The Mediation Act, 2023: Safeguards, shackles and paradoxes

The Mediation Act, 2023 is a legislation to promote and facilitate Mediation, to realize the full potential of dialogue and collaboration, and to ultimately confine the adversarial approach to select issues.

The issues include matters that fall within the realm of constitutional and statutory interpretations, policy issues, non-compoundable criminal offences, situations where a precedent is required or when disputing parties are unable to reach resolution, despite all efforts at mediation and other alternative dispute resolution (ADR) processes.

As per Section 6 of the Act, mediation cannot be conducted for resolution of any dispute contained in the First Schedule. As per Section 55, the Act cannot have an overriding effect on mediation or conciliation conducted in the statutes listed in the Second Schedule. In my view, many of these restrictions and limitations could hinder the growth of mediation in India.

In this article, I hope to examine the First and the Second Schedule of the Act to understand when the restrictions and limitations are safeguards and when they are restrictive and are shackles to the optimal growth and development of mediation in India.

It is important to mention that mediation may not be appropriate for every case in any category. However, a blanket ban or limiting the overriding effect of the Act may exclude cases where mediation would serve well. The baby could be thrown out with the bath water.

Safeguards, shackles and paradoxes in the First and Second Schedule of the Act

Safeguards:

Criminal offences of a non-compoundable nature, suits for declaration against the government and where rights of third parties are involved, are cases where normally mediation is not used. Mediation is essentially negotiation between the parties. The above-mentioned cases are normally not negotiated and, therefore, not mediated, except in rare cases and where the court deems fit.  

Shackles and Paradoxes:

Many of the exclusions and limitations in the First and Second Schedule of the Act are unnecessary and restrictive, as they relate to disputes where mediation could work well and is being used extensively in different jurisdictions.

Below are some of the exclusions and limitations with a discussion on why they are restrictive:

1) Disputes relating to claims against minors, deities, persons with intellectual disabilities and persons with disability having high support needs

Statutes such as Rights of Persons with Disabilities Act, 2016, Mental Health Act, 2017 and Order 32 of the Civil Procedure Code have provisions that are designed and customized to safeguard the decision-making powers of such persons. Guardianship, joint decision making, advance directives etc enable such persons to transact. The courts act as parens patriae and can monitor these transactions. When such a framework already exists, excluding such persons from negotiating a resolution through mediation could be discriminatory.  

The Supreme Court found it appropriate to attempt mediation in the Ayodhya Babri Masjid-Ram Mandir dispute even though the deity himself was a party in the dispute. Such mediation may no longer be possible now.

2) Complaints before statutory authorities in relation to registration, discipline, or misconduct of any professional practitioner such as lawyer, doctor, architect, dentist

Case law in India is ambiguous regarding what constitutes professional misconduct. Can professional negligence be construed to be professional misconduct? This ambiguity may be the opportunity for many litigants to avoid participating in mediation in professional negligence complaints.

Professional negligence cases are well suited for mediation. Complaints of negligence often arise because parties are seeking more information. They do not have a safe space for dialogue and conversation. When there is a complaint of professional negligence, the legal advice is invariably to withhold communication to avoid any prejudicial evidence. In mediation, on the contrary, the Act provides watertight confidentiality and thereby a safe space for open conversations and parties can explain, clarify, and learn; maybe offer an apology; or even pay compensation for the pain and loss. The extensive communication in mediation additionally has instructive value for professional practitioners. They learn where their services have been deficient and how best to improve and avoid such mistakes in the future.

The Woolf Committee constituted in 1994 in UK for making recommendations for Civil Reforms, in its report, found medical negligence cases as a priority category for mediation. International trends are moving to mediation for professional negligence claims.

3) Proceedings under the jurisdiction of the National Green Tribunal

Environment-related issues have been mediated in several countries. Water usage from the Michigan Lake and disputes relating to the 2004 Tsunami in Sri Lanka are a few examples. Mediation has the potential to be uniquely designed so that the voices of all the stakeholders in multi-party disputes are heard. Regulatory authorities and governments may become part of the mediation.

Consensus building is a type of mediation process where good faith efforts are made to meet the interests of all stakeholders and through which unanimous and sustainable agreements can be facilitated amongst entire communities. With environmental disputes only expected to increase in the future, excluding this category is flawed. This process is being frequently used in many jurisdictions for environmental disputes and India cannot lose out on this benefit.

