Mediation: The Indian Experience
A non-adjudicative process where a neutral third party (“mediator”) assists the parties to a dispute to arrive at a mutually acceptable solution is referred to as Mediation. The mediator, an expert in the process of mediation, may require the assistance of lawyers in facilitating the process by imparting their legal expertise to the entire process.
In India, mediation has been prevalent in informal avatars, but its formal integration with the judicial system has been challenging. The Law Commission of India had recommended mediation as an alternative in 1988. The concepts of mediation and conciliation were given official recognition by the Arbitration and Conciliation Act 1996; and by the amendment of the Code of Civil Procedure (CPC) in 1999 to include different and appropriate forms of ADR (including Mediation) for civil cases prior to resorting to trial. Section 89 was incorporated in CPC by section 7 of the CPC Amendment Act, 1999 (brought into effect on 1st July 2002) to resolve disputes without going to trial.
The provision under section 89 of CPC is laudable in its essence, but the purpose tends to get defeated due to legal intricacies and lack of awareness. It was not until the ruling of the apex court in Salem Advocate Bar Association v. Union of India (2005) 6 SCC 344 (popularly referred to as Salem II) that mediation was brought into focus. With the Supreme Court’s judgment in Salem II, Model rules on mediation to be implemented by high courts across the country as well as case-flow management guidelines were laid down. That judgment also led to the establishment of court-connected Mediation Centres. The Rules framed by the Supreme Court and the High Courts in pursuance of section 89 of the CPC deal with Court-annexed mediation, while Part III of the Arbitration and Conciliation Act 1996 deals with Private Mediation.
The types of cases that can be mediated were subsequently laid down by the apex court in Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd. (2010) 8 SCC 24. In Afcons, the apex court exhaustively analysed the purport of section 89 of CPC and after discussing the broad scope of the entire ADR process clarified the stage at which the parties and courts could refer a matter to ADR, including Mediation. Section 89 of the CPC, as clarified in Afcons, requires the court to consider, for each case before it, whether it is fit for reference to ADR. Further, while the parties’ consent is required for a reference to Arbitration or Private Mediation; there is no requirement of consent of parties for the other ADR processes; the court will hear the parties and determine which is most appropriate. Notably, the Supreme Court also clarified that it is erroneous to use the terms ‘mediation’ and ‘conciliation’ synonymously, since they are two different ADR mechanisms. The court went on to give an indicative list of cases which are fit for Mediation:
The Supreme Court also carved out the ‘excluded category’ of cases that CANNOT be referred to mediation. These are: suits involving public interest; cases involving grant of authority by court after enquiry (grant of probate); cases involving serious allegations of fraud; cases requiring protection of courts (claims against minors, etc); suits for declaration of title against the government; and cases involving prosecution for criminal offences that cannot be compounded. It is worth mentioning that in case of patents, a challenge to a grant or refusal of patent can be done only in legal forums; but, where a commercial resolution is possible, mediation can be applied.
More recently, in K. Srinivas Rao vs. D.A. Deepa (2013) 5 SCC 226 (a matter relating to matrimonial dispute), the apex court discussed Mediation as a tool of the larger ADR jurisprudence. The court observed:
“[The idea of pre-litigation mediation is also catching up. Some mediation centres have, after giving wide publicity, set up "Help Desks" at prominent places including facilitation centres at court complexes to conduct prelitigation mediation. We are informed that in Delhi, Government Mediation and Conciliation Centres, and in Delhi High Court Mediation Centre, several matrimonial disputes are settled. These centres have a good success rate in pre-litigation mediation. If all mediation centres set up pre-litigation desks/clinics by giving sufficient publicity and matrimonial disputes are taken up for pre-litigation settlement, many families will be saved of hardship if, at least, some of them are settled]”.
Mediation cannot work in a case which requires interpretation of a statute, or setting of a precedent or a remedial action by a court of law. Having said that, not many cases are about asserting or interpreting legal rights. Most cases are about conflict (of interests) requiring an efficient and sustainable resolution mechanism, and this is what Mediation is aimed at.
Upon the request of the Supreme Court in Salem Advocates Bar Association vs. Union of India (2003)1 SCC 49 (Salem I), the Law Commission of India framed the Draft Mediation Rules, 2003 -a comprehensive set of principles for undertaking mediation- under section 89(2)(d) of the CPC. Subsequently, the High Courts of various states enacted rules for mediation on similar lines. The Civil Procedure (Mediation) Rules framed by various high courts deal with court-annexed mediations and provide for, inter alia, appointment and empanelment of mediators, disqualifications, procedure for mediation, confidentiality, role of mediators, fixing of fees, ethics, to name a few. These Rules also provide that in disputes where the government is a party, and in matrimonial matters, the court should make every effort to assist the parties to arrive at a settlement.
