Draft Mediation Bill, 2021

On 5 November 2021, the Ministry of Law and Justice released a draft of the Mediation Bill, 2021 ("the Bill") for public comments and consultation.

On 5 November 2021, the Ministry of Law and Justice released a draft of the Mediation Bill, 2021 ("the Bill") for public comments and consultation. Following close on the heels of India signing the United Nations Convention on International Settlement Agreements Resulting from Mediation (Singapore Convention), the Bill looks to cement the position of mediation as a sought-after mode of alternative dispute resolution in India. Its many objectives include the promotion, encouragement and facilitation of mediation, especially institutional mediation, enforcement of domestic and international mediation settlement agreements and notably, making online mediation as an acceptable and cost-effective process.

Scope of mediation

1. All or both parties habitually reside in or are incorporated in or have their business in India;
2. The mediation agreement provides that the Mediation Act, 2021 would apply to the mediation; or
3. The mediation is an international mediation.

International mediation has been defined as a mediation that relates to commercial disputes arising out of legal relationships contractual or otherwise under the law in force in India and where at least one of the parties, at the time of conclusion of that agreement, is-

1. An individual who is a national of, or habitually resides in, any country other than India;
2. A body corporate including limited liability partnership of any nature, with its place of business outside India;
3. An association or body of individuals whose place of business is outside India; or
4. The government of a foreign country.

A salient feature of the Bill is the adoption of the international practice of using the terms 'mediation' and 'conciliation' interchangeably, as evident from the meaning of mediation set out under Section 4.

Pre-litigation mediation

Section 6 of the Bill mandates parties to take steps to settle disputes by pre-litigation mediation before filing a suit or proceeding in courts or tribunals. This is irrespective of the existence of any prior mediation agreement. However, at the same time, parties may approach courts or tribunals to seek urgent interim reliefs both before the commencement of or during such mediation proceedings.

Time Limit for completion of mediation

Section 20 of the Bill stipulates a period of ninety days for completion of mediation, with a further extension for an additional period of ninety days with the consent of parties.

Mediated settlement agreement

Section 21 of the Bill defines a 'mediated settlement agreement' to mean and include an agreement or interim agreement in writing between some or all parties resulting from mediation which settles some or all of the disputes between such parties and which is authenticated by the mediator. As per Section 28, such agreements shall be final and binding on the parties and persons claiming under them and shall be enforceable in the same manner as judgements or decrees passed by a court.

Since such agreements are arrived at by mutual consultation, the Bill provides for limited grounds of challenge. Section 29(2) lays down four grounds of fraud, corruption, gross impropriety, and impersonation.

Recognition of institutional mediation

The Bill defines a 'mediation service provider' as a body or organisation that provides for the conduct of mediation and has in place procedures and rules to govern the conduct of the mediation in conformity with the provisions of the statute. Lok Adalats constituted under the National Legal Services Authorities Act, 1987 and mediation centres annexed to courts have also been included under this head.

The abovementioned service providers shall be graded by the Mediation Council of India and shall be required to, among other things, maintain a panel of mediators, provide infrastructure and facilities for the conduct of mediations and register and file settlement agreements.

Online mediation

The Bill recognises online mediation conducted through the use of applications and computer networks, resorted to either wholly or in part, at a certain stage of the mediation process. It further states that the conduct of all such mediations shall be governed by the provisions of the Information Technology Act, 2000.

Establishment of the Mediation Council of India

The Bill provides for the establishment and incorporation of the Mediation Council of India and lays down its broad duties, powers, and functions (along the same lines as that of the Arbitration Council of India).

Enforcement of international commercial settlement agreements

Part III of the Bill deals with the recognition and enforcement of mediation settlement agreements authenticated under the Singapore Convention. Section 50 states that such international commercial settlement agreements shall be treated as binding for all purposes on persons claiming under them and may be relied upon by the said persons in any legal proceeding in India.

Parties applying for enforcement will have to approach the relevant High Court with the settlement agreement or an attested copy of the same along with any other evidence that may be required to prove that the settlement agreement is covered under the Singapore Convention.

Enforcement may be refused at the request of a party on the following grounds –

1. Parties to the mediation agreement were under some incapacity, or the said agreement was null and void, inoperative or incapable of being performed under the law to which the parties have subjected it or under the law of the country of enforcement;
2. The mediation agreement is not binding or is not final, according to its terms;
3. The mediation agreement has been subsequently modified;
4. The obligations under the settlement agreement have been performed or are not clear or comprehensible;
5. Granting relief would be contrary to the terms of the settlement agreement;
6. Serious breach by the mediator of standards applicable to the mediator or mediation; or
7. Failure by the mediator to disclose to the parties' circumstances that raised justifiable doubts as to the mediator's impartiality or independence and such failure had a material impact or undue influence on a party due to which it entered into the settlement agreement.

Enforcement may also be refused if the High Court finds that –

1. The subject matter of disputes is not capable of settlement by mediation under the law of India;
2. The settlement agreement was induced or effected by fraud or corruption; or
3. It is in contravention of the public policy of India.

Consolidating nature of the Bill

The press note issued by the Ministry of Law and Justice dated 5 November 2021 states that since the laws of mediation are contained in several enactments, it was felt necessary to bring forth an umbrella legislation to ascertain the present statutory framework.

In light of this objective, the Bill proposes amendments to the following legislations –

1. Indian Contract Act, 1872 – Exception 1 to Section 28 (Agreements in restraint of legal proceedings) has been modified to include resolution of a dispute by mediation along with arbitration.
2. Arbitration and Conciliation Act, 1996 – Part III of the Act covering conciliation (Sections 61 to 81) has been substituted with one section which states that any reference to resolution of disputes through conciliation under any law in force shall be construed to mean a reference to mediation under the Mediation Act, 2021.
3. Code of Civil Procedure, 1908 – Section 89 has been modified to include a reference to the Mediation Act, 2021 and to provide for the interchangeable use of the terms 'conciliation' and 'mediation'.

Appropriate amendments have also been proposed to the Commercial Courts Act, 2015 and the Legal Services Authorities Act, 1987 to include references to the Mediation Act, 2021.

Comments

By addressing the critical issue of enforceability of both domestic and international mediated settlement agreements, the Bill provides a much-needed impetus to this mode of dispute resolution in the Indian legal landscape. Secondly, the recognition of online mediation is encouraging to parties in a post pandemic world, both from cost and health standpoints. The effectiveness of measures such as mandatory pre-litigation mediation, however, remains to be seen.

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