Disclose, Don’t Disqualify: Bias and Disclosure under Section 10 of the Mediation Act, 2023

Disclose, Don’t Disqualify: Bias and Disclosure under Section 10 of the Mediation Act, 2023

The Mediation Act, 2023 is a significant step forward in how disputes are resolved in India. It establishes a legal framework for mediation and a framework for mediation agreements. The Act encourages cooperation and presents a big change from how disputes have previously been resolved through antagonism. This law is more than just an administrative tool; it also helps establish mediation as an independent and legitimate means of resolving disputes.¹

Caution, Disclosure and the Risk of Over-Regulation

At the same time, first-generation laws tend to be cautious in their framing, and this caution can lead to over-regulation.² In the case of the Mediation Act, this caution is evident because it has placed such heavy emphasis on three key elements of mediation: neutrality, structure and time frame, and enforceability. The mediator must be neutral and independent, the mediation process should be structured and completed within specific time frames and the agreement should be enforceable upon completion. Although these concerns are all valid, they can all lead to over-regulation.³

The most blatant example of this type of regulatory overreach can be found in section 10(1) of the Mediation Act which requires mediators to disclose in writing to the parties any relationship or circumstance that may be construed as a conflict of interest or that may give rise to reasonable doubt concerning their independence or impartiality prior to commencing the mediation process. The most clear example of this would be where a mediator has a previous relationship with one of the parties involved in the mediation process. Under Section 11, the Authority can revoke a mediator’s authority to facilitate a mediation only if either a mediation service or court determines that there is a reasonable question of the mediator’s independence and/or impartiality, brings it to the attention of the parties involved in the mediation, and one of the parties provides a request for a new mediator. This means that the Act prevents mediation from being compromised by requiring that the mediator be independent and impartial. Under Section 12, however, the authority to replace a mediator is only given to the parties after the mediation has concluded (i.e., not prior to) and therefore will not be determined to be based upon a valid reason for disqualification.⁴

While these provisions are intended to protect the parties to a mediation from the loss of impartiality, they also raise a more significant issue. Specifically, to the extent that the law adopts adjudicative standards of impartiality as its basis for regulating mediation, it risks diminishing mediation’s credibility by relying too heavily upon the courts’ model for enforcing the impartiality of judges. The basis for this concern is described in greater detail below but can be summarized here. A mediator assists the participants in the mediation in reaching a mutually agreeable resolution of their differences rather than making a final enforceable determination of their legal rights. As a result, a party’s previous relationship with the mediator will not necessarily be cause for disqualifying the mediator and the parties may continue to use the mediator if full and timely disclosure of such prior relationship is made and if all parties have consented to the mediator remaining in the mediation process.

Mediation is different from arbitration in that mediation does not involve an enforceable determination. Therefore, mediation should not be viewed as a preliminary phase of a judicial proceeding.⁵ A party’s willingness to continue with the process determines the mediator’s authority, not the power to make determinations of the parties’ rights. The mediator does not render a decision on the matter in dispute. The mediator will only assist the parties involved in coming to a decision on their own. Therefore, if there exists any statutes establishing standards of impartiality for mediators, such statutes would have to consider the fact that the foundation for mediation is based upon itself (i.e., it has its own normative basis).⁶ What ‘justifiable doubts’ means when it is applied, mechanically, against the background of prior relationships, risks overlooking the foundation of mediation.⁷

Why Adjudication Demands the Appearance of Impartiality

A ‘justifiable-doubt’ standard based upon prior relationships establishes a concern, originally belonging to the process of adjudication, within a mediation context. In the adjudication context, either civil or criminal, an adjudicator resolves a dispute between parties by imposing a decision, which must be accepted by both parties (subject only to the appeal process). Because the outcome of an adjudication is imposed rather than chosen, therefore the rule of law rightly demands that adjudications be made only upon a strict appearance of impartiality. If there is a reasonable apprehension of bias against the losing party, the adjudicated decision (from which there is no further recourse) is seen as lacking legitimate authority. This principle is also referred to as the core principle of ‘natural justice’ and applies equally to all aspects of law. Whether in civil or criminal cases, the appearance of impartiality from the presiding official is crucial to the process.⁸

