The Indian Mediation Act, 2023 has been long over-due and holds much promise in addressing the pendency of cases in India. While India has been steadily climbing up the ease of doing business rankings, contract enforcement remains a troubling issue. Whether the Mediation Act of 2023 manages to address this issue and encourage parties to settle out of courts thereby reducing the burden on the judicial infrastructure, only time will tell. However, it is certainly a watershed moment for Indian mediation.
Statutorily mandated mediations seen in numerous stages of pre-litigation such as family courts, commercial courts and others have often failed, as parties remain litigious. While the Commercial Courts Act, 2015 mandated pre-litigation mediation, it provided a carve out in the event parties needed urgent interim reliefs. Accordingly, applications seeking urgent interim relief were used as a tool to circumvent the mandatory pre-litigation mediation requirement.
Mediation as a conflict resolution mechanism depends on trust and cooperation. Mediation is the anti-thesis to the adversarial court process, that places premium on cooperation, communication, and compromise. It requires parties to collaboratively work under the guidance of a neutral third party, to mutually achieve an acceptable resolution. The codification and institutionalization of mediation through the Mediation Act recognizes the comprehensive policy framework which promotes the practice of mediation. However, mediation can only reach its full potential when there is awareness and acceptance of it as a legitimate dispute resolution mechanism by the general populace.
Based on the recommendations of the Standing Committee on Personnel, Public Grievances, Law and Justice, constituted by the Parliament, numerous revisions were suggested to what was then, the 2021 Mediation Bill, out of which some where incorporated in the Mediation Act, 2023. A key recommendation included in the final Act was removal of the “mandatory” requirement and making it “voluntary”. However, given India’s experience with mediation, parties may not readily “volunteer” thereby negating some of the positives that the Mediation Act, 2023 hopes to achieve. This sparks a compelling debate as to whether the legislature could have drawn inspiration from other jurisdictions which have seen success in making mediation an integral part of their dispute resolution regimes. One such example is the United Kingdom which incorporates a quasi-mandatory element into its framework.
The UK Model
In the United Kingdom, while mediation has been encouraged for ages, the government has recently introduced compulsory mediation for certain claims falling below £10,000. The British mediation system employs a unique approach that allows parties of a dispute to benefit from a free of cost, hour-long mediation telephonic session with a mediator provided by His Majesty’s Court and Tribunal Services. On an agreement during this mediation session, the same is made binding on the parties through a settlement agreement. This approach strives to strike a balance between respecting individual autonomy and ensuring that parties involved explore mediation before resorting to litigation. It also makes it easily accessible to parties and is extremely cost effective. Moreover, since it is court monitored, it endeavors to balance the interests of both parties.
To encourage mediation in claims where compulsory mediation is not applicable, the British justice system has implemented measures requiring the party refusing to mediate to provide sufficient reasons including no reasonable chances of success on an objective view. The Civil Procedure Rules of the United Kingdom include provisions whereby refusal to mediate could result in penalization through costs if the court concludes that successful mediation was foreseeable. The Civil Procedure Rules also include elaborate provisions incentivizing parties to consider mediation at various stages, prior to and during on-going litigation. Judicial time is given paramount importance under the Civil Procedure Rules with heavy costs imposed on the party refusing to settle, if the Courts find that such a party could easily have settled. A robust incentive and costs regime has encouraged parties to explore and benefit from mediation in the United Kingdom.
A pertinent question emerges: Could the Indian legislature have contemplated adopting a similar approach, wherein mediation is actively encouraged and recommended through such an incentives and costs model?
In its current form, the Mediation Act offers mediation as an entirely voluntary process. Parties retain the autonomy to opt for or against participation in the mediation process. While this approach respects individual liberty and the freedom to choose, it may possibly result in underutilization.
One of the primary challenges encountered with previous attempts at imposing mediation on parties in India has been the cultural inertia, limited awareness and understanding of alternate dispute resolution practices and their benefits. Many litigants and legal practitioners are more comfortable with adversarial court processes, displaying hesitancy toward exploring mediation as an alternative. Parties in India remain litigious, contributing to overcrowded court dockets and protracted legal proceedings.
Given the above, the voluntary provision in the Mediation Act, 2023 may act as an impediment to its success and may foster power imbalances among the parties. In situations where one party possesses greater financial resources or superior legal knowledge, they may use these advantages to dissuade the weaker party from engaging in mediation, potentially undermining the foundational principles of fairness and equality that mediation strives to uphold.
The UK Mediation model, characterized by its quasi-mandatory stance, offers a multitude of advantages. Using incentives and costs either through statute or through Court Orders would go a long way in giving parties the added push to consider mediation instead of burdening the courts. Parties retain the ultimate decision on whether to proceed with mediation, respecting their autonomy while propagating the benefits of ADR.
While the Mediation Act, 2023 signifies a crucial stride towards promoting mediation as a dispute resolution method, the voluntary nature of mediation does present certain challenges. The British mediation model, distinguished by its mandatory approach, and an incentive and costs regime, offers valuable lessons. By amalgamating the merits of individual autonomy with the advantages of mediation, India could potentially establish a more effective framework that mitigates the burden on courts, diminishes litigation costs, and cultivates a culture of harmonious dispute resolution.
While there will always be scope for improvement, the fact remains that the Mediation Act, 2023 is a massive step in the right direction. These are certainly exciting times ahead. Only time will tell how the legal landscape evolves in this regard. It is now for all stakeholders involved to steer it towards the goal that it is intended to achieve.
Contributors: Anjali Sharma, Shalvika Nachankar, Siddharth Ratho