This article discusses mediation is written by Sankalp Jain, pursuing M.A. in business law from NUJS, Kolkata.
Mediation is a voluntary, party-centered and structured negotiation process where a neutral third party assists the parties in amicably resolving their dispute by using specialized communication and negotiation techniques. In mediation, the parties retain the right to decide for themselves whether to settle a dispute and the terms of any settlement. Even though the mediator facilitates their communications and negotiations, the parties always retain control over the outcome of the dispute. Mediation is also voluntary. The parties retain the right to decide for themselves whether to settle a dispute and the terms of settlement of the dispute. Even if the court has referred the case for the mediation or if mediation is required under a contract or a statute, the decision to settle and the terms of settlement always rest with the parties. This right of self-determination is an essential element of the mediation process. It results in a settlement created by the parties themselves and is, therefore, acceptable to them. The parties have ultimate control over the outcome of mediation. Any party may withdraw from the mediation proceedings at any stage before its termination and without assigning any reason.
Mediation is a party-centred negotiation process. The parties and not the neutral mediator are the key point of the mediation process. Mediation encourages the active and direct participation of the parties in the resolution of their dispute. Though the mediator, advocates, and other participants also have active roles in mediation, the parties play the key role in the mediation process. They are actively encouraged to explain the factual background of the dispute, identify issues and underlying interests, generate options for agreement and make a final decision regarding the settlement. Though the mediation process is informal, which means that it is not governed by the rules of evidence and formal rules of procedure it is not an extemporaneous or casual process. The mediation process itself is structured and formalized, with clearly identifiable stages. However, there is a degree of flexibility in following these stages.
Mediation, in essence, is an assisted negotiation process. Mediation addresses both the factual/ legal issues and the underlying causes of a dispute. Thus, mediation is broadly focused on the facts, law, and underlying interests of the parties, such as personal, business/commercial, family, social and community interests. The goal of mediation is to find a mutually acceptable solution that adequately and legitimately satisfies the needs, desires and interests of the parties.
Mediation provides an efficient, effective, speedy, convenient and less expensive process to resolve a dispute with dignity, mutual respect and civility. Mediation is conducted by a neutral third party- the mediator. The mediator remains impartial, independent, detached and objective throughout the mediation process. In mediation, the mediator assists the parties in resolving their dispute. The mediator is a guide who helps the parties to find their own solution to the dispute. The mediator’s personal preferences or perceptions do not have any bearing on the dispute resolution process.
In Mediation, the mediator works together with parties to facilitate the dispute resolution process and does not adjudicate a dispute by imposing a decision upon the parties. A mediator’s role is both facilitative and evaluative. A mediator facilitates when he manages the interaction between the parties, encourages and promotes communication between them and manages interruptions and outbursts by them and motivates them to arrive at an amicable settlement.
A mediator evaluates when he assists each party to analyze the merits of a claim/defence and to assess the possible outcome at trial.
The mediator employs certain specialized communication skills and negotiation techniques to facilitate a productive interaction between the parties so that they are able to overcome negotiation impasses and find mutually acceptable solutions. Mediation is a private process, which is not open to the public. Mediation is also confidential in nature, which means that statements made during mediation cannot be disclosed in civil proceedings or elsewhere without the written consent of all parties. Any statement made or information furnished by either of the parties and any document produced or prepared for/during mediation is inadmissible and non-discoverable in any proceeding. Any concession or admission made during mediation cannot be used in any proceeding. Further, any information given by a party to the mediator during mediation process is not disclosed to the other party, unless specifically permitted by the first party. No record of what transpired during mediation is prepared.
Any settlement reached in a case that is referred for mediation during the course of litigation is required to be reduced to writing, signed by the concerned parties and filed in Court for the passing of an appropriate order. A settlement reached at a pre-litigation stage is a contract, which is binding and enforceable between the parties. In the event of failure to settle the dispute, the report of the mediator does not mention the reason for the failure. The report will only say “not settled”.
The mediator cannot be called upon to testify in any proceeding or to disclose to the court as to what transpired during the mediation. Parties to the mediation proceedings are free to agree for an amicable settlement, even ignoring their legal entitlement or liabilities.
Mediation in a particular case, need not be confined to the dispute referred, but can go beyond and proceed to resolve all other connected or related disputes also.
TYPES OF MEDIATION
- Court – Referred Mediation– It applies to cases pending in Court and which the Court would refer for mediation under Section. 89 of the Code of Civil Procedure, 1908.
