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Role of Judges and Arbitrators in the success of Mediation

Shreya Bansal, Advocate, CSO, GGI

Introduction In June 2019 the draft for international commercial mediation was finalised at UNCITRAL's 51st session. The final draft of Convention on International Settlement Agreements Resulting from Mediation or the Singapore Mediation Convention (hereinafter referred to as 'SMC) has been compared to the New York Convention, 1960 for arbitration as it offers enforcement of mediation settlements conducted in foreign jurisdictions, much like the New York Convention in case of arbitration. The decision to create a draft on enforcement of mediation settlements had come after three years of negotiations between 85 countries and 35 NGOs. The draft was presented for ratification in August of 2019, and a total of 46 countries ratified it including China, USA, and India. It is expected that SMC will not only boost international commercial mediations but as more and more countries ratify it; the confidence in mediation would increase. The Convention, however, has been made applicable to only commercial mediations and does not apply in cases where the agreements have either been approved by the court, or are enforceable as a judgment in the court of that state, or those which are enforceable as arbitral awards. These, along with several other limitations warrant that judges and arbitrators step in to fill the gaps left behind as the Convention is silent as to what extent they can intervene. The Convention has come at a very crucial time as litigation around the world is on the rise, and the backlog of cases is ever increasing. Judges cannot keep up with the pace as the rate of filing of suits and disposal rate of matters is significantly disproportional. India alone has 3.5 crore pending cases in courts. The ratification to the Convention would give validity to mediation proceedings, it would raise awareness concerning the proceedings, but most important of all, the Convention mandates ratifying states to pass national legislation on the same. In order to ensure the successful implementation of SMC, a very pivotal role would be played by the arbitrators and judges. As their role has not been spelt out in the Convention, it is left open to interpretation and inclusion. Since courts have been the earliest methods of dispute resolution, they cannot altogether be isolated from the process. Therefore, judges and arbitrator's role should be integrated with mediation.

Limitation of SMC and what Judges and the Arbitrators can do A new wave of settlement mechanism has been in order for a long time which has gone unnoticed for far too long. With the advent of SMC mediation will not only get a boost, but for some nations, it would be the initiation of a new age of dispute resolution mechanism. Our Courts and Arbitrators can do much to further this wave, some of which have been discussed henceforth. Even though Article 3.1 of the draft convention does not extend its scope to judicial mediations as they are capable of being executed as decrees, a lot still rides on the shoulders of judges and arbitrators. The role of judges and arbitrators in a settlement can be divided into three stages: 1. Pre-Mediation 2. Pendente Mediation 3. Post Mediation


1. Pre Mediation

Pre Mediation stage or the stage before mediation has actually commenced is vital in setting the tone and the attitude of the parties towards mediation. If the judge or the arbitrator fails to instil confidence in the parties with respect to mediation, mediation will likely fail. Mediation is a comparatively new procedure, and often parties rely solely upon second-hand data fed through advocates, judges, or arbitrators. Therefore the success of the process depends very highly upon this first interaction.

(1.1) Identifying cases fit for mediation: A judge referring a case for mediation is called a Referral Judge. Where the judges decide not to settle the case themselves, they may refer the case to a mediation centre. It is the duty of the judge or the arbitrator to identify such cases as early as possible by firstly making sure that conditions of Article 1 [1] are satisfied and then looking into some of the following conditions such as the attitude of the parties, their willingness, any previous attempts at settlement and their result, and whether there is an inclination for relationship building. A court-mandated mediation might instil a higher sense of satisfaction in the parties knowing that a justice delivery system was involved in the process thus improving the chances of execution of the agreement and reducing the possibility of a party backing out of the settled agreement. The draft convention does not provide for compulsory mediation in commercial disputes since mediation is a voluntary process. However, where a judge or an arbitrator feels that the matter is fit for mediation, he/she may be allowed to refer it for the same with the option to the parties to opt-out of the process at a later stage. Caution should be taken, however, by the judges and the arbitrators in such cases to not to let their judgment be impaired by the decision of one party to opt-out of the process and such a decision should not be taken to be indicative of a retributive nature of that party. No adverse inference should be drawn based on the conduct of the parties.

