The Bill No. XLIII of 2021, being the Mediation Bill 2021, introduced in Rajya Sabha has been recast and fortunately does address some of the concerns.
My earlier article in this column – “Draft Mediation Bill 2021 – How not to draft a mediation law” had examined the Draft Mediation Bill that had been circulated by the Government for consultative purposes. The Bill No. XLIII of 2021, being the Mediation Bill 2021 (the Bill), introduced in Rajya Sabha has been recast and fortunately does address some of the concerns.
For instance, Section 19 of the Bill now prohibits the mediator, unless otherwise agreed by the parties, from acting as an arbitrator or as a representative or counsel of a party in any arbitral or judicial proceeding in respect of a dispute that is the subject matter of the mediation proceedings; or from being presented by the parties as a witness in any arbitral or judicial proceeding. Section 23(2) of the Bill now provides that “(n)o audio or video recording of the mediation proceedings shall be made or maintained by the parties or the participants including the mediator and mediation service provider, whether conducted in person or online to ensure confidentiality of the conduct of mediation proceedings.” Section 9 of the Bill now permits the court or tribunal to refer the parties to mediation at any stage.
I believe however that the Bill remains conceptually flawed for several reasons and proposes to introduce drastic, and somewhat novel, measures that could create serious issues impacting access to justice. As a point of departure, let us first consider few provisions of the Bill.
The scheme of the Bill indicates that court annexed mediations as also proceedings conducted by Lok Adalat and Permanent Lok Adalat are to be treated on a different footing. Indeed, Section 26 inter-alia provides that “(f)or the purposes of court annexed mediation including pre-litigation mediation, the procedure of conducting mediation shall be such as may be determined under the practice directions or rules, by whatever name called, framed by the Supreme Court or the High Courts.” Section 27 provides that “(t)he provisions of this Act shall not apply to the proceedings conducted by Lok Adalat and Permanent Lok Adalat under the Legal Services Authorities Act, 1987” (the 1987 Act).
The Bill, thus, essentially appears to govern private mediation (whether by an individual or an institution) as distinct from court annexed mediation. My earlier article in this column – “Do we really need a fresh stand-alone mediation law?” had discussed the startling consequence of the decision of the Supreme Court in Afcons (2010), namely that a mediator in a court annexed mediation would be deemed to be a Lok Adalat under the 1987 Act, complete with the powers of a civil court in terms of Section 22 of that Act. The article had also analysed the fallacy in conferring varying legal status to a settlement agreement, depending on whether it was arrived at in a private matter or court-referred matter. By treating court annexed mediation on a different footing, the Bill perpetuates this regrettable state of affairs.
Now, the definition of mediation in Section 4 of the Bill treats conciliation as mediation. Private conciliation is provided for by the Arbitration and Conciliation Act, 1996 (the 1996 Act), which emphasises the principles of self-determination, party autonomy and voluntariness of the process – principles that lie at the core of conciliation/mediation. Hence private conciliation can commence only when both parties agree to conciliate (Section 62 of the 1996 Act) and would immediately terminate when either party seeks its termination (Section 76 of the 1996 Act). The Bill proposes to substitute the provisions of conciliation in the 1996 Act.
Section 6 of the Bill provides for mandatory pre-litigation mediation even if parties do not agree to mediate, and blocks their access to the courts and tribunals across the board for all kinds of cases (except those categories of disputes excluded in the First Schedule which are dealt with later) till they first resort to mediation. Section 6(1) provides inter-alia that “(s)ubject to other provisions of this Act, whether any mediation agreement exists or not, any party before filing any suit or proceedings of civil or commercial nature in any court, shall take steps to settle the disputes by pre-litigation mediation in accordance with the provisions of this Act”. Section 6(2) applies the provisions of Section 6(1) to the tribunals notified by the Central Government or a State Government, as the case may be.
Section 20 and Section 25 of the Bill force such unwilling parties to stay in mediation for at least two mediation sessions. Section 20(1) provides that a “party may withdraw from mediation at any time after the first two mediation sessions”. The date as to when the “mediation proceedings under this Act shall be deemed to terminate” includes in Section 25(c) to be “on the expiry of seven days from the date of the second mediation session, where a party fails to appear before the mediator consecutively for the first two mediation sessions, and the mediator has not received any communication from such party” and in Section 25(d) to be “on the date of the communication by a party or parties in writing, addressed to the mediator and the other parties to the effect that the party wishes to opt out of mediation provided that the parties shall have to attend at least two mediation sessions”. This, translated in actual practice, would imply that a party, who is unwilling to mediate but has to tide over two mediation sessions, may have to wait for several months before being allowed to approach courts or tribunals.
It may also be noted here that Section 8(1) of the Bill provides that “(i)f exceptional circumstances exist, a party may, before the commencement of, or during the continuation of, mediation proceedings under this Act, file suit or appropriate proceedings before a court or tribunal having competent jurisdiction for seeking urgent interim relief.”
