The Central Government made the ‘Commercial Courts (Pre-institution Mediation and Settlement) Rules, 2018 which came into effect from 03.07.2018. These rules provides for mediation and settlement mechanism.
Initiation of mediation process
The initiation of mediation process under these rules is as below-
- A party to a commercial dispute may make an application to the Authority in Form No. 1.
- The application may be filed either online or offline;
- The fee payable along with the application is ₹ 1000/-
- The Authority, on receipt of the application, shall issue a notice in Form 2 to the opposite party to appear and give consent to participate in the mediation process not exceeding 10 days.
- If no reply is received from the opposite party the Authority shall issue a final notice.
- The opposite party may sought time in this regard and apply to the Authority either on its own motion or through authorized representative or counsels.
- If the notice is unacknowledged or the opposite party refused to participate in the proceedings or failed to appear in the hearing fixed by the Authority, the Authority shall treat the process to be a non starter and make a report in Form 3 and endorse the same to the applicant and opposite party.
- If both the parties appear before the Authority, the Authority shall assign the commercial dispute to a Mediator and fix a date for hearing before the Mediator.
Fee payable
The fee payable in respect of mediation differs according to the amount involved in the dispute. The fee structure is as detailed below-
- From ₹ 3 lakhs to ₹ 10 lakhs – Fee ₹ 15,000/-
- From ₹ 10 lakhs to ₹ 50 lakhs – Fee ₹ 30,000/-
- From ₹ 50 lakhs to ₹ 1 crore – Fee ₹ 40,000/-
- From ₹ 1 crore to ₹ 3 crores – Fee ₹ 50,000/-
- Above ₹ 3 crores – Fee ₹ 75,000/-.
The above said fee is payable before the commencement of the mediation in equal shares by the parties to the dispute.
Limitation
The Authority shall complete the said process within 3 months from the date of receipt of request for mediation. The said period may be extended for further 2 months with the consent of both the parties.
Procedure
- The venue for conducting of the mediation shall be the premises of the Authority.
- The Mediator shall facilitate the voluntary resolution of the commercial dispute between the parties and assist them in reaching a settlement.
- A party may appear before the Authority either by itself or through an authorized representative or counsel.
- The Mediator, at the time of commencement of mediation, shall explain to the parties the mediation process.
- The Mediator may hold the meetings either with both the parties or separately as he thinks fit.
- Either party may share their settlement proposals with the Mediator with specific instruction as to what part of the proposal can be shared with the other party.
- The parties can exchange the settlement proposals with each other either orally or in writing.
- The Mediator shall maintain the confidentiality of the discussions made in the separate sittings and share the information allowed by the party concerned.
- Once the settlement is reached the Mediator shall reduced in writing in Form No. 4 and the same shall be signed by the parties to the dispute.
- The Mediator shall provide the settlement agreement, in original, to all the parties of the dispute with a copy to the Authority.
- If no settlement is arrived at, the Mediator shall report the same recording the reasons in Form No. 5 to the Authority.
- The Authority or Mediator shall retain the hard or soft copies of the documents filed by both parties for a period of six months and not later than.
- The parties to the dispute shall act in good faith with the intention to settle the dispute.
- The proceedings of the mediation shall not be leaked by any of the parties to the dispute.
- The District Legal Services shall forward the details of the mediation to the State Legal Services who in turn prepare reports.
Ethics to be followed by the Mediator
The Rule provides that the Mediator shall-
- uphold the integrity and fairness of the mediation process;
- ensure that the parties involved in the mediation are fairly informed and have an adequate understanding o[ the procedural aspects of the mediation process:
- disclose any financial interest or other interest in the subject-matter of the commercial dispute;
- avoid any impropriety, while communicating with the parties to the commercial dispute;
- be faithful to the relationship of trust and confidentiality reposed in him;
- conduct mediation related to the resolution of a commercial dispute, in accordance with the applicable laws for the time being in force;
- recognize that the mediation is based on the principles of self-determination by the parties and that mediation process relies upon the ability of parties to reach a voluntary agreement;
- refrain from promises or guarantees of results;
- not meet the parties, their representatives. or their counsels or communicate with them, privately except during the mediation sittings in the premises of the Authority;
- not interact with the media or make public the details of commercial dispute case, being mediated by him or any other allied activity carried out by him as a Mediator, which may prejudice the interests of the parties to the commercial dispute.
