Arbitration In IndiaLitigation in IndiaMediation – Easy & Speedy Settlement

CAN MEDIATION BE ADOPTED IN INDIA?

Long-litigation years, increasing financial pressures on parties and the also the procedural arbitration mechanism, parties have become willing to resolve disputes at a faster pace with minimal costs and are looking for an alternative dispute resolution mechanism.

Mediation is one such mechanism which can help evolving companies, MSMEs, start-ups, etc. to resolve disputes speedily  and continue with the commercial understandings between the parties. The process helps in keeping the relation intact and resolve the differences sitting across the table.

During the outbreak of COVID – 19 and the lockdown of the country, many issues arose with respect to deadlines of the contract, non-performance of contractual obligations, invocation of the force majeure clause, etc. which the parties plan to negotiate upon without affecting the agreements. Mediation shall come to the rescue in the difficult times.

It is a mechanism wherein the individuals sometimes agree to meet in the middle in order to arrive at a conclusion early and avoid approaching the Courts or even arbitration.

ROLE OF A MEDIATOR 

The third neutral party involved i.e., the Mediator is merely a facilitator in the procedure whereas the negotiating parties amicably debate, discuss and arrive at win-win situation. The Mediator can plan to conclude the issues within a week and reach a solution.

The parties agree on an understanding which is in favour of all the interested parties, strikes a balance amongst their issues and not one party benefitting at the cost of others. Understanding the impact of the pandemic to the parties involved one after the other will help in an appropriate end.

During the period of lockdown, facilitating virtual hearings will help in resolving issues in a systematic manner as compared to a face-to-face conversation. Considering the norms of social distancing, the disputes can easily be resolved via video conferencing and the parties can move on with their Agreements.

BENEFITS OF MEDIATION

The Order 32A of the Code of Civil Procedure, 1908 enshrines the Suits relating to matters concerning family wherein it is suggested that Courts should make efforts for settlement with the aim to avoid judicial procedures for family relationships. Therefore, one the key elements of mediation is guarding the relationships. Dragging a dispute to Courts can make the scenario ugly and lead to pointing fingers, elongated procedures and a tensed environment which will not help in keeping the contractual relationship running which is otherwise possible in Mediation.

 With maximum party autonomy in the mechanism, flexibility in also one of the benefits of mediation. The parties can informally decide upon the place of meeting or even consider doing it remotely. For example, during the unforeseen lockdown periods during the outbreak of COVID – 19, it is easy for parties to decide upon a virtual hearing and continue the process.

Minimal procedural requirements also helps the parties to focus on the demand of the parties and decide upon them speedily rather than going around with written submissions, documents, cross examinations, etc. As the same is opted generally over minor disputes which do not require heavy pile of documentation and therefore, it an appropriate procedure of dispute resolution.

A Time and cost effective process is always a plus point for the parties engaged in a minor dispute are also not willing to spend huge amounts or devote much time in order to arbitrate their disputes.

Confidentiality of the procedure and the hearing is also important for the parties to have control over the process and conclude peacefully.

The Mediator can help facilitating the process of settlement and reach a conclusion earlier than expected. With the fear of judicial time-limits, parties try their best to avoid the prolonged procedures before Courts therefore, Courts & even legislations have started promoting settlement before any other remedy.

INDIAN LEGISLATIONS AND JUDICIARY ON MEDIATION

1. The Civil Procedure Code, 1908 as mentioned above promotes settlement procedures when family relationships are involved considering the sensitive nature of the dispute. Furthermore, Section 89 read with Order X Rule 1 (A) of the Civil Procedure Code, 1908 also states that mediation can be one of the mechanisms referred by the Court to resolve disputes and the parties shall follow the procedure as stated by the Courts.

2. The Companies Act, 2013 under Section 442 along with the Companies (Mediation & Conciliation) Rules, 2016 promotes mediation for dispute resolution under the said Act. It also provides for a procedure for disposal of matters between the parties.

3. The Micro, Small & Medium Enterprises Development Act, 2006 makes it mandatory for the parties to approach the MSMED Council made thereunder to adopt the method of conciliation in order to try the process of settlement between the parties and when such method is unsuccessful, the Council refers the parties to arbitration.

4. The Industrial Disputes Act, 1947 under Section 4 allots the Conciliation Officers with “the duty of mediating in and promoting the settlement of industrial disputes.”

5. The Arbitration & Conciliation Act, 1996 also under Section 30 also encourages settlement of disputes through mediation or conciliation or other procedures at any time during the arbitration proceedings.

6. The Commercial Courts Act, 2015 under Section 12A made it mandatory for the parties to resort to the pre-institution mediation prior to initiating a suit under the Act.

Therefore, it is evident that many legislations are trying to adopt, promote and even codify the procedure of mediation or settlement.

Not only legislature, but the judiciary has also at several instances pushed the method of settlement rather than the Court procedures. In the case of State of Punjab v. Jalour Singh (2008) 2 SCC 660, the Supreme Court discussed the procedure of Lok Adalat as a mechanism and observed that,

“If any party wants to challenge such an award based on settlement, it can be done only by filing a petition under Article 226 and/or Article 227 of the Constitution, that too on very limited grounds.”

Furthermore, in the case of Afcons Infrastructure Ltd. v. Cherian Varkey Construction Company Ltd., 2010 (6) ALD 155 (SC), wherein the Court laid down aspects to be kept in mind while giving effect to Section 89 of the Civil Procedure Code, 1908.

“(i) If the reference is to arbitration or conciliation, the court has to record that the reference is by mutual consent. Nothing further need be stated in the order sheet.

(ii) If the reference is to any other ADR process, the court should briefly record that having regard to the nature of dispute, the case deserves to be referred to Lok Adalat, or mediation or judicial settlement, as the case may be. There is no need for an elaborate order for making the reference.

(iii) The requirement in Section 89(1) that the court should formulate or reformulate the terms of settlement would only mean that court has to briefly refer to the nature of dispute and decide upon the appropriate ADR process….”

Further, when all the methods to resolve the dispute of Ayodhya were failing, the Supreme Court went ahead to give a confidential Court-monitored mediation a try for such dispute resolution which had been ongoing for ages which also gave this process of settlement a huge amount of limelight which was the need of the hour. The Court stated that even if there is a one percent chance to resolve disputes through mediation, it should be explored.

A NEED POST COVID – 19 

Even though the country is missing a concentrated statute codifying the process of Mediation unlike Arbitration & Conciliation, it is a method which requires a push in order to help individuals with pending disputes. With the problem of awareness amongst people, it is impossible for the growth of the ADR mechanisms. With the pandemic in picture, several contractual disputes are in the pipeline, involving unpaid payments or the invocation of the force majeure clause with can be resolved through mediation even during the lockdown period.

Smaller disputes having less stake and the primary focus of the parties is on negotiating the terms without any harm to the agreement can easily opt for this procedure for easy resolution.

After the lockdown is lifted, it is not expected that the procedures of the Courts and arbitration proceedings shall be starting immediately at the same speed as before. So to avoid the hassle and huge legal expenses, Mediation and other settlement procedures are always a viable option for parties.

Easy resolution where the parties themselves come to a conclusion can aid in economic growth of the country by disposing of urgent matters involving contractual obligations. It is process having immense potential and can come to our rescue post COVID – 19.

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