mediation

Op EdsOP. ED.

On 20-12-2018, the United Nations Convention on International Settlement Agreements Resulting from Mediation (Singapore Mediation Convention) was adopted by the United Nations General Assembly and opened for signature for various State parties on 7-8-2019.[1] To date, the Singapore Mediation Convention has 54 signatories — including States such as India, the United States of America, and China — and out of these 54 signatories, 6 States have ratified the same.[2] This Convention was drafted for facilitating international trade through standardising and unifying the rules for mediation in international commercial disputes.[3] Despite the benefits provided by this Convention, India has not ratified it. Thus, in this article, firstly, the author shall briefly discuss the importance and purpose of the Singapore Mediation Convention. Secondly, the author shall analyse the challenges and implications for India for not ratifying this Convention. Thirdly and in finality, the author shall discuss whether a separate and exhaustive legislation is required for mediation in India.

1. Introduction: Importance and purpose of the Singapore Mediation Convention

In the Preamble of the Singapore Mediation Convention, we grasp that it has been lucidly acknowledged that mediation is an integral part of international commercial dispute settlement as it allows “amicable settlement” of disputes. This amicable settlement through mediation comes in the backdrop of “… reducing the instances where a dispute leads to the termination of a commercial relationship, facilitating the administration of international transactions by commercial parties and producing savings in the administration of justice by States.”[4] However, the general reason why international parties, States, and other stakeholders do not readily opt for mediation is that mediation has no legal force behind it. In other words, mediation is non-binding on the parties. The same conundrum was acknowledged by the General Assembly while adopting the Singapore Mediation Convention, wherein it also recognised the quintessential value of having an international legal framework for mediation.[5] Therefore, we comprehend that the Singapore Mediation Convention was established as an international framework to give legal recognition to “international settlement agreements” that result from international commercial mediation. This establishment of an international framework boosts foreign investors’ confidence and the host States’ willingness to resort to mediation as a dispute settlement mechanism. However, considering that majority of the signatories (including India) are yet to ratify the Singapore Mediation Convention, the consequential effect of such non-ratification must be analysed.

2. Challenges and implications: Consequential effect of non-ratification of the Singapore Mediation Convention on India

Earlier, arbitration was seen as an appropriate alternative to litigation. However, with the changing dynamics of the commercial realm, new dispute settlement mechanisms gained traction, such as mediation.[6] As mediation has no legally binding force, the Singapore Mediation Convention was introduced to resolve this decades long conundrum. However, to reap its full benefits and take full advantage of mediation, it is imperative for India to urgently ratify the Singapore Mediation Convention due to the following reasons.

Firstly, before the Singapore Mediation Convention, the parties could bring legal force to the mediation proceedings by entering into a settlement agreement. However, the problem with this settlement agreement was its enforceability. For example, parties X and Y enter into a settlement agreement. Party X wishes to enforce the settlement agreement in party Y’s State. To enforce this settlement agreement, party X must initiate domestic court proceedings in party Y’s State, which can prove to be time taking, resources draining, and cumbersome because it is highly probable that the settlement agreement may be inconsistent with the laws of party Y’s State. Alternatively, there can also be a situation where the Court may hold a different opinion towards the settlement agreement as the agreement may be against the public policy of party Y’s State. Thus, this essentially means that the enforceability of settlement agreements resulting from international mediation was a significant conundrum before the Singapore Mediation Convention, especially in the absence of an international framework.

However, presently, Article 3 of the Singapore Mediation Convention makes it mandatory for the parties to enforce a settlement agreement resulting from “international commercial” mediation.[7] This means that if parties X and Y have signed and ratified this Convention, then their domestic laws are consistent with the Convention, which, in turn, resolves the enforceability conundrum. This is because now, all that will remain for party X or party Y is to initiate “enforcement proceedings” in the domestic courts of the other party’s State. In such a situation, the probability of the settlement agreements being enforced is substantially higher as there is consistency between the domestic laws and the international standards. This increased and solidified probability of the settlement agreement being enforced is also evident from Article 5, which provides fixed grounds on which a court can deny the enforcement of a settlement agreement. These grounds essentially aim to minimise the hurdles that may arise during the enforcement proceedings.

Thus, this reduces the costs and resources involved in enforcing the settlement agreements, which, in turn, acts as a motivator for the parties to resort to mediation as a dispute settlement mechanism. Further, the credibility of international commercial mediation also substantially increases. However, it is also imperative for us to note that, according to Article 1, two types of mediations are excluded from the application of the Singapore Mediation Convention — those mediations that are (1) to resolve a dispute by a consumer for “personal, family, or household purposes”; and (2) to resolve “family, inheritance or employment law” issues. Further, this Convention also does not apply to those settlement agreements — that are approved by a court; that have been concluded during the proceedings of a court; that is enforceable as a part of a court’s judgment; or those settlement agreements that are “recorded and are enforceable as an arbitral award”.[8]

Although considerable efforts have been invested in increasing the demand for mediation in India since 2002 through various statutes such as the Companies Act, 2013[9], the Real Estate (Regulation and Development) Act, 2016[10], the Commercial Courts Act, 2015[11], and the Consumer Protection Act, 2019[12], and through the establishment of the New Delhi International Arbitration Centre,[13] the traction towards international mediation remains slow and insignificant in India. The reasons behind the same, as stated earlier, are due to the non-binding nature of mediation and the enforceability conundrum. Thus, if India does not urgently ratify the Singapore Mediation Convention, it will remain in the limbo of the pre-convention situation, which, in turn, is capable of hampering and severing investor and foreign relations. For instance, if we take the example of the Cairn case,[14] had the Singapore Mediation Convention existed back then and had India ratified the same, then the probability of the case going to arbitration would have significantly reduced as the parties may have seriously considered investor-State mediation as an option to resolve the dispute without jeopardising their resources.[15] Therefore, there arises an urgent need for India to ratify the Singapore Mediation Convention to resolve its international commercial disputes — through mediation — effectively and efficiently while ensuring the sustainability and fostering of its international relations with foreign investors and other stakeholders.

Secondly, Article 5(1)(e) crystallises and puts into writing that the mediator(s) must follow specific “standards”. Although these standards are not found in the Singapore Mediation Convention, the most proximate to these standards is the code of professional conduct by the International Mediation Institute.[16] In a pre-convention situation, we comprehend that the usage of this professional code of conduct or any other code of conduct (which remain absent for mediators) is not widely known for mediation as compared to arbitration.[17] However, presently, as these “standards” have been crystallised in the Convention in a generalised form, we comprehend that the urgent need for India to ratify this Convention substantially intensifies. This is because, as international commercial mediation was not earlier standardised, in a uniform manner, accompanied by a dearth of professional ethics and training, there was no substantial impetus for India to resort to international commercial mediation. However, as now international commercial mediation has been uniformly standardised to a large extent, accompanied by the crystallisation of specific professional “standards” for the mediators, through the Singapore Mediation Convention, the hesitancy towards international commercial mediation can be eradicated to a large extent. This hesitancy can now be overwritten by the newly found motivation (from the Singapore Mediation Convention) to seriously consider international commercial mediation a viable alternative to dispute settlement.

Thirdly and in finality, considering the Covid-19 pandemic, it has been lucidly found that the foreign investors are negatively impacted due to the regulatory measures adopted by various States, including India.[18] These regulatory measures are likely to act as a thorn in foreign investor relations, due to which the propensity of international commercial disputes arising exorbitantly rises. Further, other factors are likely to act as a catalyst in causing international commercial disputes in the Covid-19 pandemic, such as differences in political standings, significant disruption of the supply-demand chain, and other related factors. Therefore, considering how litigation and arbitration may result in severing foreign investor relations, India must focus on international commercial mediation by ratifying the Singapore Mediation Convention, which will, in turn, result in better fostering, development, and sustenance of commercial relations.

3. Conclusion: Is ratification of the Singapore Mediation Convention and separate legislation for mediation, the future way forward for India

Considering the arguments mentioned above, if hesitancy towards ratification of the Singapore Mediation Convention exists due to its potential limitations — such as lack of vivid distinction between conciliation and mediation, lack of definition for “commercial disputes,” opt-out mechanism under Article 5(1)(d), and other related limitations — then it is imperative to note that the Singapore Mediation Convention can be amended by way of Article 15, similar to how the UNCITRAL Model Law on International Commercial Conciliation, 2002 was effectively and efficiently amended and replaced with the UNCITRAL Model Law on International Commercial Mediation and International Settlement Agreements Resulting from Mediation, 2018. Further, suppose that mediation would be given priority, and the demand for arbitration would reduce. In that case, the same presumption is found on false premises because even in the contemporary scenario, we comprehend that mediation — being available in international institutions like the International Chamber of Commerce, Stockholm Chamber of Commerce, and London Court of International Arbitration — has not hampered the demand for arbitration.[19] Thus, the potential hesitancies are resolved and outweighed by the potential advantages offered by the Singapore Mediation Convention and the track record of mediation in settling disputes.

For India to ratify the Singapore Mediation Convention, the Indian Parliament must promulgate a legislation, under Article 253 of the Constitution[20], that gives effect to the Convention. In M.R. Krishna Murthi v. New India Assurance Co. Ltd.,[21] the Supreme Court lucidly held that:

  1. … Advantages of mediation are manifold. This stand recognised by the legislature as well as policymakers and needs no elaboration. Mediation is here to stay. It is here to evolve. It is because of the advantages of mediation as a method here to find new grounds. It is here to prosper, as its time has come. It is now finding statutory recognition and has been introduced in few statutes as well. Examples are the Companies Act, 2013[22], the Insolvency and Bankruptcy Code, 2016[23], the Commercial Courts Act, 2015[24], etc. In these enactments provisions are made even for pre-litigation mediation by making this process mandatory. There is, in any case, umbrella provisions in the form of Section 89 of the Code of Civil Procedure[25] which, inter alia, provides for court annexed mediation as well.… In fact, the way mediation movement is catching up in this country, there is a dire need to enact the Mediation Act as well.

Further, the New Delhi International Arbitration Centre Act, 2019[26], was passed to institutionalise arbitration, mediation, and conciliation as dispute settlement mechanisms. Thus, this essentially shows a growing, substantial acceptance for mediation in India wherein parliamentary approval and ratification of the Singapore Mediation Convention should not be a hurdle.

However, the issue arises for creating a separate legislation on mediation, consequently to the ratification of the Singapore Mediation Convention. Thus, in such a scenario, three options are available for India — firstly, Parliament can amend the Arbitration and Conciliation Act, 1996[27] (1996 Act), and add separate provisions for mediation; secondly, considering that in Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd.[28] the Supreme Court held that mediation and conciliation are synonymous to each other, the 1996 Act can be amended to include mediation under Part III of the 1996 Act i.e. conciliation-related statutory provisions; and thirdly, a separate, non-lengthy, and exhaustive legislation can be prepared that is directly consistent with the Singapore Mediation Convention.

Although the most viable option that may be chosen out of the three is subject to parliamentary deliberations and other related factors, incorporating mediation-related provisions in the 1996 Act seems to be the most efficient and effective way because if a separate mediation legislation is created, then it may create a problem of lack of uniformity in the alternative dispute resolution (ADR) law and may also lead to the creation of a complex structure for ADR law. This complex structure can, in turn, be problematic in statutory compliance. Further, it is quintessential to note that amending a legislation is relatively simpler and faster than creating a new legislation. Therefore, incorporating mediation-related provisions in the 1996 Act can weed the inefficiencies that a separate mediation legislation would have created.

† Executive Director Asia Pacific Centre for Arbitration and Mediation,
Director IIAM, e-mail: iram.majidadv@gmail.com.

[1] Status: United Nations Convention on International Settlement Agreements Resulting from Mediation, UNCITRAL, <https://uncitral.un.org/en/texts/mediation/conventions/international_settlement_agreements/status>.

[2] Status: United Nations Convention on International Settlement Agreements Resulting from Mediation, UNCITRAL, <https://uncitral.un.org/en/texts/mediation/conventions/international_settlement_agreements/status>.

[3] G.A. Res. A/73/198, Art. 1(1), United Nations Convention on International Settlement Agreements Resulting from Mediation (12-12-2018).

[4] G.A. Res. A/73/198, Preamble, United Nations Convention on International Settlement Agreements Resulting from Mediation (12-12-2018).

[5] G.A. Res. A/73/198, United Nations Convention on International Settlement Agreements Resulting from Mediation (12-12-2018).

[6] Iris Ng, The Singapore Mediation Convention: What does it mean for Arbitration and the Future of Dispute Resolution?, Kluwer Arbitration Blog (31-8-2019),

<http://arbitrationblog.kluwerarbitration.com/2019/08/31/the-singapore-mediation-convention-what-does-it-mean-for-arbitration-and-the-future-of-dispute-resolution/>.

[7] G.A. Res. A/73/198, Art. 3, United Nations Convention on International Settlement Agreements Resulting from Mediation (12-12-2018).

[8] G.A. Res. A/73/198, Art. 1(3)(b), United Nations Convention on International Settlement Agreements Resulting from Mediation (12-12-2018).

[9] <http://www.scconline.com/DocumentLink/A5aqjfDv>.

[10] <http://www.scconline.com/DocumentLink/u5bCT3Hd>.

[11] <http://www.scconline.com/DocumentLink/7566Y3w5>.

[12] <http://www.scconline.com/DocumentLink/P62rNTsE>.

[13] Laila Ollapally, India Signs the Singapore Mediation Convention, Mediate India! (April 2020) <https://www.mediate.com/articles/ollapally-india-singapore.cfm>.

[14] Cairn Energy Plc v. Union of India, PCA Case No. 2016-17, https://www.italaw.com/cases/5709. (not found, pls check)

[15] See also Iram Majid, Cairn Energy Plc and Cairn UK Holdings Limited (CUHL) v. Government of India: A rising and burning need for investor-State mediation in investor-State tax and energy-related disputes, SCC OnLine Blog (8-3-2021), 2021 SCC OnLine Blog Exp 15,

<https://www.scconline.com/blog/post/2021/03/08/cairn-energy-plc-and-cairn-uk-holdings-limited-cuhl-v-government-of-india-a-rising-and-burning-need-for-investor-state-mediation-in-investor-state-tax-and-energy-related-disputes/#_ftnref4>.

[16] Code of Professional Conduct, International Mediation Institute, <https://imimediation.org/practitioners/code-professional-conduct/>.

[17] Alison G. FitzGerald, The Singapore Mediation Convention, Norton Rose Fulbright (September 2019), <https://www.nortonrosefulbright.com/en-in/knowledge/publications/b5906716/the-singapore-mediation-convention>.

[18] Prabhash Ranjan and Pushkar Anand, Covid-19, India, and Investor-State Dispute Settlement (ISDS): Will India be Able to Defend its Public Health Measures?, 28(1) Asia Pacific L. Rev. 225, 225-247 (2020), <https://www.tandfonline.com/doi/full/10.1080/10192557.2020.1812255>.

[19] Iris Ng, The Singapore Mediation Convention: What does it mean for Arbitration and the Future of Dispute Resolution?, Kluwer Arbitration Blog (31-8-2019),

<http://arbitrationblog.kluwerarbitration.com/2019/08/31/the-singapore-mediation-convention-what-does-it-mean-for-arbitration-and-the-future-of-dispute-resolution/>.

[20] <http://www.scconline.com/DocumentLink/61pY4yl7>.

[21] (2020) 15 SCC 493 : 2019 SCC OnLine SC 315.

[22] <http://www.scconline.com/DocumentLink/A5aqjfDv>.

[23] <http://www.scconline.com/DocumentLink/86F742km>.

[24] <http://www.scconline.com/DocumentLink/7566Y3w5>.

[25] <http://www.scconline.com/DocumentLink/3iU0MzIU>.

[26] <http://www.scconline.com/DocumentLink/XEk9RbiK>.

[27] <http://www.scconline.com/DocumentLink/QWdt5a4f>.

[28] (2010) 8 SCC 24.

Op EdsOP. ED.

To make India a global destination for business and investment and accordingly, to improve its ease of doing business rankings, the Government of India took note of the observations made by the Law Commission of India[1] and established the Commercial Courts and the Commercial Division and the Commercial Appellate Division in the High Courts for speedy disposal of commercial disputes above a specified value[2]. To take this a step further, in 2018, the Government introduced a provision[3] in the law to make it mandatory for disputing parties in commercial disputes to attempt mediation before filing a claim in court. In furtherance of this provision, the Government introduced rules[4] for pre-institution mediation and settlement but authorised only the District and State Legal Services Authorities[5] to conduct these mediations.

Mediation, in its simplest avatar, is a method to resolve disputes amicably with the help of an expert mediator and without the intervention of courts. This move by the Government was welcomed by stakeholders across the board as it was believed that this would ensure timely resolutions of disputes while retaining business relationships between the parties, a win-win for all – the Government, the overburdened judiciary and the business community.

However, a recent judgment of the Bombay High Court[6] has raised the brows of many from the business and legal fraternity. In the judgment delivered on 16-2-2021, the Court observes that the provision that “compulsorily” requires disputing parties to attempt an amicable settlement via mediation is procedural and there is no absolute prohibition to file a suit before attempting mediation. The reasoning behind such an observation is three-fold:

  • The very purpose of putting in place such a mechanism was for speedy disposal of commercial disputes for their early resolution which would in turn create a positive image for the investor world about the independent and responsive Indian legal system. Routinely referring parties to compulsory mediation would run counter to the very purpose for which the law was brought into force. It would have the effect of delaying the proceedings rather than having a quick resolution of the dispute.
  • The provision itself contemplates that where any urgent interim relief is applied for, the party seeking relief is not required to exhaust the remedy of mediation before approaching the court. According to the Court, the purpose of the law appears to be that parties should try and resolve their disputes before coming to court. This is for the simple reason that if parties resolve their disputes, they need not approach the court at all. However, when parties have tried to resolve their disputes unsuccessfully, it would be futile to still drive the parties to pre-institution mediation.
  • The counterparty must object to non-compliance regarding pre-institution mediation at the earliest opportunity. If not, it would be presumed that he does not want to resolve his dispute through mediation.