Court-annexed mediation centres have been established by the Supreme Court, High Courts and several district courts in the country. Long pending cases from the court(s) are referred to these Mediation Centre(s), whose facilities and the support staff are provided by the relevant court. Mediators’ training is also organised by the court. The mediation service is either free of charge or minimally charged to the litigants. The mediation process is conducted within the court complex and the above-mentioned CPC Rules framed by the relevant high court are followed. Matters in which a settlement is arrived at are recorded in a compromise document which is then sent back to the Court for a final decree. No further appeal is possible thereof. Since there is no system of appeal through mediation, it not only reduces pendency at the level of trial courts but also helps in reducing workload of high courts and Supreme Court. Although the court does not insist upon the parties to settle the dispute through mediation, a refusal to engage in the process without a valid reason is seen unfavorably by the court.
Court annexed mediation program was formally started in the country in 2005 by Tamil Nadu High Court in Chennai.The Delhi High Court’s Mediation and Conciliation Centre was established in 2006 and Bangalore Mediation Centre was set up in 2007 under the aegis of the Karnataka High Court. Notably, a Pilot Project on Mediation was initiated in Delhi in August 2005 whereupon court trained mediators started judicial mediation from their chambers. Over a period of time, Mediation Centers have been set up in Delhi's six District Courts. These Centres have settled over 1 lakh cases in the last decade thereby contributing significantly in bringing down the pendency in the District courts. A variety of cases involving matrimonial disputes, property matters, civil cases and accident cases, besides pre-litigation matters, have been settled by these six mediation centers. (“Mediation Centres Gain Ground” reported here).
A recent Report by Vidhi Centre for Legal Policy, a New Delhi based independent think-tank, released in July 2016 has analysed the performances of Delhi and Bangalore Mediation Centres. The Report reveals that in the past five years (2011-2015), there has been a steady increase in the number of new cases referred for mediation each year at the Bangalore Mediation Centre. While 4903 new cases were referred for mediation in 2011, the number rose to 7020 in 2015. There is also an overall increase of approximately 43% of cases over a period of five years and a steady year wise increase in the number of cases being referred to mediation. Further, the data for Delhi High Court Mediation Centre shows a steady increase in the settlement rate of cases between 2011- 2015, except in the year 2013. In 2015, settlement rate of the Centre was as high as 75%. The Report concludes that while the amendment to Section 89 of the CPC was a right step in institutionalising ADR practices in the country, including Mediation, there are still impediments to the acceptability and integration of mediation with the civil justice dispensation framework, which must be addressed with structured and concrete reforms. (See “Strengthening Mediation in India”, Interim Report on Court-Annexed Mediations, Vidhi Centre for Legal Policy, available at here). The performance of the Mediation Centres in three southern states has been analysed and presented in another recent report by Centre for Public Policy Research (based in Cochin). The study says that the Court-annexed Mediation Centre in Bangalore has a success rate of 64%, and its counterpart in Kerala has an average success rate of 27.7%. Further, amongst the three southern states (Karnataka, Tamil Nadu and Kerala), Tamil Nadu is said to have the highest adoption of dispute resolution, Kerala the least. (“Assessment of Commercial Dispute Resolution (CDR) in South India” Available here).
While court-annexed mediation appears to be well-entrenched in the judicial system of the country, absence of specific statute on mediation does gives rise to a sense of confusion as well as lack of confidence about Private Mediation.
The provisions of section 89 of CPC is commonly construed to be Mediation through court annexed programmes since the provision is silent about private mediation or mediation conducted by private mediators. Mediation experts point out that it is time to expand the scope of mediation in the country to the private space so that disputing parties can resolve their disputes without going to courts. In private mediation, qualified mediators offer their services on a private fee- for- service basis to the courts, or members of public, to members of commercial sector, and also to governmental sector to resolve disputes through mediation (See Concept and Process of Mediation, Mediation and Project Conciliation Committee, Supreme Court of India, New Delhi, available here).