Mediation Is Different: Neutrality Without a Verdict

Mediation is a completely different process. The mediator is simply a facilitator who serves as a neutral third party, but does not sit as an adjudicator or a jury.⁹ Although the mediator may assist the parties in reaching a resolution of their dispute mediators who facilitate the resolution process provide neutrality, however the actual decision to accept the resolution remains the voluntary choice of each of the parties who are involved in the mediation. A mediator has two limitations: The mediator is neutral, allowing each party to decide for itself during the mediation process. Therefore, neither party has the “decision made for it” by anyone else and both parties are able to reach a mutually acceptable settlement on terms of their own making, with the right to reject any proposals or withdraw from the mediation process at any time if the “mediation process” is unsatisfactory in either party’s eyes. Although it is still critical in mediating efforts to remain neutral, such neutrality does not have the same meaning in a mediation setting as it does in an adjudicatory (litigated) setting.¹⁰

When a Prior Relationship Helps Rather Than Harms

Understanding the “prior relationship” standard under Section 10 becomes clearer when looking more closely at “prior relationship” in mediation.¹¹ Prior knowledge of a mediator by a party in a mediation setting does not have to be viewed negatively. It can also provide some level of comfort to one or both of the parties, and may even assist in making a choice of mediator who understands better the parties’ respective commercial context, the technical language of the dispute, their history in relation and the type of negotiation process that is applicable to resolving the dispute. In some instances, such as when attempting to mediate a dispute between parties in the construction and infrastructure industries, parties are likely to have more confidence in a mediator who understands the claims processes and best practices for managing contracts and who has a general understanding of behaviours in those industries than in a mediator with whom they have never had any prior contact but who lacks any knowledge about the claims processes and behaviours in those industries. In family or community disputes, trust is often enhanced when the parties know that the mediator has made previous sound judgements, than when they encounter the mediator for the first time and, therefore, may be less suitable to act as the mediator in the present dispute. A rigid rule preventing access to an individual mediator based on prior relationships creates an additional barrier to access to mediation. By presuming that all prior relationships are suspect, the law risks excluding from mediation those individuals who are in the best position to assist in resolving the dispute.¹² For instance, in many tight-knit communities of lawyers and businesspeople, previous relationships are often commonplace. Senior members of the profession, retired judges (or ex-judges), in-house counsel, technical experts and institutional mediators frequently operate within the same professional networks. To treat that common experience as creating a presumption of bias would unjustifiably narrow the pool of possible mediators while doing nothing to enhance the fairness of mediation.

This issue is particularly highlighted in commercial and institutional mediation cases.¹³ In the majority of circumstances, parties prefer a mediator who has experience in the business area covered by the dispute.¹⁴ An experienced mediator is able to identify the most valid points of contention in the dispute; assess the level of seriousness of the impasse; and assist each party in working towards a practicable resolution. Mediation centres maintain lists of reliable professionals who understand the parties involved and have had previous contact with the industry in which the parties operate.¹⁵ A “prior relationship” may be overbroadly defined by a party, thus leaving the institution exposed to multiple objections to the appointment of a mediator on the basis of nothing more than an ordinary professional relationship or strategically raised objections designed to delay or disrupt the process.¹⁶

‘Justifiable doubts’ is a key aspect of the challenge.¹⁷ The Act does not offer any indication of the amount of prior relationship required to cross the threshold, so the absence of such a calibration creates two problems.¹⁸ First, it may lead mediators to either over-disclose or not accept appointments where there is no true conflict or potential for a conflict. Second, it allows a party dissatisfied with the course of mediation to use their concerns regarding impartiality as a weapon against the other party’s position.

There needs to be an approach which distinguishes an actual conflict from simply being familiar with the parties involved. Being familiar with a party does not automatically indicate that there are no impartiality concerns. The determining factor is the extent and nature of the relationship; does it substantially impair the ability of the mediator to be impartial, or is there a legitimate basis for apprehending bias?

Calibrating Bias, Not Abandoning It

Bias is not an uncontrollable animal found in Indian law. The Supreme court of India has defined the concept of bias in several decisions, indicated its types and indicates that the mere fact of a particular association giving rise to bias is a legal question dependent on the facts and circumstances of each individual case.¹⁹ The IMI Code of Conduct, from which this proposition also relies upon, has a similar position in regard to bias in that it requires a mediator to disclose any potential matters of partiality, to refuse an appointment that has not been disclosed and has a process in place for mediator to withdraw from continuing to mediate where there is legitimate objection from one party regarding the disclosed matter. The language used by the IMI Code of Conduct is one of caution regarding bias, however, as it also states that the mere disclosure of the interest of the mediator will not automatically result in the disqualification of the mediator.

