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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.

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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 the Indian
Supreme Court has categorically stated that Section 89 is vaguely framed and
required a fresh look so that in which it can be strengthened 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):

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[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 sub-
section (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

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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 pre-
litigation 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

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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 other 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 frame 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

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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

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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 help-
desks 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 ad-
hoc 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

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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

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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 schools

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

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