For trade and commerce to flourish, efficient and collaborative ways to dispute resolution is the key. If private mediation is made easily accessible, many disputes will not reach the courts. It is widely acknowledged that most civil disputes can be easily resolved by giving the disputing parties a suitable platform which allows them to settle the dispute through a trained mediator (with the assistance of their respective lawyers), rather than a long- drawn adversarial action. But what exactly will mediation through private mediation service providers (as opposed to court-annexed mediation) achieve for the business community? First and foremost, quick resolution of commercial/business disputes, including through pre-litigation mediation, is crucial. A collaborative approach reduces cost and more importantly improves the chances of resolution while maintaining relationships; Secondly, business community will readily opt for private mediation if the quality of mediation services rendered is superior. For instance, the sophistication of mediation techniques used, conducive environment, domain expertise, choice of mediator(s) etc, are some of the criteria that could influence the decision to mediate commercial disputes privately. While court annexed mediation programmes cater to the larger community; they may not be entirely appropriate for commercial disputes which require a different level of attention and time. A lot depends on the quality and efficiency of mediation! Thirdly, resources available in the court annexed mediations are somewhat constrained and, therefore, they may face limitations in resolving business conflicts.
A look at the legislations in countries like UK, USA, Italy and Brazil, to name a few, sheds light on how a culture of mediation can be nurtured in the community through joint participation of courts as well as private- mediation service providers. Countries where mediation has been adopted with a legislative framework and implemented successfully by courts, the private mediation players and disputing parties (including MNCs) use mediation effectively thereby managing their legal risks and costs. But when Mediation is not supported by adequate and credible framework, the disputing parties have little choice but to seek other avenues that may add to the dealys and costs. In this connection, Mediation experts have given some action points, viz.,“(1) legislation for mediation promoting both court annexed and private mediation; (2) include inputs of experienced mediators while drafting legislation, to bring in practical realism; (3) National Law Schools to conduct 40-hour mediation training programmes to train mediators for private mediation.” (Refer Private mediation can relieve burden of courts, by Laila T Ollapally May 7, 2016)
Challenges to Mediation
Widespread acceptance for pre-litigation mediation is still a pipedream which probably explains why India continues to battle with mounting cases in courts. Disputing parties tend to be suspicious of resorting to mediation (and other ADR processes) due to the notion that there must be a binding litigation process to conclusively settle the issue and that the proceedings before ADR forums will be again challenged before courts, resulting in further proceedings! There are other challenges also which have been responsible for slow development of mediation. In particular, by the time parties to a dispute approach mediators or undertake mediation, they are already in the midst of litigation and, therefore, approach mediation only as a second- hand option or as an option of last resort. (Refer “Mediation in India- Building on Progress”, by Rajiv Dutta, Senior Advocate, Supreme Court)
We take a quick look at main areas of concern:
The Supreme Court in Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd. (2010) 8 SCC 24 had made a pointed criticism of the inherent defects in section 89 of the CPC in the following words:
“If Section 89 (of the CPC) is to be read and required to be implemented in its literal sense, it will be a trial judge's nightmare. It puts the cart before the horse and lays down an impracticable, if not impossible procedure in subsection (1). It has mixed up the definitions in sub-section (2). In spite of these defects, the object behind Section 89 is laudable and sound. Resort to Alternative disputes resolution (for short "ADR") processes is necessary to give speedy and effective relief to the litigants and to reduce the pendency and burden upon the courts. As ADR processes were not being resorted to with the desired frequency, Parliament thought it fit to introduce Section 89 and Rule 1-A to I-C in Order 10 in the Code, to ensure that ADR process was resorted to before commencement of trial in suits]”.
The apex court suggested a number of changes in the procedure to be adopted to make the said provision effective. These suggestions were also taken into consideration in the 238th Law Commission Report of 2011 to recast section 89 of the CPC. But so far, no amendments have been made to the provision.
There is an undeniable sense of confusion since multiple terms are used interchangeably in the context of ADR. There are primarily four Alternative Dispute Resolution processes in India, viz., Arbitration, Conciliation, Mediation and Lok Adalat (a form of judicial settlement). While the Arbitration and Conciliation Act 1996 covers arbitration (both domestic and foreign) and conciliation, there is no formal legislation relating to Mediation. Further, a bare reading of section 30 of the 1996 Act shows that an arbitrator, to encourage settlement between the parties, has the power to use tools such as mediation, conciliation or other proceedings at its discretion with consent of the parties. This gives rise to confusion amongst disputants who may have resorted to one process, when in reality they meant to utilize a different mode of ADR. A mediation process is different from arbitration or conciliation proceeding; and the functioning of a Lok Adalat too requires a different orientation. A litigant familiar with one type of practice will not find it easy to adapt to proceedings under a different ADR process. So while the end result is to encourage an 'out-of-court', settlement, the tools for such a resolution are diverse. Educating the litigating parties about the different types of ADR processes, their nuances, and mechanisms that are involved in each of the processes, is thus critical.
