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suzannemcappsca · 6 years ago

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Mandatory Pre-Institution Commercial Mediation In India: Premature Step In The Right Direction?

Juhi Gupta

The Indian parliament passed the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts (Amendment) Bill, 2018 (“Bill”) on 10 August, 2018. In a potentially significant development, section 12A of the Bill stipulates mandatory pre-institution mediation i.e. the plaintiff is mandatorily required to exhaust the remedy of mediation prior to filing a suit in accordance with the Commercial Courts (Pre-Institution Mediation and Settlement) Rules, 2018 (“Rules”), unless the suit contemplates any urgent interim relief under the parent Commercial Courts Act, 2015 (“Act”)

Why is this Bill potentially significant?

Mediation has long been considered the poorer cousin to litigation and arbitration in India. In particular, commercial disputes constitute only a fraction of mediations conducted by existing institutions, which largely mediate family, matrimonial and property disputes. Given that commercial disputes constitute a significant proportion of disputes involving Indian parties, urgent legislative, institutional and attitudinal reforms are required to promote commercial mediation. In light of this, the introduction of mandatory pre-institution mediation could provide much-needed impetus to promote commercial mediation, enhance the acceptance of mediation as a viable and preferred dispute resolution mechanism in India and further larger objectives of improving India’s Ease of Doing Business ranking (currently 100) and facilitating quicker resolution of commercial disputes.

Key features

The Bill envisages the opt-out model of mediation, which has enjoyed considerable success in countries like Italy and Turkey in the recent past. In this model, parties are required to attend an initial information session with a mediator. The session provides them an opportunity to learn more about mediation and make an informed decision about whether to attempt it or initiate litigation. Voluntariness of the process is protected as parties are not obligated to participate in an actual mediation session. Any mediated settlement assumes the status of a deemed arbitral award under section 30(4) of the Arbitration and Conciliation Act, 1996 and can accordingly be enforced as an arbitral award.

The Rules appear to prescribe the facilitative model of mediation as they expressly refer to the principles of self-determination and voluntariness. Further, confidentiality of the mediation as well as the principal ethics to be abided by the mediator are also prescribed. The mediation is required to be completed within three months from the date of the plaintiff’s application to initiate mediation, which can be extended by two months upon both parties’ consent.

Premature step?

Although a step in the right direction, there is no denying that the implementation and success of the envisaged mechanism remain highly questionable. Perhaps the biggest hindrance could prove to be the authorisation of the State Authorities and District Authorities (constituted under the Legal Services Authorities Act, 1987) as the relevant authorities to conduct the pre-institution mediation.

The object of the Legal Services Authorities Act is to “provide free and competent legal services to the weaker sections of the society to ensure that opportunities for securing justice are not denied to any citizen by reason of economic or other disabilities”. To this end, State Authorities and District Authorities (“LSA Authorities”) provide legal services to eligible persons and periodically conduct Lok Adalats (“people’s courts”), among other functions and services.

While an analysis of the Legal Services Authorities Act is beyond the scope of this post, it suffices to state that the LSA Authorities are already immensely overburdened. This problem only amplifies when you consider (1) the fact that the Bill lowers the required pecuniary threshold of a suit from one crore Indian rupees (approximately USD 142,000) to three lakh Indian rupees (approximately USD 4,285); and (2) the broad definition of “commercial dispute” under section 2(1)(c) of the Act. While a lower pecuniary threshold is an arguably well-intentioned amendment to allow more people to access commercial courts and facilitate resolution of more commercial disputes, it is likely to adversely impact the pre-institution mediation. A broad definition of “commercial dispute” combined with a lower pecuniary threshold is more likely than not to result in more suits filed under the Act, which in turn means more pre-institution mediations – the LSA Authorities are simply not equipped with the appropriate capacity currently to effectively deal with this, especially without compromising on the justice administered to the weaker sections of society, which is of course an undesirable outcome.

