2.2.1. Mediation

Mediation involves an unbiased and impartial third party mediator. The mediator tries to help the parties to reach a mutually agreeable settlement to the conflict.

♤ The agreement will not be imposed by the mediator, but will be determined by the disputing parties themselves.

♤ The mediator may assist the parties to prioritize their objectives and thus help them reach a win- win situation

♤ The mediator has no authority to make any decisions that are binding on them, but uses certain procedures, techniques and skills to help them to negotiate an agreed resolution of their dispute without adjudication

♤ Cases are conducive for mediation if there exist communication problem or emotional barriers between parties, resolution is more important than vindicating legal principles and parties have incentive to save time, cost, drain on productivity due to litigation.

Advantages of Mediation Disadvantages of Mediation

♤ Active participation of parties.

♤ Prompt resolution of disputes

♤ Cost effective method

♤ Helps maintain and conserve human relationships.

♤ Smaller but important issues can be settled through mediation, even though there is pending litigation.

♤ Bargaining of parties is based on their needs and the formulation of a solution is easier

♤ Informal procedure and therefore flexible

♤ Private and confidential

♤ If one of the parties is aggressive, the settlement of conflict becomes difficult.

♤ Cultural differences and communication gaps may make settlement of the dispute difficult.

♤ Since the decision of the mediator is not binding, the parties can yet resort to litigation.

The Commercial Courts Amendment Act of 2018 has provided great impetus to mediation. It entails that where a suit does not contemplate urgent interim relief, the plaintiff has to undergo pre-institution mediation. The Commercial Courts Amendment Act 2018 introduces the “Commercial Courts (Pre-institution Mediation and Settlement) Rules, 2018”. These rules lay down the procedure for mediation which must be followed. The rules, read with the Act state that:

♤ The Central Government may authorize the Authorities constituted under the Legal Services Authorities Act, 1987. This authority would regulate the mediation process by initiating the proceedings once an application is received by a party.

♤ It also assigns the dispute to a mediator and decides the venue of proceedings.

♤ The mediation process must be completed within a period of three months from the date of receipt of application for pre-institution mediation. This period can be extended for two months with the consent of the parties.

♤ Further, the rules provide that the parties are obligated to act in good faith and they, along with the mediator are obligated to maintain confidentiality of proceedings.

♤ It also lays down the ethics to be followed by the mediator.

♤ It further entails that the settlement arrived at by such mediation shall have the status and effect of an arbitral award under Arbitration and Conciliation Act, 1996.