Mediation in India Building on Progress Prepared by: Rajiv Dutta, Senior Advocate - Supreme Court of India India falls within the category of nations where mediation has come to stay. It is a mediation friendly country. This country overview is being prepared with a viewpoint as to how the role of mediation could further be strengthened in India. Overview Settlement of disputes through reference to a distinct third party for amicable resolution of any and all dispute has been the hallmark of civilization and part of the inherent Indian spirit of peaceful dispute settlement. This traces its lineage through the earliest known customary forms of settlement through reference to panchayats to the modern day Alternative Dispute Resolution ('ADR') processes that have undergone enormous metamorphosis pursuant to the UNCITRAL model law and Arbitration Rules, which have subsequently been incorporated in the Arbitration Act, 1940 and thereafter, into the Arbitration and Conciliation Act, 1996. In the modern context, a mere look at the legislative enactments would reveal that there are a number of statutory enactments which contain a palpable reference to Alternative Dispute Redressal/Settlement processes. For the sake of reference, some of these legislative enactments are as follows: (1) Section 30 of the Arbitration and Conciliation Act, 1996 (2) Section 4 of the Industrial Disputes Act, 1947 (3) Settlement under various provisions of the Code of Civil Procedure, 1908 such as Section 80, Section 89, Section 107(2), Section 147, Order X Rules I-A, I-B, and I-C, Order 23 Rule 3, Rule 5 B of Order 27, Order 32 A and Order 36. (4) Various Provisions of the National Legal Services Authority Act, 1987 which deal with setting up of Lok Adalats (5) Various provisions of the Hindu Marriage Act and the Special Marriage Act. (6) Settlement under proceedings under the Family Courts Act. One of such modes of ADR is through mediation. Mediation, as an aspect, while not confined to its own statutory enactment in the Indian context, like the Arbitration and Conciliation Act, is nevertheless considered to be a part of a number of statutes as one of the tools/mechanisms that can be made use of for resolving inter-se disputes. As such, therefore, mediation imbibes within itself an idea of immense value which can collectively be classified into a separate rubric. The features that make mediation usable as a tool for amicable resolution include severability, flexibility, party-participation, self-reflection, preservation of on-going relationship and/or peaceful termination of pending disputes. Furthermore, it fosters peaceful and healthier inter-personal interactions, in the long term, thereby pre-empting the cause of conflict between parties.
1
Apart from the statutory provisions, the Supreme Court in a number of matters has upheld the provisions of mediation and general ADR processes (ONGC vs. Western Co. of Northern America 1987 (1) SCR 1024, ONGC vs. Saw Pipes Ltd. AIR 2003 SC 2629, Rajasthan State Road Transport Corporation vs. Krishna Kant 1995 (5) SCC 75, K.A. Abdul Jalees vs. T.A. Sahida 2003 (4) SCC 166, Ghanshyam Dass vs. Domination of India 1984 (3) SCC 46, Raghunath Das vs. UOI AIR 1969 SC 674 and Afcons Infrastructure Ltd. vs. Varkey Construction Co. Pvt. Ltd. 2010 (8) SCC 24. In Afcons Infrastructure Ltd., the Indian Supreme Court had exhaustively analysed the purport of Section 89 of the Civil Procedure Code, 1908 and after looking at the broad scope of the entire ADR process, had clarified the stage at which the parties and Courts could refer a matter to ADR, including mediation. A host of imperfections and defects in Section 89 were set out in detail and the Supreme Court in summation had suggested that the parliament was required to revisit the section and a hard look needed to be taken at the contents of the aforesaid section. A bare look at the Afcons case law would reveal the manner in which t he Indian Supreme Court has categorically stated that Section 89 is vaguely framed and required a fresh look so that in which it can be str engthened keeping in mind the overall purpose behind enactment of the said Civil Procedure Code ("CPC") amendment. (see para 43 at page 45; Supreme Court Cases). Furthermore, the Law Commission of India, in various reports namely the 129th Law Commission Report and the 238th Law Commission Report have also dealt with the ADR process. In fact, the 238th Report of the Law Commission was in direct response to the Afcons Infrastructure Case wherein it was observed that the concept of "Speedy Justice" has become a casualty, even though each judicial officer/judge was maintaining a high rate of disposal. While one is on the topic of mediation and the ADR processes, it is important to realise that there are a number of challenges and roadblocks that still exist which prevent the smooth operation and resort to mediation/ADR processes and which, by implication still leave a lot to be desired from the adversarial litigation process. Challenges and roadblocks of mediation in India Legislative defects SECTION 89 OF THE CODE OF CIVIL PROCEDURE As the Supreme Court in Afcons Infrastructure Ltd. vs. Cherian Varkey Construction Co. Pvt. Ltd. pointed out, in para 9 at page 31 (Supreme Court Cases):