(1.2) Motivating parties for mediation: Once a judge or an arbitrator has identified a case fit for mediation, he/she might come to realise that the parties are not inclined towards opting for mediation. Since one of the principles of mediation is that it is a voluntary process compelling the parties to opt for that route might not always be a sound idea. The judges or arbitrators must first try to identify the reason which is preventing a party from opting for mediation. Where the reason is merely owing to lack of information, the judge or arbitrator can step in and explain the processes to the parties. Highlighting the benefits and drawing a parallel between the two processes may help the party in making an informed choice, thus motivating them to arrive at a settlement. Even in cases where the judge or arbitrator feels that the matter is not entirely fit for mediation, he/she may refer a part of the issue for mediation which they feel is capable of settlement.

2. Pendente Mediation Once a Referral Judge or an arbitrator refers to a case for mediation, it does not imply the end of his role in the process. Many times party may opt for mediation as a delaying tactic. In order to prevent this, it is necessary that a periodical intervention of the judges and arbitrators be required to access the progress of the process. Recently, in India, a 70-year-old matter was referred to mediation by the Supreme Court. The Court has set a two-month recall period to access the progress in the matter. Even though the reference to the mediation of the matter does not set an excellent precedent, it highlights how mediation can be harmonised with litigation. A monitoring process ensures that parties take the process seriously, and no delaying tactics are employed. At the same time, the involvement of a justice delivery system instils confidence in the parties. The Referral Judge or the arbitrator may additionally set a time within which mediation may be concluded. In case the matter is not settled within such specified time, the Court may further extend the time if it is of the opinion that the parties might benefit from it. The time period should be carefully decided. If the duration is too short, the parties might feel rushed, and the settlement might result in 'settler's remorse'. On the other hand, if the time is too long, it would defeat the time-saving element. Care should be taken to maintain confidentiality if such interventions are being resorted to by the Court. 3. Post Mediation A mediation process may either succeed or fail. In both the circumstances, the mediator is required to send a report to the Referral Judge. The agreement is not required to be in any set format and need not be a speaking order. However, the mediator must try, as far as possible, to expressly lay out the agreement and the mode of execution agreed upon the parties in order to diminish litigation sprouting from mediation agreements [2]. In cases where no agreement is arrived at, the mediator should be careful not to apportion any blame on any party with respect to the outcome since the proceedings are absolutely confidential. At the same time, the judges and the arbitrators should not try and go into the question of how and why the mediation failed. There is no such thing as a 'failed mediation' as there is always a possibility of a breakthrough even after the dispute resolution proceedings have ended. The judges or arbitrators may, therefore, try to look into other avenues of dispute resolution which may result in a settlement. On the other hand if mediation results into a settlement, the mediator is required to draw up a settlement agreement in accordance with Article 4. This settlement agreement is required to be supplied to the competent authority for execution. Under clause (iv) of sub-clause (b) to Article 4.1 wide discretion has been given to judges to accept evidence about the settlement agreement where (i), (ii), and (iii) clauses do not apply. This discretion should be exercised judiciously, and the presumption should be in favour of the enforceability of settlement agreement.

4. Other Concerns

(4.1) Concerns of Mediator Attestation to the Settlement Agreement: In institutional mediation, judges and arbitrators should work in conjunction with mediators where the matter is first brought before the court, and the referral judge sends it for mediation. In cases where the matter is directly referred to mediation, a consent form of parties may be mandated. Such a consent form may be required to be signed by the parties at the time of commencement of mediation and will also benefit the parties by extending the limitation period if they decide to opt for litigation subsequently. The form should be acceptable documentary evidence deposited in court at the time of enforcement to limit the possibility of the party claiming that no mediation took place. In some jurisdictions, mediators are averse to the idea of signing a document verifying mediation proceedings as it comes in the way of confidentiality. In many countries, as in India, it has been observed that mediators have been called as witnesses to the court. Confidentiality of proceedings should be paramount interest; therefore, an attempt should be made to expressly bar the evidence of mediators with necessary amendments in Evidence Act.

(4.2) Refusal to enforce mediation agreement: Under Article 5.1(e) of the draft convention the enforcement agency may refuse to execute the settlement agreement if the party furnishes proof that "There was a serious breach by the mediator of standards applicable to the mediator or the mediation without which breach that party would not have entered into the settlement agreement"[3]. 'Serious breach' may be interpreted differently in different jurisdictions. Additionally, the fact that mediators cannot be called in court in order to give evidence as to how their conduct does not constitute a violation; it becomes difficult to ascertain such disputes. What witness would be competent to testify and what evidence would be sufficient to substantiate the claim should be decided to keep in mind the international standards and courts and arbitrators should attempt to maintain uniformity across nations. Courts should avoid too mechanically entertaining such matters, and a prima facie case must be established before a party is subjected to a mini-trial. Only breaches in conduct with go to the root of the matter and have the effect of causing grave injustice to the party should be allowed by the judges. As far as possible, a mini-trial should be avoided.

