Explained: What is Mediation Bill, and how it will help resolve disputes

Rajya Sabha on August 1 passed the Mediation Bill, 2021, which halves the maximum time for completing mediation proceedings to 180 days. The bill was passed with voice vote amid a walkout by Opposition members, demanding a discussion on the Manipur issue.

Union Law Minister Arjun Ram Meghwal said, “Under this, we are making Mediation Council of India. This a neutral third party. This bill makes the process a time-bound mechanism which saves time and money of parties.” Referring to the 5 crore cases pending in courts, the Law Minister said, “The bill has been brought with an aim to provide legal framework to mediation.”

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The bill also aims to reduce the burden on courts by encouraging warring parties to resolve their own disputes with the assistance of trained mediators and mediations facilitated by authorised mediation institutions. Prior to the introduction of the bill in Parliament, key amendments to it were approved by the Union Cabinet last month.

What is the aim of introducing the mediation bill?

The mediation bill seeks to institutionalise mediation for civil and commercial disputes and establish a Mediation Council of India (MCI). It was first introduced in the Rajya Sabha in December 2021, and was sent to a parliamentary standing committee, which submitted its report in July 2022. The proposed law, aimed at introducing the first standalone legislation for mediation in India, envisages setting up an MCI.

The bill requires persons to try to settle civil or commercial disputes through mediation before approaching any court or tribunal. A party may withdraw from mediation after two mediation sessions. The bill lists disputes that are not fit for mediation (such as those involving criminal prosecution, or affecting the rights of third parties). The central government may amend this list.

If the parties agree, they may appoint any person as a mediator. If not, they may apply to a mediation service provider to appoint a person from its panel of mediators. Agreements resulting from mediation will be binding and enforceable in the same manner as court judgments.

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Another striking feature of the bill is community mediation that may be attempted to resolve disputes likely to affect the peace and harmony among residents of a locality. It will be conducted by a panel of three mediators (may include persons of standing in the community, and representatives of resident welfare associations).

What amendments have been made in the bill?

Among the key amendments is the removal of a provision that made pre-litigation mediation mandatory before parties could file any suit or proceedings in court, regardless of the existence of a mediation agreement between them.

The amended bill makes pre-litigation voluntary, leaving parties with the choice to participate in a pre-litigation mediation process instead of litigating. The change is in line with the suggestions of the standing committee, which had said that mediation must remain voluntary, and that restraining parties from approaching courts or tribunals may amount to denial of access to justice.

Another important amendment in the 2021 bill includes reducing the time period of concluding the process. While the 2021 draft contemplated a period of 180 days with a further extension for an additional period of 180 days with the consent of parties, the amendment brings this down to 180 days in total. The parliamentary panel had recommended reducing the time limit from 180 days to 90 days, and further an extension period of 60 days.

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How will MCI be established and who will appoint mediators?

The Union government will set up the Mediation Council of India (MCI), which will comprise of a chairperson, two full-time members (with experience in mediation or Alternate Dispute Resolution), three ex-officio members (including the law secretary, and the expenditure secretary), and a part-time member from an industry body.

Among the functions of the council will be registration of mediators and recognising mediation service providers and mediation institutes which train, educate, and certify mediators.

Mediators may be appointed by either the parties through an agreement or a mediation service provider (an institution administering mediation). They must disclose any conflict of interest that may raise doubts on their objectivity. Parties may then choose to replace the mediator.

Will a mediated settlement be on par with a court judgment?

The bill is expected to give a legal framework to a mode of dispute resolution that has largely been informal so far. Mediation is a type of alternative dispute resolution (ADR), where a dispute is referred to a neutral person, who engages with the rival parties and tries to reach a solution agreeable to both. Courts have regularly been ordering mediation to settle civil, commercial, and family disputes, among others.

Also read: Time is ripe for legislation containing compulsory pre-litigation mediation: CJI

At present, mediations are ordered by the courts, and when a dispute is thus settled, the settlement agreement is converted into a decree by the court, thus making it binding on the parties. However, the mediation bill puts a mediated settlement agreement on par with a court judgment, without the need for any further court sanction.

Mediation agreements will be final, binding, and enforceable in the same manner as a court decree. They can only be challenged on grounds of: (i) fraud, (ii) corruption, (iii) impersonation, or (iv) relating to disputes not fit for mediation.

Will it enable ease of doing business?

The bill augurs well for trade and industry, as it allows the settlement of commercial disputes. One of the salient features of the bill is the introduction of a mediation council, which will not only promote mediation across the country, but will also train mediators. This will ensure that mediators are able to handle complex commercial disputes arising out of business dealings.

The bill provides for the creation of mediation service providers, which shall oversee the infrastructure for the efficient conduct of mediation, thereby creating confidence in the business community. According to the bill, the entire process of mediation should be completed in 180 days and therefore mediation gives businesses an easier and faster way to resolve their disputes as compared to court litigation, which takes years to complete.