4) Direct or Indirect Taxes: Disputes relating to levy, collection penalties or offences

Settlement Commissions already exist in tax-related matters in India. Issues that do not involve criminality go through settlement processes. The United States has Appeal Mediation Procedures to resolve tax controversies and the United Kingdom allows His Majesty’s Revenue & Customs Taxpayers to request for ADR for resolving their disputes.

5) Proceedings before the Securities and Exchange Board of India (SEBI)

SEBI had set up an Online Dispute Resolution platform through its circular date July 31, 2023, to resolve disputes under various categories through arbitration and mediation.

Several bankruptcy disputes are being mediated. As a Weinstein Fellow in 2011, in San Francisco, I had the privilege of observing the mediation of a bankruptcy dispute at JAMS, a private mediation institution.  This dispute was described as one of the biggest in the history of America.

6) Exclusion of the overriding effect of the Act in statutes such as the Maintenance and Welfare of Parents and Senior Citizens Act, 2007 and the Sexual Harassment of Women at Workplace Act, 2013.

The Second Schedule is a list of statutes where the Act does not have an overriding effect on the mediation/conciliation that takes place under those statutes. This is a limitation. Legislation such as the above-mentioned deal with sensitive issues that would benefit from communication, reconciliation and preserving of relationships. Although these statutes provide for mediation/conciliation, they do not, in the same way as the Act does, prescribe and protect a process that espouses the core principles of confidentiality, voluntariness and self-determination. Parties are, therefore, denied the full potential of mediation. It is a paradox that in especially sensitive disputes such as these, the Act does not have an overriding effect on the mediation.

Maintenance and Welfare of Parents and Senior Citizens Act, 2007:

This Act addresses issues around the care of elderly parents and senior citizens. These family disputes would benefit from a transformative style of mediation which is focused on bringing greater understanding and transforming the relationships between the parties. The Maintenance and Welfare of Parents Act provides for the appointment of a conciliation officer by the government whose primary role is to be an investigating officer. Conciliation officers are generally not trained in mediation.

Family relationships are best protected with minimum exposure to the adversarial processes and maximum opportunities for reconciliation and building relationships.

Sexual Harassment of Women at Workplace (Prevention, Prohibition, and Redressal) Act 2013 (POSH Act)

Under the POSH Act, the Internal Complaints Committee (ICC) is the authorized body to resolve disputes. Women employees from the organization generally constitute the majority in the Committee, and this impacts neutrality. Additionally, members are generally not trained in understanding-based processes like mediation. They follow an investigative/inquisitorial process that does not necessarily permit parties to feel safe and engage in open and honest communication.

India is going through a period of transition. Young Indians from diverse backgrounds are coming into the workplace. Mistakes happen and parties need a safe space which is confidential and private so that they can share their pain and acknowledge shame and guilt. Many jurisdictions around the world offer mediation as a preferred forum of choice for sexual harassment cases and most victims choose mediation. It is a paradox that mediation under the Act does not have the overriding effect for these disputes.   

Mediation has instructive value. I mediated a workplace dispute with allegations of sexual harassment in a British company based in India. The CEO, in the feedback stated,

“This was the first time that we had used external mediation to resolve a highly sensitive and emotive workplace dispute in our India office, but it will definitely be a process that we will embed in our people practices moving forward. The mediator was able to help the individuals concerned to better understand how their actions can be perceived by others. This meant that they experienced a collaborative and empowering rather than an adversarial resolution process.” 

Conclusion

Mediation is at its threshold in India. Safeguards are required, but even more vital is to promote a culture of resolution, collaboration and good human behavior through mediation. A change in mindset is required for parties in dispute to adopt mediation. Only a critical mass of users can change mindsets. Restrictions and limitations, other than those that are necessary, are contraindicated and could stifle the growth of mediation at the very inception.    

Laila Ollapally is a lawyer and mediator. She is the Founder of CAMP Arbitration and Mediation Practice and a Founding Coordinator of the Bangalore Mediation Centre.        

Anubhab Banerjee, Principal Associate Mediation at CAMP Arbitration and Mediation Practice, is the researcher for this article.