Development of the Mediation Mechanism in India to Resolve Commercial Disputes Under International Investments

Introduction 

Recently the Ministry of Law & Justice has notified some provisions of the much awaited the Mediation Act, 2023. The Central Minister of Law and Justice, Arjun Ram Meghwal mentioned in Rajya Sabha¹ that the establishment of the Mediation Council of India under section 31 of the Mediation Act, 2023 was under process for institutionalization of the conduct of mediation in the country and One Working Group had been constituted for framing of subordinate legislation under the Act. On October 9, 2023, various provisions of the Mediation Act were brought into force by the Central Government, which inter alia, include provisions relating to: (i) non-applicability of the Mediation Act to the proceedings conducted by Lok Adalat and Permanent Lok Adalat (Section 26); (ii) Mediation Council of India (Section 31 to 38); (iii) Mediation Fund (Section 45 to 47); and (iv) other miscellaneous provisions such as definitions, power to make rules and regulations under the Mediation Act, power to remove difficulties in giving effect to the provisions of the Mediation Act, non-applicability to pending proceedings and transitionary provisions (Section 1, 3, 50 to 54, 56 to 57). Though the law has not been implemented totally but no doubt it is a praiseworthy step taken by legislature in alternative dispute redressal system of the country.

There were three major reasons for need of a separate mediation law, mainly, continuous pendency or set aside of arbitral awards, lower ranking of India in ‘ease of doing business’ due to pendency of commercial disputes and adoption of Singapore Convention on Mediation. Though arbitration law has undergone significant changes to keep pace with current developments in the arbitration landscape and to enable arbitration as a viable dispute resolution mechanism. 

Stagnation in Arbitration and Conciliation 

The Amendment Act of 2015 provided for expeditious, fast track and time bound conclusion of arbitral proceedings, neutrality of arbitrators and cost-effective delivery mechanism. This was followed by the Amendment of 2019 with the main objective of giving boost to institutional arbitration and to reduce the share of ad-hoc arbitration in the country. Further, Amendment of 2021 provided for unconditional stay of enforcement of arbitral awards where the underlying arbitration agreement, contracts or making of the arbitral award are induced by fraud or corruption. 

India and Ease of Doing Business 

Again, this present Government has been aggressively pursuing various reform measures to create an effective, efficient, and transparent “Contract Enforcement Regime” and the Commercial Court Act, 2015 is an important legislative reform to facilitate the process of ease of doing business and ease of living simultaneously. In Enforcing Contracts indicator, India achieved 163rd position in the Doing Business Report 2020, an improvement of 23 positions from the 186th rank comparing the business regulations of 190 countries in the Doing Business Report 2015. In this context, the making of mediation ecosystem in this country was another challenge for government. 

International Mediation Convention

Apart from these, United Nations Convention on International Settlement Agreements resulting from Mediation or Singapore Convention on Mediation adopted by the General Assembly on 20 December 2018, applicable to international settlement agreements resulting from mediation, concluded by parties to resolve a commercial dispute, as defined in the Convention which has been signed by India on 7^th August 2019. USA and China, world’s two largest economies, as well as China, and South Korea along with India, three largest economies in Asia, also signed this Convention.

Indian Approach in Mediation 

Already there were few areas wise development of adjudication through mediation procedure introduced directly in Company Laws,² Commercial Court Laws, Consumer Laws³ and indirectly in Real Estate laws⁴ and anti-sexual harassment law⁵ in the form of conciliation. Although the concept of mediation and conciliation were present in our matrimonial laws⁶ in very tacitly from very beginning. According to Section 55 of the Mediation Act, 2023, this latest mediation law shall have overriding effect for conduct of mediation or conciliation over the Indian Contract Act, 1872, the Code of Civil Procedure, 1908, the Legal Service Authorities Act, 1987, the Arbitration and Conciliation Act, 1996, the Micro, Small and Medium Enterprises Development Act, 2006, the Companies Act, 2013, the Commercial Courts Act, 2015 and the Consumer Protection Act, 2019 in the manner specified in third schedule to tenth schedule of the Act. Though procedures of the Industrial Disputes Act, 1947, the Brahmaputra Board Act, 1980, the Cine-Workers and Cinema Theatre Workers (Regulation of Employment) Act, 1981, the Family Courts Act, 1984, the Legal Services Authorities Act, 1987, the Maintenance and Welfare of Parents and Senior Citizen Act, 2007, the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Finance Act, 2016, the Industrial Relations Code, 2020 are excluded from the Mediation Act, 2023.⁷

