mediation, parties can opt for online mediation, the Council has been given the right to frame laws to govern the manner in which online mediation is conducted.

Lok Adalats and permanent Lok Adalats can also conduct mediation proceedings in accordance with the provisions of the Legal Services Authorities Act, 1987, and the rules and regulations made thereunder.

Conclusions

The government’s attempt to have a standalone mediation law is positive because of the beneficial effect it will have in reducing the backlog of cases in the Indian judicial system.  However, clarity needs to be provided on which entities will be recognized by the Council as mediation service providers.  In addition, the applicability of pre-litigation mediation will be a challenge for disputants who may prefer to litigate.  Therefore, the Bill should give a choice in this regard and specify that only certain types of disputes should be directed for pre-litigation mediation.

About the Author

Neerav-New-Main

Neerav Merchant, Partner at Majmudar & Partners has over 22 years of experience in dispute resolution, arbitration, litigation, enforcement of foreign judgments and awards, asset recovery, technology and telecommunication, intellectual property, employment, anti-corruption, and real property matters.

He regularly speaks at several international forums, including seminars and conferences hosted by Asian Legal Business, International Bar Association, and Law Society of England and Wales. He is on the panel of arbitrators of Mumbai Centre for International Arbitration.

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