Med-Arb in Indian Perspective: Its Efficiency and Utility in the Existing System

Openness uncovers a myriad of viewpoints and experiences. Open-ended discussions tend to nurture the statements in the face of crystallinity. Moreover, it comforts the individuals being engaged in any kind of discussion concerning social, legal and economic realms.

Pertaining to the above assertions, the article aims to analyse the utility and efficacy of Med-Arb in the Indian Judicial System.

As the notion of Med-Arb stands on the cornerstone of self-determination, impartiality and confidentiality, it is to be affirmed that the quality of openness is of paramount importance at all the stages of the procedure. The judicial system of our country has been long burdened with a large number of cases being delayed or pending before the District courts, High courts and the Supreme Court[1]. However, courts should not be the platforms where the disputes between the parties escalate, rather where the disputes end up with efficient solutions and remedies. Ensuring this as an utmost obligation of the judiciary, there has been an evolution of different alternative measures to lessen the burden on the judicial system.

The Emergence of Med-Arb under the Alternative Dispute Mechanisms (ADR) has reflected social values inclining towards less rigid and more expedient processes to resolve disputes between parties having a conflict over civil matters. There are 5 modes of disputes resolutions in the arena of ADR that are: Mediation, Arbitration, conciliation, negotiation and judicial settlement. The commonality amongst all encompasses a procedure in which a neutral third party participates to assist and resolve matters between the concerned parties.

UNDERSTANDING THE TERMS UNDER LEGAL STANDARDS

Mediation is a process in which a third neutral party as a person intermediate between the parties with an objective to satisfy them in the face of settling their dispute.

Whereas, Arbitration refers to a process in which there is an impartial third person chosen by the parties only. Under this, the parties agree in advance to abide by the Arbitrator's award issued after a hearing at which both parties have an opportunity to be heard without any bias.

Section 89 of the Code of Civil Procedure, 1908[2] provides all the 5 methods of resolution provided above. Furthermore, Arbitration and Conciliation are regulated separately under the Arbitration and Conciliation Act, 1996. Section 30 of the Act formulates mediation as a specific reference to encourage the settlement with the agreement of the parties for an arbitral tribunal. There has been the practice of recording the settlement in the form of an arbitral award on which the parties had to agree in advance as per the terms.

Thus, the question arises that if this kind of in-advance approach operating by the arbitrators for the sake of settlement, then doesn't it hinders the notion of transparency and self-determination, the cornerstones of ADR?

Lately, significant amendments were brought to the 1996 Act and came to be known as Arbitration and Conciliation (Amendment) Act, 2015[3]. It undertakes to make the mechanisms more transparent and time-effective. The key notion of transparency has been dealt promisingly under the procedure of mediation. In mediation, the parties go through by themselves in deciding the possible solution to resolve the dispute on a purely free discussion level as it has no power to impose any binding agreement in advance. The parties act in a neutral and impartial manner with procedural steps provided by the mediator in the least formal manner to have an amicable resolution of disputes. Considering the pillars of privacy and confidentiality, efforts are made to save the connection between the parties as well so that there is fair disclosure of the grievances and the reliefs they aim for, post the mediation to ensure no animosity in between the proceedings.

UNDERTAKING OF MED-ARB

Med-Arb is a hybrid of mediation and arbitration and thus used where mediated negotiations do not lead to a settlement. Under this, the parties can agree for the mediator to become an arbitrator in a concerned proceeding to issue a binding award on the prominent matters. Thus, an advance agreement under the binding award acts as a per-requisite to Med-Arb which parties agree to resolve the matters which cannot be mediated successfully. The valuable advantage of this combination in a concerned proceeding is to resolve the disputes and eliminate the need to initiate all over again with a new arbitrator who acts as a mere new entity after a failed mediation. Undoubtedly, it effectively eradicates major deformities that are affixed to the mediation process in some cases.

On the other note, the parties consider it as a risk to their confidentiality and impartiality as the arbitrator's stake as a mediator will likely to lead to an apparent bias and invalidation of an arbitral award as an undertaking[4]. In a nutshell, it will lead to inhibition of transparency in the discussion that must be there initially at a mediation level. Addressing the pertaining issue it is provided under ethical concerns to have a Med-Arb 'Opt-Out Clause'. Under this clause, the proceedings are regulated initially by a mediator and if not resolved then it is presided over by a new arbitrator. After the failed mediation stage, either party can call for a new arbitrator which ultimately leads to confidentiality and neutrality. But extra-time is needed for the new-neutral to brace up with the case details, and thus, Med-Arb-Opt-Out can be time consuming and expensive. It is just the notch of building a balance between the time and expenditure required to have this clause under execution. 

