This article examines the necessity for a fresh legislation on mediation. Let us begin by recalling that Alternative Dispute Resolution (ADR) is a collective term for a wide range of mechanisms through which disputing parties can resolve their dispute outside the court system, and, at times, alongside the court system.
The Singapore Convention on Mediation came into force on 12 September 2020. This Convention (formally known as the United Nations Convention on International Settlement Agreements Resulting from Mediation) provides an effective mechanism for the enforcement of international mediated settlement agreements directly through the courts of the countries that have signed and ratified the Convention. India signed the Singapore Convention on 7 August 2019 but has yet to ratify it. The Singapore Convention did, however, lead to renewed calls in India for a stand-alone law on mediation. The Supreme Court even set up a committee to give a draft to the Government of India for its consideration.
This article examines the necessity for a fresh legislation on mediation. Let us begin by recalling that Alternative Dispute Resolution (ADR) is a collective term for a wide range of mechanisms through which disputing parties can resolve their dispute outside the court system, and, at times, alongside the court system. Section 89 of the Civil Procedure Code (the Code) enables a court to refer the litigating parties in a pending case to the ADR processes of arbitration, conciliation, Lok Adalat, judicial settlement or mediation.
“Arbitration” is an adjudicatory process in which the parties present their dispute to a neutral third person (the arbitrator) for a decision, called the arbitral award. “Conciliation” is a non-adjudicatory process by which parties attempt to reach an amicable settlement of their dispute with the assistance of a neutral third person (the conciliator) lacking the authority to impose a solution upon the parties to the dispute. The stand-alone statute for both these mechanisms is the Arbitration and Conciliation Act, 1996 (the 1996 Act).
A “Lok Adalat” is set up under the Legal Services Authority Act, 1987 (the 1987 Act). A Lok Adalat (not to be confused with a Permanent Lok Adalat for public utilities) has no adjudicatory functions but merely discusses the subject matter with the parties to persuade them to arrive at a just settlement. According to the Supreme Court (Jalour Singh, 2008), an “award” of the Lok Adalat is a non-adjudicatory determination based on a compromise or settlement arrived at by the parties with guidance and assistance from the Lok Adalat, and not an independent verdict reached by any decision making process. If the parties do not arrive at a compromise or settlement, the Lok Adalat cannot pass an award.
“Judicial settlement”, according to the Supreme Court (Afcons, 2010), “is a term in vogue in USA referring to a settlement of a civil case with the help of a judge who is not assigned to adjudicate upon the dispute”.
That leaves the ADR mechanism of “mediation”, for which there is no stand-alone statute in India. What then is mediation? The Supreme Court has held in Afcons that mediation is “synonym” of the term conciliation. The Law Commission of India stated in Para 2.7 of its Report No. 238 (December 2011) that “there is practically no difference between conciliation and mediation and quite often they are used as inter-changeable terms.” The Law Commission quoted from the Dictionary of Modern Legal Usage by Bryan A. Garner as under:
“The distinction between mediation and conciliation is widely debated among those interested in ADR… Some suggest that conciliation is ‘a nonbinding arbitration’, whereas mediation is merely ‘assisted negotiation’. Others put it nearly the opposite way: conciliation involves a third party’s trying to bring together disputing parties to help them reconcile their differences, whereas mediation goes further by allowing the third party to suggest terms on which the dispute might be resolved. Still others reject these attempts at differentiation and contend that there is no consensus about what the two words mean – that they are generally interchangeable. Though a distinction would be convenient, those who argue that usage indicates a broad synonymy are most accurate.”
The definition of “mediation” in Article 2(3) of the Singapore Convention is quite clear. Mediation is defined to mean “a process, irrespective of the expression used or the basis upon which the process is carried out, whereby parties attempt to reach an amicable settlement of their dispute with the assistance of a third person or persons (“the mediator”) lacking the authority to impose a solution upon the parties to the dispute.” That is precisely what the 1996 Act views as conciliation, while providing in Section 67(1) that the conciliator “shall assist the parties in an independent and impartial manner in their attempt to reach an amicable settlement of their dispute.”
Do we really then need a stand-alone law on mediation? Or, would Parliament, perhaps, do better to simply remove the artificial distinction it has made between “mediation” and “conciliation” in Section 89 of the Code some two decades ago – a distinction without a difference that has not only been perpetuated but also further convoluted by judicial decisions.
“Mediation” cropped up along with “conciliation” in Section 89 as an ADR mechanism in the Code of Civil Procedure (Amendment) Bill, 1997, implying that these were separate mechanisms. As far as mediation in Section 89 was concerned, the Bill proposed that the court shall effect a compromise between the parties and shall follow such procedure as may be prescribed. In other words, the Bill contemplated mediation to be a court-effected compromise. The Law Commission of India, however, unequivocally rejected this novel idea, and recommended, in its 163rd Report on the Bill, the deletion of “mediation” as the alternative mode. The Law Commission reasoned that “(m)ediation by a court could be resorted to at any stage of the proceedings and it should not be stipulated as a matter of law either at the stage of issues or at any subsequent stage. Such a course is always open to the court and there is no reason to define or codify it.”