- Private Mediation – In private mediation, qualified mediators offer their services on a private, fee-for-service basis to the Court, to members of the public, to members of the commercial sector and also to the governmental sector to resolve disputes through mediation. Private mediation can be used in connection with disputes pending in Court and pre-litigation disputes.
ADVANTAGES OF MEDIATION
- The parties have control over the mediation in terms of 1) its scope (i.e., the terms of reference or issues can be limited or expanded during the course of the proceedings) and 2) its outcome (i.e., the right to decide whether to settle or not and the terms of the settlement.)
- Mediation is participative. parties get an opportunity to present their case in their own words and to directly participate in the negotiation.
- The process is voluntary and any party can opt out of it at any stage if he feels that it is not helping him. the self-determining nature of mediation ensures compliance with the settlement reached.
- The procedure is speedy, efficient and economical.
- The procedure is simple and flexible. It can be modified to suit the demands of each case. Flexible scheduling allows parties to carry on with their day-to-day activities.
- The process is conducted in an informal, cordial and conducive environment.
- Mediation is a fair process. the mediator is impartial, neutral and independent. the mediator ensures that pre-existing unequal relationships, if any, between the parties, do not affect the negotiation.
- The process is confidential.
- The process facilitates better and effective communication between the parties which is crucial for a creative and meaningful negotiation.
- Mediation helps to maintain/ improve/ restore relationships between the parties.
- Mediation always takes into account the long-term and underlying interests of the parties at each stage of the dispute resolution process – in examining alternatives, in generating and evaluating options and finally, in settling the dispute with focus on the present and the future and not on the past. this provides an opportunity to the parties to comprehensively resolve all their differences.
- In mediation, the focus is on resolving the dispute in a mutually beneficial settlement.
- A mediation settlement often leads to the settling of related/connected cases between the parties.
- Mediation allows creativity in dispute resolution. parties can accept creative and non-conventional remedies which satisfy their underlying and long-term interests, even ignoring their legal entitlements or liabilities.
- When the parties themselves sign the terms of the settlement, satisfying their underlying needs and interests, there will be compliance.
- Mediation promotes finality. the disputes are put to rest fully and finally, as there is no scope for any appeal or revision and further litigation.
- Refund of court fees is permitted as per rules in the case of settlement in a court-referred mediation.
LEGAL RECOGNITION OF MEDIATION IN INDIA
The concept of mediation received legislative recognition in India for the first time in the Industrial Disputes Act, 1947. The conciliators appointed under Section 4 of the Act are ” charged with the duty of mediating in and promoting the settlement of Industrial disputes.” Detailed procedures were prescribed for conciliation proceedings under the Act.
Arbitration, as a dispute resolution process was recognized as early as 1879 and also found a place in the Civil Procedure Code of 1908. When the Arbitration Act was enacted in 1940 the provision for arbitration originally contained in Section 89 of the Civil Procedure Code was repealed. The Indian Legislature made headway by enacting The Legal Services Authorities Act, 1987 by constituting the National Legal Services Authority as a Central Authority with the Chief Justice of India as its Patron-in-Chief.
The Indian parliament enacted the Arbitration and Conciliation Act in 1996, making elaborate provisions for conciliation of disputes arising out of legal relationship, whether contractual or not, and to all proceedings relating thereto. The Act provided for the commencement of conciliation proceedings, appointment of conciliators and assistance of suitable institution for the purpose of recommending the names of the conciliators or even appointment of the conciliators by such institution, submission of statements to the conciliator and the role of conciliator in assisting the parties in negotiating settlement of disputes between the parties.
In 1999, the Indian Parliament passed the CPC Amendment Act of 1999 inserting Sec.89 in the Code of Civil Procedure 1908, providing for reference of cases pending in the Courts to ADR which included mediation. The Amendment was brought into force with effect from 1st July, 2002.
Since the inception of the economic liberalization policies in India and the acceptance of law reforms the world over, the legal opinion leaders have concluded that mediation should be a critical part of the solution to the profound problem of arrears of cases in the civil courts. Mandatory mediation through courts has now a legal sanction. Court-Annexed Mediation and Conciliation Centres are now established at several courts in India and the courts have started referring cases to such centres. In Court-Annexed Mediation the mediation services are provided by the court as a part and parcel of the same judicial system as against Court-Referred Mediation, wherein the court merely refers the matter to a mediator.