2
[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]. In fact, it would be interesting to note that the Supreme Court considers Section 89 (as amended by the 2002 Amendment to the CPC, 1908 to be an imperfect section and therefore, in Salem Advocate Bar Association (I) vs. Union of India (2003) 1 SCC 49, a hope was expressed that Section 89 could be implemented in its letter and spirit by ironing out the creases. Thereafter, from para 11 to 19 of the Afcons Infrastructure Ltd. case, the Supreme Court has categorically and systematically dealt with the faults in Section 89 of the CPC. At para 43 of the judgment (Supreme Court Cases), the Indian Supreme Court has after an exhaustive analysis of Section 89 of the Code, suggested a number of changes in the procedure required to be adopted so as to make the said provision effective. These suggestions were taken into consideration in the 238th Law Commission Report dated 30.12.2011 prepared by the Commission headed by Justice P.V. Reddi, Chairman who intended to recast Section 89 of the CPC. In recasting, the Law Commission of India had suggested certain deviations from the suggestions made by the Supreme Court in Afcons Infrastructure Ltd. case. The important deviation in the view of the author is that mediation should be separate from proceedings in Lok Adalat and it would not be appropriate to refer the settlement agreement, to be forwarded to referring court, in passing a decree as suggested by the Indian Supreme Court in the Afcons Infrastructure Ltd. Case.
Confusion caused by use of multiple terms, (mediation, conciliation)
A mere look at various statutes would reveal that in the Indian context, there are primarily four Alternative Dispute Resolution ("ADR") processes, which may be classified as Arbitration, Conciliation, Mediation and a vaguely defined concept 3
known as Judicial Settlement through Lok Adalat. While Arbitration and Conciliation are broadly covered under the Arbitration and Conciliation Act, 1996, with Part 1 and 2 dealing with both domestic and foreign arbitration and part 3 dealing with provisions relating to conciliation, there are no formal legislative or statutory principles relating to mediation and judicial settlement. This has the potential of resulting in confusion amongst the practitioners who may resort to one process when in reality, they were seeking to use another tool of ADR. Therefore, care needs to be taken so that people involved within the ADR processes are knowledgeable about the types of ADR processes and the mechanisms that are involved in each ADR process. It is interesting to note that mediation as a tool of the larger ADR jurisprudence has got judicial recognition, as was pointed out by Justice Ranjana Prakash in para 39 (Supreme Court Cases) of K. Srinivas Rao vs. D.A. Deepa (2013) 5 SCC 226, which dealt with resolution of a matrimonial dispute. In Para 40 of this judgment, (Reported in Supreme Court Cases), Justice Desai observed as follows: [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]. Recognising the important role that mediation can play, the Supreme Court laid down in para 46 of the Srinivas Rao judgement (Supreme Court Cases), certain guiding principles of general importance for undertaking mediation. Para 46.3 of the judgment given by the Indian Supreme Court specified: All mediation centres shall set up pre-litigation desks/clinics; give them wide publicity and make efforts to settle matrimonial disputes at pre-litigation stage. However, as seen, these were specifically confined to resolution of matrimonial disputes. It is important to note that a mediation process is not the same as an arbitration or conciliation proceeding. Further, the functioning of a Lok Adalat, which is usually resorted to for quick dispute resolution requires a different mindset. A person who is familiar with one type of practice cannot easily adapt to undertaking proceedings under a different ADR process. Moreover, arbitration 4
and conciliation, which is designed to bring lasting peace through consensual awards/decrees is usually subject to litigation proceedings which broadly seek to terminate, set aside and/or otherwise call for the judicial forums to interfere with the awards passed, on one ground or another. The fact that there is a litigation process envisaged at the conclusion of the arbitration process merely goes on to show that parties do not place enough faith in the ADR process and still prefer to litigate the matters to its conclusion. Furthermore, a look at Section 30 of the Arbitration and Conciliation Act reveals that an arbitrator, to encourage settlement between the parties, has the power to use tools such as mediation, conciliation or o ther proceedings at its discretion with consent of the parties. This merely goes on to show that while the end result is to encourage settlement and a quietus 'out-of-court', the tools for such a resolution are diverse. A practitioner who seeks to practise ADR has to be equally competent to deal with all the minutiae involved in each of these processes. Therefore, the possibility of confusion amongst the various types of ADR is imminently possible.
