Mediation is an age old process of dispute resolution practiced since Vedic period.Mediation as an alternative way to settle disputes is now fast catching up in the country with even some senior members of the judiciary in the Supreme Court and the High Courts of several States expressing their favour. Given the pendency of cases in courts of law, it is obvious that parties to a dispute do not want justice to be delayed since it is as good as being denied. Understanding the need and importance of ADR, several laws in India have undergone changes and have incorporated ADR mechanisms within them. This Article aims to critically analyze Mediation in the new Consumer Protection Act, 2019.
Alternate Dispute Resolution
Alternative dispute resolution (ADR) refers to a variety of processes that help parties resolve disputes without a trial. Typical ADR processes include mediation, arbitration, neutral evaluation, and collaborative law. These processes are generally confidential, less formal, and less stressful than traditional court proceedings. The Consumer Protection Act 2019 (CPA) was given assent by the President of India on 09th August 2019 and came in force from 20th July 2020. The new act has brought few eminent changes in the provisions. More importantly Chapter V of the new act has brought the provisions of Mediation. Subsequent to that Consumer Protection (Mediation) Rules 2020 came in force from 20th July 2020.
Benefits of mediation
In Mediation a neutral person called a "mediator" helps the parties try to reach a mutually acceptable resolution of the dispute. The mediator does not decide the case, but helps the parties communicate so they can try to settle the dispute themselves. Mediation is voluntary, party friendly, cost effective and it aims at giving mutually satisfactory results. Mediation can prove to be an effective tool for dispute resolution and hence sector specific mediation has been highly recommended. Compared to the traditional court systems, mediation is quite flexible when it comes to procedure and is more party friendly. Also, in mediation parties can directly come together and do not require legal professionals and the end result of mediation is more agreeable as the entire process is highly collaborative.
Understanding Mediation under CPA 2019
According to new CPA, a Consumer Mediation Cell shall be attached with all the Dispute Resolution Forums at District, State and National level. The Act further states that, if upon the admission of complaint the Forum feels that if the Complaint is fit for mediation, then it can direct the parties to undertake Mediation [Sec.1 (37)] and the parties have to send their written consent to undergo mediation within 5 days. Upon the receiving consent, the Forum shall send the Complaint to Mediation Cell within 5 days.
As per the Consumer Protection (Mediation) Regulations 2020, the entire Mediation process shall stand terminated on expiry of three months from the date of first appearance before the mediator unless the time for completion of mediation is extended by the Consumer Commission, in which case it shall stand terminated on expiry of such extended time. The Agreement reached between parties is then sent to the Commission in a sealed cover. If no agreement is reached the reasons stating so must be accordingly sent to the Commission.
A consumer knocks the doors of court after he has already exhausted other alternate remedies. For instance, a complainant of defective products or one availing insurance services first approaches that product provider, service provider or Complaint cell of that provider and tries to settle the issue and if that fails a complaint is filed with Consumer Forums. However, with the introduction of Mediation Process an additional step is introduced which can prove to be time consuming. Further, if there has been no agreement between parties within 3 months the consumer would have no option but continue with the regular proceedings. This would further add to the pendency of proceedings.
Lack of bargaining power
According to Blacks – Law – Dictionary, MEDIATION is the act of a third person who interferes between two contending parties with a view to reconcile them or persuade them to adjust or settle their dispute. Mediation can often be synonymous to compromise where the parties mutually come to an agreement. However, mediation can often be problematic where one party (usually the consumer) has less bargaining power, for instance in a typical case of delayed possession a flat buyer might have to settle for much less than what the court grants. Also, the main objective of Consumer Protection Act is restoration and enforcement of “Consumer Rights” and providing a protection to consumers, the consumer forums act as a sense of security to the consumers. Also, the Consumer Protection act allows the person to appear in person and the same applies for mediation, and an individual Consumer would often not have such bargaining power. In such cases, whether Mediation would be a successful tool in restoring the consumer rights is a question to be pondered upon!