Moreover, it is likely that the LSA Authorities lack adequate and relevant experience and expertise to mediate commercial disputes as the disputes they typically address pertain to labour, family and insurance matters. Experience and training in commercial mediation is always preferable as the issues involved can be fairly technical and a skilled mediator in this regard can ensure effective dialogue and a workable settlement. Even if one were to legitimately reason that facilitative mediation does not necessarily require a mediator to be trained in the area of dispute, there is no guarantee that the officers and members of the LSA Authorities have any experience at all in any sort of facilitative mediation, let alone any training. Efficient, useful and effective mediation of commercial disputes requires, at the very least, some basic minimum training in and exposure to mediation. This is all the more essential in a country like India where awareness of mediation is minimal and, therefore, parties rely on the mediator to effectively guide the process. In my opinion, in this respect, the Bill reflects a widely-held perception in India that anyone can mediate and that mediation is not a distinct discipline which requires its own skills-set.

Ideally, the successful implementation of any reform, such as pre-institution mediation in this case, requires adequate infrastructure and resources to be established and available prior to its introduction. Italy and Turkey invested in resource-building prior to their respective pre-institution mediation reforms, which have played a pivotal role in the success of the reforms. India’s mediation machinery is minimal – there is no pool of certified accredited mediators, no central statute governing mediation and opportunities to be trained are limited. The legislature should have taken into account these constraints and designated external institutions and centres dedicated to ADR and mediation as well as mediation centres attached to courts as the responsible authorities. Such institutions and centres have empanelled mediators who are certified and have undergone certain minimum training. In addition, they are likely to have more experience and skills in commercial mediation than the LSA Authorities.

Further, section 12A creates a carve-out from mandatory mediation for “urgent interim relief” – neither the Act nor the Bill clarifies what constitutes an “urgent” interim relief. This could potentially be misused by parties and/or counsel to wriggle out of participating in mediation or delaying the same, which in turn would defeat the overall objective of the statute. In addition, it is not clear if pursuit of the urgent interim relief temporarily delays the mediation or eliminates the mandatory requirement to mediate altogether.

Lastly, in my opinion, there are two important questions to consider – (1) should there be any monetary sanction if either party does not appear for mediation or participate in the mediation seriously?; and (2) is the three-month time period (extendable by two months) for completion of the mediation too long? Mediators and practitioners in India agree that these are relevant issues, however these are complex issues to which there are no easy/straight-forward answers and merit detailed analysis. This is all the more so in India where mediation is nascent, and resources and awareness limited. For instance, who would determine whether or not a party participated seriously and on what basis? And would a penalty actually guarantee serious participation or only encourage parties to pretend to be participating seriously? Likewise, would a shorter time period actually be feasible given the capacity crunch highlighted above and instead have an adverse impact on the quality of mediation? While a detailed analysis of these issues is beyond the scope of the post, they are definitely worth deliberating and examining in the context of the Bill.

Concluding thoughts

While urgent reforms are required to promote mediation in India, and in particular commercial mediation, any such reform requires an enabling environment to succeed, which India currently lacks. Allocation of the responsibility to the LSA Authorities reflects short-sightedness and lack of careful thought on the part of the legislature. Now that only the President’s assent is required to make the Bill into law (which will almost certainly be given), it remains to be seen how this reform will work in practice. A silver lining, perhaps, is that this Bill may hopefully generate discussion and awareness about commercial mediation, which could lead to more sensible initiatives and reforms in the future.

More from our authors:

EU Mediation Law Handbook: Regulatory Robustness Ratings for Mediation Regimes by Nadja Alexander, Sabine Walsh, Martin Svatos (eds.) € 195 Essays on Mediation: Dealing with Disputes in the 21st Century by Ian Macduff (ed.) € 160.00

The post Mandatory Pre-Institution Commercial Mediation In India: Premature Step In The Right Direction? appeared first on Kluwer Mediation Blog.

from Updates By Suzanne http://mediationblog.kluwerarbitration.com/2018/09/01/mandatory-pre-institution-commercial-mediation-india-premature-step-right-direction/

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internationallawfirm-blog1 · 7 years ago

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Introduction

Globally, alternative dispute resolution is slowly, but steadily becoming the preferred mode for settling disputes. Many corporates including large business conglomerates are seriously evaluating the merits of mediation and conciliatory procedures to avoid lengthy, and expensive litigation given the state of courts in India and the multiple levels of appeal that tend to exhaust both parties. The Indian legislature, promoting the mediation route, has also been attempting to link the bridges so as to fall in line with the evolving global jurisprudence. In India, the family unit continues to play a dominant role in the social structure. It has been often seen that law and religion merges and the Courts have to decide on questions which are rooted more on values and equity than the strict interpretation of law itself. This article examines the scope of alternative dispute resolution mechanism in resolving family disputes in India and the viability of expanding the scope and functions of the family courts in India.

