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We need alternative dispute resolution mechanisms in India

COVID-19 pandemic has spurred the need for these mechanisms more than ever

By Eshwar Agarwal, Bani Singh And M.P. Ram Mohan 

The entrance to the Sanchi Stupa narrates the tale of the Battle of the Relics. Mythology states that the Kingdom of Mallas held all of Buddha’s relics and refused to part with any. This angered kings of seven other countries and war was imminent. Drona, a respected sage, intervened and questioned the motive behind the war. He reasoned that war will only lead to destruction and resentment among former allies in contravention to Buddha’s ideology. Sense prevailed and the kings agreed to the division of the relics.

In today’s democratic India, battlefields have been replaced by courts, relics by properties and disputes, and warring parties with emotionally charged family members, estranged couples, businesses and government-citizens. Many of these disputes are settled through an adversarial system where litigants may be dissatisfied given that there is necessarily a losing side. A trust-based society requires, in addition to adversarial systems, a Drona equivalent ecosystem that can help mediate millions of cases with fairness, reason and trust, leaving all parties satisfied and without acrimony.

Mediation can be understood as a process where an impartial third-party is appointed to facilitate structured negotiation between disputing parties and help them reach a mutually agreeable settlement. In addition to saving time and reducing litigation costs, mediation helps maintain relationships by promoting an amicable agreement. It also provides greater flexibility to find a solution, since it is not bound as courts are by the application of law and legal precedents. The focus shifts from asserting one’s legal rights to understanding the interests that each party wants to protect.

In India, courts can refer disputes which are capable of being settled between parties to alternate dispute resolution (Code of Civil Procedure 1908, sec. 89). The Supreme Court has been encouraging parties to take up pre-litigation mediation to settle their dispute before resorting to court proceedings. In Afcons Infrastructure v. Cherian Varkey Construction (2010), the Supreme Court emphasised the importance of mediation, especially in commercial matters, and observed that this type of Alternative Dispute Resolution (ADR) is ideal for parties faced with complex issues that they are willing to resolve through negotiations.

However, mediation in India has had limited success, both in terms of the cases referred as well as the resolution rate. For example, in Ahmedabad, from 2008 to 2019, merely 1075 cases were referred to the Ahmedabad City Civil Court Mediation centre, of which only 278 cases were successfully mediated as per Gujarat High Court website. As per this source, as of December 2019, around 30,000 cases in total had been referred to mediation centres since their establishment in Gujarat, less than 7 per cent of the over 4.5 lakh civil cases pending in Gujarat as of then. Even of the cases referred, less than 5000 had been successfully settled, leading to a success rate of around 16 per cent, which is dismal compared to a success rate of 80 per cent in the US, as found by studies.

The current COVID-19 pandemic will only exacerbate the case backlog in courts. The courts are expected to be flooded with pending cases post the pandemic. This, coupled with restrictions on travel, fear of coronavirus and reduced workforce, will impact the disposal rates. The reluctance to gather in public spaces and expose oneself to the pandemic could be used to galvanise efforts for increasing the use of mediation. Recently, there have been several well-articulated views pushing for a greater role of mediation in dispute resolution. Efforts have to be taken by the judiciary, lawyers, government, and litigants to create an ecosystem conducive for mediation.

To understand why mediation has not achieved the same level of success in India, we conducted in-depth interviews with litigants at the Ahmedabad District and Sessions Court. Our research revealed that a majority of them were not even aware of the existence of a formal mediation process. Indeed, most of them had minimal understanding of their case itself, much less of alternative legal remedies.

Further, even after having the process explained to them, many litigants were sceptical of mediation. Previously unsuccessful attempts at informal mediation definitely contributed to this attitude. Kailash (name changed), was a daily wage labourer we interviewed, whose case had been pending in court for the last 7 years. Initially, he had tried asking the help of his extended family to resolve the issue. However, as several unrelated but unresolved issues clouded the judgement of the family members, he ended up filing a court case. Having lost faith in the informal mediation process, Kailash was adamant that the only acceptable outcome was a decision completely in his favour. Thus, all scope of finding a middle ground had been lost.

For the small proportion of litigants who had tried formal mediation based on the court’s recommendations, the results were not very promising. Litigants often entered the process with a ‘win-or-lose’ mindset. Vishal, a cloth trader we interviewed, told us about his experience with mediation (which is mandated in commercial cases). According to him, the opposing party was set against the idea of mediation and insisted on getting a final and binding decision by a judge.