In Mediation the decision of a mediator is only “suggestive” in nature, the mediator can only recommend the compensation, this can be highly problematic. Typically, four situations arise when a complaint goes for mediation viz.
Settlement – Approved by Commission.
Settlement – Partly approved and partly disapproved
Settlement – Completely Disapproved by Commission
No Settlement in Mediation
Here, the situations b), c), d) can be troublesome, since the very nature of the settlement between parties and observations of Mediator are merely suggestive, how far shall that settlement be binding upon parties, wherein there is minimal or no violation of consumer rights is to be taken into account by the Commission. In case on non settlement, part settlement or disapproved settlement, the complaint is transferred back to the commission and the regular proceedings, this would entirely defeat the very purpose of speedy disposal.
The main purpose of the Consumer Protection Act is to protect the interest of Consumers. The Consumer Commissions act as deter to prevent the abuse of consumers from unfair practices and further ensures in restoring the consumer rights. These Commissions are capable of giving strict orders in case of violation of consumer rights and restoring their faith. Since, mediation aims at mutual settlement, it doesn’t act as a deter, unlike the courts, this could hamper the consumers in cases of gross violation of consumer rights, wherein the other party may just get away by paying off settlement amount.
Lack of judicial infrastructure is one of the major reasons for pendency of cases. As per a recent report, currently, Karnataka has the third highest number of pending consumer cases in the State Commissions after Uttar Pradesh (25,500) and Maharashtra (18,408). The new act talks about establishing Mediation Cells, however the act is silent as to cases with how much pecuniary limit can be sent for mediation. With the pecuniary jurisdiction of District and State Forums increased, these forums are bound to be overburdened with complaints, similarly with lack of infrastructure the mediation cells are also bound to be overburdened. This would defeat the very purpose of speedy disposal of complaints.
According to Consumer Protection Act, “At the first hearing of the complaint after its admission, or at any later stage, if it appears to the District Commission that there exists elements of a settlement which may be acceptable to the parties, except in such cases as may be prescribed, it may direct the parties to give in writing, within five days, consent to have their dispute settled by mediation in accordance with the provisions of Chapter V.” The entire essence of mediation lies in its voluntary nature. However, in situations where in one party agrees to go for mediation with court direction and if other party is reluctant in going further might still have to go further, this might severely affect the party autonomy as the consumer would often have to compromise on his right of choice
Pre Litigation Mediation
The most essential element of Mediation is that it is voluntary and mutual in nature.
One of the efficient ways in resolving Consumer Complaint is analyzing the subject matter of complaint. If the dispute can be mediated, attempts should be made at a pre litigation stage by bringing the parties together. Such a process would be less time consuming and more satisfactory compared to post litigation mediation, wherein the parties would have to wait for their case to come on board, and get the complain transferred to Mediation Cell. Establishing mediation cells that can be directly approached can be a much more effective tool for dispute resolution. The Online Consumer Mediation Centre, established at the National Law School of India University, Bengaluru under the aegis of Ministry of Consumer Affairs, Government of India aims to provide for a state-of-theart infrastructure for resolving consumer disputes both through physical as well as online mediation through its platform.
Online Dispute Resolution (ODR)
In this age of technological advancement, ODR has become a new normal. ODR platforms can be an effective tool for fast and easy dispute settlement. The new Act includes E- Commerce within its ambit, ODR mechanisms can prove to be effective tool for resolving issues arising out of E-Commerce services. ODR can be used to settle disputes involving small claims.
At the face of it consumer mediation might seem to be great addition to the Act and could prove to effective in resolving matters like delayed possession to multiple home buyers, negligence etc. However, Mediation could be an add on step to the already existing Redressal system which could be time consuming as Consumer Disputes Redressal Forums are already established for speedy disposal. Also the act does not set a cap on what type of cases could be referred for mediation this could lead to back logging of cases referred for mediation. However, consumer mediation could be effective as mediation is an informal mechanism and would not require legal experts, setting up of Mediation Centers especially online mediation centers which can be directly approached without filing of complaint in th