In our previous posts (part one, part two), we have given a brief background on the increasing need of speedy disposal of commercial disputes in India and we have also explained the modalities and pitfalls of arbitration as a mode of alternative dispute resolution. In this post, we explore the significant features and potential of “mediation” as an alternate method of resolving conflicts.
Mediation, simply explained, means a process in which a neutral third party, generally called a ‘Mediator’, assists and negotiates between two or more disputing parties to creatively resolve their disputes, while acting as a facilitator rather than a Judge. The mediator uses specialized communication skills and negotiation techniques to enable bridging of differences optimally and finding mutually acceptable resolution to disputes. It is a process that can be initiated at any stage of a conflict, be it pre-litigation/arbitration or during the pendency of the same.
Resorting to mediation is believed to be advantageous because:
- It is informal, voluntary, dynamic and flexible;
- It provides opportunities for exploring out-of-the-box solutions;
- It is private and confidential;
- Parties have the supreme authority and the right to chalk out a mutually accepted settlement;
- It does not exclude the option of resorting to other modes of dispute resolution. However, once a settlement is final, it becomes a binding contract;
- It presents the opportunity to express differences and improve relationships and mutual understandings, whether or not there is a settlement;
- It is time and resource efficient.
The practice of mediation is long-established in India, particularly in the context of personal or family disputes. Moreover, we have always had the panchayat system, whereby respected village elders as neutral third parties have participated and assisted in resolving community disputes. However, under these traditional mediation methods, if mediation failed, the mediator would render a binding decision, just like a judge, and that would completely take away the voluntary, flexible and party-centric aspect of mediation. As a result, it slowly became unpopular and failed to scale up with the economic boom in the country. (Source: x)
As a result, what we are seeing today is the emergence of a new evolved version of mediation that provides maximum party autonomy, by enabling parties to share their perspectives and expressly set out their specific needs, concerns, goals and priorities, without being intimidated by an authoritative third party like an arbitrator or judge. The role of the mediator is of supreme importance, as the mediator has to be responsible for not only encouraging exchange of information between the parties, but also for enabling the parties to understand each other’s views, promoting a productive level of emotional experience, dealing with differences of opinions, providing a detailed analysis of all the probable solution options available to the parties, etc., thereby facilitating communication between the parties, which often becomes difficult in the other modes of dispute resolution.
However, in order to avoid misuse of the extreme party autonomy in an ad-hoc mediation process, parties may also consciously opt for institutional mediation that is slowly making its place in the business world. Specialized institutions are being set up for offering services like private commercial mediation and training and certification of mediators. While private institutions like the Centre for Advanced Mediation Practice and the Indian Institution of Arbitration & Mediation are slowly working towards recreating a mediation intensive culture in the corporate world by conducting workshops, seminars, etc., court-annexed mediation under Section 89 of the Code of Civil Procedure is also gaining momentum in various states of the country, like for instance, the Bangalore Mediation Centre is promoting resolution of civil cases like rent cases, labour cases, cause of actions for specific performance, damages, injunction, declaration, tenancy cases, intellectual property cases, cheque bounce cases etc., through mediation.
However, it is important that the settlement at mediation should constitute a valid contract and be lawful. In this context, it has to be kept in mind that the biggest challenge in mediation is that it is mostly trust based and therefore, the settlement has to be well equipped to deal with eventualities of non-compliance by parties and it has to be worded such that it incorporates the operating agreements by reference and leaves scope for pursuing other modes of dispute resolution in the event that it should fail.