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India A Robust Hub For International Commercial Mediation: A Castle In The Air

Updated: Sep 12, 2023

by Ankitha Varnika & Katyayni Singh*


Abstract

The Mediation Bill 2021 envisions India’s dream to become an International Mediation Hub and open the door to settle world-wide commercial disputes cost-efficiently. This standalone law on Mediation undoubtedly abides by the Singapore Mediation Convention 2019. However, India has not ratified the convention. This paper explains what are the obstacles in India’s path to achieve its objective behind bringing up the law on mediation. Further, the paper discusses why there is a need for India to ratify the Singapore Convention, elaborating the impact of circumventing the international obligations on its dream. The paper then provides for as to how India may achieve the longstanding goal or at least strive to become one of the prominent destinations for resolution of disputes via mediation.

Introduction

The Mediation Bill, 2021 is a much needed welcome move. With Mediation being one of the most prominent forms of Alternate Dispute Resolution and its scope increasing in both Commercial and International Trade Sectors, it is high time India becomes the Pivot in regards to dispute resolutions. This however comes with severe challenges as India even though being a Signatory to the Singapore Convention has not ratified the same. Although the Mediation Bill, 2021 has several issues in regards to concepts such as Pre-Mediation Litigation, restriction on party autonomy to name a few, the scope of this Article is limited to addressing the implementation and challenges that the Mediation Bill, 2021 may experience while resolving disputes that are International in nature, thus creating roadblocks for India to become the next Global Mediation Hub.


Obstacles in The Path of India Becoming A International Mediation Hub

India, with its Mediation Bill 2021, aims to overhaul the commercial dispute resolution mechanism in domestic as well as international spheres. It was a step-ahead after signing the United Nations Convention on International Settlement Agreements Resulting from Mediation, 2019 (hereinafter the Singapore Convention). However, the aim seems to be a mere pipe dream as India has not yet ratified the Convention.


Under section 2(1)(iii), the bill provides for conduction of international mediation in India and under section 40(b), it specifies that it is the duty of the proposed Mediation Council to develop India as a robust centre for domestic and international mediation. However, the silence of the bill on the recognition of the International Mediation Settlements for sessions conducted outside India is one of the most deafening. The General Principles under Article 3 of the Singapore Convention allows a settlement agreement reached between the parties to be invoked in their respective jurisdictions in accordance with the rules laid down in the Convention. This leaves a question mark on the viability of India becoming a forum for international settlements.


Another void in the Bill is that it gives a settlement agreement the status of a judgment or decree of the Court for its enforcement. It may perhaps help to bring the dispute to an end but it is against the very essence of mediation. Further, Article 1(3)(a)(ii) expressly states that the Convention does not apply on settlement agreements enforceable as a judgment.


Although section 15 allows any mediation under the statute to be conducted outside India with the consent of the parties, it still does not address how international settlements will be enforced in India. The intent of the Singapore Convention was to make mediated settlement agreements legally binding, to maintain international uniformity and to resolve the everlasting issue of enforceability, which before the convention had to be decided through domestic proceedings. The Mediation Bill, 2021 does not provide solid clarity on the same has resulted in even more ambiguity where clarity was needed.


Another limitation for India when it comes to ratifying the convention is due to the lack of clarity in certain important definitions such as “Commercial Disputes” or “Mediation” and “Conciliation” within the proposed convention itself which leads to growing disparity. There has also been a common notion that giving mediation the upper hand would hamper arbitration but the same has been proved contrary in several other jurisdictions. Ratification of any Convention in India, is a time-consuming process as a legislation must be promulgated in the Parliament as mentioned under Article 253.


The attempt of the Indian Legislature to present an umbrella bill to abide by the convention is half-hearted as the provisions of the Convention are not being adhered to by the bill. Non-ratification of the Convention is a guise for the Legislature to bypass the Convention which is against the interest of India to become an international centre for mediation.


Prospective Impact of Ratification of The Convention on India

Keeping up with the ever-changing dynamics in the commercial realm and to maintain international uniformity is the ultimate goal of the Singapore Convention. Ratifying the same would help India achieve its goal to become the international hub. With that not happening, India’s current domestic laws are inconsistent with the convention, which makes enforceability a difficult task. One of the glaring examples is the dispute of Cairn Energy with the Government of India wherein mediation could have helped mitigate arbitral or litigation proceedings provided ratification was there.


Post-Covid era is full of opportunities for India because of foreign investors requiring a cost-efficient method to resolve their disputes. If India could make use of these opportunities, it would not only be able to maintain a healthy economic and transactional relationship with both investors and other states but also would be able to make its mark in the International Segment as a prospective future destination for resolving disputes. The same however has become non-viable with neither the ratification occurring nor the Mediation Bill, 2021 addressing the missing links involved.


With the UK becoming the signatory to the Singapore Convention on May 3, 2023, the competition has vividly increased for India as the main objective for India to introduce the Mediation Bill is to eventually become Global Mediation Hub, but the challenge for the same has increased by several folds considering the very recent developments shown by the developed country like the UK who might anytime exhibit desire of becoming a Global Hub itself.


Evolution and Adaptation are necessary to keep with evolving global trends. which may happen by creating a robust framework for mediators to hone their skills Article 5(1)(e) of the Convention has underlined the aspect that Mediators must abide by certain specific “standards,” which and these “standards” are largely based on those proposed by the International Mediation Institute. “Professional Code of Conduct” and “Knowledge on the Subject” are two essentials for any mediator in the global scenario.


Encouraging mediators could also help leaving a positive impact holistically on the judicial system. With Indian Law Society’s Centre for Arbitration and Mediation (ILSCA) being approved as meeting IMI’s competency criteria required of a Certified Mediator Training Program (CMTP) in May, 2023, this comes as a boon for aspiring Mediators in India.


Ways to Make India A Centre for International Mediation

India to address the issue at hand can first start by ratifying the Singapore Convention which is the primary essential step. The Intent of the Legislature can be determined from the introduction of the Mediation Bill, 2021, certain significant amendments can be done to the same keeping in mind the aspect of rapidly making the hub. Some of the recommendations are as follows:

1. A provision should be made for recognition of international settlement agreements. Recognition of settlement agreements reached between the signatory parties to the Convention can be done at the very least.

2. Certain changes are required in the enforcement clause of the bill. The settlement agreements per say, need not have absolute status as that of a judgment or decree of the bill. As per the Eighth Schedule, section 442 of the Companies Act is being substituted to enforce a mediated agreement through a judgment or decree. However, the Convention does not even require passing of the judgment or decree. Hence, such substitution can be done away with.

3. Opt-out model should be implemented in India at both domestic and international level wherein parties are informed about the process of mediation so that they may exercise their option of opting out from the procedure if they do not deem it fit for their case. This will develop trust within the parties and hence can incentivise even foreign parties to come to India for International Mediation as provided in the Bill.


Conclusion

India, being a developing country, has potential to expand its commercial activities within its territory. It is also witnessing a rise in commercial disputes. Cost-efficiency and timely settlements of the dispute are the need of the hour. With arbitration being the private replication of adjudication, mediation will be a game-changer in this fast-paced world where parties seek productivity in the settlements they wish to reach.


For international mediation, parties will pursue a forum that can resolve the dispute in the minimum time and cost possible manner. If the proposed Mediation Bill adopts the above-mentioned changes, it can certainly help India to become a preferred destination for international parties to settle their commercial disputes via mediation.


Katyayni Singh and Ankitha Varnika are both second year law students at DSNLU, Visakhapatnam at the time of this publication.


*All errors are attributable entirely to the author.

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