Inadequacy of rules
In Salem Advocates Bar Association vs. Union of India (2003)1 SCC 49, the Supreme Court had requested the Law Commission of India to prepare draft model Rules for Alternative Dispute Resolution (ADR) and also f rame draft rules for mediation under Section 89(2)(d) of the CPC, 1908. As such, the Law Commission framed the Draft Mediation Rules, 2003 which framed a comprehensive set of principles for undertaking mediation. Taking a cue from the report of the Law Commission, High Courts of various States enacted rules for mediation. The mediation centre set up by the Delhi High Court, in exercise of its rule making power under Part X of the Code of Civil Procedure and Section 89(2)(d) of the Code framed the Mediation And Conciliation Rules, 2004 which was brought into effect from 11th August, 2005. However, a mere look at these rules and other similar rules would reveal that these are inadequately framed as they do not cover the entire ambit of the mediation process. The Mediation and Conciliation Rules, 2004 are framed more like the Arbitration and Conciliation Act, 1996, generally covering similar provisions as are dealt with in the Arbitration and Conciliation Act, 1996. This merely reiterates the concept that was highlighted above, inasmuch as inadequate distinct rules make it impossible for clear framing of guidelines. This lack of specific statute leads to a sense of ambiguity and lack of confidence about Mediation. In Brazil and the UAE, for example, due to the absence of any specific statute, there are many questions that are being raised concerning court-connected mediation. (In Brazil, for example, a law for introducing and regulating mediation practise is in the pipeline, but has not seen the light of 5
legislative sanction). These include queries about the degree of independence possessed by a mediator and inherent lack of enthusiasm for referring matters to mediation.
Court-mandated mediation is not so successful
Parties who are referred to court mandated mediation are not in a position to determine whether mediators can function independently, even if their mandate is regulated in accordance with a particular statute and whether that statute would inherently limit their ability to act in an impartial manner. In France, Spain and Morocco, there is very little incentive for parties to refer disputes to mediation, mainly due to a strict statutory regime which is being considered as an obstacle.
Lack of mediation culture
A definite roadblock that arises is a significant lack of mediation culture or an attitude of peaceful settlement. In certain countries such as Italy and other countries within the European Union such as Spain and France a concept known as 'Mediation Directive' was introduced through directive no. 2008/52/ec dated 24.05.2008 by the European Parliament to deal with certain aspects of mediation in civil and commercial matters. The aim of this directive is to improve access to justice and furthermore, to improve access to ADR by encouraging the use of mediation and by ensuring a balanced relationship between ADR process and judicial process.
Resistance by the bar
It would not be out of place to state that mediation as a mechanism for ADR requires the active support and encouragement of both the bar and the bench. While the Bench (Judiciary) has generally encouraged resort to ADR processes, it has been seen that, strangely, the Bar (comprising of advocates, attorneys etc.) doesn't readily encourage parties to take recourse to mediation and other ADR processes. The reasons for the same may be varied, but regardless, the primary reason which stands out is that there is a perception amongst advocates that if parties resort to ADR processes, they would lose out on potential clients and gainful litigation practice. Moreover, presently, recourse to ADR within the Indian context is still an expensive proposition, with no fixed 6
financial costs being specified, leaving the mediator/mediation institute to fix whatever costs may be suitable. This is in distinction to places such as Australia, where pre-litigation mediation is relatively less expensive and higher costs are placed on the formal litigation process. In India, the situation is completely the opposite and very different. However, the fact that ADR costs are higher does not mean that parties ought to be discouraged from pursuing such remedies, especially if avenues for peaceful settlement of disputes are imminently possible. Court-annexed mediation centres, such as the one present within the Delhi High Court are less expensive than what may be charged from formal institutions engaged in mediation resolution. It is on the bar to take pro-active steps to encourage parties to resort to mediation and other ADR process and thereby reduce the burden on the courts.
Need to introduce mediation at the outset (pre-litigation mediation):
Pre-litigation mediation was formally recognised by the Supreme Court (Justice R.P. Desai) in K. Srinivas Rao vs. D.A. Deepa ((2013) 5 SCC 226 in 2013 whilst she was dealing with resolution of a matrimonial dispute. As was observed, the idea of pre-litigation mediation is catching up with the establishment of helpdesks which have been set up after much publicity There is a lack of control over the system in that by the time parties approach mediators or undertake ADR process, they have already undertaken couple of rounds of litigation and therefore, approach mediation as a second hand option or as an option of last resort. Furthermore, advocates project mediation as a second class process and which does not result in speedy resolution of inter-se disputes. In countries such as India, where litigation is a relatively inexpensive proposition, parties do not readily agree to adopt the ADR process.