One can hardly disagree with the rationale by which the Court has justified the interpretation of mandatory pre-institution mediation as procedural keeping speedy disposal of commercial cases at the helm of its observations. On the contrary, such a mindset can be seen as forward-looking as disputing parties need not routinely approach the already burdened District and State Legal Services Authorities for the purpose of pre-institution mediation, and can rather undergo mediation privately. In fact, world over online mediation through online dispute resolution (ODR) platforms has become the go-to mechanism for parties that want to settle their disputes amicably.

However, there is one observation that is concerning and will face flak by those well-acquainted with the concept of mediation, and this is the Court’s reliance on doctrine of substantial compliance in an attempt to drive its point home. The Court says:

  1. … Take a case, where through correspondence, the parties have tried to resolve their disputes before approaching the court without any success. Can it then be contended that parties are still to be referred to mediation to resolve their disputes when an attempt has already been made and failed? I think not. To my mind, one has to interpret this provision to see that there is substantial compliance, namely, that an attempt has been made to resolve the disputes amicably which has failed, and therefore, the plaintiff is constrained to approach the court for redressal of his grievances.

On a plain reading, one may wonder what is wrong with this particular observation of the Court, but on a careful reading, one will realise that this greatly undermines the process of mediation and the skills of a mediator. A standard or private attempt at an amicable resolution of a dispute by the parties or their representatives substantially differs from routing a dispute through the process of mediation and seeking an early and amicable resolution with the support of a competent and well-trained mediator.

Virtually every dispute goes through one (if not more) round of informal negotiations before it is escalated to a more serious forum. However, driving a dispute through the tunnel of mediation is wholly different from such informal negotiations and the chances of a successful settlement increases due the involvement of an independent and skilled mediator. This finds support in the fact that less than 5% of cases raised in courts across the US result in a full trial taking place. A substantial factor in that statistic is the successful use of mediation, which is estimated to result in a positive resolution of roughly 80% of cases[7]. A similar success story of mediation in India may not see the light of day if courts come to a conclusion that equates any form of correspondence between parties for amicable settlement with the process of mediation.

A well-balanced view could be such where so long as mediation is conducted through the State machinery or privately, online or in-person with the involvement of an accredited mediator or institution be looked at through the lens of the doctrine of substantial compliance. Perhaps, this could be the ground for challenge of the Bombay High Court judgment before the Supreme Court of India, unless of course, the matter is settled amicably.

*Author is the co-founder of Presolv360 – a legal-tech company that specialises in online dispute resolution. With an academic background in law and finance, he has a decade of experience in understanding law, commerce and conflict resolution.

[1] Report No. 253 on Commercial Division and Commercial Appellate Division of High Courts and Commercial Courts Bill, 2015 (January 2015)

[2] Commercial Courts Act, 2015

[3] Section 12-A, Commercial Courts Act, 2015

[4] Commercial Courts (Pre-Institution Mediation and Settlement) Rules, 2018

[5] Ministry of Law and Justice, Noti No. S.O. 3232(E), dated July 3, 2018

[6] Ganga Taro Vazirani v. Deepak Raheja, 2021 SCC OnLine Bom 195.

[7] <https://www.skuld.com/topics/legal/pi-and-defence/us-vs-uk—a-comparison-of-mediation-processes/#:~:text=Currently%2C%20less%20than%205%25%20of,of%20roughly%2080%25%20of%20cases>.

Case BriefsSupreme Court

Supreme Court: In the petition seeking for standard operating procedures for implementation of pre-litigation mediation under Section 12A of Commercial Courts Act, 2015, the 3-judge bench of SA Bobde, CJ and AS Bopanna and V. Ramasubramanian, JJ has admitted the application for intervention made by Bridge Mediation, a policy think tank based out of New Delhi, seeking the creation of a committee of experts to guide on the ground level issues arising out of the implementation of Section 12A of Commercial Courts Act, 2015.

The bench has also sought clarification from respondent Union of India and the High Courts of several states on whether the Parliament is considering rollout of a standalone legislation on mediation in India. The matter has been listed on 25th March, 2021.

Anuroop Omkar, one of the founders of Bridge said,

“We have been continuously working to bring in laws that promote commercial mediation of disputes in India. We have trained more than 350 people in commercial mediation, insolvency and turnaround under the aegis of Ministry of Corporate Affairs, Government of India. But the real mediation revolution shall not come unless experts who understand what are international standards in mediation, problems with ground level implementation in India and expectations of commercial users do not join hands in laying down better processes for implementation of Section 12A of Commercial Courts Act, 2015. There is need to give parties freedom to choose their own mediator and institutional mediation service provider. It is time to make mediation a user friendly experience.”

[Youth Bar Association of India and Other v. Union of India and Others. WP(C) No. 000849 of 2020, order dated 19.03.2021]

For Bridge Mediation: Senior Advocate Arvind P. Datar and Advocate Anuroop Omkar, Partner of AK and Partners along with Advocate on Record in the matter Adv. Surabhi Guleria.

Op EdsOP. ED.

“An ounce of mediation is worth a pound of arbitration and a ton of litigation.”

— Joseph Grynbaum[1]

Introduction

Mediation is considered a cost-effective, time saving and a less antagonistic way of resolving the discords between the parties. It encourages the parties to find the common grounds for reaching a mutual agreement. In commercial disputes, it is considered to be an effective way to resolve the disagreements between the parties as it maintains the confidentiality between the mediator and the two parties. Further, the foremost reason for parties opting for mediation settlement as opposed to litigation or arbitration is that it offers a common platform for the parties to resolve the disputes cordially in front of the facilitator i.e. the mediator and reach a cordial settlement by mutual agreement without risking to spoil the business relationship between the parties involved.  This form of dispute resolution is popular and common in almost all the countries but at international level the parties tend to wither away with mediation because of lack of uniform framework for the execution of the mediated settlement unlike the New York Convention as available for arbitration.

To do away with this absence, the United Nations General Assembly in December 2018 adopted the UN Convention on International Settlement Agreements Resulting from Mediation known as the “Singapore Mediation Convention” which was declared open for signature in the year 2019.

The Singapore Mediation Convention (hereinafter “the Convention”) came into effect on 12-9-2020 with presently 53 signatories to the Convention including the major economical nations like China, United States as well as India. The Convention aims to ease the cross-border dispute resolution mechanism via effective mediation. It hones at creating a treaty-based regime in the international frontier for enforcing the agreements resulting from mediation in the international disputes.

The authors via the present article have analysed the scope of the provisions involved in the Convention and has tried to interpret the provisions of the Convention with the help of Travaux Préparatoires Reports, discussions of the Working Groups while drafting the Convention and the authors’ own understanding of the provisions while referring to the online sources and reports available on record. Further, the article provides for the major concerns that ought to be addressed while enforcing the cross-border mediated settlements and lastly, the authors  give  an overall insight on the Convention as per their own understanding  and suggest the way forward.

Key Features

  1. Promotes credibility in resolution of cross-border disputes.— The enforcement of the mediated settlement agreements (MSAs) are generally done by recording it in the form of court order or consent awards for execution of the settlement thus involving more costs, delay as well as loss of confidentiality, which is one of the core of mediation process. However, with this Convention in place, the parties can directly enforce the mediated settlements and place such settlements at par with the arbitral awards or judgments thereby proving mediation to be a credible source for resolution of commercial disputes internationally.
  2. The Convention will facilitate international trade and commerce which shall further lead to economic development and would help in the growth of the regions to which the parties to the Convention belong.
  3. It provides for an additional dispute resolution mechanism in cases of cross-border disputes and will strengthen the dispute resolution system internationally.
  4. Uniform framework for enforcing the international settlement agreements.— The Convention provides for a uniform and harmonious dispute resolution mechanism of mediation by way of which the signatory countries while adopting this framework can build up harmonious economic relations regardless of the differences in the social, economic and legal systems in their domestic country.[2]
  5. It will help in saving cost, time and reaching a mutually acceptable solution which is the key feature of dispute resolution via mediation.
  6. It will help in eliminating one of the barriers to the foreign investment i.e. the perceived risk of the commercial disputes being brought forth before the municipal courts and the judgment thereafter to be enforced in an ordinary manner via contract law provisions or other laws as applicable, which is indeed costly, time consuming and posses a high degree of uncertainty.

Analysis of the important provisions

Applicability and scope of the Convention – Article 1

  1. International settlement agreements.—The Convention shall be applicable to only those international settlement agreements that arise out of mediation for settling a commercial dispute covered under the Convention[3].
  2. Commercial dispute.— It is applicable in cases of settlement of international agreements that results from mediation and are concluded between the parties for amicably resolving the commercial dispute.
  3. In writing.— As per Article 1 which talks about the scope of the Convention, the applicability of the Convention shall extend to those agreements which results in mediation and are concluded in writing by the parties for opting to resolve the commercial dispute by way of a settlement agreement.
  4. Place of business.—At the time of the conclusion of the settlement agreement it should be international in the sense that:
  • (i) The place of business of at least two parties to the settlement agreement should be in different States; or
  • (ii) The State in which the place of business of the parties to the settlement agreement persists should be different from either the State where the substantial part of obligations as per the settlement agreement are performed, or the State where the subject-matter is most closely associated with the settlement agreement.

Exclusions

  1. The Convention is not applicable to those international agreements that are enforced in lieu of the judgment passed by the court or by way of an arbitral award.[4]
  2. The Convention is also not applicable in cases of family matters, international settlement agreements entered into for other household/domestic purposes, inheritance or employment law.[5]

Therefore, it can be said that the Convention places reliance on the subject-matter of the agreement rather than the subject-matter of the dispute. Additionally, this provision deviates from the normal understanding of the agreements wherein the place of signing of the agreement was given some reliance while determining the jurisdiction of the competent authority as according to this article, the place of dispute shall be taken as a basis for determination of the jurisdiction of the competent authority and not the place of signing of the mediation agreement.

Further analysing the article, it can be seen that the article does not specifically state if the mediation agreement should be pre-existing thereby leaving the room for the parties to enter into mediation agreement at any point of time, the agreement so entered would be considered valid as per the Convention[6].

Requirement for Reliance on Settlement – Article 4

Article 4 of the Convention provides for the production of the evidence of the settlement agreement which resulted in mediation as a proof to the competent authority which shall check the authenticity of the evidence. While verifying the authenticity of the documents produced as evidence, the competent authority may call upon the parties relying on the settlement agreement to provide for further documents necessary to substantiate the authenticity of the documents in compliance with the provisions of the Convention.

This provision was added so as to ensure that the Convention is not used for illegitimate purposes such as money-laundering.[7] Therefore, apart from the signatures of the parties in the settlement agreement the makers of the legislation acted cautiously and added a further requirement for furnishing the proof of evidence.

The evidence can comprise of any of the following:

  1. Signature of the mediator on the settlement agreement.
  2. Signature of mediator on a separate document expressly indicating that the mediation had taken place.
  3. Attestation by the administering institution.
  4. Any other valid proof as acceptable to the competent authority.[8]

Refusal to Grant Relief – Article 5

In order to leave no room for ambiguity, Article 5 of the Convention lists down the basic formalities like the signing of the agreement by the parties, evidence of the settlement agreement resulting due to mediation and others that ought to be fulfilled by the parties for getting a relief through the settlement agreement.

Further, the courts of a party to the Convention have the power of refusal in granting  relief to the parties as provided under Article 5[9]  including of cases wherein:

  • The party/parties to the settlement agreement are under incapacity.
  • If the relief prayed for is in contradiction to the public policy of the contracting party;
  • If the settlement agreement is null, void, inoperative, incapable of being performed under law to which it is subjected;
  • There is a serious breach on the part of the conciliator as to the standard applicable, having known of that, the parties would not have entered into an agreement.

Further, Article 5(1)(d)[10] also gives an option to the parties to opt out of the Convention by stating it expressly in the terms of the international agreement against any form of relief to be granted.

This provision makes sure that the defences are preserved for protecting the parties for non-compliance of the settlement agreement due to genuine reasons as listed in this article. The other argument in this regard is that this provision can also be misused in a way wherein either party provides for defences which are not foolproof or are taken as a gauze to avoid compliance to the Convention procedures and delay the mediation process. If the later argument becomes true, then the basic feature of mediation being an expeditious and cost-friendly approach is eliminated as this would lead to delay and extra costs of conducting meetings for mediation that could be eliminated.

Reservation –Article 8

 Article 8 provides for the reservation clause wherein it gives the freedom to the party to reserve the application of the Convention to which it or any government agency is a party. This clause has been exercised by Iran by making a reservation.

This article further limits the scope of this Convention by stating that the reservation can be made any time by the party and are to be applied only to the extent that the parties have agreed to and additionally  gives freedom to the party/parties to withdraw the reservation made at any time.

From the analysis of this article, it can be understood that even though the article expressly omits to provide for authorising reservation by private personals, the parties in the MSAs can agree upon exclusion of the Convention which would be considered as a defence based upon the compliance with the settlement terms.[11] Nextly, even though this provision seems to take away the rights of the party/parties to make an informed choice/self-determination by allowing the States to opt out of the Convention automatically by making a declaration[12], in essence, it would not really affect the private parties who can still opt in to the Convention in lieu of entering into private settlement for mediation. Therefore, this provision is more feasible as it helps the parties in complying with the articles of the Convention provided that both the parties are willing to opt in or opt out or else it might create an imbalance/disharmony in situations where the other party cannot enforce the agreement because of the other party making the reservation in its country[13].

Other important provisions

Article 3 of the Convention provides for the right to invoke the Convention agreement and the general compliance and obligations that are necessary for enforcing the settlement. However, it does not list down the detailed lists of the obligations that ought to be complied by. Thus, it can be inferred that Article 3 providing for the General Provisions is very primary/basic in nature and leaves enough scope for the States to provide for detailed lists of rules, obligations and compliances  in their domestic laws that the party(ies) is bound to follow while invoking the provisions of the Convention.

Article 7 of the Convention is an enabling provision which preserves the right of the parties to not to be deprived of any rights that they may have to avail in order to reach the settlement agreement in the manner and extend as allowed by law or the treaties of the parties to the Convention where such MSA is sought to be relied upon. As per the understanding of this provision the States would not be allowed to apply for settlement agreements excluded under Article 1(2) and Article 1(3)  as those settlement agreements would fall outside the ambit of the Convention. However, it provides the States with the flexibility to enact domestic laws which could include in its ambit such settlement agreement[14].

Article 12 provides for the participation in the Convention by the Regional Economic Integration Organisations (RIOs) constituted by the sovereign States having the competence over matters governed by the Convention. The RIOs are eligible to sign, approve, ratify and accede to the Convention in which case they shall have the rights and obligations as that of a party to the Convention.

Article 13 acts like an extension to the reservation clause under Article 8. It states that in cases wherein the parties to the Convention has more than one territorial units and  the laws in relation to the territorial units are different in each/any territorial unit, in that case, the party has an option to opt in or opt out of the Convention. That is to say, that the party may declare the applicability of the Convention to all or any one or more of its territorial units at the time of signing, ratification, acceptance or accession.

Article 16 of the Convention provides for denunciation of the Convention by a Party to the Convention. It states that the denunciation is to be done by way of a formal notification which shall be addressed to the depository which shall take effect 12 months after the receipt of the notification by the depository.

Further, the Convention delivers a flexible approach of allowing the defending States to use the MSAs as shield by allowing the parties to claim the benefit of the already settled dispute. During the deliberations in the negotiation groups relating to such recognition, there were some nations like European Union (EU) which were reluctant in including recognition as well as enforcement. But on the other hand, it was vehemently argued by some States that it should offer a sword as well as shield to its members. The argument was based on the fact that reorganisation is a crucial prerequisite of enforcement and the defending State should get an equal right as of the complainant, to rely on the settlement agreement.[15]

Major concerns

The major concerns that arise out of the Convention are:

  • There is no straitjacket formula or standards listed for the qualifications of the mediator. Regulation of such practice cannot be left to the domestic laws as this would create disharmony among the municipal and international laws.
  • The Convention stresses upon the confidentiality involved in acting through mediation but the cumbersome formalities and compliances provided under Article 1 does not seem to favour the same.
  • The provision to opt out of the Convention by expressly providing in the terms of the settlement agreement tends to limit the applicability and purpose of the Convention of submitting to the provisions of the Convention and facilitating cross-border international dispute settlement.
  • The Convention is silent on the form of the enforcement of the MSA. It does not mention whether the enforcement of the MSAs would be done by providing relief in the form of damages, specific performance or any other remedy as required and sought for as applicable as per the legislations of the nation where the enforcement is applied for. This acts as a concern because the laws of the domestic countries differ in their provisions with regard to the provision of relief and hence, the uniformity to be achieved via this Convention will fall apart.

Author’s comment

After analysing the scope of the Convention, the author is of the opinion that the Convention is definitely a way forward for implementing the international framework for using mediation as a dispute settlement mechanism. Further, as more and more States ratify the Convention, it will lead to further promotion and facilitation of international trade and commerce involving less risk and simplified and standardised procedures for enforcing the mediated settlements.

However, it can also be interpreted that the Convention gives much freedom to the States for enforcing the MSAs. For instance, in States where mediation is not highly recognised as a means of settlement mechanism or the States which are unfamiliar with the process of mediation, it would pose a lot of difficulty for the enforcement of the MSA. Thus, the gap in domestic legislation can become a driving factor for non-enforcement of MSA. In absence of such competent framework, the parties are again restricted to litigation or choosing other dispute resolution mechanisms like arbitration or hybrid mechanisms such as the mixture of arbitration and mediation as practiced in Iran.

Conclusion and suggestions

At the end, it can be concluded that the Convention acts as a step forward towards engaging the parties to use mediation mechanism as a widely used phenomenon for the settlement of the MSAs at the international frontier. It would also benefit India in reaching its goal of ease of doing business as the countries ratifying such Convention will have an easy and less antagonistic way of resolving any disputes amicably through mediation and enforce the same by way of this Convention.

