The evolution of the concept of mediation within the realm of legal proceedings has been marked by significant milestones, underlining its growing prominence as a method of dispute resolution. Among the various mechanisms of Alternative Dispute Resolution, mediation stands out, gaining statutory recognition through legislative amendments. Notably, the inclusion of Section 89 of the Code of Civil Procedure, 1908 which was added/ introduced by the Civil Procedure Code (Amendment) Act, 1999, demonstrated a pivotal step in this direction. While mediation's roots can be traced back to earlier legal frameworks, such as Section 4 of the Industrial Disputes Act, 1947 where the role of conciliators encompassed mediation in settling industrial disputes, it wasn't until later that a dedicated legislative framework was established.
As the Mediation was not recognized under any statute, the legislature passed the Mediation Bill, 20 months after the bill was first introduced. The intervening period saw the Bill being referred to the Parliamentary Standing Committee, which consequently culminated in the form of a report which was presented on July 13.
The Mediation Bill, 2021 was recently passed in Rajya Sabha on 1st August 2023 and in Lok Sabha on 7th August 2023, and with the passing of the bill in both the houses, India is now on the cusp of having dedicated legislation governing this concept of mediation. Several recommendations were made by the Parliamentary Standing Committee which was considered by the Legislature as well. The Bill has not received the Presidential Assent till now, however, it is important to note the changes that the Bill is seeking in the other statutes.
Under Chapter XI of the Bill, the Bills seeks to amend certain acts, including Arbitration and Conciliation Act, 1996, Contract Act, 1872, Code of Civil Procedure, 1908, Companies Act, 2013, Consumer Protection Act, 2019, Micro, Small and Medium Enterprises Development Act, 2006. The provisions referred to the Schedules of the Bill talks about the relevant and suggestive changes to be made to the provisions of these Statutes.
Section 58 of the Bill provides for amendments to be made in the Indian Contract Act, 1872 which should be read with the Third Schedule. As per the Third Schedule, the Bill seeks an amendment to be made in Section 28 of the Contract Act which stipulates conditions for illegality of the contracts being made on the pretext of preventing an aggrieved party from seeking remedy in a relevant Court. However, there are few exceptions to it and one such exception is the exclusive jurisdiction clause of an agreement which provides for exclusivity conferred upon a Court at one place by the parties agreeing mutually through a contract that in case of any dispute between the parties, the same will be referred to that particular court. On a similar footing, the Mediation Bill is seeking to amend the provision, by including the parties’ intention to refer their disputes through mediation.
The amendment seeks to amend the exception clause and provides for validating a contract wherein two or more persons agree to refer their disputes to be resolved by way of mediation and in case of such contact being made in writing, the contract will be held to be invalid.
Section 59 of the Bill seeks to amend the relevant provision of the Code of Civil Procedure, 1908, specifically Section 89 of the Code, which provides for different alternative modes of resolving a dispute. As per the Fourth Schedule, Section 89 will be amended in a manner wherein a proper procedure will be provided to the parties who want to settle their dispute through mediation and the Court shall refer the parties to mediation to the Court annexed mediation center or to any other mediator as per the options of the parties and the provisions of the Mediation Act (as and when applicable) will be applied to such Court referred mediations.
Section 60 of the Bill seeks to amend the Legal Services Authorities Act, 1987, which will be read with the Fifth Schedule of the Bill. As per Section 4(f) of the 1987 Act the Central Authority will perform the function of encouraging the settlement of disputes by way of negotiations, arbitration and conciliation. Now, after the amendment, the Central Authority will encourage the settlement of the disputes through Mediation as well.
The Bill, under Section 61 read with Sixth Schedule, seeks to amend firstly Section 43D of the Arbitration Act, wherein the words mediation, conciliation will be omitted in sub-section (1) and in sub-section (2) the words “and conciliation” whenever they occur will be omitted.
Under the said provision of the Bill, Section 61 seeks to be substituted wherein the conciliation as provided under the Arbitration Act and the Code of Civil Procedure the same will be construed as mediation referred under Section 4 of the Mediation Bill, 2021.
Section 62 of the Mediation Bill read with the Seventh Schedule of the Bill, which seeks to amend the provision of the MSMED Act, 2006. Section 18 of the MSMED Act provides for reference to be made to the facilitation council. The amended provisions state that if the dispute has arisen with regards to any amount due under section 17 of the MSMED Act, a reference will be made to the Micro and Small Enterprises Facilitation Council and upon receipt of a reference, the Council will either conduct Mediation itself or refer the matter to any mediation service provider as per the provisions of the Mediation Act, 2021 (as and when applicable).
As per the amendment, the conduct of the mediation under this Section will be governed by the provisions of the Mediation Act, 2021 and where such mediation initiated is not successful, the Council shall refer the matter to arbitration or refer it to any institution or centre providing ADR services for such arbitration and the provisions of the Arbitration Act, 1996 will be applicable.
The Bill, under the provision of Section 63 read with Eight Schedule, seeks to substitute the relevant provision of Section of the Companies Act, 2013, specifically Section 442. The substituted Section 442, states that any party to a proceeding before the Central Government, Tribunal or the Appellate Tribunal may at any time apply for reference of the matter for mediation and the same will be referred to mediation which will be governed by the provisions of the Mediation Act, 2021.
The Central Government, Tribunal or the Appellate Tribunal can refer any dispute for mediation on suo motu basis which will be conducted under the provisions of the Mediation Act, 2021 (as and when applicable). The mediated settlement agreement arrived between the parties will be filed and the Central Government or the Tribunal or the Appellate Tribunal will pass an order making the said mediated settlement agreement as part thereof.
Section 64, read with Ninth Schedule of the Bill, seeks to amend the Commercial Courts Act. The bill seeks to substitute Section 12-A of the Commercial Courts Act, 2015 which stipulates Pre-Litigation Mediation and Settlement. Substituted Section 12-A provides for authorization provided by the Central Government for the purpose of pre-litigation mediation to a mediation service provider as defined u/s 3 of the Mediation Act.
If the parties to a commercial dispute arrive at a settlement, the same will be reduced into writing with the provisions of Section 28 and 29 of the Mediation Act, 2021 and the mediated settlement agreement arrived at under this section will be in accordance with the provisions of the Mediation Act, 2021.
Section 65 of the Bill seeks to amend the Consumer Protection Act, 2019. The provision of Section 65 read with the Tenth Schedule provides for substitution of Section 37 of the Consumer Protection Act, 2019 which provides for reference to mediation by the District Commission or the State Commission or the National Commission, on the application preferred by any of the parties at any stage of the proceedings for settlement by mediation under the Mediation Act, 2021.
Section 37A as inserted in the Consumer Protection Act, provides for agreement which is reached between the parties with respect to all of the issues involved in the consumer dispute and the terms of such agreement will be reduced to writing and signed by the parties. The mediator will be submitting the report to the commission. As per Section 37B, the Commission within 7 days of the receipt of the settlement report passes the suitable order recording such settlement of consumer dispute and if the settlement by mediation cannot be reached, the concerned commission will continue hearing the issues involved in the consumer dispute.
In a comprehensive legislative stride, the Mediation Bill has navigated its way through intricate legal terrain, garnering parliamentary approval and thereby edging India closer to a dedicated mediation framework. This bill, encompassing amendments across diverse statutes including the Contract Act, Code of Civil Procedure, Arbitration and Conciliation Act, and more, heralds a new era of structured mediation. With meticulous provisions enhancing mediation's role, particularly in commercial and consumer contexts, the bill signifies a remarkable stride towards expeditious and efficient dispute resolution.