It is only a question of time before attempts to resolve disputes between commercial parties begin with them sitting across a table to talk with a mediator’s help, says Sriram Panchu
The problems of resolving disputes through an adversarial court system in India are widely acknowledged. A dispute can take years, and sometimes decades, to be resolved. It is estimated that more than 35 million cases are pending in courts across the country. Apart from the time, parties are drained by the costs and damaged relationships. The result at the end may not even be satisfactory to either party. Arbitration that was first touted as an alternative to litigation too has failed on many counts; it has become expensive, procedural and time consuming.
Today, the fastest growing method of dispute resolution is mediation. Over the last 20 years, it has taken deep roots in several countries across the globe and is being used to resolve a wide variety of personal, property, commercial and corporate disputes. The time spent in mediation is fractional compared to the adversarial process. It is comparatively inexpensive. The process is also respectful of relationships, which is of primordial importance in the business world. It focuses on getting quick and practical solutions and encourages the disputants themselves to participate in generating options for settlement. All in all, it appears to be ideally suited for the resolution of commercial disputes.
Mediation is a voluntary and confidential process of dispute resolution in which the mediator, a neutral, helps parties in arriving at a solution that is acceptable to all the parties. The process is designed to be risk-free as the outcome of the mediation is in the hands of the parties.
The mediator guides the process but cannot impose any decision on the parties. This means that while the mediator is in control of the process of mediation, the parties are in charge of the outcome. Parties may terminate the mediation any time if they feel they are not being served well by the process. Confidentiality in mediation is assured by law and the agreement to mediate. This enables parties to participate freely.
While attention is paid to the law in so far as it impacts the matter, the objective is to arrive at a solution that is acceptable to the parties and ends the dispute. This is done by focusing parties on their long-term interests distinct from the positions they take in conflict.
For instance, in labour-management conflicts, a longer perspective will underscore the benefits of harmonious settlement for productivity, profits and wages and shift attention to the modalities of achieving agreement. Additionally, parties are encouraged towards a more realistic perspective with regard to the strength of their case, expectations from the legal process and their alternatives to settlement (often bleak). This invariably makes parties more conducive to cooperating towards a settlement.
Once agreement is reached, it becomes binding and can be enforced by the legal process. The grounds for challenge are very limited since the agreement has been reached through a voluntary process.
Since 2005, India’s courts have moved to adopt mediation as a regular feature of the court process. All the 21 high courts and the Supreme Court have set up mediation centres. They sensitize the bar and bench, train mediators, provide infrastructure and refer cases in the court’s docket to mediation. The time limit is 60-90 days and the service is usually free of cost for the litigants. These centres report a success rate upwards of 50%. It is now quite common for judges to encourage parties to go to mediation and for parties themselves to request such a referral.
Judicial encouragement, disputant satisfaction, encouragement by the bar, and media promotion have contributed to making mediation prominent in the landscape of dispute resolution. It is only a matter of time before it becomes a full-fledged professional practice for lawyers, retired judges and others with expertise in accountancy, construction, etc.
Contractual agreements now typically have a clause stipulating mediation, before providing for arbitration. Disputes which involve very high stakes – putting the loser to serious setback or ruin – invariably head for, and stay at, the mediation table since parties want to do all they can to avoid that risk. Its speed and solution-based approach means that ongoing contracts need not be terminated. And there is flexibility in choice of mediators, with options of drawing from law and business.
Mediation is becoming the preferred mode of dispute resolution in foreign collaborations; companies abroad are familiar with it, and feel comfortable with a no-risk alternative to the always uncertain and sometimes risky business of navigating litigational alleys and by-lanes in India. Mediation also circumvents the sticky issues of choice of law and jurisdiction.
While mediation is garnering speed in India, Indian businesses are yet to discover its full potential. However, it is an idea whose time has come and it is only a question of time before commercial disputants first sit across the table to talk with a mediator’s help, and only if that fails enter the pugilistic arena of court litigation.
Sriram Panchu is a senior advocate of Madras High Court and a leading commercial mediator. He was instrumental in the creation of India’s first court-annexed mediation centre at Madras High Court. Avni Rastogi assisted in preparing this article. For more information see www.srirampanchumediation.com or contact [email protected]