However, considering the above concerns as well as the uncertainties involved in the language of the Convention, it is empirical that the domestic laws should make procedural laws clarifying the uncertainty as regards to such provisions. For instance, in cases of the uncertainty as regards to the “enforcement of the mediated settlement” provided under Article 3(1) and the “applicability of the standards” under Article 5(1)(e) the municipal legislation can clearly define as to what all relief would be available to the party/parties seeking enforcement under the Convention.

To solve Concern No. 4 as listed above with regard to the form of relief while enforcing the MSA and to make it harmonious for all the parties entering into MSAs as per the Convention it is imperative that an explanation be provided under General Principles provided under to Article 3 providing for the list of specific cases/instances wherein damages should be provided and when the relief for specific performance should be preferred.  Thus, the authors are  of the opinion that once the clarity is provided in these aspects, those days are not far away when international mediation will start supplementing international arbitration and the mediation clause is considered as the most viable mechanism for the resolution of cross-border commercial disputes.

* 5th year Law students, Symbiosis Law School, Pune.

[1] Principal Mediator and Engineer, Mediation Resolution Int’l, LLC, d/b/a Power Generation Consultants.

[2] United Nations Convention on International Settlement Agreements Resulting from Mediation, United Nations General Assembly Resolution A/73/198,  Preamble (2018).

[3] United Nations Convention on International Settlement Agreements Resulting from Mediation, United Nations General Assembly Resolution A/73/198, Art. 1 (2018).

[4] United Nations Convention on International Settlement Agreements Resulting from Mediation, United Nations General Assembly Resolution A/73/198,  Art. 3 (2018).

[5] United Nations Convention on International Settlement Agreements Resulting from Mediation, United Nations General Assembly Resolution A/73/198, Art. 1(2) (2018).

[6]  Note by Secretariat, UN Commission on International Trade Law, Report of the UN Commission on International Trade Law, Fifty-first session (25-6-2018 to 13-6-2018), UN Doc. A/ 73/17, at III C.2, available at <https://undocs.org/en/A/CN.9/942>, last seen on 27-1-2021.

[7] United Nations Commission on International Trade Law, Note by the Secretariat, Settlement of Commercial Disputes, International Commercial Mediation: Draft Convention on International Settlement Agreements Resulting from Mediation, UN Doc. A/CN.9/942, at II.B(1) (2-3-2018).

[8] United Nations Convention on International Settlement Agreements Resulting from Mediation, United Nations General Assembly Resolution A/73/198, Arts. 4(1)(a) and (b) (2018).

[9] United Nations Convention on International Settlement Agreements Resulting from Mediation, United Nations General Assembly Resolution A/73/198, Art. 5 (2018).

[10] United Nations Convention on International Settlement Agreements Resulting from Mediation, United Nations General Assembly Resolution A/73/198, Art. 5(1)(d) (2018).

[11] Report of Working Group II (Dispute Settlement) on the Work of its Sixty-sixth Session (New York, February 6-2-2017 to10-2- 2017), UN Doc. A/CN.9/901 (16-2-2017), Para 78 ; UN Doc. A/CN.9/934, United Nations Commission on International Trade Law; Report of Working Group II (Dispute Settlement) on the Work of its Sixty-eighth Session (New York, 5-2-2018 to 9 -2-2018); Report of the UN Commission on International Trade Law, Fifty-first Session (25-6-2018 to13-7- 2018), UN Doc. A/ 73/17, at III C.2 , ¶37-40, ¶68.

[12] United Nations Convention on International Settlement Agreements Resulting from Mediation, United Nations General Assembly Resolution A/73/198, Art. 8(1)(b) (2018).

[13] UN Commission on International Trade Law, Report of the UN Commission on International Trade Law, Fifty-first Session (25-6-2018 to13-7-2018), UN Doc. A/ 73/17, at III C.2 , ¶40.

[14] United Nation Commission on International Trade Law, Report of the UN Commission on International Trade Law, Fifty-fifth Session (3-7-2017 to 21-7-2017), UN Doc. A/73/17, at III B.1, ¶ 19.

[15] Ming Liao, Singapore Convention Series: Refusal Grounds in the UN Convention On International Settlement Agreements Resulting from Mediation, Kluwer Mediation Blog (12-4-2020),  available at <http://mediationblog.kluwerarbitration.com/2020/04/12/singapore-convention-series-refusal-grounds-in-the-un-convention-on-international-settlement-agreements-resulting-from-mediation/>, last seen on 27-1-2021.

Law Firms NewsNews

Mr. Hiroo Advani, Senior Managing Partner, Advani & Co. retains ranking as ‘Band I’ Dispute Resolution Lawyer under Chambers and Partners Asia-Pacific Rankings, 2021.

Mr. Advani is a leading dispute resolution lawyer and an Arbitration Specialist, and has consistently held the position of a Tier 1 dispute resolution Lawyer in the country as reported by reputed publications such as Chamber & Partners and Legal 500.

He has conducted, as Lead Counsel a wide range of Arbitration’s in a variety of fields, including, construction projects, infrastructure, Power Projects, Oil Refineries, Metro/Rail Contracts, conventional sources of power generation and renewable sources of power.

Case BriefsSupreme Court

Supreme Court: The bench of MM Shantanagoudar* and Vineet Saran, JJ has held that Section 89 of CPC and Section 69-A of Tamil Nadu Court Fees and Suit Valuation Act, 1955 contemplate the refund of court fees in all methods of out-of-court dispute settlement between parties that the Court subsequently finds to have been legally arrived at and not just to those cases where the Court itself refers the parties to any of the alternative dispute settlement mechanisms listed in Section 89 of the CPC.

Issue before the Court

Madras High Court had, on8.01.2020, held that, given their beneficial intent, Section 89 of CPC and Section 69-A of Tamil Nadu Court Fees and Suit Valuation Act, 1955 must be interpreted liberally, in a manner that would serve their object and purpose.

“Construing them narrowly would lead to a situation wherein parties who settle their dispute through a Mediation Centre or other centres of alternative judicial settlement under Section 89, CPC would be entitled to claim refund of their court fee, whilst parties who settle the disputes privately by themselves will be left without any means to seek a refund.”

The High Court was of the opinion that as such differential treatment between two similarly situated persons, would constitute a violation of Article 14 of the Constitution, a constitutional interpretation of Section 89 of the CPC, and resultantly Section 69-A of the 1955 Act, would require that these provisions cover all methods of out-of-court dispute settlement between parties that the Court subsequently finds to have been legally arrived at.

Challenging the said decision, the Madras High Court’s Registry had approached the Supreme Court with the contention that Section 69-A of the 1955 Act only contemplates refund of court fees in those cases where the Court itself refers the parties to any of the alternative dispute settlement mechanisms listed in Section 89 of the CPC. Hence, it does not apply to circumstances such as in the present case, where the parties, without any reference by the Court, privately agreed to settle their dispute outside the modes contemplated under Section 89 of the CPC.

Analysis

Understanding the object of the provisions in question

The object and purpose of Section 89 crystal clear is to facilitate private settlements, and enable lightening of the overcrowded docket of the Indian judiciary.

“This purpose, being sacrosanct and imperative for the effecting of timely justice in Indian courts, also informs Section 69-A of the 1955 Act, which further encourages settlements by providing for refund of court fee.”

The purpose of Section 69-A of the 1955 Act is to reward parties who have chosen to withdraw their litigations in favour of more conciliatory dispute settlement mechanisms, thus saving the time and resources of the Court, by enabling them to claim refund of the court fees deposited by them. Such refund of court fee, though it may not be connected to the substance of the dispute between the parties, is certainly an ancillary economic incentive for pushing them towards exploring alternative methods of dispute settlement.

Why a narrow interpretation would lead to absurd and unjust outcome

The narrow interpretation of Section 89 of CPC and Section 69¬A of the 1955 Act sought to be imposed by the Petitioner would lead to an outcome wherein parties who are referred to a Mediation Centre or other centres by the Court will be entitled to a full refund of their court fee; whilst parties who similarly save the Court’s time and  resources by privately settling their dispute themselves will be deprived of the same benefit, simply because they did not require the Court’s interference to seek a settlement. Such an interpretation would lead to an absurd and unjust outcome, where two classes of parties who are equally facilitating the object and purpose of the aforesaid provisions are treated differentially, with one class being deprived of the benefit of Section 69-A of the 1955 Act.

“A literal or technical interpretation, in this background, would only lead to injustice and render the purpose of the provisions nugatory – and thus, needs to be departed from, in favour of a purposive interpretation of the provisions.”

Further, parties who have agreed to settle their disputes without requiring judicial intervention under Section 89, CPC are even more deserving of this benefit. This is because by choosing to resolve their claims themselves, they have saved the State of the logistical hassle of arranging for a third¬party institution to settle the dispute.

“Though arbitration and mediation are certainly salutary dispute resolution mechanisms, we also find that the importance of private amicable negotiation between the parties cannot be understated. In our view, there is no justifiable reason why Section 69-A should only incentivize the methods of out-of-court settlement stated in Section 89, CPC and afford step brotherly treatment to other methods availed of by the parties.” 

Noticing that there may be situations wherein the parties have after the course of a long-drawn trial, or multiple frivolous litigations, approached the Court seeking refund of court fees in the guise of having settled their disputes, the Court said that in such cases, the Court may, having regard to the previous conduct of the parties and the principles of equity, refuse to grant relief under the relevant rules pertaining to court fees.

How the Registry and State Government would benefit in long run 

Finding it puzzling that the High Court’s Registry should be so vehemently opposed to granting such benefit, the Court said that

“Though the Registry/State Government will be losing a one-time court fee in the short term, they will be saved the expense and opportunity cost of managing an endless cycle of litigation in the long term.”

[High Court of Judicature at Madras  Rep. by its Registrar General v. MC Subramaniam, 2021 SCC OnLine SC 109, decided on 17.02.2021]

*Judgment by: Justice MM Shantanagoudar 

Interviews

Thomas P. Valenti is an Attorney, Mediator, Arbitrator Facilitator and Trainer. He has been extensively trained and trains others in all aspects of Dispute Resolution.  He has judged numerous International Legal, Negotiation, Arbitration, and Mediation Competitions. He has travelled to UK, Dubai, India and Europe to train and teach courses in Negotiation, Mediation and Arbitration. 

1. Since, you have been in the field of mediation and arbitration for quite some time, so according to you what are the skill sets required to be successful in this field?

For each, I believe in a dedicated training, and advocacy experience in advance of taking on the responsibility that comes with sitting as a neutral in either capacity. The specific skills that one may include when describing a mediator are : listening, patience, ability to withhold judgment, empathy, critical thinking, ability to communicate clearly, specifically in a way that helps people assess and identify their real interests relative to the matter at hand. For an arbitrator they are: listening, patience, critical thinking, ability to communicate clearly both orally and in writing, ability to assess and insure procedural fairness, and finally the ability to decide matters based on evidence and law, and not just enter compromise awards to avoid true decision making.

2. So, at the first place what made you choose a career in mediation and arbitration?

I was sitting as an arbitrator for some time even while practising as an advocate. At some time, attorneys who were adverse to me in matters in the past, came to me and asked me to mediate current cases they had with others. I took to it, and eventually decided to take some formal training. At some point, I found it to me more satisfying than litigating. So, it was my decision to forgo advocacy entirely and sit only as a neutral.

3. Since you are a member of various global arbitration and mediation associations, in your opinion how different is their individual working scenario and is the required level of expertise different at different organisations?

I really do not think that I can give this answer in a short format that would be useful to your readers. Each stands on their own, have their own requirements, qualifications and commitments. What is universally true is that from each, there are opportunities to learn, network and contribute to the profession.

4. So, in your opinion, in this very field how much does “exhaustion of research” really have an impact?

In arbitration, we have the luxury of asking the parties for submissions on topics that are relative to the dispute, so research becomes a bit easier. In mediation, many do not think of research, but in certain disputes: we are asked to consider matters of complexity, sometimes involving quantum issues; at other times involving intricate societal or cultural backgrounds that impact the dispute; and even we may be addressing environmental issues. So mediators must not look at mediation as such a soft profession that we do not “research” these varied issues that make us better at what we do.

5. How important is doing proper legal research and how should law students equip themselves with legal research skills.

For students, legal research is the number one skill you can bring to a place of employment. Research task will occupy a very high percentage of your time in the beginning of your career. Your senior, your opponent, and ultimately the court will ascribe a reputation to you based in great part on your thoroughness in research, attention to detail, critical thinking, and analytical skills.

6. Now, since you are also an executive committee member at the Indian Bar Association, with your professional insight into the current legal scenario of India, how much do you think arbitration and mediation will flourish in India in the next couple of years?

For India, we have been waiting for some time for mediation to flourish. Arbitration has had a foothold. Recent amendments to the law have given hope that mediation will flourish, and that some recognised drawbacks in the arbitration field will be remedied. But only time will tell.

7. What in your opinion is the biggest challenge that Indian legal system incorporates that impediments the growth of the mediation and arbitration culture in the nation, and what do you feel will be the most effective way to tackle that problem?

In the Indian arbitration scheme, there needs to be the recognition that arbitration can function quite well without interference by the courts. This cannot happen, however, without a robust administrative body who manages the cases, appointments, process and entire scheme, much like you see with International Criminal Court  (ICC), London Court of International Arbitration (LCIA), Vienna International Arbitral Centre (VIAC), Singapore International Arbitration Centre (SIAC), or Hong Kong International Arbitration Centre (HKIAC). The credibility provided by institutional arbitration is needed, as are arbitrators who can efficiently manage complex cases in an expeditious manner. This will enhance domestic cases, and will ultimately have the potential of bringing back to India the many international disputes that are lost to other jurisdictions.

For mediation, once the legal community does not see mediation as an economic threat, things may change. Also, for some reason, there is a concern about enforceability of a settlement. In fact, given its voluntary nature, we rarely see enforceability as an issue. So once the Bar gets behind mediation, it can flourish. I come from a country where somewhere near 95% of all cases settle, so there is a mindset at play as well. India sees nothing like this. We need to look at dispute resolution first as a problem solving exercise, not as a litigation.

8. So, what are your set of do’s and don’ts to any student who wants to pursue a career in alternative dispute resolution (ADR)?

Do: realise that dispute resolution at a firm includes all available mechanisms.

Do: learn all of the available mechanisms.

Do: volunteer in community mediation centre to gain experience.

Do: take as many courses to add mediation and arbitration skills to your toolkit.

Don’t: think you are going to be able to make a career as a mediator when you graduate.

Don’t: think you are going to be able to make a career as an arbitrator when you graduate.

Don’t: miss opportunities to improve your skills.

Don’t: forget to make time for your personal well-being.

9. There are a lot of ADR competitions organised in law schools throughout the globe, so in your opinion how much do these competitions really help the students who want to pursue ADR as a career?

Competitions are used primarily as a resume builder.  Looking at this with this myopic view is not useful. Competitions are a great opportunity to learn, practise skills, get feedback and to network. In light of my earlier answer relating to careers, a student should not look at successful or numerous competitions which are going to help secure employment. Rather, they should be prepared to demonstrate to the recruiting firm, what specific skills and learnings were achieved in the competition(s), and what those added value items may make the student a viable candidate for employment at the firm.

10. So outside work, what keeps you occupied and what are the activities that you undertake in your leisure time?

For me reading, continued learning, mentoring, volunteering, travel and cooking keep me very busy.

11. Any parting message to our readers?

I encourage everyone to find what motivates you, your passion and pursue that. I know the stress that families put on children to pursue certain careers. Reject that, and fight for doing what will make you happy and will be of service to others.

Op EdsOP. ED.

Introduction

Human beings’ need for survival brought competition for resources, which are limited in nature, with its fellow beings. And, with competition, came disputes and conflict, which were resolved firstly and foremost, part of human existence, by fighting or war. This instinctive phenomenon continues till today. But for particular disputes, human beings have been able to come up with other systems for resolving disputes; firstly, distribution of justice by the king (in case of tribes by the tribal chief); secondly, the most prominent method used in today’s world, litigation.

Litigation as a process involved to party contending of their rights, in front of an impartial Judge, through their respective advocates. The Judge after hearing the contention of both the parties delivers a judgment which determines the rights and liability of the parties. No doubt, this method is better than justice delivered by kings/queens (which can be on their whims and fancies) or war (which leads to damage to both the parties on a massive scale).

Litigation is a consequence of one of the human beings’ another instinct i.e. evolution. War and arbitrary judgments evolved into litigation because of limitations in those systems. Litigation, also, is not devoid of limitations, hence, human being’s quest for a better way of resolving disputes lead them to evolve an efficient and effective way of resolving the disputes i.e. the alternative dispute resolution (hereinafter referred to as “ADR”) system.

ADR is an alternative to litigation; and, involves mediation, arbitration, conciliation, negotiation, settlement by judiciary and any other process of resolving dispute which does not involve court; and is governed by certain rules. The result (or settlement) of the proceedings shall be enforceable in law. With the passage of time, ADR is becoming a popular method of resolving disputes between the parties, particularly, in commercial disputes. These methods allow the parties to make choices with regard to law or rules which will be applicable to these proceedings. All the methods in most of the proceedings use a third party as an adjudicator or mediator (as per the method chosen by the parties) chosen by the parties with their consent. This provides satisfaction to the parties with regards to the process and adjudicator because these processes make people feel empowered and in control of the proceedings. After all, people desire certainty the most in life.