From this, it is therefore clear that the issue of the standard of impartiality to a mediator can be calibrated rather than abandoned. The need for protection from bias cannot be established to a conclusive extent nor limited to definite categories of what constitutes bias or does not constitute bias. There is significant factual uncertainty in regard to this subject. A narrow interpretation of the term “justifiable doubts” as it has been developed in the bias jurisprudence of the courts and which uses the Act’s process of disclosure and agreement of the disagreement rather than excluding with a presumption of bias, will align the Indian mediation law to the practical requirements for resolving disputes. If mediation is to be used as a preferred initial option rather than a detour the legislature must ensure that there is sufficient latitude for parties’ expertise, faith and selection of mediators in the governing principle. If the standards for disqualifying mediators are overly broad, the integrity, continuity and use of mediation will suffer.

Conclusion: Disclose, Don’t Disqualify

A model of disclosure is better than a model of automatic exclusion. All known relationships to one of the parties must be disclosed prior to a mediation and the mediation should run in light of the parties’ knowledge of the relationship with the mediator in a manner that is satisfactory to the parties.²⁰ This model allows for transparency and honouring of the party’s right to determine whether to mediate — which is the very purpose of mediation. In a developing mediation system such as India the legal system should enhance the faith individuals have in the mediation process rather than create barriers. Section 10 of the Mediation Act should be interpreted in a manner that only real and substantial issues are included in the definition of “justifiable doubts”; and to avoid including hypothetical or regular concerns.²¹ If the definition were expanded beyond this, the individual mediators that would be most able to assist parties would be those deemed unqualified, and the parties that would otherwise benefit from their mediation would be the parties that are now without.

References

1. Mediation Act 2023, Preamble, ss 3(g), 4, 5; Mediation Bill 2021, Statement of Objects and Reasons para 2. ↩
2. Department-related Parliamentary Standing Committee on Personnel, Public Grievances, Law and Justice, One Hundred Seventeenth Report on the Mediation Bill, 2021 (Rajya Sabha 2022). ↩
3. Mediation Act 2023, ss 10, 16, 18, 27, 28. ↩
4. Mediation Act 2023, ss 10(1), 11; International Mediation Institute, IMI Code of Conduct (2021) paras 1.3.3, 3.1–3.3. ↩
5. Mediation Act 2023, s 3(h); UNCITRAL Conciliation Rules (1980). ↩
6. Sharon Press, ‘Behind the Curtain: Ethics for Mediators’ (2019) 26(1) The Professional Lawyer; Model Standards of Conduct for Mediators, Standard I. ↩
7. Jennifer L Maute, ‘Mediator Accountability: Responding to Fairness Concerns’ (1994) 19 Journal of Dispute Resolution 347; Press, ‘Behind the Curtain’ (n 6). ↩
8. Porter v Magill [2001] UKHL 67 [103]; R v Sussex Justices, ex p McCarthy [1924] 1 KB 256. ↩
9. Press, ‘Behind the Curtain’ (n 6); Model Standards of Conduct for Mediators, Standard I. ↩
10. Model Standards of Conduct for Mediators, Standard I; Mediation Act 2023, ss 16, 24. ↩
11. IMI Code of Conduct (n 4) paras 3.3, 3.6, 3.7. ↩
12. IMI Code of Conduct (n 4) para 3.3; Sharon Press, ‘When Dispute Resolution Practitioners Wear Different Hats’ (2019) Dispute Resolution Magazine 35. ↩
13. Mediation Act 2023, ss 3(f), 8, 9, 10. ↩
14. IMI Code of Conduct (n 4) para 1.3.1. ↩
15. Mediation Act 2023, ss 3(j), 8(4), 11, 12. ↩
16. Mediation Act 2023, ss 10(4), 11; IMI Code of Conduct (n 4) paras 3.2–3.4. ↩
17. Mediation Act 2023, s 10(1). ↩
18. Mediation Act 2023, ss 10, 11. ↩
19. AK Kraipak v Union of India (1969) 2 SCC 262; GN Nayak v Goa University (2002) 2 SCC 712. ↩
20. Mediation Act 2023, s 10(3). ↩
21. Maute (n 7). ↩