One feature of court-annexed mediation is that the judges, lawyers and litigants become participants therein, thereby giving them a feeling that negotiated settlement is achieved by all the three actors in the justice delivery system. When a judge refers a case to the court-annexed mediation service, keeping overall supervision on the process, no one feels that the system abandons the case. The Judge refers the case to a mediator within the system. The same lawyers who appear in a case retain their briefs and continue to represent their clients before the mediators within the same set-up. The litigants are given an opportunity to play their own participatory role in the resolution of disputes. This also creates public acceptance for the process as the same time-tested court system, which has acquired public confidence because of integrity and impartiality, retains its control and provides an additional service. In court-annexed mediation, the court is the central institution for resolution of disputes. Where ADR procedures are overseen by the court, at least in those cases which are referred through courts, the effort of dispensing justice can become well-coordinated.
ADR services, under the control, guidance and supervision of the court would have more authenticity and smooth acceptance. It would ensure the feeling that mediation is complementary and not competitive with the court system. The system will get a positive and willing support from the judges who will accept mediators as an integral part of the system. If the reference to mediation is made by the judge to the court annexed mediation services, the mediation process will become more expeditious and harmonized. It will also facilitate the movement of the case between the court and the mediator faster and purposeful. Again, it will facilitate reference of some issues to mediation
TYPES OF DISPUTES FOR MEDIATION
Judges who refer the cases for settlement through any of the ADR methods are known as referral judges. The role of a Referral Judge is of great significance in court-referred mediation. All cases are not suitable for mediation. Only appropriate cases which are suitable for mediation should be referred for mediation. Success of mediation will depend on the proper selection and reference of only suitable cases by referral judges.
Reference to ADR and statutory requirement
Section 89 and Order X Rule 1A of Code of Civil Procedure, 1908 require the court to direct the parties to opt for any of the five modes of alternative dispute resolution and to refer the case for Arbitration, Conciliation, Judicial Settlement, Lok Adalat or mediation.
While making such reference the court shall take into account the option if any exercised by the parties and the suitability of the case for the particular ADR method. In the light of judicial pronouncements, a referral judge is not required to formulate the terms of the settlement or to make them available to the parties for their observations. The referral judge is required to acquaint himself with the facts of the case and the nature of the dispute between the parties and to make an objective assessment to the suitability of the case for reference to ADR.
Stage of Reference
The appropriate stage for considering reference to ADR processes in civil suits is after the completion of pleadings and before framing the issues. If for any reason, the court did not refer the case to ADR process before framing issues, nothing prevents the court from considering reference even at a later stage. However, considering the possibility of allegations and counter allegations vitiating the atmosphere and causing further strain on the relationship of the parties, in family disputes and matrimonial cases the ideal stage for mediation is immediately after service of notice on the respondent and before the filing of objections/written statements by the respondent. An order referring the dispute to ADR processes may be passed only in the presence of the parties and/ or their authorized representatives.
Under section 89 CPC, consent of all the parties to the suit is necessary for referring the suit for arbitration where there is no pre-existing arbitration agreement between the parties. Similarly, the court can refer the case for conciliation under section 89 CPC only with the consent of all the parties. However, in terms of Section 89 CPC and the judicial pronouncements, consent of the parties is not mandatory for referring a case for Mediation, Lok Adalat or Judicial Settlement. The absence of consent for reference does not effect the voluntary nature of the mediation process as the parties still retain the freedom to agree or not to agree for settlement during mediation.
Avoiding delay of trial
In order to prevent any misuse of the provision for mediation by causing delay in the trial of the case, the referral judge, while referring the case for mediation, shall post the case for further proceedings on a specific date, granting time to complete the mediation process as provided under the Rules or such reasonable time as found necessary.
Choice of Cases for reference
As held by the Supreme Court of India in Afcons Infrastructure Ltd. and Anr. V. Cherian Varkey Construction Co. Pvt. Ltd. and Ors., (2010) 8 Supreme Court Cases 24, having regard to their nature, the following categories of cases are normally considered unsuitable for ADR process.
- Representative suits under Order I Rule 8 CPC which involve public interest or interest of numerous persons who are not parties before the court.
- Disputes relating to election to public offices.
- Cases involving grant of authority by the court after enquiry, as for example, suits for grant of probate or letters of administration.
- Cases involving serious and specific allegations of fraud, fabrication of documents, forgery, impersonation, coercion, etc.
- Cases requiring protection of courts, as for example, claims against minors, deities and mentally challenged and suits for declaration of the title against the Government.
- Cases involving prosecution for criminal offences.