Evolution of Modern Arbitration Law in India

Though arbitration prevailed in India, in the form of panchayats (which have been now given recognition in the Constitution of India)[1] before the Britishers came in and established their authority. In 1923, the League of Nations gathered and agreed to the Geneva Convention. The Geneva Convention also contained clauses for arbitration.[2] The first arbitration dedicated provision in the Civil Procedure Code, 1908 which had Section 89 providing for arbitration but the same was repealed by Section 49 and Schedule III to the Arbitration Act, 1940.[3] Prior to enactment of the Arbitration Act, 1940, the Britishers enacted Arbitration (Protocol and Convention) Act, 1937 wherein the Preamble of the Act stated that India was signatory as a State to the Protocol on arbitration as established by League of Nations.[4] The League of Nations intended to bring the world closer through trade which made it realise the importance of arbitration. As a result, the Protocol on Arbitration Clauses, 1923 came into existence. There were several lacunae in the Protocol, hence, a need for amendment was felt. The League of Nations came up with another Convention for Enforcement of Foreign Arbitral  Awards which was lacking in the 1923 Convention.[5] This Convention of 1927 is also known as the Geneva Convention of 1927. This Convention formed the basis for other enactment i.e. the Arbitration (Protocol and Convention) Act, 1937. Section 3 of the Arbitration (Protocol and Convention) Act, 1937 refers to the existence of the Arbitration Act, 1899.[6] The Arbitration Act, 1940 came into picture repealing all the previous laws governing arbitration. The Arbitration (Protocol and Convention), 1937 failed to achieve its objective. Then after several years of work, in 1958, the world came up with a convention i.e the New York Convention, which is still running its course till date. Then, the Arbitration Act, 1940 was repealed and replaced by the Arbitration Act, 1960. The New York Convention inspired another legislation in the Foreign Awards (Recognition and Enforcement) Act, 1961 which was lacking in the Arbitration Act, 1960.

In 1981, in Guru Nanak Foundation v. Rattan Singh[7], Desai, J. observed with regards to the 1961 Act that the arbitration system has become ineffective. The point was that even in cases if the arbitrator passed an arbitral award, the parties used the provisions of the Act to challenge the award. This observation presented the 1961 Act as an additional layer which party may choose or not, prior to the litigation process. The lacunae in the provisions of the 1961 Act, made it redundant and people ended up approaching the courts for litigation. Arbitration as a process was meant to be cost effective and time efficient, but the 1961 Act failed miserably to achieve this objective. This Act would be further repealed and replaced by the Arbitration and Conciliation Act, 1996. In 1985, United Nations Commission on International Trade Law (UNCITRAL) presented a comprehensive model for arbitration. The present Arbitration and Conciliation Act, 1996 is based on that UNCITRAL model. The Arbitration and Conciliation Act, 1996 has been subjected to two more amendments in 2015 and 2019.

Conciliation

In 1987, prior to the enactment of the Arbitration and Conciliation Act, 1996, the Government enacted another legislation for resolving disputes i.e. the Legal Services Authorities Act, 1987[8]. The proceedings under this Act are in the nature of conciliation and the sitting Judge does not perform any adjudicatory function or there is no determination of rights.[9]

In P.T. Thomas v. Thomas Job[10], the Court highlighted the benefits of the legal Services Authorities Act, 1987 as following:

  1. No court fee is charged and if any fee is already deposited, it is given back on settlement of disputes.[11]
  2. It is very elastic as far as procedural law is considered and speedy in resolution of dispute. There is no application of rigid traditional procedural laws like the Civil Procedure Code, 1908 and the Evidence Act, 1872.[12]
  3. The Act enables the parties to directly interact with Judges (retired Judges who are appointed by the authorities concerned).[13]
  4. The proceedings cannot be conducted in an adversarial manner similar to what is done in courts.[14]
  5. The most important part of this Act is that if the dispute is settled; it is equivalent to a decree and enforceability of a court. The settlement arrived at by the parties is not appealable.[15] No civil appeal can be made from this settlement.[16]

In Bhargavi Constructions v. Kothakapu Muthyam Reddy,[17] the Court ruled that the settlement can be challenged on limited grounds i.e. challenge on the grounds of fraud, through writ jurisdiction under Article 226 or Article 227 of the Constitution of India.[18] [19]

The idea behind bringing the Legal Services Authorities Act, 1987 was “legal technicalities” does not get precedence over the resolution proceedings.[20]

The Arbitration and Conciliation Act, 1996 is another legislation which formally provides for the conciliation process. The conciliation process is mentioned in Part III of the legislation. The legislation also adopted as its rule the United Nation Commission on International Trade Law (UNCITRAL) Conciliation Rules. Section 66 of the Arbitration and Conciliation Act provides that the proceedings would not be bound by the Civil Procedure Code, 1908 and the Evidence Act, 1872[21]; no doubt this provision (and many other provisions) is for streamlining the conciliation procedures.

Section 18 of the Micro, Small and Medium Enterprises Development (MSME) Act, 2006, also provides for mandatory conciliation process by referencing the dispute with regards to payment due under Section 17 of the MSME Act.[22] Section 18(2) provides that Sections 65 to 81 of the Arbitration and Conciliation Act, 1996 should apply to seek conciliation as referred under Section 18(1) of the Micro, Small and Medium Enterprises Development (MSME) Act, 2006.[23]

Mediation

In 1996, the Government brought an amendment to Section 89 of the Civil Procedure Code, 1908 which gave scope to the court to formulate settlements, if it appears to the court that there is a possibility of settlement between the parties and after receiving the referral from the parties to make amendments in such settlement and refer the same to arbitration, Lok Adalat, conciliation or mediation.[24] Mediation in India is governed by the Mediation Rules of 2003.[25] These proceedings are more informal in nature as compared to arbitration and conciliation. The role of the mediator is more of a person who provides guidance and clears any misunderstanding that arises between the parties. The parties reach settlement on their own. Mediator regulates the settlement process. At the end of the process, a settlement is arrived between the parties rather than a decision.

The Law Commission of India suggested establishment of commercial courts, first, in the form of creating division in the High Court itself[26] or establishing separate commercial courts[27]. The second suggestion resulted in the passage of the Commercial Courts Act, 2015. In 2018, the present day Government, in alignment of its policy of improving the ease of doing business, came up with an amendment to the Commercial Courts Act, 2015. The President, in May 2018, promulgated an Ordinance which amended the Commercial Courts Act, 2015. As per this amendment, the Government introduced pre-litigation mediation for all the commercial disputes.[28] The provision concerned is Section 12-A(1) which states that in cases where no interim relief is required, the matter would be referred to compulsory mediation. Section 12-A(2) empowers the Central Government, through notification, to authorise the authorities under the Legal Services Authorities Act, 1987 for pre-institution  mediation.[29]

Section 89 of the Civil Procedure Code 

In 2002, Indian Parliament brought an amendment to Section 89 of the Civil Procedure Code, 1908. The amendment brought in a different alternative dispute resolution mechanism in Section 89. The Bar at Salem was not satisfied by this and other amendments. In Salem Advocate Bar Assn.(I) v. Union of India[30], the constitutionality of Section 89 was challenged. The Court upheld the constitutionality of Section 89. The Court also observed that the availability of such provisions in foreign countries have been very successful. The Court constituted a committee under the chairmanship of Justice M. Jagannadha Rao (Retired) to review the difficulty in workings of the amendments. The Court also ordered for the formulation of rules with regards to meditation[31] and ADR. As per the Committee’s recommendation, the Supreme Court ordered all the High Courts to formulate their own rules for ADR and mediation.[32] The recommendations of the Committee were accepted by the Court in another judgment.[33]

Conclusion

Human civilisation has come a long way forward as far as methods for dispute resolution is concerned. The development of ADR mechanisms has been prominently driven by the objective of resolving the issues in a timely and cost effective manner. The evolution of ADR mechanisms portrays an entangled scenario; and, one thing is sure that both legislature and judiciary has had a hard time in streamlining all the ADR mechanisms and rules regarding them. The history of ADR mechanisms started with the enactment of arbitration laws which evolved a lot over time. With time the other ADR mechanisms knocked on the door of Indian Parliament and Parliament was prudent enough to incorporate these new methods for dispute resolution. The Government also ensured that these methods are used on a specific basis in particular industries, for instance, the Commercial Courts Act, 2015 and the Micro, Small and Medium Enterprises Development Act, 2006. There has been discontent within the legal fraternity with regards to amendments in Section 89, which has been resolved based on the recommendations of Justice (Retd.) M. Jagannadha Rao Committee Report. The present day Indian Government is taking further steps in the evolution of ADR mechanisms wherein it desires to make India a global destination for arbitration and other dispute resolution methods.

* BA LLB (Hons.), Associate at S&P LLP.

[1] The Constitution (73rd Amendment Act), 1992; also refer to Article 40 of the Constitution of India.

[2] League of Nations, Treaty Series, Publication of Treaties and International Engagements registered with the Secretariat of the League of Nations <https://treaties.un.org/doc/Publication/UNTS/LON/Volume%2027/v27.pdf>.

[3] Section 89 (repealed),  Civil Procedure Code, 1908;

 WIPO Document, p. 26 <wipo.int/edocs/lexdocs/laws/en/in/in056en/.pdf>.

[4] Preamble, Arbitration (Protocol and Convention) Act, 1937.

[5] Convention on the Execution of Foreign Arbitral Awards signed at Geneva on 26-9-1927 also known as the Geneva Convention, 1927.

[6] Section 3, Arbitration (Protocol and Convention) Act, 1937.

[7](1981) 4 SCC 634

[8] The Legal Services Authorities Act, 1987

[9] State of Punjab v. Jalour Singh, (2008) 2 SCC 660

[10] (2005) 6 SCC 478

[11] (2005) 6 SCC 478, 486, para 19

[12] Ibid.

[13] Ibid.

[14] Supra Note 8.

[15] Supra Note 9.

[16] Order 7 Rule 11(d) of the Code of Civil Procedure, 1908.

[17] (2018) 13 SCC 480

[18] Id., 487, para 24.

[19] Supra Note 8.

[20] Bar Council of India v. Union of India, (2012) 8 SCC 243

[21]Section 66, the Arbitration and Conciliation Act, 1996

[22] Section 18(1) of the Micro, Small and Medium Enterprises Development (MSME) Act, 2006

[23] Section 18(2) of the Micro, Small and Medium Enterprises Development (MSME) Act, 2006 

[24] Section 89, Civil Procedure Code, 1908

[25] Alternative Dispute Resolution and Mediation Rules, 2003.

[26] 188th Report of Law Commission of India on Proposals for Constitution of Hi-Tech Fast — Track Commercial Divisions in High Courts 

[27] 253rd Report of Law Commission of India on Commercial Division and Commercial Appellate Division of High Courts and Commercial Courts Bill, 2015

[28] Section 12-A of Commercial Courts Act, 2015

[29] Ibid.

[30] (2003) 1 SCC 49 

[31] Under Section 89(2)(d) of Civil Procedure Code, 1908

[32] Salem Advocate Bar Assn. (II) v. Union of India, (2005) 6 SCC 344

[33] Ibid.

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The Commercial Courts Act, 2015, is an attempt to fast track the process of hearing and disposal of commercial suits. But to the students and the practitioners, who are not familiar with the trial court’s work, the procedural changes brought about by the Act may not be all that apparent, and to whom this ready-reckoner may be useful. This ready reckoner sets out the relevant stages in the filing and conduct of commercial suits. This is not intended to be a commentary on the entire Act and is only to serve as a guide to the procedures and stages to be followed in the filing and conduct of commercial suits.

1. Commercial Dispute

1.1 Ascertain whether the dispute is a commercial dispute to be filed in a commercial court[1].

2. Pre-institution Mediation

2.1 If there is a need for some urgent interim relief, skip this stage and go to next stage – Filing the commercial suit.

2.2 Where there is no need for any urgent interim relief, the plaintiff should submit an application to the District Legal Services Authority (DLSA) for pre-institution mediation[2].

2.3 In cases where the opposite party cannot be served with the notice for giving consent to participate in the mediation or in cases where, in spite of the service of such notice, the opposite party refuses to participate in the mediation, the DLSA shall treat the mediation process to be a non-starter and make a report accordingly to the applicant and the opposite party[3].

2.4 The DLSA must complete the mediation process within three months from the date of the application submitted by the plaintiff, which period may be extended by two months with the consent of the parties[4].

2.5 In cases where the opposite party participates in the mediation process, but there is no settlement possible, the mediator shall submit a failure report to the DLSA[5].

2.6 In cases where the opposite party participates in the mediation process and the parties reach a mutually agreed settlement, the mediator will draw up the terms of settlement in writing[6].

2.7 Such a settlement has the same status and effect an as arbitral award on agreed terms under Section 30 (4) of the Arbitration and Conciliation Act, 1996[7].

2.8 The period spent by the plaintiff in pre-institution mediation process shall not be computed for the purpose of ascertaining the limitation under the Limitation Act, 1963, for filing the commercial suit[8].

3. Filing the Commercial Suit

3.1 The conduct of a commercial suit is governed by the provisions of Civil Procedure Code, 1908 as amended by the Commercial Courts Act, 2015[9].

3.2 In cases where there is need for some urgent interim relief and the pre-institution mediation process has been skipped and in cases where the Mediator has submitted a failure report, the commercial suit has to be filed along with a Statement of Truth[10].

In cases where interest is sought in the commercial suit, the pleadings must contain the prescribed details[11].

4. Filing the Written Statement

4.1 The written statement must be filed within one hundred and twenty days from the date of service of summons, failing which the defendant shall forfeit the right to file it[12].

4.2 Mere denials shall not be sufficient. The defendant shall have to furnish reasons for denying any of the pleadings in the plaint[13].

4.3 If any allegation of fact in the plaint is not denied in the manner prescribed in Rule 3-A, such allegation of fact shall be taken to be admitted[14].

5. Disclosure, Discovery and Inspection of Documents

Disclosure

5.1 Along with the plaint, the plaintiff must file a list and photocopies of all documents in its power, possession, control or custody, pertaining to the suit[15].

5.2 The plaint must contain a declaration on oath from the plaintiff that all documents in its power, possession, control or custody pertaining to the case have been disclosed and copies thereof annexed with the plaint and that the plaintiff does not have any other documents in its power, possession, control or custody[16].

5.3 Along with the written statement, the defendant must file a list and photocopies of all documents in its power, possession, control or custody, pertaining to the suit[17].

5.4 The written statement must contain a declaration on oath from the defendant that all documents in its power, possession, control or custody pertaining to the case have been disclosed and copies thereof annexed with the written statement and that the defendant does not have any other documents in its power, possession, control or custody[18].

Discovery

5.5 Either the plaintiff or the defendant may, by leave of the court, deliver interrogatories in writing for the examination of the opposite party and the court should decide the application for leave to deliver interrogatories within seven days of its filing. The application will be dealt with in the manner prescribed in Order XI Rule 2 of the Code of Civil Procedure, 1908.

Inspection

5.6 Within thirty days of the filing of the written statement, extendable by the court by a further thirty days, the parties must complete inspection of all documents disclosed in the proceedings. If a party refuses to provide inspection of any documents, the other party may apply to the court for a direction to furnish such documents for inspection. The court should dispose of the application within thirty days of filing and if it is allowed, the inspection of the documents must be furnished within five days of the order allowing the application. A party will not be permitted to rely on a document, which it failed to disclose or of which inspection has not been given, except with the leave of the court[19].

Admission and denial of documents

5.7 Within fifteen days of completion of the inspection of documents, each party must submit a statement of admission or denial of all documents disclosed and of which inspection has been given[20].

Production of documents

5.8 Any party may issue a notice seeking production by the other party of such documents in the power, possession, control or custody of such other party which the party had omitted to disclose along with its pleadings. The other party must, within a maximum period of fifteen days of receipt of the notice, either produce such documents or justify its refusal or inability to do so. The court may draw an adverse inference against a party refusing to produce documents in cases where the court finds that the reasons for non-production of the documents are insufficient[21].

6. Case Management Hearing

6.1 Within four weeks of the filing of the affidavits of admission or denial of documents by all the parties to the commercial suit, the court must hold the first case management hearing and pass an Order framing the Issues, listing witnesses to be examined by the parties, fixing dates for filing of affidavits of evidence, recording of evidence, cross-examination of witnesses, filing of written arguments, submission of oral arguments and setting time-limits for parties and their advocates to address oral arguments. The court must ensure that the dates are fixed in such a manner as to ensure that the arguments are closed within six months from the first case management hearing, and must, as far as possible, ensure that the recording of evidence, including cross-examination of all the witnesses, is carried on a day-to-day basis. The court has wide powers in a case management hearing[22].

6.2 There are a few additional provisions for recording of evidence and submission or arguments.

7. Judgment

7.1 The court must pronounce judgment within ninety days of conclusion of arguments[23].

8. General

Costs

8.1 In relation to commercial suits, the court has the discretion to determine whether costs are payable by one party to another, the quantum of such costs and when they are to be paid, such costs to include costs of witnesses, legal fees and expenses, and any other expenses incurred in connection with the proceedings[24].

Summary Judgment

8.2 A commercial suit may be filed as a summary suit under the provisions of Order XXXVII of the Code of Civil Procedure, 1908[25].

8.3 Even in regular commercial suits, at any stage after service of summons on the defendant but prior to the framing of issues, either party may file an application for summary judgment and the court may give a summary judgment against the plaintiff if it considers that the plaintiff has no real prospect of succeeding on the claim or against the defendant if it considers that the defendant has no real prospect of successfully defending the claim[26].

8.4 Apart from either allowing or dismissing the application, the court may partly allow it or may pass a conditional order requiring a party to deposit a sum of money or provide some security[27].

Appeals

8.5 No civil revision application or petition is maintainable against any interlocutory order of a commercial court[28].

8.6 Any person aggrieved by the judgment or order of a commercial court may file an appeal within a period of sixty days from the date of such judgment or order to the commercial appellate court or to the Commercial Appellate Division of the High Court as the case may be[29].

† Practising advocate, Dhananjay Joshi Associates, Bengaluru

[1] Section 2 (1) (c) read with Section 2 (1) (i), Commercial Courts Act, 2015

[2] Section 12-A (1), Commercial Courts Act, 2015 read with the Commercial Courts (Pre-institution Mediation and Settlement) Rules, 2018

[3] Rule 3 (4) or Rule 3 (6), Commercial Courts (Pre-institution Mediation and Settlement) Rules, 2018.

[4] Section 12-A (3), Commercial Courts Act, 2015

[5] Rule 7 (1) (ix), Commercial Courts (Pre-institution Mediation and Settlement) Rules, 2018

[6] Section 12-A (4), Commercial Courts Act, 2015 read with Rule 7 (1) (vii), Commercial Courts (Pre-institution Mediation and Settlement) Rules, 2018.

