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Does India’s Mediation Bill Discourage International Disputes?

Updated: Aug 20, 2023

-Parv Lodha*


Abstract:

The Article looks at some of the criticisms made to the Mediation Bill, 2021 and addresses them by examining the truth to these criticisms, the shortcomings in the law that they point out, the implications of such shortcomings, and how they can be rectified. While it is true that non-alignment with the Singapore Convention may not achieve the desired results of the Singapore Convention, it is imperative to comprehensively look at the bare reading of the bill in order to determine whether such non-alignment truly affects the relevance of international mediation agreements under the Mediation Bill, 2021.



The Mediation Bill, 2021 was introduced in the Rajya Sabha in December 2021 and the Standing Committee’s Report on the same, was submitted to the Rajya Sabha in July 2022. While the Bill was acknowledged for its innovative and reformatory spirit in encouraging, strengthening and enhancing the adoptability of mediation as a dispute resolution method, it was also criticized for not being inclusive and accommodative enough to international disputes. This was mainly for two reasons. One of them being the exclusion of non-commercial international disputes from the purview of the Bill, which seemed contrary to the objective of the Act of promoting “resolution of disputes, commercial or otherwise,” and the second being - the alleged deprivation of any enforcement power to settlement agreements in international commercial mediations, which would affect the reliability of the Indian mediation system.


The draft of the Bill dated October 29, 2021 considered it “expedient to give effect to the Singapore Convention…for enforcement of international settlement agreements resulting from mediation.” The Singapore Convention, was framed to “provide States with consistent standards on the cross-border enforcement of international settlement agreements resulting from mediation.” Clauses 49 to 53 of the Bill were even introduced with the intention of implementing the framework of the Convention in India, but were later deleted.

According to Clause 28(2) of the Bill, mediated settlement agreements were to be “enforced in accordance with the provisions of the Code of Civil Procedure, 1908, in the same manner as if it were a judgment or decree passed by a court.” However, the Singapore Convention does not apply to settlement agreements “that are enforceable as a judgment in the State of that court.”[1] With Clause 28(2) providing for mediated settlement agreements to be enforceable, as if it were a judgment, it has been claimed by experts that such agreements are excluded from the applicability of the Singapore Convention which would therefore affect the relevance of the agreements.


However, contrary to popular (expert) opinion, the lack of alignment with the Singapore Convention might not affect the enforceability of mediation agreements. The main reason for this is that a mediation settlement agreement that carries the same status as a judgment or decree of a foreign court can be enforced in India, owing to Section 13 of the Civil Procedure Code, which declares all foreign judgments to be conclusive. Although Section 13 gives an exception to judgments that are not passed on merits, that wouldn’t prevent settlement agreements from being enforced in India. In HSBC Bank, U.S.A. v. Silverline Technologies Ltd, the Bombay High Court ruled that a settlement agreement of a foreign Court cannot be held to be unenforceable in India on the grounds that the judgment or decree passed on the basis of such settlement was not passed on merits. This is because the consent order by itself prevents the Court from going into the merits of the case and therefore, the parties (by their own conduct) are precluded from raising the defense that the judgment is not on merits. However, whether an Indian settlement agreement can be enforced in foreign jurisdictions depends on the domestic laws of those jurisdictions. Laws similar to that of Section 13 can be found in foreign jurisdictions as well, like the Foreign Judgments (Reciprocal Enforcement) Act, 1933 of the United Kingdom, or the Uniform Foreign Money Judgments Recognition Act of the United States, , or the Foreign Judgments Act, 1991 of Australia.


Moreover, as observed by Thomas Gaultier, the enforcement of cross-border mediation settlement agreements can be ensured by recording them in the form of arbitral awards, the enforcement of which, has gained far more recognition and acceptance among the signatories to the New York Convention, 1958 than mediation settlement agreements have. In fact, Article 12 of the rules of the Swedish Mediation Institute even provides for a procedure to appoint a Mediator (after the successful completion of mediation proceedings and subject to the Mediator’s approval) as an Arbitrator and request him to ratify the settlement agreement in the form of an arbitral award to give it the power of enforceability.


