Mediation Bill: Outcome of Parlimentary Committee for Section 1-10 of the Bill

1. Term not properly defined:

This Act does not clearly define term in application section 1- habitually reside in or are incorporated in or have their place of business in India.

DRPSC Comments

• The Committee notes that the terms ‘habitual residence’ and ‘place of business’ are not defined in the Bill. The Committee notes that the Foreign Exchange Management Act defines the terms ‘person resident in India’ and ‘person resident outside of India’ while the Goods and Services Act defines the term ‘Place of Business’.
• The Committee is of the considered view that lack of explicit definitions often results in ambiguity and makes multiple interpretations possible.

Therefore, either these terms should be either appropriately defined in the Bill or should be replaced by other suitable words used in other Acts.

Indian Law Watch Observations from the Report

UNCITRAL definitions given in the its convention and the Mediation Law may be adopted for sake of uniformity.

2. Exclusion of the Government from Mediating

The provisions of Section 2 (2) states that sub-section shall not apply wherein one of the parties to the dispute is the Central Government or a State Government, or agencies, public bodies, corporations and local bodies, including entities controlled or owned by such Government, except where the matter pertains to a commercial dispute. Provided that nothing shall prevent the Central Government or a State Government from notifying, such kind of dispute, as it deems appropriate for such Government, for resolution through mediation under this Act, wherein such Government, or agencies, public bodies, corporations and local bodies including entities controlled or owned by them, is a party.

DRPSC Comments

• As per Proviso to clause 2 (2), unless specifically notified by the Central and / or State Governments, non-commercial disputes with Government as one party, are, by and large, outside the ambit of the mediation Bill.

Committee recommends that the wordings of clause 2 (2) may be suitably modified so that government related disputes are not excluded from the purview of the Mediation Bill, 2021. The Committee is confident that such a move will inspire confidence in the stakeholders that mediation is a viable option, which even the government is ready to adopt for disputes where it is one of the parties.

Indian Law Watch Observation from the Report

• The subclause (2) prevents  automatic application of the sub-section whereby one party is the government and also includes the  enabling provision for extending mediation for resolving disputes also wherein Government is a party.
• Government as largest litigator, should be within the ambit of the proposed Mediation Act as observed by the Committee. It can help save time and money and also inspire confidence as observed by the Committee.
• The Chief Justice of Bombay High Court opined that expanding the scope of the Bill to cover both civil and commercial disputes involving the Government and its agencies will bring relief to lakhs of litigants with scarce means who otherwise are constrained to approach different Courts against the Government / public bodies even for small and petty issues.

3. Commercial Dispute as defined in Commercial Court Act

Commercial dispute means a dispute defined in section 2 (1) (c) of the Commercial Courts Act, 2015. Subject to other provisions of this Act, whether any mediation agreement exists or not, any party before filing any suit or proceedings of civil or commercial nature in any court, shall take steps to settle the disputes by pre-litigation mediation in accordance with the provisions of this Act: Provided that pre-litigation mediation in matters of commercial disputes of Specified Value shall be undertaken in accordance with the provisions of section 12A of the Commercial Courts Act, 2015, and the rules made thereunder.

DRPSC Comments

• The Committee notes that the definition of commercial disputes under the Commercial court Act has various list has two components:
  • the ordinary commercial disputes and
  • commercial disputes of Specified Value as given in the Commercial Courts Act which is applicable for the purpose of this Bill.

The Committee is of the view that this will create a dichotomy wherein commercial disputes of specified value are dealt with in a manner different from other commercial disputes that are not of specified value. Not only that, under Section 12A of the Commercial Courts Act, parties to a commercial dispute will not have a choice of the mediator and will be allotted mediators from panels maintained by Authorities set out in this section.

The Committee infers that parties to a dispute of a value falling below the specified value and parties to civil disputes will have access to mediators of their choice while parties to a commercial dispute of a specified value will necessarily have to go the Legal Services Authority/ Mediation Service Provider authorized by the Central Government, and be bound to mediate through mediator selected by them. Although, Section 12A of the Commercial Courts Act is proposed to be amended through Ninth Schedule of the instant Bill, mediation in respect of commercial disputes of Specified Value is being conducted in a manner different from that of ordinary commercial disputes. The Committee, therefore, recommends that these facts should be clearly indicated in the definition of ‘Commercial Dispute’ in clause 3 (a) of the instant Bill in order to avoid any dispute.

