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How is mediation under Companies Act different from private institutional mediation
How is mediation under Companies Act different from private institutional mediation?
Institutional mediation is typically undertaken with respect to contractual matters. The mediation provided for under the Companies (Mediation and Conciliation) Rules, 2016 is with respect to statutory matters. If these rules were not passed, these matters would not be capable of mediation in the first place.
In a private institutional mediation, parties enter into an agreement to refer disputes to private institutions like London Court of International Arbitration (LCIA), etc. which also offer institutionalized professional mediation services (apart from arbitration). It is at pre-litigation stage and the procedure is as per the framed rules of the institutions whereas under the Companies Act, 2013, any matter pending before the Central Government, Tribunal or Appellate Tribunal under this Act, can be referred for mediation either by the parties themselves or suo moto by the Central Government, Tribunal or Appellate Tribunal and the Companies (Mediation and Conciliation) Rules, 2016 will apply.
Hence, you will notice that parties will need to select mediators from the panel prepared and maintained by the MCA.
What is the role of the mediator/conciliator and how does he or she conduct the proceedings?
The primarily role of mediator / conciliator as defined under Rule 17 is to facilitate the parties in arriving at a voluntary consensus by helping to identify the issues of the dispute, clearing the misunderstanding and suggesting possible solutions.
Under Rule 11, the mediator with a consensus of the parties shall fix a timeline where all parties need to be present and shall conduct either joint or separate meeting with the parties. The place shall be decided as prescribed by the Central Government, Tribunal or Appellate Tribunal under this Act. Under the rules, the parties shall also exchange a memorandum ten days (which may be curtailed at the discretion of the mediator /conciliator) before fixed sessions mentioning the issues in the dispute, their stand and any other relevant information necessary to adjudicate the dispute
What is a ‘without prejudice’ settlement?
According to Rule 16, at any stage of the proceedings, the parties are entitled to offer, “without prejudice” a settlement to another party with a notice to the mediator or conciliator. This can be understood to mean that a settlement can be offered without affecting any existing right or claim. The rule also permits the parties to offer, “with prejudice” a settlement to the other party with a notice to the mediator / conciliator.
Can the mediator / conciliator propose his or her own terms for the settlement or is it necessary that all the terms must be proposed by the parties? Can there be a combination of the parties’ terms and the suggestions of the mediator / conciliator?
Rule 18 explicitly mentions that the primarily role of a mediator/conciliator is only to facilitate the parties in arriving at a decision to resolve the dispute and the mediator cannot and shall not impose any settlement. The mediator or conciliator cannot even provide an assurance to the parties that the mediation or conciliation will result in a settlement.
However, under Rule 17, with the consent of the parties, the mediator / conciliator may impose such terms of settlement which may facilitate the early disposal of the dispute. However, these would be terms which facilitate the settlement and not the terms of the settlement itself.
Usually, a conciliator plays a more proactive role in formulating the terms of the settlement and enabling the parties to agree to it as compared to a mediator, who will leave it upon the parties to arrive at the settlement terms and merely facilitate their negotiation.
What is the timeline for the process?
Under Rule 19, the process of mediation / conciliation shall be terminated upon the expiry of ninety days from the date of appointment of mediator from the panel. However, this period can be extended by the Central Government or the Tribunal or the Appellate Tribunal, if deemed fit and useful by not more than three months either by an application of mediator / conciliator or upon the request of either of the parties.
This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.
- How is mediation under Companies Act different from private institutional mediation?
- What is the role of the mediator / conciliator and how does he or she conduct the proceedings?
- What is a ‘without prejudice’ settlement?