[7] Section 12-A (5), Commercial Courts Act, 2015

[8] Second Proviso to Section 12-A (3), Commercial Courts Act, 2015

[9] Section 16, Commercial Courts Act, 2015

[10] Proviso to Section 26 of the Code of Civil Procedure, 1908

[11] Order VII Rule 2-A of the Code of Civil Procedure, 1908

[12] Second Proviso to Rule 1 of Order VIII of the Code of Civil Procedure, 1908 

[13] Order VIII Rule 3-A (3) of the Code of Civil Procedure, 1908

[14] Second Proviso to Rule 5 (1) of Order VIII of the Code of Civil Procedure, 1908 

[15] Order XI Rule 1 of the Code of Civil Procedure, 1908

[16] Order XI Rule 3 of the Code of Civil Procedure, 1908

[17] Order XI Rule 7 of the Code of Civil Procedure, 1908

[18] Order XI Rule 9 of the Code of Civil Procedure, 1908

[19] Order XI Rule 3 of the Code of Civil Procedure, 1908

[20] Order XI Rule 4 of the Code of Civil Procedure, 1908

[21] Order XI Rule 5 of the Code of Civil Procedure, 1908

[22] Order XV-A of the Code of Civil Procedure, 1908

[23] Order XX Rule 1 of the Code of Civil Procedure, 1908

[24] Section 35 of the Code of Civil Procedure, 1908

[25] Order XIII-A Rule 1 (3) of the Code of Civil Procedure, 1908

[26] Order XIII-A Rule 3 of the Code of Civil Procedure, 1908

[27] Order XIII-A Rules 6 and 7 of the Code of Civil Procedure, 1908

[28] Section 8, Commercial Courts Act, 2015

[29] Section 13, Commercial Courts Act, 2015

Case BriefsHigh Courts

Delhi High Court: Mukta Gupta, J., quashed an FIR on noticing that the matter was being dragged only with the purpose of harassing one of the parties by the other.

In the instant petition, directions to respondent 2 were sought with regard to abiding the settlement terms arrived between the parties before the Delhi High Court Mediation and Conciliation Centre for quashing of FIR under Sections 406/420/467/468/471/506/120-B of Penal Code, 1860.

What were the allegations in the above-stated FIR?

FIR lodged by respondent 2 contained allegations that complainant’s father was the owner of a property and had given the said property on license basis to his real brother (R.N. Chopra) in light of his brother’s financial condition not being good.

Complainant’s father passed away in 2001 and later in 2010, the complainant came to India and requested the petitioners to vacate the property. But the petitioners refused to do the same. Further in the FIR, it was alleged that with the intention to cheat, the petitioners executed a sale deed in 2005, which was executed by the petitioner 2, as attorney of late R.N. Chopra in favour of respondent. However, the father of the complainant passed away on 29-07-2001, the said GPA was invalid.

Since respondent 2 was not coming forward and claimed further money on the ground that he had to undergo visits to India, for settling the matter, the parties were referred to mediation and on 28-09-2017, a settlement agreement was entered into between Satish Kumar Chopra and Ashok Kumar Sehgal, as first-party and Anil Chopra, as second party.

Respondent 2 did not deny the settlement and repeatedly did not appear before the Court. Every time his grievance has been that he requires to be paid more money as he had to spend money on the travel for the settlement.

Bench stated that since the matter has already been settled and respondent 2 has just been dragging his feet only to delay the quashing and to harass the petitioners, therefore, Court quashed the FIR in view of the settlement deed arrived at between the parties before the Delhi High Court Mediation and Conciliation Centre.

In view of the above discussion, the petition was disposed of. [Satish Kumari Chopra v. State, 2021 SCC OnLine Del 203, decided on 22-01-2021]

Advocates for the parties:

Petitioners: Gaganmeet Singh Sachdeva and H.S. Sachdeva, Advocates

Respondent: Rahul Mehra, Standing Counsel (Crl.) with Chaitanya Gosain, Advocate for State.

Rajeev K. Agarwal, Advocate for R-2.

Case BriefsHigh Courts

Uttaranchal High Court: The Division Bench of Sudhanshu Dhulia and Alok Kumar Verma, JJ., allowed an appeal which was filed challenging an order passed by Judge, Family Court whereby, the application filed by the appellant, under Order 9 Rule 13 of the Code of Civil Procedure, 1908 for setting aside of the ex-parte Judgment and Decree was dismissed.

The parties were married to each other and out of the wedlock a son was born aged about 16 years and was residing with his mother. After disputes between parties arose husband filed a petition for dissolution of marriage. In the petition, it was mentioned that the wife/appellant appeared on 07-10-2015 but after that, she did not appear in that case. Therefore, an ex-parte proceeding was drawn against her. The husband filed his own affidavit in the ex-parte evidence. After hearing the arguments of the husband, the ex-parte judgment and decree was passed on 08-11-2016, aggrieved by which an application was moved by the appellant, which was dismissed. Hence, the instant appeal.

The counsel for the appellant, Rajat Mittal submitted that in the original suit, during mediation at Haridwar, the respondent/petitioner took appellant and her brother in the belief that he would get his petition dismissed and stay happily in Haridwar. The counsel for the respondent, Bhuvnesh Joshi didn’t rebut this statement.

The Court observed that provision of Order 9 Rule 13 of the Code of Civil Procedure, 1908 envisages two different situations. It provides for setting aside of ex-parte decree where summons have not been duly served on the defendant or where he is prevented by the sufficient cause from appearing when the suit is taken up for hearing. While interpreting the meaning of ‘sufficient cause’ the Court said that “What constitute “sufficient cause” cannot be laid down by hard and fast rules.” mentioning the judgment of the Supreme Court in Bhivchandra Shankar More v. Balu Gangaram More, Civil Appeal No. 4669 of 2019 where it was held that “It is fairly well-settled law that “sufficient cause” should be given liberal construction so as to advance sustainable justice when there is no inaction, no negligence nor want of bona fide could be imputable to the appellant.”

The Court while allowing the appeal stated that the appellant has given sufficient explanation for her non-appearance before the Family Court and the unrebutted explanations offered by the appellant are bonafide and deserve to be accepted.[Seema Gupta v. Manoj Kumar, 2020 SCC OnLine Utt 724, decided on 03-11-2020]

Suchita Shukla, Editorial Assistant has put this story together

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Introduction

Change is the only constant. One must evolve with time; law and legal processes are no exception.

Considering the pitiable state of litigation in India and catching up with global trends, mediation has been made a mandatory subject to be taught in Indian law schools with effect from the 2020-2021 academic session.

The underlying purpose behind this move is to acquaint future lawyers with the practical skills required for mediation, and also to raise awareness about the undoubted benefits of mediation in resolving disputes.

This can also be seen as another stride towards generating a strong “mediation culture” in India. Previously, various statutes have accorded statutory recognition to mediation, and courts have also highlighted the benefits of resorting to mediation.

Despite the proactive efforts to envisage an expansive role for mediation in India, tax disputes are one category of disputes that have remained aloof from it. Practice in other jurisdictions manifest that an option to mediate may be a successful way to mitigate tax disputes and reduce tax appeals. India suffers massively from distrust between taxpayers and tax authority, and consequentially, from excessive pendency of tax appeals.

In order to tackle this mistrust, Indian Prime Minister, on 13-8-2020, announced a historic change in the tax mechanism, making the tax appeal and assessment faceless. Through this move, the Government has eliminated any one-to-one interaction between income tax (IT) officers and taxpayers, thereby attempting to empower taxpayers, and generate their belief in the assessment and appeal mechanism.

In furtherance of the same, this article analyses the prospects of introducing the option of mediation for taxpayers to resolve their tax disputes or concerns, harmoniously through dialogue, without having to indulge with the appellate forums.

The article is divided into 3 sections. Firstly, the article discusses the introduction of the faceless mechanism for tax assessment and appeals in India. Secondly, the article examines the potential impact of the faceless mechanism on the taxpayers in India. Thirdly, the article analyses the possibility of introducing mediation, in addition to the recent tax reforms, as an option for taxpayers to resolve their tax concerns or conflicts.

Faceless Mechanism: The Way Ahead for India

On 13-8-2020, the Prime Minister of India announced a historic shift in the taxation mechanism of the country, targeted towards ensuring ultimate transparency in tax assessments and appeals. Coined as “Transparent Taxation-Honoring the Honest”, the unprecedented move has announced the advent of faceless assessment, faceless appeal and the taxpayers’ charter.[1]

The Prime Minister explained the new mechanism as follows:

“Till now, all tax-related matters in a city are dealt by Income Tax Department of that city, IT officers of that city play main role. Now on, using technology, scrutiny will be done by a randomly chosen IT officer anywhere in the country.”[2]

In other words, under the new mechanism, the identity of the taxpayer and the assessing officer will remain unknown to each other. Faceless assessment will be carried out on account of a document identification number (DIN) that will be issued by a computerised artificial intelligence (AI) system, wherein there will be a random selection of taxpayers, and they will be assessed by a randomly allotted tax officer. In consequence, the new mechanism does away with the territorial jurisdiction of tax officials. In doing so, the Government has eliminated any physical interface between the taxpayers and the tax officials.

Similarly, with the introduction of “faceless appeal”, the Government has sought to make the appeal process for tax disputes transparent. As per the same, tax appeals shall be undertaken by a randomly chosen IT officer. Therefore, the identity of the officer deciding the appeal will remain unknown. The faceless assessment regime will come into force from 13-8-2020, whereas faceless appeal structure will come into force from 25-9-2020.

Despite this major overhaul, the Government has enlisted certain exceptions to the new mechanism, and the same includes cases pertaining to the Black Money Act, benami property, serious frauds, major tax evasion, sensitive and search matters, and also international taxation. Therefore, the Government has safeguarded its economic and political considerations by keeping certain discretionary powers intact.

That said, the tax reforms introduced are bound to completely change the manner in which direct tax is paid and collected in India. Until now, taxpayers had to often visit the local tax office, and wrangle with officials in case of any conflict and often had to pay bribes to “settle” their cases or be subject to tax tyranny. However, with the faceless regime, honest taxpayers will be exempted from any hassles of the erstwhile system.

Impact of the Introduction of a Faceless |Mechanism

One of the foremost intended impacts of the new tax reforms is to build confidence amongst the taxpayers, such that they are able to trust and appreciate the system for collection of taxes in India. There is often hostility between taxpayers and tax officials. Particularly, in the Indian context, there is a lack of trust of taxpayers in the tax authority, that arises owing to the massive power imbalance between them, in terms of authority, experience, technical knowledge, etc. Tax officials in India are often criticised for passing discretionary and non-judicious assessment orders. This has led to a psychological barrier or apprehension against a supposed tendency of tax officials to pass aggressive assessment orders.

Moreover, the erstwhile regime granted the tax officials abundant powers, and as highlighted by the Prime Minister,[3] on occasions, these powers have been misused by certain officials to make unlawful gains or promote “jaan pehchan”(familiarity) culture. In order to curb such overreach by tax officials, the new tax reforms have diluted their powers, as the faceless regime limits the scope of these officers’ discretionary actions.

These changes should mitigate the existing psychological barriers between the taxpayers and tax officials, and provide a better atmosphere for voluntary compliance of tax obligations in India. Moreover, the transparent regime, as introduced, may also reduce the staggering number of tax appeals in the appellate forums in India. The reason being that the taxpayers should now have greater confidence in the blind assessment and appeals done by the IT officials.

For greater clarity, the appellate structure for tax appeals in India is as follows[4]:

(a) First—Commissioner of Income Tax (Appeals).

(b) Second—Income Tax Appellate Tribunal (ITAT).

(c) Third—High Court.

(d) Final—Supreme Court of India.

The ITAT is the final finding court for tax cases, and the appeal to the High Court and Supreme Court must relate to a substantial question of law.[5] India suffers from a massive pendency of tax appeals. To put the same in context, as on 30-11-2019, disputed direct tax arrears in India were equal to Rs 9320 billion compared to actual direct tax collection in the financial year 2018-2019 of Rs 11,370 billion.[6] Moreover, approximately 4,83,000 cases are reckoned to be pending at different appellate forums in India.[7]

Previously, as a measure to reduce the pendency of tax appeals, the monetary threshold for an appeal before the ITAT was increased to Rs 50 lakh from Rs 20 lakh by the Central Board of Direct Taxes (CBDT).[8] Similarly, with respect to the High Courts and the Supreme Court in India, the monetary threshold had been doubled to Rs 1 crore and 2 crore, respectively.[9]

The new faceless regime is introduced at the level of the first appellate forum i.e. the Commissioner of Income Tax (Appeal). The increased transparency in the first appellate forum is expected to reduce lasting conflicts, and consequently reduce pendency of tax appeals. However, the success of these reforms is contingent on the smooth execution of the new mechanism, and efficiency will be the key in ensuring that the new mechanism garners a positive outcome. The faceless mechanism must be structured in a way that it does not result in taxpayers being denied an opportunity to be heard efficiently at any forum. Moreover, while deciding an e-appeal, the officials must adequately address the complexities of the case, and apply the relevant law, without any bias.

In addition to the faceless regime, a reconsideration of the collection targets endowed upon the tax officials is also important. Often the tax officials are provided with unrealistic collection targets, trying to meet them is the major reason that they have to pass aggressive assessment orders. A reconsideration of these targets will mitigate the supposed tendency of tax officials to pass aggressive assessment orders, thereby reducing the possibility of tax disputes from arising in the first place.

In light of the constant tussle between taxpayers and tax authority, the next section of the article considers the possibility of providing the taxpayers with an option to mediate after the assessment is done, such that they can enter into a dialogue with the tax authority to resolve their concerns relating to the assessment order, without actually indulging with the appellate forums.

Mediation—A Way to Ensure Harmonious Prevention of Appeals

On 13-8-2020, another important development came to light. The Bar Council of India (BCI) wrote to the Vice-Chancellors of all universities, issuing LLB degrees, mandating the introduction of mediation (with conciliation)as a compulsory subject to be taught with effect from 2020 in all 3 years and 5 years law courses.[10] The BCI acknowledged that more and more litigants are being drawn towards mediation and are recognising its benefits. Moreover, the BCI also noted the benefits of mediation, as it leads to resolution in the absence of arduous trials, and resolution comes to fruition expediently. This move has been undertaken in the hope that mediation will go a long way in reducing the staggering pendency and backlog in Indian courts.

Historically, disputants in India have been more conditioned or habituated to the traditional litigation process. As a result, India requires heightened and active efforts to ensure that mediation does not exist or serve only as a “buzzword” for the disputants. In line with the same, in the last decade, various statutes like in India the Companies Act, 2013 have accorded statutory recognition to mediation. However, there was still a further need to institutionalise mediation, as a household discussion, such that it could occupy a more expansive role in India. The introduction of mediation as a compulsory subject in law schools will ensure more awareness among lawyers, about the prospects of mediation, and will lead to it being looked upon as more of an option than traditional litigation.

The importance of mediation has been highlighted by the Supreme Court of India in M.R. Krishna Murthi v. New India Assurance Co. Ltd., wherein the Court stated:

  1. … mediation as a concept of dispute resolution, even before dispute becomes part of adversarial adjudicatory process, would be of great significance. Advantages of mediation are manifold. This stands recognised by the legislature as well as policy-makers and need no elaboration. Mediation is here to stay. It is here to evolve. It is because of the advantages of mediation as a method here to find new grounds. It is here to prosper, as its time has come.…In fact, the way mediation movement is catching up in this country, there is a dire need to enact Indian Mediation Act as well.[11]

While there is growing legislative and judicial support for mediation in India, there are still certain categories of disputes that are yet to embrace mediation. For instance, till date, tax disputes in India have remained outside the ambit of mediation. Predominantly, the absence of mediation from the tax framework in India can be rooted in the traditional approach of the Government, and the comprehensive yet cumbersome tax structure enshrined in the Income Tax Act, 1961. However, recent reports have suggested that India has been pondering upon the introduction of mediation to prevent/resolve tax disputes.[12]

This can be an attempt in furtherance of the measures like the faceless taxation mechanism and the 2019 Sabka Vishwas Scheme, taken by the Government to reduce tax litigation. Meditation, if introduced, will be aimed at providing a more cost and time-efficient model to prevent tax disputes, and mitigate the staggering pendency of tax appeals in India, thereby making the country more friendly for taxpayers. Therefore, mediation may provide a more direct and robust mechanism, that would help in unlocking the disputed tax revenues, and also aid ease of doing business by reducing excessive tax litigation in India.

A. Practice in Other Countries

Though mediation of tax disputes will be a new phenomenon in India, it is already being practised successfully in various countries. For instance, Her Majesty’s Revenue and Customs (HMRC), a department of the UK Government responsible for the collection of taxes has seen favourable results in its use of mediation for resolution of tax disputes.[13] The HMRC provides the option to individuals   or organisations to resolve their personal or business disputes to apply for mediation. The mediation is focussed on (i) the areas that need to be resolved; and (ii) re-establishing communications, if needed. Interestingly, UK has a similar tax dispute resolution appeal structure to India i.e. there are four appellate forums. Therefore, the practices of HMRC, in appropriately utilising alternative dispute resolution (ADR), can serve as an example for the Indian tax authority to embrace and use mediation to prevent/resolve tax disputes.

Other jurisdictions like the United States, Netherlands and Belgium have also successfully utilised mediation as a viable alternative dispute resolution mechanism for tax disputes.[14] In the United States, tax mediation has been a mature practice, and the US Internal Revenue Service has a voluntary mediation programme known as fast track mediation i.e. utilised to expediently resolve tax disputes. The objective of the fast track mediation programme in the US is to ensure that disputes are resolved efficiently within 40-120 days. The experience in the US indicates that such a practice is significantly faster than the traditional appeals process. The key features of the fast track mediation programme include: (i) facilitation of the settlement discussion by an independent mediator; and (ii) retention of the right to appeal, if the dispute remains unresolved through the mediator.