Additionally, the reverse of Med-Arb is ‘Arb-Med’ under which Arbitration is followed by Mediation. This can be taken as a sub-transparent procedure under the Med-Arb itself. For the efficient settlement, the neutral third party after receiving the evidence and testimony from the parties on a concerning matter, reconcile their disputes with a mutual agreement in case the parties fail to mediate at a later stage after the arbitration. The arbitral award initially formulated by the neutral becomes a binding resolution if the mediation becomes successful in resolving the dispute. This arbitral award kept as a confidential element being utilized in the further mediation phase with the same neutral and thus if the parties enter voluntarily at the same agreement as per the stage of mediation, then the neutral never discloses that arbitral award.

However, if the parties are unable to reach an efficient settlement, then the award is revealed and becomes binding in a usual manner. Conclusively it is to be postulated that mediation's confidentiality and neutrality encourages free expression of demands, concerns and conflicts under the process of resolution. It allows the parties to remain reasonable in their arguments as well as maintaining their rapport with the other party.

Under the Med-Arb phase, it reduces the cogency of the process on which it accumulates. The pillars of confidentiality and self-determination become blurred in the broad frame of its implementation. The presence of a same neutral third party at both stages and its further procedures based upon the in-advance agreement makes the whole process detrimental to the matter which carries an urgency to be settled[5].

Therefore, parties should be made free to select the different neutral party under Med-Arb to make the process more transparent or they should be permitted to have a separate process with a different neutral third party. As a result, parties will not become skeptical in discussing their positions openly in front of a mediator who will not be the arbitrator of the concerned dispute. Taking it as a fair process, the parties should be given the autonomy to choose the separate neutral party under Med-Arb if not satisfied at an initial stage of mediation.

RECOGNITION OF MED-ARB CENTRES UNDER THE AEGIS OF COURTS

Court-annexed mediation centres are the most effective mechanisms to bolster the notion of med-arb in Indian judicial system. Almost all the lower, higher, as well as the Supreme Court, have mediation centres. There has been an emergence of private mediation institutions as well to abate burden on court-annexed centres. The basic consideration behind this emergence is the usage of mediation and arbitration in a wide range of matters related to commercial, housing, family, technology, sports, media as well as other workplace disputes.

In ‘Alfons Infrastructure Ltd. and Anr. v. Cherian Varkey Construction Co. Pvt. Ltd. And Ors’[6] the Supreme Court held that there are a number of areas of matters that are unsuitable for the ADR process to get settled.

The matters are related to:

·         Elections in public offices

·         Forgery, fraud-related lawsuits

·         Cases against minors, deities and mentally challenged persons

·         Suits against the government

·         Criminal cases

It is to be further noted that this categorization is not at all rigid and the proceedings under the mediation-arbitration mechanism depend upon the facts of related cases.

Considering the efficacy of the mechanism in our judicial system, it is substantiated that med-arb has effectively aided in reducing pending cases before the courts. The National capital of India, Delhi, has settled over 1 lakh cases in the past ten years through mediation[7]. Particularly, with the increment in delayed justice, people are looking forward to an out-of-court settlement as this mode of alternative resolution is much more speedy and effective as per the time frame as compared to lengthy court proceedings. Hereto, there is no system of appeal in this arena and thus helps in reducing the overabundance of pending appealed cases.

The Ministry of Law and Justice has also taken crucial steps to regulate pre-litigation voluntary mediation which helps the litigants to have a pre-knowledge regarding out-of-court settlement that seems possible in every case. It is just a matter of trust and transparency in the system of med-arb. To build this up and develop in forthcoming times, it is requested that the lawyers and judges of our system acknowledge the need to advise the litigants at every stage of the judicial proceedings to settle their disputes amicably.

 It is a well-known fact that things become ugly in the court, and thus to have a persisting promising connection between the parties and the judicial system, the courts need to proclaim the mechanism of med-arb as its sub-branch of serving justice. It may not be wrong to say that people still consider it as an extreme path to resolve their issues but the genuine fact is that the people need to consider it as a prioritized path to settle their disputes. Unless the judges and lawyers don't engage in the discussion around this mechanism at a pre-litigation stage, then the litigants will hardly get to believe and understand this notion of an out-of-court settlement which majorly lingered over the juncture of lack of awareness in the general public.

It is pertinent to have parallel judicial proceedings along with the med-arb proceedings to comprehend the gravity of the concerned issue and settle it with voluntary primary solutions granted by the judiciary. In this way, the parties will not become reluctant to address their disputes in med-arb proceedings as the doors of the conventional judicial proceeding will be still accessible for the parties' satisfaction and dignity to fight for their rights and justice.

According to the statistics, 63 out of 100 litigants know about the mediation system and the remaining 37 don't have knowledge regarding this arena. A total of 62% of the litigants from all districts are receptive of the ADR system but 38% are still not aware of the ADR[8]. Thus, the reasons behind this lack of awareness are analogous to the assertions discussed above. This alternative method of resolution left unindicated by lawyers and judges to the litigants been whirling between hope and despair.

