Law Relating to Mediation as a Mode of Alternative Dispute Resolution

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Mediation is a means to resolve disputes without resorting to litigation or other adversarial modes of dealing with conflict. By seeking a “win-win” solution, acceptable to both sides, mediation promotes better understanding among disputants. It also costs less, results in more lasting agreements than litigation, and can be used for emotionally sensitive disputes where other forms of conflict resolution are inappropriate. As a result, mediation has proven useful in a wide range of arenas including parent-child and family disputes, divorce, business and organizational disputes, environmental conflicts, community/neighbourhood conflicts, and victim-offender mediation. Mediation activities make extensive use of negotiation skills, communication skills, conflict dynamics and analysis, and mediation concepts and techniques.

The Supreme Court appointed the Rao Committee[1] to prepare draft rules for mediation under Section 89(2)(d) of the Code of Civil Procedure, 1908. Pursuant to the said judgment, the Rao Committee prepared the Draft Mediation Rules in 2003.

An analysis of the Rules reveals that the mediation process is a rather informal process and is the least time-consuming form of alternate dispute settlement. As per the Draft Rules, the mediation process is set in motion by the appointment of a mediator. All the parties may agree on the name of a sole mediator for mediating between them. If there are two sets of parties that are unable to agree on a sole mediator, each party shall nominate a mediator.

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If a person is approached in connection with his possible appointment as a mediator, he shall disclose in writing to the parties, any circumstances likely to give rise to justifiable doubt as to his independence or impartiality. If the Court, in which the suit is filed, is satisfied, after conducting such inquiry as it deems fit, and after giving a hearing to the mediator, that there is a justifiable doubt as to the mediator’s independence or impartiality, it shall cancel the appointment by a reasoned order and replace him by another mediator.

The advantage of mediation over the other mechanisms is that the parties may agree on the procedure to be followed by the mediator in the conduct of the mediation proceedings. However, if the parties do not agree on any particular procedure to be followed by the mediator, the mediator shall follow the procedure set out by the mediation rules proposed by the Rao Committee.

These Draft Rules include that the mediator shall fix, in consultation with the parties, a time schedule, the dates, and the time of each mediation session, where all parties have to be present. The mediator shall hold the mediation at any convenient location agreeable to him and the parties, as he may determine. There could be joint or separate meetings with the parties.

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Each party shall, ten days before a session, provide the mediator with a brief memorandum setting forth the issues, which need to be resolved along withal the information reasonably required for the mediator to understand the issue. The mediator can ask either party for any more information, which he deems necessary.

In cases where there is more than one mediator, the mediator nominated by each party shall first confer with the party that nominated him and shall thereafter interact with the other mediators, with a view to resolving the disputes.

To make the matters resolved by the mediator, more flexible and expeditious, the mediator is not bound by the Code of Civil Procedure, 1908 or the Evidence Act, 1872, but shall be guided by principles of fairness and justice, have regard to the rights and obligations of the parties, usages of trade, if any, and the circumstances of the dispute.

The parties shall be present personally or through their counsel or power of attorney holders at the meetings or sessions notified by the mediator. If a party fails to attend a session or a meeting notified by the mediator, other parties or the mediator can apply to the Court in which the suit is filed, to issue appropriate directions to that party to attend before the mediator and if the Court finds that a party is absenting himself before the mediator without sufficient reason, the Court may take action against the said party by the imposition of costs or by taking action for contempt.

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The mediator shall attempt to facilitate the voluntary resolution of the dispute by the parties, and communicate the view of each party to the other, assist them in identifying issues, reducing misunderstandings, clarifying priorities, exploring areas of compromise, and generating options in an attempt to solve the dispute, emphasizing that it is the responsibility of the parties to take a decision which affects them. The mediator shall not impose any terms of settlement on the parties.

The mediator only facilitates in arriving at a decision to resolve disputes and cannot impose any settlement nor can he give any warranty that the mediation would result in a settlement.

For the expeditious settlement of cases by the mediator on the expiry of sixty days from the date fixed for the first appearance of the parties before the mediator, the mediation shall stand terminated, unless the Court, which referred the matter, either suo motu, or upon request by any of the parties, and upon hearing all the parties, is of the view that extension of time is necessary or may be useful. The said extension shall not be beyond a further period of thirty days.

While no one can be compelled to commit to settle his case in advance of mediation, all parties shall commit to participate in the proceedings in good faith with the intention to settle the disputes, if possible. The mediator may disclose the substance of any factual information to the other party so that the other party may have an opportunity to present such an explanation as it thinks fit. However, if the party gives any confidential information to the mediator, he would not disclose the same to the other party.