However, not all countries have seen similar fruition of mediation for tax disputes. For instance, in contrast to the US, despite mediation for tax cases being introduced in Canada in 2000, Canada has not seen success in its usage. The Canada Revenue Agency could only settle negligible number of cases through mediation, and as a result it decided to stop providing the option of mediation to its taxpayers.[15] Therefore, the success of mediation, as a tool, for resolution of tax disputes, is contingent on the specific conditions under which it is utilised. In order to ensure a sustainable framework, mediation must be introduced in a manner i.e. optimal for both, taxpayers and tax officials.

B. Introducing Mediation for Tax Disputes in India

(a) Legal Considerations in Play

For mediation to be a success in India, in resolving tax disputes, and in mitigating the excessive pendency of tax appeals, it must harmoniously mingle with the existing principles of tax law and the underlying psychological barriers that exist between taxpayers and the tax authority in India. The tax authority in India is strictly bound by the Income Tax Act, 1961,[16] and therefore, any agreement reached during mediation will need to fall within the permissible limits of the statutory framework. This is known as the “principle of legality” in mediation.[17] Moreover, while mediation seeks to heed to the specific circumstances, emotions and interests of the parties, the statutory framework will require all taxpayers, in the same position, to be treated similarly in mediation i.e. the “principle ofequality of treatment”.[18] As a result, the discretionary powers of the tax authority to settle disputes in mediations will be limited. Therefore, in order to allow taxpayers to come out and honestly settle their concerns or disputes, the Government must introduce schemes that incentivise such behaviour. Taxpayers must be given the assurance that they will not be penalised and that the dispute will be settled expediently.

(b) Best Utilisation of Mediation

Despite the aforementioned legal considerations, mediation may be very well utilised in India to prevent tax disputes from arising, and appeals from being filed in the first place. The same can be done by ensuring a transparent interchange or dialogue between taxpayers and the tax authority, the lack of which is one of the foremost reasons for the staggering rate of tax appeals in India.

In order to mitigate any psychological barriers and the lack of trust of taxpayers in the tax authority, post the faceless assessment by the tax officials, the taxpayers can be given the option to avail mediation with the tax authority.[19] In the event that the taxpayers have any confusions, reservations, misunderstandings or apprehensions with respect to the assessment order, mediation can be used appropriately to allow the tax authority to help the taxpayers understand the rationale of the order, and also the technicalities and procedure followed to reach such an assessment. At this stage, both taxpayers and the tax authority can strive to settle any conflicts as per the schemes provided by the IT Department.[20]

During the mediation, the tax officials should shift their focus from mere collection of tax to indulging in an active dialogue with the taxpayers, wherein they can explain the assessment procedure/technicalities to the taxpayers, build confidence, clear misunderstandings and/or provide any additional information.

Such dialogue between taxpayers and the tax authority during the mediation shall go a long way in building a relationship between them i.e. premised on mutual trust and cooperation, and will also ensure less appeal. In other words, mediation will be helpful in allowing the taxpayers to communicate with the tax officials, such that they can collectively ascertain the final amount that is due to be paid, and promote voluntary compliance.

(c) Ensuring Perceived Neutrality of the Process

In addition to an active dialogue and confidence building between the parties, it is also extremely vital to ensure the neutrality of the mediation process. As discussed above, the root causes for the excessive tax litigation in India are the psychological barriers and the distrust between taxpayers and the tax authority. Therefore, for successful use of mediation in India for tax disputes, it is important to ensure a semblance of fairness and impartiality during the mediation, such that parties are truly able to appreciate and put faith in the process.

Consequentially, it would be better to not appoint internal tax officials as mediators, as it might give an impression of an overlap between their roles as mediators and tax officials. Moreover, avoiding the appointment of internal mediator will also ensure that the mediation does not seem like a supplementary administrative review procedure.

Therefore, it would help to have an external panel of accredited mediators, which may comprise of retired judges, retired tax officials, lawyers or other neutral persons having expertise in tax matters.

Conclusion

The tax reforms announced on 13-8-2020, are certainly pathbreaking and historic in nature, and if implemented properly, have the potential to make the Indian tax system much healthier. The intention of these reforms is to bring utmost transparency into the process; it needs to be backed up with proper implementation, for it to get the desired results. It cannot be denied that these measures have immense potential to streamline tax collection in India and trigger voluntary compliance.

Taxpayers in India do not want litigation, as it causes them extreme hardships, in terms of the high litigation costs and inordinate delays. Therefore, any genuine effort by the Government to ensure transparency will be welcomed and appreciated by taxpayers in India.

Incidentally, the introduction of mediation as a mandatory subject to be taught in law schools is a manifestation of the support between accorded to alternate modes of resolution in India. In light of the same, mediation can also be a possible introduction to resolve/prevent tax disputes, as it will allow taxpayer to clear any misunderstandings, without having to indulge with the appellate forums. However, it is important to ensure that mediation is not rendered to a mere procedural formality or an additional administrative procedure, and therefore, tax officials must be ready to perform a proactive role, wherein they reflect a fair, transparent, judicious and collaborative attitude during the mediations.

The option to mediate can be introduced as an optional mechanism i.e. available to the taxpayers, and can be utilised, at will, instead of the appeal forums. The amicable settlement of the tax disputes by mediation will also positively impact India’s image as a tax-friendly country, and boost its economy, given the sizeable amount of revenues that are locked up in these pending tax disputes.

Bhumesh Verma is Managing Partner at Corp Comm Legal and can be contacted at bhumesh.verma@corpcommlegal.in. Abhisar Vidyarthi, Research Associate, Corp Comm Legal.

[1] What is Faceless Income Tax Assessment Scheme? Key Things to Know, 13-8-2020, <https://www.livemint.com/news/india/income-tax-faceless-appeal-scheme-exclusions-explained-11597297807782.html>.

[2] Ibid.

[3] PM Modi Launches Country’s First Taxpayers’Charter Promised in the Budget, 13-8-2020, <https://www.hindustantimes.com/india-news/pm-modi-launches-country-s-first-taxpayers-charter-promised-in-the-budget/story-2OrX12N5QLdRLIDhG9rC4M.html>.

[4] Appeals, Income Tax Department, <https://www.incometaxindia.gov.in/Pages/i-am/firm.aspx?k=Appeals>.

[5] High Court Confirms Appeals must Relate to Substantial Question of Law, <https://www2.deloitte.com/in/en/pages/tax/articles/high-court-confirms-appeals-must-relate-substantial-question-law.html>.

[6] Bill to Implement New Direct Tax Dispute Resolution Scheme Introduced in Parliament, Deloitte, 19-2-2020, <https://www.taxathand.com/article/12962/India/2020/Bill-to-implement-new-direct-tax-dispute-resolution-scheme-introduced-in-parliament>.

[7] Ibid.

[8] Hiking Income Tax Appeal Limit to Reduce Litigation, Help Govt. Focus on High-Value Cases: Experts, 11-8-2019, <https://economictimes.indiatimes.com/news/economy/policy/hiking-income-tax-appeal-limit-to-reduce-litigation-help-govt-focus-on-high-value-cases-experts/articleshow/70629021.cms?from=mdr>.

[9] Ibid.

[10] Mediation with Conciliation to be a Compulsory Subject in Law Colleges from Academic Year 2020-2021: BCI, 15-8-2020, <https://www.barandbench.com/news/lawschools/bci-mediation-with-conciliation-compulsory-subject-law-colleges-academic-year-2020-2021>.

[11] 2019 SCC OnLine SC 315.

[12] Deepshikha Sikarwar, Govt. Mulls Mediation to Solve Tax Issues with Companies, 23-1-2020, <https://economictimes.indiatimes.com/news/economy/policy/govt-mulls-mediation-to-solve-tax-issues-with-companies/articleshow/73537586.cms?from=mdr>.

[13] Use Alternative Dispute Resolution to Settle a Tax Dispute, HMRC, 25-6-2020, <https://www.gov.uk/guidance/tax-disputes-alternative-dispute-resolution-adr>.

[14] Diana van Hout, Is Mediation the Panacea to the Profusion of Tax Disputes?, World Tax Journal, 44-95, 2019, <https://www.ibfd.org/sites/ibfd.org/files/content/pdf/Is-Mediation-the-panacea-to-the-profusion-of-tax-disputes.pdf?utm_source=facebook&utm_medium=social-media&utm_campaign=facebook-week-40&utm_content=pdf/Is-Mediation-the-panacea-to-the-profusion-of-tax-disputes>.

[15] Ibid.

[16] Income Tax Act, 1961, <https://dor.gov.in/sites/default/files/IT%2520Act%2520%2528English%2529_0.pdf>.

[17] Supra note 14.

[18] Ibid.

[19] Good News Awaits Income Taxpayers —Mediation Now Likely in Case of Dispute, The Print, 25-4-2019, <https://theprint.in/economy/good-news-awaits-income-tax-payers-mediation-now-likely-in-case-of-dispute/226616/>.

[20] Ibid.

Hot Off The PressNews

Bar Council of India introduces Mediation with Conciliation as a compulsory subject to be taught with effect from the Academic Session 2020-2021 in 3 years and 5-year LL.B Degree.

BCI directs all the universities to incorporate the above-stated subject as a compulsory paper from the Academic Session 2020-2021.

In times of pandemic and Covid-19, when physical hearings in courts are suspended and norms of social distancing are required to be maintained, Mediation as a tool for conflict resolution has come to the fore. Litigants have been drawn towards Mediation and have begun to realize it’s immense benefits.

Mediation and Conciliation has been seen to lead to resolutions without undergoing arduous trials and moreover resolutions/solutions are arrived at, at a relatively lesser time.

Further BCI states that the teachers for such programs must be trained adequately. The qualification of teachers required to teach Mediation with Conciliation shall be decided by the Bar Council of India in consultation with any authority/institution as it may deem fit including U.G.C. For the moment, applications may be invited from the lawyers having at least 10 years of practice with theoretical knowledge and practical experience in these subjects, inclusive of trained Mediators/Conciliators, and from persons having 2-years LL.M Degrees in these subjects.

Training will also be introduced by the Bar Council of India, in the near future and subsequently, such certificate/ Diploma holders would be preferred for being appointed as Teachers for teaching the subject of Mediation and Conciliation.

Read the detailed Circular, here: Mediation_Mandatory_Bar_Council_Course

Bar Council of India

[Circular dt. 13-08-2020]

COVID 19Cyril Amarchand MangaldasExperts Corner

I. Introduction

For eons, Indians have been reliant on court-driven litigation and, more recently on arbitration for resolving commercial disputes. The significance and impact of mediation in amicable dispute resolution is vastly underrated and under appreciated as reliance on mediation has been restricted to only family disputes and other elementary matters. However, the advent of COVID-19 has forced the world, including the legal industry, to change the norms and to adapt and reform around the new normal and we believe that the insurgence of COVID-19 will give us an opportunity to re-discover the significance of mediation as an effective form of dispute resolution mechanism, especially in commercial matters.

II. Evolution of Mediation

Mediation was popular even before it found a place in the books of law. Ancient Greek civilisation had village elders resolving fights between the locals. In India, instances of mediation can be found in the village panchayat system, wherein, the village elders or ‘Panchs’ resort to mechanisms like mediation to amicably resolve family and land related disputes between the  locals.

Acknowledging the importance of mediation, the Indian legislature enacted the Legal Services Authorities Act, 1987[1], which introduced the Lok Adalat system. Lok Adalats provide a platform to resolve disputes in the pre-litigation stage by way of amicable settlement.

Thereafter, in 1988, the 129th Law Commission Report on Urban Litigation and Mediation as Alternative to Adjudication and the Arrears Committee Report, also known as the Justice Malimath Committee Report was published. Considering the backlog of cases lying before the Indian courts, Justice Malimath Committee Report recommended that the parties be encouraged to refer their disputes to alternate dispute resolution mechanisms (“ADRs”)[2]. These recommendations eventually paved the way for the Code of Civil Procedure (Amendment) Act, 1999[3], which introduced Section 89 of the Code of Civil Procedure, 1908 (“CPC”). Section 89 CPC empowered the courts to refer disputes, with the potential to be settled to ADRs (which included arbitration, conciliation, mediation, judicial settlement)[4].

On April 9, 2005, the Tamil Nadu Mediation and Conciliation Centre, the first court annexed mediation centre was inaugurated[5]. Thereafter, in August 2005, the ex-Chief Justice of India, Justice R.C. Lahoti, constituted a Mediation and Conciliation Project Committee for imparting mediation training for Judges[6]. As of date, several High Courts have their own mediation centres and rules governing them.

Please see below a table providing the various initiatives taken by different High Courts in India:

Sl. No.

High Court

Initiative

Delhi

The Delhi High Court has its own Mediation and Conciliation Centre known as Samadhan and they have regular training workshops of advocates enrolled in the Delhi Bar Association.

Mumbai

The Mediation Monitoring Committee of the Bombay High Court operates a mediation scheme to resolve pending cases before the District Courts, Taluka Court, City Civil Court, Small Causes Court, etc., by providing litigants an opportunity to resolve their disputes by mediation.

Calcutta

The Calcutta High Court recently organised a workshop for Judges at different courts to promote mediation. Experts were brought in from  US to impart their expertise on the subject- matter.

Realising the potential of mediation for speedy and cost-effective dispute resolution, an amendment to the Commercial Courts Act, 2015, was made in 2018, introducing Section 12-A, which mandatorily requires the parties to attempt to mediate their disputes before initiating judicial proceedings[7]. Recently, the Supreme Court in January 2020, set up a panel, headed by Mr Niranjan Bhat, to recommend and draft legislation, codifying mediation practice in India.

These attempts made by the legislature and judiciary to bring mediation in the mainstream have been futile as the true potential of mediation still remains underutilised.

III. Statistical Analysis of Mediation in India

Vidhi Centre for Legal Policy (“Vidhi”) published a report called “Strengthening Mediation in India” in December 2016 (“the Report”)[8], wherein Vidhi, in collaboration with the Department of Justice, Ministry of Law and Justice, analysed the progress of court referred mediation[9], focusing on the data provided by Bangalore Mediation Centre and Delhi High Court Mediation and Conciliation Centre.

The table below shows certain key trends in mediation[10]:

Sl. No.

Mediation Centre

Cases referred

Success Rate

2011

2015

Karnataka

2.79%

4.83%

66%

Delhi

2.86%

2.31%

56%

According to the statistics available on the website of Kerala State Mediation and Conciliation Centre, matters referred to mediation show a success rate of 35.42% in 2016[11]. These abysmal figures can be attributed to various factors, including reluctance of litigants to mediate, lack of awareness and inadequate infrastructure.

IV. Why Mediation?

Mediation is different from other forms of ADR such as arbitration, conciliation and settlement. Unlike litigation and arbitration, which are adversarial in nature, mediation is founded on pillars of cooperation and trust, and is similar to negotiation. A mediator acts as a facilitator between the parties to arrive at a solution, without dictating the settlement terms.

The main difference between mediation and conciliation lies in the role played by a mediator and a conciliator. A conciliator has broader powers of intervention and is empowered to draft the terms of settlement. However, a mediator is a facilitator, who helps parties to resolve their problems on their own. A mediator can give suggestions and persuade the parties to arrive at a solution.

Indian courts have always been over-burdened and the backlog of pending cases is daunting. Even though litigation provides an effective dispute resolution method, it does have various drawbacks, including exorbitant costs, undue delays and cumbersome procedure.

In recent times, arbitration has gained popularity. Although arbitration provides solution to the various drawbacks of litigation, it remains to be an expensive ADR.On the other hand, mediation provides for a cost-effective manner of dispute resolution. It also provides parties an opportunity to resolve their disputes amicably, within a pre-decided time-frame. This helps them avoid the exorbitant cost incurred due to litigation and the undue delays, which are beyond their control.

Mediation gives the parties the flexibility to decide the manner and procedure to be followed to resolve their disputes, depending on the nature of their dispute and the relation between the parties. It also allows the parties to arrive at a tailor-made solution, minimising an unfavorable impact. Parties have the autonomy to conduct a cost-benefit analysis before arriving at the most favourable solution. Additionally, unlike litigation, where the documents once filed become public, mediation allows the parties to keep their documents and discussions undertaken during the mediation, confidential. This is specifically relevant for the companies, as any adverse information about the company, can fluctuate share prices of the company.

It is worth mentioning here that various multi-national corporations, companies and partnership firms have also realised the above mentioned benefits of mediation, which has resulted in them introducing clauses for mandatory mediation in cases of any disputes or disagreements between the parties. Even with all these advantages, mediation is still not a popular choice.

V. Mediation in the wake of COVID-19

As already discussed in the introduction, this pandemic has placed us in a situation where we are forced to adapt to survive. Slowly and gradually, we are shifting from the traditional ways to modern and innovative ways.

Mediation provides a viable alternative to resolve disputes. Under the current circumstances, it would be beneficial for the parties to act in cooperation instead of being adversarial, as an adversarial approach may not always yield a beneficial outcome.

In light of the virus outbreak, jurists contemplate that a number of disputes will arise on the interpretation of force majeure clauses, material adverse effect clauses and termination clauses. While doing so, it is not always advisable to knock on the doors of the courts to seek justice, especially when such key clauses are missing or inadequately drafted. Therefore, while the courts are grappling with the existing backlog of cases, the restrictions in its functioning due to the lockdown and the fresh set of disputes arising due to the current scenario, we feel there might be a shift in the manner in which commercial disputes are or will be resolved, with increased reliance on mediation.

Several Indian High Courts, including the High Court of Judicature at Bombay, Delhi High Court, Kerala High Court, etc., and various international organisations like the Singapore International Arbitration Centre, London Court of International Arbitration, International Chamber of Commerce have already formulated mediation rules. These rules are comprehensive, extensive and can be adopted by parties to deal with the procedural aspects of mediation. Parties also have the option of opting for adhoc arbitration, allowing them to decide on the procedure to be followed during mediation.

Keeping in mind the above benefits and the role mediation can play in the times to come, Singapore International Mediation Centre has launched the SIMC COVID-19 Protocol[12], providing business with an effective solution by way of expedited mediation for dispute resolution. A similar project has been launched by Georgian International Arbitration Centre in collaboration with Resolve and with assistance of European Union and United Nations Development Programme, allowing the parties to either refer their dispute to facilitation or mediation[13]. These moves show the preparedness of various organisations in accepting that mediation will bring the new dawn in dispute resolution, during and even after the pandemic.

