Impact of Mediation in India

Maithili Pai*

1. Introduction

Mediation is a voluntary dispute resolution process in which the parties to a dispute are assisted by a neutral third party to negotiate a settlement. Though the concept of mediation has evolved in the later half of the 20^th century, its roots can be traced ancient Indian legal system such as the village Panchayats and the Nyaya Panchayats that prevailed in rural areas.[1] The Village Panchayats still exist in different parts of India and the Government of India is making efforts to revive these justice delivery mechanisms by allocating funds for its functioning.[2]

1. Statutory Provisions and Judicial Developments

Statutory recognition has been provided to mediation in India under the Arbitration and Conciliation Act, 1996 and the Code of Civil Procedure, 1908. Mediation was first introduced into India by the Arbitration and Conciliation Act, 1996 wherein sub-section(1) of Section 30 of the Act encourages parties to seek mediation and conciliation even when arbitral proceedings have been initiated and empowers the arbitral tribunal to use mediation as a method of settling disputes . However since the act does not provide any detailed rules regarding mediation, this provision is rendered almost futile. In 1999, the Code of Civil Procedure (Amendment) Act, 1999 (CPC Amendment Act) was enacted where a new Section 89 was introduced into the Code of Civil Procedure dealing with alternate methods of dispute resolution. This section introduced the concept of ‘judicial mediation.’[3] Apart from parties referring disputes to mediation voluntarily, under Section 89 of the Civil Procedure Code, 1908 where it appears to court that there exist elements of an amicable settlement which may be acceptable to the parties, the court may refer parties to, inter alia, arbitration, conciliation or mediation.
Where disputes are referred by a court to arbitration or conciliation under Section 89 of the CPC, the procedure set out in the Arbitration & Conciliation Act, 1996, will apply. However, unlike arbitration or conciliation, there is no specific statute that deals with mediation in India.[4] Therefore, unlike other statutorily-recognized forms of non-binding alternative dispute resolution confidentiality in mediation proceedings is not specifically provided for in any statute in India.[5] In the absence of clear statutory rules on mediation, there have been, various decisions delivered by the Apex Court in India on this issue.[6] On 7 January 2011 the Supreme Court of India, in the case of Moti Ram (D) Tr. LRs and Anr. Vs Ashok Kumar and Anr (Civic Appeal No. 1095 of 2008), held that mediation proceedings were confidential in nature, and that only an executed settlement agreement or alternatively a statement that the mediation proceedings were unsuccessful, should be provided to the court by the mediator.[7] Prior to this judgment, whilst parties were free to make a contractual agreement to maintain confidentiality of mediation proceedings, no statutory authority provided that mediation proceedings were confidential. The judgment is expected to improve the popularity of mediation as a method of resolving disputes in India.[8]

The fact that mediation is slowly catching on has been observed on numerous occasions. The Law Commission of India in its 129th Report made a recommendation to make it obligatory for the Court to refer disputes to ADR including mediation for settlement.[9] On 22^nd Feb, 2013 the Apex Court directed Family Courts to make all efforts to settle matrimonial disputes through the process of mediation and to refer parties to mediation centres with consent of the parties, especially matters related to maintenance, child custody, etc. In the few years since mediation centers of Delhi (2005) and Bangalore (2007) have been set up, approximately 30,969 cases have gone through the mediation process, and 60% of these cases have been settled since then.[10] This has resulted in 18,581 cases being resolved in a matter of two months each instead of years of fighting in the court.[11]

The trend evinced by various Supreme Court decisions in the recent past appears to indicate that a favourable attitude towards mediation is being adopted by the Courts. Mediation seems to have specifically caught on with regard to the settlement of patent disputes. Indian generic drugmakers are increasingly resorting to mediation as a dispute settlement mechansism for disputes related to patents.[12] This includes patent disputes between Hoffman La Roche and Cipla, and Merck and Glenmark.

The application by Roche for its product, erlotinib (its brand name: Tarceva) belonged to this category. Roche obtained the patent but meanwhile Cipla had started manufacturing and marketing a generic version, Erlocib. Roche filed an infringement suit against Cipla in Delhi High Court in January 2008. The Delhi High Court had ordered Roche and Cipla to attempt mediation and appointed a mediator to resolve disagreement between both pharmaceutical companies. However, on October 31, 2014, the mediator submitted a “failure” report before the Delhi high court and the case is back before the divisional bench for hearing. This was the first high profile case to be referred to a mediation process. It was also being observed closely to see how India would interpret its new patent laws which have been in effect since 2005. The interpretation would also affect similar pending cases.

After the Roche –Cipla case, the second patent case to be mediated was the Merck-Glenmark patent dispute involving anti-diabetic product Januvia. Unlike the Roche Cipla case, where the parties agreed to engage in mediation pursuant to court orders, in the Merck Glenmark case. The international arm of US drugmaker Merck&Co. and Glenmark agreed to mediate and settle the patent infringement that has been filed by the former MNC against the latter generic drugmaker for launching generic copies of two of its diabetic drugs Januvia and Janumet in the Indian market in 2013.

