In 2019, India was among the first group of signatories to the United Nations Convention on International Settlement Agreements, popularly known as ‘Singapore Mediation Convention’ (SMC). On the first day of the convention, 46 countries signed the convention and India was among them. The other countries that have signed include USA, China, Israel, Iran, Saudi Arabia, and Malaysia, Philippines, Turkey, South Korea and some of the African countries.
Signatory states are committing to create a conducive environment for international trade and commerce by setting in place efficient systems to resolve cross border disputes.
The next step to take for the signatory countries is ‘ratification of the convention’. Each signatory country is required to work with their own domestic processes and procedures to bring them in conformity with the protocols required for ratification. India has to make alterations of existing domestic law and if required, enact a new legislation. Several ministries like the Ministry of External Affairs, Ministry of Law and Justice, Department of Legal Affairs and others have to come together for necessary approvals and a cabinet note has to be forwarded to the Parliament for the approval of the ratification. A treaty is ratified by obtaining the instrument of ratification under the signature and seal of the President of India. SMC will enter into force in six months after three Signatory States have ratified it.
The countries that have ratified the convention, will gain recognition and enforcement of mediated settlements, when multiple jurisdictions are involved, in an expedient and straightforward manner.
SMC brings an opportunity:
As we take steps to ratify the SMC to promote international mediation we can also strategically set in place effective systems for domestic mediation. Excessive litigation and public dissatisfaction with the civil justice system are marring the administration of justice in our country. There is a cry for alternatives like mediation. The success of international mediation in India will largely depend on a robust eco system for domestic mediation. Countries like USA, UK, Australia and Singapore that are today the leaders in mediation, handled the crisis of pendency and delays by giving an impetus to domestic mediation, especially through private commercial mediation.
Developing an ecosystem for mediation, holistically and strategically can be the pathway for India to become a domestic and international hub for mediation. SMC is timely and can take the mediation movement in India to the next level.
Mediation in India, thus Far:
Mediation was introduced in 2002 through amendment to Section 89 of the Civil Procedure Code. Whenever there is an element of settlement in a dispute, Judges are required to give the parties an option to resolve their disputes through either Arbitration, Mediation, Conciliation, Lok Adalat or Judicial settlement.
Indian Courts frequently persuade attorneys and clients to opt for mediation. In Afcons Infrastructure and Ors. v. Cherian Varkey Construction and Ors 2010 (8) SCC 24, the Supreme Court clarified that Courts can suo moto order parties to go for mediation and listed out the categories of suitable cases. The court in its wisdom indicated that mandating parties to participate in mediation does not prejudice the ‘voluntariness’ of mediation as the extent of participation and the outcome of mediation is left entirely to the free will of the parties.
In Krishna Murthy Vs. New India Assurance Co. Ltd, 2019 online SCC 315, the Supreme Court has highlighted the need for a standalone legislation for mediation. The Committee constituted for Institutional reform for Arbitration and the Task Force constituted for making recommendations to Improve Ease of Doing Business in India have both recommended a standalone legislation for mediation in India.
As of today, almost all High Courts in the Country have set in place a Court Annexed Mediation program. Some courts including the Supreme Court, when they require specialized and high quality mediation services, are referring cases to private mediation. Private mediation has started. However, it is challenging in the current environment.
Several of our statutes provide for mediation. The Company’s Act 2013, The Real Estate (Regulation and Development) Act 2016 and the Consumer Protection Act 2019 include mediation. The Commercial Courts Act 2018 has a mandatory requirement for pre institution mediation.
Despite these commendable steps the use of mediation in India is not adequate. Self-determination, party control and voluntariness in mediation are its most unique and compelling features. This is what distinguishes it from all the other existing forms of dispute resolution. However these same unique features allow the litigants caught in the competitive and adversarial tenor of conflict, to resist it. Only a change in mindset of all the stakeholders can overcome this resistance. The success of mediation in India will depend largely on how we engage with it as we set the systems in place for its operation.
Suggestions for the Way Forward:
A society that is looking for a paradigm shift in approach to dispute resolution has to aim to make mediation the default response while in dispute. A multipronged approach, combining top down and bottom up approach is required. Some suggestions for this approach are:
A standalone legislation for mediation is important in India. At the Global Pound Conference (GPC), the International Mediation Institute (IMI) conducted an electronic survey of over 2500 stakeholders to a dispute in 24 countries including India. The majority voted for a legislation for mediation as the most important way to improve commercial dispute resolution. Only a legislation can give mediation the clarity, credibility, recognition and legitimacy it requires.
Currently several ambiguities and legal confusions exist regarding the process used in ‘conciliation’ and ‘mediation’. Should these two processes be considered ‘synonymous’ and what are the core values of each? A legislation needs to clarify these confusions.
There are different models of mediation. Some categories of disputes are more amenable to mediation than some others. A policy that applies a model that is suitable to each category of case can increase the use of mediation. The models for consideration are;
> Mandatory Mediation Model: Mediation is mandatory. Family disputes are a good example of cases appropriate for mandatory mediation. In the family courts at Bangalore, although mediation is not mandatory under the law, matrimonial cases are being referred for mediation and more than 70% of these cases resolve.
