Party Autonomy and Pre-Litigation Mediation vis-à-vis The Draft Mediation Bill, 2021

-Shrawani Mohani and Dhruv Jategaonkar*

Justice does not always require black gowns and elaborate arguments; the future belongs to Mediation

-Chief Justice of India N. V. Ramana (At the inaugural session of the International Virtual Mediation Summer School, 2021)

 Alternative Dispute Resolution (“ADR”) mechanisms have been gaining a strong foothold worldwide, especially post-pandemic. Apart from arbitration and negotiation, ‘mediation’ forms one of the most important methods of resolving disputes. Mediation may be understood as “a non-adjudicatory and relatively informal process, where parties participate to reach solutions to resolve their legal disputes”. It is a flexible process with numerous variations, but the common underlying factors in all forms of mediation are self-determination and party participation, which, in fact, form the core values of mediation. In this discussion, we shall refer to self-determination as ‘party autonomy’, since they are synonymous in the context of mediation.

Present Legal Framework governing Mediation in India:

 At present, mediation proceedings may be initiated through three ways: (i) by invoking the mediation clause in the agreement in the event of a dispute, (ii) by way of discretionary reference by the Court under Section 89 of the Code of Civil Procedure, 1908 (hereinafter “the CPC”), or under special legislations such as Section 442 of the Companies Act, 2013and (iii) mandatory pre-litigation mediation under Section 12A of the Commercial Courts Act, 2015. Since the above provisions are scattered and non-uniform, a need was felt for an “umbrella legislation” on mediation. Accordingly, the Draft Mediation Bill, 2021 (hereinafter “the Draft Bill”), which was was recently tabled before the Rajya Sabha on December 20, 2021,was prepared as  standalone legislation with the objective “to promote, encourage and facilitate mediation especially institutional mediation for resolution of disputes commercial and otherwise” across the country. It

However, the provisions, as they presently stand are, under the contemporary international literature on mediation, instances of different approaches to mediation. It is important to study the approaches as they have a direct impact on the discussion of party autonomy in mandatory mediation.

Approaches to Mandatory Mediation:

The second category of provisions as mentioned above i.e., under Section 89 of the CPC or under special legislations, is characterized by an absence of automatic and compulsory reference of matters to mediation. Instead, it is up to the discretion of the Courts to refer certain matters to ADR, as they deem fit. These provisions fall under the category of what Professor Frank Sander terms as the ‘discretionary referral approach’ to mediation. On  the contrary, Section 12A of the Commercial Courts Act, which entails mandatory pre-institution mediation, may be characterized as a ‘categorical’ provision- which statutorily mandates reference of certain matters to ADR.

The Draft Bill envisions mandatory pre-litigation mediation, defined under Section 2(n) of the Draft Bill as “a process of undertaking mediation, as provided under section 6 of this Act, for settlement of disputes before the filing of a suit or proceedings of any nature in respect thereof, before the Court or Tribunal of competent jurisdiction.” Now, Section 6(1) of the Draft Bill provides for mandatory pre-litigation mediation in all suits or proceedings, irrespective of the existence of any mediation agreement or otherwise, between the parties. Section 7 of the Draft Bill , however, excludes disputes in relation to matters listed in Schedule-II of the Draft Bill from reference to mediation. These include disputes involving the prosecution of non-compoundable criminal offenses, matters prohibited under any law or opposed to public policy, morality, or justice, disputes which affect the rights of a third party not privy to the mediation proceedings, among others.

The provision for mandatory pre-litigation mediation under the Draft Bill falls under the categorical approach in reference to ADR, as it entails statutorily mandated reference of disputes to mediation, without involving the Court’s discretion.

Does the Draft Bill harm Party Autonomy?

It is essential to address the crucial question and the major bone of contention, whether party autonomy will be harmed by the implementation of the Draft Bill. At the very outset, it is important to distinguish between consent given by parties for participation in the process of mediation (i.e. front-end consent), and consent that is required for an “authentic agreement (i.e. back-end consent). Speaking in terms of coercion, the difference is between coercion into mediation, and coercion within mediation. The parties may be directed to refer their dispute to mediation, but that is not equivalent to compelling them to arrive at a settlement through it. Section 9(3) of the Draft Bill enshrines this very difference by stating that a direction to the parties to go through mediation shall not impose an obligation on them to reach a settlement at the end of it.

Therefore, the mandatory nature is only in relation to reference to mediation, and not to coerce the parties into arriving at a settlement through the process. Besides, the parties are always at liberty to resort to litigation if mediation fails. Hence, it is important to understand that mediation is being introduced not to replace litigation, but instead to reduce it.

Further, the parties can choose the mode of mediation they wish to adopt i.e., institutional mediation or ad-hoc mediation, since both these types are considered valid under the Draft Bill. The settlement arrived at by the parties has the same status and effect as that of an order, judgment or decree of a Court or Tribunal. Therefore, the settlement arrived at by mutual understanding of both parties, facilitated by a mediator, shall be binding upon the parties. Thus, the pillars on which mediation is founded i.e., co-operation and trust are kept intact both during and after the mediation process.

Advantages of Mandatory Pre-Litigation Mediation:

All the benefits of mediation as an ADR method, such as the non-adversarial resolution of disputes, increased freedom to parties, confidentiality, time- and cost-effective solution, accrue to mandatory mediation as well. However, a specific advantage of mandatory pre-litigation mediation is that it will help reduce the burden on the courts, by avoiding further addition to the pendency of cases. This does not imply that with mandatory mediation in place, there will be no litigation, but that parties will at least explore the option of amicable settlement of their disputes instead of directly approaching the courts. In the authors’ opinion, the advantages of the Draft Bill won’t be visible immediately, since it might take some time for the benefits to seep in. However, once parties realize the extent of the freedom they can enjoy in deciding their dispute resolution process, they will begin to appreciate the significance of the Draft Bill.  

Concerns about Mandatory Mediation under the Draft Bill:   

One of the first concerns with the blanket introduction of mandatory mediation is that it may not be the most suitable method for resolving all kinds of disputes. Therefore, mediation should be made mandatory only for certain categories of disputes. Further, it should be introduced in a phased manner considering procedural difficulties such as concerns about good faith, confidentiality, resources, lack of adequate skilled mediators and enforcement of settled agreements. This will also allow a test run to determine the extent of settlement of disputes in the pre-litigation stage. 

Conclusion:   

Since the Draft Bill envisages only compulsory reference to mediation, it is safe to conclude that party autonomy will be kept intact and that the Draft Bill does not entail harm to the self-determination of mediating parties in any way. While it is too early to comment on its effectiveness, the Draft Bill is certainly a welcome change to the legislative regime of mediation. However, its success will now depend on the manner in which it is implemented by the executive as well as the judiciary.

*Shrawani Mohani and Dhruv Jategaonkar are currently a 4th year student of B.A.LL.B. at ILS Law College, Pune. You may reach out to Shrawani here or via email at shravya230800@gmail.com, and Dhruv here or via email at jategaonkardhruv@gmail.com.


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