The Mediation Act 2023: Awaited Solution Of Judiciary

20th May, 2024 - 1:04 pm Categories: Mediation Act 0 Comments

ABSTRACT

The issue of surging cases, resulting in the pendency of cases before the courts. it is implicated that there lies a clear intention of promoting ADR(s), explicitly the mediation. Multiple studies have been conducted, and thereafter, it has been concluded that mediation is a preferable option, as not it resolve the dispute in a shorter period, but also eases the appeal. Furthermore, among different types of ADR(s), mediation remains more economical, flexible, speedy, and lucid compared to other ADR mechanisms such as Arbitration. Lastly, it highlights provisions of the Mediation Act, 2023 outlining definitions, provisions, and the establishment of the mediation council. The Act’s contemporary and inclusive approach includes confidentiality in mediation communications and the incorporation of online mediation. Thus, the present article covers the reason, intention, need, and overview of the Mediation Act, 2023.

THE ALTERNATE DISPUTE RESOLUTION AND MEDIATION

‘Alternative Dispute Resolution’ (ADR) is a form of dispute resolution mechanism other than litigation. According to Rozdieczer and Alvarez de la Campa, 2006 “Litigation in which a neutral third party assists in or decides on the resolution of the issues in dispute”. It can involve different types of disputes such as disputes/differences between businesses and creditors; or between businesses and the government. It can be comprehended by referring to “Designing the Future of Dispute Resolution the ODR Policy Plan for India (NITI AAYOG)” that ADR is a method of settling disputes without litigation. While it is usually understood to mean arbitration, negotiation, and mediation, it can include other mechanisms such as, but not limited to, resolution through an ombudsman, complaint boards, and facilitated settlements. Further, a hybrid model of different forms of ADR(s) mechanisms such as mediation-arbitration (med-arb), med-arb-med, and arb-med-arb also qualify as ADR. Thereby, Mediation is a part/form of ADR. Further, Mediation is well defined under the newly enacted Mediation Act, 2023, under section 3 (h). It includes pre-litigation mediation, online mediation, community mediation, conciliation, or an expression of similar import.

UNDERSTANDING THE NEED OF MEDIATION

In the year 2024, the pendency of cases has surged by an exorbitant amount, according to the date National Judicial Data Grid pending cases in the Supreme Court of India currently are 80,013, on further bifurcation of these pending cases, there is a total of 62,955 civil and 17,058 criminal cases pending before the Supreme Court. Furthermore, in district and taluka courts of India total pending cases amount to 4,43,31,168 comprising 1,09,15,801 (civil) and 3,34,15,367 (criminal). Pertinently, the reason for pendency in civil cases considering that among 100% of total pending cases as per 2020 data are found to be at a stage of stay (29.56%), awaiting records (23.64%), unattended (16.07%), securing presence (14.82), frequent application (13.81%), execution (2.72%) and bulky case (0.01%). Overall the pendency is not only due to the institution of new cases but also because of the complex stages of trial and appeal.

[Image Sources: Shutterstock]

As per the studies conducted by Rosenberg and Folberg (1994), it was found that it shorten the time compared with the court process. Hann and Baar (2001) found that mediation resulted in more cases being disposed of sooner. Barkai and Kassebaum (1992) found that the arbitration program in Hawaii was four months faster on average than litigation. Lastly, Wissler (2004) reports found that the time taken for the disposition of appellant cases was one to three months shorter than other cases. Thus, the need for ADR and Mediation, as the time consumption to resolve a dispute through ADR, specifically mediation, is relatively shorter than traditional litigation.

THE INTENTION BEHIND MEDIATION ACT 2023

The legislature has previously enacted the Arbitration and Conciliation Act, of 1996 which established the Arbitration Council of India, in the year 1965, which is a specialized body at a national level to promote amicable, quick, and inexpensive settlement of commercial disputes employing arbitration and conciliation. However, the arbitration itself is not economical and concludes with an arbitrator passing an award which in general gets further challenged, whereas the mediation is economical and concludes on a mutual agreement and settlement. Moreover, arbitration is a formal proceeding and consists of strict stages, on the other hand, mediation is informal and is flexible in procedure. Therefore, among other ADR(s) mediation is more preferable. The purpose of the legislature in enacting the mediation act can also be contemplated by the first few lines of the act or from the press release monsoon session 2023, the act seeks to promote and facilitate mediation in the matter of commercial disputes or otherwise.

