What is Mediation and the role, a Mediator plays during Mediation?
Mediation is a flexible, voluntary and a confidential process initiated by the parties to find an amicable solution to their dispute through a collaborative mechanism suitably aided by a neutral called a Mediator. The Mediator’s primary role is to establish a channel of communication between the parties (helping them with the process involved) to enable them to open a dialogue with an intent to understand the ‘issue’ at hand and work towards a mutually acceptable solution. It helps avoid the traditional litigation route and help both the parties to see each other’s perspective to further help them find solutions based on their interests, needs and situation, without anyone thrusting their opinions on them.
So, essentially the Mediator in a Mediation process:
- Assists in exchange of information between the parties
- Ensures a bridge between the parties through the appropriate communication channel
- Inspires trust and confidence in the parties
- Helps get the parties’ views across to each other
- Identifies areas of misunderstanding and avoids possible miscommunication
- Helps the parties keep a positive outlook and helps them see the bigger picture
- Helps each other to see the potential benefits in the continuing relationships and thus prevents them from being short-sighted and focuses on the greater good of both
- Bridges the gap and helps parties to move from a position of dispute to that of settlement
- Explains the relevance of determining ‘what is right’ rather than ‘who is right’
What are the main features / advantages of mediation?
- Cost effective & Time effective (parties remain in control of the Mediation process and decide when to call off, if they do not feel comfortable)
- Parties remain in charge of the settlement and decide for the one that best suits them (as both need to be satisfied with the outcome)
- Nobody can impose a solution without the consent of the parties
- Prevents severance of relationships
- Focuses on a win-win, through a possible ‘give & take’
- Solutions can be as creative and as flexible / out of the box as possible, totally linked to interests and needs of each side
- Solutions may or may not be laid out in a specific law, hence any hybrid model of tangible /intangible is possible.
- Parties get a lot more time to go deeper on the real issues involved and accordingly it helps them to see what works in best interests of the relationship
- An unbiased & facilitative third party in the form of a Mediator who cannot and does not thrust his opinion but merely facilitates the entire process.
- It is a Voluntary process and as such can be discontinued at any stage.
What are the timelines of mediation process?
The length of a mediation depends on the number / complexity of the issue (s) and how interconnected they are. It is also a function of the cooperation of both the sides and the seriousness shown by the parties. For relatively simple issues, it has taken one session and based on the complexity and the flexibility sought by the parties, the matters have got resolved in 4 to 5 sessions. Finally, this process is a flexible process with the authority to the parties to extend the timelines if they feel an extension at any stage can help them achieve the solution.
As part of the pre-mediation process, the Mediator, through his experience, assists the parties to determine the timelines and identifying the real issues at hand that need to be resolved. That helps the parties to plan out their timings and approach.
Does the mediator possess the authority to make binding decisions on behalf of the parties?
NO, the mediator does not make any decisions on behalf of the parties and neither does he impose his will on them. The mediator by his very position is an unbiased professional and is the third party who is a neutral and without any investment in the final settlement. His role is to facilitate a communication channel between the parties and not pass any awards, orders and judgments like a Judge or an Arbitrator are expected to do. He is not expected to have his personal views and opinions influence the mediation process or affect the decision of either party. None of the suggestions so made by the mediator are binding on either of the parties.
Is there a recourse if one is dissatisfied with Mediation?
In case you are dissatisfied with the Mediation process, you may discontinue at any stage and choose to go down a different route of dispute resolution which can be that of litigation, arbitration or any other mode available to you.
What is the difference between mediation and arbitration and how does one choose one over another?
The primary difference between the two is that in an Arbitration, the arbitrator considers the legal rights and wrongs of a dispute and makes a decision and then passes an award which is binding on the parties. The award is both enforceable as a Court Decree and challengeable as per laid procedure. Arbitration is just a private court. Arbitration is governed by the Arbitration and Conciliation Act 1996, a formal statute.
In Mediation, a Mediator does not possess the authority to impose a decision. The parties are in control and mutually reach a settlement which is suitable to both. The settlement agreement (as it is called) as a result of a successful Mediation, can have any shape, format, sequence or terms as the parties require, till the time both the sides are comfortable with them and are willing to adhere to the agreed terms. Accordingly, the agreed terms are reduced in writing and are signed by both the sides along with the Mediator as a matter of record and, continue to be confidential.
Mediation is better suited for you if you prefer greater flexibility and an informal setting allowing you the space, freedom and opportunity to make your own decisions and come up with solutions in creative and unorthodox methods where ordinary and orthodox ways have failed or would have a handicap in providing something more fruitful suiting the context.
What is the difference between mediation and conciliation and how does one choose one over another?
These two terms are often used synonymously and are actually quite similar in nature barring one point of difference where in, in Conciliation, the Conciliator lets his views and opinions be known and actively gives proposals and propositions on the basis of which parties aim to reach a settlement.
Mediation further takes a step forward where in the parties are completely free from any influence of the mediator whatsoever and decide for themselves without being privy to the views and opinions of the Mediator. Mediator plays a more passive role as opposed to a Conciliator.