All other suits and cases of civil nature, in particular, the following categories of cases (whether pending in civil courts or other special tribunals/forums) are normally suitable for ADR processes:
- i) All cases relating to trade, commerce and contracts, including
– disputes arising out of contracts (including all money suits);
– disputes relating to specific performance;
– disputes between suppliers and customers;
– disputes between bankers and customers;
– disputes between developers/builders and customers;
– disputes between landlords and tenants/licensor and licensees;
– disputes between insurer and insured
- ii) All cases arising from strained or soured relationships, including
– disputes relating to matrimonial causes, maintenance, custody of children;
– disputes relating to partition/division among family members/coparceners/co-owners; and
– disputes relating to the partnership among partners.
- iii) All cases where there is a need for continuation of the pre-existing relationship in spite of the disputes, including
– disputes between neighbours (relating to easementary rights, encroachments, nuisance, etc.);
– disputes between employers and employees;
– disputes among members of societies/associations/apartment owners’ associations;
- iv) All cases relating to tortious liability, including
– claims for compensation in motor accidents/other accidents; and
- v) All consumer disputes, including
– disputes where a trader/supplier/manufacturer/service provider is keen to maintain his business/professional reputation and credibility or product popularity.
The above enumeration of “suitable” and “unsuitable” categorisation of cases is not exhaustive or rigid. They are illustrative which can be subjected to just exceptions or addition by the courts/ tribunals exercising its jurisdiction/discretion in referring a dispute/case to an ADR process.
In spite of the categorization mentioned above, a referral judge must independently consider the suitability of each case with reference to its facts and circumstances.
Motivating and preparing the parties for Mediation
The referral judge plays the most crucial role in motivating the parties to resolve their disputes through mediation. Even if the parties are not inclined to agree for mediation, the referral judge may try to ascertain the reason for such disinclination in order to persuade and motivate them for mediation. The referral judge should explain the concept and process of mediation and its advantages and how settlement to mediation can satisfy the underlying interest of the parties. Even when the case in its entirety is not suitable for mediation a Referral Judge may consider whether any of the issues involved in the dispute can be referred for mediation.
The mediation process is initiated through a referral order. The referral judge should understand the importance of a referral order in the mediation process and should not have a casual approach in passing the order. The referral order is the foundation of a court-referred mediation. An ideal referral order should contain among other things details like name of the referral judge, case number, name of the parties, date and year of institution of the case, stage of trial, nature of the dispute, the statutory provision under which the reference is made, next date of hearing before the referral court, whether the parties have consented for mediation, name of the institution/mediator to whom the case is referred for mediation, the date and time for the parties to report before the institution/ mediator, the time limit for completing the mediation, quantum of fee/remuneration if payable and contact address and telephone numbers of the parties and their advocates.
Role after conclusion of mediation
The referral judge plays a crucial role even after the conclusion of mediation. Even though the dispute was referred for mediation the court retains its control and jurisdiction over the matter and the result of mediation will have to be placed before the court for passing consequential orders. Before considering the report of the mediator the referral judge shall ensure the presence of the parties or their authorized representative in the court.
If there is no settlement between the parties, the court proceedings shall continue in accordance with law. In order to ensure that the confidentiality of the mediation process is not breached, the referral judge should not ask for the reasons for failure of the parties to arrive at a settlement. Nor should the referral judge allow the parties or their counsel to disclose such reasons to the court. However, it is open to the referral judge to explore the possibility of a settlement between the parties. To protect confidentiality of the mediation process, there should not be any communication between the referral judge and the mediator regarding the mediation during or after the process of mediation.
If the dispute has been settled in mediation, the referral judge should examine whether the agreement between the parties is lawful and enforceable. If the agreement is found to be unlawful or unenforceable, it shall be brought to the notice of the parties and the referral judge should desist from acting upon such agreement. If the agreement is found to be lawful and enforceable, the referral judge should act upon the terms and conditions of the agreement and pass consequential orders. To overcome any technical or procedural difficulty in implementing the settlement between the parties, it is open to the referral judge to modify or amend the terms of settlement with the consent of the parties.
COMPARISON BETWEEN JUDICIAL PROCESS AND VARIOUS ADR PROCESSES
Judicial process is an
where a third party (judge/
other authority) decides the outcome.
Arbitration is a quasi-judicial adjudicatory process where the arbitrator(s) appointed
by the Court or by the parties decide the dispute between the parties.
