Title: Settling disputes out of court
(Pre-litigation mediation is an important step to improve the ease of doing business)
Context:- Mandatory pre-litigation mediation in commercial disputes has been introduced by the recent Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts (Amendment) Ordinance, 2018, which amends the Commercial Courts Act of 2015.
Mandatory pre-litigation mediation puts the ball in the court of the parties involved, rather than looking at external agencies like courts, and urges them to engage with and resolve disputes.
The meaning of mediation
The Commercial Courts Act was legislated to improve the enforcement of contracts, as part of improving the ease of doing business. The law defines “commercial disputes” to include regular commercial and business contracts, construction contracts, shareholder agreements, licensing agreements, etc.
The law makes changes for reduction of timelines, tightening processes and designating special commercial courts and commercial divisions to deal with these disputes, among others.
The ordinance stipulates that no suits concerning commercial disputes will be filed under this Act unless the person filing the suit exhausts the remedy of pre-litigation mediation. If an urgent interim relief is required, this pre-litigation mediation can be dispensed(distribute) with.
However, in all other cases, the mediation is mandatory and will be conducted within a period of three months (extendable by another two months with the consent of the parties). Any settlement arrived at through mediation will have the status of an arbitral award on agreed terms and be enforceable like a decree of court. Importantly, the time limits for filing cases will pause during the time the pre-litigation mediation is underway.
Mediation is a process of resolution of disputes by the parties to them. It involves discussion of the conflicts, moving out of the loop of allegations and counter-allegations, and assessing where interests lie in resolving the disputes. Options for settlement are explored and a settlement is worked out through joint evaluation.
Mediation, and mandatory mediation specifically, is not new in India. Some questions arise. One of the advantages of mediation is its voluntary nature; how does this reconcile with the mandatory nature of pre-litigation mediation? Will a pre-existing mediation agreement be enforced? What will be the status of cross-border mediation?
The Italian case
Italy, which faces a high rate of pendency of cases, has adopted what is referred to as ‘opt out’ mandatory mediation. In 2010 and 2013, it introduced a law for pre-litigation mediation. Attempts to mediate were made mandatory for certain disputes (like partition and joint ownership of property) before a case was filed in court. This law reconciles the voluntary nature of the process, while mandating mediation.
What lies ahead
The ordinance is an important step in mainstreaming mediation, but it is not enough. Most disputes seek urgent orders for preservation of status quo(यथास्थिति) or restraint orders on filing. With such an application, pre-litigation mediation could effectively be given a go-by(avoid).
There is a need for a comprehensive policy on mediation, rather than the abbreviated and disconnected steps so far. This policy would encapsulate(express) the process, the role and professional responsibilities of mediators, the rights and obligations of parties in the process, and the outcome of the mediation agreement.
Final Words
When seen in the context of a deliberate and well-considered law, mediation as a process would be more credible to disputants, as has happened in the case of arbitration.
Definition:
Arbitral award:
Arbitration is simply another way of solving a dispute between two parties of a contract. Whereby a person, “Arbitrator” is appointed with agreement by both the parties to act like a judge, in case of a dispute. The Arbitrator after weighing the evidence decides the dispute, which is called Arbitral Award.
Vocabulary words:
Litigation (noun) = The process of taking legal action (मुक़दमेबाज़ी)
Stipulate (verb) = Demand or specify a requirement (प्रतिज्ञा करना)
Arbitral (adj) = Communal (पंचायती)
Conciliation (noun) = The action of mediating between two disputing people or groups (समझौता)
Status quo (noun) = The existing state of affairs, especially regarding social or political issues (यथास्थिति)
Perceptible (adj) = Noticeable (सुस्पष्ट)
Rupture (noun) = Break or burst suddenly (बिगाड़)
Put aside (phrasal verb)= To save something
Rhetoric (noun) = The art of effective or persuasive speaking or writing
Sermonise (verb) = Publicize (प्रचार करना)
Tenor (noun) = Theme, respect (विषय)
Susceptible (adj) = Likely or liable to be influenced or harmed (अतिसंवेदनशील)
Meddle (verb) = Interfere, intervene (हस्तक्षेप करना)
Diplomat (noun) = Statesman, politician, ambassador (राजनयिक)
Credence (noun) = Acceptance, belief (विश्वास)
Punitive (adj) = Intended as punishment (दंडात्मक)
Probe (noun) = Investigation (तहक़ीक़ात)
Torrent (noun) = A strong stream (धारा)
Retaliate (verb) = Make an attack in return (जवाबी कार्रवाई)
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