Thus, Conciliation might be more suitable if you would like to have a third party actively make suggestions and drive the resolution process and Mediation is surely better suited if you want the reigns of the process completely in your hands. The difference though is quite limited and often does not make a significant change in the process. Also, Conciliation is governed by Arbitration & Conciliation Act 1996 whereas there is no specific statute for Mediation as of now.
What incentive would someone have to opt for Mediation over Litigation if one has a clear winner at hand?
In case you are absolutely certain that you have a clear and winning case and the other party is in the wrong, opting for Mediation still has an undeniable upside, i.e. it helps in saving, salvaging and preserving relationships by allowing the parties to work out their differences privately and amicably without any public embarrassment and humiliation for either of them. Frankly, it also cuts out on the uncertainty of the litigation process, which at times can surprise any side.
We have seen Mediation Process getting over in matter of no time, when one party is able to convince the other about his perspective, his being right /fair and the other party accepting the same. All this ably supported by the Mediator. In any case, as suggested earlier, the process can be stalled/terminated at any time and one can go back to the other best alternative at hand. This process be used to ‘be better off’ than just be proven right.
Is there a role for a Legal Counsel of any party in Mediation?
Yes, surely, a party inspite of having knowledge about Mediation might still expect some assistance from his legal counsel, either for an advisory support or to ensure that his legal counsel remains in the loop, should there be a requirement to explore other alternatives for the issues that remain unresolved post Mediation.
- Mediation does give the legal professional the opportunity to expand his area of expertise to domains of dispute resolution other than litigation.
- He can counsel the parties by giving them useful insights just like he would in a court proceeding, only this time he will be doing this outside the courts and in an informal set up
- Lawyers can charge accordingly as they help their clients settle their disputes expeditiously and efficaciously. After all there is nothing better than a satisfied client.
- Lawyers are well equipped to deal and assist with dispute resolution. Since mediation is not rigid in its process, lawyers too, get the freedom to devise creative solutions for their client’s problems.
What if the mediation process is non-conclusive?
In the event the parties are not able to mutually agree on a solution and no settlement is reached, all other options of dispute resolution remain open to them, which were there, prior to entering the Mediation process. An attempt to Mediate does not dilute any of the other options.
What is the enforcement procedure for the mediation agreement in a private mediation?
Ideally, since the parties themselves have decided on the agreement, there is normally no requirement to enforce it, because that is a voluntary exercise and each party agrees to adhere to his part of the agreement and is aware of each other’s role in the resolution. The process would not be over in case any party feels uncomfortable with the other side.
In any case, after the settlement is arrived between the parties, the same is reduced in writing and is signed by all the parties along with the mediator and it becomes a binding contract for both the sides.
In case where, it can lend more credibility to the concept (if so required by the parties), then the process is followed in such a manner that the Settlement Agreement is given a shape of an Award and the same as per Sec. 74 of the Arbitration & Conciliation Act has the same status and effect as that of an Arbitral award.
(If the disputed case is pending in Court, the settlement terms are also filed in Court for approval and a decree is passed, which is final and non-appealable.)
How to convince the other party to resolve disputes through mediation?
If you are interested in mediation, we @ Missing Bridge, will advise you on how to contact the opposite party. We at our own level will also try to get the other side to the table. After all it is a team effort, and everyone stands to benefit from the process.
But the process remains voluntary and no one can be forced to agree to Mediation. Just that the maximum benefit of Mediation is at a pre litigation stage, where the damage to relationship can be better contained. But an amicable process can be and should be used/tried out at any stage of dispute (even if a dispute is sub-judice, permission of court can be sought to explore mediation)
Is the mediation process secure and confidential?
Mediation process is strictly confidential and no such information, trade secrets, sensitive communications, documents, and other materials leave the room without a prior explicit written permission of the disclosing party. To reinforce this, all the parties sign a Non-Disclosure agreement which clearly classifies what all constitutes Confidential Information. No such document or information which is made privy to the parties during the mediation process can be used against the disclosing party in case the dispute is taken to courts unless such information or document is available to the party outside the mediation process and further, the mediator cannot be summoned to a proceeding in the court to testify for or against either party.
When does and where all one requires Mediation Services?
Mediation is also understood as an “Assisted Negotiation”, hence it needs to be seen in a broader context where, the use of Mediation Techniques does surely help the parties in finding/discovering amicable solutions, but there are many other areas where the techniques can be and are being used, like, to avoid potential dis-agreements and disputes, to improve the deal making, to strengthen the dispute resolution clauses, to take care of eventualities even while drafting of contracts, Joint Venture Agreement’s and other similar agreements. Hence, to have a Neutral in an Investor Meet, a Board Meeting, other stakeholder meetings (like Lenders and Borrower Meetings, Committee of Creditors Meetings under CIRP (IBC) is of great importance. He can be consulted for a potential issue or can be there just as an OBSERVER. If required, he can share his observations/views in the following scenarios.