Indian Law Watch Observations from the Report

Section 12A of the Commercial Courts Act is proposed to be amended through Ninth Schedule of the instant Bill, mediation in respect of commercial disputes of Specified Value is being conducted in a manner different from that of ordinary commercial disputes. The Committee, therefore, recommends that these facts should be clearly indicated in the definition of ‘Commercial Dispute’ in clause 3 (a) of the instant Bill in order to avoid any dispute.

4. Court definition

“court” means the principal civil court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the disputes forming the subject matter of mediation, if the same had been the subject matter of a suit or proceeding.

DRPSC Comments

• The Committee is of the view that there is a need to widen the ambit of the definition of ‘Court’.
• Accordingly, the Committee recommends that the term ‘Court’ should cover all Courts located within the territory of India, ranging from subordinate (primary) Courts to the apex Court, having territorial and subject matter jurisdiction over the dispute that is the subject matter of mediation.

Indian Law Watch Observation

Bangalore International Mediation Arbitration and Conciliation Centre, a Mediation Institution, has opined that the definition of the term ‘Court’ should include High Courts and Supreme Court so as to widen the scope and ambit of mediation proceedings.

Presently the bill is silent qua the remedy available for conducting Mediation in Compoundable Criminal matters or Matrimonial Cases. This grey area needs to be rectified.’

5. International Mediation

“international mediation” means mediation undertaken under this Act and relates to a commercial dispute arising out of a legal relationship, contractual or otherwise, under any law for the time being in force in India, and where at least one of the parties, is—

(i) an individual who is a national of, or habitually resides in, any country other than India; or

(ii) a body corporate including a Limited Liability Partnership of any nature, with its place of business outside India; or

(iii) an association or body of individuals whose place of business is outside India; or

(iv) the Government of a foreign country;

DRPSC Comments

• The term international mediation covers only commercial mediation. As per the Bill, in case of international mediation conducted in India, settlement agreements will be enforceable in the same manner as a decree or judgement of a Court. However, this does not apply to settlements arising out of international mediations conducted abroad. Experts felt that the provisions of the Bill should be consistent with the requirements of Singapore Convention in respect of international commercial mediation since India is a signatory to it.
• that the Bill should also cover international civil matters.
• The Committee observes that the purpose of Singapore Convention is to facilitate international trade and commerce by enabling disputing parties to easily enforce and invoke settlement agreements across borders. The Committee was informed by the Ministry that India has not ratified UNISA yet. However, the Committee understands that ratification of any international convention is by way of making a domestic law on that subject in the country. Since the proposed Bill on Mediation is also the subject matter of UNISA, it may amount to partial ratification of it.

The Committee recommends that the present definition of ‘International Mediation’ needs to be revisited, so that, in future, the provisions of Singapore Convention can be incorporated in the enactment without any ambiguity. By doing so, the Committee feels that, as provided in Clause 40, the object of developing India into a robust centre for domestic and international mediation can be achieved.

Under the Singapore Convention, signatory nations must recognize and enforce mediated settlement agreements, similar to the enforcement process for international arbitral awards. The Committee recommends that the Bill should have an in-built mechanism that would prohibit automatic enforcement of any international Mediated Settlement Agreement that does not conform to the public policy of India or if the agreement pertains to a dispute which is not mediatable.

Indian Law Watch Observation

To make India as hub of international mediation, the condition of at least one party being Indian may be removed. i.e. Two outside parties may be able to mediate in India.

There is no proposal to extend the application of the bill beyond international mediation conducted in India relating to commercial disputes.

Stakeholders hold that provisions relating to the Singapore Convention on Mediation should be included in the Mediation Bill, 2021, to enable settlement agreements as provided for in the UNISA to be enforced in India.

India states 46 countries, including the world’s two largest economies – the United States and China – as well as three of the four largest economies in Asia – China, India and South Korea – signed the Convention on the day it opened for signature. Another 24 countries attended the signing ceremony in Singapore to show their support for the Convention. On 25 February 2020, Singapore and Fiji became the first two countries to deposit their respective instruments of ratification of the Convention at the United Nations Headquarters in New York. With the third instrument of ratification deposited by Qatar on 12 March 2020, the Convention entered into force on 12 September 2020.

As per the argument of Senior Advocate J.P Sengh, since the proposed Act deems an international mediation settlement agreement to also be a decree of the court, the same would not be enforceable under the Singapore Convention. Therefore, conducting an International Mediation in India may deprive the parties of the benefit of the Singapore Convention, and parties would then prefer to have the Mediation conducted out of India. We will lose the opportunity to make India a robust hub for International Commercial Mediation which has being envisaged while drafting the Bill.