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• GS 2: Government Policies and Interventions for Development in various sectors and Issues arising out of their Design and Implementation.
• Tags: #MediationAct2023 #ADRinIndia #DisputeResolution #IndianLegalSystem #MediationBill #LegalReforms   #UPSC #CurrentAffairs #TheHinduEditorialAnalysis.

Why in the News?

The Mediation Act, of 2023, recently passed by both houses of the Indian Parliament, marks a significant shift in dispute resolution by promoting mediation as an essential method for resolving disputes.

Mediation: A Growing Focus in India’s ADR Landscape

• In India, the Alternative Dispute Resolution (ADR) system is gaining prominence as a means for parties to settle disputes outside the courts.
• Previously, discussions mainly centered on arbitration and conciliation under the Arbitration and Conciliation Act, 1996.
• However, mediation is now gaining recognition as a valuable method for resolving disputes.
• This shift is driven by the delays and rising costs associated with court litigation in India. 

The Mediation Act, 2023: A Step Forward in Indian ADR

The recently passed Mediation Bill in the Indian Parliament during the monsoon session has now become the Mediation Act, 2023, following the President’s assent.

• Existing ADR Framework: India’s legal framework already encourages courts to refer disputing parties to Alternative Dispute Resolution (ADR) methods, including mediation.
• Mandatory Pre-Litigation Mediation: The Act takes a significant step forward by obligating each party involved in a dispute to engage in pre-litigation mediation, regardless of any prior mediation agreement.
• Maintaining a Panel of Mediators: The Act mandates that both courts and relevant institutions maintain a panel of qualified mediators to facilitate the pre-litigation mediation process.

Benefits of Mandatory Pre-Litigation Mediation

Reducing Frivolous Claims

• One of the primary advantages of mandatory pre-litigation mediation is the expected reduction in the filing of frivolous claims before Indian courts.
• This requirement compels parties to explore mediation as a means of resolving disputes before resorting to litigation.

Confidentiality and Relationship Preservation

• Mediation is known for its confidentiality, which can help prevent the deterioration of the parties’ relationship that often occurs during a public courtroom battle.
• This confidentiality can encourage open communication and resolution.

Balancing Concerns

• Despite the benefits, concerns exist regarding an obligation to mediate rather than a genuine desire for amicable resolution.
• In some cases, this might empower a reluctant defendant to delay a valid claim. However, the Act incorporates safeguards to address these concerns.

Empanelled Mediators

• The Act stipulates that mediation must typically be conducted by an empanelled mediator who is neutral and possesses expertise.
• This requirement ensures that mediations are led by qualified professionals.

Timely Resolution

• Parties are required to complete the mediation process within 180 days from their initial appearance, unless an extension is agreed upon.
• This provision emphasizes efficiency and timely dispute resolution.

Access to Courts

• Importantly, the Act does not eliminate access to Indian courts entirely.
• In exceptional circumstances, parties can seek urgent interim reliefs from the court before or during mediation.

Balanced Framework

• The Act aims to create a balanced framework that encourages parties to focus more on their commercial relationships and less on disputes.
• Prioritizing expertise and efficiency while preventing the weaponization of the obligation to mediate.

Similarities between Mediation and Commercial Arbitration

The Mediation Act, 2023, effectively positions mediation in India in a manner similar to commercial arbitration. There are striking similarities between the supporting legislations for mediation and arbitration.

• Stringent Timelines: Both mediation and commercial arbitration under the Act impose strict timelines for the conduct of proceedings.
• Mandatory Referral: Indian courts are obligated to refer parties to mediation or arbitration, depending on the circumstances of the dispute.
• Confidentiality: Both mediation and arbitration proceedings are mandated to maintain confidentiality, allowing parties to engage in open discussions without fear of public
• Default Appointment Mechanism: The Act provides a default mechanism for the appointment of a mediator or arbitrator if the parties cannot agree on one. This ensures that disputes are not prolonged due to appointment issues.
• Enforceability: Mediated settlement agreements and arbitral awards are both made enforceable by law, providing parties with the assurance that their agreements will be upheld.
• Establishment of Councils: The Act establishes the Mediation Council of India, similar to the proposal for an Arbitration Council of India in 2019. These councils aim to oversee and promote the respective dispute resolution methods.
• Allies in Resolution: Mediation and commercial arbitration are positioned as allies in the journey of dispute resolution. While mediation focuses on amicable settlement, commercial arbitration provides a structured process for binding resolutions.

Parliament’s Message to Indian Industry

• Dispute Resolution Shift: courts should no longer be the default venue for resolving commercial disputes.
• Preference for Mediation and Arbitration: Parties are expected to amicably resolve their disputes through mediation or commercial arbitration.
• Courts as Last Resort: Access to Indian courts should be seen as a last resort if other dispute resolution methods fail.
• Fostering Camaraderie: The Act aims to promote camaraderie between mediation and arbitration for commercial disputes.
• Reducing Court Burden: This shift in approach is intended to reduce the burden on Indian courts, making them a final option for dispute resolution.

Service Providers in Dispute Resolution

• Institutional Mediation Emphasis: Similar to recent amendments prioritizing institutional arbitration under the A&C Act, the Mediation Act highlights institutional mediation.
• Role of Mediation Service Providers: The Act envisions “mediation service providers” offering not just mediators but also the necessary facilities, secretarial support, and infrastructure for efficient mediation.

Similar to arbitration organizations, mediation service providers in India are projected to play a big role in enabling mediation and turning the country into a hub for international business dispute resolution.

Source: The Hindu

Mains Question

Explain the significance of the Mediation Act, 2023, recently passed in India, in the context of dispute resolution. What benefits and challenges does it pose for the Indian legal system?