Unmoved, Parliament enacted Section 89 along the lines of the Code of Civil Procedure (Amendment) Bill, 1997. Parliament did so through the Code of Civil Procedure (Amendment) Act 1999 which took effect from 1 July 2002. Though the original intention of using the term “mediation” in Section 89 was apparently a shot at mediation by the court which was hearing the matter, the involvement of a mediator (other than the judge hearing the matter) stood explained by the ruling of the Supreme Court in Salem Bar II (2005). In this case, the Court held that the provision meant that “when mediation succeeds and parties agree to the terms of settlement, the mediator will report to the court and the court, after giving notice and hearing the parties, ‘effect’ the compromise and pass a decree in accordance with the terms of settlement accepted by the parties.”
Let us now examine Section 89 of the Code as it stands. Section 89 permits the court to refer the dispute in a pending case to arbitration or conciliation, and these processes would be governed by the 1996 Act from the stage of such reference. The court could refer the dispute in a pending case to Lok Adalat, and this process would be governed by the 1987 Act from the stage of reference. It may be noted that the ADR processes of judicial settlement and Lok Adalat bear close resemblance, as both mechanisms could be presided over by a judicial officer to assist the parties to settle the dispute. Section 89 enables the court to refer the dispute in a pending case for “judicial settlement including settlement through Lok Adalat” to a “suitable institution or person” and provides that “such institution or person shall be deemed to be a Lok Adalat and all the provisions of the Legal Services Authority Act, 1987 shall apply as if the dispute were referred to a Lok Adalat under the provisions of that Act”. As regards mediation, Section 89 contemplates, as stated earlier, that the court could, in a pending case, effect a compromise between the parties and shall follow such procedure as may be prescribed.
The Supreme Court in Salem Bar I (2002) took the view that the language of Section 89 “contemplates appropriate rules being framed with regard to mediation” and, accordingly, appointed a committee to do so. The Supreme Court in Salem Bar II, while considering the report submitted by this committee, noted that it “seems clear from the report that while drafting the model rules, after examining the mediation rules in various countries, a fine distinction is tried to be maintained between conciliation and mediation, accepting the views expressed by British author Mr. Brown in his work on India that in ‘conciliation’ there is little more latitude and conciliator can suggest some terms of settlements too”. In providing such theoretical, and not necessarily accurate, distinction between conciliation and mediation, it was evidently overlooked that a difference that makes no difference is no difference at all.
Then came the decision of the Supreme Court in Afcons, where the issue was whether Section 89 empowered the court to refer the parties to a suit to arbitration without the consent of both parties. The Supreme Court held, and rightly so, that it did not. The Court, however, went on further to pose the question “(w)hat is wrong with Section 89 of the Code?” and then included in its answer the following:
“The first anomaly is the mixing up of the definitions of ‘mediation’ and ‘judicial settlement’ under clauses (c) and (d) of sub-section (2) of section 89 of the Code. Clause (c) says that for “judicial settlement”, the court shall refer the same to a suitable institution or person who shall be deemed to be a Lok Adalat. Clause (d) provides that where the reference is to “mediation”, the court shall effect a compromise between the parties by following such procedure as may be prescribed. It makes no sense to call a compromise effected by a court, as “mediation”, as is done in clause (d). Nor does it make any sense to describe a reference made by a court to a suitable institution or person for arriving at a settlement as “judicial settlement”, as is done in clause (c)….The mix-up of definitions of the terms “judicial settlement” and “mediation” in Section 89 is apparently due to a clerical or typographical error in drafting, resulting in the two words being interchanged in clauses (c) and (d) of Section 89(2). If the word “mediation” in clause (d) and the words “judicial settlement” in clause (c) are interchanged, we find that the said clauses make perfect sense….the definitions of ‘judicial settlement’ and ‘mediation’ in clauses (c) and (d) of section 89(2) shall have to be interchanged to correct the draftsman’s error. Clauses (c) and (d) of section 89(2) of the Code will read as under when the two terms are interchanged:
(c) for “mediation”, the court shall refer the same to a suitable institution or person and such institution or person shall be deemed to be a Lok Adalat and all the provisions of the Legal Services Authority Act, 1987 (39 of 1987) shall apply as if the dispute were referred to a Lok Adalat under the provisions of that Act;
(d) for “judicial settlement”, the court shall effect a compromise between the parties and shall follow such procedure as may be prescribed. The above changes made by interpretative process shall remain in force till the legislature corrects the mistakes…”.
The startling, and unacceptable, consequence of such judicial interchanging of the terms is that in a court-referred matter, the mediator is now deemed to be a Lok Adalat under the 1987 Act! By virtue of Section 22 of this Act, such mediator will have the powers of a civil court, including though not limited to, the summoning and enforcing attendance of any witness and examining him or her on oath; the discovery and production of any document; the receiving of evidence on affidavit; the requisitioning of any public record or document or copy of such record or document from any court or office and so on so forth. And all mediation proceedings will be deemed to be judicial proceedings within the meaning of those provisions of the Indian Penal Code, 1860 that, for instance, deal with punishment for false evidence or for intentionally insulting or causing interruption to a public servant in judicial proceedings. Further, every mediator will be deemed to be a civil court for the purpose of provisions of the Code of Criminal Procedure, 1973 pertaining to prosecution for contempt of lawful authority of public servant, or for offences specified in Section 22.
