LexisNexis

Law on mediation in India and its recent developments

Monday 20 December 2021

Shreyas Jayashima
Aarna Law, Bangalore​​​​​​; Website Officer, IBA Mediation Committee

Aishwarya Paspulate
Aarna Law, Bangalore

Introduction

Mediation has in recent years proven to be an effective alternative – they are now being pushed as a first option for parties to pursue. In 2002, an amendment was made via section 89 of the CPC[1] that empowered courts to refer matters that 'contained elements of settlement' to be settled out of court. The section enumerates different options for alternative dispute redressal, one of them being mediation.

Judicial support for mediation

In Salem Bar Association v Union of India[2] the Honourable Supreme Court directed for a committee to be appointed to frame model rules explaining the procedure for mediation. Consequently, the Mediation and Conciliation Project Committee[3] to inter alia provide for training programmes, certification to mediators, grant-in-aid, and awareness programmes.

The Law Commission of India, in compliance with the aforesaid judgment, drafted the consultation paper on Alternative Dispute Redressal and Mediation Rules in 2003 which was adopted by several High Courts to formulate their separate Mediation Rules.

Courts in Ahmedabad, Chennai, Delhi, Kerala and Bangalore (to name a few) now have annexed mediation centres within court complexes to encourage the adoption of this alternative.[4] The Courts, even at appellant stage, have encouraged mediation as a viable dispute redressal mechanism. 

Legislative provisions on mediation

Legislations are also not far behind. Mediation finds mention in the Companies Act[5] which calls for the institution of a mediation panel to whom the parties or the Court may at any time during the proceedings refer the matter with the intention to amicably settle the matter. In 2018, the Commercial Courts Act, 2015 was amended to include Section 12A - this stipulates that a suit which does not contemplate any urgent interim relief shall not be instituted unless the parties exhaust the remedy of pre-institution mediation.​​​​​​[6]

Internationally, India showed its support for mediation when it became a signatory to the UN Convention on International Settlement Agreement.​​​​​​[7] Further, provisions have been specifically included to incentivise litigants to voluntarily choose this path. For instance, Section 16 of the Court Fees Act, 1870​​​​​​[8] provides for the refund of the entire court fees if the matter was finally settled using the alternative dispute redressal mechanism.​​​​​​[9]

Absence of a comprehensive legislation on mediation

Despite these developments, India still does not have a law dedicated to mediation. When the pandemic struck in 2020, courts were forced to shut down and shift online. While the mode of dispute resolution may have changed, the burden did not. From 2015-2021, out of the 109,869 cases referred to mediation by the Family Court, Tis Hazari Courts, Delhi, a total number of 95,102 were successfully disposed of, resulting in a disposal rate of 86.56 per cent in that court.​​​​​​[10] This clearly shows the effectiveness of mediation as a dispute resolution mechanism. The Apex Court​​​​​​[11] recently also directed the government to consider the feasibility of enacting an Indian Mediation Act. Formalizing mediation through a legislation will help make the procedure uniform. Currently, it finds itself scattered across in different provisions. A comprehensive legislation providing for institutionalized framework for mediation will help gain more clarity, and encourage parties to Mediate (either private or court sanctioned mediation). It is, now more than ever, become paramount that a uniform legal framework be adopted in respect of Mediation in order to protect the rights of the parties involved and ensuring speedy and cost-effective course of action pertaining to enforcement of such settlement agreement.

[11] M.R. Krishna Murthi v. New India Assurance Co. Ltd, (2020) 15 SCC 493, (India).

[1] Code of Civil Procedure (Amendment) Act, 1999, No 46, Acts of Parliament, (India), came into effect in 2002.

[2]Salem Bar Association v Union of India (2003) 1 SCC 49; [2005] 6 SCC 344 (India).

[3]The Committee was constituted by the Chief Justice of India, Honourable Mr Justice R C Lahoti by order dt. 9 April 2005.

[4] Mediation Training Manual of India, Mediation and Conciliation Project Committee, Supreme Court of India, p8.

[5]Section 442, The Companies Act, 2013, No.18, Acts of Parliament, (India).

[6]Inserted via The Commercial Court, Commercial Division and Appellant Division Of High Courts (Amendment) Act, 2018, No 28, Acts of Parliament, (India).

[7] The Convention was adopted on 20 December 2018 and India became a signatory on 7 August 2018.

[8]Inserted via Code of Civil Procedure (Amendment) Act, 1999, No 46, Acts of Parliament, (India).

[9] M Siddiq (D) Thr Lrs v. Mahant Suresh Das & Ors, Civil Appeal No. 10866-10867/2010, (India).

[10] Delhi Courts, https://delhicourts.nic.in/dmc/statistical.htm.

[11] M R Krishna Murthi v New India Assurance Co Ltd, (2020) 15 SCC 493, (India).