IV. Conclusion

The outbreak of the COVID-19 pandemic has resulted in the introduction of various restrictions and changes in law by the legislature, thereby disrupting the functioning of business. Due to the lockdown initiated on account of the COVID-19 outbreak, the Indian economy is experiencing a steady downfall. People and businesses are fending for themselves and are making all efforts to survive. Market leaders are contemplating that the present situation will act as a hotbed for disputes. These new disputes would require speedy and cost-effective solutions. To contain the impact of the fast spreading virus, the courts have also been functioning at minimal capacity and only hearing urgent matters, which makes approaching the courts for dispute resolution a slightly challenging exercise. In the wake of the current situation, mediation appears to be a viable and effective alternative to traditional dispute resolution methods as it can deliver cost-effective and speedy resolution of disputes, especially in cases of commercial disputes. Considering the pandemic and the repercussions to follow, we envisage a shift in the dispute practice being driven by mediation. This shift would require us to be prepared and hence it is imperative to ensure we obtain the requisite training and the skill set to be able to meet the changing demands.

*Partner, Cyril Amarchand Mangaldas

**Associate, Cyril Amarchand Mangaldas

***Associate, Cyril Amarchand Mangaldas

[1] Legal Services Authorities Act, 1987  

[2] https://delhicourts.nic.in/dmc/history.htm, last visited on May 28, 2020.

[3] Code of Civil Procedure (Amendment) Act, 1999

[4] Section 89  CPC 

[5] http://www.hcmadras.tn.nic.in/mashist.html last visited on June 10, 2020.

[6] https://delhicourts.nic.in/dmc/history.htm last visited on June 10, 2020.

[7] Section 12-A, Commercial Courts Act, 2015

[8] https://doj.gov.in/sites/default/files/Final%20Report%20of%20Vidhi%20Centre%20for%20%20Legal%20Policy.pdf last visited on May 28, 2020.

[9] There are two broad categories of mediation: (i) Court referred mediation, wherein, the courts while exercising their powers under Section 89 CPC, refer appropriate matters to mediations; and (ii) Private mediation, wherein, the parties to a dispute agree to mediate their disputes.

[10] https://dakshindia.org/Daksh_Justice_in_India/14_chapter_04.xhtml#fn21 last visited on May 28, 2020.

[11] http://keralamediation.gov.in/Statistics  last visited on May 28, 2020.

[12] http://mediationblog.kluwerarbitration.com/2020/05/21/international-mediation-and-covid-19-the-new-normal/?doing_wp_cron=1591162205.3996729850769042968750 last visited on June 3, 2020

[13] http://giac.ge/giac-and-resolve-are-joining-forces-to-launch-covid19-business-support-initiative/last visited on June 3, 2020.

Op EdsOP. ED.

The principle of Gram Swaraj is based on the idea of “self-governance” or “self-rule” which teaches human beings to be self sufficient by living in peace and harmony and by understanding and respecting the needs and demands of their fellow brethrens.

In dispute resolution, this principle inspires the conflicting parties to resolve their disputes amicably by understanding and respecting the needs and demands of each other. The true aim of the dispute resolution system based on the principle of Gram Swaraj is to unite the parties towards the path of humanity and love for mankind.

Mohandas Gandhi, in his autobiography, had shared an instance wherein he successfully convinced the parties to arbitrate their dispute and, thereafter, successfully convinced the award holder to allow the award debtor to pay the awarded sum in “moderate instalments”, even though the instalments were to run “over a very long period”. Had his client (the award holder) not gotten convinced for such a settlement, the award debtor would be declared bankrupt “and there was an unwritten law among the Porbandar Memans living in South Africa that death should be preferred to bankruptcy.”[1] Gandhi wrote thereafter that “It was more difficult for me to secure this concession of payment by installments than to get the parties to agree to arbitration. But both were happy over the result, and both rose in the public estimation. My joy was boundless. I had learnt the true practice of law. I had learnt to find out the better side of human nature and to enter men’s hearts. I realized that the true function of a lawyer was to unite parties riven asunder. The lesson was so indelibly burnt into me that a large part of my time during the twenty years of my practice as a lawyer was occupied in bringing about private compromises of hundreds of cases. I lost nothing thereby – not even money, certainly not my soul.”[2]

This enshrines the spirit of Alternative Dispute Resolution mechanism in India.

Alternative Dispute Resolution (hereinafter ‘ADR’),which stands as an acronym for a variety of dispute resolution methods such as arbitration, mediation, conciliation, Permanent Lok Adalats, etc., complements the formal justice system. The ADR mechanism gives the autonomy to the parties to select the procedure and the dispute resolution method which are best suited to their needs and preferences. This enables them to resolve their disputes more efficiently by avoiding the complexities involved in court adjudication. This means that they will have more freedom, relaxed rules, tailored remedies, speedy resolution, cost-efficient mechanisms, and an improved access to justice.

However, the parties while deciding to resolve their dispute through any mode of ADR face certain difficulties such as uncertainty in the selection of procedures, uncertainty in the selection of an efficient panel of neutrals (arbitrator, conciliator, mediator, etc.), uncertainty in fixing the fee of the panel of neutral(s), difficulty in searching for a proper place of proceeding etc. To overcome these shortcomings, the institutional ADR offers many advantages. The institutional ADR facilitates the process of ADR by equipping the parties with the prerequisites for effective conduction of the proceedings. For example, it provides to the parties a well built-in infrastructure, a panel of specialised and efficient neutral(s), uniform fees, updated rules, and predetermined procedures, among others.

While these institutional advantages can be avail for the ADR methods such as arbitration, mediation, negotiation, etc, in India, the institutional system of Permanent Lok Adalat (hereinafter ‘PLA’) provides for some additional benefits. Moreover, whenever we think about institutional ADR, we mostly think of Arbitration and Mediation. However, we fail to acknowledge that these mechanisms are predominantly of the rich and the corporate. The common man hardly avails justice through these modes of ADR. Thus, the PLA is an ADR institution for justice to the common man. It is cost-efficient, speedy, government-supported, and promises justice to all, irrespective of their economic, social, or other disability.

PERMANENT LOK ADALATS

Permanent Lok Adalats (hereinafter ‘PLAs’) are one of the most effective tools of ADR in India. PLAs are special tribunals established by the National Legal Service Authority (hereinafter ‘NALSA’) or the State Legal Service Authority (hereinafter ‘SLSA’) with a pre-litigation attempt to resolve the disputes related to public utility in a speedy manner by means of compromise. The latest statistics on PLAs available on the NALSA website reveal that currently there are 298 PLAs in the country which had collectively settled 102,625 out of 143,061 cases from April 2018-March 2019, the total settlement value of those touches Rs. 3,870,578,815[3]. Moreover, the pecuniary jurisdiction of the PLA has been increased from Rupees Ten lakhs to Rupees One crore.[4]

Unlike Lok Adalats which can only be called occasionally, PLAs are established institutions. With the aim of fulfilling the constitutional promise of justice to all, in an affordable, efficient and speedy manner, Parliament in 2002 made certain amendments in the Legal Services Authorities Act, 1987 (hereinafter ‘the Act’), and added Chapter VI-A for pre-litigation conciliation and settlement of the disputes.

This amendment, which gave birth to the system of PLA, was an attempt to further strengthen the system of Lok Adalat in India by institutionalising a forum for compulsory pre-litigation re-conciliation and settlement of disputes related to public utility services such as those related to transport, postal, sanitation, education, dispensary, banking, insurance, housing and real estate, power, light, water, etc.[5]

Further, the unique feature of PLA is that, unlike Lok Adalat, it is a hybrid mechanism of reconciliation and adjudication. In Interglobe Aviation Ltd v. N. Satchidanand,[6] the Supreme Court of India said that the procedural trait of PLA is CON-ARB (that is “conciliation-cum- arbitration”). Further, in Bar Council of India v. Union of India[7], it was said that PLAs are empowered to decide the dispute on merits upon failure between the parties to arrive at a settlement by the way of conciliation.[8]

This means that PLA has twofold power. First: it has the power to conduct the conciliation proceedings between the parties, taking into consideration the circumstances surrounding the dispute, to help them reach an amicable solution in an impartial, speedy, and independent manner.Second: if during the conciliatory proceedings in action, the panel of neutrals realises that one of the parties is unnecessarily becoming adamant to not settle the dispute, even when there exist possible “elements of settlement” for the parties to sign an ‘agreement of settlement on dispute’, then the PLA also has the power to give a decision in the dispute, provided that the dispute does not relate to any non-compoundable offence.[10]

Therefore, the major advantage of PLA is that even though it is a forum for ADR which primarily aims at resolving disputes consensually, yet it is empowered to give a final and binding decision when one of the parties purposefully gets unwilling to settle a fit case.

Are the awards of PLA appealable?

Every award of PLA is final and binding[11] and “shall not be called into question in any original suit, application or execution proceeding”[12]. Here, one may argue that the appeal of the award of PLA should be possible primarily because (i) the Act expressly doesn’t bar the appeal for the award of PLA whereas it does expressly bar the appeal for the award of Lok Adalat under Section 21(2) of the Act which says that “no appeal shall lie to any court against the award [of Lok Adalat]”[13] and (ii) because PLA can adjudicate a dispute on the merits of the case which opens room for the aggrieved party to move the award in appeal, in contrast to Lok Adalat which only conciliates a dispute and passes award on the consent of the parties, thus, leaving no room for an appeal.[14]

However, the Supreme Court of India refuted these arguments in Bar Council of India[15](supra), and held that the award of PLA is non-appealable. It further clarified that (i) the right to appeal is not an inherent right but a creation of statute; if a statute doesn’t expressly prohibits the appeal of an award, that by ipso facto doesn’t make an award appealable especially when the text of the statute strongly suggests otherwise; (ii) that PLAs are special tribunals aiming at resolving public utility disputes at the earliest, and hence, to avoid unnecessary prolongation, the right to appeal is absent; (iii) that if at all, a party is aggrieved by the adjudication of PLA, he always has an option to invoke the special and extraordinary jurisdiction of the High Court under Articles 226 and 227 of the Constitution of India.[16]

Procedure followed by PLA

The procedure followed by the PLA is in complete resonance with what is required to be followed in any ADR mechanism. The legislation requires that the proceedings in the PLA, both at the time of conciliation between the parties and at the time of deciding a dispute on merit if needed, should be guided by “the principles of natural justice, objectivity, fair play, equity, and other principles of justice.”[17] Moreover, it is required that the PLA should remain impartial and independent while conciliating the parties to reach an amicable solution.[18] Further, as far as procedural applicability is concerned, the PLA is not bound by the Code of Civil Procedure, 1908 and the Evidence Act, 1872[19]. However, “for the purpose of holding any determination”, the PLA shall have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 while trying a suit.[20]

Suggestions

While PLA is one of the fastest growing ADR institutions in the country, its jurisdiction to entertain only the matters related to the public utility services needs to be expanded. I suggest that the civil dispute claims such as breach of contract claims, tort claims, equitable claims, traffic rules claims, negotiable instrument claims, etc., must also be put under the purview of PLA. Here, it is noteworthy that according to the 245th Report of the Law Commission of India, the disputes related to negotiable instruments, police and traffic challan, electricity bills, and sanitation are the source of excessive litigation in the country.[21]

The huge backlog of cases only makes justice less accessible. Therefore, to reduce the backlog of cases, and in the interest of speedy justice, it is suggested that such disputes should compulsorily be resolved through PLA.

Further, after regarding the composition of PLA, it is my suggestion that there should be some definite definition of the term persons “having adequate experience in public utility service”.[22] In SN Pandey v. Union of India[23], the Supreme Court of India said that “We do emphasis that the persons who are appointed on the Permanent Lok Adalats should be person of integrity and adequate experience. Appropriate rules, inter alia in this regard, no doubt will have to be framed, if not already in place”.[24] Hence, it is proposed that the Government should notify certain specifications for the appointment of the neutrals in the panel of a PLA.

Lastly, a time-frame needs to be introduced for resolution of disputes in PLAs. Currently, there is no time limit for the resolution of disputes that are filed before PLAs.Therefore, if disputes are left unresolved for a longer period, there will be ambiguity and instances of unchecked discretionary actions by the PLA panels. Hence, to keep alive the spirit of PLA, a time-frame must be defined by the Government.

PLA vis-à-vis International Arbitration Institutions

Whether it can be said that PLA is an Indian model bearing close similarity to international arbitration tribunals?

While there are a few procedural similarities between the PLA and international arbitration institutions, the system of PLA is a unique one. The unique model devised to grant justice to the common man makes PLA stand out in the world from the rest of the ADR institutions.

The PLA charges zero fee for the resolution of disputes[25]. Also, the parties have the option of arguing their case by themselves, thus allowing them to save on the lawyer’s cost. In contrast, resolving a dispute before an international tribunal through any mode of ADR viz. arbitration, mediation, or conciliation is very costly. It involves hefty administration fee, counsel fee, neutrals’ fee (i.e. the fee charged by the panel of arbitrators, mediators, or conciliators as the case may be) among others.

Further, the PLA model is inherently a ‘multi-tier dispute resolution’ model i.e. it first provides conciliation of the dispute, and, if the conciliation fails because of the adamant nature charged with mala fide of one of the parties, then the PLA can even adjudicate the dispute. Whereas, to avail a multi-tier dispute resolution process before an international tribunal, it requires (i) consent of the parties at dispute, (ii) a multi-tier dispute resolution clause, (iii) time, resources, and efforts to defend any challenge related to the existence, validity, invocation, or qualification of the multi-tier dispute resolution clause, and (iv) multiple costs at every tier of the multi-tier dispute resolution.

Furthermore, under the PLA model, the parties do not have to decide anything ‘mutually’ concerning the dispute resolution before entering into any contractual relationship relating to the use of public utility services. PLAs are government institutions which provide CON-ARB form of ADR with pre-defined procedure, rules, composition and qualifications of the panelists, and which are currently located at 298 different ‘places’ in India. A party can unilaterally invoke the jurisdiction of the PLA without the need for any pre-existing dispute resolution agreement. In contrast, the resolution of a dispute before an international tribunal is purely based on ‘party autonomy’ and existence of a valid ‘dispute resolution agreement’. Thus, the parties have to mutually agree upon the form of ADR, its procedure, forum, place, venue, number of arbitrators (or mediators or conciliators as the case may be), subject-matter, etc., before entering into any contractual relationship. This involves a lot of time, effort, and resources both during the drafting of the dispute resolution agreement and thereafter, during defending its ingredients before the tribunal. The system of PLA, therefore, provides an escape route from these complexities and challenges, thus, saving a lot of time, resources and energy of the parties, and ensuring a time-bound resolution of the dispute.

Finally, the subject-matter of disputes before PLAs and international tribunals is largely different. PLAs aim at resolving public utility disputes at the domestic level while the international tribunals function to resolve international/domestic commercial disputes, investor-State treaty disputes, and State-to-State disputes. Both the tribunals, however, share similarity so far as both are (i) institutionalised forum of ADR and (ii) not bound by the domestic rules of evidence and civil procedure.

The advantages of the PLA cannot be compared readily with those of international tribunals. PLA is a forum that provides justice to the common man whereas international tribunals are predominantly of the rich and the corporate.

CONCLUSION

PLA – the unique hybrid of reconciliation and adjudication in India- is the Indian contribution to the world ADR jurisprudence. The PLA performs the function of promoting and strengthening the principle of “equal access to justice” in the country.  It is very popular among the litigants and legal functionaries not only because of its innovative nature and inexpensiveness but also because it serves the common man. The country which is infected with illiteracy, poverty, downtrodden and pendency of cases, PLA is the institutional ADR mechanism progressing towards the attainment of the principle of “Gram Swaraj” and the constitutional promise of justice to everyone at the doorstep.

*IV Year BA LLB (Hons.) student at Maharashtra National Law University, Nagpur. Email id: prakhar.spc@gmail.com

[1] Mahatma Gandhi, The Story of My Experiments with Truth 158 (1959).

[2] Ibid, 158-59 (1959).

[3] National Legal Service Authority, Permanent Lok Adalat, April 2018 to March 2019, National Legal Service Authority of India (May 02, 2020, 02:05 Am)

[4] Section 22-C(1) of the Legal Services Authorities Act, 1987

[5] See Section 22-A(b) of the Legal Services Authorities Act, 1987

See also, National Legal Service Authority, Lok Adalat: Permanent Lok Adalat, National Legal Service Authority of India (May 02, 2020, 02:25 Am), https://nalsa.gov.in/lok-adalat.

[6] (2011) 7 SCC 463

[7] (2012) 8 SCC 243

[8] See also, Section 22-C(8) of the Legal Services Authorities Act, 1987

[9] S.N. Pandey v. Union of India, (2012) 8 SCC 261

[10] Section 22-C(7) read with Section 22-C(8) of the Legal Services Authorities Act, 1987

[11] Section 22-E(1) of the Legal Services Authorities Act, 1987

[12] Section 22-E(4) of the Legal Services Authorities Act, 1987

[13] Section 21(2) of the Legal Services Authorities Act, 1987

[14] P.T. Thomas v. Thomas Job, (2005) 6 SCC 478

[15] (2012) 8 SCC 243

[16] Bar Council of India v. Union of India, (2012) 8 SCC 243

[17] Section 22-D of the Legal Services Authorities Act, 1987

[18] Section 22-C(5) of the Legal Services Authorities Act, 1987

[19] Section 22-D of the Legal Services Authorities Act, 1987

[20] Section 22(1) of the Legal Services Authorities Act, 1987. 

See also, Bar Council of India v. Union of India (2012) 8 SCC 243.

[21] Law Commission of India, Report No. 245 on Arrears and Backlog: Creating Additional Judicial (wo)manpower, Government of India, (July 2014) 

[22] Section 22-B(2)(b) of the Legal Services Authorities Act, 1987

[23] (2012) 8 SCC 261

[24] SN Pandey v. Union of India, (2012) 8 SCC 261

[25] National Legal Service Authority, Lok Adalat, National Legal Service Authority of India (May 04, 2020), https://nalsa.gov.in/lok-adalat.