Thus, the question arises do the advocates, lawyers and judges are that much satisfied with the current court system that they don't consider it vital to suggest the litigants about the alternative resolutions?

Based on the statistics, out of 100 advocates, 59% of them are not at all satisfied with the current court system. The reasons concerning this dissatisfaction are unnecessary delay and lengthy proceedings that necessitates the availability of a large amount of cost and time. Therefore, the legal professionals should break the chain of standards they strongly feel about under the judicial system and rather they should engage in effective discussions with the litigants to get their issues resolved with the either judicial procedure (court proceedings or ADR proceedings) that best suits the resolution at the earliest.

CONCERNS

The proposed format and procedure for Med-Arb raises some concerns. Firstly, it is a common principle of mediation that parties are open and forthright with the mediator, disclosing sensitive information to him or her relative to their dispute and negotiating position. This is in contrast to a more guarded approach that parties might adopt in an arbitration. However, if the parties know that the mediator could become the arbitrator, this may change their attitude and approach towards the mediation. Parties could, for example, adopt a more tactical approach to the mediation with one eye on the possible arbitration. They could also be concerned at sharing something with the mediator for fear that this could be a reason for issuing a judgment against their interests in an arbitration.

RECOMMENDATIONS TO FURTHER STRENGTHEN THE ADR UNDER THE SYSTEM

As with other forms of ADR, the uptake of Med-Arb will be shaped by many factors such as cost, commercial practicalities, client demand and awareness in the legal profession. Although Med-Arb may combine the benefits of both processes, this does not make it the panacea of the ADR world.

With the lack of awareness, the deep-down point that should be prominently considered by both legal professionals and litigants is that before blaming one another for the ineffectiveness and lack of usage of ADR, it is to be evaluated that the ADR system itself is to be strengthened to make it suggestible and bring it under the broader frame of usage and implementation.

Firstly, there is no statutory framework for other dispute resolutions like conciliation, negotiation, mini-trial and Early Neutral Evaluation (ENE) which are also proving to be beneficial in abroad for resolving the disputes The major limelight has always been confined to med-arb, and thus to make effective use of the whole ADR system and its all forms, it is recommended to have separate comprehensive legislation to give it a cascading impact on the advance development of ADR in the Indian judicial system.

The International Centre for Alternative Dispute Resolution (ICADR) which is an autonomous organisation headquartered at New Delhi provides a procedure for resolving international as well as domestic commercial disputes promptly[9]. It has also framed rules for the same considering the other modes of ADR like ENE.

ENE is conducted when the parties submit their case to a neutral evaluator through a confidential evaluation session[10]. This kind of in-advance evaluation can be represented as a part of a clause in a concerned contract or agreement been made in good faith to resolve such contractual disputes. Thus, there should be additional alike platforms along with the court-annexed centres so that all ADR matters are resolved as expeditiously as possible. Furthermore, there should be regulated ethical standards to ensure transparency, confidentiality and impartiality in between the ADR proceedings. The parties should be granted autonomy to choose a separate neutral third party when engaged in med-arb and arb-med proceedings.

Another aspect of consideration is that there is a need to evolve a separate cadre of professionals, ADR lawyers and practitioners specializing in this sole arena to advance its development and implementation in the current system. At an initial stage, the law colleges/universities, and other legal organisations should assimilate courses on ADR in their curriculum and should be assisted in practical training for the exposure in the respected field.

At last but not least, Online Dispute Resolution in the Age of IT and telecommunication advancement will prove to be an efficient usage of the ADR mechanisms. All the forms of ADR are conducted through written digital communication platforms under ODR which brings it under the broader framework.

Undoubtedly, the silver lining in a dark crisis like COVID-19 can be taken as an opportunity as well to initiate the effective implementation of the ODR. This may be the right time to bring the ODR and its facilities under the scrutiny especially when the Supreme Court is also hearing the urgent matters through video conferencing. Forthwith, it is to be postulated that the retired judges can engage as an assisting hand in the ODR as well as ADR proceedings to bring the entire mechanism under the vigilance of eminent judicial officers in the spirit of public welfare obligations under administration of virtual justice.

In a nutshell, the notion of med-arb holds the utmost potential to resolve a plethora of disputes concerning security as well as the dignity of the right of the general public. The facet of effective implementation is the need of the hour.

About Authors :-
Aditya Jain is an Advocate on Record at Supreme Court of India and Partner at J&G Advocates.

Neha Gyamlani is an Advocate at Rajasthan HC/Supreme Court and Partner at J&G Advocates.

Harshita Sharma is a Second Year Student of  Dr. Ram Manohar Lohiya National Law University.Currently interning with J&G Advocates, Jaipur. 

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