Due to the COVID-19 related restrictions, the commercial world is seeing a slowdown, leading to disruption. Coronavirus has made the developed nations realize their lack of medical infrastructure for handling such a pandemic. Different jurisdictions are realizing how unprepared they are to carry on doing business and ensure contract enforcement, leading them to consider increasing usage of technology. We may not even have a next edition of the ease of doing business and contract enforcement rankings of nations, published by the World Bank, as many nations would have ended up falling out of the rankings.
We should not be in a state of denial that businesses are poised to see a meteoric rise of commercial disputes, as the underlying essence of such matters will be non-exhaustive. For the sake of clarity, one may consider that commercial disputes include conflicts not only related to supply of goods and services but also ordinary transactions of merchants and bankers, aviation industry, construction and infrastructure, sale or purchase of commercial property, franchising and licensing business models, joint ventures, technology companies, intellectual property rights and insurance, among others.
Let us remember that businesses want to do business and are least interested in venturing into the business of dispute resolution. Preferably, they would let judges, lawyers and industry experts advise and assist them in successfully navigating the turbulent tide of disputes, giving themselves time to focus on firefighting, diversifying and multiplying their fortunes.
Some years earlier, commercial entities were taken aback due to the delayed justice delivery system, finding it difficult to do business and make investments. In 2015, the government then realized the need for specific legislation to boost the ease of doing business in India by providing speedy and efficacious enforcement of contracts and recovery of monetary claims and introduced the Commercial Courts Act, 2015. The Act allowed formation of commercial courts at both district and High Court levels to hear commercial matters.
Frankly, there was a failure in implementation, resulting in these special courts being clogged, and the litigants stuck in a maze of delayed redressals of disputes. Once again, the need arose to revamp the legislation and the Act was amended in 2018. An ordinance was issued to introduce pre-institution mediation by inserting section 12A into the Act.
This section mandates parties to a commercial dispute to exhaust the option of pre-institution mediation to reach a settlement prior to instituting a suit. The parties may do away with the option of pre-institution mediation only in those cases where they wish to seek an urgent interim relief, subject to grant of approval by the court. This amendment saw disputants being encouraged to take the route of mediation to resolve their disputes. It worked rather slowly, but it worked!
For those who are unaware, mediation is a process where parties to the dispute sit across the table, assisted by a third-party and neutral mediator to craft workable, progressive and enforceable solutions to put themselves in a win-win position.
After the amendment, the industry tried to use the provision of mediation in the case of Daramic Battery Separator India Pvt Ltd. At that time, the law was new and the disputants were looking for an expert in the battery industry. The Legal Services Authority was unable to provide one because their pool of mediators consisted only of lawyers and, occasionally, a psychologist or an engineer. This led to industry associations with mediation centres stepping up to provide domain experts trained in mediation, along with retired judges, lawyers and experienced mediators, as co-mediators.
In the current context of the pandemic that has completely turned our worldview around on various matters, the thought arises whether we need to reinvent the wheel of conflict resolution mechanisms. The convenient alternative is to continue to plod a trodden path, wading through various statutes put in place by legislators. The answer is a definite no. In times like these when courts are either closed or entertaining only urgent matters through virtual hearings, the possibility of a matter even being heard for urgent interim relief shall be next to impossible.
Many commercial disputes have been and are being resolved via mediation, and it has become popular with the parties who have tasted results, saving them from incurring further costs and disruption from continuing litigation. Mediation has been recognized internationally after the introduction of the UN’s Singapore Convention on Mediation in August 2019, signed by at least 51 countries, further paving the way towards ease of doing business internationally.
We are also seeing the judiciary entering an era of court proceedings with the help of technology. Recently, an honourable judge of the Supreme Court commented that the use of technology for dispute resolution must be institutionalized not just now but also in the coming times after the lockdown. These challenging times call for the use of remote mediation, which is possible with sufficient legislative backing, innovative solutions, availability of experts and technological tools for implementation.
Remote mediations boast significant benefits, such as the sessions being arranged quickly and accessible for all to attend, irrespective of location, no expenditure on travel, diffused tension and animosity since the parties not physically present. This can actually help in easing the way towards finding a solution.
The possibility of remote mediation has been further simplified by dedicated mediation institutions or centres recognized by the courts that provide proper operating procedures to ensure confidentiality, transparency and cyber security. Such centres have already stepped up to assist the judicial system. For instance, the Centre for Mediation and Conciliation set up by Bombay Chamber of Commerce confirms they have already concluded several commercial mediations, centrally and remotely, much before the pandemic.
Change is inevitable and we will see remote mediations gaining recognition as businesses grapple with disruptions to the court system and the possibility to resolve disputes without meeting in person. Such conflict resolution tools will continue to gain recognition and become the preferred dispute resolution mechanisms of the future.
-Justice BN Srikrishna is a former Judge of the Supreme Court of India. He headed the "Srikrishna Commission" and is currently the Chairman of the Financial Sector Legislative Reforms Commission. Ashok Barat is the Past President of the Bombay Chamber of Commerce and Industry. The views expressed are personal.
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