The position that emerges is that Parliament, by statutory prohibition, proposes to block the access of the citizen to courts and/or tribunals to seek redressal of his or her grievances till he or she undergoes at least two mediation sessions, while permitting the citizen at the same time to initiate litigation before courts and/or tribunals to seek “urgent interim relief” by pleading “exceptional circumstances”. Such a proposal is inexplicable at several levels. Firstly, the blocking of access of the citizen to courts and tribunals for relief is constitutionally vulnerable. Secondly, it defies comprehension as to how such provisions will help in reducing the pendency of cases or delays in the dispensation of justice, since an aggrieved party will invariably initiate litigation hoping to persuade the court/tribunal of its “exceptional circumstances” for the grant of “urgent interim relief”. Needless to add, such litigation will, in all likelihood, be pursued through constitutional remedies under Article 227 to the High Court, and then under Article 136 up to the Apex Court, more so, in light of the uncertainty as to what constitutes “exceptional circumstances”. Thirdly, no right of appeal has been provided by the Bill from any judicial decision that may be taken by the court or tribunal under Section 8, rendering this provision constitutionally vulnerable as well – after all, at least one right of appeal on facts is, in current jurisprudence, integral to fair procedure and natural justice even if the right of appeal itself is a creation of statute. Fourthly, the provision of mandatory pre-litigation mediation not only runs the risk of being viewed by an unwilling party as being condescending, but also fails to appreciate that a given case, otherwise fit for mediation, may not be right nor ripe for mediation at that stage. Fifthly, such provision destroys the principles of self-determination, party autonomy and voluntariness that are the essence of mediation. Rather, mediation will be reduced to an empty formality at least as far as parties who are unwilling to mediate are concerned – it will become just an additional layer to be crossed for being allowed access to courts/tribunals. Far from “mainstreaming” mediation, such provisions have the potential of irreparably damaging and discrediting the mediation movement itself. Hence, while it is progressive to offer pre-litigation mediation as an option to those who are willing to mediate, it is imperative to reconsider making it mandatory.
Again, if the Bill essentially governs private mediations as distinct from court annexed mediations, it is baffling as to why Section 21 mandates a time limit to complete mediation at all. There could indeed be cases that entail parties to, say, alienate property in adverse market conditions or to carry out extensive construction, and the time required for such action may exceed the stipulated time limit – a maximum of 360 days. If parties wish to mediate or keep mediation pending for more than a year and if the mediator is glad to do so, one is left wondering as to what could be the possible objection of the Government.
Then there are provisions in the Bill that undermine the confidentiality principle of mediation. Section 24(1) mandates (and rightly so) that “(n)o mediator or participant in the mediation, including experts and advisers engaged for the purpose of the mediation and persons involved in the administration of the mediation, shall at any time be permitted, or compelled to disclose to any court or tribunal, or in any adjudicatory proceedings, by whatever description, any communication in mediation, or to state the contents or conditions of any document or nature or conduct of parties during mediation including the content of negotiations or offers or counter offers with which they have become acquainted during the mediation”. However, the proviso to this provision states that nothing in this section “shall protect from disclosure, information sought or provided to prove or dispute a claim or complaint of professional misconduct of mediator or malpractice based on conduct occurring during the mediation.”
But then, should there be professional misconduct of the mediator or malpractice during the mediation, it is open to the party to immediately terminate the mediation. Surely an allegation of misconduct or malpractice during the mediation does not warrant removing the confidentiality attached to mediation.
Section 24(2) of the Bill makes it worse. It provides that “(t)here shall be no privilege or confidentiality that will attach to (a) a threat or statement of a plan to commit an offence punishable under any law for the time being in force; (b) information relating to domestic violence or child abuse; and (c) statements made during a mediation showing a significant imminent threat to public health or safety.” Again, “a threat or statement of a plan to commit an offence” or “statements showing a significant imminent threat to public health or safety” – howsoever vague and omnibus as these expressions are – should entail immediate termination of mediation by the mediator rather than being a ground to do away with confidentiality or privilege.
As regards lack of confidentiality or privilege with respect to information relating to domestic violence or child abuse, it is true that the Supreme Court in Perry Kansagra (2019) took the view that the principle of confidentiality would not apply in matters concerning custody or guardianship issues since the court, in discharge of its role as parens patriae to determine the custody or guardianship of a child, should have access to all material relating to the child, including child counsellor reports in mediation touching upon the home environment of the parties, their personalities and their relationship with the child. This view, however, overlooks the perspective of the parties in mediation. It is the cloak of confidentiality and privilege that persuades a party, even in custody or guardianship disputes, to lower its defences, express its fears and apprehensions and eventually shift from its vigorously stated position towards a settlement. Parties are in fact encouraged to disclose even incriminatory information in mediation for the purpose of addressing underlying interests and concerns. A party may see no reason as to why mediation should become a forum to gather expert opinion or be converted into a discovery process for the court merely because the court has to perform its own role to determine the custody or guardianship of the child. Mediation depends on the goodwill and consent of the parties and a party might choose not to mediate at all, rather than risk a subjective, if not one-sided, report being given by a mediator (or by a child counsellor who participated in the mediation) to the judge who would be deciding that case on merits. Moreso, if the incriminatory information disclosed by a party for the purpose of mediation could get conveyed to the judge and be used against that party. A party could be reluctant to even bring the child to the mediator or counsellor, and should there be judicial directions to do so, it would only add to the undesirable element of compulsion in mediation with consequential loss of faith and trust of that party in the process.
