The desire for timely, informal, and effective remedy has been the Raison d’être for the rise of Mediation. Despite consumer rights gaining momentum, justice to consumer has been hard to achieve therefore Consumer Protection Act, 2019, the applicable rules and Mediation Act, 2023 seek to address consumer concerns in a timely and informal manner so that the intricacies of litigation do not hinder the remedy.

The overburdened judiciary is a common feature in India as well as across the globe, at the same time there are many other advantages which are attached with Alternate dispute resolution methods including speedy and effective resolution, domain specific solution by the experts as well as confidentiality and low cost involved make it all the more obvious choice. Among all other methods of ADR, Mediation has emerged as the most effective and convenient for the parties due to its inherent features.

Mediation is a method that has recently appeared as one of the strongest and most acceptable means of resolution of any dispute. Till recently there was no statutory recognition of Mediation except Article 89 of the Code of Civil Procedure,1908[i]. There were many disputes which could very easily be brought to amicable solution with the least friction. Especially the matrimonial and other family disputes were considered better suited for mediation. But the current trend has changed the perception of business houses where even commercial disputes can be effectively resolved through techniques of Mediation. There was a long-felt need for codification of law relating to mediation which can overcome the inherent drawbacks of mediation as process of dispute resolution. The popularity of mediation and the lack of formal procedural guidelines has led to enactment of Mediation Act 2023[ii].  Mediation as a process involves a third-party mediator that facilitates communication between the parties and striving towards finding an amicable resolution. The biggest drawback of mediation has been absence of binding force behind decision of the mediator and the structural boundaries within which it can be performed. Therefore, Mediation Act 2023 seeks to leave behind those challenges and provide a sensible procedure and outcome acceptable to the parties as result of mediation.

When it comes to judging its suitability for commercial disputes it has many added benefits which may not be available in other ADR mechanisms. At the very outset, the nature of mediation is such that it is premised on a non-adversarial model therefore there is more possibility of the outcome incorporating the interest of both the parties causing minimum loss to anyone of them. Further where maintaining long-term business relations is of value that can also be better preserved through mediation. Also, the business concerns are more focussed on a curative solution over which they have control and which caters to their personal needs can be guaranteed by mediation.

Currently, in an era of market economy and online purchases by consumers in a different sort of markets with different level of anti-competitive practices, consumer disputes are on the rise and the consumer forums also are struggling to deal with vacancies and irregular decisions therefore Mediations offers some fruitful solutions to the consumer disputes. Let us examine suitability of Mediation for resolving consumer disputes, its challenges, and how the Mediation Act 2023 seeks to provide an answer to those challenges.

Mediation under Consumer Protection Act 2019

 Even before the Mediation Act 2023 came into being the Consumer Protection Act 2019 allowed for resolution of consumer dispute through Mediation.

The Consumer Protection Act, 2019 has introduced the provision where the relevant Commission can refer a consumer dispute for mediation when there is a scope of settlement between the parties. However, parties to the mediation are given a time frame of 5 days to accept or reject the process of mediation, as consent is vital for it[iii]. Once a dispute is referred to mediation, the fee paid to the Commission for dispute redressal is refunded to the parties[iv]

Settlement under Consumer Protection Act 2019

Settlement has been defined as a means of settlement arrived at in the course of mediation[v]If the mediation leads to a positive outcome it is reduced to writing and it is also possible to confine it to only certain issues that are resolved or all disputes have been resolved as a result of mediation then the acceptable terms of the agreement is put into writing and receives the signature of the parties[vi]

The Commission under the Act is given the agreement and the report of the settlement after being signed by the parties. The commission then passes the order as per the report of the Mediator. Further, this is more formalized by a suitable order by the District/State/ National Commission within seven days of receiving the Settlement report. Thus, the dispute is disposed of accordingly.[vii]

Every order made by a District Commission, State Commission, or National Commission shall be enforced by it in the same manner as if it were a decree made by a Court in a suit before it, and the provisions of Order XXI of the First Schedule to the Code of Civil Procedure, 1908 shall, as far as may be, applicable, subject to the modification that every reference therein to the decree shall be construed as reference to the order made under this Act[viii].

