Introduction
Although mediation as a method of conflict resolution has been deeply embedded in Indian law, the parliament has made an effort to formalise mediation as an Alternative Dispute Resolution process in an effort to streamline it and recognise its growing importance in the life of a dispute.
On December 20, 2021, the Mediation Bill 2021 (the “Bill”) was introduced in the Rajya Sabha with the goal of promoting and facilitating institutional mediation, especially institutional mediation for the resolution of commercial or other disputes, enforcing “mediation settlement agreements”, creating a body for the registration of mediators, encouraging community of mediation, and making online mediation a respectable and affordable process. The Bill was ultimately approved by the Rajya Sabha on August 1, 2023, and the Lok Sabha on August 7, 2023. The Mediation Act, 2023 (“Act”) was enacted on September 14, 2023, with the approval of the President of India.
What has the bill brought
1. Mediation Agreement: According to the Act, every mediation agreement must be in writing ; it state that all disputes between the parties involved would be resolved through mediation.
The mediation agreement can either be written as a clause in another agreement or as a distinct document.
The Act considers a mediation agreement to be “in writing” if it is:
(i) executed as a document between parties;
(ii) contained in an exchange of communications (including electronic communications for the purposes of the Information Technology Act, 2000); or
(iii) contained in any pleadings where one party alleges the existence of such agreement, and the assertion is not denied by the other party.
2. Pre-Litigation Mediation: The Act allows parties to a disagreement to willingly and “voluntarily submit their issue to mediation” before bringing a lawsuit or starting any judicial procedures, regardless of whether they have signed a mediation agreement. The Standing Committee’s report, which suggested voluntary pre-litigation mediation in its place, may be responsible for this provision’s withdrawal from the 2021 Bill, which had previously mandated that parties attend at least two mediation sessions..
3. Exceptions: A list of problems that cannot be referred to mediation under the Act is also provided by the Act. Included in this are disagreements over criminal offences, legal actions taken about the improper conduct of any registered professional, and disagreements over the assessment and collection of any direct or indirect taxes or refunds..
4. Appointment of a Mediator: A person of any country may be appointed as a mediator, unless the parties agree otherwise, providing that they meet the necessary educational, professional, and accreditation requirements. Additionally, the choice of the mediator and the method of appointment is up to the parties. The claiming party may submit an application to a mediation service provider to appoint a mediator if the parties are unable to agree on the mediator or the process. The mediation service provider must either assign a mediator chosen by the parties themselves or one from its pool of mediators within seven days after receiving the application.
5. Jurisdiction: Every mediation that is started pursuant to the Act must take place within the geographical jurisdiction of the court or tribunal that has the authority to decide the dispute. The mediation shall be regarded as having taken place within the geographical jurisdiction of such court or tribunal for the purposes of enforcement, challenge, and registration of the mediated settlement agreement, even though, if the parties so agree, the mediation may be performed at any other location or even online.
6. Time Period: The Act stipulates that mediation processes must be concluded within 120 days after the first appearance before the mediator, with a maximum extension of 60 days..
7. Mediated Settlement Agreement: The conditions of settlement must be reduced to a written agreement signed by the parties and legally validated by the mediator once the mediation has been satisfactorily ended (with regard to all or some of the problems referenced). An uncontested Mediated Settlement Agreement that has been authenticated may thereafter be enforced in line with the rules of the Code of Civil Procedure, 1908, just like a court-issued judgement or decree would be. The sole grounds for challenging a mediated settlement agreement are fraud, corruption, impersonation, and where the mediation was illegal under the Act (as stated above).
Effect of the Mediation Bill On Other statute
1. In Comercial Court
The Bill’s Ninth Schedule, when read together, aims to reform the Commercial Courts Act. The bill aims to replace Pre-Litigation Mediation and Settlement under Section 12-A of the Commercial Courts Act, 2015. Substituted According to Section 12-A, a mediation service provider, as defined by Section 3 of the Mediation Act, may get authorisation from the Central Government for the purpose of pre-litigation mediation. If the parties to a commercial dispute reach a settlement, Sections 28 and 29 of the Mediation Act, 2021 must be followed for the agreement to be reduced to writing, and the Mediation Act, 2021’s rules must be followed for the mediated settlement agreement reached under this section.