Further, given the wide connotation of the terms “domestic violence” and “child abuse” and the fact that these would factor in most family and matrimonial matters as also guardianship and custody cases, it is doubtful that, in the absence of confidentiality or privilege, a given party would agree to even discuss, let alone address, issues of domestic violence or child abuse. These provisions of the Bill render mediation as an unattractive alternative to resolve such disputes which ironically constitute a large chunk of matters typically referred to mediation.
Others who wish to avoid mediation would not have to go far to look for loopholes. Section 7 of the Bill provides that mediation “shall not be conducted for resolution of any dispute or matter contained in the indicative list under the First Schedule”. The list in the First Schedule inter-alia involves disputes “involving allegations of serious and specific fraud, fabrication of documents, forgery, impersonation, coercion”. The Bill unwittingly offers a party a vast range of grounds to choose from – fraud, fabrication of documents, forgery, impersonation, coercion – for that party to claim and plead (rightly or wrongly) that the dispute is not one in which mediation can be conducted. These kinds of allegations are particularly routine in commercial, contractual and company disputes – yet another large chunk of matters typically referred to mediation.
While on the First Schedule, it may be noted that the list also includes “disputes involving prosecution for criminal offences”. Now, there is a distinction between cases involving heinous criminal offences like murder and rape, and cases relating to criminal offences like cheque bouncing and electricity theft. While mediation cannot be conducted in the former category of cases, it can certainly be conducted in the latter. An interesting matter which I had the occasion to mediate related to the prosecution of a big brand selling polythene carry-bags to its customers in violation of the environmental regulations. The parties happily settled in mediation, with the department not pressing for prosecution in lieu of a handsome contribution by the brand for the department’s environment protection fund. The Bill does no service to mediation by treating every kind of dispute “involving prosecution for criminal offences” as being unfit for mediation.
Further, the Bill retains several of the lacunas which were present in its earlier version that had been circulated for consultation. The Bill still requires in Section 22 the registration of the mediated settlement agreement (other than those arrived at in a court or tribunal referred mediation, or awards under the 1987 Act) with an authority constituted under the 1987 Act, without addressing the question as to whether such provision would not negate the settled proposition that confidentiality extends also to the settlement agreement except for the purposes of its enforcement. An incentive for, say, MNCs or celebrities to settle in mediation is that the settlement terms are kept away from public gaze. The requirement of registration of settlement agreement, and thereby putting its terms in the public domain even if it is for the purposes of record only, disincentivizes mediation. Again, the Bill remains silent on the consequences of the settlement agreement not being registered or on the rationale for putting the responsibility of the registration on the mediator.
The Bill still insists in Section 29 on the legally untenable position that the limitation for challenging a mediated settlement agreement, say on the ground of fraud, would run from the date of receiving of a copy of the settlement agreement. It is commonplace to prescribe that the statutory period of limitation to move the court against fraudulent action would begin from the date of the discovery of fraud – and not from the occurrence of some pre-determined event like the receiving of a copy of the settlement agreement. The Bill remains silent regarding the provisions to govern international mediation relating to non-commercial disputes, since Section 3(f) confines “international mediation” to mediation relating to a commercial dispute arising out of a legal relationship, contractual or otherwise, under Indian law and where at least one of the parties is a foreign national or resident, or a body corporate or association having foreign place of business.
One would have expected that these obvious infirmities would have been addressed in the Bill, and can only hope that they are now corrected before the Bill becomes law. There should be a fresh look at the Bill starting from the very definition of “mediation” in Section 4 which, in my view, is not complete. Mediation is inter-alia defined in Section 4 to be a process “whereby party or parties, request a third person referred to as mediator or mediation service provider to assist them in their attempt to reach an amicable settlement of a dispute.” The global practice, as reflected in the Singapore Convention, is to specify in the definition of mediation itself that the mediator lacks the authority to impose a settlement upon the parties. Section 4 contains no such provision. Rather, Section 18 of the Bill, while requiring the mediator to emphasise that it is the responsibility of the parties to decide and to inform them that he only facilitates in arriving at the decision, goes on to state that the mediator is to inform the parties that he “may not” impose any settlement. The loosely worded language of Section 18 makes it all the more necessary for Section 4 to categorically declare that the mediator and the mediation service provider lack the authority to impose a settlement upon the parties. To conclude, it is only once the basics are sorted out – both conceptually and in practical terms – that it will be possible to draft a coherent and workable law on mediation.
Dr Aman Hingorani, Advocate-on-Record & Mediator, Supreme Court of India; Arbitrator, PHDCCI; International Advocacy & Mediation Trainer; Author, Unravelling the Kashmir Knot (SAGE)