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» The Mediation Bill, 2021

The Mediation Bill, 2021

Ministry: Law and Justice

Introduced

tee Rajya Sabha Stan

Dec 20, 2021

• • •

Highlights of the Bill

The Bill requires persons to try to settle civil or

commercial disputes through mediation before
approaching any court or tribunal. A party may
withdraw from mediation after two mediation
sessions. The mediation process must be completed
within 180 days, which may be extended by another
180 days by the parties.

The Mediation Council of India will be set up. Its

functions include registering mediators, and
recognising mediation service providers and
mediation institutes (which train and certify
mediators).

The Bill lists disputes that are not fit for mediation
(such as those involving criminal prosecution, or
affecting the rights of third parties). The central
government may amend this list.

If the parties agree, they may appoint any person as a

mediator. If not, they may apply to a mediation
service provider to appoint a person from its panel of
mediators.

Agreements resulting from mediation will be binding

and enforceable in the same manner as court
judgments.

Key Issues and Analysis

The Bill makes participation in pre-litigation

mediation mandatory. Mediation is a voluntary
dispute resolution process. The question is whether
it is appropriate to mandate parties to attempt pre-
litigation mediation. On one hand, this could lead to
more out of court settlements and reduce the
pendency in courts. On the other hand, mandating
mediation goes against its voluntary nature.

The Mediation Council, established to regulate the

profession of mediators, may not have representation
of practising mediators with adequate experience.
This is unlike other professional regulators such as
the Bar Council of India.

The Mediation Council requires prior approval from

the central government before issuing regulations
related to its essential functions. It is not clear why
such prior approval is required. This may also be
questioned since the central government may be a
party to mediations.

The Bill applies to international mediations only if

they are conducted in India. It does not provide for
enforcement of settlement agreements resulting from
international mediation conducted outside India.

PART A: HIGHLIGHTS OF THE BILL

Context

Alternate dispute resolution (ADR) refers to means by

which disputes are settled outside the traditional court
system. In India, modes of ADR include arbitration,
negotiation, mediation, and Lok Adalats. Mediation is a
voluntary process in which parties try to settle disputes
with the assistance of an independent third person (the
[1]
mediator). A mediator does not impose a solution on
the parties but creates a conducive environment in which
they can resolve their dispute. The mediation process
depends on the choice of parties, and there are no strict or
binding rules of procedure.1 Benefits of mediation
include its voluntary and non-adversarial nature, the
flexibility and confidentiality of the process, its speed and
cost effectiveness, and the finality of consensual
[2]
settlements. As a mode of ADR, mediation may also
help reduce the case burden on courts.

At present, mediation in India may be: (i) court referred

(courts may refer cases to mediation under the Code of
Civil Procedure, 1908), (ii) private (for instance, under a
contract having a mediation clause), or (iii) as provided
under a specific statute (such as the Commercial Courts
Act, 2015, the Consumer Protection Act, 2019, or the
[3],[4],[5],[6]
Companies Act, 2013). Mediation services are
provided by private ADR centres or mediation centres, as
well as centres set up by courts or tribunals (known as
court annexed mediation centres). As per data published
by the National Legal Services Authority for the year
2021-22, India had 464 ADR centres (397 functional),
570 mediation centres, 16,565 mediators, and nearly
53,000 cases were settled through mediation.[7]

Various countries including Australia, Singapore, and

Italy have standalone laws on mediation.[8] The
suggestion to enact a separate legislation governing
mediation in India has been made on a number of
occasions, including by the Supreme Court (2019), and
the High Level Committee to review the
institutionalisation of arbitration mechanism in India
(2017).8,[9] Further, a committee formed by the Supreme
Court in 2020 had recommended and prepared a draft
umbrella legislation to give sanctity to dispute settlement
[10]
through mediation. The Mediation Bill, 2021 seeks to
promote mediation, particularly institutional mediation,
and provide a mechanism for enforcing mediated
settlement agreements. The Bill has been referred to the
Standing Committee on Personnel, Public Grievances,
Law and Justice.

Key Features

Pre-litigation mediation: Parties must attempt to

settle civil or commercial disputes by mediation
before approaching any court or certain tribunals.
Even if they fail to reach a settlement through pre-
litigation mediation, the court or tribunal may at any
stage refer the parties to mediation if they request for
the same.

Disputes not fit for mediation: The Bill contains a

list of disputes which are not fit for mediation. These
include disputes: (i) relating to claims against minors
or persons of unsound mind, (ii) involving criminal
prosecution, and (iii) affecting the rights of third
parties. The central government may amend this list.

Applicability: The Bill will apply to mediations

conducted in India: (i) involving only domestic
parties, (ii) involving at least one foreign party and
relating to a commercial dispute (i.e., international
mediation), and (iii) if the mediation agreement states
that mediation will be as per this Bill. If the central or
state government is a party, the Bill will apply to: (a)
commercial disputes, and (b) other disputes as
notified.