2. In Indian Contract act
The Indian Contract Act, 1872 will be amended by Section 58 of the Bill, which should be read in conjunction with the Third Schedule. As the Third Schedule of the Bill is read, The bill intends to alter Section 28 of the Contract Act, which outlines the requirements for contracts to be illegally established on the pretence of preventing a party that has been wronged from obtaining redress in a relevant Court. The exclusive jurisdiction clause of an agreement, which provides for exclusivity conferred upon a Court at one location by the parties mutually agreeing through a contract that in case of any dispute between the parties, the same will be referred to that particular court, is one of the few exceptions to this rule. Similar to this, the Mediation Bill aims to change the clause., by stating that the parties want to use mediation to resolve their differences. The amendment, which attempts to modify the exemption clause, provides for the validity of a contract if two or more parties agree to send their issues for resolution through mediation; however, if such a contact is not established in writing, the contract will be deemed void
3. Companies act
The Bill proposes to replace the pertinent section of the Companies Act of 2013, namely Section 442, in accordance with Section 63 read with the Eighth Schedule. According to the amended Section 442, any party to a proceeding before the Central Government, a tribunal, or the Appellate Tribunal may request at any time that the matter be referred to mediation, which will be governed by the Mediation Act, 2021.
Any disagreement may be referred to mediation on an as-needed basis by the Central Government, a tribunal, or an appellate tribunal. The mediation will take place in accordance with the Mediation Act of 2021 (where and when appropriate). The parties’ mediated settlement agreement will be filed, and either the Central Government, the Tribunal, or the Appellate Tribunal will issue an order incorporating it into the overall settlement.
4. Code of Civil Procedure
The relevant section of the Code of Civil Procedure, 1908, notably Section 89 of the Code, which offers many other options of settling a dispute, is what Section 59 of the Bill wants to change. According to the Fourth Schedule, Section 89 will be modified so that parties who wish to resolve their disagreement through mediation will be given the proper procedure. The Court shall refer parties to mediation to the Court-annexed mediation centre or to any other mediator at the parties’ request, and the Mediation Act’s provisions (as and when applicable) will be applied to such Court-referred mediati
5. Legal service authority act
The Legal Services Authorities Act, 1987, which shall be read in conjunction with the Fifth Schedule of the Bill, is being modified pursuant to Section 60 of the Bill. The Central Authority shall execute the duty of promoting the resolution of disputes through discussions, arbitration, and conciliation in accordance with Section 4(f) of the 1987 Act. Following the modification, the Central Authority will now support mediation as a means of conflict resolution.
Conclusion
India does not currently have a specific piece of legislation that addresses mediation; instead, mediation-related measures have been integrated into a number of other statutes. Thus, the Mediation Bill 2023 will greatly aid in the formalisation and development of mediation practises throughout the nation. By making MSAs enforceable and binding after being approved by the parties and mediator, the Bill has the ability to relieve court overcrowding by reducing the number of new conflicts that arise and resolving those that already exist.. The inclusion of pre-litigation voluntary mediation emphasises a practical approach, grounded in the consent-driven nature of mediation, that does not require parties to go through the rigmarole of mandatory mediation with reluctance or lack of trust in the process.
The mandatory provision is dormant and ready to be activated as mediator capacity increases and favourable mediation experiences serve as the most compelling incentives for litigants to embrace this alternative dispute resolution mechanism, allowing for a paradigm shift in its due time and natural course. However, the voluntary application of the Bill’s provisions does not appear to serve the legislative intent of the Bill with which it was sought to be enacted.As India journeys toward a more harmonious dispute resolution era, the Bill stands as a beacon, illuminating a path towards efficacious and equitable resolution.