Unlike Court proceedings mediation sessions and meetings are private. Only the concerned parties or their counsel or power of attorney holders can attend. Other persons may attend only with the permission of the parties and with the consent of the mediator. The Mediator enjoys certain immunity as well. No mediator shall be held liable for anything bona fide done or omitted to be done by him during the mediation proceedings for civil or criminal action nor shall he be summoned by any party to the suit to appear in a Court of law to testify in regard to information received by him or action taken by him or in respect of drafts or records prepared by him or shown to him during the mediation proceedings.

The most important aspect of a mediation process is the settlement agreement. Where an agreement is reached between the parties in regard to all the issues in the suit or some of the issues, the same shall be reduced to writing and signed by the parties or their power of attorney holder. If any counsel has represented the parties, they shall attest the signature of their respective clients. This settlement agreement so signed and attested shall be submitted to the mediator who shall, with a covering letter signed by him, forward the same to the Court in which the suit is pending.

In cases where no agreement is arrived at between the parties or where the mediator is of the view that no settlement is possible, he shall report the same to the said Court in writing.

The Court shall issue a notice to the parties fixing a day for recording the settlement. The Court shall then pass a decree in accordance with the settlement so recorded, only if the settlement disposes of all the issues in the suit. If the settlement disposes of only certain issues arising in the suit, the Court shall record the settlement on the date fixed for recording the settlement and shall include the terms of the said settlement in the judgment, while deciding the other issues.

The Court shall, after consulting the mediator and the parties, fix the fee of the mediator. In cases where there are two mediators, the Court shall fix the fee payable to the mediators that shall be shared equally by the two sets of parties. The expense of the mediation including the fee of the mediator, costs of administrative assistance, and other ancillary expenses concerned, shall be born equally by the various contesting parties or as may be otherwise directed by the Court.

To sum up, the abovementioned provisions relating to the various ADR mechanisms, the Supreme Court listed out categories of cases which are normally not considered to be suitable for ADR process having regard to their nature:-

(i) Representative suits under Order 1 Rule 8 CPC which involve public interest or interest of numerous persons who are not parties before the court. (In fact, even a compromise in such a suit is a difficult process requiring notice to the persons interested in the suit, before its acceptance).

(ii) Disputes relating to election to public offices (as contrasted from disputes between two groups trying to get control over the management of societies, clubs, associations, etc.).

(iii) Cases involving the grant of authority by the court after inquiry, as for example, suits for grant of probate or letters of administration.

(iv) Cases involving serious and specific allegations of fraud, fabrication of documents, forgery, impersonation, coercion, etc.

(v) Cases requiring protection of courts, as for example, claims against minors, deities, and mentally challenged and suits for declaration of title against the government.

(vi) Cases involving prosecution for criminal offences.

All other suits and cases of civil nature, in particular, the following categories of cases (whether pending in civil courts or other special Tribunals/Forums) are normally suitable for ADR processes:-

(i) All cases relating to trade, commerce, and contracts, including

(a) disputes arising out of contracts (including all money claims);

(b) disputes relating to specific performance;

(c) disputes between suppliers and customers;

(d) disputes between bankers and customers;

(e) disputes between developers/builders and customers;

(f) disputes between landlords and tenants/licensor and licensees;

(g) disputes between insurer and insured.

(ii) All cases arising from strained or soured relationships, including

(a) disputes relating to matrimonial causes, maintenance, custody of children;

(b) disputes relating to partition/division among family members/coparceners/co-owners; and

(c) disputes relating to partnership among partners.

(iii) All cases where there is a need for continuation of the pre-existing relationship in spite of the disputes, including

(a) disputes between neighbours (relating to easementary rights, encroachments, nuisance, etc.);

(b) disputes between employers and employees;

(c) disputes among members of societies/associations/Apartment owners Associations.

(iv) All cases relating to tortious liability including claims for compensation in motor accidents/other accidents; and

(v) All consumer disputes including disputes where a trader/supplier/manufacturer/service provider is keen to maintain his business/professional reputation and credibility or ‘product popularity.

The above enumeration of ‘suitable’ and ‘unsuitable’ categorization of cases is not intended to be exhaustive or rigid. They are illustrative, which can be subjected to just exceptions or additions by the Court/Tribunal exercising its jurisdiction/discretion in referring a dispute/case to an ADR process.

[1] In Re, Salem Bar Association Case, (2003) 1 SCC 49.


This article is authored by Sanjeev Kumar & Anshul Sehgal of L&L Partners Law Offices.


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L&L Partners Law Officeshttps://www.llpartners.com/
Since its inception in 1990 which coincides with India’s economic liberalization, L&L, formerly Luthra & Luthra Law Offices, has assisted numerous multinational corporations to set up their presence in India, and navigate the complex Indian legal system. Our new identity reaffirms inclusiveness and recognizes the contributions of its founder, partners, associates and support staff in creating a leading institution.
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