- whenever there is a likely disagreement amongst the participants on an issue,
- when he is asked to share a fresh perspective on an issue.
The objective being to get an unbiased, balanced view and a fresh perspective from a neutral so that an informed call can be taken with regards to a contentious issue.
Does a Mediator has a role while entering contracts?
When entering a contract or an agreement with regards to starting a business / any other contractual relationship, it makes sense to engage a Mediator where the Mediator dons the hat of a Negotiator and helps avoid potential conflicts by pre-empting the issues which can become the sore point in times to come as the relationship evolves.
Role of the Mediator is to help parties see the bigger picture, ways of increasing the pie for the benefit of all interested parties, ensuring that both sides see the other side’s perspective and are able to extract the maximum from the relationship for mutual benefit without leaving any value on the table.
What are the new areas where Mediation is possible or can be tried out?
Since Mediation is a voluntary exercise and displays the intent of the parties to resolve their disputes in the most collaborative way, all by themselves, Mediation in that sense becomes applicable in just about any dispute and at any stage, just limited by the situation of the dispute or the applicability of law. So, a dispute which requires Adjudication through a formal process of law of land, or there is an element of fraud, criminality involved in the dispute, would make it ineligible to be resolved through Mediation. But for all other situations and disputes, there is Mediation, the only pre-requisite being the right ‘intent to resolve’ and ‘an open mindset’ of the parties in dispute
New Areas which are being explored/tried for Mediation and are achieving a very visible success, across the jurisdictions are:
Insolvency & Bankruptcy Law:
- NCLAT passed an order for Mediation in a CIRP (Corporate Insolvency Resolution Process) and it got settled amicably, proving its efficacy in IBC.
- So pre CIRP disputes between Corporate Debtor and Borrower, disputes between COC members during the CIRP, disputes amongst other stakeholders (with IP) while CIRP is on, disputes amongst stakeholder consultation committee and Liquidator, can all be resolved through Mediation, as the common objective for all of them and the IBC process is the resolution and maximisation of value and/or recovery and all it requires is putting the right perspective for everyone to see and appreciate the larger picture. This would also reduce the need to rush to Adjudicating Authority as stakeholders would appreciate the potential outcome of a collaborative approach.
Cases of Cheque bouncing:
- If the drawer himself or the company on whose behalf the cheques were issued in the first place are under stress and there is a genuine inability to pay up the total dues, the parties are realizing the relevance of Mediation by sitting across the table and finding a resolution to the issue of non-payment at hand vs the long drawn uncertain traditional processes available for now.
- Mediation can help in creative solutions which may also involve waiver, deferment, in kind settlement, barter, restructuring of payments, extra/different collaterals, etc and so on and so forth.
Cases of Real Estate:
- Disputes between Builders and Buyers, especially in India have a peculiar history. The disputes in this industry unfortunately have been an inherent part and parcel of this relationship for quite long. These have been seen both at the stage of construction and at the time of delivery/handing over of the property. Wherever the reasons of disputes are lack of communication or delays in delivery which are beyond control of either side, or result of some policy changes impacts, surely can be handled through Mediation, as the basic characteristic of Mediation is to assist parties to view, review and appreciate each other’s perspective and explore a suitable/amicable solution which beneficially works for both. Ideally the buyer wants a peaceful possession and the builder wants the closing of the loop post handing over so that he creates his goodwill and moves on to the other project and these twin objectives are easily met through a well-managed Mediation process.
Other Areas being considered:
Income Tax Disputes:
- Government has been very vocal about its intent to explore and use Mediation for the Income Tax Disputes and its matter of time, when all the relevant/affected stakeholders would see the value of this concept, where apart from the reduction in pain from the long drawn court cases, there would also be some certainty to the amounts being payable and receivable in agreed timelines reducing the burden on the system and also appreciating the true time value of money. All this in addition to the EODB (Ease of Doing Business) and the goodwill for the country where people will appreciate the non-adversarial approach and the overcoming of ‘trust-deficit’ across stakeholders.
- Insurance disputes have been on the rise and there is already an attempt to use Mediation in cases where the facts are available easily and there are no inconsistencies due to intent issues on either side.
- (Ayodhya Case) The very fact that this was attempted by Honourable Supreme Court is a perfect example of use of Mediation for community issues, where the impact is on the entire society, not necessarily quantified in monetary terms but still having huge implications.
Who all stand to benefit from the Mediation / Negotiation?
The types of disputes and stakeholders for whom these services are helpful are as follow:
For Dispute Resolution through Mediation
- Business Houses / Corporates – (for disputes arising out of Commercial Contracts, Joint Ventures, M&A, etc)
- Investors – Investment Agreements
- Employment Disputes (from perspective of Employers / Employees)
- Family Disputes (Property, Relationships, Succession, etc)
For Effective Negotiation Support
While drafting Contracts/Agreements relating to:
- Commercial Contracts / Relationships
- Joint Ventures
- Merger & Acquisition
- Builder Buyer Agreements, etc