With the advent of the Draft Mediation Bill, 2021, there is a growing interest to understand the functioning of private institutional mediation. It is important to know that besides the popular court annexed mediation programmes, India also has ad hoc private mediators and institutions offering private mediation services. Hundreds of hours have been spent on creating awareness through webinars and workshops, and you would be surprised to learn that private mediators are still misunderstood for money recovery agents, liquidators, investigators, and many other false identities.


Additionally, there is a misplaced fact that private mediation is only limited to pre-litigation mediation or mediations held before a case is filed in court. This is not accurate – as many High Court and Supreme Court Judges are referring disputing parties to private mediation centres. Many of these referrals are either initiated under Section 89 of the Code of Civil Procedure, 1908 (CPC), or before appointing the arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 (Arbitration Act).


The draft Bill on mediation as per reports, is likely to be introduced in Parliament this winter session and we sense that it will be passed into a legislation before the year end. There are plenty of provisions in the draft bill that recognise the roles and responsibilities of private “mediation service providers”; however, this article highlights existing provisions to bust some unfounded myths surrounding private mediation in India, in the pre-legislation era.

Myth: Participating in private mediation means waiving the right to future legal action in court

Fact: Private mediation is a voluntary process. The ultimate goal is to assist the parties in reaching an amicable settlement through dialogue and interaction. If mediation is not successful (parties are unable to arrive at a mutually acceptable solution), parties have the choice to approach the courts to exercise their legal rights and remedies. There is no law in India that prohibits disputing parties from approaching any court because they participated in mediation. In fact, the proposed mediation law [Section 6(1)] strongly advocates for parties taking all possible measures to settle disputes before filing a case in court.


As of November 2021, parties can initiate litigation and then pause proceedings to explore mediation, wherein the Judge can refer parties to mediation under Section 89 CPC.


Myth: Private mediation is an anti-lawyer practice; legal counsels are not welcome

Fact: Lawyers, who have a dynamic litigation or arbitration practice, continue to play a crucial role in mediation — though, a fundamentally different one. When approached by a client, lawyers orient the client on mediation as an option among other dispute resolution mechanisms. Lawyers assist in identifying the most suitable mediator for the case, bringing to focus relevant documentation and decision-makers, breaking down the complex dispute and streamlining the issues to enhance a fast-track resolution through mediation. Lawyers advise their clients in setting out their expectations, approach, demands and concessions during the mediation process. Of course, any settlement arrived at, during mediation, will also need to be vetted and drafted into a settlement agreement. Although, there is no obligation for parties to bring a lawyer to the mediation table, mediators encourage parties to have sound legal counsel before making and accepting offers.


Myth: A private mediation settlement is not recognised by courts, if parties dishonour terms

Fact: A mediation conducted without the reference/supervision/monitoring of the court can be termed as a private mediation. In India, although there is no dedicated legal framework or legislation governing private mediation or settlements reached through private mediation, there are enough legislations already in place giving validity to a mediated settlement reached through a private mediation process.


Very often, private commercial mediation in India leans on the procedural framework of conciliation and is governed by Part III of the Arbitration Act. A settlement agreement arrived at through this mechanism is enforceable as a conciliator’s award under Section 74, provided the procedure prescribed under the Arbitration Act is followed.


Alternatively, if the parties enter into a privately mediated settlement agreement during the arbitral proceedings, then under Section 30(4) of the Arbitration Act, the settlement agreement is granted the status of an arbitral award which can be enforced under Section 36 of the Arbitration Act.


Further, to encourage parties to mediate and settle the disputes, Section 12-A(5) of the Commercial Courts Act, 2015, was introduced. As a step further, it provides that the settlement arrived at under Section 12-A shall have the same status and effect as if it is an arbitral award on agreed terms under Section 30(4) of the Arbitration Act, which can be enforced under Section 36 of the Arbitration Act.


Further, an agreement arrived at through private mediation enjoys the same status and enforceability of a “contract” as defined in Section 2(h) of the Contract Act, 1872 i.e. “an agreement enforceable by law”. Thus, if a private mediation settlement agreement satisfies the threshold of being a legally enforceable contract, then the terms of the same can be enforced by seeking recourse to the relevant provisions of the Contract Act.