Eminent intellectual property scholar Basheer has aptly the state the problem with regard to mediating patent disputes which have great significance: “Given the hostile nature of our adversarial proceedings and a desire to win at any cost, and the resulting waste of time, resources and money, alternative methods should be encouraged. However, given the sheer importance of pharmaceutical patents and their relation to public health objectives, I personally feel that the court should have applied its mind and given a ruling here. Perhaps after a few such cases, one might have seen the emergence of some foundational jurisprudence on patent law which could have guided future courts.” [13] Generic drug companies are often expected to keep public health concerns in mind, and it is feared that while settlements through mediation would be beneficial to both parties and help them avoid prolonged legal proceedings, consumers in developing countries such as India are likely to be at the losing end as this would make drugs more expensive.[14]

In spite of the resistance that is being shown to mediation with regard to settlement of patent disputes, mediation is an efficient option for parties that wish to reach a speedy settlement, to maintain control over the dispute settlement process, value confidentiality, do not wish to damage their reputation and is also desired by parties who wish to enhance their relationship.[15]

1. Mediation in India – The Way Forward

While mediation has been successful in various countries, it has not been so in India due to mainly the low levels of awareness regarding mediation. There appears to be a lack of initiative on the part of the government and even the legal fraternity to spread awareness about mediation. In India, while judges have been quick to recognize increased use of mediation as a helpful mechanism for reducing case backlogs and delays, Indian lawyers not responded to mediation quickly. As with American lawyers in the early 1980’s, Indian lawyers are conservative. They do not like change and hesitate to expose their clients to the uncertain risks of an ADR process of which they have limited awareness. Also, Indian lawyers fear that mediation would potentially deprive them of income by settling cases prematurely and thereby doing away with the legal fees that would otherwise be earned during the prolonged judicial proceedings.

It cannot be said that the adversarial system must be totally done away with. The adversarial system is the appropriate method in a number of situations especially those needing authoritative interpretation or establishment of rights or which manifest severe negotiating imbalance. It is also required as a last resort of resolution. However, its indiscriminate and unvarying application across a broad band of conflict is a major cause of the several ills plaguing the legal system.[16]

Effective reform lies in measures which promote both efficiency and ethics. Confidence in the mediation process will be fostered only if the mediator discharges in positive terms the ethical concerns of a process to which the role of the mediator is central.[17] Perhaps the time has come for a new way of looking at conflict resolution and the legal profession – one that will harmonize the ethics of practice, the values of the law and the demands of public policy. Meeting the resistance to changing from adversarial litigation to methods of alternate dispute resolution such as mediation, creating awareness in society of the benefits of the mediation process, and developing capacities and involving the Bench and the Bar in a co-operative effort are critical elements in the success of the process.[18]

[1] Anil Xavier, Mediation: It’s Growth and Origin in India, available at http://www.arbitrationindia.org/pdf/mediation_india.pdf

[2] Madhu S, Mediation in India, available at http://cppradr.blogspot.in/2008/07/mediation-in-india.html

[3] Vyapak Desai and Sahil Kanuga, Mediation proceedings are confidential says Supreme Court, available at http://www.indialawjournal.com/volume4/issue_1/article_by_desia_kanuga.html

[4] Id

[5] Id

[6] Id

[7] Herbert Smith Freehills, Supreme Court of India holds that mediation proceedings are confidential, available at

http://www.lexology.com/library/detail.aspx?g=2f7baf8e-833a-455a-8614-ce8e888cb50b

[8] Id

[9] Madhavi Nalluri, Mediation and Conciliation Proceedings in India, available at http://practicalacademic.blogspot.in/2012/08/guest-post-mediation-and-conciliation.html.

[10] Forbes India, Mediation in Indian Courts, available at http://www.forbes.com/2010/09/28/forbes-india-judiciary-encouraging-mediation-reduce-baclog.html

[11] Id

[12] C H Unnikrishnan, More pharma firms trying to settle patent rows via talks, available at
http://www.livemint.com/Companies/zGHIrTR2eQqGgc2q4qzDCJ/More-pharma-firms-trying-to-settle-patent-rows-via-talks.html?utm_source=copy

[13] Sagnik Dutta, Trying ‘mediation’, available at http://www.frontline.in/the-nation/trying-mediation/article6189578.ece

[14] Id

[15] World Intellectual Property Organization, Why Refer Intellectual Property Disputes to Mediation?,

http://www.wipo.int/amc/en/mediation/why-mediation.html

[16] Sriram Panchu, On the Mediation Process, http://lawcommissionofindia.nic.in/adr_conf/sriram17.pdf

[17] Justice D Y Chandrachud, Mediation – realizing the potential and designing implementation strategies , available at http://lawcommissionofindia.nic.in/adr_conf/chandrachud3.pdf

[18] Id

 

*Maithili Pai: I am a 3^rd year student pursuing B.A LL.B(Hons.) at the WB National University of Juridical Sciences, Kolkata. I would like to thank Thomas Valenti, Rahim Shamji and Tanya Jamal for an extremely informative and thought provoking mediation training course conducted by AdRg and NLU Delhi in November 2014, which was provided me the exposure as well as the inspiration to write this essay. Needless to say, the views in this essay as well as any errors or omissions remain mine                                                     alone.