Such consequence runs contrary to every conceivable principle of mediation anywhere in the world. And leaves one utterly bewildered – what exactly is the status of the mediation rules under Section 89 which had been approved by the Supreme Court in Salem II prior to such judicial interchanging of the terms in Afcons. After all, the court-annexed mediation centres running throughout the country, including that of the Supreme Court itself, are premised on these mediation rules, and so are their training manuals and guidelines.
Indeed, the incredulous approach towards court-referred ADR mechanisms has led to further issues. It may be noted that the 1996 Act provides that an arbitral award and a conciliated settlement agreement are executable as a court decree, with the latter enjoying the same status and effect as if it were an arbitral award on agreed terms.
In Afcons, the Supreme Court held that a case referred under Section 89 to arbitration goes out of the stream of the referring court and becomes an independent proceeding before the arbitral tribunal, which is to then deliver the award. However, a case referred under Section 89 to conciliation would not go out of the stream of the referring court. Rather, the settlement would have to be placed before the referring court which is to then record its terms and dispose of the case by applying the principles of Order 23 Rule 3 of the Code, that inter alia deal with compromise applications.
The result is that while an arbitral award in a court-referred arbitration under Section 89 is straightaway executable as a court decree, a conciliated settlement agreement (having the same status and effect as if it were an arbitral award on agreed terms) in a court-referred conciliation is not. And this, when both the arbitration award and conciliated settlement agreement are dealt with on identical lines as to their executability by the 1996 Act. Now for a further twist. Should such conciliated settlement agreement in a court-referred conciliation under Section 89 pertain also to disputes which were not the subject matter of that suit, the Supreme Court says in Afcons that the referring court would have to direct, for such a settlement to be effective qua such disputes, that the settlement will be governed by the 1996 Act.
If all this was not strange enough, consider the varying status and consequences to which the disputing parties are subject in respect of the same settlement agreement depending on whether it is arrived in conciliation or in mediation.
Where parties resort to a private conciliation with Mr. A acting as their conciliator under the 1996 Act, the conciliated settlement agreement would be executable straightaway as a court decree. However, if the same parties chose to have a private mediation with Mr. A acting as their mediator and follow the same process in the same dispute, the mediated settlement agreement would, at best, be akin to a contract and would, in case of breach, need to be specifically enforced by the aggrieved party by filing a suit in court.
Again, if the same dispute in a pending case between the same parties is referred by the court under Section 89 to Mr. A to act as a conciliator, Mr. A would follow the mandate of the 1996 Act, mercifully having no powers of a civil court. However, if the same dispute in a pending case between the same parties is referred by the same court under Section 89 to Mr. A to act as a mediator, Mr. A would follow the mandate of the 1987 Act, be a deemed Lok Adalat and could also exercise the aforesaid powers of a civil court.
I have run out of space in this column to share the unhappy fate of judicial settlements or Lok Adalat awards. I, for one, am at a loss to understand such sad state of affairs. I started teaching mediation to law students at the Campus Law Centre, Delhi University in 1998, and have acted as a mediator for about the same period of time. This was right in between the introduction of the Code of Civil Procedure (Amendment) Bill, 1997 and the passage of the Code of Civil Procedure (Amendment) Act, 1999. It defied comprehension at that time, and it continues to do so till date, as to why Section 89 uses two terms – “conciliation” and “mediation” – to describe essentially the same process entailing the same performance skills of the neutral third person to facilitate the resolution of the same dispute by the same disputing parties and culminating into the same settlement agreement that logically should enjoy the same legal status and consequences.
Having made the artificial distinction between conciliation and mediation, the mindless search in India has been for a stand-alone mediation law. The clarity in the Singapore Convention with regard to the mediation process offers an opportunity to rationalise the manner in which mediation itself is viewed in India. Surely we do not have to go down a lot of wrong roads to find the right road. Our law-makers could do us a favour. Rather than struggle to enact a fresh stand-alone law on mediation, please just use the term “mediation” in conjunction with “conciliation” in the 1996 Act and delete “mediation” as a separate mechanism in Section 89 of the Code. By doing so, you will have in your hands the elusive stand-alone law for mediation and, at the same time, will have addressed most of the issues faced by the mediating parties. Adding yet another law to the maze of existing legislation would only serve to blunt the mediation process – an effective ADR mechanism so wholeheartedly encouraged and endorsed by our courts and institutionalised primarily through court-annexed mediation centres.
Dr Aman Hingorani, Advocate-on-Record & Mediator, Supreme Court of India; Arbitrator, PHDCCI; International Advocacy & Mediation Trainer; Author, Unravelling the Kashmir Knot (SAGE)