Mediation process: Mediation proceedings will be

confidential, and must be completed within 180 days
(may be extended by 180 days by the parties). A
party may withdraw from mediation after two
sessions. Court annexed mediation must be
conducted as per the rules framed by the Supreme
Court or High Courts.

Mediators: Mediators may be appointed by: (i) the

parties by agreement, or (ii) a mediation service
provider (an institution administering mediation).
They must disclose any conflict of interest that may
raise doubts on their independence. Parties may then
choose to replace the mediator.

Mediation Council of India: The central government

will establish the Mediation Council of India. The
Council will consist of a chairperson, two full-time
members (with experience in mediation or ADR),
three ex-officio members (including the Law
Secretary, and the Expenditure Secretary), and a part-
time member from an industry body. Functions of the
Council include: (i) registration of mediators, and (ii)
recognising mediation service providers and
mediation institutes (which train, educate, and certify
mediators).

Mediated settlement agreement: Agreements

resulting from mediation (other than community
mediation) will be final, binding, and enforceable in
the same manner as court judgments. They may be
challenged on grounds of: (i) fraud, (ii) corruption,
(iii) impersonation, or (iv) relating to disputes not fit
for mediation.

Community mediation: Community mediation may

be attempted to resolve disputes likely to affect the
peace and harmony amongst residents of a locality. It
will be conducted by a panel of three mediators (may
include persons of standing in the community, and
representatives of resident welfare associations).

PART B: KEY ISSUES AND ANALYSIS

Whether mandating pre-litigation mediation is

appropriate

Mediation is a voluntary dispute resolution process.

Unlike litigation or arbitration, which involve
adjudication of a dispute, mediation involves settlement
with the consent of the parties. The Bill mandates pre-
litigation mediation in civil and commercial disputes.
The question is whether it is appropriate to require
participation in a process which is essentially voluntary.
Note that under the Code of Civil Procedure, 1908, courts
may refer disputing parties to mediation without their
consent.3 There are divergent views on the potential
benefits and drawbacks of mandating mediation. We
discuss these below.

Mediation is a cost-effective dispute resolution process

that also helps reduce the burden on courts by enabling
out-of-court settlements. Mandating participation in pre-
litigation mediation may help reduce pendency and the
slow disposal rate in courts. One may also argue that the
Bill is only compelling parties to participate in the process
and not to settle. Parties may withdraw from the
mediation process after two sessions. The NITI Aayog
(2021) has observed that this model of compulsory
mediation up to a few sessions has been successful in
countries such as Italy, Brazil, and Turkey.10 Other
countries including Australia and England statutorily
mandate mediation for certain disputes, or allow courts to
[11]
order mediation.

On the other hand, mandating participation in mediation

is contrary to its voluntary nature. It may not translate to
a greater uptake of mediation since unwilling parties may
attend the initial mediation sessions as a mere formality
before withdrawing from the process. This could further
delay dispute resolution, and result in additional costs.
Note that the Bill mandates parties to attend at least two
mediation sessions, failing which costs may be imposed
on them.

Further, mandating pre-litigation mediation would require

availability of sufficient trained mediators. NITI Aayog
(2021) noted that a framework for mandatory pre-
litigation mediation in India must be planned keeping in
mind the number of mediators available and the
ecosystem’s ability to provide a large number of
mediators.10 It recommended rolling out mandatory pre-
litigation mediation in a phased manner, first for certain
categories of disputes and then eventually to cover a wide
range of disputes. It observed that the expansion in the
classes of such disputes should see a corresponding
increase in capacity in terms of mediators and ADR
centres.

Mediation Council of India

The Bill provides that the central government will

establish the Mediation Council of India. Functions of the
Council include: (i) registering mediators, (ii) recognising
mediation service providers (institutions administering
mediations) and mediation institutes (providing training,
education, and certification of mediators), (iii) grading
mediation service providers, and (iv) laying down
standards for professional conduct of mediators,
mediation service providers, and mediation institutes. We
discuss two issues with the Council.

The Bill does not require representation of practicing

mediators on the Council

Key functions of the Mediation Council relate to

certification, assessment and registration of mediators,
and laying down standards for their professional and
ethical conduct. The Council will consist of seven
members, including two full-time members with
experience in mediation or ADR, and ex-officio members
such as the Law and the Expenditure Secretaries. The
Bill does not require a practicing mediator to be a member
of the Council. It is also not clear why the Expenditure
Secretary has been made a member of the Council.

Generally, statutory bodies for regulating professionals

(such as lawyers, chartered accountants, and doctors)
necessarily comprise persons having considerable
[12],[13],[14]
experience or practicing in the relevant field.
While the full-time members of the Council must possess
knowledge or experience pertaining to mediation or ADR
laws and mechanisms, they may not necessarily be
practicing mediators with significant experience. For
instance, the Bill would permit an arbitrator to be
appointed as full-time member of the Council. An
arbitrator may not be best suited to perform functions
such as prescribing standards of professional conduct of
mediators. Note that the law governing arbitration in
India was amended in 2019 to provide for setting up the
Arbitration Council of India, whose functions include
grading of arbitral institutions, and accreditation of
arbitrators.[15] This provision has not yet come into
force. The 2019 amendment requires the Arbitration
Council to have a full-time member who is an eminent
arbitration practitioner with substantial knowledge and
experience in institutional arbitration.

