Ease of doing business: Govt to form Mediation Council by year-end

Mediation involves parties appointing a mediator to help them reach a consensus. Unlike other out-of-court dispute resolution mechanisms, mediation does not result in a binding award or judgment. Instead, the mediator helps parties reach a mutually agreeable settlement.

“We are trying our best to finish the process for formation of the Mediation Council of India by the end of this year,” one of the persons told Mint. 

Members of the council may be directly appointed by the central government or based on the advice of a special search-cum-selection committee, the person said. “There is a definite push for mediation right now,” the other person said.

The MCI will be formed under the aegis of the Mediation Act, which was passed by the government last year and mandates mediation proceedings to be completed within 180 days of start of the process, as per a Rajya Sabha disclosure. The council will set rules to be followed during mediation and give authority to mediators.

The MCI will also oversee the education, assessment, and certification of mediators through recognized institutes. It will also lay down standards for conduct of mediators, and recognize mediation service providers. 

The council will have a chairperson and two members who are experts in mediation, as per the Act. It will also have a chief executive officer and a representative of a recognised body of commerce and industry, chosen by the central government.

First milestone in dispute resolution

The creation of the council is the first milestone towards making mediation a go-to method of dispute resolution, especially for corporates in India, experts said.

“Formation of the MCI is a milestone step, although one step in a long journey that lies ahead,” said Namita Shah, co-founder of Presolv360, an online dispute resolution (ODR) forum providing e-mediation services. 

“We are already seeing a renewed focus on mediation, especially online mediation. The formation of MCI will continue this momentum. ODR institutions, as mediation service providers, are key to the growth of online mediation. With MCI in place, ODR institutions will be able to grow faster and more strategically to make India a hub for online mediation,” said Shah, whose company is empanelled with numerous courts in the country.

Currently, litigants opt for mediation when mandated by courts or by the law. The number of parties voluntarily opting for mediation is relatively small, practitioners said. For instance, under the Commercial Court Act, 2015, parties are mandated to try mediation before entering courts. The formation of the MCI will change this scenario and bring more parties to mediation of their own accord, and not because the law asked them to, said Shah of Presolv360.

Efficient dispute resolution enhances the ease of doing business in an economy. Although India’s overall rank in the World Bank’s now-discontinued Doing Business Report (DBR) improved from 100 in 2017 to 63 in 2020, this jump was not due to faster enforcement of contracts.

India’s score in enforcing contracts, a key indicator of commercial dispute resolution, remained unchanged from 2019 to 2020 in the DBR, last published in 2020.