One of the reasons behind this behaviour could be the well-documented deference towards authority in Indian culture. Since mediation is aimed at facilitating discussion, the mediator does not have the authority to enforce an agreement without the consent of the involved parties. This, along with a general lack of awareness of the mediator’s role, makes the process lose credibility. Litigants may go through with it as a mere formality rather than giving it a fair chance.

The culmination of all these factors has contributed to an overall lack of adoption of mediation in India, leaving the courts straining under the burden of millions of cases that could perhaps have been settled outside.

An opportunity

The current COVID-19 pandemic will only exacerbate the case backlog in courts. The courts are expected to be flooded with pending cases post the pandemic. This, coupled with restrictions on travel, fear of coronavirus and reduced workforce, will impact the disposal rates. The reluctance to gather in public spaces and expose oneself to the pandemic could be used to galvanise efforts for increasing the use of mediation. Recently, there have been several well-articulated views pushing for a greater role of mediation in dispute resolution. Efforts have to be taken by the judiciary, lawyers, government, and litigants to create an ecosystem conducive for mediation.

Firstly, an attitudinal change is required among people to go for mediation. With mediation currently being a largely informal (and often emotional) process, many litigants have already had a bad experience previously. They need to be made aware of the benefits of mediation, specifically its ability to generate mutually acceptable resolutions. Successful examples of mediated cases should be prominently highlighted on notice boards in courts so that litigants know that there are other ways to resolve disputes. This will help build legitimacy and credibility for the formal mediation system in the eyes of the litigants. Mediation drives can be conducted that work on a two pronged approach of creating awareness and onboarding litigants to try the route of mediation.

The government can play a role by actively promoting mediation, creating trained mediation personnel, laying down rules and terminologies for the process, and incorporating the required legal support. With the Supreme Court setting up a Special Committee to draft a mediation law, the government should closely follow the committee’s work and consider proposing the resulting draft legislation before Parliament.

The government can play a role by actively promoting mediation, creating trained mediation personnel, laying down rules and terminologies for the process, and incorporating the required legal support. With the Supreme Court setting up a Special Committee to draft a mediation law, the government should closely follow the committee’s work and consider proposing the resulting draft legislation before Parliament. Further, given that the central and state governments are the most prolific litigators in the country, they can push for mediation in the cases they are party to, thus unburdening courts and building a culture of mediation. A system that dispenses quick acceptable solutions for business litigants will also increase the ease of doing business. Scores of small and medium business owners like Vishal could save time and expenses they would have incurred otherwise.

Courts also need to provide support in the form of infrastructure and resources for mediation centres, the performance of which must be monitored by the highest authority of the respective courts. A combination of quicker resolution through mediations and a consequential faster disposal of cases requiring adjudication will increase the trust reposed in the judicial system. Lawyers, too, are a key element and need to make an active effort to integrate mediation into their practice in order to increase its use.

Further, mediation can ride on the back of the digitalization wave during the pandemic, with online mediation providing an alternative to the conventional process. The Department of Justice has compiled a list of twelve organisations which provide online mediation services. More such organisations will be required to increase the frequency with which mediation is used. Online mediation promotes asynchronous communication, making it easier to keep emotions in check and helping parties openly communicate with the mediator. It works well with the social distancing and travel restriction norms currently in place. Further, it can learn from the quick dispute resolution mechanism of internet marketplaces and platforms. Many of them are routinely involved in disputes on issues ranging from non-payment, faulty returns and reneging on pre-agreed terms. Rather than going through courts which consume a lot of time, a precious commodity in the start-up world, they prefer online dispute resolution platforms.

Perhaps, mediation of court cases can serve as a blue ocean opportunity for start-ups to exploit. They could explore technologies such as AI and machine learning, to help customers gauge the tentative time frame and likely outcome in courts. This will give litigants realistic expectations, nudging them to look after interests than being swept away by their emotional conviction about the strength of their cases. However, appropriate safeguards are required to ensure that the digital divide does not let affluence skew outcomes.

A holistic approach involving all the stakeholders is the way forward to achieving the required change in the alternate dispute mechanism process of mediation. The COVID19 pandemic adds to the reasons we need to accelerate these changes. We are thus faced with the question—are we, like Drona, sagacious enough to act wisely in this hour of need?

The authors are associated with IIM Ahmedabad.

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