As with all the tools of ADR, mediation requires support and co-operation from the legal fraternity. But there is a general tendency amongst lawyers in India to not encourage disputing parties to resort to any of the ADR processes, as that would mean loss of potential clients thereby affecting their “lucrative” litigation practice. There is also a tendency amongst lawyers in India to project mediation as a second option, as a result of which parties do not readily agree for it to settle the dispute. To a large extent, the onus is on the lawyers to take pro-active steps to encourage parties to resort to mediation (also other ADR processes) which does not happen.
In case of arbitration and conciliation, disputing parties have the option to approach adhoc arbitrators or any of the formal recognized arbitration institutions. However, in case of mediation, it is the courts which determine which model of mediation to opt for. A court-mandated/annexed mediation wherein the courts refers matters to mediators within the court premises may be less effective than parties independently approaching mediators of their choice or opting for private mediation. But if a party wants to opt for private mediation, the process for same has not been clearly spelt out which causes ambiguity. Moreover, in the Indian context, recourse to private mediation is still an expensive proposition- with no fixed financial costs, the private Mediator/Mediation institutions are free to fix costs. In many developed countries, pre-litigation mediation is relatively less expensive and it is the formal litigation process which proves to be costly. In India, while court-annexed mediation centres are inexpensive, the same cannot be said about private institutions engaged in mediation.
Lawyers with limited understanding of ADR processes -specifically mediation-are not in a position to assist in mediation techniques since they are not familiar with the nuances involved in such a process. The skills required for mediation as also other ADR mechanisms are different from what is required from a litigating lawyer. When lawyers send settlement oriented cases for protracted litigation, they contribute towards needlessly burdening the court. Today, more than ever, there is a need to train and orient lawyers for achieving settlements through mediation. To achieve that, law schools/colleges will have to train the law students to distinguish between those cases which are fit for ADR and those where litigation should be resorted to.
Building a Mediation culture
As with arbitration, India is said to be lacking a mediation culture- ie an attitude to settle peacefully. Potential litigants tend to be either unaware about benefits of opting for mediation or misunderstand the concept. In most cases, the possibility of amicably resolving disputes at the outset is not genuinely explored and disputants are literally pushed into what becomes an endless court battle. Not surprisingly, 54% of the population in India has not tried any alternative dispute resolution before going to court (See Survey by Daksh, available here).
For building a mediation culture/environment in the country, a lot will have to be done to spread awareness and increase access to private mediation services. Innovative initiatives like ODRways (an online platform by law students of the National University of Juridical Sciences (NUJS) Kolkata for promoting mediation in the country by integrating it with technology) should help in changing the dispute resolution narrative from adversarial approach to a collaborative one. Starting April this year, the platform has mediators in 18 cities across India and will help people connect to mediators for wide-ranging disputes. (See here). Notably, ODRways is.organizing the first ever Indian Mediation Week in December 2017 in the NUJS campus to spread awareness, knowledge, and use of mediation across the country through creative and innovative events like street plays, mediation camps etc. (See here)
Former judge of the Supreme Court, Justice (Retd) R.V Raveendran had once eloquently said, "But, who will make mediation successful? The government is not going to do it. The lawyers will not encourage it. The litigant is not in a position to understand the benefits of mediation and conciliation. So, it is for the judges to take the lead in making litigants understand the value of mediation." In his writings on the relevance of mediation, Justice Raveendran has set out key elements of making mediation a successful practice area. These include judges’ training programmes on dispute resolution strategy and design; increased case referrals to mediation centres; quality (and well trained) mediators; developed infrastructure facilities for mediation; and above all increasing user awareness. (See Justice R.V. Raveendran, “Mediation-Its Importance and Relevance” (2010) PL October 10).
The notification of Arbitration and Conciliation (Amendment) Act, 2015 after a prolonged wait is in many ways a milestone for arbitration in India since it has brought crucial improvements in the erstwhile law. It is now time to revisit and re-cast section 89 of the CPC so as to ensure greater access to Mediation and to “iron out the creases”. Or perhaps it is time to usher in a specific statute on Private Mediation in civil and commercial matters. After all, “An ounce of Mediation is worth a pound of Arbitration and a ton of Litigation.”
Part I and II can be read here and here.
Image from here