Law Commission Report

The Law Commission of India has endeavored to bridge the differences between the diverse personal laws in India at least in the matter of resolving family disputes. In its 129th Report, it has recommended that alternate modes of dispute redressal ought to be made obligatory on the Courts after the issues have been framed. The settlement can be reached by conducting any of the alternative dispute resolution mechanisms namely, arbitration, mediation, conciliation, judicial settlement or through a Lok Adalat (a settlement court). Accordingly, Section 89 of the Civil Procedure Code 1908 lays down the mechanisms, machinery and procedure for practicing alternative modes of dispute resolution in all matters of civil litigation in India.

Civil Procedure Code 1908

The substantive provision (Section 89) has been procedurally supported by Order X, Rules 1A, 1B and 1C. Rule 1A provides an option to the parties to a suit for settlement of the dispute outside court. If a party exercises this option, a date shall be fixed for appearance before the forum or authority which has been opted by the parties for settlement. Rule 1-B stipulates that, the parties have to appear before such forum or authority and Rule 1-C gives power to the Presiding Officer of the forum or authority to revert the same matter to the Court in the event the said Presiding Officer feels that the said forum or authority should not proceed with the matter in the interests of justice.

It may be pertinent to point out in this regard, that all the proceedings in India governed by the Hindu Marriage Act and the Special Marriage Act are regulated by the provisions contained in the CPC. The Indian Legislature enacted Order XXXIIA in the Code of Civil Procedure by an amendment in 1976 to provide for mandatory settlement procedures in all matrimonial proceedings. Thus, it may be specifically concluded that there has been a conscious effort on the part of the Indian legislature to ensure that family disputes can be settled by means of alternative dispute resolution mechanisms.

The relevant Order is reproduced here below:

“Order XXXIIA: Suits Relating to Matters Concerning the Family:

1. Application of the Order

(1) The provisions of this Order shall apply to suits or proceedings relating to matters concerning the family. (2) In particular, and without prejudice to the generality of the provisions of sub-rule (1), the provisions of this Order shall apply to the following suits or proceedings concerning the family, namely:-

Sub-clause (3) makes it a mandatory duty of the court to make efforts for a settlement to be reached between the parties. The relevant clause is reproduced here below:

“3. Duty of Court to make efforts for settlement

(1) In every suit or proceeding to which this Order applies, an endeavour shall be made by the Court in the first instance, where it is possible to do so consistent with the nature and circumstances of the case, to assist the parties in arriving at a settlement in respect of the subject-matter of the suit. (2) If, in any such suit or proceeding, at any stage it appears to the Court that there is a reasonable possibility of a settlement between the parties, the Court may adjourn the proceeding for such period as it thinks fit to enable attempts to be made to effect such a settlement.”

A conjoint reading of the above sub-clauses clearly establish the statutory mandate laid down by the Civil Procedure Code in the first instance to assist the parties in arriving at a settlement in a matrimonial cause in any matrimonial proceeding before a court of competent jurisdiction. Thus, for any suit or proceedings praying for matrimonial, ancillary or other relief in matters concerning the family, a separate and independent statutory obligation exists providing for mandatory settlement proceedings.

Hindu Personal Laws and Special Marriage Act

The Vedas and other Holy Scriptures makes reconciliation an essential tool to be followed by Hindus before a marriage irretrievably breaks down. When the Holy Scriptures was codified to unite the diverse laws of various sects of Hinduism, reconciliation is mandatory under The Hindu Marriage Act, 1955 (HMA) and The Special Marriage Act, 1954 (SMA). Section 23(2) of the HMA lays down that before proceeding to grant any relief under the HMA, it shall be a duty of the Court in the first instance, to make every endeavour to bring about reconciliation between parties in all cases. This is in relation to any relief sought on most of the fault grounds for divorce specified in Section 13 of HMA. The provisions contained in Sections 34(2) and 34(3) of the SMA are pari materia to the provisions contained in Sections 23(2) and 23(3) of the HMA.

