Which Law governs Mediation

Law on Mediation

‘Mediation’ means the process by which a Mediator appointed by parties or by the Court, as the case may be, mediates the dispute between the parties to the suit by facilitating discussion between parties directly or by communicating with each other through the Mediator, by assisting parties in identifying issues, reducing misunderstandings, clarifying priorities, exploring areas of compromise, generating options in an attempt to solve the dispute and emphasising that it is the parties own responsibility for making decisions which affect them.

Commercial Mediation in India

Commercial Mediation in India was given life in 1996 when the Indian parliament amended the Civil Procedure Code (CPC) and introduced Section 89, which empowered courts to direct settlement of disputes by mediation amongst other means. This provision governs mediation in the court system in India. The year 1996 also saw the introduction of the Arbitration and Conciliation Act, 1996. The provisions of the Act govern private Mediation (Conciliation) in India.

In India ADR and Mediation Rules, 2003 were drafted after the judgment of the Supreme Court of India in Salem Bar Association vs. Union of India, in which the Supreme Court has requested this committee to prepare draft model rules for Alternative Disputes Resolution (ADR) and also draft rules for mediation under Section 89(2)(d) of the Civil Procedure Code, 1908. Pursuant to the said judgment, we have prepared the following set of draft rules. They are in two parts – the first part consisting of the procedure to be followed by the parties and the Court in the matter of choosing the particular method of ADR. The second part consists of draft rules of mediation under section 89(2)(d) of the Code of Civil Procedure, 1908.

Mediation under Commercial Courts Act, 2015

Other legislation that covers mediation is the Commercial Courts Act, 2015, whereby it is mandatory for parties to exhaust the remedy of pre-institution mediation under the Act before instituting a suit. The Commercial Courts (Pre-Institution Mediation and Settlement) Rules, 2018 (the PIMS Rules) have been framed by the government under the Act.

Rule 2 (f): "Mediation" means a process undertaken by a Mediator to resolve, reconcile and settle a commercial dispute between the parties thereto.

Other salient features of PIMS Rules, 2018 are-

Rule 3. Initiation of Mediation process

    (1) A party to a commercial dispute may make an application to the Authority as per Form-1 specified in Schedule-I, either online or by post or by hand, for initiation of mediation process under the Act along with a fee of one thousand rupees payable to the Authority either by way of demand draft or through online;
    (2) The Authority shall, having regard to the territorial and pecuniary jurisdiction and the nature of commercial dispute, issue a notice, as per Form-2 specified in Schedule-I through a registered or speed post and electronic means including e-mail and the like to the opposite party to appear and give consent to participate in the mediation process on such date not beyond a period of ten days from the date of issue of the said notice.
    (3) Where no response is received from the opposite party either by post or by e-mail, the Authority shall issue a final notice to it in the manner as specified in sub-rule (2).
    (4) Where the notice issued under sub-rule (3) remains unacknowledged or where the opposite party refuses to participate in the mediation process, the Authority shall treat the mediation process to be a non-starter and make a report as per Form 3 specified in the Schedule-I and endorse the same to the applicant and the opposite party.
    (5) Where the opposite party, after receiving the notice under sub-rule (2) or (3) seeks further time for his appearance, the Authority may, if it thinks fit, fix an alternate date not later than ten days from the date of receipt of such request from the opposite party.
    (6) Where the opposite party fails to appear on the date fixed under sub-rule (5), the Authority shall treat the mediation process to be a non-starter and make a report in this behalf as per Form 3 specified in Schedule-I and endorse the same to the applicant and the opposite party.
    (7) Where both the parties to the commercial dispute appear before the Authority and give consent to participate in the mediation process, the Authority shall assign the commercial dispute to a Mediator and fix a date for their appearance before the said Mediator.
    (8) The Authority shall ensure that the mediation process is completed within a period of three months from the date of receipt of application for pre-institution mediation unless the period is extended for further two months with the consent of the applicant and the opposite party.

Rule 4. Venue for conducting Mediation

The venue for conducting of the mediation shall be the premises of the Authority.

Rule 5. Role of Mediator

The Mediator shall, on receipt of the assignment under sub-rule (7) of rule 3, facilitate the voluntary resolution of the commercial dispute between the parties and assist them in reaching a settlement.

Rule 6. Representation of parties in Mediation

A party to a commercial dispute shall appear before the Authority or Mediator, as the case may be, either personally or through his duly authorised representative or Counsel.

Rule 7. Procedure of Mediation

(1) The mediation shall be conducted as per the following procedure-
    (i) At the commencement of mediation, the Mediator shall explain to the parties the mediation process;

    (ii) The date and time of each mediation sitting shall be fixed by the Mediator in consultation with the parties to the commercial dispute.

    (iii) The Mediator may, during the course of mediation, hold meetings with the parties jointly or separately, as he thinks fit;

    (iv) The applicant or opposite party may share their settlement proposals with the Mediator in separate sittings with specific instruction as to what part thereof can be shared with the other party;

    (v) The parties to the mediation can exchange settlement proposals with each other during mediation sitting either orally or in writing;

    (vi) During the process of mediation, the Mediator shall maintain confidentiality of discussions made in the separate sittings with each party and only those facts which a party permits can be shared with the other party;

    (vii) Once both the parties reach to a mutually agreed settlement, the same shall be reduced in writing by the Mediator and shall be signed by the parties to the commercial dispute and the Mediator as per Form-4 specified in the Schedule-I;

    (viii) The Mediator shall provide the settlement agreement, in original, to all the parties to a commercial dispute and shall also forward a signed copy of the same to the Authority; and

    (ix) Where no settlement is arrived at between the parties within the time specified in the sub-section (3) of section 12A of the Act or where the Mediator is of the opinion that the settlement is not possible, the Mediator shall submit a report to the Authority, with reasons in writing, as per Form-5 specified in Schedule-I.

(2) The Authority or the Mediator, as the case may be, shall not retain the hard or soft copies of the documents exchanged between the parties or submitted to the Mediator or notes prepared by the Mediator beyond a period of six months other than the application for mediation under sub-rule (1) of rule 3, notice issued under sub-rule (2) or (3) of rule 3, settlement agreement under clause (vii) of sub-rule (1) of rule 7 and the Failure report under clause (ix) of sub-rule (1) of rule 7.

Rule 8. Parties to act in good faith in Mediation

All the parties to a commercial dispute shall participate in the mediation process in good faith with an intention to settle the dispute.

These laws are however not based on the UNCITRAL Model Law on International Commercial Conciliation.

IDRC Mediation Rules, 2019 

IDRC Mediation Rules, 2019 contains a detail procedure for Mediation as under -

Article 1  -  Commencing Mediation – prior existing agreements to mediate
Article 2  -  Commencing Mediation – no prior agreement
Article 3  -  Appointment of Mediator
Article 4  -  Statements by the Parties
Article 5  -  Conduct of the Mediation
Article 6  -  Conclusion of the Mediation
Article 7  -  Settlement Agreement
Article 8  -  Costs
Article 9  -  Judicial or Arbitral Proceedings
Article 10 -  Confidentiality and Privacy
Article 11 -  Limitation of Liability 

Schedule 1- Administrative Costs