Institutional Development of ADR In India

On the institutional standpoint, though it was not successful, but the International Centre for Alternative Dispute Resolution was earlier initiative in 1995 under the Societies Registration Act, 1860. Finally, the major step was taken by establishing ‘New Delhi International Arbitration Centre’⁸ as an independent institutional arbitration centre in the line of London Court of International Arbitration or Hong Kong International Arbitration Centre. The Centre was established on 13^th June 2022 for administering and conducting arbitrations and renamed as ‘India International Arbitration Centre’ through the Amendment Act⁹ of 2022. In 2019, the Arbitration Council of India was set up to minimize the roles of courts in arbitration matters, by providing that parties may approach arbitral institutions which are graded by the Council and designated by the Supreme Court and High Courts and to frame policies governing the grading of arbitral institutions and recognizing professional institutes’ providing accreditation of arbitrators. The Council has been operationalised by the notification of the Department of Legal Affairs on 12th October 2023. Again, International Arbitration and Mediation Centre, Hyderabad has been set up to assist in resolving commercial and legal conflicts by providing efficient, cost-effective, and impartial methods of eliminating hurdles at various stages of the life cycle of the conflict.

Conclusion 

The Mediation Act, 2023, describes the legislative framework for mediation to be adopted by disputing parties, especially institutional levels where various stakeholders have been identified to establish a full-bodied and effective ADR ecosystem in India. Now time will show whether Mediation law will able to become a pivotal legislative format for the growth of a culture of amicable settlement of disputes, out of court especially to draw international investments.

1. 1. Rajya Sabha, Unstarred Question No. 2192 (Answered On 21.12.2023), Department of Legal Affairs Ministry of Law & Justice, Government of India
   ↩︎
2. 2. ‘Mediation & Conciliation Panel’ under Section 442 of the Companies Act, 2013 and subsequently the Companies (Mediation & Conciliation) Rules, 2016
   ↩︎
3. 3. Section 74 of the Consumer Protection Act, 2019 deals with establishment of ‘Consumer Mediation Cell’ and subsequently the Consumer Protection (Mediation) Rules, 2020 by the Central Government and the Consumer Protection (Mediation) Regulations, 2020 by National Consumer Disputes Redressal Commission ↩︎
4. 4. Section 32(g) of the Real Estate (Regulation and Development) Act, 2016 ↩︎
5. 5. Section 10 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act,
   2013 ↩︎
6. 6. Section 34(3) & (4) of the Special Marriage Act, 1954, Section 23 (2) of the Hindu Marriage Act, 1955 and
   Section 9(2) of the Family Courts Act, 1984 ↩︎
7. 7. The Second Schedule of the Mediation Act, 2023 ↩︎
8. 8. Through the provision of Section 3 of the New Delhi International Arbitration Centre Act, 2019 ↩︎
9. 9. Act NO. 23 OF 2022 [30 th December 2022] ↩︎

                       

Partha Partim Mitra

Prof. (Dr.) P.P.Mitra has been researching, teaching and writing on various issues on law including Corporate Laws for nearly two decades. Presently he is Dean, Faculty of Law, Vivekananda Global University, Jaipur, Rajasthan. Previously he served as Assistant Dean (Academic Affairs) and as Registrar (in Charge) at National University of… MORE >

                       

Nehal Ahmed Nadwi

He is serving as an Assistant Professor of Law at Woxsen University, Hyderabad, India. He is also serving as a Coordinator of Mediation Cell at School of Law, Woxsen University, Hyderabad, India. He is an alumnus of National Law School of India University (NLSIU), Bangalore, India & Faculty of Law,… MORE >