Lack of structured mediation market/Lack of autonomy in adopting different mediation models
The biggest roadblock that confronts any party that is desirous of exploring ADR process is the inherent lack of autonomy in deciding whom to approach. In arbitration and conciliation proceedings, parties have the option to approach adhoc arbitrators or undertake arbitration under the auspices of any of the recognised arbitration institutions. Similar is the case with Conciliation. However, when it comes to mediation, it is the Courts which determine where the parties go for mediation. This merely indicates a trenchant lack of autonomy 7
in choosing particular mediation models which may be far more advantageous than court-mandated mediation processes, wherein the courts would generally refer matters to mediators within the court premises, rather than permitting the parties to independently approach mediators of their choice or adopting ADR pathways which would permit a greater degree of freedom than court-annexed mediation. If a party wants to choose their own mediator, the process of such appointment has not been clearly set out, with even the Mediator and Conciliator Rules, 2004. Furthermore, it should be recognised that there is very little information that is publicly available to potential litigants concerning the benefits of undertaking mediation. When a party has a legal dispute, the first thing that they would do, in all probability, is to approach a member of the bar, advocate, attorney, who would recommend the potential disputing party to undertake adversarial litigation by preferring a case before the formal judicial forum. This binds the parties to a near-brinkmanship adversarial position and does not permit them to retract from their adopted stands, until and unless, through judicial or other settlement, the parties agree to rescind their relationship. The possibility of amicably resolving disputes at the outset before lengthy court records can be built is effectively nullified, with parties left to deal with unnecessary bitterness and agony that may arise in an otherwise peaceful relationship. It can be said that while ADR may permit parties to restore status quo as it existed prior to the said dispute, a litigation process would not permit parties to maintain any prior status quo ante, which may have existed. Another factor that arises is that a legal practitioner with even a small understanding of ADR processes can go around referring to themselves as Mediators, without understanding the nuances and minutiae behind undertaking such a process and therefore, result in countless difficulties that can arise due to their and the parties limited awareness. As has been dealt with hereinabove, the mindset/skills that are required to be adopted in mediation/ADR process are completely different from what an ordinary advocate is required to adopt while conducting an ordinary litigation practise.
Lack of identifiable mediation institutions
Within many countries including India, there is a lack of any well defined mediation institutions. Apart from international institutions such as the ICC, LCIA, SIAC and HKIAC which have formulated specific rules for mediation, there are not many institutions which provide clear training and follow up workshops for interested persons. There is a clear lack of exclusive and dedicated mediation centres in many countries, which clearly goes on to show that ambiguous training is provided to many persons. There are many countries 8
such as France etc. where there are more mediation centres than cases, resulting in such centres working under capacity.
Need for teaching mediation techniques in law s chools
Most legal practitioners built their foundation in law schools which focus on preparing students for a litigation oriented practise. Students cannot determine which are the cases which are appropriate for immediate settlement through mediation and ADR processes and which are the cases where litigation should be resorted to. Not every case that is filed is suitable for adjudication through litigation. Even practitioners of law in many cases cannot adequately differentiate between the two classes of cases, thereby sending patent settlement oriented cases for long and protracted litigation, thereby needlessly burdening the court. Students, who are not taught this fine distinction between cases fit for ADR and cases where litigation is to be resorted to, therefore, develop an inherent bias and cannot adequately act as facilitator or enabler, which is a prime quality required to be a mediator. Furthermore, even after the ADR process is complete and the determination has been rendered, as pointed out hereinabove, the proposed amicable settlement is usually challenged before the civil courts in a fresh round of litigation, thereby completely negating the positive benefits of ADR. As such, mediation practise and traditions have seen slow development. Furthermore, many legal students do not pay too much attention or interest in ADR processes and the reality of ADR within the domestic jurisprudence. In certain countries, there is still a perceived aura concerning litigation practise. As such, due to the lack of knowledge and desire to practise ADR, the development of mediation is still progressing at an extremely slow pace. Therefore, as can be seen, there are a number of challenges and potential roadblocks that are still existing in the modern context that prevents ready adoption of mediation and other ADR processes and prevents ready adoption. Furthermore, it needs to be pointed out that parties are suspicious of resorting to mediation and other ADR processes due to the fact that they feel that for bringing quietus, there needs to be a binding litigation process that conclusively settles the issue. Many people feel that proceedings before ADR forums are likely to get challenged before Courts, resulting in further proceedings even after apparent consent agreements. Therefore, clear guidelines need to be framed in this regard to ensure a binding quietus. 2015 ***** 9
