Mediation Bill, 2021: Everything You Need To Know About Mediation Bill

To strengthen the foundation and procedure of ADRs, the parliament introduced another Bill with respect to mediation in the parliament in December 2021. The Bill is named the Mediation Bill, 2021. The Bill provides a detailed description of all the requirements of the proceedings of mediation and also explains mediated agreement settlements. It also gives the definition of terms like mediation. Mediator, institutional mediation, etc. The Mediation Bill aims to institutionalising and promoting the process of mediation

At an event to mark India Mediation Day, organised by the International Arbitration and Mediation Centre. The Supreme Court judges Justice Hima Kohli, Former judges Justice Lavu Nageshwara Rao and Justice R.V. Raveendran spoke on the relevance of mediation and shared insights to enhance the practice of mediation. They said that the draft Mediation Bill, 2021, which Parliament is discussing, will make India an emerging hub of institutional mediation once it is legislated.

Former Chief Justice of India N.V. Ramana said, “This Bill would be useful for the judiciary, and litigants and there will be demand for efficient mediators either from the legal profession or domain experts in various fields.”

Brief Timeline Of The Mediation Bill, 2021

 

Need For The Mediation Bill:

Arbitration, mediation, conciliation, negotiation, and Lok Adalats are all forms of alternative conflict resolution in India. All of these give a framework for resolving conflicts outside of traditional courts. A mediator does not impose any agreement or settlement on the parties during mediation but rather fosters an environment in which both parties can address their disagreements and jointly achieve a settlement. There is now no uniform legal procedure for mediation, nor is there any authority that oversees the entire process. Private ADR centres handle this work. 

In the absence of any regulation governing the mediation procedure and of any central authority, it can now be begun in two ways:

• If the court refers the parties to mediation under Section 89 of the Code of Civil Procedure of 1908,
• With the assistance of any contract between the parties that includes a mediation clause or if it is included in any specific statute.

Because of the lack of procedure uniformity and the absence of official authority, misunderstandings arise and cannot be overcome. In such a case, effective mediation legislation must be enacted in order to reduce such uncertainties. This will help alleviate the pressure on the courts of ongoing cases. The Supreme Court recognized the necessity and offered such recommendations in the case of M.R. Krishna Murthi v. New India Assurance Co. Ltd. (2019). 

A Bill on mediation was introduced in the parliament with this goal in mind which was then referred to several standing committees for comments and proposals.

Main Objectives Of Mediation Bill, 2021

• To promote and facilitate mediation, particularly institutional mediation, for the resolution of commercial or other disputes.
• To enforce mediated settlement agreements.
• To establish a body for mediator registration.
• To encourage community mediation.
• To make online mediation an acceptable and cost-effective process, as well as for matters connected with or incidental thereto. 
• It proposes to create a codified legislation on mediation and to provide for the enforcement of settlement agreements reached through mediation, as well as to prioritize voluntary mediation over litigation. The mediation procedure must be completed within 180 days, with the option of an additional six-month extension.

Highlights Of The Mediation Bill, 2021

• Before reaching any court or tribunal, people are required by the Bill to try to settle civil or commercial issues through mediation.  After two mediation sessions, a party may withdraw from the process.   The mediation procedure must be completed within 180 days, which can be extended by the parties by another 180 days.
• The Indian Mediation Council will be established.  Its tasks include the registration of mediators as well as the recognition of mediation service providers and mediation institutes (which train and certify mediators).
• The Bill specifies which disputes are not appropriate for mediation (for example, those involving criminal prosecution or impacting the rights of other parties).   This list may be amended by the central government.
• If the parties agree, any person may be appointed as a mediator.  If not, they may request that a mediator from a mediation service provider be appointed.
• Mediation agreements will be binding and enforceable in the same way that court decisions are.

Recommendations By The Standing Committee

• Pre-Litigation: It recommended making pre-litigation mediation optional and further introducing it in a phased manner instead of introducing it with immediate effect for all civil and commercial disputes.
• Appointment of chairperson: The panel recommended that the Central Government can appoint the Chairperson and Members of the Mediation Council of India through a selection committee. In the bill, it was given that people dealing with problems related to ‘Alternative Dispute Resolution’ can become members and chairman of the council if they show ‘capacity’ and ‘knowledge and experience’ in mediation.
• Establishment of Mediation Council in Each State: Given the vast range of duties and obligations allocated to the Mediation Council of India, mediation councils should be established in each state.
• Unique Registration Number: The Mediation Council should issue each mediator with a unique registration number, and those provisions be made in the bill to allow the Mediation Council to continuously evaluate the mediator by holding training sessions on a regular basis and that the mediator earns a minimum number of credit points on a yearly basis in order to be eligible to conduct mediation.
• Reducing Time Limit: The panel recommended reducing the time limit from 180 days to 90 days and further an extension period of 60 days instead of 180 days.
• Reframing Definition: They also recommended reframing the new definition of mediation and do not put it separately under clause 4 as it is already given in clause 3.

Scheme Of The Bill

The Bill is divided into 11 chapters, which consist of various sections and clauses, and 10 schedules. The different chapters under the Bill are:

• Chapter 1 deals with the title, extent, and commencement of the Bill as an Act if enacted by the government. 
• Chapter 2 explains the application of the Bill. 
• Chapter 3 explains the concept of mediation, pre-litigation mediation, mediation agreements, and the power of courts and tribunals to refer parties to mediation. 
• Chapter 4 further talks about mediators, their appointment, termination, salaries, allowances, and replacement. 
• Chapter 5 describes mediation proceedings and other intricacies involved therein. 
• Chapter 6 further deals with the enforcement of mediated settlement agreements. 
• Chapter 7 explains the concept of online mediation. 
• Chapter 8 prescribes the establishment of the Mediation Council of India and its other necessities.  
• Chapter 9 provides for mediation service providers and institutes. 
• Chapter 10 explains community mediation. 
• Chapter 11 is a miscellaneous chapter dealing with mediation funds, accounts, and audits. 

