HOW CAN MEDIATION AVOID LITIGATION?

Litigation by its very nature is an exercise fraught with confrontation. When you indulge in litigation, whether you lose or win, the fact of the matter is that you have lost for a long time to come any business that you could have done with that party. If these reasons were not good in a country like India litigation is like slow roasting process where you go through all the pain and peril not knowing how good it is going to be in the end. Cases can drag on for years with no resolution in sight. Parties and advocates get all their skill and resources to work to drag cases further, especially the party that knows that its chances of winning are thin. Now the question that stands a begging is whether all this effort worth it? One can understand and even concede that sometimes there are disputes that are of such a nature, wherein, it would be a waste of time to engage in any other exercise but to send it straight to a judge. However, in a vast majority of cases, it has been seen, that if handled carefully, litigation and all the perils associated with it can be easily avoided. What parties, especially corporate, are doing is resorting to arbitration. With 99% of corporate agreements having arbitration clause built in, even if a party goes to court the judges are too happy appointing an arbitrator from a pre approved list and referring the matter to them. However, even arbitration has its perils. To start with, like litigation, arbitration is also a confrontational exercise where parties are competing and confronting each other to win a point. Arbitrations are also expensive especially corporate arbitrations. A single arbitrator has been known to charge huge fees and when you have tribunals with 3 arbitrators the cost just skyrockets.

One ADR which has completely missed everyone’s attention and one that can help immensely, if used properly, is Mediation. Now defectors would say that more often than not mediation has failed to achieve any noticeable results. My answer to that question is that while it might be true the fact of the matter is that Mediation has not been used properly, especially in India. All over the world parties have been known to resolve complex disputes in a cordial and amicable manner through mediation. It’s one of the only major ADR which tries to reach a win-win resolution for parties involved. The problem is not with mediation but it’s the way it has been approached. In India even mediation proceedings are carried out under the aegis of Advocates. What that leads to is that what should be a reconciliatory exercise which the parties need to approach with an open mind; it becomes a confrontational exercise where parties simply refuse to budge from their positions, even when they know well that they stand on a very sticky wicket. The reason is that advocates approach mediation with the same aggressive stand-offish approach that they do litigation. What makes it worse is that they infect their clients with the same mindset thereby making any headway, in mediation proceedings, impossible. For Mediation to be a successful exercise we need to change the mindsets and the approach we have towards mediation. We need to start by focusing on the issues that parties agree upon and build upon that. The approach should be towards consensus building and making parties agree upon the smaller issues before approaching the big ones. Parties need to understand that the idea is not to blame each other but to understand the problem and look at possible solutions. The biggest pitfall and reason that fails the mediation process is the blame game. Therefore, it’s pertinent that parties absolutely do not engage in blame game. The idea should not be to ascertain whose fault was it but how to resolve the problems at hand. The most difficult job in mediation is to make parties understand that it is about give and take. They cannot approach mediation proceedings with a wish list of what I want. They also need to have a list of what I am ready to give up. Both the parties need to lose small battles so that collectively they win the war. This is where the mediator’s role becomes very important. He can make the parties realize what they can and cannot get i.e. how weak or strong their case is and what is a valid bargain. He needs to make the parties understand that how by going through this process they are going to save themselves money, time and effort of going through an arbitration or litigation. In the end it’s basically the intent of the parties and the mediator which decides in which direction things are going to go towards a resolution or towards failure and forced litigation. Therefore the successes of mediation lies in making the parties mentally ready for the process and then guide them through the process. I think one of the biggest incentives for corporate can be the fact that if things are taken care of by mutual understanding then they won’t lose out on each other’s business in the future which is often the case after a bitterly fought litigation. Mediation can be a huge success only if it is used smartly and diligently and can be a major help in avoiding unnecessary litigation. Lastly any resolution that the parties agree on can be made legally binding by way of a Settlement Agreement u/s 73 of the Arbitration and Conciliation Act , 1996. Such an agreement shall have the same legal validity as that of an arbitral award and the parties shall be bound by it accordingly.