Mediation Bill 2023: A New Path For Dispute Resolution
The bill proposes to enforce a mediated settlement on par with a court judgment.
Litigation comes with prohibitive costs. More so in India where delays make it worse. Indian courts already face a backlog of nearly 5 crore cases, and this pendency rises with each passing year.
To ease this burden on courts and litigants, the Indian Parliament has passed the Mediation Bill, 2023. It's the first such standalone legislation in the country that aims to resolve disputes through mediation.
The bill was approved by the Lok Sabha on Monday, following its passage in the Rajya Sabha on Aug. 1.
"The time for mediation has come and this bill is a watershed moment in respect of how disputes need to be resolved in India. The bill emphasises a non-adversarial mindset which encourages the settlement of disputes without the involvement of courts," Vijayendra Pratap Singh, partner at AZB and Partners, told BQ Prime.
In essence, mediation is a participatory procedure in which a neutral third party assists conflicting parties in reaching a settlement agreement.
The bill, introduced in 2021, has now been revised based on parliamentary deliberations and a standing committee report.
Previously, the timeline to complete a mediation was set at 180 days, extendable by an additional 180 days. The revised version of the bill reduces the time period to 120 days, extendable by another 60 days. This effectively cuts the overall mediation duration from 360 days to 180 days.
In the 2021 version of the bill, the process of pre-litigation mediation was mandatory. However, now it is a voluntary process, allowing parties to choose whether or not to pursue pre-litigation mediation for resolving their disputes.
Making pre-litigation mediation mandatory was akin to taking the horse to the water. It did not necessarily lead the horse to drinking the water.Vijayendra Pratap Singh, Partner, AZB and Partners
Singh explained that mediation is based on consent which may be coaxed but cannot be forced. Hence making pre-litigation mediation voluntary is a pragmatic decision.
"If a party is unwilling to mediate and has no faith in the process then there is little point in forcing parties to go through the rigmarole of mandatory mediation sessions before approaching court," said Sanjeev Kapoor, partner at Khaitan and Co.
A significant feature of the bill is that a mediated settlement agreement, which has been duly signed by the parties and the mediator, will be final and binding on both the parties and therefore will be enforced in the same manner as if it were a judgement or a decree passed by a court.
Courts can be the biggest beneficiary of the bill, if mediation as an idea kicks off. This may allow decongesting the courts by not only cutting down supply of fresh disputes to the courts but also by reducing the existing disputes in the system, Singh said.
The bill includes a provision for conducting mediation through online mode, aligning with the objective of enhancing cost-effectiveness in the process of justice.
Although the bill speaks of maintaining confidentiality of mediation proceedings, a significant aspect for those opting for an alternative dispute resolution, it currently lacks provisions for sanctions in case of confidentiality breaches.
This raises a notable concern, as the absence of prescribed penalties may render this provision ineffective.
In the absence of an express penalty provision, consequences of breach remain uncertain and may not instill confidence in parties involved in disputes involving sensitive data.Sanjeev Kapoor, Partner, Khaitan and Co.
To address this issue, Kapoor said that parties should consider entering into a confidentiality agreement at the start of the mediation to ring-fence any potential breach of confidentiality. This would enable the parties to approach court for injunctive relief in connection with the breach and also sue for damages to compensate for loss caused as a result of the breach.
