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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
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.
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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.
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.
Legislative defects
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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.
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.
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:
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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.
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.
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.
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.
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.
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.
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.
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.
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.
2015
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