Applicability Of Mediation Bill

Section 2 of the Bill explains the Bill’s applicability. The Bill states that it will apply to all mediations in the country where:

• All parties to a dispute either reside in India, are incorporated here, or conduct business in India.
• If the mediation agreement states that any such issue will be handled through mediation in accordance with the terms of the Bill or 
• Where international mediation exists within India. 

It further states that it will not apply if one or both of the parties are central or state government, public bodies, corporations, or local bodies, entities owned and controlled by such government, unless the subject is a business dispute between the parties.  

Key Features Of The Mediation Bill

• Pre-litigation mediation: Parties must attempt to settle civil or commercial disputes by mediation before approaching any court or certain tribunals.  Even if they fail to reach a settlement through pre-litigation mediation, the court or tribunal may at any stage refer the parties to mediation if they request for the same.
• Disputes not fit for mediation: The Bill contains a list of disputes which are not fit for mediation.  These include disputes: (i) relating to claims against minors or persons of unsound mind, (ii) involving criminal prosecution, and (iii) affecting the rights of third parties.  The central government may amend this list.
• Applicability: The Bill will apply to mediations conducted in India: (i) involving only domestic parties, (ii) involving at least one foreign party and relating to a commercial dispute (i.e., international mediation), and (iii) if the mediation agreement states that mediation will be as per this Bill.  If the central or state government is a party, the Bill will apply to (a) commercial disputes, and (b) other disputes as notified.
• Mediation process: Mediation proceedings will be confidential, and must be completed within 180 days (may be extended by 180 days by the parties).  A party may withdraw from mediation after two sessions.  Court-annexed mediation must be conducted as per the rules framed by the Supreme Court or High Courts.
• Mediators: Mediators may be appointed by: (i) the parties by agreement, or (ii) a mediation service provider (an institution administering mediation).  They must disclose any conflict of interest that may raise doubts about their independence.  Parties may then choose to replace the mediator.
• Mediation Council of India: The central government will establish the Mediation Council of India.  The Council will consist of a chairperson, two full-time members (with experience in mediation or ADR), three ex-officio members (including the Law Secretary, and the Expenditure Secretary), and a part-time member from an industry body.  Functions of the Council include: (i) registration of mediators, and (ii) recognising mediation service providers and mediation institutes to train, educate and certify.
• Mediated settlement agreement: Agreements resulting from mediation (other than community mediation) will be final, binding, and enforceable in the same manner as court judgments.  They may be challenged on grounds of: (i) fraud, (ii) corruption, (iii) impersonation, or (iv) relating to disputes not fit for mediation.
• Community mediation: Community mediation may be attempted to resolve disputes likely to affect the peace and harmony amongst residents of a locality.  It will be conducted by a panel of three mediators (may include persons of standing in the community, and representatives of resident welfare associations).

Benefits Of Mediation Bill, 2021

1. It gives the uniform definition and meaning of mediation, mediators, and other legal terms and explains the concept of pre-litigation mediation.
2. It facilitates speedy and amicable dispute resolution outside of traditional court systems and strengthens the country’s alternative dispute resolution (ADR) structure.
3. It will decrease the strain on the judiciary while also saving time and money for the parties involved in civil or commercial disputes.
4. It defines the role and functions of mediators and provides provisions for their appointment, termination, and replacement. 
5. It provides that all the agreements or settlements of mediation will be binding on the parties and have the same effect as if passed by the courts. 
6. It would establish a legal framework for executing mediation settlement agreements, giving them the same status and effect as an arbitral award or a court order.
7. Online mediation will provide numerous benefits to parties.
8. It will encourage institutional mediation and create a Mediation Council of India to regulate and promote mediation, accredit mediators and mediation institutions, and keep a database of mediators and mediated cases.
9. It would promote online mediation and provide procedures and protections for it, making it more accessible and easy for the parties.
10. To facilitate the mediation process, mediation infrastructure will be established around the country. The Mediation Council of India will primarily be responsible for registering mediators, recognizing mediation service providers, and training and certifying mediators.
11. The bill will only apply to foreign mediations if they take place in India.

Main Concerns Of Mediation Bill, 2021

• Pre-litigation mediation is required for both parties before filing any suit or proceeding in court, regardless of whether they have a mediation agreement.
• Parties that fail to attend pre-litigation mediation without a sufficient excuse may be charged, but access to justice is a constitutional right that cannot be fettered or curtailed, according to Article 21 of the Constitution. 
• Mediation should be entirely voluntary; otherwise, it would amount to a denial of justice. 
• Furthermore, according to Clause 26 of the Bill, court-annexed mediation, including pre-litigation mediation, will be conducted in line with the Supreme Court or High Courts’ orders or rules.
• The Committee, however, opposed it. It claimed that Clause 26 violated the spirit of the Constitution. 
• Furthermore, where international mediation is undertaken in India and the settlement is recognized as a judgment or decree of a court, the Bill deems it domestic. The Singapore Convention does not apply to settlements that already have the status of judgments or decrees. 
• As a result, conducting cross-border mediation in India will be devoid of the enormous benefits of global enforceability.

 

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This article is written and submitted by Sanskar Singhal during his course of internship at B&B Associates LLP. Sanskar is a 5th Year BBA LLB student at Geeta Institute of Law, Panipat.