> Easy Opt - Out Mandatory Mediation Model: Also known as the Italian Model where mandatory mediation is required in certain categories of disputes even before filing of a case in court. However, the requirement is only to be present for an initial session and the parties are able to easily opt out. eg: Contractual disputes.
> Opt-in model: In this model, parties use mediation voluntarily. India currently follows this model for almost all categories, except for the mandatory provision under the Commercial Courts Act, 2018.
Easy Opt-Out Mandatory Mediation Model-Why it works.
The success of the Easy Opt-Out Mandatory Mediation in Italy since it was introduced in 2013 is good reason to dwell deeper on this model. This model applies only to 15% of civil and commercial disputes in Italy. Parties, prior to instituting a case in court under 13 specified subject heads, have to be present mandatorily along with their lawyers, for an initial meeting with a mediator. Penalties are there for not showing up for the initial meeting. However, once they are present for that initial meeting, they can leave the process in the quickest possible time and there is no penalty for opting out. This mandatory initial meeting is available at little or no cost.
In Italy ‘Easy Opt-Out Mandatory Mediation’, though applicable only in few specified subject heads, has resulted on an average of 150,000 mediations per year since 2013. Research has shown that of these cases that go in for mandatory mediation 50% transition after the initial mandatory meeting and continue as voluntary mediation. 50% of these settle. There has also been a dramatic decrease (30-50%) in the filings of new cases under those subject heads. Italy is seeking to increase the number of subject heads for ‘Easy Opt-Out Mandatory Mediation’.
Behavioral Science explains the efficacy of ‘Easy Opt-Out Mandatory Mediation Model’. A study was conducted in 2003 on the Organ Donation Scheme called ‘Do Default save Lives?’ by Eric Johnson, Columbia Law School and Daniel Goldstein, London Business School. In Countries with ‘Opt-In Scheme’ (e.g. Germany, US, UK) where people donated their organs as an opt-in, voluntarily at the time of death 15% of the people donated. In countries with ‘Easy Opt-Out Mandatory Scheme’ (Spain, Belgium, Austria) where the policy is such that by default people donate organs at the time of death and they can easily opt out, if they chose to do so, 90% of the people donated. This model provides easy opt out so that if any person or member of his/her family is not agreeable she only needs to intimate the concerned authorities accordingly. However very few people took the option of opting out. The conclusion is that human behavior is such that ‘People prefer to conform to Status Quo’. They prefer to keep things as they are and rarely go against the existing state of affairs.
It is apparent from the study that the current opt-in mediation model alone cannot increase the use of mediation substantially. In order to change the mindset of the public, the status quo itself must change. Mediation should be the norm rather than an alternative.
The implementation of any policy has to take into account all the stakeholders. How can they be prepared to cope with this new process of dispute resolution? The important stakeholders in mediation are the lawyers, judges, parties and mediators.
Lawyers: The success of mediation will depend on the buy-in of the lawyers. In order to obtain their buy-in:
> Increase familiarity: The aforementioned GPC survey shows that unfamiliarity of the lawyers to the mediation process keeps them away. Training in ‘Advocacy in Mediation’ can be a good way to increase and improve lawyers’ willingness to try mediation.
> Choice of mediator and mediation service providers: Court annexed programs are mostly free or minimally paid and parties do not have a choice of mediator. For a complex commercial dispute, lawyers need to choose their mediator. Commercial clients may seek mediators with process expertise, subject expertise, competence to safeguard confidentiality and the other ethical aspects of mediation. Lawyers need a choice of court annexed and private mediation.
> Lawyer’s Fees: Unless participation in mediation is as lucrative as appearing in court, lawyers are reluctant to choose mediation. There has to be well-structured and attractive lawyer fee for participating in mediation.
Judges: Judges are the most powerful influencers. They can persuade parties to resolve their dispute through mediation. They will be convinced only if they have a deeper understanding of the mediation process and training on the skills required to refer appropriate cases for mediation. Parties: Awareness on mediation is currently very low among litigants. Once the judge has persuaded them or the statute has pushed them into mediation, a positive experience is most valuable to promote mediation. Efforts are required to safeguard the quality of mediation. Mediators: Standards are to be maintained through proper accreditation and market self-selection. The best talent for mediation is attracted only if it is as lucrative a profession as the other dispute resolution professions.
Signing the SMC was a timely step taken by India. As we proceed to ratify the SMC, we have gained an opportunity to set in place the systems to entrench mediation as the default response to a dispute. A legislation for mediation, a policy to bring in ‘Easy Opt-Out mandatory mediation’, deeper attention to quality and an approach that nurtures all stake holders are to be included to create a robust ecosystem for mediation. This can be the pathway for India to become a hub for international mediation. Successful international mediation is a sequel to efficient and effective domestic mediation. An excellent opportunity exists as we prepare to ratify the SMC. We cannot miss it.