Q2.

Explain the Mediation and conciliation as ADRs and discuss the method of
enforceability of the settlement agreements resulting from these ADRs.

Answer: Mediation is a negotiation process in which a neutral third party assists the
disputing parties in resolving their disputes. A Mediator uses special negotiation and
communication techniques to help the parties to come to a settlement. The parties can appoint
a Mediator with their mutual consent or a mediator can be appointed by the Court in a
pending litigation. Mediation always leaves the decision-making power with the parties.
Mediation is voluntary and non-binding.

Conciliation can be defined as “the settlement of a dispute by mutual and friendly agreement
with a view to avoiding litigation”.1 In simple terms, Conciliation is a form of Alternate
Dispute Resolution (ADR) process of settling disputes arising out of a legal relationship
between parties without the interference of the Court, through conciliators appointed by the
parties.

The main aim of mediation and conciliation is to avoid litigations and to provide speedy
disposal of cases through negotiation where the parties can actually put forth their points
without any further disputes and eventually come to a same page through discussed
resolution. It important to reiterate that the potential benefits of mediation and conciliation,
including the cost and time effectiveness of the processes, must be balanced against the
reality that mediation and conciliation can also be seen as an additional layer on civil
litigation where it does not lead to a settlement and that every step along the way drives up
the costs of litigation.

The method of enforceability of the settlement agreements-

There exist separate mechanisms for enforcement of settlements based on whether they were
a result of pre-litigation or court referred mediation proceedings. Pre-litigation mediation
settlement agreements may be enforceable in three different ways-

First, to give effect to a private settlement agreement, after parties have reached a settlement
they may choose to file suit and subsequently make an application to the court under Order
XXIII Rule 3 to effect a compromise; however this has been recognised as an highly irregular
method to enforce a settlement, as parties would have to bear the primary costs of litigation
even with no intention to pursue litigation.

Second, private mediation settlement agreements, in the absence of any other legislation, are
enforceable on the basis of contract law. Enforceability of settlement agreements by relying
on the Indian Contract Act implies that principles of duress, free consent and fraud will apply
to settlement agreements. This takes us back to the confidentiality aspect of the proceedings
and the question of what evidence of mediation proceeding can remain outside judicial
purview. Furthermore, as no enforcement mechanism similar to other ADR techniques exists
for mediation settlements, parties need to approach courts to enforce the settlement, which

1
Definition of Conciliation by Merriam Webster Dictionary.
brings with it a host of problems associated with litigation that the parties sought to avoid
when they agreed to resort to mediation in the first place

Third, parties have sought to enforce mediation settlements as arbitral awards or conciliator
settlements. A mediation settlement can be enforced as an arbitral award if the proceeding
takes on recommendation of the arbitral tribunal and the tribunal records the terms of
settlement as an award.

It is also pertinent that 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. Section 74 of the ACA provides that a settlement agreement has the same effect as an
arbitral award on agreed terms. The position in the Commercial Courts Act is also the same
as a settlement in a pre-institution mediation proceeding under the Act and is given the same
status as that of an arbitral award under the ACA. Such an arbitral award is enforceable as a
decree of court as per section 36 of the ACA. In cases of settlements in court-annexed
mediations, the settlement is enforced through the courts as the court passes an order or
decree in terms of the written settlement.