A high court judge advised infrastructure companies and other industrialists to go for mediation in case of commercial disputes as it was faster and cheaper way of dispute resolution.
Justice Soumen Sen of Calcutta High Court said that the parties could appoint a mutually agreed mediator or approach the high court that had created a panel of mediators.
Justice Sen said that mediation was a new concept in India, but recent legislations makes it mandatory before proceeding with legal action. “Mediation is a new concept in India. But it has been in the USA since 1976, in European countries since 1980s,” said the judge.
He added that though there was a feeling among the industry that the government was not willing to come for mediation, amendments to the Commercial Courts Act has made it mandatory for aggrieved parties to try mediation before taking legal action.
“Recent amendments to the Commercial Courts Act, insertion of section 12A in the Act makes mediation mandatory before filing suits,” he said.
Section 12A states, among others, that “a suit which does not contemplate any urgent relief under this Act, shall not be instituted unless the plaintiff exhausts the remedy of pre-institution mediation and settlement in accordance with such manner and procedure as may be prescribed by rules made by the central government”.
Lawyers appearing in commercial disputes said that thousands of such cases were pending in Indian courts.
“Mediation is the cheaper and faster method of dispute resolution. Mediation leads to certainty that arbitration cannot. Once in mediation a settlement is reached it is final,” Justice Sen added.
In arbitration, the arbitrator passes an order and any one party is likely to approach a higher court if it feels aggrieved. But in case of mediation, a settlement is reached only after all parties agree to it. So the chances of approaching a higher court after settlement through mediation is very little, explained a lawyer.
Justice Sen added that there had been instances where the parties were happy with mediation and did not approach courts subsequently. He also cited some other merits of mediation.
“Confidentiality is an important factor of mediation,” he said.
Smarajit Roy Chowdhury, a practising high court lawyer, cited some challenges before mediation. “If mediation was that successful then parties wouldn’t have approached the National Company Law Tribunal. Also the tendency of judges to push commercial disputes to mediation is likely to face opposition from lawyers,” he said.