The most recent World Bank Index on ‘Ease of Doing Business’ has ranked India 130 out of 189 countries. Effective dispute resolution is core to the “Enforcement of Contracts” component of the World Bank Index, where we rank an abysmal 178.
Trade and commerce can develop only when there are simple, efficient and collaborative means to resolve disputes. Easy access to mediation, available privately, is a good way to ensure that many disputes do not even reach the courts. Through a robust system of mediation in the community, we can significantly change the culture of dispute resolution from adversarial to collaborative.
Business models of today are collaborative. Relationship and trust is increasingly becoming the basis of contractual arrangements. Platforms like internet and other networking associations have connected people. Peer reviews are easy and life cycle of any business is increasingly limited. Commercial organisations will readily embrace transparent methods of identifying problems and resolving them immediately in a confidential and collaborative manner.
Research has shown that most civil disputes can be resolved by offering the disputing parties a proper venue where parties are given adequate opportunity to set aside time with their respective lawyers and mediator so that they can together look at their files in a holistic manner, rather than a piece by piece adversarial action over a long period of time. In a survey done by CEDR, a premier dispute resolution agency in United Kingdom, in 2014, it was found that an aggregate of 86% of cases got settled through mediation, 75% on the same day and 11% shortly afterwards. The possibility that through mediation the dispute could be resolved in a day, is extremely attractive for disputing parties.
In India, the Commercial Court Act, 2015 has provided for mediation under Section 89 of the Civil Procedure Code, 1908 (CPC) which is commonly construed to be mediation through court annexed programmes. However, it is silent about private mediation (mediation conducted by private mediators). It is crucial to give the commercial sector opportunities for mediation through private mediation service providers as well for the following reasons:
1) The criticality of speedy resolution of disputes in the commercial sector, including through pre litigation mediation. This minimises the risk of conflict, reduces cost and improves the chances of resolution and maintains relationships;
2) Commercial sector would be inclined for mediation if the level of services provided is of a superior quality. Nuanced techniques, sophisticated approach, comfortable environment, subject matter expertise, choice of mediator etc, are important criteria that could influence the decision to mediate. Convening and follow up could improve efficiency and effectiveness of mediation. Court annexed programmes are catering to the larger community. It is mostly conducted by volunteers who receive an honorarium. Levels of attention and time that the commercial disputes require may not be viable or practical in a court environment; and,
3) Resources of the courts are constrained and it may not be able to offer optimal structure for ensuring a proper environment.
Culture of mediation An analysis of the legislation in a few countries could help understand how it nurtures a culture of mediation in the community through both Courts and Private mediation service providers.
Italy: The New Italian Law applicable from 2013 has created a pilot project for 4 years requiring mandatory mediation for several major civil disputes areas. Parties with their lawyers have to undergo a compulsory initial meeting with a mediator after which they can decide to opt out. The law secures the confidentiality and privilege in mediation and enforceability of a mediated settlement. Court annexed mediation is not available. Private mediation Services are available through Bar Association, Chambers of Commerce and other organisations and individual providers. Tax incentives are given for mediation.
United Kingdom: European Union directives provide for mediation in cross border disputes and civil procedure rules provide for domestic mediation. Common law principles provide for confidentiality of mediation and enforceability of a mediated settlement. Court annexed mediation is available in a few programmes at the county court level for smaller cases. Private mediation is available through organisations and independent mediators. Cost is imposed if reasonable efforts for mediation and other alternative dispute resolution (ADR) mechanisms have not been made.
USA: State law ensures confidentiality of a mediation proceeding and enforceability of a mediated settlement. The Federal Uniform Mediation Act has been enacted by 8 states. It ensures uniformity of mediation services and covers confidentiality, privilege etc. Court Annexed Mediation: Each state has its own programme at original and appellate level. Private Mediation providers include CPR (International Institute of Conflict Prevention & Resolution), American Arbitration Association, other organisations and individual mediators.
Brazil: Brazilian Mediation Law, 2015 provides for judicial mediation, out of court mediation, as well as the settlement of disputes involving government and public entities. Parties to an agreement may provide for a mandatory mediation meeting if a dispute arises. Like an arbitration clause, this mediation clause will have a binding effect. Court annexed mediation is available in some courts. However, all domestic courts are not able to offer optimal structure for ensuring a proper environment. Parties are therefore given the freedom to choose mediation outside. Notifications exist which encourage pre-litigation mediation. Private mediation include CPR and other private mediators.
Where mediation has been adopted with a legislative framework and implemented successfully by courts, private mediation institutions and mediators of repute, disputing parties, including global companies, use mediation effectively and manage their legal risks and costs. However, when there are insufficient credible structures supporting mediation, parties are forced to seek suboptimal solutions that increase uncertainty and costs and reduce productivity.
Some action points: 1) Legislation for mediation promoting both court annexed and private mediation.
2) Include inputs of experienced mediators while drafting legislation, to bring in practical realism.
3) National law schools to conduct 40-hour mediation training programmes to train mediators for private mediation.
(The writer is with the Centre for Advanced Mediation Practice, Bengaluru)