A similar strategy seems to have been adopted by the framers of the Mediation Bill, 2021 in the Sixth Schedule of the Bill. Section 74 of India’s Arbitration and Conciliation Act, 1996 (“ACA”) endows conciliation settlement agreements with the same status and effect as an arbitral award. This wouldn’t have affected the enforceability of mediation agreements unless Schedule Six of the Mediation Bill sought to amend the ACA as well. The Schedule amends Section 61 of the ACA, which after the amendment, will deal with ‘Reference of Conciliation in Enactments’ and will require “conciliation” in the ACA to be construed as “mediation,” as defined in Section 4 of the Mediation Bill. The end result being that every settlement agreement arising out of mediation conducted under the Mediation Bill would have the same status and effect as an arbitral award because with the amendment coming into effect, mediation becomes a subset of conciliation and wherever the word ‘conciliation’ is used in the ACA, it would have to include mediation. Owing to Sections 61 and 74 of the ACA, mediation settlement agreements will now have the same enforceability as arbitral awards.


Therefore, while it is true that the Singapore Convention doesn’t apply to the Bill, there would have to be two obstructions in place to prevent a Mediation Settlement Agreement in India from being enforceable in other jurisdictions. The first being the non-recognition of foreign decrees or judgments in these other jurisdictions and the second being the non-recognition of foreign arbitral awards in other jurisdictions – both of these obstructions being successful is unlikely.


That is, however, not to say that the inapplicability of the Singapore Convention is immaterial. In order to make the most of the compatibility, uniformity and ease of mediation that the Singapore Convention aims to achieve, it becomes imperative for India and other member states to ratify and enforce the Convention. Collaboration in the form of communication, exchange of information and technical assistance among member states will facilitate and expedite the process of implementing the Convention.


The intent to include international mediation within the ambit of the Bill cannot be denied as it is made quite obvious in Clause 40(b) of the Bill, where the Mediation Council of India is entrusted with the responsibility of ensuring that India develops to “be a robust centre for domestic and international mediation.” However, the Ministry[2] decided not to include the applicability of the Singapore Convention within the ambit of the Bill and the Part that gave effect to the provisions of the Convention was even deleted. The Ministry gave four reasons for its change of heart – the first being that India has yet not ratified the Convention, the second being that only 9 out of 55 member states have ratified it and none of them are major economies, the third being that the Convention has to be examined more holistically to ensure that it does not bypass any domestic laws and the fourth being that more time was needed to see whether the Convention is gaining greater international acceptance.


While one can scrutinize, and object to, the criticism being made of the Bill inasmuch as the enforceability of Settlement Agreements in cross-border disputes is concerned, the Ministry should not overlook the added advantages of adopting and ratifying the Singapore Convention. There is no reason to assume that the Singapore Convention won’t gain the same level of acceptance as the New York Convention did, which was also ratified by only a few countries in its initial years, with none of them being major economies. Moreover, unlike the New York Convention, the Singapore Convention includes among its first signatories, three out of India’s four largest trading partners, one of which (Saudi Arabia) has even ratified and enforced the Convention.


Therefore, while it is true that non-alignment with the Singapore Convention will have no effect on the relevance of Settlement Agreements under the Bill in foreign jurisdictions, it is also important to note that the reasons given by the Ministry for its non-adoption are not satisfactory.


Nonetheless, in conclusion, it can be observed that the Bill doesn’t discourage international disputes merely by reason of its non-alignment with the Singapore Convention (as alleged by several experts in the 117th Report on the Mediation Bill); rather it adopts an intelligent strategy of ensuring that Mediation Agreements are enforced in foreign jurisdictions by giving them the same status as an arbitral award and as the judgment or decree of a Court – the non-recognition of both of which, in a foreign jurisdiction is highly unlikely. The framers of the Bill have even laid special emphasis on international disputes and have solidified it through Clause 40(b) by ensuring that special efforts are made to encourage the resolution of international disputes through mediation in India – therefore, the allegation that the Bill discourages international disputes is untrue.

[1] United Nations Convention on International Settlement Agreements Resulting from Mediation, Article 1(3)(2) [2] Department-Related Parliamentary Standing Committee On Personnel, Public Grievances, Law And Justice, One Hundred Seventeenth Report On The Mediation Bill, 2021,Chapter-III Clause by Clause Consideration of the Bill, paras 3.34-3.35


Parv Lodha is a Final Year L.L.B Student at Government Law College, University of Mumbai at the time of the original publication. You may reach him via Mail or LinkedIn.


*All errors are attributable entirely to the author.



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