“… Pre-litigation mediation is the need of the hour to avoid delaying justice and for early disposal of pending cases, which are mounting. I think the time is ripe to devise a comprehensive legislation, which contains compulsory pre- litigation mediation…” Mr. S A. Bobde, Former Chief Justice of India

Introduction

In a country that is struggling to reduce pendency of 4.5 crores plus cases, the delay caused by Covid-19 has further pushed back the already clogged system by many more years.

The adversarial approach to dispute resolution has resulted in a huge backlog virtually crippling the Indian justice system. In April 2016, ex-Chief Justice of India, Justice T.S. Thakur had suggested additional 70,000 judges to clear the pending cases pointing to the inadequacy of judicial strength as the prime cause.

However, simply increasing the judicial strength will not resolve the problem. We have to somehow prevent entry of fresh cases in the court of the first instance. This void has been attempted to be plugged by alternate methods of dispute resolution, in particular, arbitration and also by the amendment in the Commercial Courts Act mandating pre-litigation mediation for commercial disputes. However, with judicial interventions at various stages, arbitration in the past has not turned out to be as effective as it was touted to be.

The primary focus of this piece is on mandatory pre-litigation mediation to be adopted as the way forward to ensure that lesser number of disputes enter into our Court system at the first instance and attempts be made to ensure their disposal through an effective pre-litigation mediation outside of Courts, so that unlike today, the Courts become measure of last resort rather than being the first choice.

Significantly, it is now the need of the hour that for certain category of civil disputes such as commercial, matrimonial, property, Negotiable Instruments cases, Mandatory Pre-Mediation Mediation be introduced as a legislation in India. There are also discussions to include mediation for matters pertaining to Insolvency & Bankcruptcy Code, 2016, where the major reason for rejection of the Application seeking initiation of Corporate Insolvency Resolution Process (CIRP) is the pendency of dispute between the Parties. In such IBC cases, it would be prudent for the Adjudicating Authority to refer such matters to mediation where there are disputes raised by the Corporate Debtor. Upon receipt of failure report from the Mediator the Court may consider the disputes accordingly and decide the matter in accordance with Law.

in the Italy has done this successfully since 2013 for 13 categories of civil disputes.

Mediation is being considered as a viable method of dispute resolution and has in the recent times gained enormous popularity in India. Court annexed and private mediations through various mediation centres operating in different parts of the country have reported significant levels of success.

What is Mandatory Pre-litigation Mediation Approach?

Mandatory pre-litigation mediation provides an opportunity to parties and their legal counsels to meet with a professional neutral mediator at a neutral place to learn about the process and decide whether they would like to give themselves an opportunity to collaboratively settle the dispute. If after this mandated initial session, the parties are amenable to try and settle their dispute through mediation, the case may not even reach the Courts. If the parties, however, decide not to proceed with mediation, they are deemed to have fulfilled the requirements of the law and can then thereafter approach the Courts for resolution of their disputes.

What has been the experience of other international jurisdictions in this context?

Many jurisdictions of the world such as United States of America, Singapore, Japan, Italy, Spain, France, Germany and most other countries of the European Union promote pre-litigation mediation. Most of these countries have pre-litigation mediation since a long time. The settlement agreements arising out of such mediations are enforceable in a Court of law.

Mandatory mediation with an easy opt-out has proven to generate a substantial number of litigations to mediations in several jurisdictions. Pre-litigation mediation is practised extensively in civil matters in the European Union.

India is going through a similar crisis that Italy had gone through way back in 2013. Italy faced a high rate of pendency of cases, adopted what is referred to as ‘opt out’ mandatory mediation. In 2010 and 2013, it introduced a law for mandatory pre-litigation mediation for certain disputes (like partition and joint ownership of property) before a matter was filed in court. Under their opt-out model, the litigants cannot approach the Italian Courts, unless and until they can prove that they have attended an initial mediation session and that was not successful.  This law in Italy has over the years shown good success.

In USA, mediation is a distinct profession. For example, the states of California and Ontario’s respective mandatory mediation programs although they are differ in terms of how they are administered. While California has implemented mandatory mediation in family cases, specifically cases where child custody and visitation are in issue.  By contrast, Ontario has implemented mandatory mediation in most civil disputes but has explicitly carved out an exception for family cases.

In Singapore, the Singapore International Mediation Institute (“SIMI”), an independent professional body lays down standards and qualifications for mediators and trains/accredits mediators has been established. SIMI is supported by the Singapore Ministry of Law and the National University of Singapore.

Even in India, there have been many instances where the Courts would at the first instance urged Parties to meet and make an effort to settle the disputes in the presence of a Third Party Mediator failing which the matter be brought before the Courts for adjudication. However, these instances were far and few and not within the regulatory framework and thus neither binding for the Courts nor for the Parties.

The Mediation Bill, 2021

Interestingly amidst the lingering need for giving further sanctity to mediation in India, in a welcome move, a Mediation Bill (“Bill”) was introduced in Rajya Sabha on December 20, 2021, which has been sent to the Committee on Law and Justice for further scrutiny. The idea behind the Bill, rightly, is to promote mediation including pre-litigation mediation in India for the resolution of disputes.  In addition to applicability of the Bill to individuals and private companies, its provisions are also applicable to government bodies/agencies provided the dispute is commercial in nature. Section 6(1) of the Bill makes it mandatory for a party to take steps to settle the dispute by pre-litigation mediation before filing any suit or proceeding in any Court or Tribunal, and the same may be carried out irrespective of there being a Mediation Agreement. The aforesaid section thus makes pre-litigation mediation mandatory for many types of civil disputes provided such a dispute is not barred by Schedule I (which includes criminal offences) and not being a commercial dispute falling within the Commercial Courts Act. 2015. Commendably, the bill gives liberty to parties to appoint a mediator of their own choice. Alongside, the bill also makes a provision whereby a party can file a Suit before a Court for seeking urgent interim relief, which shall go a long way in giving a the much needed boost to Mediation. The Bill provides that a Mediated Settlement Agreement can be enforced in accordance with the provisions of the CPC, 1908.

The Way Forward

The Bill has come at the right time and will definitely provide the much needed clarity, credibility, recognition and legitimacy it requires to Mediation as a process.

For mediation to gain further momentum in our country, other initiatives including improving quality of mediators; providing enhanced training to mediators; establishing necessary and adequate infrastructural and administrative facilities; and securing a universal code of ethics and professional standards to be followed by all mediators, must also be incorporated through a specifically enacted mediation law.

A robust mediation bar just as there are in international jurisdictions is critical to the development of mandatory mediation in India to ensure availability and accessibility of practitioners with knowledge and experience.

Lawyers of the future need to develop a range of adversarial and consensual methods to resolve disputes. If they are familiar with only the adversarial, they tend to use it indiscriminately, thereby causing harm to the litigants. Towards this end, we lawyers can contribute to this cause by advising our clients is that if settlement is a possibility it must be explored before taking the matter to the Court. Contrary to the popular belief that this is counter-productive to a good practice, a client may in reality appreciate that it was his interest that was kept paramount and will help build one’s goodwill and reputation as a lawyer.

By Shweta Bharti, Senior Partner & Sumit Jay Malhotra, Principal Associate, Hammurabi & Solomon Partners