Requiring central government approval before issuing

regulations may not be appropriate

Under the Bill, the Council will discharge its major

functions by issuing regulations. It must take approval
from the central government before issuing such
regulations. Regulations may prescribe: (i) professional
standards for mediators, (ii) conditions for registering
mediators and recognising mediation institutes and
mediation service providers, and (iii) the manner for
grading mediation service providers. The question is
whether it is appropriate for the Council to require prior
approval from the central government before issuing
regulations.

First, the Council may play only a nominal role if it must

obtain approval from the central government for
discharging its essential functions. Second, the central
government (or agencies, corporations, and public/local
bodies owned or controlled by it) may also be party to
mediations under the Bill. Note that no such previous
approval for issuing rules and regulations is mandated for
the National Medical Commission (which regulates the
education and profession of doctors) and the Bar Council
of India (except when prescribing the conditions for non-
citizens to practice as advocates).12,14 On the other
hand, regulations made by the respective Councils of the
Institute of Chartered Accountants of India (ICAI) and the
Institute of Company Secretaries of India (ICSI) are
[16]
subject to the approval of the central government.13,

No provision for enforcing certain international

mediated settlements

The Bill applies to international mediations (i.e., where at

least one party is a foreign party) of commercial disputes,
if they are conducted in India. However, there may be
instances involving an Indian party where the mediation is
conducted abroad. In such cases, the problem arises with
the enforcement of settlement agreements in India. The
Bill provides that mediated settlement agreements will be
enforceable in the same way as a judgment or decree of a
court. This does not cover settlement agreements
resulting from international mediation conducted outside
India. Note that the Singapore Convention on Mediation
provides a framework for cross-border enforcement of
settlement agreements resulting from international
[17],[18]
mediation. On August 7, 2019, India became a
signatory to this Convention, but has not yet ratified it.

Mediators conducting pre-litigation mediation require

four registrations

The Bill makes pre-litigation mediation compulsory in

case of civil and commercial disputes. Unless the parties
agree otherwise, mediators conducting pre-litigation
mediation must meet four conditions. They must be
registered with the Mediation Council of India, and
empanelled by a court annexed mediation centre, a
recognised mediation service provider, and a Legal
Services Authority (National, State, or District). That is,
they must be registered/ empanelled at all four places. It
is unclear why satisfying any one of these conditions is
not sufficient for such mediators. For instance, a mediator
registered with the Council but not empanelled by a court
annexed mediation centre or a recognised mediation
service provider will not be eligible to conduct pre-
litigation mediation.

[1]. ‘Mediation’, Mediation and Conciliation Project

Committee, Supreme Court of India.

[2]. Mediation Training Manual of India, Mediation and

Conciliation Project Committee, Supreme Court of India.

[3]. Section 89, The Code of Civil Procedure,

1908; Afcons Infrastructure Ltd. vs. Cherian Varkey
Construction Co., Supreme Court of India, Civil Appeal
No. 6000 of 2010, July 26, 2010.

[4]. Section 12A, The Commercial Courts Act, 2015.

[5]. The Consumer Protection Act, 2019.

[6]. Section 442, The Companies Act, 2013.

[7]. Settlement through Mediation Report (April 2021 to

March 2022), National Legal Services Authority.

[8]. Report of the High Level Committee to Review the

Institutionalisation of Arbitration Mechanism in
India (Chair: Retd. Justice B.N. Srikrishna), July 30,
2017.

[9]. M.R. Krishna Murthi vs. New India Assurance Co.

Ltd., Supreme Court of India, Civil Appeal Nos. 2476-
2477 of 2019, March 5, 2019.

[10]. ‘Designing the Future of Dispute Resolution: The

ODR Policy Plan for India’, NITI Aayog, October 2021.

[11]. Section 60I, Family Law Act 1975 (Australia); The

Civil Procedure Act 2005 (New South Wales, Australia);
Halsey vs. Milton Keynes General NHS Trust, Court of
Appeal (England), [2004] 4 All ER 920.

[12]. The Advocates Act, 1961.

[13]. The Chartered Accountants Act, 1949.

[14]. The National Medical Commission Act, 2019.

[15]. Section 10, The Arbitration and Conciliation

(Amendment) Act, 2019.

[16]. The Company Secretaries Act, 1980.

[17]. United Nations Convention on International

Settlement Agreements Resulting from Mediation, United
Nations Commission on International Trade Law
(UNCITRAL), March 2019.

[18]. Singapore Convention on Mediation (Convention

Text), last accessed on January 20, 2022.

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