Moreover, the judiciary in recent precedents mandating meditation as a form of ADR, referring to the case of K. Srinivas Rao v. D. A. Deepa, cited as (2013) 5 SCC 226, the Supreme Court has mandated that mediation as an avenue that must be exhausted in matrimonial disputes. In the recent case of Patil Automation Private Limited And Others v. Rakheja Engineers Private Limited, reported in 2022 SCC ONLINE SC 1028, while interpreting section 12-A of the Commercial Courts Act, 2015, which provides “pre-institution mediation” the Supreme Court observed and made the declaration of section 12-A of Commercial Courts Act as “mandatory”. A sign of promoting mediation over litigation.

OVERLOOK OF THE MEDIATION ACT 2023.

The Chapter II defines “mediation”, “institutional mediation”, “international mediation”, “mediation agreement” and “pre-litigation mediation” which the Commercial Courts Act, 2015 was unable to define. Even though the commercial courts act under section 12-A mandates the pre-institution mediation and settlement, however, does not provide the statutory definition of such. In Chapter III it lays down the mediation agreement and pre-institution mediation. Mediation agreement shall be written and mere reference in any agreement containing a mediation clause shall constitute a mediation agreement if it is part of the agreement.

Pre–Litigation mediation has been defined as a process of undertaking mediation, for settlement of disputes before filing of a suit or proceeding of civil or commercial (section 3(u)). Whether any agreement exists or not the parties before filing a suit of a civil or commercial nature may voluntarily, with consent, take steps to settle the disputes (section 5). Further, another method of settlement for compensation arising out of an accident under the Motor Vehicle Act, 1988 where the ‘claims tribunal’ shall refer the parties to mediation in case the settlement for compensation does not arrive. The act also lays down the matters that are not fit for mediation under list one which includes- (a) Disputes that at the time being may not be submitted for mediation; (b) Disputes related to minors or handicaps/disables, Taxes, Competition law, Electricity Act, SEBI; (c) criminal offenses; (d) Proceedings against professionals or practitioners for their misconduct or behavior; (e) Disputes affecting rights of third parties; (f) Where NGT or Petroleum and Natural gas board have jurisdiction; (g) compensation under land acquisition laws (h) any other matter notified by central government (section 6). Another imperative element is that the law provides power to the Courts as well as the Tribunal to order at any stage, the parties to the mediation, regardless of any mediation agreement entered into between the parties, however, parties are not obliged to come to a settlement in such situation (section 7).

Chapter IV, provides an appointment along with the disclosure of all the material that may lead to potential interest that might create doubts regarding the independence and impartiality of the mediator. Chapter V lays down the process of mediation and the jurisdiction which shall be the court or tribunal having competent jurisdiction to decide the subject matter provided that the parties via mutual agreement may also decide the jurisdiction including online mediation. Furthermore, the mediator may take such measures as deemed appropriate and is not bound by the Code of Civil Procedure, 1908, or Evidence Act, 1872. The most imperative factor under Chapter V is confidentiality i.e. mediator, parties and participants shall keep mediation communication and everything relevant confidential, thus, anything done or said during mediation is not subjected to disclosure in any court of law or any authority (section 22), although the said section does not apply to a mediation settlement agreement where it is online mediation. The act under Chapter VII covers online mediation which includes pre-litigation mediation as specified under the act itself and is subjected to other provisions of the act. Chapter VIII provides for the establishment, appointment, composition, and termination of the mediation council. Chapter IX trivially defines the mediation service provider and their functions, Chapter X talks about the community mediation and procedure thereof, and any dispute vis-à-vis residents or families can be resolved through mediation.

CONCLUSION

It can be implicated that the mediation is preferential over other ADR(s), also a necessity as there is an exorbitant amount of pending cases, thereby mediation turning out to be a viable, economic, lucid, and faster measure. The Mediation Act, of 2023 was brought not only as a substitute for Arbitration but also to make commercial disputes resolve with ease.

Author: Rhythm Chaurasia, in case of any queries please contact/write back to us via email to chhavi@khuranaandkhurana.com or at  Khurana & Khurana, Advocates and IP Attorney.