Muslim Personal Laws

Contrary to popular belief about the unilateral methodology of the Muslim form of divorce, the Quran lays down a specific four-step reconciliation procedure before the talaq is granted.

As a first step, when there is a marital discord, the Quran laws down that the husband should try and talk out the differences (faizuhunna) with his wife. In the event the misunderstanding between the parties persists, as a second step, the Quran recommends that the parties should be asked to stay separately and keep any form of physical intimacy in abeyance (wahjuruhunna). Such measure has been recommended so that temporary separation may help the parties to reunite.

In the event this procedure too fails, as a third step, the husband is instructed to discuss with his wife again (wazribuhunna) about the seriousness of the situation in order to try and bring about reconciliation. In pursuance of wazribuhunna, the husband shall try and explain to the wife that if the differences are not resolved by the parties shortly, the dispute shall be taken beyond the confines of the four walls of the home, which may be harmful to the interests of both the parties.

In the event the dispute still remains unresolved, as a fourth step, the Quran requires the dispute to be placed before two arbitrators, one from the family of each spouse, for resolution.

Family Courts Act 1984

The Preamble to the Family Courts Act, 1984 enacted by the Indian Parliament laws down as follows:

“An Act to provide for the establishment of Family Courts with a view to promote conciliation in, and secure speedy settlement of disputes relating to marriage and family affairs and for matters connected therewith.”

Section 9 of the said Act makes it a duty of the Court to make efforts for a settlement. It shall be worthwhile to note that the legislative intent and thought behind enactment of the said Act was to provide not only legal remedy for settlement of family disputes but ensure that estranged families avail of the services of professional and trained mediators who may provide counselling and easier settlement of disputes. Thus, this enactment can be termed as a wholesome legislation on reconciliatory modes in family law disputes in Indian matrimonial disputes.

Judicial Pronouncements

The Division Bench of the Calcutta High Court in Shiv Kumar Gupta v. Lakshmi Devi Gupta, 2005 (1) HLR 483 observed that compliance with Section 23(2) of the Hindu Marriage Act, 1955 is a statutory duty of the judge trying matrimonial cases.

The Apex Court in the case of Jagraj Singh v. Bir Pal Kaur, JT 2007 (3) SC 389, observed as follows:

“The Act (Hindu Marriage Act, 1955) is a special Act dealing with the provisions relating to marriages, restitution of conjugal rights and judicial separation as also nullity of marriage and divorce. Chapter V (Sections 19 to 28A) deals with jurisdiction and procedure of Court in petitions for restitution of conjugal rights, judicial separation or divorce. Sub-section (1) of Section 23 expressly states that where a petition for divorce is filed under Section 13 of the Act on certain grounds, before proceeding to grant any relief, the Court, 'in the first instance', should make an endeavour to bring about reconciliation between the parties.”

The Apex Court, in the case of Salem Bar Association v. Union of India (2003 (1) SCC 49) has provided the final version of the Model Rules of ADR and the Model Rules of Mediation with a direction that all High Courts of the country should adopt the said rules with necessary modifications.

Conclusion and recommendations

The family structure of India is extremely conservative and prefers not to take the disputes to unknown experts and/or mediators. It is recommended that in this context, greater awareness is generated about the usefulness of alternative dispute resolution mechanisms in the Indian society. The advantages of the procedures may be explained in detail even in the remotest villages so that a majority of the existing disputes are settled at the grassroot levels. It is further recommended that the powers and scope of Family Courts be increased so that it reaches to the far corners of the society at large. More family courts should be opened across the length and breadth of the country in order to facilitate easier resolution in family disputes.

[The author is a Senior Associate, Corporate Practice, Lakshmikumaran & Sridharan, Kolkata]

#family law #Muslim Personal Laws #Judicial Pronouncements #Hindu Personal Laws and Special Marriage Act #Conciliation for settling family disputes

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