As per the Consumer Protection Mediation Rules 2020, parties are prohibited from initiating judicial proceedings in respect of those matter as this is a matter of mediation. The parties are debarred from initiating legal proceedings if they have expressly agreed not to initiate any such proceeding.[ix] The question arises whether such prohibition is for the betterment of the parties and in the larger interest of justice.

Mediation Act 2023 and Consumer Disputes

Mediation Act, 2023 defines Mediation as-

 “Mediation includes a process, whether referred to by the expression mediation, pre-litigation mediation, online mediation, community mediation, conciliation or an expression of similar import, whereby parties attempt to reach an amicable settlement of their dispute with the assistance of a third person referred to as mediator, who does not have the authority to impose a settlement upon the parties to the dispute.”[x]

The new legislation has defined mediation as a most comprehensive mechanism that may include prelitigation mediation, online mediation, and community mediation and the parties are interested in finding an amicable settlement of a dispute where a third party will act as facilitator and his authority is not binding on the parties.  Thus, the new legislation seeks to address all fines aspects of consumer disputes that may be addressed through online mediation.

This act further strengthens the role of mediation in dispute resolution, providing a comprehensive framework for its application, including in consumer disputes. The Act mandates that the settlement agreement becomes final after the parties confirm with their signature and mediator confirms it. The enforcement is guaranteed by conferring the status of decree passed by the court[xi]and it can be relied upon by the parties in judicial proceedings.

Challenges of Consumer dispute resolution  through Mediation

If the parties do not find it favourable enough then the challenge to the mediated agreement can be made by the parties within 90 days of receiving the copy of the settlement. The reasons for which it can be rejected are provided as fraud, corruption, impersonation, or if mediation is done in matters not capable of being mediated as per section 6 of the Act. The delay in filing the challenge can be entertained even after 90 days if there are sufficient reasons for the same. The new legislation has also provided for registration of mediated agreement with an authority under the Legal Services Authority 1987 so that a legal status is conferred on the same which makes it impossible for the parties to deviate from it.

Though Mediation offers a significant relief to the consumers offering them quicker reliefs but there has been certain challenges of the consumer dispute resolution under the Mediation Act 2023. In the small legal world, there is always an apprehension about the biasness and impartiality of the Mediator. Further, the parties fail to find effective mechanism to enforce the settlement agreement.

 There can be no denial of the fact that there is still a huge majority of the population who might be aware of their consumer rights breach but still find traditional methods of dispute resolution through litigation more appropriate and effective remedy. It is a welcome trend where mediation as a process is recognised and conferred similar status as an arbitration award where all the benefits of the ADR process is followed and the advantage of decree of the court in terms of enforcement is also achieved under the new legislation. It will boost the resolution of consumer dispute resolution and the irregularity of proceedings at District and State consumer forums can be overcome by the proceeding under this legislation.

There is further an urgent initiative required on the part of the government to conduct outreach activities so that more and more disputes are considered and resolved effectively through mediation. The local administration needs to strengthen in terms of infrastructure and trained mediators. The training can begin from law schools itself where mediation is presented as a viable career opportunity for law graduates. This will not only supply new and dynamic lawyers into mediation but also solve employment issues for law graduates.

Endnotes

[i] Sec 89. Code of Civil Procedure 1908

[ii] Mediation Act 2023

[iii] Section 37(2), Consumer Protection Act, 2019.

[iv] Rule 5, Consumer Protection (Mediation) Rules, 2020.

[v] Rule 2 (f) of Consumer Protection (Mediation) Rules, 2020.

[vi] Section 80(1) of CPA, 2019

[vii] Sec 81 (1) Consumer Protection Act 2019

[viii] Sec 71 Consumer Protection Act. 2019

[ix] Rule 6 of Consumer Protection (Mediation) Rules, 2020

[x] SECTION 2(h) of the Mediation Act, 2023

[xi] Sec 27 (2) Mediation Act 2023