(4.3) Limitations of New York Arbitration Agreement might befall SMC: SMC is to mediation what New York Convention is to Arbitration; therefore, it can be apprehended that some of the limitations of the New York Convention might befall SMC as well. In India, one of the issues concerning international arbitration that arose was creating a distinction between 'venue' and 'seat' of arbitration. In the case of Enercon (India) Ltd And Ors vs Enercon Gmbh And Anr.[4] the Supreme Court of India held that 'venue' is the designated place where arbitration proceedings take place, and 'seat' determines the court that has jurisdiction to oversee the arbitration proceedings. This interpretation can also be extended to SMC, which gives rise to the question of whether the jurisdiction can be ousted by way of an agreement between the parties. On this issue, the Courts in India have consistently held that a party cannot take away a court's power to set aside the arbitral award by way of an agreement [5]. This position is not internationally consistent and might come in conflict with certain jurisdictions [6]. Where no 'seat' has been agreed upon between the parties, another situation might arise where parallel proceedings might be initiated in the respective jurisdictions of the parties. The Courts and Arbitrators must, therefore, attempt to harmonise the process as far as possible and to try to create uniformity are proceedings internationally.

(4.4) Quality Check of Mediators: The Courts and arbitrators must also make sure to keep quality check of mediators where they act as officers of the Court and are salaried employees as it is observed that in such setups the incentive to facilitate settlement lacks in mediators as against those who have independent practice. Regular skill training should be provided for the first few months in order to cement the principles of mediation and mediators performing well should be recognised, and efforts appreciated.

Conclusion Without a doubt, the settlement has taken a much more prominent position in litigation these days. However, the judiciary has not been able to keep up with the pace of this new development, and consequently, standards of settlement in court have not been able to evolve. While some people are of the opinion that a patent demarcation is created prohibiting the judges from settling their case, any such attempt would strip us of a viable opportunity to settle at the stage of litigation. Therefore, it is suggested that rather than focusing on creating a distinction between litigation and mediation, it be acknowledged that two techniques are similar and capable of harmonisation. A settlement should become the norm and not the exception where ever possible. For this, the judges must assist and when possible, act in furtherance of settlement. In order for the SMC to become fully functional elements of mediation should be woven in with litigation, with mediation functioning parallelly rather than monopolising cases and issues and attempting to create visible demarcations.

[1] Article 1: This Convention applied to an agreement resulting from mediation and concluded in writing by parties to resolve a commercial dispute (“settlement agreement”) which, at the time of its conclusion, is international in that: (a) At least two parties to the settlement agreement have their places of business in different States; or (b) The State in which the parties to the settlement agreement have their places of business is different from either: (i) The State in which a substantial part of the obligations under the settlement agreement is performed; or (ii) The State with which the subject matter of the settlement agreement is most closely connected. UNCITRAL Model Law on International Commercial Mediation and International Settlement Agreements Resulting from Mediation, 2018 [2] Article 5.1c (ii) of UNCITRAL Model Law on International Commercial Mediation and International Settlement Agreements Resulting from Mediation, 2018 [3] Article 5.1(e) of UNCITRAL Model Law on International Commercial Mediation and International Settlement Agreements Resulting from Mediation, 2018 [4] Enercon (India) Ltd and Ors v. Enercon Gmbh and Anr Civil Appeal No. 2086 of 2014 dated 14 February 2014 [5] Union of India v. Hardy Exploration 2018 (Sup Ct (Ind))

[6] Shashoua v. Sharma [2009] EWHC 957 (Comm)



Bibliography:


1. Mediation Training Manual for Referral Judges, Mediation and Conciliation Project Committee Supreme Court of India.

2. UNCITRAL Model Law on International Commercial Mediation and International Settlement Agreements Resulting from Mediation, 2018 (amending the UNCITRAL Model Law on International Commercial Conciliation, 2002), available at https://www.uncitral.org/pdf/english/commissionsessions/51st-session/Annex_II.pdf.

3. When is the ‘Venue’ of an Arbitration its ‘Seat’? Auth: Phillip Capper (White & Case LLP) available at http://arbitrationblog.kluwerarbitration.com/2009/11/25/when-is-the-venue-of-an-arbitration-its-seat/

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