Mediation is a negotiation
process and not an adjudicatory process. The mediator facilitates the process. Parties participate directly in the resolution of their dispute and decide the terms of settlement.
|2.||Procedure and decision are governed, restricted, and controlled by the
provisions of the relevant statutes.
|Procedure and decision are governed, restricted and controlled by the provisions of the Arbitration & Conciliation Act, 1996.||Procedure and settlement are not controlled, governed or restricted by statutory provisions thereby allowing freedom and flexibility.|
|3.||The decision is binding on the parties.||The award in an arbitration is binding on the parties.||A binding settlement is reached only if parties arrive at a mutually acceptable agreement.|
|4.||Adversarial in nature, as focus is on past events and determination of rights and liabilities of parties.||Adversarial in nature as focus is on determination of rights and liabilities of parties.||Collaborative in nature as focus is on the present and the future and resolution of disputes is by mutual agreement of parties irrespective of rights and liabilities.|
|5.||Personal appearance or active participation of parties is not always required.||Personal appearance or active participation of parties is not always required.||Personal appearance and active participation of the parties are required.|
|6.||A formal proceeding held in public and follows strict procedural stages.||A formal proceeding held in private following strict procedural stages.||A non-judicial and informal proceeding held in private with flexible procedural stages.|
|7.||Decision is appealable.||Award is subject to challenge
on specified grounds.
|Decree/Order in terms of the
settlement is final and is not appealable.
|8||No opportunity for parties to communicate directly with each other.||No opportunity for parties to communicate directly with each other.||Optimal opportunity for parties to communicate directly with each other in the presence of the mediator.|
|9||Involves payment of court fees.||Does not involve payment of court fees.||In case of settlement, in a court-annexed mediation the court fee already paid is refundable as per the Rules.|
|10||Mediation is a non- adjudicatory process.||Conciliation is a non- adjudicatory process.||Lok Adalat is non-adjudicatory if it is established under Section 19 of the Legal Services Authorities Act, 1987.
Lok Adalat is conciliatory and adjudicatory if it is established under Section 22B of the Legal Services Authorities Act, 1987.
|2.||Voluntary process.||Voluntary process.||Voluntary process.|
|3||Mediator is a neutral third party.||Conciliator is a neutral third party.||Presiding officer is a neutral third party.|
|4||Service of lawyer is available.||Service of lawyer is available.||Service of lawyer is available.|
|5||Mediation is party centred negotiation.||Conciliation is party centred negotiation.||In Lok Adalat, the scope of negotiation is limited.|
|6||The function of the Mediator is mainly facilitative.||The function of the conciliator is more active than the facilitative function of the mediator.||The function of the Presiding Officer is persuasive.|
|7.||Involves payment of court fees.||Does not involve payment of court fees.||In case of settlement, in a court-annexed mediation the court fee already paid is refundable as per the Rules.|
|8.||The consent of the parties is not mandatory for referring a case to mediation.||The consent of the parties is mandatory for referring a case to conciliation.||The consent of the parties is not mandatory for referring a case to Lok Adalat.|
|9.||The referral court applies the principles of Order XXIII Rule 3, CPC for passing decree/order in terms of the agreement.||In conciliation, the agreement is enforceable as it is a decree of the court as per Section 74 of the Arbitration and Conciliation Act, 1996.||The award of Lok Adalat is deemed to be a decree of the Civil Court and is executable as per Section 21 of the Legal Services Authorities Act, 1987.|
|10.||Not appealable.||Decree/order not appealable.||Award not appealable.|
|11.||The focus in mediation is on the present and the future.||The focus in conciliation is on the present and the future.||The focus in Lok Adalat is on the past and the present.|
|12.||Mediation is a structured process having different stages.||Conciliation also is a structured process having different stages.||The process of Lok Adalat involves only discussion and persuasion.|
|13.||In mediation, parties are actively and directly involved.||In conciliation, parties are actively and directly involved.||In Lok Adalat, parties are not actively and directly involved so much.|
|14.||Confidentiality is the essence of mediation.||Confidentiality is the essence of conciliation.||Confidentiality is not observed in Lok Adalat.|
Mediation is a valuable dispute resolution tool because the means of reaching an agreement can be as varied as the disputes that need to be resolved. Mediation procedures can be tailored to a variety of factors: the personality of the mediator; the nature of the dispute; the time or resources available; and the antagonism between the parties. The procedure can thus minimize contentiousness, cost, and resources. If it is unsuccessful, the parties can always resort to the courts or other means of dispute resolution. In short, mediation is a valuable weapon against delay, cost, and injustice.
2014 Galgotia Journal of Legal Studies by K.K Geetha
Mediation in India: Practical Indepth LexQuest