Myth: Private mediators are not recognised by court since they are not trained by the court

Fact: In private mediation, parties mutually agree to appoint a neutral third party as a mediator, based on their trust and comfort levels. Till date, there is no legal requirement that the appointed private mediator should be trained by the court programme — there is no such condition in the Draft Mediation Bill, 2021 too. In private mediation, parties generally appoint a mediator as per the terms stipulated in their contractual mediation clause or upon mutual terms. Once the dispute is resolved, parties enter into a binding settlement agreement. As long as the agreement entered is with the consent of parties and is legally enforceable, the qualifications and accreditations of the mediator have no bearing on the “recognisability” of the settlement.


Nevertheless, parties and lawyers are advised to do thorough research, obtaining clarity on their training, background, experience, cultural orientation, etc., before appointing a mediator. Ideally, and as per well-recognised and respected international standards, private mediators should have at the very least completed a 40-hour training by a reputed institute. Private mediators need not be lawyers and may include business and management leaders, teachers, doctors, architects, engineers, artists, social workers, counsellors or any other professionals.


Myth: Businesses and corporations must file a court case before considering mediation

Fact: Institution of any action before court is not a precondition to go for mediation. Mediation can be pursued at any time — soon after the disagreement has erupted, after negotiations between the parties have stalled, before filing in court or even after the matter has been pending in court. If the legal agreement between the parties mandates mediation, it would be pursued before a court filing. If not, parties may mutually agree at any time to refer their dispute to be resolved by mediation under the rules formulated by a mediation institution of their choice.


Myth: There is no scope for private mediation once arbitration proceedings begin

Fact: Section 30 of the Arbitration Act, which governs the alternate dispute resolution clauses in India, states that the Arbitral Tribunal, with the consent of the parties, may use mediation or conciliation or other procedures at any time during the arbitral proceedings to encourage settlement. This provision gives impetus to settlement by mutual agreement of parties and does not make it incompatible with an arbitration agreement. In the event that the parties settle the disputes during the arbitral proceedings, the Arbitral Tribunal would terminate the proceedings; and if requested by the parties, and not objected by the Arbitral Tribunal, record the settlement terms in the form of an arbitral award on agreed terms.

Of late, courts have referred parties to private mediation while appointing an arbitrator under Section 11 of the Arbitration Act, just innovating an arb-med structure in the Indian justice delivery system.


Myth: Mediation settlement agreements are necessarily stored in a depository and registered with the court, as per law.

Fact: A mediation settlement agreement arrived at in a pre-litigation scenario remains completely confidential and is not privy to anyone outside the parties, lawyers and mediators. The common practice by most private mediators and mediation institutes is not to sign on the mediation settlement agreement (even as a witness) as it is completely agreement made by the parties and the mediator has no authority over such an agreement. No outside party can get access to even the knowledge if a mediation has taken place, lest receive information on the mediation settlement agreement.


In mediation settlement agreements arising out of a court proceeding or arbitral proceedings, parties may by consent file the same with the arbitrator and request the arbitrator to take the same on record and pass an award in terms thereof or request the Tribunal to just make reference to the mediation settlement agreement and state that as the arbitration is settled in terms of the mediation settlement agreement, the proceedings stand terminated. As regards the court, a similar process may be followed by consent of parties where the court may be informed of and shown the mediation settlement agreement and requested to dispose of the proceedings in terms of the same. Parties may request the court to refer to the same but may not file the same in the court. If filed in the court, a request may be made to the court to place the agreement in a sealed envelope due to the nature of its confidentiality.

† Raj Panchmatia is a Partner in the Dispute Resolution practice group at Khaitan & Co. He has rich experience in the field of dispute resolution and commercial litigation, both at the domestic and international fora.

†† Jonathan Rodrigues leads the Corporate Relations vertical at CAMP Mediation.

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One comment

  • To this:-
    “Further, an agreement arrived at through private mediation enjoys the same status and enforceability of a “contract” as defined in Section 2(h) of the Contract Act, 1872 i.e. “an agreement enforceable by law”. Thus, if a private mediation settlement agreement satisfies the threshold of being a legally enforceable contract, then the terms of the same can be enforced by seeking recourse to the relevant provisions of the Contract Act.”
    I say:-
    When Mediators can use the Chapter III Conciliation in cases of Pre-litigation or Private mediations/Arbitrations and get a conciliated settlement agreement which has the efficacy as well as enforceability of an Arbitral Award; where is the need of going via “Contract” route!?

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