Counsel and witnesses

Are the parties typically represented by lawyers in commercial mediation? Are fact- and expert witnesses commonly used?

It is extremely common to see parties being represented by lawyers in commercial mediations in India. However, fact and expert witnesses are rarely used.

Procedural rules

Are there rules governing the mediation procedure? If not, what is the typical procedure before and during the hearing?

In court-appointed mediation proceedings, the mediator is free to decide on the mediation procedure to be followed or to follow the Civil Procedure Mediation Rules. Some mediators request parties to file a brief statement of facts and issues prior to the first session. At the first session the process of mediation is explained fully, facts and issues are ascertained and (if they have not done so already) the mediators may request statements or summaries to be filed.

In private mediation, it is quite common for the mediator to require parties to submit a statement of facts and a summary of legal proceedings ahead of the mediation. Parties are requested to come to mediation prepared with the facts and with authority to settle the dispute. The mediator may also ask for further notes for additional information during the course of the mediation.

Mediation usually begins with a plenary (joint) session. The mediator will usually hold separate sessions with the parties during the course of mediation as and when he or she deems necessary.

Prior to the mediation, the following take place:

  1. the mediator will ensure that he or she has no conflict of interest in the matter, and will withdraw if any exists;
  2. the terms of engagement of the mediator (fees and expenses, etc) are made known and agreed to by the parties; and
  3. the confidentiality agreement is signed between the parties and the mediator.

Steps (ii) and (iii) do not apply in court-referred mediations.

At the mediation proceedings, at the first joint session, the mediator will:

  • ensure that all required are attending and have the requisite authority to do so, and make the necessary introductions;
  • explain the concept of mediation and answer queries on the same;
  • request parties to each make their opening statement;
  • request the lawyers to make the supplementary statements on the law relevant to the matter;
  • see if any further facts are needed, and determine how to ascertain them; and
  • identify the issues that need to be resolved to arrive at a settlement.

Thereafter at the separate sessions the mediator will:

  1. explore the long-term interests of the parties;
  2. identify the weakness in their case, and the lack of good alternatives to settlement (in the evaluative mode);
  3. encourage and engage with the parties in identifying options for settlement;
  4. focus on possible settlement options and refine them; and
  5. draft, or help draft, the written settlement agreement.

Steps (iii) to (v) may also take place in joint sessions.

As per the PIMS rules, the following is the prescribed procedure:

  • At the beginning, the mediator shall explain the process to the parties. The time and date of each mediation sitting shall be fixed in consultation with the parties.
  • The mediator may hold sessions jointly or separately with the parties as he or she deems fit.
  • The parties may share their settlement proposals with the mediator with instructions as to what can be shared with the other party. The parties may also share settlement proposals with each other orally or in writing.
  • Once a settlement is reached, it shall be reduced to writing, and signed by the parties and the mediator. The settlement shall be provided to all parties and a signed copy will be sent to the authority under the Commercial Courts Act.
  • When no settlement is arrived at within the time limit allowed under the Act, or if the mediator is of the view that settlement is not possible, the mediator shall submit a report stating the same to the authority under the Act.
Tolling effect on limitation periods

Does commencement of mediation interrupt the limitation period for a court or arbitration claim?

As per the Commercial Courts Act 2015, any period during which the parties ‘remain occupied’ with the pre-institution mediation under the Act shall not be computed for the purposes of limitation.

In other cases, the mediation proceeding does not suspend the limitation period for a court claim. Section 77 of the ACA prohibits parties to conciliation from initiating any arbitral or judicial proceedings during the conciliation proceedings in respect of a dispute that is the subject matter of the conciliation proceedings, except that a party may do so where such proceedings are necessary to preserve its rights. So, in the event that the limitation period is close to expiring, the claimant is advised to initiate arbitral or judicial proceedings.

Forthcoming legislation is likely to address this issue and is expected to exclude the period of mediation from the period of limitation.

Enforceability of mediation clauses

Is a dispute resolution clause providing for mediation enforceable? What is the legal basis for enforceability?

A dispute resolution clause providing for mediation would be enforceable in India in the sense that if a suit is filed, then a court would most likely enforce the clause and send parties to mediation in pursuance of its power under section 89 of the CPC.

Confidentiality of proceedings

Are mediation proceedings strictly private and confidential?

Mediation proceedings are strictly private and confidential in India. Section 75 of the ACA provides that, notwithstanding anything contained in any other law in force in India, the conciliator and the parties shall keep all matters relating to the mediation proceedings confidential, and that confidentiality extends to the settlement agreement except where its disclosure is necessary for implementation and enforcement.

Best practices dictate that in a private commercial mediation, parties to the dispute and the mediator sign a confidentiality agreement prior to the commencement of mediation proceedings.

Section 80(b) of the ACA specifically provides that the conciliator shall not be presented by the parties as a witness in any arbitral or judicial proceedings.

Section 81 of the ACA makes the following inadmissible as evidence in arbitral or judicial proceeding:

  • views expressed or suggestions made by the other party in respect of a possible settlement of the dispute;
  • admissions made by the other party in the course of the conciliation proceedings;
  • proposals made by the conciliator; and
  • the fact that the other party had indicated to accept a proposal for settlement made by the conciliator.

In court-referred mediations, confidentiality is protected by the rules drawn up by courts under the CPC to regulate cases referred by judges to mediation (Rule 20 of the Model Civil Procedure (Mediation) Rules 2003). These rules are similar to the rules set out in the ACA. In their reports to the court, the mediators must only state whether the case has been settled or not; no further details are to be given.

Confidential information given by one side to the mediator in the mediation process cannot be revealed to the other party.

In the case of a breach of confidentiality, the injured party can sue for breach of contract, negligence or wilful misconduct. It can seek damages or a permanent injunction against disclosure. It may also be entitled to seek interlocutory injunctions to prevent disclosure. The court will take a serious view of a breach of confidentiality.

Success rate

What is the likelihood of a commercial mediation being successful?

It is generally observed that the likelihood of a commercial mediation being successful is above 50 per cent.