Hot Off The PressNews

Supreme Court: The 5-judge bench headed by SA Bobde, CJ has dismissed a batch of petitions seeking review of its November 9 Ayodhya land dispute verdict, which cleared the way for construction of a Ram Temple at the disputed site. The bench took these review pleas for consideration in-chamber, rejected them after finding no merits.

On November 9, the 5-judge bench of Ranjan Gogoi, CJ, S.A. Bobde, Dr. D.Y. Chandrachud, Ashok Bhushan and S. Abdul Nazeer, JJ, sat down on a Saturday morning, otherwise a holiday, to finally put an end to the Ayodhya Title dispute and held that the disputed land is to be given to Trust for construction of Ram Mandir. In an effort to balance the interest of both the parties involved, the Court directed  that a suitable plot of 5 acres must be granted to Sunni Waqf Board to set up a Mosque. The sensitivity of the issue was evident from the fact that the1045 pages long ‘unanimous’ verdict was silent on who wrote it. One of the 5-judges wrote a separate but concurring opinion on the issue whether disputed structure is the holy birthplace of Lord Ram as per the faith, belief and trust of the Hindus. The name of the judge was, however, not disclosed as well.

After noticing that the allotment of in respect of the possessory claim of the Hindus to the composite whole of the disputed property stands on a better footing than the evidence adduced by the Muslims, the Court gave the following directions:

  • Central Government to formulate a scheme for he setting up of a trust with a Board of Trustees or any other appropriate body within 3 months. Nirmohi Akhara to be given adequate representation in the Trust.
  • Possession of the inner and outer courtyards shall be handed over to the Board of Trustees of the Trust or to the body so constituted. Possession of the disputed property shall continue to vest in the statutory receiver under the Central Government till then.
  • A suitable plot of land admeasuring 5 acres be allotted to the Sunni Central Waqf Board either by
    • The Central Government out of the land acquired under the Ayodhya Act 1993; or
    • The State Government at a suitable prominent place in Ayodhya.

Also read:

Here’s why the 5-judge bench held that the disputed Ayodhya site belongs to the Hindus

Law School NewsLive Blogging

Welcome to the Delhi Summit of the Indian Mediation Week 2019! The event is taking place at the Constitutional Club of India in Delhi. The theme of the summit is Promoting ADR and Technology in Government Disputes.

10:00 AM – The registration for the event has begun! The summit will be attended by various law school students, lawyers and ADR experts.

11:00 AM – The Summit is underway! Pranjal Sinha, the Chief-Coordinator of Indian Mediation Week and one of the Co-founders of SAMA, addresses the crowd and welcomes everyone to the event.

11:02 AM – The Summit kickstarts with a video which describes the origin of Indian Mediation Week.

11:07 AM – Pranjal describes the state of Indian judiciary and the huge number of pending cases.

11:13 AM – Akshetha Ashok, one of the co-founders of the SAMA, invites Bhaskar Bhartendu to the stage.

11:14 AM : Bhaskar describes the importance of conversation in our day to day lives. Bhaskar proceeds to describe the impact IMW has had through its history. Team IMW has conducted 5000+ drives in the last 3 years with the help of 4000+ volunteers across 65 cities.

11:17 AM : The ambassadors from the North Zone are lauded for their marvelous efforts through the course of the campaign.

11:18 AM : Pranjal invites on stage the 1st Keynote speaker of the Summit, Mr. Sunil Chauhan , the director of NALSA.

11:22 AM : Mr. Chauhan focuses on the lack of awareness regarding Alternative Dispute Resolution (ADR) mechanisms across the country. The director of NALSA also describes the various barriers which have created the huge backlog of cases in the country. He elucidates the benefits of ADR mechanisms. He explains the financial burden and policy which restrict the Government from settling its cases through ADR mechanisms. He suggests that there should be development of a culture which promotes ADR and identification of cases which can be settled through ADR mechanisms. He explains that the officials who visit the courts do not the authorization to settle cases which has proved to be the biggest obstacle in the past. The keynote address ends with him encouraging the young upcoming lawyers to promote ADR in the days to come.

11:35 AM : Pranjal thanks Mr. Sunil Chauhan for his insightful address.

11:43AM : Mr. Sunil Chauhan is facilitated by Kritika Bhatt and Nipun Katahar, two of the student ambassadors of Indian Mediation Week.

11:46 AM : Pranjal invites the second keynote speaker of the day Mr. Sanjeev Ahuja on stage. Mr. Sanjeev Ahuja is an ADR expert and the founding director of Ensemble Resolution Professionals.

11:48 AM : Mr. Ahuja explains the motto of the campaign ” Suljhao, Magar Pyaar se“. He explains that in a litigation case the resolution of the dispute takes place at the loss of one of the parties. He focuses on the loss of Pyaar or love and respect between the parties in a case being pursued through litigation. He explains the benefits of mediation and states that mediation is the future of dispute resolution. He also explains the need to identify cases which are fit for mediation. This would help in effective dispute resolution. He ends his address by congratulating SAMA for organizing yet another successful edition of Indian Mediation Week.

11:57 AM : Akshetha thanks Mr. Ahuja for his wonderful address. The floor has now been opened for questions.

12:13 PM : Mr. Ahuja is felicitated by Prashant Mishra, one of the top performing ambassadors of Indian Mediation Week.

12:15 PM: Anushka Thakur, one of the most hardworking ambassadors of Indian Mediation Week, is felicitated by the two keynote speakers. She has proved to be a true asset to the team.

12:16 PM : We move on and Pranjal invites Ayush Rastogi ,founder of AfPR, to the stage. He focused on students who are interested in international law can join AfPR and create literature in contemporary fields such as criminal law and arbitration.

12:23 PM : Ayush ended his speech by inviting the students to pitch in more ideas and make efforts in a collaborative manner.

12:24 PM : We move on to the next segment, the Case management workshop being conducted by SAMA. We look at the feasibility of Mediation as a profession. Pranjal and Akshetha tell us about the qualities of a good case manager which include communication skills, neutrality and confidentiality. A case manager works along with the mediator and helps in prompt scheduling. One also needs to give feedback about the performance of the mediators. One has a more administrative role and is not allowed to enter the merits of the case. The focus of a case manager has to be the resolution of the case.

12:50 PM : The case management workshop ends with an informative Q&A session. The various steps required in order to become a mediator were the focus of the questions.

1:00 PM : The Summit ends with the distribution of certificates to the people in attendance.

We thank you for joining us for the Delhi Summit of Indian Mediation Week! We will see you next time!

Case BriefsSupreme Court (Constitution Benches)

Supreme Court:

“This Court as the final arbiter must preserve the sense of balance that the beliefs of one citizen do not interfere with or dominate the freedoms and beliefs of another.”

As the entire nation held it’s breath, the 5-judge bench of Ranjan Gogoi, CJ, S.A. Bobde, Dr. D.Y. Chandrachud, Ashok Bhushan and S. Abdul Nazeer, JJ, sat down on a Saturday morning, otherwise a holiday, to finally put an end to the Ayodhya Title dispute and held that the disputed land is to be given to Trust for construction of Ram Mandir. In an effort to balance the interest of both the parties involved, the Court directed  that a suitable plot of 5 acres must be granted to Sunni Waqf Board to set up a Mosque. It said,

“justice would not prevail if the Court were to overlook the entitlement of the Muslims who have been deprived of the structure of the mosque through means which should not have been employed in a secular nation committed to the rule of law.”

However, the 1045 pages long ‘unanimous’ verdict is silent on who wrote it. One of the 5-judges wrote a separate but concurring opinion on the issue whether disputed structure is the holy birthplace of Lord Ram as per the faith, belief and trust of the Hindus. The name of the judge was, however, not disclosed as well.

Here are the key takeaways from the Ayodhya Verdict

Conclusion on Title

“The allotment of in respect of the possessory claim of the Hindus to the composite whole of the disputed property stands on a better footing than the evidence adduced by the Muslims.”

  • On the balance of probabilities, there is clear evidence to indicate that the worship by the Hindus in the outer courtyard continued unimpeded in spite of the setting up of a grill-brick wall in 1857. Their possession of the outer courtyard stands established together with the incidents attaching to their control over it.
  • As regards the inner courtyard, there is evidence on a preponderance of probabilities to establish worship by the Hindus prior to the annexation of Oudh by the British in 1857. The Muslims have offered no evidence to indicate that they were in exclusive possession of the inner structure prior to 1857 since the date of the construction in the sixteenth century.
  • The Muslims were dispossessed upon the desecration of the mosque on 22/23 December 1949 which was ultimately destroyed on 6 December 1992. However, there was no abandonment of the mosque by the Muslims.

Though it held that Ram Mandir be built at the disputed site, the Court, however, directed

“Having weighed the nature of the relief which should be granted to the Muslims, we direct that land admeasuring 5 acres be allotted to the Sunni Central Waqf Board either by the Central Government out of the acquired land or by the Government of Uttar Pradesh within the city of Ayodhya.”

Legality of Allahabad High Court verdict

The three-way bifurcation by the High Court was legally unsustainable. Even as a matter of maintaining public peace and tranquillity, the solution which commended itself to the High Court is not feasible. The disputed site admeasures all of 1500 square yards. Dividing the land will not subserve the interest of either of the parties or secure a lasting sense of peace and tranquillity.

Ram Lalla is a Juristic person

In the case of Hindu idols, legal personality is not conferred on the idol simpliciter but on the underlying pious purpose of the continued worship of the deity as incarnated in the idol. Where the legal personality is conferred on the purpose of a deity‘s continued worship, moving or destroying the idol does not affect its legal personality.

Ram Janmbhoomi is not a Juristic person

The conferral of juristic personality is a legal innovation applied by courts in situations where the existing law of the day has certain shortcomings or such conferral increases the convenience of adjudication. In the present case, the existing law is adequately equipped to protect the interests of the devotees and ensure against maladministration without recognising the land itself as a legal person. Hence, it is not necessary to embark on the journey of creating legal fictions that may have unintended consequences in the future.

Nirmohi Akhara‘s claim to possession of the inner courtyard

Nirmohi Akhara had denied the existence of the mosque & had said that the structure is a temple and not a mosque & that it had exclusive possession of the inner courtyard. It was also it’s case that no incident had taken place on 22/23 December 1949, when the idols were surreptitiously installed into the disputed structure. Refusing to accept the submissions, the Court has held,

“The mosque was partially damaged in 1934 and subsequently, obstructions were placed in the course of offering namaz in the mosque involving a denial of the right to pray for the Muslims. This is followed by the events which took place on 22/23 December 1949 when idols were surreptitiously placed under the central dome. Soon thereafter, proceedings were initiated under Section 145 resulting in the attachment of the property. In this background, it is difficult to accept the case of Nirmohi Akhara that the disputed structure was a temple which was in its exclusive possession and that no incident had taken place on 22/23 December 1949.”

Nirmohi Akhara is not a shebait

A stray or intermittent exercise of management rights does not confer upon a claimant the position in law of a de facto shebait. It cannot be said that the acts of Nirmohi Akhara satisfy the legal standard of management and charge that is exclusive, uninterrupted and continuous over a sufficient period of time. Despite their undisputed presence at the disputed site, Nirmohi Akhara is not a shebait.

Archaeological Survey of India’s Report

Taking into account the archaeological evidence of a massive structure just below the now falled Babri Masjid and evidence of continuity in structural phases from the tenth century onwards upto the construction of the disputed structure along with the yield of stone and decorated bricks as well as mutilated sculpture of divine couple and carved architectural members including foliage patters, amalaka, kapotapali doorjamb with semi-circular pilaster, broken octagonal shaft of black schist pillar, lotus motif, circular shrine having pranala (waterchute) in the north, fifty pillar bases in association of the huge structure, are indicative of remains which are distinctive features found associated with the temples of north India.

Sunni Waqf Board’s claim to possession

The Sunni Central Waqf Board has not established its case of a dedication by user. The alternate plea of adverse possession has not been established by the Sunni Central Waqf Board as it failed to meet the requirements of adverse possession. Since the Hindus have been in exclusive and unimpeded possession of the outer courtyard where they have continued worship, Sunni Waqf Board can’t be held to have the possession of the disputed property.

Destruction of Babri Masjid on December 6, 1992

The destruction of the mosque took place in breach of the order of status quo and an assurance given to this Court. The destruction of the mosque and the obliteration of the Islamic structure was an egregious violation of the rule of law.

Dismissal of Shia Central Board of Waqf’s SLP

The Waqf Board was not able to explain the inordinate delay of 24964 days in filing the Special Leave Petition against the final judgment dated 30 March 1946 of the Civil Judge, Faizabad. The SLP was, hence, dismissed.

Directions

  • Central Government to formulate a scheme for he setting up of a trust with a Board of Trustees or any other appropriate body within 3 months. Nirmohi Akhara to be given adequate representation in the Trust.
  • Possession of the inner and outer courtyards shall be handed over to the Board of Trustees of the Trust or to the body so constituted. Possession of the disputed property shall continue to vest in the statutory receiver under the Central Government till then.
  • A suitable plot of land admeasuring 5 acres be allotted to the Sunni Central Waqf Board either by
    • The Central Government out of the land acquired under the Ayodhya Act 1993; or
    • The State Government at a suitable prominent place in Ayodhya.

[M. Siddiq v. Mahant Suresh Das, 2019 SCC OnLine 1440, decided on 09.11.2019]

Hot Off The PressNews

Supreme Court:  The 5-judge bench of Ranjan Gogoi, CJ, S.A. Bobde, Dr. D.Y. Chandrachud, Ashok Bhushan and S. Abdul Nazeer, JJ will deliver its verdict on the Ayodhya dispute on Saturday, ending decades of uncertainty ever since the Babri Mosque was demolished in 1992.

The notice published on the Supreme Court website reads:

“Take notice that the matters above mentioned will be listed tomorrow i.e. 9.11.2019 (Saturday) at 10.30 a.m. For pronouncement of judgment in Chief Justice’s court before the bench comprising Ranjan Gogoi, CJ, S.A. Bobde, Dr. D.Y. Chandrachud, Ashok Bhushan and S. Abdul Nazeer, JJ.”

Earlier today, Chief Justice of India Ranjan Gogoi held a meeting on Friday with Uttar Pradesh Chief Secretary Rajendra Kumar Tiwari and state DGP Om Prakash Singh to take stock of law and order situation in the state.

Security arrangements have been beefed up in various parts of Uttar Pradesh, especially in Ayodhya district, in view of the impending judgment in the case. Section 144 has been imposed in the district till December 10.
Uttar Pradesh Chief Minister Yogi Adityanath had held a meeting on Thursday via video conferencing with all district magistrates and senior officials directing them to crack down on those trying to disrupt peace. He also asked the officials to stay alert and pro-active.

Between August to October, the Supreme Court held a day-to-day hearing for 40 days on a batch of petitions challenging Allahabad High Court’s order trifurcating the 2.77 acres of the disputed land at Ayodhya into three equal parts to Ram Lalla, Sunni Waqf Board and Nirmohi Akhara. The 16th-century Babri Masjid was demolished on December 6, 1992.

Hot Off The PressNews

Supreme Court: Ahead of the impending verdict in the Ayodhya case, Chief Justice of India Ranjan Gogoi held a meeting on Friday with Uttar Pradesh Chief Secretary Rajendra Kumar Tiwari and state DGP Om Prakash Singh to take stock of law and order situation in the
state, sources said.

The officials briefed the Chief Justice about their preparedness in handling the law and order situation. They also said that the administration is ready to deal with any kind of situation across the state. In the meeting lasted a little more than an hour, the CJI asked officials to take all necessary steps and ensure that no untoward incident takes place in any place in the state.

Security arrangements have been beefed up in various parts of Uttar Pradesh, especially in Ayodhya district, in view of the impending judgment in the case. Section 144 has been imposed in the district till December 10.
Uttar Pradesh Chief Minister Yogi Adityanath had held a meeting on Thursday via video conferencing with all district magistrates and senior officials directing them to crack down on those trying to disrupt peace. He also asked the officials to stay alert and pro-active.

Between August to October, the Supreme Court held a day-to-day hearing for 40 days on a batch of petitions challenging Allahabad High Court’s order trifurcating the 2.77 acres of the disputed land at Ayodhya into three equal parts to Ram Lalla, Sunni Waqf Board and Nirmohi
Akhara. The 16th-century Babri Masjid was demolished on December 6, 1992.

The judgment is expected to be pronounced before November 17, when CJI Gogoi demits office.

(Source: ANI)

More from the day-to-day hearing in Ayodhya Title Dispute:

Won’t hear the matter for even a single extra day after October 18: SC to all counsels

SC asks parties to come up with tentative timeline for conclusion of arguments

SC slams Nirmohi Akhara for opposing Ram Lalla’s plea; Says you ‘stand’ or ‘fall’ together

No Muslim has entered the disputed land since 1934: Nirmohi Akhara

SC seeks evidence of possession of Ramjanmabhumi from Nirmohi Akhara

Both Hindus & Muslims have always called the disputed site a ‘Janmasthana’: Ram Lalla’s counsel

SC rejects Sr Adv Rajeev Dhavan’s plea against 5-days a week hearing

Arguments advanced on whether there was an existing temple at the disputed site

Court shouldn’t go beyond rationality of belief of Ayodhya being Lord Ram’s birthplace: Ram Lalla’s counsel

Excavations show that a massive Lord Ram temple existed at the disputed site: Ram Lalla’s counsel

Babri Masjid was built either on the ruins of Ram Mandir or by pulling it down: Ram Lalla’s counsel

There was a temple in the inner courtyard of the disputed site: Nirmohi Akhara

Also read:

Ayodhya Dispute to be settled by a ‘confidential’ Court monitored mediation; No Gag order passed [Full Report]

Should Ayodhya dispute be decided by mediation? SC to decide on March 6 [Full Report]

Ram Mandir Babri Masjid| Ayodhya matter not to be referred to larger bench; matter not barred by res judicata in Ismail Faruqui case either: SC